Here come the calls to lock into a Fixed Rate

Last week we saw the Bank of Canada raise the Key Rate by 0.25% and the Banks quickly raised Bank Prime lending rate to 2.75%.  For those in a Variable rate mortgage, the question of whether to lock into a fixed rate is coming up again.

No surprise, the media has started the fear mongering and the so-called ‘Experts’ are suggesting that it’s time to lock into fixed rates, once again….  This article came out today and I’m not surprised that these ‘Experts’ have quickly jumped on the band wagon with talk of ‘rates hikes’ and ‘higher housing costs’ to get their name in lights…  click here and judge for yourself.

The real question is ‘how much does the Bank of Canada need to raise the Key Rate to control inflation and economic growth?’   And earlier this year, we reported on Ben Tal’s, Senior Economist with CIBC, forecast that the Bank Prime only needs to increase by no more than 3.00%….and that this is the most it should increase… but it will take around 2 years or longer to get there… if they get there at all….   click here for the full report.

So why would anyone lock into a mortgage at over 4.00% today, when they could enjoy rates of just over 2.00% and slowly see their rates rise?   If you know that answer, please share with me…

We all have different needs and there isn’t a ‘one size fits all mortgage’…  seek professional, unbiased advice…get a strategy in place…. monitor the market and stay informed and you’ll always make the right decision.

2 Responses to “Here come the calls to lock into a Fixed Rate”

  1. Brad Compton Says:

    Great Post….
    I am surprised I have not been receiving more calls from clients asking if they should lock in. I even have clients set to close in a month with a variable rate that are still comfortable with the choice they made. I think most people understand there is quite a bit of cushion built in to the variable rate before they would be above the going fixed rate. What remains to be seen is how fast the government raises rates (most predictions say it will be slow) and eats away that cushion.

    • SG Says:

      Hi Brad, I think we are seeing a more informed borrower these days… with so much information available online, borrower’s have easy access to professional advice…. the danger is that they need to distinguish between amateurs and professionals. There are a lot of self-proclaimed ‘Experts’ and this really gets under my skin….

      To all borrowers…check the bio and credentials of any so-called ‘Expert’… you may be surprised to see there is very little experience or expertise….


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