David Larock, mortgage broker and owner at Integrated Mortgage Planners, and Joe Sammut, principal broker and owner at Mortgage Architects, recently joined BNN Bloomberg to discuss the current trends in the mortgage market. One key prediction that Larock made during the interview was the potential uptick in demand for variable-rate mortgages. This prediction is based on expectations that interest rates will continue to fall in the near future.
In July, the Bank of Canada made a move to lower its key policy rate by 25 basis points to 4.5 per cent, following a rate cut in June by the same amount. This decision was influenced by volatility in the U.S. labor market, as reported by Bloomberg News. Market analysts are now anticipating further interest rate cuts by the Bank of Canada at all remaining decisions this year.
Leah Zlatkin, a licensed mortgage broker and expert at LowestRates.ca, shared her insights on the current mortgage market trends during the interview with BNN Bloomberg.ca. Zlatkin mentioned that she is already seeing some clients opting for variable-rate mortgages, while others are sticking to fixed-rate products. She highlighted that there are certain factors that „savvy clients“ are considering when choosing a mortgage.
One of the factors mentioned by Zlatkin is the volatility in Canadian bond yields, which is leading to expectations of further downward trends in fixed rates. Additionally, she pointed out that concerns about the U.S. unemployment numbers are also influencing consumer decisions. The recent volatility in global stock markets has raised fears of a potential economic downturn, prompting consumers to consider the impact on borrowing costs.
Zlatkin emphasized that during economic downturns, borrowing costs typically decrease. This, coupled with the current indicators suggesting further interest rate cuts, is making the variable-rate mortgage option more appealing to some consumers. However, she also noted that individual risk appetite plays a significant role in making the decision between variable and fixed-rate mortgages.
While Zlatkin takes a more conservative approach herself, she mentioned that most of her clients are opting for a three-year fixed mortgage. Ultimately, the choice between variable and fixed-rate mortgages depends on individual circumstances and preferences. As the mortgage market continues to evolve, it is essential for consumers to stay informed and seek advice from experienced professionals like Larock and Sammut.