Helping you achieve profits affordably

graph on mobile phone fixed or variable interest rates

Fixed or Variable?

graph on mobile phone fixed or variable interest rates
Bank of Canada shows no change in interest rates until 2023

Fixed or variable interest rates remain the ongoing question for borrowers. The following summary blog is derived from two sources: Huebl, Steve, “Bank of Canada Hints at No Interest Rate Hikes Until 2023″ https://www.canadianmortgagetrends.com/, July 16, 2020. The second source is MortgageSandbox,”Canadian Interest Rate Forecast Until 2023”, https://www.mortgagesandbox.com/mortgage-interest-rate-forecast, August 16, 2020.

Fixed and Variable Interest rates will remain at an all time low until 2023

Despite the poor economy, fixed and variable interest rates continue to remain at record lows. With interest rates showing no signs of escalating until 2023. This is certainly good news. Current mortgage holders and new forrowers can take advantage of these unprecidented rates.

MortgageSandbox economic predictions

According to MortgageSandbox

  • The Canadian economy is in recession. Unemployment is between 10% and 13% depending on how you chose to measure it.
  • In March, the Bank of Canada (BoC) reduced its target rate by 1.75% to 0.25%. This was an extraordinary effort to cushion the economy against the impact of the Coronavirus.
  • The BoC rate is linked to variable mortgage rates. The BoC target rate is at its “effective lower bound.” Canadians shouldn’t expect further rate drops.
  • Lower rates are intended to help prevent a crash in home prices. Nevertheless, average home prices are expected to drop between 5% and 20% depending on the source of your forecast.

“Canadian businesses are facing an unusual amount of uncertainty.
So we have been unusually clear about the future path for interest rates.” Therefore, “Interest rates will remain near historic lows for a long time.” Says Governor Tiff Macklem, of The Bank of Canada (BoC).

BoC waiting for economic recovery before raising fixed or variable rates

The BoC also hints that homeowners, can expect the BoC to continue with these low rates. At least until the economic recovery is “well underway.”

Among the forecasts predicted by the BoC are:

  • firstly COVID should subside by mid-2022
  • secondly, inflation should remain below 2% in 2020 and rise to 1.7% by 2022
  • lastly, GDP growth in 2020 is predicted to be -7.8%  and in 2022, to rise to 3.7%

Fixed or variable? Fixed!

In light of these predictions, this poses the question of whether to lock in mortgages at fixed or variable rates? Although variable rate mortgages have been as low as 2.45%, new variable rates will be higher. Although fixed rates have dropped, thus reducing the risk for mortgage lenders.

“Unless you’re able to find a variable rate at least a half-point under the best 5-year fixed rates from fair-penalty lenders. The risk-reward of floating your rate isn’t overly attractive,” wrote Rob McLister, founder of RateSpy.com.

Would you like to learn more about mortgages and finances for real estate?

 


Bank of Canada shows no change in interest rates until 2023

Fixed or variable interest rates remain the ongoing question for borrowers. The following summary blog is derived from two sources: Huebl, Steve, “Bank of Canada Hints at No Interest Rate Hikes Until 2023″ https://www.canadianmortgagetrends.com/, July 16, 2020. The second source is MortgageSandbox,”Canadian Interest Rate Forecast Until 2023”, https://www.mortgagesandbox.com/mortgage-interest-rate-forecast, August 16, 2020.

Fixed and Variable Interest rates will remain at an all time low until 2023

Despite the poor economy, fixed and variable interest rates continue to remain at record lows. With interest rates showing no signs of escalating until 2023. This is certainly good news. Current mortgage holders and new forrowers can take advantage of these unprecidented rates.

MortgageSandbox economic predictions

According to MortgageSandbox

  • The Canadian economy is in recession. Unemployment is between 10% and 13% depending on how you chose to measure it.
  • In March, the Bank of Canada (BoC) reduced its target rate by 1.75% to 0.25%. This was an extraordinary effort to cushion the economy against the impact of the Coronavirus.
  • The BoC rate is linked to variable mortgage rates. The BoC target rate is at its “effective lower bound.” Canadians shouldn’t expect further rate drops.
  • Lower rates are intended to help prevent a crash in home prices. Nevertheless, average home prices are expected to drop between 5% and 20% depending on the source of your forecast.

“Canadian businesses are facing an unusual amount of uncertainty.
So we have been unusually clear about the future path for interest rates.” Therefore, “Interest rates will remain near historic lows for a long time.” Says Governor Tiff Macklem, of The Bank of Canada (BoC).

BoC waiting for economic recovery before raising fixed or variable rates

The BoC also hints that homeowners, can expect the BoC to continue with these low rates. At least until the economic recovery is “well underway.”

Among the forecasts predicted by the BoC are:

  • firstly COVID should subside by mid-2022
  • secondly, inflation should remain below 2% in 2020 and rise to 1.7% by 2022
  • lastly, GDP growth in 2020 is predicted to be -7.8%  and in 2022, to rise to 3.7%

Fixed or variable? Fixed!

In light of these predictions, this poses the question of whether to lock in mortgages at fixed or variable rates? Although variable rate mortgages have been as low as 2.45%, new variable rates will be higher. Although fixed rates have dropped, thus reducing the risk for mortgage lenders.

“Unless you’re able to find a variable rate at least a half-point under the best 5-year fixed rates from fair-penalty lenders. The risk-reward of floating your rate isn’t overly attractive,” wrote Rob McLister, founder of RateSpy.com.

Would you like to learn more about mortgages and finances for real estate?

 

 

Leave a Comment

Your email address will not be published. Required fields are marked *