Threats of Trade War Won’t Keep Interest Rates Down
Matrix Mortgage Global – Threats of Trade War Won’t Keep Interest Rates Down
If you have spent any time shopping for a mortgage lately, you know that interest rates are on the rise. In fact, The Bank of Canada has raised interest rates four times within a twelve-month span and more hikes could be on the horizon.
While U.S. President, Donald Trump threatens trade wars and tariffs, some Canadians may be hoping that borrowing costs will come down, but according to many economists, the opposite is more likely. That’s because, despite everything that’s going on with NAFTA, there are strong signs of growth within our economy including more jobs, rising housing prices, and inflation.
South of the border, large tax cuts initiated by President Trump have stimulated the economy, which of course has an impact on Canada too. The Canadian economy has been doing its fair share of pumping out jobs. With trade wars looming, increased tariffs are likely to result in inflation, and if this happens, The Bank of Canada will likely act to counteract it by raising interest rates again.
So what are Canadian borrowers to do?
The days of two percent interest on mortgages appear – at least for now – to be over. If you are currently in the process of house hunting and have not already been pre-approved for a mortgage, doing so could lock in your interest rate and protect you in the event that rates go up again in the near future.
If you currently have a variable rate mortgage, it could be time to start thinking about converting all or a portion of it to a fixed rate mortgage.
Or if you are considering other types of mortgage products such as refinancing, a second mortgage, home equity line of credit or a reverse mortgage, then it is a good idea to sit down with your mortgage broker and explore these options.
Finally, further rate increases could affect those who may have difficulty meeting the standards for the new mortgage financial stress test. Fortunately, there are ways to get around this but it is always a good idea to consult with your mortgage broker to determine the best strategy for you.
If you are concerned about rising interest rates and would like to speak to a mortgage broker, contact the team at Matrix Mortgage Global today at 1-877-366-2961.