Giving Thanks to Low Mortgage Rates
At this time last year, sitting around the feast laden table, many economic forecasts indicated that mortgage rates
would be on the rise in 2011. Here we are on the fleeting end of the year and rates for the most part have remained at a historical 30 year low.
Although prime rate remains unchanged, a noticeable trend
over the second half of the year seems to be the pricing by the mortgage facilitators or lackthereof on any variable rate products offered. This said most lenders are offering prime minus -0.30% to -0.60% of which still remains a ridiculously great rate, should one be tempted to the fate of the variable option, stay tuned for our discussion on fixed versus variable mortgages.
So should you need to search the corners of your mind to find something to be thankful for, here it is - Prime rate has been below 10% since May 1991, and one has to wonder whether or not we will ever see double digit rates lending again.
With increased purchase power, affordability
is relatively attainable in the majority of Canadian cities. As more Generation X and Y’s move into homeownership and Boomers are buying the vacation or pre-retirement homes, now is the time to make the leap of faith. Equity and prices have leveled off in almost every major city with of course the notable exception of Vancouver.
Here are some fun facts for you, while we are talking about increased purchase power:
- 1981 Prime Rate 22.75% based on mortgage of $300,000 and an amortization of 25 years, the monthly payment would be $5460.28
- 2011 Prime Rate 3.00% based on mortgage of $300,000 and an amortization of 25 years, the monthly payment would be $1419.74
What does this mean to you? With the likelihood that mortgage rates will rise in 2012 now is the time to look into early renewal options, refinancing or making that purchase you have been holding off on.
Contact your CENTUM mortgage broker post haste.
Posted by CENTUM Canada
on October 4, 2011