For the first time in over a decade, the average 5-year fixed mortgage rate has exceeded 6%. This is a significant milestone for the Canadian mortgage market, as it signals a shift in the current economic climate.
The Bank of Canada’s overnight rate has remained at 1.75% since October 2018, and this has kept mortgage rates relatively low. However, recent economic data has caused lenders to increase their rates in order to protect themselves from potential risks. This has led to the average 5-year fixed mortgage rate rising above 6%.
The increase in mortgage rates could have a significant impact on potential homebuyers. With higher rates, borrowers may be forced to take out larger mortgages in order to cover the cost of their home. This could lead to an increase in monthly payments, which could put a strain on household budgets.
It is important for potential homebuyers to understand the implications of higher mortgage rates. Borrowers should consider their current financial situation and determine whether they can afford a higher mortgage payment. It is also important to shop around and compare different lenders in order to find the best rate available.
Overall, the average 5-year fixed mortgage rate exceeding 6% is an important milestone for the Canadian mortgage market. It is important for potential homebuyers to understand the implications of higher rates and take steps to ensure they are getting the best rate available.