We’ve seen a lot of media coverage about the interest rate hikes coming this summer.. yes, it’s true… The Bank of Canada will raise their overnight rate very soon.. By how much? Maybe 0.75% by the end of the year.. or maybe 1.00% like this these Economists are forecasting as reported in the Globe and Mail.
Think about it.. if you arranged your variable rate mortgage before Oct 2008, then you have been enjoying interest rates below 2.00%… WOW!…I mean come on, are you kidding me? What’s wrong with that…?
So let’s assume rates go up by 1.00% or even 2.00% like some think it will over the next few years… that would still mean your mortgage is below 4.00%…. And the record low for a 5 year fixed mortgage rate is just below 4.00%…
That’s right… even if rates increase by 2.00%, you would still be in historical low rates when compared to a 5 yr fixed rate…..So why is this so bad or going to be such shocker??
And by the way, competition and improved investor confidence is bringing variable rate mortgage pricing closer to normal levels…..the good old days…!
To qualify for a variable rate mortgage you had to qualify at the 3 year fixed rate…posted rate for most lenders…
I hope you are seeing a pattern here…. the New Mortgage Rules coming into effect April 19 will mean you must qualify at the Chartered Bank 5 yr POSTED rate….Banks would love for all their clients to take a 5 yr fixed rate as these are the most profitable product for them…(would you rather pay 1.85% or 3.79%??)
Don’t be in too much of a hurry to get yourself into a higher rate…a fixed rate… you are only buying insurance… and very costly at that…..
For some of us, a fixed rate is worth the peace of mind and is important for us to know what our budget is … Discuss with a mortgage broker…. get the facts…
As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.