When financial institutions have all published their rates in 2008 and 2009, everybody known they would be at an historical low rate! For example, one can find a fixed closed mortgage rate for one year at only 3.90%.
With those cuts in interest rates, there is nothing comparable since 1980.
If you look to 5 years term for closed fixed rates, you will see a historic low of 5.25% in different banks and financial institutions. We just have to look to history to see what changes happens. With data dating back to 1975, at that time mortgage rates were at a different level.
An example? In 1981, rates had reached a peak of 21.75% for a 5 years term closed fixed home mortgage! And remember that all rates figures are posted by banks. In other words, according to the risk profile of the borrower, these rates may vary.
According to economists, other mortgage rate cuts are still possible, but we do not have to expect much better, because rates are already incredibly low!
But banks cannot indefinitely reduce their rates because they have to be able to make a profit on the mortgages they borrow. In order to make profit, they must borrow at higher rates than they borrow.
And their borrowing cost is almost at its lowest with the decision of Central Banks in the world to lower their policy rate close to zero: it is almost impossible to reduce those rates.
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