Bank of Canada Mortgage Rate Announcement - July 2021
July 19, 2021 | Posted by: Ron Chan
Another month has passed into the summer of 2021, and like clockwork than Bank of Canada has issued another press release, announcing the state of the economy and its impact (or lack thereof) on mortgage rates across the country, Manitoba included. What wasn’t clockwork, was the impact it would have on mortgage rates. But don’t worry buyers, it’s not what you think. In fact, the results are contrary to what most experts have been predicting for the summer of this annum. Let’s have a look.
What Home Buyers Need to Know About the July 2021 Bank of Canada Announcement Regarding Lending Rates
The Bank of Canada Is Maintaining the Policy Rate
While Canada is indeed experiencing economic growth as the health crisis abates with greater vaccination rates, The Bank of Canada reports that growth is slower than they expected for this juncture of the year. Fair enough, as if you asked most of us a few months ago, we unanimously would have stated that we’d be out of this mess by now (almost). Why is economic growth slower than anticipated? The answer is fairly simple. While consumers are ready to spend, provincial and federal bodies have a stranglehold on numerous markets and activities. This has kept the economy from bouncing back as quickly as expected. In response, the Bank of Canada has decided yet again to maintain the policy rate at .25%. While we’re all frustrated with the restrictions that are holding the economic recovery back, there is indeed a major silver-lining for those who want to enter the real estate market.
Variable Mortgage Rates Have Just Hit Their Lowest Levels in Canadian History
Since the Bank of Canada policy rate is directly tied to variable rate mortgages, experts predicted variable borrowing rates to also stand still, if not increase after already sitting at record lows over the last year. This did not happen, because in addition to maintaining the .25% rate, the Bank of Canada also announced that they will keep the rate exactly where it is until the economy is ready to manage an increase. OK fair enough, but when do they expect that to be? They have stated that they don’t anticipate this to occur until the third quarter of 2022. And that, is why variable rates took a dive this mid-July.
How low have they gone? RateHub is reporting that some lenders are offering variable rates that are lower than 1%. Less than one percent! If you don’t mind a little risk (with the big reward that can come with it) that may make you a fan of variable mortgage rates. As such, we most certainly encourage you to take advantage of one of the biggest opportunities in history for getting a mortgage in Winnipeg Manitoba!
The 5-Year Fixed Mortgage Rate Remains at Rock-Bottom Too
Fans of fixed mortgage rates are not being left out of the unprecedented home buying opportunity. While nearly every expert in the industry predicted that the average 5-year fixed rate would sit well above 2-percent this summer, RateHub reports that some lenders are currently offering 5-year fixed rates for as low as 1.74 percent! There’s a caveat to this massive opportunity. It’s tied to the Bank of Canada’s bond buying activity. A strengthening economy (even a slow growing one) is followed by higher returns on Canadian bonds which results in higher fixed mortgage rates. The time to make your move and get locked in on these amazing rates. Don’t know how to do this? Reference our guide on how to lock into low mortgage rates in Canada.
If you’re unsure about which rate and/or lender is best suited to your tastes, needs, and goals, and want access to even lower, unadvertised, variable or fixed mortgage rates? Contact Ron Chan at 204.290.9950 to get started with a friendly conversation.