When mortgage rates increase, so do the concerns of homeowners over the affordability of their mortgages. However, a recent release from the Bank of Canada indicates that homeowners will be able to breathe a bit easier for a while.
The Bank of Canada stated that they do not plan to raise mortgage rates for the foreseeable future, which is welcome news for homeowners and investors alike. This announcement comes hot on the heels of reports that mortgage rates across the country are falling.
Various indicators point to a recovery occurring in the Canadian housing market. Several major markets have experienced increases in annual sales and average prices. However, some experts have dismissed this as a “short-term blip” as people rush to lock in lower pre-approved mortgage rates.
“It’s possible interest rates will go down,” said CIBC deputy chief economist Benjamin Tal. “I’ve seen what is in the pipeline in mortgage activity, and you won’t believe the numbers when it is official.”
Lower rates may influence Canadians to shift to variable-rate mortgages, which are directly connected to the prime rate, but this could come at a cost to consumers.
Some are concerned that if the Canadian housing market is recovering too fast, finance minister Jim Flaherty may be forced to step in and tighten the lending rules once again.
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