Bank of Canada drop rates again

[Mike Oxlong]

Originally Posted by FLAMESRULE

Just out of curiousity, we have a floating mortgage as well, but we fixed our monthly payments at about a 5.7% interest rate, now that we'll be down to 2% its taking years off our mortgage.

Any good reasons why people have let their payments float (keeping the total term the same), vs fixing the monthly payment and letting the length shorten/lengthen??

We did it to budget easier.

What you are doing is very smart and financially responsible. Like you said with rates dropping it is taking years off your mortgage.

Some people let their payments float with the rate so they take advantage of lower monthly payments. However it doesn't help them pay anything off any quicker. Especially at 5.7% where you are you are putting a LOT towards the principal now.

[Bertuzzied]

Originally Posted by photon

Me?

EDIT: Nevermind, I have prime -0.5% on my lines of credit, not -1%, not sure what I was thinking.

Ok I don't feel as bad anymore. haha. still. 2%! thats crazy.

[Mike Oxlong]

Originally Posted by Bend it like Bourgeois

So when does it become reasonable to move the fixed rate mortgage?

Is there a handy calculator for that somewhere?

This isn't a calculator but it is a pretty good debate showing fixed vs. variable.
http://watch.bnn.ca/stars--dogs/febr...09/#clip144597

[DementedReality]

Originally Posted by Slava

I haven't seen anything yet...where did you find that?

mechanically speaking, how can National Bank match the bank prime of 2.5% for the AIO product, but M1 cant?

[Slava]

Originally Posted by DementedReality

mechanically speaking, how can National Bank match the bank prime of 2.5% for the AIO product, but M1 cant?

I'm not too sure on this. I am going to contact the bank and get a response.

[Doctordestiny]

Originally Posted by Slava

I'm not too sure on this. I am going to contact the bank and get a response.

Let us knwo what they say please.

[Deegee]

I'm not sure what this drop is supposed to do, really.

[Slava]

Originally Posted by Deegee

I'm not sure what this drop is supposed to do, really.

Free up credit, entice entities who are qualified to want to borrow and spend.

[Deegee]

As a lender I have noticed that while you would think a rate drop would increase the level of borrowing I have noticed that credits that would be automatic approvals a year ago are now no longer automatically a go and require a lot more effort to push through, even for longtime borrowers. I am refering to Agricultural and Commercial credits moreso then Consumer deals. I can concur that people I know that work for competitors have echoed those comments to me.

I guess I should have used the green text, as I am aware of what a rate cut is supoposed to do, I am just skeptical that banks going from a Prime lending rate of 3.00% to 2.50% will suddenly change things.

[Slava]

There is no question that there is a lot of tightening in the credit markets...particularly in the areas that you work in! I notice that the lenders in general are taking a lot less risk, and at the same time would-be borrowers are less willing to go into debt. Its a two-way street in that respect. You're right though, cutting the rate doesn't sway things quickly...but it might see some increased spending for some big ticket items and that would be a good start for the economy.

[DementedReality]

it makes sense that it is harder to get a loan when the rates are this low ... the risk is much higher as the banks dont have the margins from the good loans at higher interest rates to buffer the bad ones.

2.5% doesnt represent that great a return, so it makes sense they are only going to go for the safe loans.

its a balancing act, raise the rates and the banks can loan more but less people will be willing to take on the debt.

odd, but interesting. am i off base?

[MacDaddy77]

Quote:
Originally Posted by FLAMESRULE
Just out of curiousity, we have a floating mortgage as well, but we fixed our monthly payments at about a 5.7% interest rate, now that we'll be down to 2% its taking years off our mortgage.

Any good reasons why people have let their payments float (keeping the total term the same), vs fixing the monthly payment and letting the length shorten/lengthen??

We did it to budget easier.

My Wife and I did the same thing. Right now we are paying 65% more Principle than interest.

i am so glad we went with a variable mortgage

[Glenflame]

I am happy to have 1.8% rate from April 1 for the rest of 4 years.

[DementedReality]

Originally Posted by Glenflame

I am happy to have 1.8% rate from April 1 for the rest of 4 years.

you are locked in at 1.8 ? wow, how did you manage that?

[Bertuzzied]

Originally Posted by DementedReality

you are locked in at 1.8 ? wow, how did you manage that?

All variable rate mortgages used to be prime - . Not anymore.

Poor BMO customers. I guess it's official they upped their EXISTING helocs by 1%.

I just got an email from my mort broker. they have a 5 year closed at 3.99%. Still happy with my heloc though.

[DementedReality]

Originally Posted by Bertuzzied

All variable rate mortgages used to be prime - . Not anymore.

Poor BMO customers. I guess it's official they upped their EXISTING helocs by 1%.

I just got an email from my mort broker. they have a 5 year closed at 3.99%. Still happy with my heloc though.

i understand that part .. but when someone says they have 1.8 for the rest of 4 years, that indicates a locked in rate. dont you think?

[Bertuzzied]

Originally Posted by DementedReality

i understand that part .. but when someone says they have 1.8 for the rest of 4 years, that indicates a locked in rate. dont you think?

oh haha. i misunderstood that. good point. well he's betting prime will stay at 2.5% for those 4 years.

[photon]

I haven't got any notice yet from BMO.