Here is some information I received from Bob and thought some of you may find this interesting. Cheers! Dean
Mortgage shoppers crave certainty, so they continually question brokers or bankers about where interest rates are headed. If this is something you’re prone to doing, first ask yourself if your broker or banker can predict the next global catastrophe, war, financial crisis, or sovereign insolvency. If not, you may want to rethink your question.
Unforeseeable events impact mortgage rates at unforeseeable times. The events of this past week are the latest reminder of how fluid rate expectations can be…. A month ago, some economists were contemplating a BoC rate hike as soon as May.
Now, you see:
- the benchmark 5-year yield plummeting Wednesday to 2.43% (bond rates determine how fixed mortgage rates are set)
- deeply discounted 5-year fixed rates falling back to 3.79%
- market rate-hike expectations being pushed out to September/October (based on Overnight Index Swap [OIS] yields).
The prediction business is as predictable as it never was.
After the collapse of the markets in 2008 and the subsequent recovery, we were promised a roller coaster ride. And that is what we are on. What becomes important is keeping short-term market emotion from steering long-term mortgage strategy.
Those of you who are sitting on your variable rate mortgage and considering locking in... you now have some more time to ponder. It's okay to stay with your variable rate for a little longer.
Bob Quinlan, Mortgage Broker
#2 - 1810 third Ave.,
Prince George, BC
Top Office Producer 2010
Oh, by the way. I'm never too busy for your referrals!