Why Now May Be the Time to Lock In Your Mortgage

With central banks around the world now shifting their cumulative focus to raising interest rates after nearly a decade of historical-low rates, speculation as to how quickly central banks will choose to deliver rate hikes in the near to medium term have spooked many homeowners with large loan to value ratios or variable mortgage payments which are set to increase with each additional interest rate hike.

The gradual decline of interest rates globally since the 1980’s has resulted in a very nice windfall for homeowners who decided to stick with a variable mortgage over the past 30 years. As rates have continued to fall (albeit with a few slight spikes along the way), homeowners have largely benefited from lower mortgage payments and/or additional principal pay down over time, a very advantageous environment indeed for the average homeowner approaching retirement.

For new homeowners looking at taking on a mortgage, or those with mortgages which may become more difficult to service should rates rise, economists from all of the large Canadian banks have indicated that now may be the time to lock in a mortgage with rates hovering near all-time lows, given the fact the Big 6 Canadian banks forecast a consensus interest rate at the end of 2018 approximately 150 basis points higher than today’s rate, should the Bank of Canada continue to hike as expected.

The saying “it’s better to be safe than sorry” perhaps holds true now more than ever for Canadian homeowners in today’s economic environment.

Invest wisely, my friends.