Refinance Mortgage Rates Mississauga

With the Monetary policy for July 2017 almost at hand, there’s speculation as to what’ll be its impact on refinance mortgage rates. Before we discuss the effect of current central bank interest rates, let’s discuss the general repercussions of changes monetary policy on mortgage market.

Mortgage Division, the leading Mortgage Lenders in Mississauga, have just released a revised list of current refinance rates. Their mortgage market experts are of the opinion that there is a two way relation between mortgage industry and central bank.

The point here is that mortgage business is bigger than ever and policies are formulated by Bank of Canada taking into consideration the same. Real estate mortgage business is important as it contributes a large share to economic growth. Not everyone can invest in equity or mutual funds but everyone wants to own a dream home. Mortgage markets have led to risk diversification and hence enabled a stable economic growth. Mortgage markets are where most savings are channelized and thus, it keeps the money circulation going more efficiently.

Impact of Monetary Policy

Dependence on central bank interest rates has sort of financially integrated the entire mortgage market.

If we seek to understand the relationship between interest rates determined in monetary policy and mortgage market, we must understand a simple concept of overnight rates. The variable rates are set by lenders according to the prime rates which are in accordance with the overnight rates set by Bank of Canada. An increase in overnight rate will ultimately increase prime rate and thus, variable rates will increase.

This will curb the borrowing power of people in general. Also, the lending power of banks is affected. This leads to a fall in demand as the property rates increase.

On the contrary, if overnight rates are decreased, prime rates are decreased and borrowing is promoted. Lending power of banks increase and there is a rise in demand. 

But there’s no need to be panic as central bank adjust their interest rates in line with the market interest rates development. People who’ve opted for fixed rate mortgage have nothing to worry about at all.

There is another effect on mortgage market of monetary policy. It’s a great way to increase competition between lending institutions and banks which ultimately benefits borrowers.

Should Homeowners be Worried?

Not at all. Monetary policy is a part of a larger picture that acts as a mean to stabilize economy. It controls the inflation-deflation cycle and helps to maintain a demand-supply balance. This in turn determines the exchange rate of currency. Moreover, it cannot oscillate too far from the center in negative or positive direction. Any increase or decrease is of a minor fraction and can be absorbed by the financial market efficiently.

Check out the refinance rates offered by Mortgage Division, the lowest ever in Mississauga. Irrespective of highs or lows in central bank rates, they offer the best and lowest mortgage rates in town.