Falling Interest Rates: What Homebuyers and Homeowners Need to Know

Category: Blogs,Mortgage Tips & Advice

📉 Falling Interest Rates:

What Homebuyers and Homeowners Need to Know 🏡💰

There is finally some good news for Canadians who are looking to purchase or renew a mortgage: interest rates are starting to fall 📉, and they might continue to drop in the near future. Recently, Canada’s big banks revised their forecasts, predicting lower rates sooner than expected. This is a significant shift after a long period of higher rates where borrowing has been expensive and difficult to qualify for many borrowers. Let’s explore what’s happening and how it could affect you 🏡.

 Why Are Interest Rates Falling? 🤔

The drop in interest rates is largely due to signs that inflation, which has been driving prices up for many things, is finally starting to cool down 🧊. As you know, when inflation is high, the Bank of Canada raises interest rates, making borrowing more expensive, which in turn slows down spending. Now that inflation is easing, there appears to be less need to keep interest rates high.

Earlier this year, when asked, most banks forecasted a 175 bps reduction in rates. Now, as we move into the year, those forecasts are being revised due to global economic factors 🌍 and likely we can expect a greater reduction. For example, the bond market, which influences mortgage rates, has seen lower yields recently. This has led to a decrease in fixed mortgage rates. Simply put, the cost of borrowing is going down, which is good news for anyone with a mortgage or looking to get one 🏠.

How Does This Affect Homebuyers? 🏘️

If you’re thinking about buying a home, falling rates could make it more affordable 💰. Lower interest rates mean lower mortgage payments, which will make qualifying easier. Over the past year, high rates made it tough for many Canadians to buy homes, as monthly mortgage payments were much higher. But with rates starting to drop, it could be a great time to start exploring your options 🛤️.

For those considering a fixed-rate mortgage, now might be an especially good time to lock in a rate 🔒. Fixed-rate mortgages are tied to bond yields, and since these yields are falling, fixed rates are coming down too.

What About Current Homeowners? 🏠

Adjustable-rate mortgages will benefit from these changes 🔄. Adjustable and variable-rate mortgages are directly affected by the Bank of Canada’s interest rate, so if rates continue to drop, adjustable-rate mortgage payments will decrease, giving you some extra room in your budget 🤑.

Those in a current fixed-rate mortgage will also benefit when they are up for renewal as they will have the opportunity to move into a rate that will be less shocking than it was earlier this year. Those in higher-rate mortgages may want to review the option of refinancing 🔄. However, that’s an option that we will need to explore in detail to ensure that it’s financially beneficial for you.

What About the Housing Market? 🏡

The housing market could also see some changes due to these falling rates. When borrowing becomes cheaper, more people tend to buy homes, which can increase demand. This might push home prices up 📈. However, the full impact on the market will depend on how quickly and by how much rates continue to fall.

Should You Make a Move Now? 🛠️

With interest rates falling, now might be a good time to think about buying a home or reviewing your mortgage 🏡. However, it’s important to consider your personal financial situation and long-term goals 🎯.

Final Thoughts 💭

Canada’s big banks are predicting that interest rates will continue to fall, offering relief to homebuyers and homeowners alike 🎉. Whether you’re looking to buy your first home, upgrade to a bigger space, renew or refinance your current mortgage, these changes could make your financial goals more achievable 🏆.

As always, I invite you to connect and review your options 📞.

Talk soon,

Ana

Mortgages can be complicated; we are here to help you make “cents” of it.

We focus on Mortgage Solutions, Period!

To learn more connect with Ana Cruz 905.870.0513 or email at ana@askanacruz.ca