This week even more good news was announced by the Bank of Canada. A press release stated that the overnight rate will stay the same for the time being. This is great news for those with variable rate mortgages.
Only weeks ago, many were speculating on a micro-decrease but that didn’t happen. Now, we saw the media at it again. They were forecasting for a possible Bank of Canada rate increase. Well, this should shut them up.
Since variable rates are based on the Bank of Canada rate, homeowners with variable rate mortgages are in the clear. Since the overnight rate will not be rising anytime soon, those in a variable rate have little to worry about when it comes to their mortgages. And in fact, they are the true winners of these historical low rates.
The commitment is for no increase until 2023, and possibly even longer. Fixed rates may have gone up a little (and I do mean a little), but variable rates aren’t going anywhere. Stay the course and go with a variable rate…that’s my advice.
Take advantage of the low interest rates now!
The bank rate will stay at 1/2 percent, and the deposit rate at 1/4. This works out to mortgages rates between 1.35% and 1.55%. Those looking to buy should take advantage of this now and get into a variable rate mortgage if they can qualify. These record low rates will not stay forever, but for the foreseeable future the good rates are here to stay.
The Governing Council has said that the economy requires ongoing monetary support. For this reason they have decided to keep interest rates low. They commented, “We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved.” This is seriously excellent news and some that should be acted upon by potential homebuyers.
Recovery after COVID-19
Both Canada and the US are finally seeing their way out of the mess that COVID left the economy in, and the global economy as a whole is starting to see the light at the end of the tunnel. In Canada, recovery looks possible for most sectors of the economy. This is brilliant news in itself.
For those finally getting back onto their feet after the blow COVID dealt us, taking advantage of the low interest rates is one way for many to further their recovery. With rents continuing to rise, it makes more sense now than ever to stop renting and buy. The lower interest rates won’t be around forever, so jump on them while you still have the chance.
Holding on to a property for just seven years can help you find your financial footing again. This is the amount of time it generally takes to build strong equity. So, if you can afford to buy and hold, do it while you can get a historically good rate.
More good news!
GDP increased a good 9.6% in the last quarter of 2020. Growth in the first quarter of this year is expected to be positive as well. This puts people in a good position to buy.
As business owners adapt to COVID restrictions and start to get back on track again, things are starting to look up. The housing market has been steadily increasing in performance, with housing prices finally leading the way. It’s a seller’s market, but that is no reason not to buy now. Buyers can benefit greatly from the record low interest rates.
Not sure what to do? Talk to a mortgage broker.
A mortgage broker, like me (hi), can help you make sense of buying while the opportunity to get in on low interest rates is still available. A mortgage broker (again, hi) can help you with everything from getting your financial documents in order to applying for a mortgage.
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; firstname.lastname@example.org
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.