Now is the Time for Canadians to Choose ARMs!

“They’re going up, they’re going up!” That’s all experts have been able to say about Canadian mortgage interest rates over the past few weeks. But while the panic has made some homebuyers jump into things like fixed rate terms, many others have held off, waiting to see what’s really going to happen before making any sudden moves. And while that may seem like a risky move when all the news has been that interest rates are going to skyrocket, in this case the risk is definitely worth the reward.
Now experts are saying that the low interest rates that Canadians have been enjoying for the past while will continue, if not only get lower. So why the change of tune? Because they’re starting to realize what many have known all along: that in this down-trodden global economy with great financial powers like the U.S. and the U.K. crumbling to all-time lows, Canada’s economy is starting to look pretty good. And why should the Bank of Canada raise the interest rates on Canadian mortgages when there’s simply no need to, in an economy that’s growing and predicted to grow even further? Even if they wanted to, they most likely wouldn’t be able to raise the overnight rate any more than 1%; certainly not enough to deter homebuyers who are getting more excited by the day about ARMs. And eager they are! Trends in Canadian mortgages are now showing that 85% to 90% of homebuyers are now opting for ARMs, with that number expected to grow to 92% by late fall.
Even homebuyers that want to play it safe with a fixed rate mortgage, rather than be sorry with an ARM, may want to rethink their choice – and not just because interest rates are going to be low for a little while longer yet. With the bond market looking much more risky these days than the housing market, and that having a direct effect on fixed rates, the future of these types of Canadian mortgages seem to be the ones that are actually most at risk.
While the U.S. scrambles to keep themselves from heading into another recession, the Canadian government knows that now is the time to lure Canadians with incentives like extremely low interest rates to entice them into buying a home. With homebuyers already becoming more eager to scoop up their piece of the market, and with Canadian mortgage interest rates so low, Canada’s economy will only continue to grow, and continue to look even more stable in such a shaky global economy.