An overall Global Economic slowdown caused by tariffs, and overall political uncertainty has caused the bond market yields to fall. We may not see a recession in 2020 as originally thought, but there is tremendous volatility in play at present.

In July, the jobless rate rose causing the Bank of Canada to come up with a plan to buy Canadian bonds back to create a stabilization to our bond yields. Falling yields are good for fixed mortgage rates. We have recently seen rate sales increase for purchases of homes under $1M and for mortgages coming up for renewal through lenders’ transfer programs. Refinance and rental rates have seen a modest reduction as well.

We are currently in an inverted market where variable rates are higher than the 5 yr fixed rates. If you are in a variable rate mortgage you may wish to explore your rate to convert into a new 5 yr fixed rate, you may end up saving money by locking in. However, it is very important to consider that locking your rate in also exposes you to a higher exit penalty. If you plan on selling to buy a bigger place, or downsizing you may be better off staying in a variable mortgage as your penalty will be be capped at a 3 months interest penalty for a traditional variable mortgage product.