CategoryInterest rates

Posted January 16, 2015 Interest rates

So, you think rates are gonna spike up this year? Who says?

Here we go again… The beginning of a new year, and the same annual forecasts for interest rates to go up! Before I share my thoughts.. Here’s some of the recent headlines that I’ve seen….

a report by CBC News sharing 4 ways to prepare.. including selling your home, waiting to buy and locking into a Fixed rate mortgage! (Can you say panic?)
Here’s another from The Globe and Mail telling us it’s “Bad News for Borrowers: The economy could improve this year”. Really? Tell that to the people in Alberta, Newfoundland and Saskatchewan.
And this one from last week says Get ready for Interest Rate Shock in 2015.

Wow, reading this means rates are certain to up this year…right? So let’s see.. we should sell our home, put off buying (yet again) and lock in our Variable rates into Fixed rate mortgages..

Now let’s look at the most recent headlines.. Continue reading “So, you think rates are gonna spike up this year? Who says?”

Posted August 13, 20143 Comments Interest rates

Variable or Fixed? an update on how to choose.

FIXED OR VARIABLE?

The debate over fixed vs variable never seems to end. For the past 5 years, the Federal govt and the BIG SIX BANKS have been doing everything in their power to force us into choosing a 5 year Fixed rate. The govt says it gives us security and protection against the anticipated interest rate hikes. BANKS jumped on this bandwagon because 5 yr fixed is the most profitable mortgage product.. and with fixed rates hovering at 3.00% for the last 3 years, it’s been an easy sell.

On the surface, it’s not bad advice. Fixed rates were supposed to go up. The spread between Fixed and Variable has been less than 1.00% over the last 3 years. My rule of thumb is that Variable rates should be 1.00% lower than 5 yr fixed in order to benefit from the possible rate fluctuations. So naturally, 5 yr fixed was a better choice.

DO YOU TRUST YOUR GOVT AND YOUR BANK? Continue reading “Variable or Fixed? an update on how to choose.”

Posted March 26, 2014 Interest rates

2.99% is back… does that mean we should take it?

5 year fixed @ 2.99% is back. This is NOT a NO FRILLS product (for those of you that saw a similar rate elsewhere earlier this year) but there is tougher qualifying. This seems to have become an annual event. For the past 3 years, we’ve seen 2.99% or less, being offered each Spring. So, why haven’t rates gone up like the Bank’s economists, government analysts and other so-called ‘experts’ had predicted?

There are several reasons but, to sum it all up, the global economies haven’t recovered from the 2008 recession. The US recovery is slower than expected. Canada’s inflation rate is below target levels. There were even concerns we could see deflation, which would cause the Bank of Canada to lower rates… those concerns have gone away…. for now!

WHAT’S THE FORECAST NOW?

Continue reading “2.99% is back… does that mean we should take it?”

Posted March 7, 20146 Comments Interest rates

Stay away from mortgage cashback offers!

It’s the Spring market… ok, the weather isn’t saying this but the real estate market is. You’re gonna start seeing and hearing more ads on TV, radio, news sites, even finance blogs. So here’s a some quick words of advice. STAY AWAY FROM TODAY’S CASH BACK OFFERS!

There are a few different types of mortgage cash back offers. The most common offer is one where the Bank or Lender gives you 5% of the mortgage balance on closing. That’s right they give you 5% back in cash. For example: a $400,000 mortgage would get you back $20,000 in cash.

This type of cash back does serve a purpose. If you are a young home buyer with little or no down payment, but you have a good job and don’t want to wait to save up that down payment, then this isn’t a bad way to get in the market. Just ask those that did this 5 years ago. With real estate values up by around 35% to 50% in that time, this isn’t a bad deal. Continue reading “Stay away from mortgage cashback offers!”

Posted October 2, 20132 Comments Interest rates

Another US Govt shutdown… could mean lower mortgage rates for Canada.

Remember the U.S. Debt ceiling crisis in the summer of 2011? Panic was an understatement. That story dominated headlines for close to 2 months. Stock markets dropped, but mortgage rates dropped, too. In fact, fixed wholesale mortgage rates dropped 0.50% in the months leading up to the Debt Ceiling deadline, from June to August…. And continued to drop another 0.70% into 2012.

Mortgage rates hit all-time lows in the fall of 2011 and just kept right on dropping. We hit our the all-time low in May 2013 before rates jumped almost 1.00% to our present 3.69%. (This is for 5 year fixed mortgages. Variable rates did not budge… Bank Prime rate has changed since Sept 2010…that’s important to remember as I will explain later) Continue reading “Another US Govt shutdown… could mean lower mortgage rates for Canada.”