Are Fixed Interest Rates Still A Good Option?

Fixed interest rates are still a good option! Between October to December 2021 we saw a sharp incline to the fixed rates. They increased by about .75%-1.00% in just 3 months and have now tapered off and held steady with a few lenders dropping their base rate by about .05%. The fixed rates follow the bond market and not the Bank of Canada’s prime rate changes and so there are different economic factors that will affect fixed rates over the floating rates.

If COVID has brought us anything (outside of a booming Real Estate market!) it has brought us low mortgage rates and now with the Omicron variant, it’s holding rates stable. Until the economy in general starts to stabilize, our fixed rates won’t drastically increase and COVID plays a big part in this. When rates do start to rise, the finance minister has suggested a slow and steady incline. They do want to keep rates low as this helps consumers keep their cost of living down which means they have more money to spend and put back into the economy.

The fixed rates and bond market are following COVID. The charts below were as per December 2021. As case numbers soar, the bond market drops which means rates drop or stabilize. The best indicator going forward with rates is to follow COVID and the economic recovery which will be slow.