While variable rate mortgages have gained in popularity as of late, there are still many homeowners who prefer to go with a fixed rate mortgage. The current housing market, however, has made it difficult for those looking for a fixed rate mortgage to find one that suits their needs.
Over the past few months, the Bank of Canada has begun to raise the interest rate. This increase in the prime rate has had an effect on the mortgage rates offered by the major banks. As banks adjust to higher borrowing costs, they have been forced to pass along the increases to consumers in the form of higher rates on fixed rate mortgages.
As a result, the average five-year fixed rate mortgage has gone up by three-quarters of a percentage point, from 6.3% to 7.05%. This represents the largest single increase in over a decade. While this jump might seem small, it can have a significant impact on homeowners' budgets. The cost of borrowing for an average $300,000 mortgage, for example, could be as much as $7,000 more expensive over the life of the loan.
The good news is that there are still some good deals to be found if you look around. Major banks are offering five-year fixed rate mortgages for as low as 6.15%. However, these rates often come with certain restrictions, such as higher down payments and points fees upfront.
These days, Canadians should be prepared to shop around for the best deal when it comes to a fixed rate mortgage. While locking into a fixed rate may provide the peace of mind that comes with a predictable repayment schedule, it can still be wise to explore all possible options to ensure that you get the best deal possible.
Analysis:
In recent months, the Bank of Canada has increased the interest rate, making it more expensive for banks to borrow. As a result, the average five-year fixed rate mortgage has gone up significantly, from 6.3% to 7.05%. This rise in interest rates can have a significant impact on a homeowner’s budget, resulting in thousands of dollars of extra costs over the life of the loan.
Despite the hike in interest rates, it is still possible to find good deals on five-year fixed rate mortgages. Major banks are offering rates as low as 6.15%, although these rates often come with restrictions such as higher down payments or points fees.
For Canadians looking for a fixed rate mortgage, it is important to shop around to get the best deal. Locking into a fixed rate provides peace of mind and stability, but it is still important to explore all available options to ensure that you get the best possible deal. With careful research and comparison shopping, individuals can find the best mortgage for their particular situation.
This article was contributed on Nov 08, 2023
