In recent weeks, both homeowners and new buyers have benefited from a noticeable drop in fixed mortgage rates. This shift follows a cut in the Bank of Canada’s interest rate, which also influenced bond yields to plummet. As a result, mortgage providers reduced their fixed rates by up to 0.25%.
Key Factors Behind the Rate Drop
Several factors contributed to this trend:
- Bank of Canada Rate Cut: Lowered variable mortgage rates and influenced fixed rates.
- Falling Bond Yields: A decrease in bond yields, which directly affects fixed mortgage rates.
- Economic Indicators: Slower GDP growth and easing inflation.
Fixed vs. Variable: What Should Borrowers Consider?
The debate between fixed and variable mortgage rates continues:
- Fixed Rates: Offer stability and predictability, making them a good choice for risk-averse borrowers.
- Variable Rates: Historically lower but come with uncertainty due to potential future rate increases.
Experts like Ryan Sims and Ron Butler suggest that while fixed rates offer less hassle and predictability, variable rates might be favorable if further rate cuts occur. However, with current spreads, fixed rates might be more advantageous in the short term.
Conclusion
As mortgage rates remain unpredictable, it’s crucial for borrowers to consider their financial situation and risk tolerance. Consulting with a mortgage advisor can provide personalized insights to navigate this dynamic market.
For more detailed analysis and expert opinions, read the full article here
Isabel Medina
Mortgage Broker DLC National
778 513 0169
isabel.medina@dominionlending.ca