This day in History, hard to believe that 15 years have already passed since the 2008 financial crisis in the United States.
On March 16, 2008, Bear Stearns, the 85-year-old investment bank, narrowly avoids bankruptcy by its sale to J.P. Morgan Chase and Co. at the shockingly low price of $2 per share.
The link to the full story to revisit history below but more importantly the impact of news on mortgage rates can be significant, and recent developments have caused a reversal in the upward trend of fixed rates.
The collapse of Silicon Valley Bank in the US has shocked the banking world and created fear of an imminent recession. This fear has resulted in plummeting bond yields, putting significant downward pressure on fixed rates. As a result, we may see the Bank of Canada cut their rates sooner than expected, with the bond market pricing in three 0.25% rate cuts in 2023.
Since the news of SVB’s collapse broke, bond yields have tumbled by more than 20%, indicating that cuts to fixed mortgage rates are coming. The extent of the cuts is uncertain, but it’s possible that they could be significant. The news is great for those looking to buy a new home or renew their mortgage.
It’s unclear if this downward trend in rates is the start of a new trend or a market overreaction to the news. Nonetheless, the news has created optimism for fixed rate cuts in the near future, which is good news for consumers. Even if you’ve already locked in a rate, you’re not obligated to go with that offer. It’s always best to find the lowest mortgage rates on the market.
While the news is promising for mortgage rates, there is still considerable uncertainty moving forward, and inflation remains a concern. However, it’s the most positive news we’ve had for mortgage rates in the past year, and circumstances can always change.
If you would like to talk about how this may affect your mortgage lets chat.
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