Month: January 2017

This information is the result of my in-depth research and also goes in line with the opinion of mortgage industry leaders whose expertise I value. This is not something you will hear on the news where the objective is to instill concern and sometimes panic.

So let’s get to it:

For Variable Rate Holders:
Enjoy the stability of your variable-rate mortgage.  Sounds kind of contradictory, doesn’t it? But this is what variable rate mortgages are now.  We are not anticipating Prime rate going up. Why? Prime rate is deeply influenced by the health of the Canadian economy. A good analogy is, imagine that the Canadian economy is like a car. Once the car starts accelerating a little too much (unemployment rates are low, consumer confidence and spending goes up, inflations picks up) the driver (the Canadian Government) steps on the brakes to slow things down.

This is when they increase the overnight lending rate and Prime rate goes up.

The reality is the Government is putting their foot all the way down on the gas in their effort to stimulate the economy….So it is very possible Prime may even drop down 0.25%.

For fixed rate holders:
Fixed Rates have been very “wild” lately jumping up 0.25 to 0.50% since the changes to the mortgage rules got introduced.  Longer term fixed rates ( 4, 5, 7 and 10 yr) are influenced not by Prime rate but by the bond market and the bond market has been very volatile lately trading between 1.00 and 1.20%.

A jump in bond rates means that fixed rates will always follow. What is happening with Prime has absolutely no influence on 5 yr fixed rates.

If you are set on a 5 yr fixed mortgage, my advice is to get pre-approved to have the rates locked for you! We can hold the rates for 4 months. If your mortgage is coming for a renewal this year, contact me 4 months prior to the renewal date and we will lock the best available rate for you. Or may I suggest looking at a variable rate mortgage? 🙂
Experts predict that 5year fixed rate will remain under 4% by the end of this year.

Wishing you a very calm and successful 2017!

Sincerely,

Lena Larsen