Mortgage Rates
One question our mortgage brokers get all the time is 'what are your mortgage rates'? This is a bit of a loaded question that cannot be answered easily without knowing the product that the client is needing. From strictly a traditional point of view, many clients are referring to the 5 year fixed, which has always been the benchmark for where mortgage rates are sitting. However today, nearly as many clients take a variable rate mortgage as the long term fixed and the variable is tied to the Prime lending rate which is also considered a benchmark for lenders. Here is a breakdown of the different terms and the rate trends we normally see associated with them.
Fixed terms generally have higher mortgage rates the longer you go, you are basically paying for the security of knowing what your payments will be for the term of the mortgage. You can expect to pay quite a bit more for a 5 year mortgage than for a 1 year term, its an insurance policy against rising mortgage rates. Having said that however, when the shorter terms are higher than the longer terms, generally what you may expect to see are interest rates going down as the banks are trying to 'persuade' you into the longer terms by offering them at a lower price.
Variable rate terms are not tied to fixed rate terms, they do tend to go in the same direction but not always. Variable rate mortgages fluctuate with the prime lending rate, and on top of that fluctuation your rate relevant to the prime can vary as well (not once you are tied into a term). Clients who have had variable mortgage rates over the past few years have done very well, but you also have to be careful with these products as they do not come with the same 'insurance' we talked about above with the fixed terms; they can move quickly on you if you are not following them.
Another product that we sell is the HELOC mortgage, or Home Equity Line of Credit. These mortgages are also tied to the prime lending rate, although they are usually not as discounted as what you see on the variable rate mortgages. The advantage to the line of credit is the flexibility, they offer interest only payments and the ability to pay them off at any time without penalty.
Call one of our Mortgage Brokers today, or apply online for a Free Pre-Approval today.
