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Mortgage rates went up…. but why? And will they continue to go up?

fearup down graph

A month ago, I said Fixed mortgage rates probably hit the bottom.   A week later, fixed mortgage rates started to go up… around 0.20% over the past 3 weeks.  Variable rate mortgage pricing has gone from Prime less 0.65% to Prime less Prime less 0.40%.

Now, here’s the thing….  I don’t think rates will skyrocket over the next 6 or 12 months, like the pessimists would have you believe.  I think mortgage rates hit the bottom….BUT, they probably won’t go up very quickly.

In fact, the forecast now is for the Bank of Canada rate to stay the same until 2017.   This is just another example of how the world has become a smaller place.  If someone sneezes in Germany, we catch a cold.  With most of the global economies just getting by, there isn’t much reason for mortgage rates to go crazy.   They should remain low.

The key driver for rates going up recently is nothing more than profit taking.  Banks have had a great year… In case you didn’t know.  That’s right.. we seem to forget that 2015 was one of the best years on record for real estate and mortgage volume…  and house prices have never been higher.    Funny how that seems to get lost in the media reports.

Look for Variable rate pricing to fall in the new year…  Fixed rates could also come down slightly, but don’t count on them hitting the record lows that we saw this summer.   Hey, that’s not to say rates are bad.   We are still well under 3.00%.   These are ridiculously low mortgage rates.    Enjoy them while you can.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114

Steve Garganis View All

As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.

4 thoughts on “Mortgage rates went up…. but why? And will they continue to go up? Leave a comment

  1. Hi Steve,
    Thanks for that interesting write up.
    I live in Calgary and I am looking into buying my first property. I am thinking of going for a variable rate and currently being offered -0.50% less prime rate compared to -0.65% available just 2 weeks ago. I am very anxious about the talks of interest rate going up and house prices crashing further in Calgary come 2016.
    I really don’t know if I should go ahead with the variable rate being offered or go for fixed rate? Is it really a good time to buy in Calgary?
    I’m really confused and having sleepless nights.

    • Hi Paul, noticing some comments didn’t get replied to. maybe better late than never.. 80% of the time, I recommend Variable rate.. but depending when you bought and closed, I may have recommended fixed.. for example, in early 2016, I was recommending short term fixed rates in the 2.39% range.. this turned out to be great advice as variable rate pricing has come back to record lows .. today we are seeing prime less 1.00% or better. hope this helps.. let me know if you nee any more info.

  2. I hope they don’t continue to rise, because I am going to rent out a house soon, and I want the best mortgage rates. That won’t be the case if the mortgage rates keep rising. I hope you understand.

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