It has been a crazy and turbulent year for the mortgage industry, with mortgage rates touching record lows several times. But If you still have been on the fence and haven’t refinance your mortgage or purchased a home, this is the right time to do so.
As for some time the economic outlook has bolstered due to a progressive and good fight against Covid and promising news of a vaccine. This has pushed up expectations for economic growth and inflation and thereby resulted in a spike in five-year mortgage rates.
Though we don’t have a crystal ball of fortune, it can be predicted that mortgage rates will inch more upward in the coming days.
The current upward rate momentum of the five-year Government of Canada (GoC) bond has prompted a hike in five-year fixed rates of mortgage.
As per the analysis by Benjamin Tal, deputy chief economist of CIBC World Markets Inc “the five-year mortgage rate growth should be gradual and slow or else it would jeopardize the Canadian economy’s growth. It could result in the economic turmoil and turbulence that potentially can be recessionary”.
It is clear and evident to all of us when a recession hits, economic activity crumbles, thereby a decline in business profits, a surge in unemployment and sinking or tumbling consumer spending. Government during this time generally lowers its bank rates to allow more people to access credit, thus stimulating spending to give a boost to the economy.
While it is also being said that gradual or progressive/unhurried rising of the fixed rate can be beneficial. The speed at which the rates are soaring is of utmost importance i.e., an increase of 20-30 basis points over time will be a favourable thing as it will tone down the housing market and tame the sizzling red-hot housing market that has been seeing the ascent during a pandemic. So piecemeal rise won’t be a bad thing!
If you are finding yourself in a situation that requires professional mortgage help contact MMC for best-suited options and advice.