Economists suggest rate hike imminent affecting variable rates

Jeff Evans

Another new item of news with mortgage implications has come out today:

Pressure grows for Bank of Canada to hike rates

In sharp contrast to my variable mortgage outlook from one day ago, this new article talks about very strong growth in the Canadian economy the past quarter, and how there is pressure to raise rates as soon as next rate update in 5 weeks from now (the last update happened this morning and mortgage rates were unchanged).

These are strong indications of a mortgage rate hike being imminent which will affect variable rate mortgage borrowers. The extent to which they will raise the mortgage rates is unknown (if in fact they do raise rates). I do still believe that the upward limits of any mortgage rate increase will be largely handcuffed by the US Federal Reserve rates.

For borrowers who have variable rate mortgage at prime +1%, this might not be a bad time to consider a lock-in, with those borrowers receiving variable rates of 3.25% and five year fixed rates around 3.9%, it might be worth considering to lock into a mortgage at this time, or to refinance for a variable rate mortgage with a discount, where they are currently around prime -.25% to -.4% from many of my lenders.

Author: Jeff Evans

I am a mortgage broker, hair salon owner, squash player, student, and husband, aspiring to do good for people.

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