This is already happening before the Spring real estate market. Traditionally the Spring has been the best time of year to sell a home because there are the most buyers looking to make a summer move.
However this past year, the ending months of the year were particularly strong ahead of predicted interest rate rises. The buyers that are jumping into the market because of interest rate deals are taking up 5 year fixed mortgages to avoid the added and unknown expense of gambling on a variable rate during rising interest rate times.
Traditionally, it has usually been better to take the variable as you start the game ahead by getting a lower rate than the fixed rate. Even the 5 year fixed rate on a 30 year mortgage is a quasi-variable rate because it resets in 5 years to the current market value.
Chances are the in 5 years from now rates will be considerably higher than they are now. Proponents of variable interest rates argue that payments made in the early part of the mortgage allow more money to go toward principle hence creating less financing costs over the long haul.
Whether you have an appetite for a little risk by opting for the variable rate despite knowing mortgage interest rates are ahead, or you want to sleep at night knowing exactly how much your mortgage payment will be, the real estate market promises to be hot in Canada again in 2011 because we are still historically on the low side of interest rates.
Finance Minister Jim Flaherty announced today:
“The recent increase by a couple of the banks is exactly what we expected,” Flaherty explained to reporters at the House of Commons yesterday.
And more interest rate increases should be coming, Flaherty predicted, since the lending rates have been held at historic lows for quite some time.
“We’re likely to see higher interest rates as we go forward because interest rates are still very low.”
With the finance minister broadcasting higher rates, now seems to be the time to lock in lower rates for those that have not yet done so and want to take advantage of this historical anomaly.
Dominion Lending is a mortgage broker in Ontario, contact Lee Anne Taylor at Home Loans Ontario about getting the lowest interest rates available. Home Loans Ontario will shop your loan across dozens of potential lenders to arrive at the best deal for your particular situation and needs.