The West Haven Group has asked that its primary mortgage broker partner team, Pilot Mortgage Group (Damon, Tyler, and Rob), prepare a monthly interest rate update and outlook article to assist our clients in remaining up to date with what is happening with interest rates. Below is their update article for July 2019.
Where are interest rates going in 2019 and beyond? This has been a common question that we have been fielding from our clients lately and is an important factor in determining the plans for your mortgage as well as future budgeting. While no one has a crystal ball, there are a couple of key indicators that we are watching closely, and the short answer is that rates are going nowhere fast.
Analyzing Job Market and Housing Data as well as reading reports from economists is rarely exciting and all of the numbers can be hard to understand. In addition, trying to pull out the details in regards to the recent trade news from the sea of other Trump-related news can be similar to looking for a needle in a haystack. The key to remember is that uncertainty within the market usually equates to rates remaining the same or decreasing.
After the dreadful performance last winter, the Canadian economy has bounced back as the central bank predicted. However, elevated household debt and housing market imbalances remain as key vulnerabilities moving forward that could quickly slide Canada back to where it was at the end of 2018.
With Trump at the helm within the US and his continued trade pressure globally, the ongoing threat of trade wars has slowed the US economy. There is now increasing pressure from the White House on the US Fed to cut rates on July 30th and this could then translate to increased pressure on the Central Bank of Canada later this year as our economies are closely intertwined as key trade partners.
5 year fixed rates are now back under 3% with the variable discounting lagging behind with Prime still relatively high at 3.95%. With many key economists predicting a rate cut to the overnight rate in Q4, it is possible that we see the resurgence of a variable rate mortgages later this year.
We expect rates to remain stable for the remainder of 2019 and into 2020 with the upcoming Canadian and American elections breeding continued uncertainty within the markets.
To learn more about Pilot, please visit their website HERE.
Stay tuned for future updates!