To answer the burning question regarding future rate hikes and when, it’s important to understand that Fixed rates and Variable Rates are each influenced differently. i.e. Fixed rate mortgages are influenced by 5 year government bonds and the market price being paid for bonds by investors, banks and lenders. Bond prices determine the interest rates set for fix rate mortgage rates.
Fixed rates can change at any time depending on the direction of bond prices in the market. For example, fixed rates have been on a weekly rise for the past 2 months and currently 5 year rates average 4.59% for a high ratio mortgage and 5.04% for a refinance.
Variable rate mortgages on the other hand, are influenced by the Bank of Canada Overnight Lending Rate which is set at regularly scheduled meetings throughout the year. Here’s the schedule for the balance of 2022:
Wednesday, July 13
Wednesday, September 7
Wednesday, October 26
Wednesday, December 7
Even then, lenders may adjust their discounts off of their Prime rate in the interim should they see volatility in the market or larger than normal spreads between fixed and variable interest rates.
Courtesy: Steven Porter
MORTGAGE ARCHITECTS - BROKER
Milton, Oakville, Burlington, Greater Toronto & Greater Hamilton