Mortgage Update: Misreading the Economy

"We are wrapping up an uneventful week from a mortgage stand point. There are changes, but nothing significant that deserves mention. A variable rate still remains the best option for home buyers, but not everyone seems to understand this."

"After speaking with people who are looking to refinance before their current term expires, I realized that even well informed people can misread economic news. A number are talking about "interest rates going through the roof," and refuse to even consider current variable rates. The reality, I propose, is quite different."

"After closely following the economy and financial markets for more than 15 years, I have learned one valuable lesson—economic recoveries do not happen overnight, especially after a serious financial crisis. It will take years to get the economy to previous levels, and to support the weak economy interest rates must stay low. Even our top banker has said that he will keep the Bank of Canada prime interest rate at this level at least til next June."

"If one can get a mortgage now that is guaranteed to be 2.65% at least for a year, why would they prefer rate of 4.5% or more? This makes no sense to me. If after a year Prime increases by 0.25% and then increases again by another 0.25%, one's mortgage rate will still be 3.15%, not 4.5%. There will be many rate increases before the current Variable Rate matches current 5-year Fixed Rates."

"That said, here are the best available rates as of today..."

Variable Rate: 4-year Prime + 0.30% or 2.55% (Prime is currently 2.25%)
5-year Fixed Rate: 4.29% or 4.18% (Closing within 30 days)

Enjoy the weekend,
Vasko DeLev, AMP
Accredited Mortgage Professional
License # M08000574

Verico Capital Mortgages Inc.
106 - 18 Deakin St, Ottawa ON K2E 8B7
Direct Line: 613-882-7603
Fax: 613-228-2555
Email: vasko@CapitalMortgages.com