While December is not typically a busy season for many mortgage professionals, since the market has traditionally cooled off in conjunction with the colder weather, the unpredictable circumstances through last year have us also seeing an active real estate market going strong through these winter months. As the spring market was pushed forward into the summer, we are still experiencing ongoing real estate transactions, seeing many home buyers who are eager to take advantage of the all-time low interest rates that financial institutions are offering.
We began 2020 with an overnight target rate of 1.75% and with all things considered in regards to the unprecedented circumstances last year brought on, that rate has understandably been impacted and is currently sitting at an all-time low of; 0.25%. Continuing on into 2021, there’s good news for anyone looking to purchase real estate, as the Bank of Canada’s target overnight rate is predicted to remain stable at 0.25% into 2021.
At the Bank of Canada’s October policy meeting, they announced that they don’t expect to raise their target overnight rate until at least 2023. This aligns with the projections in their previous July report regarding economic recovery where they stated their belief is that the economy will not return to its previous highs prior to 2022. In fact, the Bank of Canada projected Consumer Index Price (CPI) inflation would remain below their target of 2.0% until beyond 2022, which means we can likely expect the Bank of Canada's target overnight rate to remain at the lower bound of 0.25% in 2021 and even into 2022.
In addition to this, on December 6th HSBC, a multinational investment bank and financial services holding company, came out with a variable mortgage rate of 0.99%, which is believed to be the first variable mortgage rate offer below 1% within Canada, ever. It should be noted, however, that this rate is only being offered to high-ratio insured mortgages; meaning that only about 10% of potential home buyers would likely qualify, as it targets buyers who are paying less than 20% as their down payment – who would then need to pay mortgage insurance on top of the 0.99% rate.
The BC mortgage industry affects the Shuswap real estate market – and staying on top of these trends and changes is so important to me as a REALTOR® to ensure I’m able to offer you the most up-to-date information. If you’d like to learn more about how these predictions impact you and your individual real estate circumstances, or if you’d like a referral to a trusted mortgage professional; connect with me today and we’ll discuss the options that are best for you.