Navigating the ups and downs of mortgage rates

Ever get that nagging feeling that something bad is going to happen, and feels like it’s just around the corner and then nothing really drastic happens even when all factors lead to something that is supposed to happen?

Since 2009 fixed interest rates have stayed at or near historic lows and all signs point upwards as rates historically rise faster then they fall.

Sure they’ve hobbled along a bumpy road moving slightly up, then slightly down but nothing really drastic has occurred as positive news comes along quickly but then is curbed by negative economic news, major catastrophes or even new wars.

I’ve been in the mortgage industry for six years now and economists surely have been front and center with regards to their economic forecasts since September 2008.

One recurring theme they ‘always’ say, is never say always, and never say never. Even though it’s redundant, it’s been proven that it’s near impossible to predict interest rates and economic futures.

With interest rates as low as they are, most economists keep saying that they’ve only got one way to go, and that’s up.

Surely this is true for the long term and that’s easy enough to predict based on the past 100 years, but for the short term the national economy keeps getting tripped up by some global event that affects us all.

And this seems to have stalled the huge increases that many have been calling for, except for that one month in 2010 where rates shot up a full point in one month, and then tumbled shortly thereafter.

From the sidelines, what I’ve found quite interesting is watching buyers’ behaviors, whereas we were so used to interest rates in the 5.25-6.25% range for 20 years that the consumer that is currently buying at levels right around the 3% +/- level.

And the excitement with that is waning.

Consumers are now getting quite complacent with where interest rates are at, but who can blame them. The basis for which they’ve become complacent is based on the past four years whereas such excitement was created by the fact that we were near historic interest rate lows and the euphoria created with that felt like you were winning the lottery.

Benjamin Tal, Canada’s most quoted economist, says that interest rates will likely be going up but slower than originally thought and we shouldn’t see the drastic increases that have been brought to light over the past couple of years.

This is very important information to know, because it may slow down the process of the consumer making their home buying decisions. They will no longer have that rushed feeling that if they don’t buy now, rates will shoot up and they’ll miss out on thousands of dollars of savings.

But on the other hand how true is this?

This time last year rates went up a full percentage point in as little as a month! The cost of that on a $300,000 mortgage is $15,000 over a five-year period or $250/month!

Interest rates are going to do what they are going to do; the consumer doesn’t have any control of that.

What the consumer does have control over is preparedness, meaning get educated on the housing market and interest rate market. How does one do that? Hire the correct professionals; on the buying end you are in control, the information is free.

Bottom line, if you’ve teamed up with the right professionals and educated yourself properly, then when you’ve found the right house all else should fall into line quite smoothly even though the interest rate ride may be a little bumpy, but that’s what 120-day rate holds are for!

Jean-Guy Turcotte is an Accredited Mortgage Professional with Dominion Lending Centres-Regional Mortgage Group.

Just Posted

UPDATE: Red Deer RCMP arrest man involved in fatal hit and run

RCMP flew to Nipawin, Sask. to arrest Tosh Vertraeten

Pop Evil hits the stage at Bo’s Nov. 25th

Acclaimed band is touring in support of self-titled disc released early this year

Oh What a Night! celebrates iconic American legends

Frankie Valli and Andy Williams honoured during Red Deer show

Red Deer Lights the Night gets residents into the holiday spirit

Free winter festival is on Saturday, Nov. 17th from 4 to 7 p.m.

First Nation marks ‘milestone’ land deal at Alberta ceremony

Lubicon Lake First Nation Chief Billy-Joe Laboucan signed treaty last month

Baloney Meter: Will tougher penalties for gang members make Canada safer?

Since 2013, gang-related homicides in Canada’s largest cities have almost doubled

Early data suggests no spike in pot-impaired driving after legalization: police

Some departments said it’s too early to provide data, others said initial numbers suggest stoned driving isn’t on the rise

Humans reshaping evolutionary history of species around the globe: paper

University of British Columbia researcher had the paper published in the Proceedings of the Royal Society

Toronto ‘carding’ activist Desmond Cole stopped by police in Vancouver

Cole says his experience reveals what daily life is like for black and Indigenous residents

Commercial trucks banned from left lane of Coquihalla

B.C.’s Ministry of Transportation has introduced a new program that hopes to prevent accidents and closures on the Coquihalla Highway.

Canadians more prepared for weather disaster than financial one: poll

RBC recommends people check their bank app as often as the weather app

Supreme Court hears case on migrant detainees’ rights to challenge incarceration

Currently, migrants who do not hold Canadian citizenship can only challenge detention through an immigration tribunal or a judicial review.

Canada Post issues new offer to employees as eBay calls on Ottawa to end strikes

Ebay is calling on the federal government to legislate an end to the Canada Post contract dispute, warning that quick action is needed to ensure retailers don’t lose out on critical Black Friday and Cyber Monday sales.

Most Read