Tag Archives: 10-year term

Mortgage Monday Rate Update – May 2013

May 6, 2013

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For those that are shopping for a new house, or looking to do a refinance (or even just a simple mortgage renewal), rates and numbers are an important part of the mortgage equation. When rates change even the slightest of percentage points, it could cost or save you thousands of dollars. Every once in a while, here on the Mortgage Monday posts, I’ll update you on what’s going on in the world of mortgage rates. As has been the case pretty much since we started these Mortgage Monday Rate Updates, there hasn’t been a tonne of movement in the world of mortgage rates.

  • The Bank of Canada interest rate continues to be stuck at 1.00%.  The next meeting is at the end of May, but indications are it will continue to stay where it is for a while yet.
  • The Bank of Canada prime lending rate is also holding steady at 3.00%. It has also been holding steady since Fall 2010 – if the bank rate goes up, the prime lending rate will follow.  We probably won’t see this start to move up well into 2013 or even 2014.
  • The qualifying rate (the rate you would need to qualify at for a variable mortgage) for a 5-year mortgage is still 5.14% (recently down from 5.24%). That being said, there are still not too many folks  getting into a variable mortgage these days with fixed rates continuing to be so low.
  • The current best variable rate (can change on a daily basis) is in the prime-0.40% (2.60%) ballpark, though many lenders are still currently offering ‘prime’ as their variable rate.
  • The current best 5-year fixed mortgage rate (this can change daily) continues to hang out in the 2.79%-2.99% range, depending on qualifications and options.  Again, always contact your mortgage broker for current best rates for your situation (and as we’ve talked about previously, The Best Mortgage Rate is Not Always the Best Option).  Be careful when looking at some of the heavily discounted rates – many of them are considered “no-frills” mortgages and can come with restrictive options which could end up costing you thousands.
  • While the “hot term” in Canada these days may be moving away from the 10-year and back toward the more common 5-year term, the full-featured, 10-year fixed mortgage continues to be popular with rates as low as 3.69% (check out my posts from last year on the 10-Year Mortgage Below 4% and Should You Consider a 10-Year Mortgage?).  Based on the history of lending rates, locking in for 10 years at well-below 4%, or 5 years for less than 3% is nothing short of fantastic.

While I’m happy to provide an update on what’s going on as rates, if you’re interested on getting personalized mortgage advice, speak to your favorite mortgage broker who can help you decide the best rates and options for you.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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How Low Can it Go?

January 28, 2013

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We’re talking about the 10-year fixed mortgage rate.  Last year we saw them dip below the 4% mark (see some previous posts from last year: 10-Year Mortgage Below 4% & Should You Consider a 10-Year Mortgage?) and many Canadians started to make the switch to the previously unpopular 10-year term.  The 10-year mortgage continues to be popular this year, with rates dropping even lower.

Last week, mortgage brokers started seeing rates below 3.8%!  Just a few short years ago, anything below 3.8% for a 5-year term was considered fantastic, but now Canadians can lock in for 10 years at rates below 3.8%!

Usually, the main concern about locking in for 10 years is the penalties.  If you have to get out of that mortgage early for one reason or another, mortgage penalties can be outrageous – especially if you have to break the mortgage in the first 5 years of a 10-year term (though with most mortgages you can easily port it to a new house, so it’s not like you’re locked into that property for 10 years…).  But what most people don’t realize, in Canada, the most your penalty can be beyond the first 5 years of the term is a 3-month interest penalty.  So once you’re out of the first 5 years of a 10-year mortgage, the penalty to break that mortgage is quite low.

The best way I’ve heard it described is this:

Think of it as a slightly higher 5-year rate, and with that slightly higher rate, in 5 years you have the option to renew at the same rate for an additional 5 years. The cost of not exercising that renewal option is only a 3-month interest penalty.

 

A 10-year fixed rate mortgage is not for everyone. But if you’re looking for rate (and payment!) stability, and are likely to stay in your mortgage for at least 5 years, be sure to talk to your favourite mortgage broker about the 10-year term – it could end up saving you tens of thousands of dollars over the next decade.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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Mortgage Monday Rate Update – June 2012

June 11, 2012

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Whether you like it or not, stats and numbers are a part of the world of mortgages. When rates change even the slightest of percentage points, it could cost or save you thousands of dollars. Every once in a while, here on the Mortgage Monday posts, I’ll update you on what’s going on in the world of mortgage rates. If this kind of stuff doesn’t really interest you, I won’t be offended if you just skim through it – I’ll try to make it as painless as possible. ;)

  • The Bank of Canada interest rate held stead yat 1.00%  for a 14th consecutive time early in the week, which was expected, but the Bank’s commentary reflected the ongoing challenges in the global economy and shifted sentiment clearly away from a rate increase anytime soon. There was even some limited speculation of a possible rate cut.  The next meeting date is July 17th, 2012.
  • The Bank of Canada prime lending rate is also holding steady at 3.00%. It has also been holding steady since Fall 2010 – if the bank rate goes up, the prime lending rate will follow.  At the earliest, we’re probably looking at late 2012/early 2013.
  • The qualifying rate (the rate you would need to qualify at for a variable mortgage) for a 5-year mortgage has dropped to 5.24%.  Not many folks are getting into a variable mortgage these days (variable rates just aren’t competitive with fixed rates right now – so this doesn’t affect that many folks).
  • The current best variable rate (changes daily) is in the prime-0.1% (2.9%) ballpark, though many lenders currently are offering ‘prime’ as their variable rate.
  • The current best 5-year fixed mortgage rate (changes daily) has dropped slightly and is now in the 3.09% range – again, always contact your mortgage broker for current best rates for your situation (and as we’ve talked about previously, The Best Mortgage Rate is Not Always the Best Option).
  • The “hot term” in Canada these days is still the full-featured, 10-year fixed mortgage with rates as low as 3.89% (check out my post from a couple of months ago on the 10-Year Mortgage Below 4% and my post from two weeks ago: Should You Consider a 10-Year Mortgage?). If you want to lock in for a decade and record-low rates, definitely take a look at locking in for 10 years at less than 4%.

As noted above, some of these numbers change monthly, where as some change daily. While I’m happy to provide an update on what’s going on as rates, if you’re interested on getting personalized mortgage advice, speak to your favorite mortgage broker who can help you decide the best rates and options for you.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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Should You Consider a 10-Year Mortgage?

May 28, 2012

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There’s been a lot of talk lately about whether or not folks should be taking advantage of the sub-4% 10-year fixed mortgages.

With the 5-year fixed mortgages hovering just above the 3% mark, you will pay a little bit more to lock in for 10 years (though the spread between the 5-year and 10-year is a lot less than it has been in the past).  That alone makes the 10-year a little less popular (it’s hard to commit to a little bit higher rate up front in the hopes that rates go up enough to justify the extra cost).

Another common concern about locking in for 10 years is the fear of the penalties if you have to get out of that mortgage early for one reason or another.  While it’s true if you need to break that mortgage in the first 5 years, the penalties can be high (though with most mortgages you can easily port it to a new house, so it’s not like you’re locked into that property for 10 years…).  But what most people don’t realize is that in Canada, the most your penalty can be beyond the first 5 years of the term is a 3-month interest penalty.

The best way I’ve heard it described is this:

Think of it as a slightly higher 5-year rate, and with that slightly higher rate, in 5 years you have the option to renew at the same rate for an additional 5 years. The cost of not exercising that renewal option is only a 3-month interest penalty.

Obviously whether or not you pick a variable rate, a 3-year term, a 5-year term, or a 10-year term, will depend on your tolerance for risk.  There are pros and cons associated with any term… but in my opinion, with sub-4% 10-year mortgages out there to be had, make sure to give the 10-year a long, hard look.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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Mortgage Monday Rate Update – February 2012

February 6, 2012

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Whether you like it or not, stats and numbers are a part of the world of mortgages. When rates change even the slightest of percentage points, it could cost or save you thousands of dollars. Every once in a while, here on the Mortgage Monday posts, I’ll update you on what’s going on in the world of mortgage rates. If this kind of stuff doesn’t really interest you, I won’t be offended if you just skim through it – I’ll try to make it as painless as possible.

  • The Bank of Canada interest rate is holding steady at 1.00%. Doesn’t look like this will be changing any time soon. The next meeting date is March 8th, 2012.
  • The Bank of Canada prime lending rate is also holding steady at 3.00%. It has also been holding steady since Fall 2010 – I also wouldn’t be surprised if we see ‘prime’ at 3% for quite a while still (the next meeting date is March 9th, 2012).
  • The qualifying rate (the rate you would need to qualify at for a variable mortgage) for a 5-year mortgage has dropped from 5.29% down to 5.14%. This is low as it’s been in, well, decades (though it was down as low as 5.19% as recently as September 2011).
  • The current best variable rate (changes daily) is still in the prime-0.2% (2.8%) ballpark, though many lenders currently are offering ‘prime’ as their variable rate.  With the loss of “discounted” variable rates, the majority of mortgage-seekers are opting for fixed rates.
  • The current best 5-year fixed mortgage rate (changes daily) is still hovering around the 3.19% – 3.39% range – again, always contact your mortgage broker for current best rates for your situation.
  • The new “hot term” in Canada these days in the 10-year fixed mortgage (changes daily), with rates as low as around 4% (though watch out for the restrictions on these heavily discounted rates – check out my post from a couple of weeks ago on the 10-Year Mortgage Below 4%).

As noted above, some of these numbers change monthly, where as some change daily. While I’m happy to provide an update on what’s going on as rates, if you’re interested on getting personalized mortgage advice, speak to your favorite mortgage broker who can help you decide the best rates and options for you.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

More Posts - Website

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