You need to know the pros and cons of fixed vs. variable mortgage rates because this will help you decide which type of mortgage is the best answer for you.
Both of these types of mortgages have their advantages and their disadvantages. The best way to learn about all of the advantages and disadvantages is to do your homework.
Mortgage brokers can help you make the best decision possible because they have all the knowledge and information needed to help you make the smart choice for you. Trying to make the decision on your own can be done but talking to a professional will help you make the most informed decision.
Advantages of fixed rate mortgages:
1. When you get a fixed rate mortgage you will have security knowing what your payments will be each month until the end of the fixed period. This is a big advantage for a lot of people because it gives you the chance to plan your financial future easier.
2. If interest rates were to increase then you will be safe because your payments will not increase since you are at a fixed rate for a certain period of time.
Disadvantages of fixed rate mortgages:
1. If interest rates should decrease you can’t take advantage of this because you are on a fixed rate for a certain amount of time.
2. You will have to pay a higher interest rate than the SVR or standard variable rate in order to get the fixed rate you want.
Advantages of variable rate mortgages:
1. When you have a variable rate loan it will follow the base interest rates. If the rates are low then this is a big advantage for you because depending on the lender you have, it can make your base rates fall and this will help to reduce your monthly payments.
Disadvantages of variable rate mortgages:
1. Since your rates follow the base rates if they should rise then this means that your rates will also rise and in turn your monthly payments will also be higher.
Now that you have this important information about mortgage interest rates you will have a much easier time making your decision. Just make sure you take your time and do your homework and be smart by talking to a mortgage professional.
For more information visit www.gtamortgagematters.com.
Tuesday, September 21, 2010
Best Mortgage For You!
The search for a universal “best mortgage” is an impossible quest, because what is great for one buyer may not work well for another. Choosing the very best financing option for your home purchase or re-finance loan is about knowing both your current and potential future needs, and finding the right mortgage to meet them. Having someone to work with who not only understands how to choose the best mortgage to meet certain needs, but also has access to a wide variety of lender information is a big asset. A Mortgage Broker is an excellent choice for anyone searching for a mortgage. Read More
Thursday, September 16, 2010
Softening Economy Should Slow the Rise of Bank Prime. August 6th, 2010
Canada’s Housing market is slowing and is expected to continue to slow as inventory rises. Supply of resale homes has risen by 3% in the second quarter of 2010, while demand has fallen 9% in the same time period.
In Ontario, we have observed a massive run up in housing prices this year. This was caused by changes that were made this year by the Federal and Provincial Government. In April CMHC introduced new rules and in July, the Province of Ontario introduced the HST (harmonized sales tax). These two major events were likely the cause of the massive run up in prices. Multiple offers being a regular occurrence in the first quarter of 2010, in addition to the lack of willing buyers has added fuel to the current decline in prices.
Housing sales in Toronto have fallen 34% in July alone when compared to June when prices had declined an average of 3.3%. Vancouver and Calgary where even worse and what’s interesting is that this is all happening during a time where Canadian Banks are still offering extremely low, fixed and variable interest rates. I expect that this trend will continue until at least the 2nd quarter of 2011.
Employment numbers for Canada and the US released today are also terrible. Canada had expected to gain 14,000 jobs and actually ended up losing 9,000 jobs. The Canadian unemployment rate has now edged up to 8%. The US was even worse. The US expected to lose only 61,000 jobs but actually lost 131,000 jobs.
I anticipate that we will most likely see one more interest rate hike this year. Mark Carney, the Governor of the Bank of Canada seems to be committed to seeing the Bank of Canada continue to raise interest rates in Canada, but I suspect that after the next interest rate hike, the rate increases may stop for some time. Carney will probably take a “wait and see approach” to see, how the Canadian economy will react to the interest rate increases and to see if the US will start to raise their interest rates. I don’t think that the US will look at increasing interest rates until at least 2012.
The Bank of Canada will only start raising rates again if the threat of inflation exists or if the US starts to tighten their belts. I don’t see this happening. If deflation sets in we could see low interest rates for some time and more stimulus spending. The two recent interest rate increases by the Bank of Canada has been more effective than anyone could have predicted, so more interest rate increases could have a negative effect on the economy which no one wants to see happen.
Canadians will need to feel stability, security and housing prices will have to stabilize before they will start borrowing again. Climbing interest rates will not achieve this result.
In recent news, the US has reported that that their housing market has not even hit the bottom yet. These reports have also had a negative effect being the cause of a lack of consumer confidence on our side of the border.
I was in Michigan last weekend helping to raise money for a children’s hospital and I can tell you that I did not see any signs of a bustling economy. In fact the Shopping Mall was all but empty on a Saturday afternoon. If Americans don’t start spending this will eventually spill over into Canada since they are our largest trading partner which will create further downward pressures which will only result in further belt tightening.
Paul Mangion
In Ontario, we have observed a massive run up in housing prices this year. This was caused by changes that were made this year by the Federal and Provincial Government. In April CMHC introduced new rules and in July, the Province of Ontario introduced the HST (harmonized sales tax). These two major events were likely the cause of the massive run up in prices. Multiple offers being a regular occurrence in the first quarter of 2010, in addition to the lack of willing buyers has added fuel to the current decline in prices.
Housing sales in Toronto have fallen 34% in July alone when compared to June when prices had declined an average of 3.3%. Vancouver and Calgary where even worse and what’s interesting is that this is all happening during a time where Canadian Banks are still offering extremely low, fixed and variable interest rates. I expect that this trend will continue until at least the 2nd quarter of 2011.
Employment numbers for Canada and the US released today are also terrible. Canada had expected to gain 14,000 jobs and actually ended up losing 9,000 jobs. The Canadian unemployment rate has now edged up to 8%. The US was even worse. The US expected to lose only 61,000 jobs but actually lost 131,000 jobs.
I anticipate that we will most likely see one more interest rate hike this year. Mark Carney, the Governor of the Bank of Canada seems to be committed to seeing the Bank of Canada continue to raise interest rates in Canada, but I suspect that after the next interest rate hike, the rate increases may stop for some time. Carney will probably take a “wait and see approach” to see, how the Canadian economy will react to the interest rate increases and to see if the US will start to raise their interest rates. I don’t think that the US will look at increasing interest rates until at least 2012.
The Bank of Canada will only start raising rates again if the threat of inflation exists or if the US starts to tighten their belts. I don’t see this happening. If deflation sets in we could see low interest rates for some time and more stimulus spending. The two recent interest rate increases by the Bank of Canada has been more effective than anyone could have predicted, so more interest rate increases could have a negative effect on the economy which no one wants to see happen.
Canadians will need to feel stability, security and housing prices will have to stabilize before they will start borrowing again. Climbing interest rates will not achieve this result.
In recent news, the US has reported that that their housing market has not even hit the bottom yet. These reports have also had a negative effect being the cause of a lack of consumer confidence on our side of the border.
I was in Michigan last weekend helping to raise money for a children’s hospital and I can tell you that I did not see any signs of a bustling economy. In fact the Shopping Mall was all but empty on a Saturday afternoon. If Americans don’t start spending this will eventually spill over into Canada since they are our largest trading partner which will create further downward pressures which will only result in further belt tightening.
Paul Mangion
Subscribe to:
Posts (Atom)