To say that rates have been a roller coaster these past 3 weeks is an understatement. We have seen 3 rate cuts by the Bank of Canada leading to a large drop in the Prime rate to Fixed Rates dropping, then rising and some now slightly dropping again.
Banks borrow money for mortgages and to simplify it, the cost of those funds have gone up. Despite our economy being unstable world wide, the banks are now paying more for mortgage funds that they lend to us as the traditional home owner. The reason behind that is that mortgages are now considered higher risk loans due to lower property values with higher loan amounts, unemployment rates on the rise and the overall uncertainty surrounding mortgage loans. Dr. Sherry Cooper, our Chief Economist at DLC wrote this article today that may help explain in more detail as well.
To read Dr. Sherry Cooper’s full report, CLICK HERE to get more understanding of the current market conditions.