Are rates going up? or down?
Everybody has been seeing the interest rate of late going up but are the rates increase here to stay?
The biggest question I get asked is what are the interest going to do in the next 5 years. Well If I knew the answer I would be a very rich man. But there are signs in the market that gives us indication on what the rates may do.
The word from USA was that the government was not going to spend any more money in reference to help the economy, that ment that days of borrowing cheap money( borrowing at low interest) was over. This type of news it is usually very good for those in the bond world as they are able to get higher interest for their money. The increase in the bond yield ment higher mortgage rates. The increase in the bond yield has a direct relation to the mortgage interest. Bond Yield goes up, mortgage rates increase.
But will that trend continue?
That is the million dollar question. In my opinion, with the biggest market in shambles it seems to me the higher rates are short term. Does this mean that the rates are going to decrease dramatically?
Not neccessarly, What I believe it means is that it will be a long time before we see rates in the 5-6% rates, I would caculate that those rates may show up in the next 4-5 years.
So the next question should be, what about a variable rate mortgage?
That question that will be answered next time
If you have an opinion I would love to hear it, feel free to visitt my website at www.cpmg.ca
Posted by Vittorio Oliverio
on October 18, 2013