Mortgage rates have never been lower – now what?

How low are they now?

How long will these mortgage rates last?

How does it affect me?

It was 2009 and I was fortunate enough to do a mortgage for a professional financial planner. I was so proud because we were able to secure a fixed rate below 4% for five years. Today the same five year fixed mortgage rate is below 2%. Wow! Even variable rates are below 2%. Canadian mortgage consumers have never seen this mortgage money so cheap. Never.

When interest rates change there is always a reason. In 2009, inflation was coming down. Today we have a pandemic. This virus has obliterated the economy. Lost jobs, lost productivity and a poor looking future has prompted the government to really lower rates to help Canadians get back to work. The silver lining of this bleak economic picture is that low mortgage rates will be here for a while. I suspect we will have years of incredibly low borrowing rates. However, it should be remembered that what goes down comes back up. Luckily, we will not have to worry about the price of money for a while.

If you are a new mortgage purchaser or your current home loan is coming too, your timing is excellent. The Hamilton real estate market in Canadian housing has not missed a beat. Why? The collapse of the rates. More than 30 years ago a five year fixed rate was over 11%. As rates have drifted over the past years to be low 2% over the same five year period, it is not surprising housing prices have gone up. As rates drop, house prices increase with affordability.

Luckily, we will not have to worry about the price of money for a while.

If you are a new mortgage purchaser or your current home loan is coming too, your timing is excellent. The Hamilton real estate market in Canadian housing has not missed a beat. Why? The collapse of the rates. More than 30 years ago a five year fixed rate was over 11%. As rates have shifted over the past years to be low 2% over the same five year., It is not surprising housing prices have gone up. As rates drop, house prices increase with affordability.

Homeowners who are renewing their mortgages are increasingly deciding to renovate. Their decision is based upon several factors. Buying to upgrade your current home is very costly, so it makes sense to stay where they are in renovate especially with deep rates. As homeowners don’t move up in the market, it creates a shortage of listings. The old supply and demand rules keep price is going higher.

Existing homeowners are also fortunate as there has never been a better opportunity to consolidate debt and increase cash flow. As new homeowners and existing mortgages come into the market in the near future smiles will continue to dominate as rates continue to hit bottom.