The Bank of Canada has been raising mortgage rates all year long. As your mortgage broker in Toronto specialists, we want you to have the right information to make a good choice.
That’s why we’ve taken the time to answer the question of why mortgage rates are going up.
First off, one of these contributors is inflation. Groceries are going up at the fastest rate in decades. Even though gas prices fell recently, food is increasing. Consider that the cost of getting groceries is up 11.4% over last year.
House prices skyrocketed during the pandemic. That’s another factor. Those same prices are now dropping as the borrowing costs go up. Here’s another important factor we take into account as a mortgage broker in Toronto.
The Bank of Canada sets the policy interest rate. That affects the numbers that Canadian banks set for mortgages. Overall, the low mortgage rates of the last few years are a thing of the past.
House prices are dropping across the country. Unfortunately at the same time, homeowners might have more problems qualifying for mortgages.
During these volatile times, it’s important to assess mortgages based on rates that are even higher than the ones offered. That helps buyers have a cushion because they have already been verified for a higher rate.
Buyers should remember there’s a difference between a fixed rate and a variable rate mortgage. For the fixed-rate variety, the payments will stay the same until it gets renewed. The payment amount is fixed for variable rate mortgages well. However, there will be more interest which means buyers will pay off less principal. We’re the Toronto mortgage broker that can help get the rates and terms best for you.
Recently, the Bank of Canada increased its interest rate to 4.25%. That’s the highest it’s been since 2008.
