US election year… low rates today, but higher rates tomorrow.?

US electionLooking at this pic, aren’t you happy to be living in Canada?    Ok.. back to the article…

September 7th is the sixth of eight scheduled meeting dates for 2016.  The Bank of Canada governor, Stephen Poloz, is expected to leave the rate unchanged.  The Bank of Canada rate affects Bank Prime rates and Variable mortgage rates.  It also affects Fixed mortgage rates, indirectly.stephen poloz

Historically, Canadian mortgage rates have followed the US election year.  As we lead up to an election, rates tend to lower than normal.   And in the months after the election, rates go up.  Not always, but this happens often.

Will this happen in 2017?   Hard to say… however, we’ve seen the US Fed Reserve Chair, Janet Yellen, state that the US rate could go up as soon as Sept 21.

This may or may not happen.   Ms. Yellen has hinted at a looming rate hike for months.   (sort of reminds me of our previous Bank of Canada governor, Mark Carney, making numerous statements of a pending rate hike that didn’t materialize for years).   Be careful, she could be known as “The woman who cried wolf”?

Stay tuned.. the next few months could be a bit of a roller coaster..   And as always, don’t panic.  If you’re not sure, contact an experienced Mortgage Broker for neutral, unbiased advice.

Oh, by the way, did you know we are experiencing the lowest fixed rates in history?  For those that have a mortgage, congrats.  You should be paying less interest than ever before.

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

Tax Free Savings Accounts should be 2nd on your list

There are over 10million TFSA accounts in Canada according to this article in the Financial Post.   Wow, it’s great to see that level of savings….

But hold on…..is this the right strategy for those of us with a mortgage?    Well, if you have a mortgage on your principal residence and the interest is not tax-deductible, then I think it’s NOT the right strategy.

For most of us, the interest on a residential mortgage is not tax deductible (I say for most of us because if you rent out part of the home or use it for your business then you may be able to claim a tax deduction).

Take those after-tax $$dollars and pay your mortgage first before putting them into a TFSA… reduce the amount of non-deductible debt and then focus on a TFSA….   If you own an investment property, then this strategy may vary slightly…. but for most of us, let’s get rid of that mortgage first…

And yeah, for those higher income earners looking to diversify, then sure.. A TFSA makes sense.  But for most Canadians, I would suggest getting rid of the mortgage is a better strategy.

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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