Fixed mortgage rates are going up – Warren Buffett said it’s a good time to get a mortgage!

Over the last few days we’ve got more than 5 different banks increased their fixed mortgage offerings. If trend to continue we will kiss “goodbye” to below 2% rates very soon.

We’ve already seen rate rises by 0.10-0.30%, depending on the bank and term. Moreover, the 5-year Canada Mortgage Bond, which affects fixed rates at some of Canada’s most competitive lenders, rose by 0.30% yesterday compared to February 1. That’s why further increases are expected.

People remember the central bank’s forecast of no rate hikes until 2023 and stick to it fully, which is probably not the best idea. The deal is that the Bank of Canada’s key lending rate affects variable mortgage rate directly and doesn’t have the same influence on fixed mortgage rates. The latter are affected by the bond market and by what it expects from the BoC and the national economy.

On Monday, bond yields kept growing because of several factors: commodity prices reached the highest level in more than 7 years, the US House Budget Committee approved one more massive stimulus relief package, COVID-19 deaths keep going down, the media talks about a new roaring twenties or post-pandemic economic boom.

It’s not what inflation hawks who reduce government bonds want to hear. (When selling decreases bond prices, interest rates go up.)

When a billionaire investor gives you a free piece of advice, it’s usually worth considering.

And, of course, 90-year-old Berkshire Hathaway CEO Warren Buffett is one of them. He says it’s a good time to take on debt today with the current extremely low interest rates. He noted: “It’s a great time to borrow money, but not to lend money. However, it’s good for the economy that it’s a great time to borrow money.”

His words may be true in case record-low borrowing costs are supporting our fragile economy, and interest rates may remain low for a long time.

In fact, his own company followed his advice last year, taking on over $1.8 billion in debt in a form of bonds (0.67-2.00%). With almost zero rates, no one can say it was a bad decision for a financially stable investor.

If you are financially and mentally ready to own a real estate – now is the perfect time to buy and get historically low mortgage interest rate. If you are on the market or your existing mortgage is coming up for renewal – reserve your rate asap.