For the first time in over one year, Canadian mortgage rates are rising. While some home seekers may see the development as bad news, it’s still possible to find good property purchase funding options. A little bit of research and preparedness will go a long way.
So, what exactly will the Canadian mortgage rates in 2021 look like? Several determining factors will need to be examined in order to answer that question.
Canadian Mortgage Rates in 2021: What’s the Outlook?
Over the course of 2020, Canadians enjoyed some of the most affordable mortgage rates in a long time. The Covid-19 pandemic and the measures introduced to curb the spread of the virus had a pronounced impact on the market.
As a result of these developments and the relatively affordable home prices, the record-breaking 551,000 residential real estate transactions got to completion over the course of the year.
Will the situation remain similar in 2021?
As of March 2021, five-year fixed mortgage rates are starting to go up. This is the most affordable mortgage variety and the one that most Canadians would favor for obvious reasons. Recently, the mortgage rate went up 25 basis points to reach a new level of 1.64 percent, Ratehub.ca reported.
This is the first mortgage rate increase registered since January 2020. In March of last year, Bank of Canada brought down its benchmark interest rate to the unbelievable 0.25 percent in an attempt to stimulate the local economy.
Now, some banks are beginning to increase rates on their products. A few exceptions still exist.
In mid-March, the Royal Bank of Canada announced that it hadn’t gone through recent mortgage rate increases. TD Bank and National Bank of Canada, on the other hand, did increase interest on some of the common and popular types of mortgage products.
Some financial experts have commented that the rise is coming a little bit sooner than anticipated. Forecasts suggest that the launch of Covid-19 vaccination campaigns will help the economy recover, at least partially. As a result, the real estate market will probably see some dynamic developments later on in the year. These events will probably impact interest rates further.
So, What Do These Numbers Tell You?
As of now, several other types of mortgages have seen a change in interest rates apart from the five-year fixed plans.
The one-year mortgage has seen an average increase from 1.64 percent in 2020 to 1.84 percent in March 2021. That’s a hike of 0.2 percent on an annual basis. The seven-year interest rate changed from 2.44 to 2.64 percent and the 10-year plan now comes with an interest of 2.95 percent instead of 2.84 percent.
Needless to say, major variations exist from one bank to another.
It’s still essential to compare mortgage plans side by side. The increase in interest rates so far in 2021 isn’t a major game-changer. As already mentioned, some banks have decided to keep offering their clients favorable conditions. Depending on your current financial standing and the amount of financing you’re seeking, chances are that you’ll still get to score an affordable loan.
We live in dynamic times and it’s not exactly clear how soon Canada’s economy and real estate sector will recover. Hence, conditions right now still favor the buyer and provide access to good financing options.
If you are clueless about mortgage comparisons and funding your real estate purchase, do consider the assistance of a professional mortgage broker. This expert’s job is to give you options and pinpoint the products that address your needs in the best possible way. A little bit of expert guidance can help you save money in the long run, regardless of how the economy moves forward.