Fixed mortgage rates are at record lows and aren’t expected to go anywhere for at least the remainder of 2013. Mark Carney’s final economic forecast, released earlier this week, cuts the 2013 growth outlook and predicts that our economy won’t hit full capacity for at least 2 more years.
Although variable mortgage rates and fixed mortgage rates are governed by different economic levers they have one thing in common – economic growth forecasts. Variable rates are tied directly to economic growth and inflation and are set by our very own Bank of Canada (BOC). Fixed mortgage rates on the other hand are determined by bond markets which are influenced by global players. The Canadian bond market will maintain low rates as long as global economic growth stagnates and Canada maintains its financial stability.
The BOC revision puts us on track for one of our weakest periods of economic growth over the past decade. Despite this anemic forecast we will maintain our solid fundamentals leaving us as strong or stronger than the European countries stuck in recession and the US market with its never ending recovery.
This low mortgage rate forecast is a silver lining in the cloudy times that lay ahead. The security of cheap borrowing costs and low mortgage payments should offer some solace to the many Canadians struggling to maintain and grow their incomes.