New record low fixed rates… how low can they go?

record low rates5 yr fixed rates just got better.  With last weeks U.S. Fed chair, Janet Yellen, saying these low rates are the ‘new normal’, the markets reacted.

Bond yields are down and that has moved fixed rates lower.   The best full featured, no handcuffs 5 yr fixed rate is 2.49% (yes, some fast closing specials exist but 2.49% is the best today).  (oh, by the way, Yellen wasn’t the first govt rep to say this.  Our own Senior Deputy Governor for the Bank of Canada, Carolyn Wilkins, said this 2 yrs ago.. Go Canada!)

Hard to believe they keep going lower.  Does that mean we should jump into a 5 yr fixed?  For some, yes. But for many of us, no.    For over a decade, I’ve recommended Variable rate or a short term priced products.   History has proven that short term priced products result in lower cost to the borrower.

However, there is something to be said for peace of mind.  Many of us want to set it and forget it.   For those that can’t sleep at night or for those that are borrowing to invest, then perhaps, 5 yr fixed makes sense.

If you really want to know what’s best for you and your situation, you must speak with an unbiased mortgage professional.   A Mortgage Broker doesn’t work for any one Bank.  They work for you.  They will give you unbiased, neutral advice and they can offer hundreds of different products.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Short term fixed products are still in…

SHORT TERM RATES ARE STILL IN

A few months ago, I said Variable was out, Fixed rates were in.   I recommended going with a short-term fixed rate products.  The reasons are simple:

  • You can get the same or better in a 2 and 3 yr fixed rate term.  That eliminates the Variable rate for me.
  • 2 yr is 2.19% and 3 yr is 2.29%.
  • Variable is 2.30% today.  Why choose a fluctuating rate when you can get a guaranteed better rate for the next few years?
  • I also don’t like the current Variable rate pricing that’s out there.
  • Prime less 0.40% isn’t good enough.. I like to see Prime less 0.50% or better.

Historically, we’ve always done better by choosing short-term rates.  And that’s what Variable rates are…A mortgage product priced from short-term funds.  The only difference today, is that it makes more sense to lock into 2 or 3 yr fixed term vs choosing a Variable rate.

WARNING

( you’ll see lower rates advertised.. but be careful.  There are so many NO FRILLS products or products that carry inflated penalty calculations, limited repayment options and other hidden fees.. stay away from those)

MORTGAGE TIP

Hey, want to know which Mortgage Advisor to use?  Check out their historical recommendations and forecasts.  That should tell you all you need to know about that advisor.   And if you can’t readily find those historical forecasts, then walk away and look elsewhere.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

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