The impact of mortgage on Canadians
At least in the short term, whether they are the market for new mortgage loans, or hopes to renew the current mortgage loan period. As the benchmark rate is now lower than its 5 % peak of 2 %, the cost of lending is greatly reduced, and the pressure of existing borrowers will be reduced. They will be forced to renew the visa at the speed of the lowest point in 2021 and 2022. Essence
Effect on variable interest rate mortgage
The latest speed affects those who have variable mortgage loans. Those who have a adjustable rate of mixed mortgage will immediately see their monthly payment decrease. Those who have variable mortgagers but are in a fixed payment timetable will now see more payment for their principal balances, rather than provide services for interest costs.
Effect on fixed interest rate mortgage
Although fixed mortgage interest rates are not directly authorized by BOC, they will definitely be affected by its rate direction. This is because fixed interest rate pricing is based on the bond market. Moreover, bond investors tend to respond to the reduction of tax rates to central banks, even if they are already priced at the market. After the news was announced this morning, the Canadian government’s five -year bond yield was reduced to 2.8 %, the lowest level since December 10, 2024.
As a result, the loan is expected to pass some discounts. However, there will be no sharp swinging down. Investors are worried that the impact of tariffs and expectations for inflation will maintain higher long -term expectations to maintain a five -year yield to be between 2.8 % and 3.1 % since the second half of last year. When encountering these problems, we are unlikely to see more decline in the bond market or fixed mortgage interest rate.
Check the following rates to view the current state of the Canadian mortgage interest rate.
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What does this mean for the housing market?
The decrease in the latest reduction may continue to squeeze the market demand of the housing, and began heating a few months after 2024. Many potential buyers have been in the field during the whole process in the first half of the year because interest rates are still rising. Now they have fallen, and house prices have not been restored-many real estate committees, including the Canadian Real Estate Association (CREA), expect the early spring sales season.
In its recent housing forecast update, CREA pointed out: “Assuming that it is still a combination of two and a half years of stress demand and low borrowing costs, and the usual spring list will lead to the rebound of market activities in 2025 across the country. In 2024, in 2024. There may be a good preview in the fourth quarter of the year.
Of course, this also requires a warning, that is, whether the tariffs of the in-and-in-and-out will relax the purchasing power-if the work loss is getting bigger and bigger.
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