While the Bank of Canada has said it wouldn’t raise interest rates until the economy improves, that hasn’t prevented Canada’s big banks from raising fixed mortgage rates.
Past News ReleasesRSS
Toronto, Canada (PRWEB) November 06, 2013
Canadalend.com, the leading low-cost private mortgage solution provider in Canada, is releasing its expert opinion on recent signs from the Bank of Canada signaling a sustained low-prime-rate environment and why variable mortgages will continue to be an attractive option for potential first-time home buyers.
On October 23, the Bank of Canada announced it would maintain its overnight rate—a guideline used by banks to set variable mortgage rates—at one percent; the near-record low level has remained unchanged since September 2010. Citing a weak economic climate, the bank could even lower rates; meaning that variable mortgages could become an increasingly attractive option for home buyers. (Source: “Bank of Canada maintains overnight rate target at 1 per cent,” Bank of Canada web site, October 23, 2013; http://www.bankofcanada.ca/2013/10/publications/press-releases/fad-press-release-2013-10-23/.)
“While the Bank of Canada has said it wouldn’t raise interest rates until the economy improves, that hasn’t prevented Canada’s big banks from raising fixed mortgage rates. At the same time, economic uncertainty has made variable interest rates even more attractive, since they fluctuate with the overnight rate,” says Bob Aggarwal, president of Canadalend.com. “With mortgage rates expected to remain near record-low levels for the foreseeable future, there is currently no cause for consumers to panic and buy a home just to avoid rising interest rates.”
Aggarwal explains that despite overnight rates staying at one percent, Canada’s big banks have not really reversed long-term fixed mortgage rates. This has made the more fluid variable rate more attractive; today, five-year variable rate mortgages are being offered near 2.5%, and even shorter-term variable rates are attractively priced. Aggarwal notes that some of Canada’s big banks are offering five-year fixed closed mortgages at 3.89%, while some smaller banks are charging as much as 5.34%, a significant difference.
“With some predicting the overnight lending rate might not change until 2015, consumers have a longer horizon to borrow more money, which translates into being able to purchase a more expensive home,” Aggarwal adds. “While it’s important to get a good mortgage rate, it’s also important to get onto the property ladder for the right reasons. With debt at record levels in Canada, some consumers could get in over their heads. After all, interest rates might be at near-record lows, but they will eventually rebound.”
That’s why it’s important for first-time home buyers to contact a mortgage brokerage with a proven track record of helping consumers get the financial products best suited to their lifestyle needs. The independent licensed agents at Canadalend.com will not only shop around to ensure their clients get the best rate possible, but they also take into consideration their short- and long-term financial needs.
Canadalend.com is one of the largest, most trusted private mortgage brokers in Canada, with skilled independent licensed professionals helping Canadians coast-to-coast. Canadalend.com provides its clients with residential and commercial mortgages, home equity credit, debt consolidation, and financing concerns. To learn more about Canadalend.com, visit the web site at http://www.Canadalend.com.