Tag Archive for: fixed vs variable

Predictions

Predictions

After reading the Bank of Canada’s press release after it’s last rate announcement on April 13th, it is quite clear that they believe that we will be in a higher inflationary zone till almost 2024. What this means is that we have definitely not see the last of the Bank of Canada rate hikes. Our CPI numbers were released after the BOC met and blew away their prediction of a 6% rate when we hit 6.7%.

Some in my field are even saying that the BOC’s target for the prime rate will hit 5.20% before things start to settle down. Just so you don’t have to do the math that is a full 200 basis points or 2% higher that we are right now. By reaching those rates it will also take us closer to parity with the 5 year … Read more

Do The Math

Do the Math

There is a lot of talk about the Bank of Canada changing overnight lending rate at it’s next meeting. So some ill informed homeowners are rushing to lock in their mortgage rates to avoid any rate hikes. That is entirely understandable if you are risk adverse, however if you haven’t already I think there is a few things you should know.

Ok so to make sure that you are informed, we need to do some math. I just looked at the our current rates, and for AAA credit clients who required an insured mortgage the variable rates are averaging at prime ( 2.45) less 1.10%, so that means they start at 1.35% and the fixed rates for insured mortgages average 2.89%. If you haven’t done the math that is 1.54% in the difference. For uninsured clients the rates are slightly … Read more

Average Mortgage Lifespan

38 Months in

Doesn’t mean anything to you? Well it should if you are planning on signing a 5 year fixed mortgage rate in the near future. 38 months is the average when people break their five year fixed mortgages. They could be broken for any number of reasons, marriage, divorce, job loss, job transfer or big promotion. The point is that I want to make the experience of you breaking your mortgage ( if you choose to do so) as painless as possible.

So there are a few things you need to know and I will then explain them a little bit further. Interest rate differential, posted rates, discounted rates and three months interest.

The penalty to break a five year fixed mortgage is either 3 months of interest or interest rate differential, which ever is greater. The formula to calculate out … Read more

Fixed or Variable Rate Mortgage?

“Wow”! You say to your wife as you hit the bakes on the car. “Did you see the mortage rates those guys are advertising”? Your worries are over you’re thinking. Just lock in a rate like that for the next 10 years and you’ve got it made!

 

Not so fast. That rate may not be the one for you. Typically, the lowest available rate – and the one that makes the rate sign look great from the street – will be for a variable or adjustable rate mortgage. That rate has the potential to be like a roller coaster. The posted variable or adjustable rate is the rate that you’re getting today. Unless you have an economic ouija board, you will not be able to predict what kind of ups and downs are ahead of you.

 

Let’s take a closer … Read more