The Bank of Canada’s latest decision to keep the overnight rate frozen at 0.25% is “bad news” for variable-rate mortgage borrowers, according to James Laird, co-founder of Ratehub.ca.
The central bank’s latest announcement was brimmed with optimism when it comes to recovery trends for both the Canadian and the global economies. This has led to the BoC predicting that it might move its rates up as early as the second half of next year.
“If good news continues across all parts of the economy, it is possible the bank will move up their timeline even further. Therefore, Canadians should brace for higher mortgage rates sooner than expected,” Laird said.
Read more: Analysis: Variable rate borrowers at ease in the low-rate environment
This has less than positive implications for those who currently have variable-rate mortgages, however, “as they should now be prepared for prime to move sooner than expected,” Laird cautioned.
“Now is a good time for anyone currently holding a variable rate to consider locking into a fixed rate,” Laird said, as “the positive outlook also means that fixed rates should continue to drift up throughout the remainder of 2021.”
For those who are looking to take advantage by purchasing homes right now, they “should get a pre-approval which will hold today’s rates for up to 120 days and allow them to move quickly in the competitive spring market,” Laird suggested.
MBN
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