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What the U.S. interest rate turning point means to Canadians

What the U.S. interest rate turning point means to Canadians
Disentangling from the low-interest rate trap of the past 6½ years will be a slow and delicate process. Many of us are getting the house in order now. After 80 months of central bank interest rates at or near zero, the low cost of borrowing shows signs of coming to an end. The U.S. Federal Reserve ended a two-day policy meeting with Chair Janet Yellen giving notice of the first American interest rate hikes in almost a decade. Yellen said if the American recovery continues rates with rise this year. Eventually, it will drag us along, though for now our central bank has no similar plan. Economists...
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Banks cut prime rates but savers suffer

Banks cut prime rates but savers suffer
The big banks have cut their prime rates after RBC became the first to make a move. The bank had already reduced its mortgage rate but the prime rate cut will also make a difference to other loan products. It stopped short of passing on the full 0.25 per cent reduction that the Bank of Canada made to its lending rate last week and cut 0.15 per cent. While borrowers may be rejoicing at the lower costs of their loans, for savers it’s not such good news; some lenders have already trimmed back the interest paid on savings and investment accounts, by the full 0.25 per cent of course. by Jamie Henry 28...
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Too soon to bet against a variable-rate mortgage?

When it comes time to renew your mortgage the question always comes up: How much money are you leaving on the table if you opt for fixed rate over variable? Academic studies indicate that the best predictor of future interest rates is the current yield curve. Based on that, interest rates are going to be pretty low for the foreseeable future. Add in some shallow discounting off prime for variable-rate mortgages and it’s easy to see why almost everyone is opting for fixed-rate mortgages these days. Even a new player on the mortgage scene has decided that a five-year fixed-rate mortgage is the only...
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The Value Of A Rate Hold

The Value Of A Rate Hold
Securing a rate hold is like having insurance on your mortgage rate – you no longer have to worry about mortgage rates increasing while you find your new home over the next 90-120 days. And if rates drop within that same period, so too will your preapproved rate. For instance, if you obtain a 3.00% rate hold and then global risks subside and the economy strongly recovers over the next three to four months, that 3.00% could easily jump to 3.5% or higher. In this case, your rate hold for 3.00% would have saved you half of a percentage point, which would translate to a savings of a significant...
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Too soon to bet against a variable-rate mortgage?

When it comes time to renew your mortgage the question always comes up: How much money are you leaving on the table if you opt for fixed rate over variable? Academic studies indicate that the best predictor of future interest rates is the current yield curve. Based on that, interest rates are going to be pretty low for the foreseeable future. Add in some shallow discounting off prime for variable-rate mortgages and it’s easy to see why almost everyone is opting for fixed-rate mortgages these days. Even a new player on the mortgage scene has decided that a five-year fixed-rate mortgage is the only...
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