Over the last couple of months, mortgage rates have been tumbling steadily, brokers are giving discounts for certain 1-to-5-year fixed rates. Some mortgage rates are as low as under 2%.
The concern of COVID-19 second wave has caused Canada’s 5-year bond yield to fall to its own record low, which is pulling down fixed mortgage rates.
HSBC started the trend when they announced the 5-year fixed default an insured mortgage for 1.99%.
Several brokers now are offering 5-year fixed rates from 1.98% and even lower.
What makes The Mortgage Rates so Low?
There are a numbers of factors:
1. Investors are concerned that the second wave of COVID-19 would hamper an economic recovery caused by bonds.
2. Bank of Canada’s $5 billion weekly government bonds purchase continued to gain lender’s confidence that the market will remain sustainable and allowing them to offer lower rates as funding cost fall.
3. Fixed and variable rates are likely to remain at or below their current levels
Does it Make sense breaking your current mortgage for a low rate?
While these rock-bottom rates are good news for new homebuyers, on the other hand, it is somewhat a source of frustration for borrowers who are currently locked in at much higher rates.
The Strategy is not for everyone, it might be worth if you are currently locked in at a much higher interest rate. If you wanted to know more about it, you may check with us who could easily do the calculations to see if breaking your mortgage makes sense.