13 March 2014
“Of course, it seems like economists keep predicting rate hikes and it never gets true,” says the report.
“Nevertheless, today we can see many signs that it may be that very case, especially with the U.S. economy showing significant economic growth. During the previous year the bond market has showed that the era of low interest rates may be finally coming to its end.”
Now a five-year fixed mortgage rate from one of the largest Canadian banks stays above 3%, while variable rates are below that mark. Besides, certain financial institutions offer even 2.99% for 5 years fixed mortgage.
“The deal is that if you can’t afford a rate increase (e.g. you’re a first-time homebuyer), any possible extra cost for your peace of mind may be worth paying these days,” – the report says.
We would like to remind that our best variable is 2.35% (Prime minus 0.65%) today for well qualified borrowers. However, if you would lose sleep over potential 0.25-0.50% rate increase next year, maybe it’s better to consider 2.99% fixed.