Home loan interest rates or Calgary mortgage rates are trapped in a struggle between strong inflation and the Federal Reserve’s efforts to contain it, which inadvertently raised rates.
By December of 2022, the Federal Reserve had raised its benchmark interest rate seven times. According to the most recent Consumer Price Index (CPI), inflation increased by 6.5% in December, down from a 7% increase in November. Prior to that, the Fed gave notice that it intended to keep raising the federal funds rate through 2023, albeit with smaller increments.
In the upcoming months, experts anticipate that the Fed’s continued monetary policies will continue to exert some upward pressure on Calgary mortgage rates. The bond market, which reacts to the Fed’s moves, has a direct impact on mortgage rates.
According to George Ratiu, head of economic analysis at Realtor.com, “we should expect financial market volatility to continue until investors have more information about the trajectory of the economy.” Since the Fed is determined to maintaining its commitment to monetary tightening until inflation is clearly moving toward 2%, borrowing costs will continue to be high, keeping housing affordability at the top of the list of issues to be resolved this year.
While some real estate experts believe mortgage rates have likely peaked and anticipate more declines before stabilising, they continue to be cautious in light of the year’s extraordinary volatility and ongoing economic uncertainties.
The mortgage market is still in danger since “the Fed vowed to maintain rising the funds rate over the next few months,” according to Ratiu. Before the end of the year, “we may yet see rates rise back beyond 7%.”
Here’s how other experts predict market conditions will affect the 30-year, fixed-rate mortgage in the coming months:
- Compass U.S. region president, Neda Navab: Given recent positive inflation data and a matching decline in the U.S. Treasury yields, which are a key factor in determining mortgage rates, there have been indications that mortgage interest rates may be at or close to their peak. Mortgage rates may reach the 5% area late in the second quarter or in the second half of 2023 if a persistent decline continues, but that is not a given.
- Mortgage Bankers Association (MBA): “Long-term rates have already peaked. We expect that 30-year mortgage rates will end 2023 at 5.2%.”
- National Association of Realtors (NAR) senior economist and director of forecasting, Nadia Evangelou: Mortgage rates may level out below 6% in 2023 if inflation continues to decelerate, which is what we anticipate will happen in 2023. Many buyers like to think that the 3% might return, but we don’t anticipate it to happen.
- Freddie Mac: Forecasts the average 30-year mortgage rate to start at 6.6% in Q1 2023 and end up at 6.2% in Q4 2023.
Is There Still Time To Refinance?
Americans regularly monitor mortgage rates, and if they decline even little, more individuals seek for mortgages. According to MBA data, rates are still significantly higher than they were a year ago, but applications are still hovering around their lowest point in more than 20 years.
While certain refinancing alternatives can result in reduced monthly payments, not all of them also result in lower interest costs overall. For instance, switching from a 5% mortgage with 26 years remaining to a 4% rate with 30 years left on it will result in you paying more than $13,000 in extra interest.
You can use a mortgage refinancing calculator to determine how much you could save before looking around for a lender.
As closing expenses can deplete your funds if you sell your house soon after refinancing, you should also think about how long you intend to stay there. Depending on the lender, refinancing closing expenses range from 2% to 5% of the loan amount. As a result, you should aim to keep your house for a long enough period of time to cover those expenses and benefit from cheaper refinancing rates.
Remember that in addition to your credit score, debt-to-income (DTI) ratio, loan-to-value (LTV) ratio, and evidence of a consistent income, other criteria may affect the rate you qualify for.
Current Calgary Mortgage Rates Trends
The 30-year fixed Calgary mortgage rates average has increased from 3.22% in the beginning of 2022 to 6.56% today.
A 15-year fixed-rate mortgage now costs 5.80% on average, up from 2.43% at the beginning of January 2022.
ARMs may be less expensive than fixed rate mortgages in the current market. 5.44% is the average 5/1 ARM.