PAUL DUECK MORTGAGES
  • Home
  • Services
  • Apply Now
  • About Paul
  • Testimonials
  • Blog
  • Tools

The Mortgage Minute

With Prime rates dropping and markets crashing, why are mortgage rates going up?

3/19/2020

0 Comments

 
Over the past several days many financial institutions have quietly increased their fixed mortgage rates, increased their Prime rates, and decreased discounts from Prime. If you have been reading my blog or listening to my ramblings on Instagram or Facebook, these rate changes may baffle you based on everything I've told you about how rates are set. With the 5-year Canada bond yields continuing to drop, and with the markets crashing we would expect that rates would continue to drop, or at least stay put. 

Economist Dr. Sherry Cooper explains why rates are going up while the markets continue to suffer: "over the past two weeks, liquidity has dried up. Financial instability has risen sharply with the high level of volatility. Banks have experienced significant withdrawals as consumers are hoarding cash like everything else. The cost of funds to banks has risen sharply because of the enhanced perception of risk. With the collapse in oil prices, banks exposed to the oil sector are building up reserves for nonperforming loans."

So even though the Bank of Canada issued a second emergency reduction to the Overnight rate by 50 basis points to increase liquidity on March 13, financial institutions are concerned about unemployment rates and the risks associated with taking on new mortgages with mortgagors that could see reduced hours, work stoppages, and increasing unemployment numbers. 

With all that being said, rates are still lower than they have been for over a year, and I am showing clients 7 and 10 year fixed rate options to capitalize on low fixed rates. Additionally, I have been assured by my lenders that their underwriters are working remotely and are able to continue with business as usual. Take care of yourselves, and don't hesitate to reach out with any questions. I am working from home, and can get a mortgage done remotely without a client having to meet me in person.

With all that being said, the most important thing is for all of you to stay safe, spend time with your family, and remember to exercise and eat well.
0 Comments



Leave a Reply.

    Author

    Paul holds a Master's degree in Business Administration, loves to golf, watch hockey, and drink black coffee.

    Archives

    March 2025
    February 2025
    January 2025
    February 2024
    January 2024
    December 2023
    October 2023
    July 2023
    June 2023
    May 2023
    October 2021
    August 2021
    June 2021
    April 2021
    March 2021
    February 2021
    January 2021
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    April 2020
    March 2020
    February 2020
    January 2020

    Categories

    All

    RSS Feed

Paul Dueck     204-791-9449    [email protected]      Castle Mortgage Group, 100-1345 Waverley St., Winnipeg MB R3T 5Y7

  • Home
  • Services
  • Apply Now
  • About Paul
  • Testimonials
  • Blog
  • Tools