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.
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Is a Variable Rate Mortgage the way to go right now?
Low 5 year variable home loan rates
Some good points about a Variable rate Mortgage
There is no denying that Variable rates are Low. So low in fact that the average Canadian is starting to take a second look at the 5 year Variable rate Mortgage, when before it was all about the 5 year fixed. 1-3 years ago I would rarely have anyone ask me what my opinion on what is better the fixed or the variable, because the majority always went with the fixed. Now everyone keeps asking me, “what you think is the best way to go?’ So here is what I think and I’m not the only one thinking the same thing.
The 5 year variable or even the 4 year variable closed are at prime (2.25%) or slightly under prime. A couple of months ago you were lucky to get prime +. 4(2.65%). Yes you will have the best rate in town for the next 6-12 months and then most of the economists are expecting rates to rise. How fast rates rise and by how much, no one knows for sure and everyone seems to have a different opinion about that subject. Also remember that before all the mess in the U.S variable rate mortgage were prime - .8 - .9%. So prime doesn’t seem like such a deal when you compare it to prime - .8 - .9%
Professor Milevsky (at York University) who wrote a scenario based report on how more people should take a look at the variable option, in 2001, has made some interesting points. His recent comments suggest, now might not be the best time for a variable rate mortgage. Financial Post writer, Garry Marr, says Professor Milevsky is now “leaning somewhat in favour of the five-year closed fixed-rate mortgage.” Marr also writes, “Consumers getting into variable rate products are facing the risk that the discounts they negotiate today will look pretty ugly in a few months.”
With the 5 year fixed rate mortgage you are getting some of the lowest rates ever in History and you are guaranteed it won’t rise during that term. In short my answer is, “either way it is up to you, as you are the one whose name is on the mortgage”. But as well keep in mind that we are in uncertain economic times and my thoughts are to go with the fixed rate mortgage. We have mortgage rates as low as 3.69% currently and the average bank is under 4% on a 5 year fixed mortgage. For those that just can’t make up your mind you can always do Matrix type mortgage that can combine part variable and part fixed. That way if you make the wrong decision you’ll only be half wrong. Or if you look at the glass half full you would half right!! If you have any questions or comments please feel free to contact me.
Variable Mortgage Rates - 5 year Variable 2.25%(prime)
Current variable mortgage rates are very low but how long will they stay low?
Variable Mortgage Rates- 2.25% 5 year variable rate
On July 21, 2009 the Bank of Canada did not change the Over night lending rate which directly affects variable mortgage rates. Current variable mortgage rates are as low as Prime (2.25) right now and not looking on going up. 2 yeas ago and even up to mid 2008 Prime minus mortgage rates were common and now it looks like variable mortgage rates are coming down again. With everybody looking to get the lowest mortgage rates current variable rates are looking very attractive.
