Bank of Canada – No Movement on Interest Rates | March 6th

Clinton joins Rob Snow on City News to talk about the latest Bank Of Canada announcement for March 6th, 2024. Clinton asks mortgage holders to take the bull by the horns and seek financial advice from an unbiased mortgage professional, on what another hold on rates announcement means for them.

Rob Snow
The Bank of Canada held the line on interest rates today no move in either direction. So what’s the trend with mortgage rates? Clinton Wilkins is back with us from the Clinton Wilkins Mortgage Team, Centum Home Lenders in Dartmouth. Thanks again for joining us!

Clinton Wilkins
Thanks for having me, Rob. How’s your day going?

Rob Snow
Oh, everything is fine here. What did you think of today’s decision?

Clinton Wilkins
I certainly wasn’t surprised, you know, economists were really projecting that it was going to be a hold situation. You know, I think it’s good news for Canadians. Anybody who has a variable rate mortgage, you know, a home equity line of credit, or really any debt product that is connected to a bank prime rate, I think is resting easy tonight. Rob, you know, I think people are cautiously optimistic that there could have been a decrease. But you know, people in the industry, and I think economists knew that it was going to still be a hold, at least for right now.

Rob Snow
Okay, so what does this mean for mortgage rates and the timeline for lower mortgage rates?

Clinton Wilkins
You know, I think the timeline may be still the same as we talked about, you know, a couple months ago. I think that we’re going to start seeing rates decrease in the near future. You know, on Mortgage 101, our show that we have on City News in Halifax, I said that I was gonna go out on my sword saying that rates were going to be 200 basis points less by the end of 2025. I think that’s still going to happen. The question is, when are rates going to start going down? And how quickly are they going to go down? Rob? You know, I think we may see rates start to soften midway through this year. So we’re talking maybe in June, we’ll start seeing some rates soften, I think some people may be, you know, more of a mindset of September, we’re gonna start seeing rates go down. And I think it’s going to be a slow burn on the way down. You know, I think in these things, especially when they’re trying to bring this rate back down, they don’t want it to become inflationary. The Bank of Canada spent a lot of time and put Canadians through a lot of distress, in many cases, to try to bring inflation down. And obviously, it’s going in the right direction. But there are some indicators that are still indicating why it should be a hold. You know, the job market is very strong, we’re looking at inflation in the US and what’s going on with the jobs in the US as well. And now, obviously, they might not have a direct correlation to what’s going on in Canada, but it certainly does have an impact. And things are moving in the right direction, inflation is softening. So we will see the rates go down. The question is going to be really, when?

Rob Snow
So what should consumers who are in the market for a mortgage product, given they’re anticipating lower rates, what should they be considering when they’re thinking about the perfect mortgage for them, Clinton?

Clinton Wilkins
Certainly a lot of consumers right now are deciding to go with a variable rate mortgage product, we’ve seen a huge uptick, the last few weeks, around consumers coming in asking us for our variable. Part of the reason why is when the rates soften, you’re going to benefit from having a lower rate. Another reason is really the flexibility. Those variable rate mortgages can be converted into a fixed rate with many lenders with no penalty. And also a consumer, that’s in a variable, if they were to break their mortgage early, it would only be a penalty of three months of interest to exit that term. So the flexibility is really huge. And, you know, I think everyone knows that the rates are going to be less. And that’s really a reason why people are taking a variable. In terms of the most popular product, historically, it’s a five year fixed. And less and less consumers are choosing to do a five year fixed right now. You know, in terms of fixed rate product, I would say a three year typically is the most popular, at least that’s what we’re seeing here on our end.

Rob Snow
What are some of the common questions right now that you’re getting from your clients, Clinton?

Clinton Wilkins
You know, I think some people are concerned if they are going to qualify, or they’re concerned if they’re going to be able to afford their mortgage, in terms of a mortgage renewal. I think people are scared and I think some people are procrastinating and we’ll call it ‘ostriching,’sticking their head in the sand and trying to avoid the situation. I think, take the bull by the horns, you know, ask for financial education, ask for help, you know, talk to an unbiased mortgage professional, especially if you’re buying a home, if you have a mortgage coming up for renewal. We’re seeing a lot of consumers that are choosing to do longer amortizations than we would have seen before Rob. I have clients that are coming up for renewal that only have 10 years left on their amortization. And they’re choosing to extend their amortization to 2025, or even 30 years in some cases, to lower their cost of borrowing, in terms of the amount of money that they’re putting out every month. Now the interest cost isn’t necessarily going to be less because obviously the more you owe, and the slower you pay it down, the more interest may be charged, but it’s really stopping the bleeding in many cases. You know, consumers as we know, and we’re hearing the reports, are at an all time high in terms of their indebtedness. You know, we’ve really kind of gone hog wild in terms of borrowing, and really having the ability to have access to that unsecured credit. So that’s one thing to really take into consideration. You know, before you start worrying about paying your mortgage down faster. How is the financial house in order for everything else? I think that’s something that you really need to think about, especially if you’re going to be buying a home. Or, if you have a mortgage coming up for renewal, like these are key pivotable times in people’s lives, that they really need to think about what’s going on with their finances.

Rob Snow
Okay, Clinton Wilkins on Bank of Canada Day once again, great to hear from you.

Clinton Wilkins
Thanks for having me, Rob.

Rob Snow
Yep, Clinton Wilkins Mortgage Team Centum Home Lenders in Dartmouth. I’m Rob Snow. This is City News.