Mortgage Rates are at a Record Low
Currently Canadian Mortgage Rates are at a record low. If you are in the market to buy a home, you might be wondering if rates will go any lower?
Canada’s Central Bank slashed the benchmark interest rate by 0.5 per cent on three separate occasions in March. Government of Canada five-year bond yields fell 0.41 per cent in August from 1.64 per cent last December. Both measures affect how mortgage rates are set.
Lenders are in competition to gain business
By June most major banks and mortgage brokers were offering five-year fixed rate loans at less than two per cent. Lenders are in competition to gain business as buyers are taking advantage of low rates. This combined with pent-up demand after the pandemic limited new sales listings in the Spring has led to a competitive mortgage market.
Lack of supply and accelerated house prices
The lack of supply also accelerated house prices in most markets across Canada. The Canada Mortgage and Housing Corp. and other analysts believe that housing prices will drop, although by how much is being disputed.
What will happen to Mortgage Rates?
Some analysts say borrowing costs will not increase significantly until after a solid economic recovery is well under way. When that happens depends on the strength of the expected second pandemic wave due this winter and when a vaccine becomes widely available.
The fall in the annual inflation rate of 0.1 per cent in August from 2.4 per cent in January had also helped keep interest rates positive and the central bank is unlikely to let them go negative, according to deputy chief economist at the Canadian Imperial Bank of Commerce, Benjamin Tal.
Other analysts say it’s unlikely the Bank of Canada will further cut interest rates – unless something even more devastating happens to the economy- as it’s been said a few times that 0.25 per cent is as low as it wants to go.
Why you should contact us
During these uncertain times, it is important to talk with someone who is up to date on everything in the mortgage finance world. A Client First Mortgage Solutions Mortgage Advisor can answer all of your questions and determine a course of action that will work for you. Contact us today!
Original Article – Financial Post – Colin McClelland