In an earlier post, I asked mortgage specialist Lior Hershkovitzhow mortgage rates are determined. I also asked him another question: do you have any views on where mortgage rates may be headed? He replied:
Barring any major rebound in bond yields, fixed rates would likely head lower or remain where they presently are. Variable rates would head higher because the Bank of Canada is widely expected to raise its overnight rate target by 25bp in September.”
“However, the increase would likely be cushioned as more lenders offer customers a lower decrement to Prime. If fixed rates would continue to come down (we can currently offer a 3-year fixed at under 3% and 5-year fixed at 3.69%), from a risk premium perspective it would be very attractive for borrowers who are moderately risk averse to lock in a fixed rate.”
“Bear in mind that any major economic issues in the U.S. or Europe may change things rather quickly. September is a tricky month to call as it’s historically the worst month for the financial markets.