Tag5 year fixed rate

Posted May 14, 20151 Comment Interest rates

Bond Yields are up… will Fixed Mortgage rates follow?

Fixed mortgage rates are tied closely to the Govt of Cda bond yields. And bond yields are up… Since mid April, the 5 yr Gov of Cda bond yield has gone from 0.75% to 1.07%. That’s a 0.32% jump. Normally, we would see fixed mortgage rates go up.

So far, no increase. But that’s probably more to do with a competitive Spring housing market. This is when most house sales and mortgage transactions take place. The Banks need to maintain certain market share levels in order to keep shareholders happy. They are willing to sacrifice a little profit margin (and I do mean little… they seem to make up for this with higher service fees as was recently reported, but let’s not get into that now…).

If the bond yields continue to increase, we will see fixed mortgage rates rise. That’s an automatic. The real question is how long will the bond yields continue their climb? It will be interesting to watch the next few months. We can expect to see some rate increases as the Spring market ends and Banks look to increase their profit…. A pattern that repeats itself year after year.. but here’s what you can do to protect yourself… Continue reading “Bond Yields are up… will Fixed Mortgage rates follow?”

Posted February 28, 2015 Mortgage News

Mortgage Rates hit Record lows again!

This isn’t 2010, 11, 12, 13 or even 2014… It’s 2015, and once again, we are making this announcement. 5 year Fixed Mortgage rates are an new all-time lows! Today, you can get a 5 yr fixed rate for 2.79%, even 2.74%, with some conditions. (and by the way, yes, I am seeing slightly lower rates advertised, and I have access to these, but I won’t recommend these to my clients as they contain inferior terms, limited privileges, product restrictions and inflated prepayment penalty calculations… I won’t promote these.)

Just 2 years ago, the Federal Minister of Finance’s office picked up the phone, and called a Bank because they were advertising a 5 yr fixed rate at 2.99%. The federal govt was concerned that the record low rate, at the time, would promote more consumer spending and make the already hot real estate market, even hotter. Continue reading “Mortgage Rates hit Record lows again!”

Posted November 11, 20131 Comment Mortgage News

Long term is almost always more expensive.

Ever wanted to change cell phone providers? How about internet providers? Move your investments or rrsps? Cancel that hydro or gas contract because you moved?

And how about mortgages? When interest rates started heading down about 4 years ago, thousand of borrowers in fixed rate mortgages wanted to get out of their higher rates and start benefiting from the record low interest rates.

But borrowers were shocked to hear of unbelievably high early prepayment penalties… Penalties of $15,000, $20,000, $30,000. One recent situation had CIBC charging a $33,000 penalty on a $500,000 mortgage. I’ve seen dozens and dozens of situations like this. Almost all of these high penalties were from one of the BIG SIX BANKS… Continue reading “Long term is almost always more expensive.”

Posted August 19, 2013 Interest rates

5 year Fixed rates are going up.. time to consider Variable rate.

The 5 yr Gov of Cda bond yields hit a 2 yr high on Friday reaching just over 2.00%. That’s up around 0.35% since mid July and up around 0.75% since May. The increase started in May when the U.S. Federal Bank Chair, Ben Bernanke, made some comments about possible easing of the Fed’s stimulus program beginning as early as September.

Fixed mortgage rates are closely tied to the Gov of Cda bond yield. When the yield goes up, mortgage rates are sure to follow. With 5 yr fixed rates expected to rise, it makes for an interesting mortgage market. Which product and term is best to choose today? The answer is different for everyone. We all have different needs, goals and risk tolerances. Continue reading “5 year Fixed rates are going up.. time to consider Variable rate.”

Posted July 16, 2013 Case study

Looking back 5 years.. which mortgage product did your Banker recommend in 2008?

Remember 2008? It was almost 5 years ago that the U.S. sub-prime mortgage scandal erupted. October 2008, to be exact. That’s almost 5 years ago… And with October and November 2013 renewals being less than 120 days away, we can now lock in some rates for those upcoming renewals. So I thought this would be a great time to see what sort of advice and recommendations the Banks were giving to their mortgage customers.

THE BANK’S ADVICE

The funny thing is, Banks have never changed their advice or strategy. ‘Take a 5 year fixed rate’. That’s all the Banks seem to want to promote. And with good reason… it’s the most profitable product FOR THE BANKS. But historically, it’s NOT the best product to take. There is no historical data that I am aware of that shows taking a 5 year fixed is the best strategy. But I’ll get into that in more detail later. Continue reading “Looking back 5 years.. which mortgage product did your Banker recommend in 2008?”