Interest Rates and why they are rising.
First, a quick explanation on how the fixed rates work.
Fixed rates are affected by the Canadian bond markets, specifically the bond yields. If the Canadian bond yields increase, you will see that effect trickle into the 5 year fixed mortgage rates in way of an increase in mortgage rates. Over the past year we saw the opposite because the bond yields decreased, in turn, providing a lower mortgage rate.
So why are rates increasing?
The simple explanation is that the bond yields have increased and in turn funding costs rise for the lender. The margins get squeezed to a point they can no longer absorb the increase and so they pass that onto the borrower – thus the fluctuation in the 5 year fixed rates. What you need to remember is that this is just the 5 year fixed rates. When it comes to the variable rate, there has been no change.
What does this all mean for you?
- If you are not planning on making any changes to your mortgage, not planning on selling, buying etc and you currently have a fixed mortgage – there is no change for you. Your rate is locked into whatever term you agreed to with your lender.
- If you have a variable mortgage, these current rate increases do not affect you as the bond markets do not dictate your fluctuation, the Bank Of Canada does.
So, if you have found yourself sitting on the fence about making a decision to contact a mortgage broker, don’t wait. Had we connected a week ago, you would have been able to save hundreds, even thousands depending on your new mortgage amount . Waiting has already cost you $$ this past week and come midnight tonight ( March 8, 2021) it will cost you even more as many lenders have announced another rate increase.
Today’s theme – Don’t wait! If you are thinking of making a move or a change to your mortgage, give us a call. Let’s have a discussion so you can make an informed decision.
Until next time, have a great week
Want to connect? Email me at firstname.lastname@example.org | Call or text 905-870-0513
Alternatively our office can be reached via text at 289-769-8864