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CategoryMortgage Trends

Posted 2 Comments on Here come the calls to lock into a Fixed Rate Mortgage News

Here come the calls to lock into a Fixed Rate

Last week we saw the Bank of Canada raise the Key Rate by 0.25% and the Banks quickly raised Bank Prime lending rate to 2.75%.  For those in a Variable rate mortgage, the question of whether to lock into a fixed rate is coming up again.

No surprise, the media has started the fear mongering and the so-called ‘Experts’ are suggesting that it’s time to lock into fixed rates, once again….  This article came out today and I’m not surprised that these ‘Experts’ have quickly jumped on the band wagon with talk of ‘rates hikes’ and ‘higher housing costs’ to get their name in lights…  click here and judge for yourself.

The real question is ‘how much does the Bank of Canada need to raise the Key Rate to control inflation and economic growth?’   And earlier this year, we reported on Ben Tal’s, Senior Economist with CIBC, forecast that the Bank Prime only needs to increase by no more than 3.00%….and that this is the most it should increase… but it will take around 2 years or longer to get there… if they get there at all….   click here for the full report.

So why would anyone lock into a mortgage at over 4.00% today, when they could enjoy rates of just over 2.00% and slowly see their rates rise?   If you know that answer, please share with me…

We all have different needs and there isn’t a ‘one size fits all mortgage’…  seek professional, unbiased advice…get a strategy in place…. monitor the market and stay informed and you’ll always make the right decision.

Posted Consumer Debt

Bank of Canada rate up by 0.25% and personal debt levels down.

BANK OF CANADA RATE UP

July 20th, 2010….an interesting day.  This was the 5th of 8 scheduled Key Interest Rate announcements… No real surprises… the Key rate went up by 0.25%…. the second increase this year…

The new Bank Prime rate is now 2.75%.    Variable rate borrowers will see a 0.25% increase in their mortgage rate… but don’t feel too bad… your mortgage is probably just over 2.00%….. that’s much lower than even the lowest 5 year fixed rate mortgage of 3.69% which was being offered mid last year….and recent reports are calling for a very slow and gradual interest rate hike…click here for the latest.

PERSONAL DEBT LEVEL DOWN

Remember the reports about the high personal debt levels that Canadians had?  We were spending like fools… according to many “Experts”… And bank on May 13, I questioned these reports….

Now we are seeing that Canadian Personal Debt levels are down….Come on… we didn’t change overnight.. we  have just been taking advantage of these record low rates to invest or spend wisely…and what’s wrong with that?..  see the latest stats…


Posted Interest rates

Historical Interest Rate charts

One of our Lenders, Firstline, sends out a monthly update on Interest rates  .. click here FLM-Historical- Rate-Sheets-May 2010 .  The Charts go back 25 years… some very interesting patterns…  Overwhelming data that shows Variable rate or short-term mortgages really do outperform Longer term fixed rate products…

Another benefit is a fixed or reduced mortgage prepayment penalty…. (anyone with a longer term fixed rate could face enormous penalties of 6, 7, 10 or even 12 months worth of interest)…. Variable rate or short mortgages usually have penalties of 3 months interest or less.

Not sure where you fit in?   Call me anytime with your questions or comments.

Posted Mortgage News

Are you one of these people?

Was reading this survey about First Time Home Buyers that TD Canada Trust did recently...

Thought the most interesting stat was that 3/4 of the people surveyed were opting for a Fixed Rate mortgage.   And in the same paragraph, the TD rep acknowledged that Variable Rate mortgages performed better… Does any of this sound familiar?

Here’s some more good news.. well, actually it’s bad news for the Stock Market and investor confidence but it’s good news for interest rates… The 5 year Canada Bond has dropped significantly…  We were at 2.33% at one point today… meaning 5 year fixed mortgage rates should really be hovering around 3.80%… but instead we are seeing best rates at around 4.29%…   WHY?  Pure profit taking by the Banks…

But don’t fret…this uncertainty means there is less chance for rates to increase and less chance they will increase significantly…. And for those in a Variable rate, rates of 3.80% and 4.29% are still too high….  Variable rate mortgage clients are enjoying 2.00% or better…   Enjoy the summer!

Posted 1 Comment on Rates hikes may be stalled Mortgage Rates

Rates hikes may be stalled

Bad news is good news for borrowers…  problems some European economies and other parts of the world could stall the much talked about and anticipated rates hikes..

Bank of Canada Governor, Mark Carney, said the timing of future interest rate hikes is not ‘pre-ordained’.

This just goes to show that even the best Economists don’t have a magic crystal ball….    Fixed rates are still very low, and Variable rates are even lower… 5 year fixed rates are hovering at around 4.39% and Variable rates are at around 1.90%…

This all adds up to good news for borrowers…  Enjoy the low rates!