Mortgage Rates Dropping Soon?

If you’re waiting to see Mortgage Rates Dropping again, you’re not the only one! In recent weeks, many lenders have increased their 5 year fixed rates. They are going in the wrong direction!

The 5 year swap yield which happens to be one of the best indicators for fixed rate mortgage rates is at levels that we were seeing 6 months ago. Today, the five year fixed rate is around 3.69% whereas back then, the rate was more like 3.49%.

Why Aren’t Mortgage Rates Dropping Then?

So why aren’t the Mortgage Rates Dropping per the indicator?

Well, big banks which control the majority of the mortgage dollars in Canada are in no hurry to drop rates. It’s like the price of oil – when the price per barrel drops, it doesn’t always immediately translate to lower gas prices at the pump. And sometimes, it doesn’t reflect it property at all!

The stricter mortgage rules have also delayed the Mortgage Rates Dropping because the number of prime borrowers has shrunk. That is, less people can qualify for a mortgage.

The banks are also hedging against the credit cycle deteriorating by preventing Mortgage Rates Dropping now, anticipating that they may need to weather a storm.

Please call me!

Any questions, please call Robert Floris’s office, no obligation, easy to talk to, honest answers.

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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