Yesterday we received word that the
average 5 year mortgage rate in Calgary would be dropping from 2.69% to
2.59%. A week ago we heard from
financial analysts that rate were sure to go up in the near future. The reason
for this change is due to Coronovirus. Rumours of the spread to New York City.
These rumours have proven to be false but it was enough to spook investors who
moved their money out of the stock market and put it in long term government
bonds.
As a result
of this sudden flow of investors, the bond market is flush with cash and it’s
offering bond buyers less interest on their investment. As a result the bond
yield dropped . Our 5 year fixed rate mortgages are tied to the bond rate. If
the bond rate drops so does the mortgage rate. As a result, we are seeing lower
rates and this may continue into the spring.
With the blockades stopping trains across
Canada, our economic activity is dropping. This should encourage the Bank of
Canada to lower its overnight rate which affects variable rate mortgages.
Either fixed or variable, this spring is the perfect time to get into a home or
to purchase an investment property. Be sure to contact me before you speak to a
realtor to get a preapproval in place.
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