Mortgage Agent - Malav Shah

Mortgage Agent - Malav Shah Committed to help the community through awareness and find them lender to meet their financial needs

Is it time to switch to fixed rate mortgage?With BoC raising benchmark interest rate to 2.5% today, an increase of 100 b...
07/13/2022

Is it time to switch to fixed rate mortgage?

With BoC raising benchmark interest rate to 2.5% today, an increase of 100 basis points. It is predicted that BoC will continue to raise interest rates up to 3.25% by the end of the year and 3.5% by Q1 2023. This will result in additional 1% increase in the interest rate for variable rate mortgages in the coming months.

In my professional opinion, If you are a variable rate mortgage holder, your current interest rate will be in the range of 3.5% to 3.8% after todays increase. If you switch to fixed rate mortgage, you will be locked in at 5.3 to 5.6% for the rest of your mortgage term. Even with additional 1% interest rate increase in the coming months, you are still better to stay in variable rate option since when the rates do start to slide, you can benefit from it.

If you are looking for guidance with your existing mortgage or looking for a new mortgage, I can help you make the right decision. Feel free to reach out.

07/08/2022

Is it a start or an end to recession?

We are starting to see that the inflation cooling off from the peak after June 21, the oil future have undergone major correction and the stock market is making incremental recoveries. Unemployment is at one of the lowest levels in the history at 4.9% . Are these signs of recovering economy? The answer is no.

We are at an early stages of recession where the tightening of monetary policy is yet to show an impact in the economy. Bank of Canada is lagging behind in efforts to control inflation. Even with inflation coming down it is still substantially high with respect to a target of 2%. Thus, we are not going to see any change in monetary policy and the BoC will continue to raise interest up to 3.5% by Q1 2023. This will kill the growth and will result in stagflation. This shall result in rate cuts in late Q2 and early Q3 and we start to see economic recovery by Q4 2023.

So hold on tight, this will be a long and bumpy ride.

If you are looking for guidance with your existing mortgage or looking for a new mortgage, I can help you make the right decision. Feel free to reach out.

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Brampton, ON

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