BMO Mortgage Rates
BMO Mortgage Rates
Bank of Montreal sent out a detailed report on their take on the very debated topic of which is better, fixed or variable rates. They started the discussion with this statement “Fixed or variable decision much closer to call, While variable-rate mortgages continue to beat out fixed-rates when it comes to cost savings, the gap between the two is likely to become closer due to the economic environment.’ BMO is taking the stance that a variable rate mortgage over a 5 year term will save you more money than going with a 5 year fixed generally. BMO economists Douglas Porter and Benjamin Reitszes state,
Variable rate products have proven the better option 82 per cent of the time since 1975, Porter and Reitzes wrote, and forecast that variables will continue to remain cheaper than fixed rate mortgages.
On the other side, they these same two BMO economists argued the economic recovery - and the expected rise in interest rates next year - has potentially caused “one of those rare periods when a fixed rate turns out to be the superior choice.” It also pointed out that negotiated rates (as opposed to posted rates) make fixed and variable products closer to call.
The graph that they are using to determine that Variable rate has outperformed the fixed rates 82% of the time, is below.
Variable and Fixed Mortgage Rates graph
One of the problems with this graph is that very few Canadians pay posted rates on fixed mortgages. This was an argument made by a mortgage website Canadamortgagetrends.com. They did a different a graph that better represents fixed vs variable rates.
lowest mortgage rates over the the last 25 years
This graph is based off of posted – 1.5%. With these numbers there were at least six periods in recent history when fixed rates beat variable rates at prime. One thing we have to keep in mind is that when prime rates go higher generally we can get prime – products which would again change the graphs completely.
Maybe this new Bank of Montreal report has something to do about them not being extremely competitive with their fixed rates. Below is BMO current mortgage rates a
| Type |
Term |
Annual Percentage |
| Fixed Rate | 6 month (convertible) |
4.650% |
| Fixed Rate | 6 month (open) |
6.450% |
| Fixed Rate | 1 year (closed) |
3.700% |
| Fixed Rate | 1 year (open) |
6.800% |
| Fixed Rate | 2 year (closed) |
3.950% |
| Fixed Rate | 3 year (closed) |
4.450% |
| Fixed Rate | 4 year (closed) |
5.290% |
| Fixed Rate | 5 year (closed) |
5.780% |
| Fixed Rate | 6 year (closed) |
5.780% |
| Fixed Rate | 7 year (closed) |
6.800% |
| Fixed Rate | 10 year(closed) |
6.950% |
| Fixed Rate | 18 year (open) |
8.950% |
| Variable Rate | 3 year (open)* |
3.050% |
| Variable Rate | 5 year (closed)* |
2.250% |
If you had good credit and a very good relationship with your BMO Mortgage specialists they could probably offer you closer to the 4.50% on a 5 year fixed and similar discounts on all the other fixed rates. My current rates are
Best alberta mortgage rates
As you can see, on the fixed rates BMO current mortgage rates are nowhere close to being competitive but on the variable rates they are the same if not very close. Maybe this is one reason they are encouraging people that variable is the way to go? Either way my advice stays the same on the debate on which is better, fixed or variable. It all depends on you. No one can argue that best mortgage rates are at an all time low for both the fixed and the variable. If you are looking for piece of mind that your payments will never increase during the term then fixed is the way to go. If you want to get today’s lowest interest rate, even if that means having a higher rate any time during your term then variable is probably going to work the best. Either way it is up to you….
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Calgary Real-estate update
New stats on your Calgary mortgages and Calgary Real-estate
Calgary Real-estate update
Great news Calgary!! For the sixth consecutive month, MLS residential sales in Calgary have increased from year-ago levels in both the single-family home and condominium markets. This is just one indicator that the market seems to be rebounding.
The strength of the market can also be seen in average house prices. Today, single-family homes, for example, are selling in the neighbourhood of $50,000 more than they were in January.
According to many local Calgary real-estate websites, there were 1,015 single-family home sales for an average price of $465,125 and 460 condo sales for an average of $284,511, month-to-date until Oct. 25. In October 2008, the Calgary Real Estate Board reported 820 single-family home sales with an average price of $449,100 and 399 condo sales for an average of $289,148. As you can tell the average house price has increased but due to more condo’s on the market the average condo sale has decreased slightly.
Here are some of the reasons why people seem to still be buying and Calgary mortgages continue to be in high demand:
- Record Low Calgary Mortgage Rates
- High employment rate
- Low Calgary house prices
- and I feel the most important of all is consumer confidence
There are still those that have fallen on hard times but it seems with the above mentioned indicators the majority of Albertan’s, especially Calgarians seem to be doing just fine.
Newest update for Variable Rate Mortgage Fans
So if you are still trying to decide between fixed and Variable rate mortgages here is a positive for those leaning towards the variable rate mortgages. The Bank of Canada today announced that it’s overnight lending rate is staying the same. What that means is that Prime is still at 2.25%. They say the following reasons are why they have not raised rates:
- “Heightened volatility and persistent strength in the Canadian dollar are working to slow growth and subdue inflation pressures.”
Many economists with re looking at their early statements of supporting Bank of Canada’s statement of them not increasing rates until the second quarter of 2010 because of these reasons:
- “Stronger business and consumer confidence”
- “Increase in household wealth”
- “Higher Commodity prices”
Personally I have seen a huge increase in consumer confidence not only in Real-estate but also people investing in paper assets again. Although many people have noticed a huge increase in spending here are some comments the Bank of Canada is making on inflation and economic growth. “Growth is expected to be slightly higher in the second half of this year than previously projected but to average slightly lower over the balance of the projection period. The Canadian economy is projected to grow by 3.0 per cent in 2010 and 3.3 per cent in 2011, after contracting by 2.4 per cent this year. This is a somewhat more modest recovery in Canada than the average of previous economic cycles.”
All in all I feel that Prime’s days of not increasing are numbered. Australia, the first of 20 countries, has already raised their central bank rates. Could Canada be number two? Whatever report you read the ending point is always the same, you as the consumer have to make the best choice for you. Can you afford your mortgage if rates do jump up? Are you going to watch carefully enough to be able to lock in your rates if they jump up higher than what is comfortable for you? If you feel you can ride it out then Variable is a great choice. If you will lose sleep over it then getting the best fixed mortgage rate is my suggestion for you.
