Surprise! Mortgage Rates Are Going UP
I chatted with a client yesterday who wondered if the falling “mortgage rates” would affect the real estate market.
Well first, there is not much of a market but that is a different topic you can read about here. Secondly, mortgage rates are not dropping. The bank rate is what is dropping and now sits at just 0.25%. Not too long ago, the feds were inching it up to cool off the housing market and now it is dropping like a stone.
But wait. Mortgage rates are going up! There have been at least two hikes since the COVID bug infiltrated our lives. Rates are increasing again, as mortgage lenders express concerns about liquidity and rising defaults. Then there is the problem of tanking oil prices, rising debts and increased risks.
With the cool down in the real estate market, the majority of people accessing mortgages right now seem to be people who are refinancing. Experts appear to be suggesting that variable rates are not a safe bet right now and that it may be wiser to lock into a fixed rate right now.
If you have mortgages coming due soon and have the option to negotiate an early renewal, you may want to consider locking down a rate now if the trend continues. Consult with a mortgage specialist to discuss your best options.
On a positive note, rates are still very low so, there’s that. And before we all go screaming about banks, we have one of the most stable banking systems in the world for a reason. If this helps keep it that way, well then so be it.