With Canada’s economy motoring along at almost full capacity, and a freshly minted NAFTA (er…USMCA) agreement in the books, all signs are pointing to a series of interest rate hikes spanning the rest of next year and into next. So, what does this mean for mortgage borrowers? Well, if you’re in the market for a new mortgage, a renewal, or if you’re thinking about locking in your variable rate mortgage, here are some things you may want to look out for:
This mortgage is best for borrowers who crave consistency—and who are ideally going to be in one place for the next five years. If a move might be in your future, make sure your mortgage is portable—or at the very least has a consumer-friendly penalty. These rates are quickly moving up, but if you can find one in the low 3s, it should pay for itself in the face of rising variable rates.
While Prime is in an upward swing at the moment, many experts believe that—in the next few years at least—another recession is bound to hit. Which means rates should come back down again. According to the Globe, if Canada only gets three or four more hikes before that happens, a 5-year variable priced at Prime minus 0.90 should be able to beat a 5-year fixed. In the meantime, to make the hikes a little easier to withstand, try boosting your payment to what it would be if you had a 5-year fixed.
Other Fixed Terms
While one-to-three-year fixed mortgage terms are high right now, that can always change. If you’re not due for a mortgage for another few months, it’s worth revisiting those rates at that time. Terms longer than five years—like the 7-year and 10-year fixed mortgages—are usually much higher, and very rarely worth the gamble.
In today’s mortgage climate, things can change quickly. If you’re due for a mortgage within the next 120 days, give me a call and we’ll get you locked-in to today’s best rates. If rates improve by the time you need to sign on the bottom line, you’ll still have access to them—but if they go up, you’ll have peace of mind knowing you were able to strike while the iron was hot.