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Could Fixed Mortgage Rates in Canada Be on The Rise?

Could Fixed Mortgage Rates in Canada Be on The Rise?

posted in Mortgage News

With the recent announcement of a new and effective vaccine on the horizon, bond yields in Canada and the U.S. are hovering right around 0.50%, the first time they’ve done so since the beginning of June. Bond yields lead fixed mortgage rates, causing some to suggest that mortgage rates could be finding a bottom and may only get higher from now on in. With the profit margins of lenders already exceptionally tight, rising yields are doing nothing to help and are in fact, tightening their margins even more. Some within the industry have observed that if yields continue to rise, banks will waste no time taking their fixed rates with them. That said, experts predict that the future is bright where the housing market and mortgage rates are concerned, and that 2021 will be all about recovery.

Can mortgage rates get any lower?

Should the final phases of approval for a covid-19 vaccine fall through, then mortgage rates may well fall even lower, but experts predict that this would be the only event that could possibly have such a dramatic effect. That said, fixed rates could still move up over the coming year; the situation as a whole is hard to predict, and positive developments for the vaccine will probably lead only to a short-term spike.

Are long-term trends still there?

With so much debt, the economy is still struggling and can’t support higher interest rates; long-term trends are still there and higher 5-year fixed rates for the upcoming years, are not expected, according to experts.

What mortgage shoppers should know:

All the talk about rising rates has naturally made those seeking to borrow money to purchase a property, more than a little nervous, but the advice from expert mortgage brokers is to seize the moment and lock in a rate now if you’re in a position to do so. While there’s no guarantee that rates will rise materially, it’s safe to say that the risk versus the reward, no longer goes in the favor of variable mortgage rates.

If shopping for a mortgage now, try to hold on to a variable rate such as 1.45% or less, or pay to lock in at under 2%. While there are several factors that will determine which route you take as a mortgage shopper, working closely with a qualified and experienced mortgage broker will help you make the right choice for your current circumstances, while taking the future of the economy into account at the same time.

 

Mortgage News

01 dDec, 2020

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