August 24, 2011
It almost seems the Banks are making us end our Summer early and put pressure on our decision making….. this read should help, let’s just hope its not too late.
So Many of us Canadians have been caught up in Life, ending the summer with Vacations, or getting the kids ready for school. The last thing we want to worry about is….. ” Can today’s low interest rates save me money?”
Well, you may only have a few days to get the answer you looking for. Whether you are looking for a Fixed rate or a Variable rate both of them may be quoted higher in just a few weeks time… let me explain.
Fixed rates are affected by the Bonds, as they go up or down, so does the fixed rates…. Example, 5 year bond goes down, expect the 5 Year fixed rates to drop.
We hit an ALL-TIME low just a few days ago, and now the bonds have been increasing,
Variable rates adjust by our Prime rate… They typically go up or down depending how our Feds set the Canadian Prime rate….
But, this is where it get interesting... Many of us know Bank of Canada just met and announced Prime will stay still. .so to many Mortgage holders our rate floats with a Prime rate of 3.00%. Many banks are or were offering .75% below Prime…. so, we can get a rate of 2.25% !!!!
But… what if the banks weren’t happy with the profits from the variable, what if they changed the discount to only .45% below prime, which would leave us with a best rate of 2.55% !!!
Well that is EXACTLY what I see happening thanks to this write up in today’s Globe and Mail . and trust me, the rest of the banks will follow. In fact, I have already received some emails from some major banks notifying me of the increase.
Why you ask?…. well most of us know that the US has announced their Prime will stay low for another 2 years or so, which typically means ours won’t be too far off. So perhaps they feel they aren’t profiting enough on the discounted variable and are making the variable rate discounts to be less appealing, so we decide to commit to a fixed rate. Also this opens up the door to allow the Banks “retention” sector to be extremely aggressive to keep any business… but again, just my opinion.
So, to sum all this up….. if you are thinking mortgage savings in the next 4 months, you better contact me ASAP to secure TODAY’s discounts….whether it be a Fixed or a variable.