Fixed rates are going up, Variable rates remain low

The Bank of Canada announced yesterday it will be maintaining their current level of policy rate until the inflation objective of 2% target is achieved.  This is great news for those of you in a variable rate mortgage as this isn’t projected to happen until 2023.  This means variable rates should remain low until this pandemic is under control, vaccines are well in hand and unemployment has eased, and inflation is on target.   For more information please check out the Bank of Canada’s announcement here

The bond market, which has some control over the 5 year fixed term,  has increased by almost 0.50% in the last month, with most of the increase in the last 2 weeks. There has been lots of chatter that some rates will be rising. Some lenders have already increased their lower-end rates!  This may correct itself, however, we recommend you make your own decisions.  If you are thinking of taking a fixed rate mortgage, you may want to check this out and contact us. 

Nobody has a crystal ball, so we recommend you try to keep informed as much as possible.  Our website MortgageKW.com is an excellent resource, however your most direct source for updates is The Bank of Canada’s site

Here’s a snapshot of today’s best rates, there’s a range depending on your needs (these rates are subject to change and valid for today only).  The lowest rates are for insured purchases and transfers.  For larger insured mortgages, there may be even lower rates!  Refinance rates for equity take out or debt consolidation would be on the high end of these rates. 

5 Year Fixed Rates 5 Year Variable Rates
2.04% – 2.29% prime -1.00% (1.45%) to prime -0.90% (1.55%)

 

How our clients are taking advantage of these historical low rates:

1) Breaking their mortgage for a lower rate

With a fixed rate product, we will determine your penalty, if the numbers make sense you can break the mortgage early, add the penalty back in and secure today’s low rates.  Making up your penalty with a lower rate and securing this low rate for another 5 years.  We will show how the numbers work!

If you are in a variable rate (prime minus) product and the new pricing is lower, you will recover the smaller penalty quickly and have the lower pricing for another 5 years.

2) Renovations

Renovating to improve your life at home always makes sense, and with the new work-from-home trend and Covid restrictions, it’s where you’re spending the majority of your time!  With home valuations being at an all-time high, why not take advantage of these low rates and put your equity to good use. Not only will the renovations make you happy, but they will also add further value to your home to help justify the cost.  Summer is coming up quickly and now is the time to plan!

3) Moving up

With COVID accelerating the virtual world, working from home is becoming the norm with many companies.  Not only are clients looking to find a more suitable property, but they are able to move further away from their offices since they can work from home.  However, with such limited inventory, this is making for a very hot seller’s market.  The main issues are finding the right property and have the winning offer!   We can help by getting you pre-approved at no cost!

4) Helping your Kids achieve homeownership

The average price of a single-family home in the Waterloo Region ranges from $650,000 to over $800,000.  This makes it quite difficult for your average first-time home buyer to purchase without help from parents in the form of a gift and/or co-signing on a mortgage.  We can discuss your options with you and how we might be able to help!

5) Separation Mortgages/ Spousal Buyout

One of the many fallouts with COVID-19, is the early realization that couples cannot work out their differences and separate to hopefully make both their lives better!  If one of the parties would like to keep the home, there is a way that we can lend up to 95% of today’s value.  We should be contacted at the beginning of your separation.

With so much uncertainty and people having to deal with stressful situations, our team at The Mortgage Centre is available anytime to help you through the financial decisions or difficulties you may have.

Please contact us today to see how we can help you! 

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