What’s Going On With Mortgage Rates And What This Could Mean For You
I wanted to bring to your attention some good news that might interest you, especially if you are looking to buy or sell a home, or if your existing mortgage is up for renewal.
Read on for a summary of the situation, as well as what it means for homebuyers, sellers, and owners like you.
• Two Recent Developments Could Help Bring Mortgage Rates Down
First, the collapse of banks in the U.S. and Switzerland sent shockwaves through the financial sector, causing a ripple effect through the global economy.
Fixed mortgage rates generally follow the 5-year Canadian bond yield. A growing number of investors, concerned about instability in the banking sector, are now fleeing to the safety of these government-backed bonds. An increase in bond prices means lower yields—and lower mortgage rates
What’s Going On With Mortgage Rates?
Then, on Monday, the February Consumer Price Index was released by Statistics Canada, showing a sharper-than-expected deceleration in inflation.
This has led some industry experts, including ING Chief International Economist James Knightly, and to speculate that interest rates have peaked—and that a rate cut could be coming soon.
“Back in January, the BoC indicated that ‘it expected to hold the policy interest rate at its current level, conditional on economic developments…’ This guidance is likely to remain in place at the next BoC meeting on April 12, with the BoC likely to sound even more cautious in the wake of US and European banking woes… We still think the next move in the BoC policy rate will be downwards and that the first cut is likely to come before the end of the year,” Knightly wrote.
A drop in the Bank of Canada’s benchmark rate would bring down variable mortgage rates and could further lower the interest rate on new fixed-rate mortgages, as well. Still, no one knows for certain what the central bank will do next or how the banking crisis will play out and ultimately impact rates.
Bottomline: We could see some major volatility in mortgage rates in the coming months.
WHAT ALL THIS COULD MEAN FOR YOU:
BUYERS: If you have considered buying a home, it’s important to be aware of the situation and to be prepared to lock in a low rate if the time is right. A lower mortgage rate could potentially save you hundreds of dollars on your monthly payment, so you can’t afford to miss out.
It’s also going to be crucial to work with knowledgeable real estate professionals (like us!) who are monitoring this situation closely as it continues to unfold. We can also refer you to a trusted mortgage professional, who can help you get pre-qualified for a home loan.
SELLERS: A further dip in mortgage rates could bring more buyers to the market. These buyers may want to act quickly in case rates rise again.
If you’ve been on the fence about selling your home, now may be the perfect time. We can help you prep your home and get it listed quickly to take advantage of a possible increase in demand.
HOMEOWNERS: If your existing mortgage is up for renewal or you have a variable rate, there could be an opportunity to secure a fixed rate with more favourable terms. Let us connect you with a mortgage professional to discuss your options.
WHAT STEPS SHOULD YOU TAKE?
You don’t want to miss out on this potential window of opportunity! Reply to this email or give us a call today to schedule a free consultation so you can be prepared.
And as always, don’t hesitate to reach out with any questions about this or other real estate issues. We would love to hear from you!
