As a client or business associate of The Mortgage Centre I am taking this opportunity to update you on mortgage interest rates. Personally, I am not locking- in my rate at this time, but I am paying attention.The recent decline in oil prices has pushed the Bank of Canada to lower its overnight lending rate because it wants to ensure that the country doesn’t slip into a recession. This has led most lenders to cut their Prime Rate, which in turn has lowered variable mortgage and secured line of credit rates.
Recessionary concerns have led to many forecasters to believe that Canada will see little economic growth over the next 2-3 years, which has led to a decrease in expectations for inflation. This, in turn, has pushed bond yields down. Fixed mortgage rates, being driven by bond yields, have decreased and are very attractive. Many people are asking if now is a good time to “lock-in.”
While this may be a good time to lock-in, I note that in the past 16 years of being in this business I have learned not to say that this is as low as rates will go. Frankly, it is hard to believe that they can go much lower, but people said that when they hit 5%, then when they hit 4%, and again when they hit 3%. Now they’re sitting beneath that.
I have a mortgage that is broken into two parts. The first part (for the majority of the money) is a variable rate mortgage. The second portion is fixed (about 25% of the total). I am not going to convert the variable rate portion at this time, however I am going to keep an eye on things as I have done for the past couple of years. I tend to watch the data on employment numbers, wages, real and expected inflation, and the Producer Price Index. I have written a short article on how these things impact rates. You can access the article here.
If my team and I can be of assistance in any way please contact us. We are happy to help.
Wishing a you successful 2015,
Chris