Mortgage Rates Today - October 2018

 

Mortgage Rates Today - October 2018


Planning to buy a home soon? Where are interest rates heading?  What are mortgage rates today?  


Buying a home is not getting any more affordable.  Yes prices are heading downwards across greater vancouver, but interest rates have gone up over the last 4 quarters. 

Affordability has not changed at all. 


I also expect the Bank of Canada to proceed with further rate hikes that will raise its overnight rate from 1.50 percent currently to 2.25 percent in the first half of 2019. This will keep mortgage rates under upward pressure and boost ownership costs even more across Canada in the period ahead.”


That would lift the prime rate to 3.95 per cent and suck more dollars from the pockets of variable-rate borrowers


“But remember A quarter of one percentage point isn’t a big spike in payments.  Based on a $200,000 to $300,000 mortgage, this might mean an increase of $20 per payment.”  


Also with variable rate mortgage with a deep discount over a 5 year average you should be low enough to beat a standard five-year fixed. But need something like prime rate minus 0.90 per cent or better. Variables also have friendlier penalties – usually just three months’ interest and ability to lock into a fixed mortgage product at anytime.   


With fixed rates the banks have been increasing lately, 

Scotia bank has recently increased its 5 year posted rate to 5.44, with the current mortgage qualifying rate at 5.34.


Do I see further fixed mortgage rate increases in the near future?


That all depends on the 5 year Canadian Bond Yield.  Oil prices have been crashing across Canada and our bond yield is currently at 2.5%.  Unless we see oil prices correcting and we surpass the 2.5% mark on Canadian bank yields.   I personally don’t see the 5 year fixed rates going up any further. 


So if I was a buyer in real estate now, I would recommend going with a variable mortgage with the largest discount you can find or a fixed mortgage at close to 3.4% or below. 


If you have any questions about this topic please feel free to reach out to me.   


Question of the day, where do you think rates are heading?  Up or down.  Please leave it in the comments below. I will try my best to personally answer all comments myself.     


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