News Flash: Mortgage rates are still lowWith all the recent media hype about rising interest rates, you'll be forgiven if you thought the days of record-low rates were far behind us. The truth is, while the Bank of Canada did increase the Prime rate by 0.25% in June - thus resulting in slightly higher variable rate mortgages - fixed rates are still incredibly low. Right now, eligible mortgage candidates can still get a five-year fixed rate mortgage for 3.99%. The low rates are largely due to the uncertainty surrounding the global economy. Basically, when the stock market fluctuates frequently, investors pull their money and instead invest in bonds - believing they're the safer option. The more people that invest in bonds, the higher the demand. While this increases the price of the bond, it lowers the rate of interest that investors earn on it, thus lowering the yield (or annual rate of return). This lowers the cost to banks which, in turn, pass the savings onto mortgage customers through lower fixed rates. Long story short, negative economic news - such as the threat of a 'double dip recession', and oil spill off the Gulf Coast - often come with a silver lining by means of lower fixed rate mortgages.    |
