Homeowners Weigh Options
Rate debate continues following central bank’s latest decision
The Bank of Canada’s decision to keep interest rates unchanged on Wednesday came as no surprise to the mortgage industry – but it leaves plenty of questions for borrowers weighing up the best choice on interest rates.
The central bank’s announcement kept the policy rate at 2.25%, meaning variable rates and home equity lines of credit (HELOCs) will remain unchanged. Meanwhile, five-year Government of Canada bond yields have ticked upward since last week, likely increasing fixed rates.
Governor Tiff Macklem struck a careful tone in remarks at Wednesday’s press conference, signalling that the policy rate will likely remain steady for now but could change depending on the crisis in the Middle East. Homeowners and homebuyers, then, are left in the lurch.
Borrowers’ risk appetite remains central to decisions
Each borrower’s specific circumstances are different, but Ng said he’s still seeing a decisive shift toward fixed-rate mortgages in the current environment.
“If they’re looking for comfort, then fixed rates are where it’s at,” he said. “Variable rates may suit some, but for the most part, more and more Canadians now are moving to those fixed rates because of that uncertainty going forward.”
Three- and five-year terms are especially attractive to borrowers at present, he said, because they allow peace of mind during a potentially prolonged period of instability.
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