Navigating Mortgage Rate Uncertainty: Strategies for Homebuyers Facing Higher Interest Rates
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Strategies to hedge interest rate risk for mortgage borrowers in 2024 include multiple rate holds, going variable rate, choosing short-term fixed rates, or using a hybrid mortgage.
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Uncertainty remains around when and how much the Bank of Canada will cut rates, affecting variable rates, and how bond yields will move, impacting fixed rates.
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Getting multiple rate holds from lenders guarantees fixed rates for set periods and allows taking advantage if rates fall before closing.
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Opting for variable rate mortgages provides ability to benefit from falling rates but has risks if rates rise further.
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Hybrid mortgages split loans into part variable, part fixed rate portions to limit rate risk but allow some upside if rates decline.