Current interest rates may make a difference for some Canadians looking to buy a home. There’s stellar news for prospective homebuyers across the country since interest rates are currently at the lowest they’ve been in the last two years.
This summer, for the first time since summer of 2017, interest rates for mortgages fell below 3 percent.
Reasons for the Rate Drop
There are a couple of reasons the rate has taken a plunge. Firstly, since this past fall, bond yields have dropped a full percentage. The bond market is where lenders head to borrow money to sell to consumers for higher rates. When bond rates are lower, lenders can also lower their rates while still getting a good return. Secondly, the time of year has a bearing on interest rates. Lenders usually offer their best rates at the beginning of spring to get in on the busiest home-buying time, which is late spring and into the summer. Many consumers like to close on their purchases when their kids are already out of school for the summer.
Shopping Around is Still a Must
Even with interest rates on the low, it’s still important to shop around for a mortgage. Settling for the first offer you’re made may not be the wisest move. You also have to look at the terms and conditions of a mortgage offer. Just make sure you’re getting the best rate possible before you lock yourself in.
Be sure to read the fine print on any offer and ask about penalties, should you wish to make prepayments or break a mortgage early.
Buy Sooner Rather Than Later
Economists predict that home prices will continue to rise over the next five years, so if you can find the perfect home for you and your family now, and are in a position to buy, you might want to take the plunge.
One in Six Mortgages up for Renewal
A recent report from the National Bank of Canada shows that about one in every six mortgages in the country comes up for renewal in 2019, but with the drop in interest rates, most homeowners will likely be able to renew at rates barely above their current ones, which is more good news.
