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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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.
When should you lock in your Variable Rate?
When to lock in your Variable Rate Mortgages
This seems to be a hot question for those people that already have a variable rate mortgage. When should you lock in? Well that depends on what type of person you are. If you can’t sleep at night because you are worried that variable rates are all of a sudden going to sky rocket then it is time to lock in. Fixed rates are at a historical low and so why not take advantage of them. Everybody seems to be in some competition to get the lowest mortgage rates, which is great but if rates do rise a bit and you miss the boat is that going to devastate you?
For those of you looking to get into variable rates you are jumping in at the latter part of the low rates. Yes they may and probably will go down a bit but they won’t stay down for long. Top economists are expecting that by the end of 2009 to the beginning of 2010 is when the economy will start turning around. I lean towards the beginning of 2010 to the middle of 2010 for the rates to start climbing.
One thing I want to make very clear to everyone in a variable rate mortgage or thinking about a variable rate mortgage is you don’t lock in on the rate that you have you lock in to whatever the best rate that your lending institution is offering! Most of my clients are at a 1.9% interest rate or lower. Prime - 0.6 - 0.8 was common a year and a half ago. With prime at 2.5% most of my clients are paying next to nothing on a rate. This does not mean that they can lock in to that 1.9%; they would have to lock in at whatever the best rate that lending institution is offering for what is left on their term. You can lock in at any time, even the next day, but you have to be aware of what rate you are going to be locking in too.
There are some variable mortgage products that will put a ceiling on how high your rate can go or you can always check out an open variable rate. Feel free to contact me to review your personal situation and I can help you with the pros and cons of each solution.
