What’s happening with Canada Mortgage Bonds?

Did you hear the news?   Or did you miss it? Last week the Bank of Canada announced they would stop buying Canada Mortgage Bonds.  But it seems like nobody is talking about this. 

Why should you be paying attention to this?

The buying of Canada mortgage bonds helps to keep fixed mortgage rates low.  The Bank of Canada announcing they would stop this method of quantitative easing, could and probably will put pressure on fixed mortgage rates.  But that may not happen right away as it takes a few months to work its way through financial markets.

Bank of Canada Governor, Tiff Macklem, has said they will keep the overnight rate as is or lower for the next three years, possibly even longer. This will help to keep short-term interest rates and variable-rate mortgages low. As we’ve seen fixed and variable-rate mortgages drop steadily since the beginning of Summer.

How low can they go? I’m not sure we’re going to see 0% interest rates (although that would be great for consumers or anyone borrowing money) but we are still trending downward, believe it or not. We’re probably very close to  the bottom for interest rates.  Who would have thought we’d see fixed rates below 2%?  We actually have fixed rates for certain situations at 1.64%.  

If you are looking to borrow money whether for a mortgage, refinance or something else, searching rates online is like  playing spin the wheel at the carnival.  The wheel is filled with low numbers and you will most likely land on one of those little numbers. But that doesn’t necessarily mean you win. Mortgages have become far more complicated in our field with restrictions and limitations that most don’t consider.   We’ve all read or heard stories about massive penalties of $20,000, $30,000 or more to exit a mortgage.  Or others trapped in a mortgage where you can’t refinance or get out unless you sell the home.  There are a lot of little hidden restrictions built into mortgages… and they are usually attached to those products with those super low rates.  

Here’s my advice … take the time to get some unbiased advice from an experienced mortgage broker that can help guide you into the right product.  

Getting a low interest rate is easy, knowing which product to choose so that you are paying the lowest amount of money to own your home isn’t as easy. This requires some long-term thinking and planning.

My question to you is what is your time worth? What if 5 minutes might save you hundreds of dollars? What about thousands? How long would it take most people to earn that kind of income? The benefits are clear… it’s worth your time to get expert advice?

So before taking your next financial step, let’s start with a conversation… you’ll be glad that you did!

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@mortgagenow.ca