Fixed interest rates on mortgages have been steadily increasing over the past few weeks and are likely to continue increasing over the next several months. This is largely because the bond market in both Canada and the United States has a direct impact on the interest rates that lenders charge their clients on fixed mortgages.
This invariably means being in tune with the Bond Market. As COVID-19 concerns calm as more and more people are getting vaccinated in the U.S and Canada, the growing thought is that inflationary pressures will rise faster than many have previously believed. This speculation has caused upward movement in the bond market which in turn has been causing interest rates to rise. At Clover Mortgage, we are always in tune with the mortgage market.
Many believe that interest rates are stagnant as long as the Prime Lending Rate controlled by the Bank of Canada is stagnant. This is a simplified way of looking at interest rates and doesn’t account for the day to day fluctuations of interest rates. The prime rate fluctuations are more commensurate with larger fluctuations in interest rates most notably with regard to variable and adjustable rate mortgages. In this case, the borrower is immediately feeling the impact of an increase.
Bond yield increases have a less drastic and immediate effect on interest rates, seeing 0.05% 0.10% or 0.20% increases to rates offered to clients. In many cases, mortgage brokers and agents will get e-mails from lenders stating that their rates are raising effective at midnight. This is why working with a hard working, competent and smart mortgage agent can be so integral to the purchasing and refinancing experience.
The best mortgage agents, brokers and brokerages have their fingers on the pulse of the bond market to make the best recommendation to their clients as to when to move forward with the best rate. This can result in drastic savings for a homebuyer seeking a mortgage to purchase a home, or a homeowner looking to refinance their mortgage or get a home equity loan.
Many experts are saying "Absolutely!" and that it is only a matter of time before we see significantly higher interest rates. This will likely be a gradual increase over time as lenders readjust based on their cost of funds calculations. The positive for the average borrower – a flood of capital in the market causing stiff competition resulting in lenders not wanting to be the first to raise their rates, so you still have some time to lock in a record low rate, but time seems to be running out because rates have already been inching upward with most mortgage lenders.
Lock into a new mortgage or refinance your mortgage now with the help of a Clover Mortgage Broker. Our mortgage brokers will find you the best rate and terms that are available to you based on your specific individual needs and situation. If you are planning on closing on your property or refinancing within the next 90 to 120 days, call or email us now to take advantage of today's low rates while they last. That way, if rates will rise, you are already locked in. If rates go down before your mortgage gets funded, your mortgage broker will submit a request to the lender to extend a rate decrease accordingly to you before you close on your mortgage.