When bond markets move quickly lenders scramble to offer lower terms – 1-4 years in efforts to lure clients in with lower rates that can correspond.
But, it’s important to remember that the lowest rate does not always guarantee the lowest cost for your mortgage over time!
Here’s why:
1. Ottawa says they don’t want the low fixed rates we have seen to return and various economists agree.
Poloz: “..expect that short-term interest rates, as is normal, will be above inflation” http://t.co/3l8DLVuYwM (ie. > 2%. We’re at 1% today)
2. As a result, we have already seen fixed rates increase more than 1% in a matter of weeks.
3. Why would you want to be up for renewal sooner, when that means your interest rate will increase sooner? It’s our goal to keep your payments as low as possible for as long as we can.
4. If you renew sooner and your rate increases as a result, you may have to have more income to qualify for a mortgage you have already been paying.
This is the time to go long or risk the cost of homeownership going up.
Simply put, this is not the time to go “short term” even if you think you’re moving. It’s unlikely the date of renewal will match so, therefore, your best option is to go variable.
If your mortgage provider isn’t explaining the correlation between the bond market, government news, history of rates, or a plan to protect you from future payment shock, chances are you’re working with someone who isn’t protecting your best interests!
We’d be happy to explore your best options with you!
Angela Calla, AMP
Dominion Lending Centres-Angela Calla
Host of ” The Mortgage Show” Saturdays @ 7pm on CKNW AM980 Phone :
604-802-3983 Fax: 604-939-8795
Email: acalla@dominionlending.ca