The Bank of Canada rate drop and the rumors of another drop to come seem to be in the news every day lately, but what does that mean to you, the homeowner?
We put this question to the experts:
I’ve heard a lot about interest rates and the Bank of Canada drop in the news lately, should I be doing anything with my mortgage?
Lisa Insalaco, Mortgage Broker, Mortgage Alliance Company of Canada
lisa@lisainsalaco.com
With the Bank of Canada’s recently cutting its key overnight lending rate by a quarter of a percentage and the world markets in a slight downturn, now is the ideal time to review your existing mortgage and explore your options. Consider borrowing to lower your current rate, invest or to take advantage of some unused RRSP limits. January is the time when a lot of Canadians analyze their debts and find ways to reduce their overall interest payments or increase their monthly cash flow for the year ahead. I can help with both.
Rick From, Mortgage Specialist, Royal Bank of Canada
richard.from@rbc.com
The economic environment has taken a downward turn, do to the unexpected drop in the price of oil, this in turn has made the Bank of Canada drop the Prime rate. So this brings to question mortgage rates and what is happening with the financial institutions and the prospect of lower rates in the market place. People are speculating weather or not this will start a rate war in the short term and if so, what do you do. For those people who are now in the market to make a purchase, the timing is fantastic, you can have your pick of rates Fixed or Variable you can shop around and see what is out there that best suits your needs. Remember rate is not everything when it comes to mortgages, you need to get all the information on the do’s and don’ts for each financial institution you go to. Both Mortgage brokers and Banks have their place in the market, be aware of the fine print and make sure that you can do those little extra’s with the mortgage. I.E. double up payments or lump sum payments. Is the mortgage portable to a new property if needed, can you refinance part way through or are you stuck with a great rate and no options. Information is your best friend, so ask questions and remember to write the response down. The rates have never been better so for those who have been sitting on the fence, got out there and make the move.
Jeff Attwooll, Mortgage Broker, Verico K-W Mortgage
jeff@jeffattwooll.ca
The drop in the Bank of Canada prime lending rate has widened the margin between a fixed rate and a variable rate mortgage. If you have a fixed rate that you have arranged in the last 4 yrs that is over 2.89% then you should look into the costs to switch to a variable rate. The cost to switch will be the penalty your current mortgage holder will charge to break the mortgage. Generally smaller Mortgage Broker lenders have better penalties then larger bigger banks. I would be happy to evaluate this comparison and realize if the switch works for you. If you have a variable rate mortgage currently then what you should be doing is keeping your payment the same or increase your payment in order to take advantage of these lower rates which is a gift from the Bank of Canada.