Where are Mortgage Rates headed? Calgary Mortgage Broker
Typically one of the most asked questions - what are interest rates going to do? At this point in a conversation, I will say "let me get my crystal ball out". The best answer to that can be narrowed down to accuracy, not precision. For anyone who lived through the early eighties and experienced the "bubble" that burst, you know how volatile the market can be.
When looking at market trends a few factors are taken into consideration. Things like, the National Debt and bond rates, commodities, supply and demand, and world events are first to pop into my head. Take for example world events. What did your mutual funds do when the trade towers came down? It's safe to assume that most mutual funds came down with them. Oddly enough, mortgage interest rates were affected only slightly after this disaster. As long as unforeseen and unfortunate world events happen, there is no way to guarantee a precise answer to what mortgage rates are going to do. Terrorist attacks, assassinations, etc. have effects on what our purchasing power is in the housing market.
The National Debt - o.k., this is not permission to go take a nap! Yes, there are many factors to consider when looking at the National Debt and how they derive their findings. We are not going to get into that. Let's just say that we look at the "results" instead of "how" they get there. (otherwise you would go and take that nap!) The accuracy in interest rate prediction can only be judged after all of the world's political and economic events have worked their way through the bond market over a period of time.
Focusing on the population and local or regional expansion, we will take Alberta as a great example. When employment and economic conditions favour a particular area (and we are talking about the great province of Alberta!) demand for housing hits high gear. Where there is work, there are people! Combined with the strength of the dollar, housing demands are up, and inventory (supply) is behind.
What does this have to do with where the interest rates are going? When the Canada Mortgage and Housing Corporation (CMHC) want to slow the market down, they can influence the market by raising the interest rates. Think of CMHC as a "heating and cooling system" reacting to the pace of Canadian housing and the temperature of the economy.
So as you can see it is not one, but MANY factors that determine where our interest rates are going. The only thing we can be sure of when discussing interest rates is that hindsight is always 20/20. What's around the corner? Well, let me get my crystal ball...
Please contact me if you have any further interest rate questions.
Sincerely,
DAN MASS, Mortgage Agent
700-4th Avenue SW
Calgary, Alberta, Canada
direct: 403.294.0033 cell: 403.710.1505 fax: 1-866-902-4910
Calgary Mortgage Broker