If you are tossing and turning every night trying to figure which way mortgage interest rates are moving join the club. My impression is that nobody knows exactly which way rates are moving and what the long term trend is. I certainly wouldn't rely on the sound bytes that come out of the media on a daily basis... you'll drive yourself crazy!
Take this morning's paper. The Globe & Mail and Toronto Star each ran an article in their respective business sections about mortgage interest rates. In the Globe & Mail article the author interviews an Ottawa mortgage broker about what he is personally doing. The broker is locking in his ridiculously low variable rate mortgage to curb the risk of higher rates in the future due to inflation.
Then you read the Toronto Star article where numerous economists are interviewed about their predictions for the future. They feel that the recent increase in fixed rate mortgages due to an increase in bond yields was an over reaction by bond investors and that we are certainly not at a critical point where rates will be increasing with speed. We are still far away from inflation and the high interest rates that are associated with it.
My advice echos that at the end of the Star article... take your time before making any rash decisions. If you are in a variable have a good long look before you give up your low effective rate. Just because rates have increased doesn't mean that they won't come back down. If you are in the market for a new mortgage you may still want to consider a variable because there exists the potential for fixed rates to decrease again... maybe not as low as we saw two weeks ago. If you are really on the fence consider a product like the Merix 50/50 mortgage where you get half your mortgage as a fixed mortgage and the remainder as a variable.
Do you have a question about your mortgage? Tridac Mortgages has been helping clients for over 30 years. Call our Toronto office at 416.461.0204 and ask for Chris. We're here to help you.
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