Understanding mortgage Canada rates is important to help you decide on a variable mortgage or fixed mortgage.The current interest rates for Canada are below there historic levels. Presently central bank is charging its main customers (major banks like CIBC and BNS) an interest rate of around1%.
The banks then charge people like you and me an additional 2-3% above the 1% they pay the Bank of Canada. This is the lowest rate that is possible for the banks best customers at this time, which means the banks best customers would pay around 3% in Canada for a variable mortgage.
You will need to look at a number of factors to determine what will be the best mortgage rates Canada in the near future. A good indicator of what future mortgage rates Canada might be is to look at mortgage rates over the past 30 years, the range over this time period was from a low of 2% to a high of just over20%. Based on this you would expect to see mortgage rates rise back to a more normal level in the 5- 6% range.
There are a number of sources that you could refer to regarding interest rates. The most important would be the Bank of Canada, at this time the Bank of Canada has stated that they will not be moving up interest rates until the second half of 2012. With this information you can choose an open variable mortgage which comes with the lowest interest rate possible. A borrower can then later, if the Bank of Canada changes its position, convert to a fixed five year mortgage. This allows the borrower to save money while reducing the level of risk related to rising interest rates.
Mortgage Canada rates are also affected by economic activity inside and outside of the country, but the most important factor will be economic activity within Canada. When economic activity picks up and unemployment levels fall then the Bank of Canada may feel that the Canadian economy can withstand higher interest rates which can moderate economic activity.
The Bank of Canada also watches inflation rates and gross domestic product. The target inflation range is around 1% -3% above this level you can expect the bank to raise interest rates. The range for gross domestic product growth can be higher but if it reaches above 6% you should interest rates to rise.
To make a fully informed decision you should consult with a mortgage broker on fixed mortgage rates Canada verses variable mortgage Canada rates to determine where your situation fits in, if you would like some free advice on mortgage Canada rates please call us.