Canada’s economy is closely tied to the U.S., and major changes south of the border impact Canadian mortgage rates. Trends to follow include:

Canadian Fixed Mortgage Rates May Trend Up or Remain Buoyant as U.S. Yields Increase:

• • Canadian mortgage rates, often follow changes in the U.S. economy.
  • If U.S. interest rates rise, Canadian rates could increase as well. However, the impact may be less significant for Canada due to our current weaker economic growth.
  • If U.S. GDP growth strengthens and trade tensions ease, Canada’s economy could also improve, potentially pushing Canadian fixed rates higher
  • That being said, global risks— including trade tensions, geopolitical uncertainties, commodity price fluctuations, and currency changes—could delay or limit Canadian rate increases, even if U.S. rates go up.

What About Canada’s Prime Rate?

• • The prime rate in Canada is still expected to decrease, to 5.20% by March from its current level of 5.95% if bond market expectations are met.

What Does This Mean for Borrowers?:

• • Due to global uncertainties and the unpredictable nature of U.S. economic performance, Canadian mortgage rates may fluctuate unexpectedly over the next few months, something we seem to be getting used to hearing of late.
  • Should the new forecasts hold true:
    • Current fixed-rate borrowers will see no difference in their rates over the term of existing mortgages.
    • Variable-rate mortgage borrowers whose payments stay the same with changes to the prime rate will continue to see interest costs and amortizations decrease as prime drops.
    • Adjustable-rate mortgage borrowers and those with balances on lines of credit whose payments change with changes to the prime rate will continue to see payments drop as the prime rate goes down.
  • If you’re planning to sell a property with a fixed-rate mortgage secured against it before the end of the mortgage term, there may be strategies available to you to minimize potential penalty costs.
  • If you’re thinking of buying property, or renewing or refinancing an existing mortgage, it’s important to stay informed about these market shifts so you can plan.

As always, I’m always happy to see how I might help you take full advantage of the options available to you.  Call me any time to set an appointment at 604-992-9891.

Adapted from www.MortgageLogic.news

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