Can Buyers Count On Low Mortgage Rates?

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You can count on the fact that the spring real estate market is ramping up, but can buyers count on low mortgage rates to compliment? Check out this article from that gives you a breakdown of the status quo.

Penelope Graham

Spring has officially arrived in Canada, and with it the blooming of peak home buying season; sellers are emerging from a polar vortex-induced hibernation and buyers are more than eager to jump into Canada’s reheating market.

While warmer weather tempts buyers out to open houses, they can also be accompanied by discount financing trends, also known as lender mortgage rate wars. The first instance of rate cutting was seen when, two years ago, BMO first introduced the 2.99 per cent 5-year fixed mortgage. It was the lowest rate ever offered by one of the big banks, and many lenders – including highly competitive brokers – responded by slashing their rates to new record lows.

This year’s competition is already heating up; BMO’s 2.99 per cent has already made its first go-around and other discounted rates have dipped as low as 2.89 per cent. But bargain-happy buyers should take note: ultra-low financing may not stick around for the whole season.

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The Global Economic Impact

While lenders have kicked off home buying season with mortgage discounts, RateSupermarket’s expert Mortgage Rate Outlook Panel says external economic factors could upset the status quo.

“Changing global economic trends will counter the possibility of a competitively low interest rate environment, as investors shift their focus from safe haven bonds, driving yields and fixed rates higher in the long term,” states the panel’s consensus.

Home Buyers Want To Lock In Now

This “get em’ while they’re hot” mentality is prevalent among buyers; they are increasingly anxious to enter the market while discounts are still available. According to a CIBC study conducted by Nielsen, nearly half (47 per cent) of Canadians think mortgage rates will be higher by this time next year.

Another 48 per cent stated that, if they had to make the decision today, they would choose a fixed rate – the fourth year in a row fixed has remained the top choice.

Variable Mortgage Rates Still a Bargain

While fixed-rate customers are contemplating their timing, there’s stability in store for those with Prime-linked financing. Despite rumblings that economic improvements could prompt a central rate rise, the Bank of Canada declined to do so in their April 16th announcement – for the 29th consecutive time, since September 2010.

It’s the longest the central rate has remained unchanged in Canada’s history, and indicates growth factors won’t be up to snuff in the short term to justify a hike.

States panelist member and CAAMP Economist Will Dunning, “The recent weakening of our dollar will result in a temporary uptick for the Canadian inflation rate, due to cost rises for imported goods. But, the Bank of Canada is likely to view this as a temporary event that does not justify any change in the base rates that it controls.”

Why Canadians Should Care About The U.S. Taper Penelope Graham for ZoocasaPenelope Graham is the Editor of’s Money Wise, the personal finance resource that “Makes sense of it all”. In addition to providing a daily breakdown of current economic news for everyday Canadians, Graham has also provided commentary to publications such as the Globe and Mail, The Toronto Star, and MSN Money.

Read more, and find your best rate, at, Canada’s comprehensive and transparent personal finance resource.

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