The most important question for borrowers at this particular time is if the rates will increase within the year and if so, by how much? Since most Canadians prefer the five year fixed rate mortgage, here is a brief look at the trend currently:
- The rates for the five year fixed mortgages tanked below the 2% range in before the first half of 2017.
- By the end of last year (2017), the rates increased to about 3%.
- The above was the highest proportional increase witnessed in the fixed rates since the Great Recession started.
The big question therefore, is what will happen now? The experts are all talking about a relatively higher five year fixed rate for the year 2018. Now, will the experts be right in their predictions? Or will other outside influences change the predicted rates?
These outside influences include changes in technology, debt levels, and demographics. None of these forces will be going away any time soon and in the next five years, it is possible that the effects of the central bank policy rates may go up, but due to these forces, they may be compelled to keep the rates low.
In the meantime, it is evident that the central banks are tightening the rates especially during the first quarter of 2018. These may eventually push the rates up in the few months to come. With the overall household debt at an all-time high, the rising number of leveraged mortgage borrowers will find it an uphill task to meet their repayment obligations. So would it be a good idea to lock in the rates with a variable rate mortgage?
The bottom line is that you should have some confidence in your private mortgage loans. Nothing is written in stone and it would be a good idea to talk with an experienced mortgage broker to help you discuss all the possible scenarios and potential situations according to your specific case. This is how you can find a mortgage you will be confident in and which will save you a lot of money and stress in the long run.