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

Crews respond to diesel spill in Penhold

Individuals transferred diesel from one truck to the other

Local filmmaker works on documentary featuring women farmers

Red Deer woman receives $50,000 grant from STORYHIVE to produce documentary

Red Deer Rebels lose to Edmonton Oil Kings 4-1 at home opener

General Manager and Coach Brent Sutter said team ‘played hard’

Thurber Raiders snatch season opener from the Lacombe Rams

Red Deer game saw 44-8 win for the Raiders

Snowfall warning in effect for Red Deer

Around 10 to 15 centimetres expected

Environment Canada confirms Ottawa area hit by two tornadoes Friday

At one point more than 200,000 hydro customers were blacked out

Trump drains oxygen from Trudeau foreign policy with PM, Freeland bound for UN

A lot has changed since the Liberals came to power in Canada in 2015

Coaches, players on Alberta university rugby team buckle up for the Broncos

16 people died when Humboldt Broncos bus collided with a semi-truck in rural Saskatchewan

The Vatican ‘owes God an apology,’ activist says in letter to Pope Francis

Letter came after a report on sexual abuse of more than 1,000 children in six Pennsylvania dioceses

Ottawa to name new ambassador for women, peace and security, Freeland says

Chrystia Freeland also confirmed Canada would spend about $25 million to fund number of initiatives

‘A little bright spot:’ Ottawa residents rescue dog trapped beneath rubble

Freelance journalist says rescue of a dog trapped under rubble was happy ending amid chaos in Ottawa

VIDEO: Inside an eerily empty mall in Canada

Only nine of 517 retail spaces are open for business as the grand opening postponed to next year

Tens of thousands without power following tornado in Ottawa region

Hydro Ottawa says more than 170,000 customers were without power early this morning

BALONEY METER: Do Liberal policies mean a typical family is $2,000 richer?

MPs took to Twitter to talk how ‘typical’ Canadian families have more money due to Liberal policies

Most Read