Mortgage Rates Remain Stable, but Inflation Threatens Future

📆 8/10/2023 10:48 PM
📰 globebusiness

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Despite no increase in Canada's leading mortgage rates this week, the threat of rising inflation and high energy prices could result in the prime rate remaining at or above 7.20%. The bond market predicts rates will eventually fall, but disappointing inflation and job numbers may delay the first Bank of Canada rate cut. Borrowers are advised to avoid long-term loans at current rates due to the uncertain economic climate.

Borrowing costs have ridden an uptrend since May, but none of Canada’s leading nationally-advertised mortgage rates went up this week. That’s the good news.While central banks have made ample progress on inflation—as witnessed by Thursday’s mostly constructive 3.2 per centoil prices

are surging. High energy prices could combine with weak monthly inflation data from one year ago to threaten higher annualized inflation for the next few months. That raises the chance that Canada’s prime rate sticks at or above 7.20 per cent for longer than mortgagors had hoped.published by CanDeal DNA, but disappointing inflation and overly cheerful job numbers could push out the first Bank of Canada rate cut.

Either way, it makes little sense for all but the most risk-averse to lock into a long-term loan at today’s rates. Certainly, thecould rain on the housing parade with more hikes, but damage to the economy is mounting, and borrowers can’t take much more of this. For that reason, three-year fixed terms—which have been flying off the shelves—are about as long as a well-qualified borrower should commit to., they’re currently as popular as a rainstorm at a picnic, but they could become the next summer hit if the BoC cues up 2024 rate cuts as expected.

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