With so much uncertainty surrounding the pandemic, many Canadians are wondering if now is the right time to purchase a house.
Ratehub.ca has compiled the available data over the last 10 years–from January 1 2010 to present, and Canada’s current mortgage rates are near historic lows.
In the last 10 years, the lowest five-year variable rate was 1.69 per cent in 2017; today, that rate is best available five-year variable rate is 1.95 per cent.
Additionally, over the last 10 years, the lowest five-year fixed rate was 2.09 per cent; today, the best five-year fixed rate is 2.14 per cent.
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“The Bank of Canada’s target for the overnight rate is currently at a historic low of 0.25 per cent. The Bank has continued to reiterate in their announcements that they are at their lower bound and will maintain this rate as long as required,” James Laird, co-founder of Ratehub.ca and president of CanWise Financial mortgage brokerage, said in a news release.
“For borrowers interested in getting a variable rate, prime rates are likely as low as they will get. However, there is still some room for lenders to offer further discounts to prime,” he said “Fixed rates are already pretty close to their historic lows. There’s little room for rates to go down much further. There’s more room for them to move up.”
Due to the fact rates are currently so low, Laird advises those considering a mortgage to get a pre-approval, which will ensure their rate stays the same for four months, even if rates go up, and allow borrowers to get lower rates if they drop.
Additionally, Laird advises those with renewals coming up to compare rates to ensure they’re getting the best price. “So long as your employment is secure and your income has not decreased, you should have no issues requalifying with a new provider at renewal time,” he said.
Moreover, Laird believes those unsure about refinancing might want to consider it.
“Typically, the savings you would get from refinancing to get a lower interest rate would be approximately the same as the penalty you would be charged to break your mortgage. The main benefit comes from securing a lower rate that may no longer be available on your renewal date. If you believe that rates will go up before your mortgage is up for renewal, then you should refinance to avail of today’s low mortgage rates,” he said.
“If you are considering breaking your mortgage for other reasons like consolidating your debts or taking equity out of your home, then it may make sense for you to refinance now regardless of your outlook on rates,” he continued.