This rise in rates was attributed to a number of factors, including a strengthening of the Canadian dollar, an increase in bond yields, and higher inflation expectations due to rising oil prices. These factors were all creating upward pressure on rates, with some lenders reacting by increasing their prime mortgage rates by as much as 0.25%.
For borrowers, this meant that they needed to be aware of the changing environment and adjust their mortgages accordingly. For example, those who decided to wait for the next rate decrease before applying for a mortgage could find themselves paying more for their mortgage than if they had locked in now. On the other hand, those who took advantage of the recent rate reductions could find themselves paying less for their mortgage.
The article also discussed the implications of this rate increase on the housing market. It argued that higher rates would likely lead to slower house price growth, as the cost of borrowing would become more expensive for potential buyers. Higher rates could also dampen the appetite for risk among lenders, leading them to become more conservative when offering financing products.
This article provides an insightful look into the Canadian mortgage market in June 2007. During this period, the market was faced with several factors that increased pressure on interest rates, including a stronger Canadian dollar, higher bond yields, and rising inflation expectations. Borrowers needed to be aware of the changing environment and adjust their mortgages accordingly, as waiting for the next rate decrease could result in them paying more for their mortgage. Higher interest rates could also lead to slower house price growth, and cause lenders to become more conservative when offering financing products. Ultimately, this article provides readers with an informative overview of the Canadian mortgage market during this period and highlights the importance of being aware of the changing environment.
This article was contributed on Jul 23, 2023
