Nov 29, 2018
Join our Team!
Looking for a hard-working and friendly articling student to join our team
Nov 06, 2018
Leaving your real estate agent:
Breaking up doesn't just happen in love relationships
Oct 31, 2018
Law firm bring in the spooky spirit to the office
RSS FeedClick to view feed
Is it time to consider a fixed rate mortgage?
Mar 03, 2014
According to a new report by BMO Capital markets, a longer term fixed rate may soon be a better deal than variable.
Historically, a variable mortgage rate has been more “cost effective” than locking into a long term fixed rate but with signs of an improving economy this may not be the case.
It’s anticipated that the Bank of Canada and the U.S. Federal reserve will move to increase interest rates in 2015 especially with the U.S. economy poised to accelerate. The bond market has sent out warning signals over the past year that the era of low interest rates may finally be drawing to a close.
Currently a five-year fixed mortgage rate from one of the big Canadian banks hovers at 3% with variable rates ranging below that, so even if variable rates take some time to climb we may not see low fixed rates again any time soon.
They also note that any potential hikes could affect people who are already stretched too thinly in the housing market so the higher fixed rate may be beneficial to this group to weather any drastic increases.
For those who don’t have financial flexibility and would run into difficulty from a pronounced upswing in interest rates (typically first-time homebuyers), any potential extra cost for peace of mind now appears to be a price worth paying according to the report.