2.99%

[Talo]

Anyone going to take advantage of the new mortgage rates ? Doesn't look like it's going to be around for long.

As for myself , my mortgage is due for a renal now so it looks like I'm getting a better deal than I thought I would get.

[razorsedge]

It's a screaming great rate bro.

Funny how the bankers and government just months ago warned Canadians about incurring more debt or that we were carrying, on average, too much debt. Now, a first time home owner who did some homework and was looking at a home in the 250K max range is all of a sudden looking in the 300-340K range as the "payment" would be the same. I hope lots of people take advantage of the rate and it stimulates some spending but let's hope too many people don't get in over their head...things such as this is what contributed to the mess south of the border a few years back and they're still not close to climbing out of that situation......but it the meantime...happy spending.

[IronRobi]

That's where the danger comes in. You lock in at 2.99% on a variable rate and buy a 400k house, then all of a sudden the rate jumps to 8% how do you afford it? Hope not too many people spend outside their means

[Talo]

I agree 100% with you and I think more people are going to buy / break their contract ( if it's not too much of a loss ) to get in on this deal.

Another thing would be to have a lower payment plan like 15yrs instead of 25yrs. Get out of debt quicker and pay a lot less in interest. Get out before the rates go over the 10% or 15% mark like in the 80's - they say history repeats itself .

It's funny because just before Christams my bank offered me 3.19% to renew with them and I thought that was a great rate. Glad I didn't sign anything yet :)

[Talo]

That's where the danger comes in. You lock in at 2.99% on a variable rate and buy a 400k house, then all of a sudden the rate jumps to 8% how do you afford it? Hope not too many people spend outside their means

I agree with what you say , but it's a fixed rate ( most are 5 years ) not variable.

[fathead]

anyone know how to calculate whether or not its worth while paying the penalty to get out of your current mortgage to go for a different rate?

[TT Eric]

17 years ago when I bought my first habitation they were saying that it would increase as well, in fact they they tend to put some fear into the people, I don't think it will jump that much fast. Best thing to do IMO is to buy something that you can pay inside 15 years, but put it on 25 years payments with additional installment to make it like if it was on 15 years, that way if the rates are going too high (which they always say it could happen) you just cancel the additional money you were giving to hurry up.

Personally I'm at 2.3% actually, following the market, yes it can raise anytime, but so far I saved so much money then everyone that always get tied up out of fear.

Eric

[TT Eric]

anyone know how to calculate whether or not its worth while paying the penalty to get out of your current mortgage to go for a different rate?

It depend of your bank, but usually you have to pay all the interest you would have to pay until your next renewal.

Eric

[steve_d]

anyone know how to calculate whether or not its worth while paying the penalty to get out of your current mortgage to go for a different rate?

we did this a few years ago when my wife worked at a bank and employees got a promotional rate at prime -2.5%. At the time the prime rate actually dipped so low that they had to change the policy because we would actually have a negative rate! It was worth it for us. Depending on how high your rate is, it may be worth it for you. But usually there has to be quite a differential because they have pretty tight penatlies for breaking mortgage. For us, it wasn't that bad. It worked out to 3 months interest only. Once you know the penalty: ex. if its 3 months interest at 4% on a 400k mortgage, that works out to 4000$. If you drop this down to 3%, then you will be saving 1% (4000$ per year). So you will have made up the difference in that year. However you also need to factor how much longer you are in your term...If you only have a year to go, and you break it, you will owe that 4000$ right now (do you have that money? if you have to borrow that money from a credit line ...you might be paying another 6-7% on that amount until you can pay it off...so it won't work out perfectly.

You also would need to think that in a years time, you could potentially get the same or better rate then they are offering now. Personally I've always stuck to variable. I don't fear rates going high, because even if they did, its not going to happen tomorrow, therefore the low rate I have now will compensate later if it does go up higher than fixed. In fact, in recent history (last 10-15 years or so), if you look at all the rates history, I got in a variable rate at the WORST possible time, and after 5 years I still ended up ahead...And that was a worst case scenario.

If you have less of a risk tolerance then me, you can always try to get in on a fixed rate...particularly this one which is quite nice. My sister actually had this same rate 3-4 months ago (on a 4 year term though) fixed. So its not THAT out of the ordinary if you shop around and good at negotiating. I have a 2.15% variable rate. It hasn't changed in the 1 year I've been on it so far. At the time, I could have gotten about 3.45% fixed or maybe a bit better...but that saved me 3000$ THIS year...And it will probably be another 3000 this year as well. So at that point, unless the rate skyrockets, I still come out ahead. Again, its all about your risk tolerance.

The other thing about variable is many of them actually have constant payments. Which is weird because say for example the rate does skyrocket. your 1000$ monthly payment doesn't actually cover the interest, and your mortgage actually will be increasing! But...on the plus side, your payments are the same so you don't all of a sudden get in a situation where you have to sell. The bank can review it, but generally the bank don't want you to have to go bankrupt and be forced to foreclose - they end up losing too in that case. Usually they would just hope the rates eventually go down again by the time you have to renew and if everything works out you still qualify to carry the mortgage at the new rate when the renewal comes up.

[Talo]

As far as I understand the penalty it's like this : If you currently have a rate of 5% and you want to get locked into a 3% rate. Dpending on how much time is left on your mortgage (e: If you have less than a year ) then you need to look at what your bank offers for it's 1 yr rate and minus the two.
So 5%-3% = 2%. Then you need to take what you owe on your mortgage : 200,000 x 2% = $4000 for the year. But that will change if your have 3 years left on your mortgae and or if you owe 300,000.

A good thing to do would be to contact either your bank or a broker to figure it out for you.

[ironwill]

Anyone going to take advantage of the new mortgage rates ? Doesn't look like it's going to be around for long.

As for myself , my mortgage is due for a renal now so it looks like I'm getting a better deal than I thought I would get.

You Betcha......
House just sold in Alberta, and the prices are quite low on Vancouver island right now,Perfect timing...

Fathead, the bank can tell you the Penalty for renegotiating your mortgage.....
There are many factors involved with your mortgage depending on the company you are working with, also some banks or brokers offer incentives if you let them take over your mortgage...
It pays to look deep into it, especially right now...:)

[Talo]

Your leaving Alberta ! You lucky bastard -40 here now !!

[massmachine]

You Betcha......
House just sold in Alberta, and the prices are quite low on Vancouver island right now,Perfect timing...

Fathead, the bank can tell you the Penalty for renegotiating your mortgage.....
There are many factors involved with your mortgage depending on the company you are working with, also some banks or brokers offer incentives if you let them take over your mortgage...
It pays to look deep into it, especially right now...:)

I thought you just paid cash!

Currently at 2.4% fixed for 2 years. Previously was on a fixed variable for 3 years where it hovered around 2.25% for the term...

[Thorgrim]

These rates are good for people that already have a house and can refinance and lower their payments but for new buyers it only encourages them to buy too much house. Rates could stay this low for quite awhile but it will lead to high rates of inflation. At some point the rate will rise and those that over extended themselves will be screwed.

I plugged some numbers into a mortgage calc and a 400k 25 year mortgage at 2.99% was $1890/month. At 5% the payment went to $2326 and 6% was $2559. 5-6% is still low by historical standards. I remember years ago getting a 5.15% 3 year term mortgage at what then was historically low mortgage rates and thinking wow, it can't go any lower then this.

Unfortunately what goes down will eventually come back up.

[natenator]

Your leaving Alberta ! You lucky bastard -40 here now !!

thought you said it wasn't that bad? You know, cause it's a dry cold?

:D

[Talo]

Like you said - cold is cold .

From what I remember -20 in Ontario feels worst than this. God I hate that wet bone chillinig cold.

[fathead]

so if you have 2.5 years left on your 5 year mortgage and the current rates are 1% lower than what you are paying right now (3.9 fixed) im guessing its not worth it? I also assume it becomes less worth it if you are paying your mortgage down at an accelerated rate? i owe about 230k at this point, half way through my 5 year at 3.9... help!

[JMP]

That is calculated on the amount you originally borrowed (the penalty) & a few other factors , i would contact your bank ( they can tell you in about 15mins if its worth it) , you should also have at least once per year you can drop lump sum payment .



so if you have 2.5 years left on your 5 year mortgage and the current rates are 1% lower than what you are paying right now (3.9 fixed) im guessing its not worth it? I also assume it becomes less worth it if you are paying your mortgage down at an accelerated rate? i owe about 230k at this point, half way through my 5 year at 3.9... help!

[steve_d]

Yeah, you need to find out the penalty. Then it will be easy to calculate if its worth it.

[ironwill]

Massmachine....LOL, if i had your money i would just burn mine my friend!!!

[ironwill]

Left my brutha......It is a balmy plus 1 right now....Still boating on the lake!!
drop a line if out for a vaca this summer ...