31 march 2010

“Yesterday’s 0.60% hike reflects today’s situation on the bond market”, – CIBC economist, Benjamin Tal. Discounted 5-year fixed rates are expected to drop to 4% range just when all lenders stop raising their rates (but it’s still below the 10-year average of 5.22%).

• In case you have a “prime plus” variable mortgage (for example, prime + 25%), it’s recommended to consult your mortgage planner concerning all possible options. If you’d like to stay with the variable rate, ask your advisor to gauge the benefit of switching to a prime – 50% variable.
• “No one expects the Bank of Canada to raise rates so rapidly,” – says BMO’s director of mortgages, John Turner. “But for those who plan to buy property, it’s interesting to know that now rates are as low as they can be…”
• “It’s actually possible that we’ll get a 10 or 15 basis point correction but the tendency for the rates is concentrated on raising…The next move will be another rate hike, but it won’t be 60bp. It will be more reasonable,” – Peter Routledge, senior VP at Moody’s
• “I can’t see any rate decrease any time soon.” – Judith Cane of the Financial Advisors Association of Canada.
• If you’re thinking of breaking your fixed mortgage for a lower rate and you have an IRD (interest rate differential) penalty, you should understand that now is the right time to do it. You can get a 4% fixed rate today. The deal is that when rates rise, your IRD penalty can drop and really save you money.

Market situation can change in a moment. That’s why any statements concerning rates can become a subject to change.