Current Mortgage Rates in Cambridge: Key Insights for Buyers

Buying a home is the most significant financial decision you can make. So, understanding current mortgage rates in Cambridge is a key part of that process. 

In Cambridge, Ontario, like in the rest of Canada, mortgage rates vary based on various factors like economic conditions. It includes the Bank of Canada’s decisions and the housing market.

This guide will help you understand the current mortgage rates in Cambridge. Also, you will get some key insights for buyers, making it easier for you to plan your home purchase.

Mortgage Rates in Cambridge

The mortgage rate is the interest rate the lender charges you on that loan. In simple words, it’s the cost of borrowing money.

These rates can either be fixed or variable:

 

• Fixed-rate mortgages have a set interest rate that doesn’t change for the length of the loan term. It is usually 3, 5, or 10 years.
• Variable-rate mortgages vary based on the prime interest rate, meaning your payments could go up or down over time.

What are the Current Mortgage Rates in Cambridge?

As of the latest data (October 2024), the average mortgage rates in Cambridge are:

• Fixed-rate mortgages: Between 5.5% and 6.0% for a 5-year term.
• Variable-rate mortgages: Around 6.2% to 6.7%, depending on your lender and other factors.

These Cambridge mortgage rates are a little higher than they were a year ago. The Bank of Canada raised its policy interest rate several times in 2024 to curb inflation. 

When the central bank increases its rate, lenders also adjust their mortgage rates, making it more expensive to borrow money.

Why Are Mortgage Rates Increasing?

Mortgage rates are influenced by the Bank of Canada’s key interest rate. It is the rate at which banks borrow money. 

In 2024, the Bank of Canada raised its rates to combat inflation, which had been driving up the cost of living.

When inflation is high, people spend more on everyday items like groceries, gas, and utilities, which pushes up prices across the board. 

To control this, the Bank of Canada increases interest rates to encourage people to save more. And borrow less, slowing down spending and, hopefully, reducing inflation.

As a result, higher mortgage rates are now part of the cost of borrowing money. It means that buyers in Cambridge may face higher monthly payments compared to previous years.

How Do Mortgage Rates Impact Buyers?

Higher mortgage rates affect how much home buyers can afford. If mortgage rates are higher, you may qualify for a smaller loan amount than you would if rates were lower. 

For example, if you’re looking at a home priced at $500,000, with a lower interest rate, your monthly mortgage payment would be less. It means you might have more flexibility in your budget.

But with the current rates in Cambridge being relatively high, your monthly mortgage payment will be higher. 

Let’s understand with a simple example

At an interest rate of 5.5% for a $400,000 mortgage over 25 years, your monthly payment might be around $2,430. But if the rate increases to 6.5%, your monthly payment would jump to approximately $2,620.

That’s an extra $190 per month, which adds up to more than $2,200 per year.

What’s the Outlook for Mortgage Rates?

While predicting the future is always tricky, most experts agree that mortgage rates in Canada may remain elevated throughout the rest of 2024. 

The Bank of Canada’s efforts to control inflation are expected to keep rates higher than they’ve been in the past few years.

However, some analysts believe that by 2025, inflation will have cooled, and we may see rates begin to drop slightly. 

For now, buyers in Cambridge should prepare for rates to stay relatively high and plan their home purchases accordingly.

Final Thoughts

Mortgage rates are very important for anyone looking to buy a home in Cambridge.

Right now, rates are higher than they were in the past few years, but knowing how they work can help you make smart choices when buying a home.

By picking the right type of mortgage, getting pre-approved, and exploring all your options, you’ll be better prepared for the 2024 housing market in Cambridge.

When you’re ready to move forward, talk to a mortgage broker or financial advisor. They can help you find the best rates and terms for your needs.