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.
( 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)
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 email@example.com
Today, right now, we are experiencing all-time record low fixed mortgage rates. Great news if you need a mortgage. And some of you may be thinking of locking into a longer term mortgage. Let’s take a look at that option.
Going longer could be an option for some. The Best 5 yr fixed is around 2.59%.. some special deals exist for larger mortgages or faster closings… but let’s use 2.59% for now. Does it make sense to pay 0.30% more for the first 3 years of your mortgage, just for the benefit of knowing what your rate will be for the last 2 years?
(a 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)
Continue reading “Should you look at 10 year fixed rate mortgages?”
For more than a decade, I’ve been recommending Variable rate mortgages, as the product of choice. My clients have saved $thousands. It’s been a great 11 year run.. But now, the strategy has changed slightly. Read on, to see my newest recommendations..
QUICK VARIABLE RATE HISTORY.
First, you need to understand the history.. Variable rate had lots of pluses. It had a lower rate of interest, the penalty can never go over 3 months interest, and you have the option to lock into a Fixed rate at any time.
Being in a Variable meant paying lower rates. In fact, the difference, compared with Fixed rates, ranged between 1.00% and 3.00%. This translated to several $$thousand in less interest each year. Continue reading “Variable rate is out, Fixed rates are in…. But, which term…?”
Only recently has 5 year fixed rate become a product worth considering when it comes to paying the least amount of interest on your mortgage. Studies prove that short term mortgage funds are the cheapest way to finance a house.. this includes Variable rate mortgages.
Historically, Variable rate and short term fixed rates have had lower rates than long term rates. And yet, the BIG SIX BANKS, the Federal govt, and several popular finance experts have preached 5 yr fixed. ‘You must take 5 year fixed so you know what your rate is.’ That’s a load of nonsense. It’s true, that over the past 2 years, 5 yr fixed did make more sense given that the spread between Variable and Fixed was less than my target of 1.00%. (I like to see a 1.00% spread between Variable and 5 yr fixed before recommending Variable). Continue reading “Choose short term money for long term gains.”