What Mortgage are people taking going into 2010?

Jan 14, 2010

Great Question, with fixed rates currently lower then 4.00%… depending on your goals in the next 2-3 years, % year fixed may be the way to go… ?… Here’s a write up with quotes from CAAMPS Jim Murphy.

Canadians playing it safe with mortgages, report finds vast majority of Canadians taking on fixed-rate, less risky loans, association reports

Canadian home buyers are being cautious when taking out new mortgages, a report suggests.

The Canadian Association of Accredited Mortgage Professionals examined 40,000 loans issued in 2009, and found that 86 per cent of new mortgages issued were fixed-term. These are considered less risky than variable-rate terms, because the homeowner is locked in at one rate for a set amount of time, typically five years.

“The vast majority of Canadian mortgage borrowers are not taking on undue risks,” said Jim Murphy, the association’s president. “They have factored rising interest rates in to their mortgage decisions.”

While variable rate loans have been available as low as 2.25 per cent (compared to 4 per cent for fixed rate mortgages), there is concern that interest rates will rise higher and make it difficult for many on variable plans to meet their rising costs.

But among the majority of borrowers who took out fixed terms, 70 per cent took terms of five years or longer. The majority of borrowers also took out mortgages below the maximum they’d be allowed under the gross debt service ratio – a figure generated by the bank that considers how much debt someone can reasonably take on.

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Here’s how I see it…. we have been VERY spoiled over the last 5-7 years with LOW interest rates, its key when setting up a plan that you are truly paying off as much Principle as possible. I want all of my clients to look back at these days and say….

” Wow I really paid off a lot of debt back when rates were low “

I just finished up with a client who is now set to pay off $90,000 in debt over the next 5 years !!!… better then the $3260 per year that he was on pace for

Michael Mullis AMP