Quote:
Originally Posted by Mike Oxlong
In my opinion though when I can get you a 5 year fixed rate at 3.59% you really can't lose. I see what the OP is trying to do by timing his mortgage terms to maximize the lower rates. It's a risky way to do it but it might pay off. On the other hand a year from now when that 1 year term is expiring a 5 year fixed rate could also be back up to 4.5%. Which still isn't a bad rate but certainly not the obscenely low 3.59%.
This is like trying to time the exact bottom of the stock market or the real estate market. It's a tough thing to do, there are so many variables out there.
Bottom line is can you deal with 3.59% for the next 5 years and be pretty comfortable with things? Or do you want to roll the dice on a 1 year term and see where things are in a year? A lot can change in a year.
Being a mortgage broker I have an advantage of getting a bit of a sneak preview of what rates are doing. As soon as one lender drops or raises rates the others are bound to follow within a week or so.
It's tough to predict where rates are going to go and when. When 5 year fixed were at 4% I really didn't think they would get much lower but they did. I really don't think they have too much more room to drop. They may slightly but as I said 3.59% on a 5 year is unheard of.
If you asked everyone on this board a year ago if they would lock into a 5 year at 3.59% I think everyone would have jumped all over it.
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Very helpful. Thanks for the clear advice. Locking in now, at a 5 yr fixed rate, seems to be the consensus on the way to go. You guys have definitely helped me make up my mind.
FYI, if I hadn't come on here and asked for advice I probably would have gambled on a 1 yr fixed rate at 2.9% and then at the end of the year gone for a 5 yr fixed rate mortgage. BUT, I was under the impression that mortgage rates are tied to the Bank of Canada rate (which of course they are) but not totally (thanks to everybody for clarifying that). I didn't know that a 5 yr rate was tied to the 5 yr bond rate too.. which is affected by various factors including inflation. My earlier plan now seems much more riskier.
Thanks again everybody. Please carry on with the discussion wherever it ends up. I'm learning a lot.