What can we expect from COVID-19 and mortgage rates in 2022?

At Slokker Homes, we’re fortunate to have a mortgage professional on staff. Here, our very own Tanya Miedema sheds light on what we can expect in mortgages in 2022.

COVID-19 and high inflation will both impact mortgage rates in 2022 – each nudging the Bank of Canada in opposite directions, Mortgage and New Home Specialist Tanya Miedema says.

“Normally high inflation prompts the Bank of Canada to increase mortgage rates,” Tanya says. “But with COVID-19 still affecting all aspects of our daily lives, we are unlikely to see much movement in the short term.”

WITH SO MUCH UNCERTAINTY, HERE’S 4 TIPS TO SECURE THE BEST MORTGAGE RATE IN 2022

1. STAY UP-TO-DATE ON NEWS ABOUT COVID

The new Omicron variant, which was identified in early December, looks set to play a significant role worldwide in 2022. This threat (and ensuing instability) will encourage the Bank of Canada to keep mortgage rates low through to at least mid 2022, Tanya predicts.

As long as COVID-19 persists — and obviously there’s uncertainty around how long the pandemic will last — COVID-19 will continue to influence mortgage rates.

“Really, the only reason rates are at a record low, and have been for two years, is because of COVID-19,” she says.

For rates to go up, the pandemic needs to be significantly in retreat.

The economy needs to be functioning as it did before we’d ever heard the word Covid, and employment rates need to be at pre-Covid levels.

“I predict we will need to see a level of normality return to daily life before interest rates rise.” Watch for this and keep up with the latest news.

In its final scheduled announcement this year on benchmark policy rate, the Bank of Canada said it would keep the rate steady at 0.25 per cent, restating its forecast that rate increases are likely to begin some time in the middle of 2022.

2. KEEP AN EYE ON NEWS ABOUT INFLATION

That said, inflation is surging. It is now at its highest rate since 2003. “Inflation remains a significant concern,” Tanya says. “If inflation escalates and surpasses the Bank’s current projections, the Bank may feel compelled to increase interest rates, even as the pandemic drags on.”

At that point we’d likely be seeing a lot of positive news about Canada’s continued economic recovery. “This is the kind of thing you should watch for,” she said.

The future of mortgage rates in 2022 will depend on how these factors — COVID-19 and inflation — unfold.

Banks often raise their standard rates before the Bank of Canada modifies its official rate — often in the lead-up to a Bank of Canada meeting.

The banks may anticipate the Bank of Canada’s decision because they believe the benchmark policy rate is set to rise.

With timing both tight and crucial to obtaining the best mortgage, it pays to stay informed and prepared.

3. STAY IN TOUCH WITH YOUR MORTGAGE ADVISOR AND ORGANIZE YOUR PAPERWORK

Develop a relationship with an experienced and informed mortgage advisor and stay in touch. Let your mortgage advisor know what you want and need.

Get all the documents you need in advance and fill out the required paperwork. Have everything ready to go.

Your mortgage specialist can then act proactively on your behalf, keeping you informed.

You’ll know when you need to act and how quickly  — for example, to secure a rate hold before rates rise.

When bond yields are up, banks often advise mortgage specialists that fixed mortgage rates are likely to change imminently. Advisors in turn can (and do) alert their clients.

4. WHEN IT’S TIME TO ACT… ACT

Tanya says disorganization and hesitation can cost you thousands when it comes to a new mortgage, so act quickly when your broker calls.

Keep your eye on the prize. Remember what it is you want for your future and why you’re putting in the effort.

“Sometimes your mortgage broker is expecting a rate change within hours,” Tanya says. “So if you get the call to sign a document, do it straight away.”

And then?

Then you’re back to the age-old ‘fixed-versus-variable’ mortgage debate, which is admittedly easier to navigate. This decision is more a matter of personal preference. And both options have their advantages.

If you have any questions regarding your mortgage in 2022, reach out to:

Tanya Miedema
Axiom Mortgage
(403) 519-5491

or

Faiz Khaku
True Mortgage
(403) 615-4343