As the Bank of Canada has increased the trend-setting interest rates almost four times since last year, the benchmark expense of borrowing has skyrocketed from around 0.25 percent to 2.5 percent quite recently. This has brought about a boil in the variable interest rates -pushing them from the rate of 2 percent as enjoyed by consumers for the past two years to as much as 4 percent quite lately.
In the given light, even fixed interest rate borrowers are not having an easy time. The rate of bond yields, the parameter used by lenders for setting the pricing of the fixed-rate product, has also accelerated to its subsequent record highs quite recently. It was due to the increasing fear of recession amongst investors of the nation. This has ended up in pushing fixed options of 5 years from big banks of Canada to around 6.14 percent.
Is there Some Hope?
Thankfully, there is a silver lining in the sky. As more recent research reveals that inflation has peaked, there are higher chances that the Bank of Canada can be on the end of its interest rate-increasing mandate.
The bond market is also ultimately breathing yields have moderated back from the all-time high of 3.5 percent last year. All of these factors have led to significant discounting amongst mortgage lenders with all leading banks -within the range of 5.2 percent for the fixed rate of 5 years.
Should You Switch to the Fixed Rate Model?
Are you currently on the mortgage plan featuring a variable interest rate? With help from a reliable mortgage specialist in Kingston, you can think of transitioning to the fixed rate mortgage plan without incurring extra penalties. As you make the transition, it is crucial to consider whether or not selecting the fixed rate mortgage plan is the best choice -both on a short-term and long-term basis. A reliable mortgage specialist in Kingston can help.
The real concern is whether the country is still expecting the interest rates to continue rising. For how long will the increase in the interest rates continue? Anyone having access to mortgage rates, whether variable or fixed, will be under the influence of the spike for the upcoming duration of 10 years or even longer. The Bank of Canada has been constantly increasing the respective mortgage interest rates especially through 2021 and 2022. Still, it is expected to decrease the respective rates to boost its economy while preventing a catastrophic period of recession.
According to the projections laid forth by the Bank of Canada, interest rates will not start declining until the early period of 2024 when inflation will eventually subside significantly. However, the Bank of Canada might also consider decreasing the rates in 2023 in case the economy will contract significantly. If all of this information is true, a top mortgage broker in Kingston will suggest you to opt for the fixed rate mortgage towards protecting you from increasing rising interest rates. You can consult a reliable and top mortgage broker in Kingston to get the most out of your mortgage.