Lower Interest Rates in 2019 Mean Better Housing Affordability

For many Canadians, the dream of owning their own house is primarily dependent on one thing – the ability to secure affordable financing.

Since very few people can afford to buy their houses in cash, Mortgages are usually the only way for potential home buyers to participate in the housing market. When mortgage rates are high, fewer people can afford to buy homes, and on the flip side eager home-buyers and property investors are always on the look out for favorable mortgage conditions.

If you are considering buying a house this year, here is some good news for you – mortgage rates are in a great place right now.

In this article, we explain why 2019 is shaping up to be a good year to take advantage of the low mortgage rates.

Five-Year Government Bond Yields are Down

The Government of Canada’s bond yields are currently the lowest they have been since the Summer of 2017.

Here is a graphic (courtesy CBC News/Bloomberg) that shows just how far these yields have dropped over the last 12 months:

Since Banks and other mortgage lenders usually get the money that they loan out by borrowing from the bond market themselves, this means that their mortgage rates should be on their way down.

Several big banks, including RBC and TD Bank, have already cut their fixed-mortgage rates. Expect even more to do so.

About 3 out of 4 mortgage borrowers opt for fixed-rate mortgages, so these becoming more affordable is great news for home buyers

Bank of Canada’s 2019 Outlook : “Steady or Down”

Unlike Fixed-rate mortgages, Variable-rate mortgage rates tend to move according to the Bank of Canada’s actions and outlooks, and even here there is good news for potential home-buyers

For starters, most analysts believe that there is zero chance of an interest rate hike in 2019. With the general economy somewhat sluggish, the BoC is expected to keep interest rates low to spur investment and spending.

On top of that, Analysts believe that interest rates may actually be cut… with a 44% expectation of a cut by by September 2019.

This means variable mortgage rates in the near future will either stay the same, or will come down to even more affordable levels. Which is obviously good news for anyone willing to finance a new home in 2019!

The Final Word

As a prospective home buyer, mortgage rates coming down is always good news.

Coupled with the new incentives for First Time Home buyers, 2019 is shaping up to be a better year for potential buyers than any in recent memory.

Of course, there are many additional criteria to consider, such as maximum home value eligibility, mortgage rates, closing fees, and other eligibility requirements depending on your specific mortgage product. We strongly recommend speaking to qualified mortgage professionals to understand your options better.

If you ARE in the market for a new home, whether for investment or for your own use, Condos represent great value. With many new projects coming online in the coming months, Pre-construction Condos are definitely worth look!