Putting Interest Rates in Context

As in past instances, when today’s employment rate was released - with more new jobs created than expected - it resulted in the media saying that this will probably lead to a better chance that interest rates will increase. Maybe true...

But even as prime rates go up, sometimes over a period of time bond rates vary and that is what sets mortgage rates. Because of changing bond rates, the mortgage rates for some products actually declined this week, even though there was no change in the prime rate.

It seems that everyone makes a big issue of mortgage rate changes. Yet, for the most part in recent years, rate changes have been marginal and rates today continue to be very low. In fact, just last week one of the Big Five banks in this country - RBC - quietly cut rates another 10 basic points.

We are today sitting at some of the lowest Bank of Canada interest rates since 1975, and in the last 14 months, we have seen the lowest prime rate, lowest 1-year, 3-year and 5-year mortgage rates - in all of the last decade.

So, everything in context, it remains a great time to buy a home. Of course, most home buyers will need to consult a professional mortgage broker to find out all available options. Then they need to consider what makes them comfortable and for what time frame.

What home buying or selling decisions are you considering right now in light of changing rates?

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