At Mortgage Teacher, we take a different perspective when watching the mortgage rates, because we deal with so many different lenders, we like to take an unbiased approach. At the end of the day, we know all the lending institutions are basically borrowing from the Bank of Canada, so we follow the Bank of Canada's 5-year bond to monitor what the lenders are paying for their money. As you can see from the image below, it allows us to more easily predict how the rates will fluctuate and what rates the lenders will use.
Over the past 5 years you can see how much the rates have fluctuated and why.
It’s important for consumers to be aware of this as we look into the new year and potential for the rates to rise again. So let's take a look at the image above, and understand the timeline and just what has happened to the 5 year fixed mortgage rate over the last few years. You can now see why we are currently unable to get the rates we were able to secure just a few months ago. Times have changed and so have the economic situations in our country that dictate the Bank of Canada 5 year bond. As soon as Trump assumed power, the rates have been steadily on the rise. We are still sitting relatively low compared to the market in 2007-2010.
It’s also important to keep in mind that these rates are the insured rates. Although both insured and uninsured mortgages will have to qualify at the stress test rates, uninsured mortgages will still have between .15-.25% lower rates than insured mortgages. This is due to the risk the lender assumes when you are uninsured.
Be sure to check back to our blog often, where we update you on all the latest rule and rate changes.