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5 Year Fixed Mortgage Rates

The Rate Game!

Over the last few weeks the rates on five year fixed mortgage have steadily risen as the corresponding bond yields have also increased. This all has to do with recent concerns with inflation or better yet a game of cat and mouse between bond traders and the FOMC ( Federal Reserve’s Federal Open Market Committee) which sets the US federal funds rate. You see the traders believe that the FOMC have the funds rate set too low so as a result they are pushing the yields up higher to see if the FOMC will react.

You may be asking how does this effect you and me here in Canada. Well their actions have increased the yield of our five year bonds and thus drove our fixed rate mortgages higher. Mortgages which as of late were at historic low rates. So … 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

Mortgage Rate changes

#TuesdayVibe

Well after several months of mortgage rates going down, they turned the corner and started going back up yesterday. As fixed mortgages are tied to bond yields, they hit a 10 month high on Monday with the 5 year bond closing at 0.67% forcing lenders to pass the increase on to borrowers.

The bond yields are increasing because there is belief that the US inflation with rise much quicker than initially expected. Thus taking our Government of Canada bonds up with them. While I have no crystal ball, we have been very fortunate lately with our current rock bottom fixed mortgage rates. Nothing stays low forever, so if you have been on the fence about buying a property then now is the time to get pre approved and lock in your mortgage rate in advance of future increases.

While these … 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