Variable mortgage rates to stay low until next year

Jeff Evans
0 Comments

According to the FINANCIAL POST, on Thursday, the chief economist of CIBC, Avery Shenfeld, has estimated that the Bank of Canada prime rate will continue to remain low into 2011 due to lower productivity and a strong Canadian dollar. This has been in line with my previous thoughts on what will happen with low variable mortgage rates going forward.

What does this mean to you? If you currently have a variable rate mortgage…if this information is correct, then you can expect to continue with very low interest rates for a while to come yet. With fixed mortgage rates increasing .6% on a 5 year fixed last week, the option of locking in has become much less attractive, especially when for many current borrowers, it could take approximately 10 prime rate increases to match the rate that a 5 year fixed rate would currently offer.

If you are buying a home in the Greater Vancouver Area, the new mortgage regulations coming into effect on April 19th mean that it will be difficult for you to find the home you want and qualify for a variable rate mortgage anyway. As of April 19th, the current qualifying rate for a variable mortgage will go from (for me and many of my lenders) 3.7% up to 5.85%. That takes away a lot of mortgage affordability for people in the Vancouver area. If you want to buy the most house you can for your given income, you will need to get a 5 year fixed rate (if you buy with less than 20% downpayment).

However, if you are a conservative buyer who is not trying to max out the possible amount they can borrow…you could still qualify for the home you want with a variable rate mortgage. Being prudent in these days is not necessarily a bad thing.

Contact me today to find out what I can do for you. Simply fill in the form below.

[contact-form-7 404 "Not Found"]

Related

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam.
Learn how your comment data is processed.