We have finally seen the lenders calm down with changes in the mortgage industry of last week. However some of these changes have been somewhat drastic.
- Within a 1 week span the pricing on variable rate mortgage products have gone from prime -.60 to Prime + 1.00. This puts variable rates back in line with fixedrates.
- Gas prices have returned to almost a $1.00 a litre.
- The Canadian dollar has returned to it previous somewhat standard exchangerate of $1.13 which is great for our Canadian exports.
It was almost as if the "EASY" button was replaced with a "RESET" button.
I came across this article in yesterday's Financial Post, which further clarifies the fixed vs variable debate.
Banks pushing homeowners to lock in mortgage rates: expertsGarry Marr, Financial Post Published: Tuesday, October 14, 2008
http://www.financialpost.com/news/story.html?id=879937
We have to sell what we have; the bottom line is that variable rate mortgages with rates below prime are no longer profitable for the bank's tooffer, even at prime + 1.00% having prime just dropped a .50%, means you arestill borrowing at 5.25% which is still a great rate. It is still below what most banks were offering as their best 5 year rate before everything started to rise.
Variable Rate ...5.25%My best 5 year fixed 5.49% vs most bank's offering 5.89 to 6.10%
Anyone with a below prime variable now has something that can no longer be replaced, for those staying variable makes sense. New applications, it is not so "cut and dry." With the 5.49% 5 year fixed rate vs 5.25% variable, for the sake of .25% and with the Canadian Banks starting to step outside of standard monetary policy with the setting of Prime, one may be seeking the security of a 5 year fixed rate mortgage.
These are volatile times which at times trigger some large rate adjustments. If you have a mortgage maturing in the next 4 months do not wait any further as it appears the longer we wait the worse the deals are getting. Please call me so we can commit a mortgage which will protect you from further product/rate changes.
Thanks,
David Kendall
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