Quoting rates isn’t straightforward anymore. Your final rate is based on your credit score, purchase price or home value (homes over $1 million purchased after Oct 17, 2016 have higher rates), the loan to value (mortgages under 65% LTV and above 80% LTV get best rates), location, job type and income confirmation documents.
That’s right… ALL these factors will determine your interest rate!
Today, there’s a great variable rate available at Prime minus 1.09%. That translates to 2.39%. This is a real rate… it’s not a bait-and-switch ad like so many rate-comparison sites are quoting these days.
Continue reading “Prime minus 1.09%… Yes, this is a record-low Variable Rate!”
Next Wednesday will be the first Bank of Canada meeting date to set the Target rate, which directly affects Bank Prime rate and Variable rate mortgages. It’s almost a certainty that the Bank of Canada Governor, Stephen Poloz, will raise the rates.
POSITIVE DATA MEANS HIGHER RATES
There’s been too much positive economic data lately. Low unemployment levels (5.7%, the lowest since the ’70s), higher spending by consumers, slightly higher inflation (2.1%), record level stock market. We’ve also seen some comments and posturing by the Bank of Canada Govr that suggests we should expect a 0.25% increase.
Bond yields have also been moving steadily upward. Yup, we should expect a rate hike. And depending on how the market reacts to this, we could possibly see another rate hike at the next Bank of Canada meeting on March 7th.
BUT WAIT, IS THIS THE END OF MORTGAGE RATES IN THE 3.00%’s?
Continue reading “Rates are going up… for now… is this the end of low rates?”
Fixed mortgage rates are tied into Govt of Cda bond yields. As the yields go done, so does the fixed mortgage rates.. well, usually.. more on that later..These bond yields have hit all-time lows in the past week… Yesterday, they were as low as 0.55%... To put that into perspective, the 5 yr bond yield is lower than the Bank or Canada overnight rate, which now stands at 0.75%. Another historical event. That almost never happens.
Check out these 2 historical charts to compare the Bank of Canada rate from 1935 to Dec 2014 and 5 year Govt of Cda bond yield from 1980 to Dec 2014….
If you’re wondering what this means for you, a Canadian consumer, it means mortgage rates should go even lower. Institutional investors are pricing in a further Bank of Canada rate cut at their next schedule meeting on March 4th, 2015. Continue reading “Record low Bond yields means even lower fixed mortgage rates”
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.”
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.”