Back in fall, it was being widely predicted that both fixed and variable rates would continue to see rapid increases through 2019. However, a shift in economic development has radically changed the outlook for mortgage rates as we prepare to enter the 2nd quarter of 2019.
While the original predictions were for as many as three more increases in 2019 by the Bank of Canada, we could potentially see decreases, and possibly as soon as summer.
Between July 2017 and October 2018, we had seen five increases by the Bank of Canada. Another 3 would have made it eight. Regardless of previous predictions, I’ve been saying all along that it would be extremely unlikely to go another three years without seeing any decreases to prime rate. It is now looking as though a decrease could come sooner than later.
The Bank of Canada rate announcements mainly affects those with variable rate mortgages, since they are all about the direction of prime rate. However, as economic outlook weakens, fixed mortgage rates will likely continue to drop as well. Over the past couple of weeks, we’ve seen multiple drops on fixed rates across the board. It’s rare for there to be this many rate drops within such a short period of time.
Spring is only a week away, and I would expect to see lenders come out with some spring promos, which we are already starting to see. It’s quite likely that we’ll see 5 year fixed mortgage rates below 3% once again.
Paul Meredith is the author of the Amazon #1 best selling book, Beat the Bank – How to Win The Mortgage Game in Canada, and has ranked as one of the top 75 mortgage brokers in Canada since 2016. He was a finalist for Mortgage Broker of the Year in 2018, and can be seen as the exclusive mortgage broker on season two of TV’s Top Million Dollar Agent.
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