You might have seen the headline “HSBC crushes mortgage records with 0.99% variable rate”. No doubt about it, this is a great rate. However, it’s not for everybody. It is important to remember, like most deals, there are some restrictions. Among other things this offering is limited to high-ratio mortgages with a downpayment of less than 20 per cent. The reality is a higher interest rate may apply for non-owner-occupied properties, amortizations greater than 25 years and other exceptions to standard lending guidelines.Continue reading “Because not everyone fits into the same box”
Mortgage rate outlook 2017.. Expect Fixed mortgage rates to go up…Expect Variable rate pricing to drop.
Fixed mortgage rates have increased by about 0.40% in the last 6 weeks. Today’s 5 year fixed rates are at around 2.89% and will could continue to go up in 2017. There are political and fundamental reasons why rates have gone up. (oh, by the way.. it’s not panic time.. who ever said that 5 yr fixed rates were the best product to choose anyways? more on this later.)
Govt of Cda bond yields have gone up around 0.55% since October (fixed rates are priced from govt of Cda bond yields). It’s more expensive for Lenders to fund mortgages due to stricter government regulation and higher Capital holding requirements. These increased costs are being passed down to the consumer.
Okay, this is the “how” the rates are higher.. but what’s prompted these fundamentals? Why are rates higher?
POLITICAL REASONS.. IT’S ALL POLITICS Continue reading “Mortgage rate outlook 2017.. Expect Fixed mortgage rates to go up…Expect Variable rate pricing to drop.”
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 firstname.lastname@example.org
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)
Here’s a warning to all…. Watch out for the BANKS to increase their Variable rate mortgage pricing. History tells us that when the Bank of Canada lowers their Target Rate, and the Bank Prime falls, Variable rate mortgage pricing increases.
If you have a mortgage coming due in the next 4 months, speak with a mortgage broker to get you a rate hold immediately!
Today, you can get Prime less 0.65% on a Variable rate mortgage. That’s 2.85% – 0.60% = 2.20%. THIS PRICE COULD DISAPPEAR! 2.20% is a great rate! No one would argue that. The BANKS are counting on you to be content with that 2.20% rate. On March 4th, the Bank of Canada meets again to set the Target Rate. And all indications point to another 0.25% reduction. Continue reading “Will Variable rates increase as Bank Prime drops?”