Good Afternoon Everybody!
Hope you are all enjoying the lovely fall weather.
Current mortgage rates are still at an all time low with 5 year fixed averaging 3.59% and variable at 2.60%.
Fixed rates: We did experience a slight increase over the past two months. 5 year fixed went from a low of 2.89% to 3.79%. This was down to a sell off in the bond market. This increase has flattened out. Rates did decrease last week with some lenders. What is important to remember here is that fixed rates will move with the bond market and therefore you will see fluctuations throughout the year. Last increase was down to some positive news from the US regarding there economy. We as a Country and strongly linked to the US so any news good or bad there will have an effect here in Canada. Overall the trend for fixed rates is still flat and we do not expect any increase in the near future.
Prime or variable mortgage rates: The prime rate has being sitting at 3.00% for past two years. This is the bank lending rate which is controlled by the Bank of Canada. Current discount is averaging -.40% making variable rate at 2.60%. The prime/variable rate is strongly linked to our economy and will only move when the Bank of Canada say so. Again with our reliance on the US and the rest of the world the Bank of Canada can not really do anything until economic forecasts improve elsewhere. There has being allot or predictions on when a increase is expected in the prime/variable rate. The US predicted late 2014 or early 2015. Scotia bank last week predicted not until early 2016.
10 year fixed rate: The 10 year rate is currently at 4.29%. This may seem high when you look at the current variable at 2.60% or a 5 year fixed at 3.59%. If you however look at mortgage rates over the past 10 years you will see that a rate of 4.29% does present a prudent long term plan strategy. If rates are to go up over 5% (were as high at 6% in 2009) over the next 5 years then a current rate of 4.29% over 10 years will put you in a better position over the 10 year term then a 5 year fixed term today
Conclusion: We are still in a very low rate environment. Depending on your risk profile all three options above are amazing. I do personally think the variable mortgage will give you more opportunity over the long run however the 10 year fixed can be a solid play for borrowers who like a conservative approach with a consistent mortgage payment and are willing to give up some premium now for gains later on. I do have reports on the 10 year that I can share with you that highlight this. Let me know if you would like a copy.
Enjoy the rest of your week everybody!
Contact Robert Clancy today to find out how to take advantage of these interest rates!