Now is the time to lock in a low rate
A short recession or a long recession, that is the question.
While we have reduced our growth estimates for this year, it is believed that we will experience a relatively strong rebound in 2021.
The sharp stock market pullbacks have already discounted a large part of this year’s anticipated economic and profit slowdowns.
But we must not forget that history has always proven that the economic market tends to rally tremendously after a crisis.
In my opinion a long recession does not seem to be in the cards this time. Lower interest rates, specifically mortgage rates, seem to be encouraging first-time buyers to enter the real estate market.
Pent-up demand is beginning to surface as we witness competitive offers in some of our bigger cities across Canada.
We have started to see rates drop down to
2.39 per cent for a five-year fixed mortgage, a massively discounted rate now offered by some of the big Canadian banks to lure in new clients.
The Big 5 banks have all announced lower profits this quarter creating an inner competition between lenders that will enviably benefit the customer.
I am the first person to tell you that you should never use your home like an ATM to repeatedly get yourself out of debt. However, the current rate environment should not be ignored by those who still have consumer debt, a line of credit or a mortgage.
Now is the time to put your debt portfolio in order and capture a lower rate for a longer term. Many lenders are even incentivizing clients to do so by covering appraisal fees, title costs and even penalties to win business from rival banks.
Before COVID-19, all the banks were beginning to increase lending rates and were forced to pull back once the crisis hit.
I can tell you the
Canadian banks will not keep rates down for long. As we recover and as demand increases, so will lending rates. Take advantage of this unique situation now, put your debt portfolio in order and begin to build a plan to reduce it.
Christine Ibbotson is author of Don’t Panic: How to Manage Your Finances and Financial Anxieties During and After the Coronavirus and the bestselling How To Retire Debt Free & Wealthy.