What You Can Expect From Canadian Mortgages Going Forward

Hey everyone! As usual, it’s been too long since my last post – and given that it’s a time of big change for Canada, that’s a problem I need to rectify. So here goes, a quick update on the state of the Canadian mortgage industry under our new Liberal government:

There’s nothing to worry about!

Okay, here’s a bit of a longer update: yes, things are changing, but it’s not as bad as you might think. Dawson Creek (and all of Northeastern BC) is still represented by a Conservative MP, and Canadians will always need affordable mortgages – no matter who the Prime Minister is, that will always be true. And so despite the fact that mortgage rates have been slightly on the rise recently, Canadians can rest assured that they’ll stabilize (and even come back down) sooner than you think.

Here are some hard numbers from Steve Garganis over at Canada Mortgage News: “Since the election on Oct 19, [Government of Canada] bond yields have made a steady climb upwards… going from around 0.80% to 0.97% today [Nov 5].” That sounds dramatic until you consider that the Liberals ran on a campaign of increasing the deficit; in the wake of their majority victory, investors are buying bonds in the hope that that promise is kept (and thus that their bond yields will increase in value). Here’s the rub, again from Steve Garganis: “If the yields go up, then fixed mortgage rates go up. If they go down, then fixed mortgage rates go down.” It’s a simple correlation – and it does a great job of explaining why mortgage rates are on the rise right now – but it doesn’t offer much in the way of prediction. The economy is vastly more complicated than can be summed up by a single equation, and that holds especially true during a period of political changeover. It’s fair to say that if the government keeps on borrowing, it will probably up the borrowing cost for average Canadians. But even with the government’s projected deficit, the increase in mortgage rates for those average Canadians is expected to be “minimal,” and in my professional opinion we’ll start to see them coming down again right away. And keep in mind that standard mortgage rates right now are the lowest they’ve been in years, so even a slight uptick (as in the approx. 0.10% increase we’re seeing now) seems worse than it really is.

In short: our new Liberal government has only been in power for a few weeks, and we’re a far way off from having to worry about borrowing rates. Trust me, when that time comes I’ll be the first to blog about it – but for now, things are pretty much right where we should expect them. We may be in a bit of a state of flux, but that’s true about the entire country as a whole.

If you still have any concerns about mortgage rates, or if you feel like any more of my opinions on the matter, remember that my phone is always on. That number again is (250) 782-9665.

Have a great weekend everybody, and keep looking up!

Lori Lalonde, Your Northern BC Mortgage Broker

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