Mortgage rates are going back up

[Mike Oxlong]

Originally Posted by Sidney Crosby's Hat

Here's a dilemma, do I go with 3 years at 3.15% or 5 years at 3.50%?

I would go 5 years at 3.5% without question. These rates are historically low. It's going to be a lot more than 5 years before we see them again.

The difference between 3.15% and 3.5% is significant but you have to consider where rates are going to be in 3 years from now when you come out of that term. You would have to do the math to figure out what rate you would need to break even at after 3 years to make it worth taking 3.15 over 3.5.

In my opinion when rates are at historic never before seen lows, lock in for as long as possible and milk them for all you can.

A lot of economists think that with all the money that has been injected into the economy during the recession there is going to be some pretty heavy inflation as it works it's way through the system. The way they are going to battle inflation is to raise interest rates. How high they will go and for how long is another matter, but for my money I would lock in and be safe for as long as possible.

If someone offered you 3.5% for 5 years a year ago I think everyone would jump all over it.

[Glenflame]

Originally Posted by photon

Thanks for the input guys, yeah I should have locked some in at 3.5%.

You are locking the best rate in history. We probably could not see it again within 30 years.

[T@T]

Originally Posted by Sidney Crosby's Hat

Here's a dilemma, do I go with 3 years at 3.15% or 5 years at 3.50%?

My spidy sense says in 3 years 6% will be a good rate. lock in at 3.5 and buy a new car with the winnings!

[macker]

Originally Posted by Mike Oxlong

Bond markets affect long term FIXED rates yes. However prime is directly affected by the Bank of Canada overnight rate which is expected to stay low until June of 2010. Variable rates are tied to the prime rate at lenders.

Bond yields have been climbing for a while now. I am surprised it took this long for the lenders to raise rates. Seems like they are making up for lost time as well.

Right but someone was asking if they should lock in "long term" and based on the rapidly rising fixed rates I think the answer is now yes. Besides I trust the bond market more than BOC If you wait too long you might be stuck variable....Foreign investors will demand attractive bond yields or they will choose to not invest in the US and that is what is driving things right now...not much the Fed can do about it as they need these foreign investors at this point and it was working today......http://www.bloomberg.com/apps/news?p...d=aUtTOSvQ5ENU

[Jedi Ninja]

Is anyone still offering a rate less than 4% that also offers at least a 90 day rate guarantee?

[Mike Oxlong]

Originally Posted by Jedi Ninja

Is anyone still offering a rate less than 4% that also offers at least a 90 day rate guarantee?

Other than ATB no. Not that I know of,the lowest rate for a 5 year fixed I can find now is about 4.34%.




Boy those escalated quickly, I mean it really got out of hand fast.

[Draug]

Originally Posted by Mike Oxlong

Boy those (rates) escalated quickly, I mean it really got out of hand fast.

Do you think there is any chance they'll drop back down a bit in the next month or two, or longer? Or are we guaranteed to slowly climb until inflation becomes a problem and forces a huge climb?

I have a couple rental properties that I was hoping to refinance at under 4% 5 yr Fixed. I was just waiting until I moved into our new place at the end of this month to make sure there was no possible way to ruin my current approved mortgage ... unfortunate timing on these drastic rate hikes.

[macker]

Originally Posted by Jedi Ninja

Is anyone still offering a rate less than 4% that also offers at least a 90 day rate guarantee?

http://www.macquariefinancial.com/WSCM_MFLCanada/ Pretty sure these guys are but I think the only shop in town that has them is Mortgage Alliance? http://www.mortgagealliance.ca/

[Tron_fdc]

I have a couple rentals, and this is what my banker at RBC just emailed me this morning.

Good morning Matt, fixed rates have gone up. For example a 5 year fixed closed rate would be 4.55% Currently you have open variable for two segments at prime less.55% currently 1.7% For the new open variable segment it is Prime + 1% or 3.25% The payments would go up if we locked in and stayed at the same amortization. The Bank of Canada has said their prime lending rate should remain the same until next June at least, however this can always change. I would suggest to stay at the lower rate in the open variable. At any time we can make a lump sum payment to keep the same amortization on track. Let me know what you think.



I have no idea what the guy is talking about, but he's usually pretty good with me.

[Bring_Back_Shantz]

Originally Posted by Mike Oxlong

Other than ATB no. Not that I know of,the lowest rate for a 5 year fixed I can find now is about 4.34%.




Boy those escalated quickly, I mean it really got out of hand fast.

Totally. I was so worried about my mortgage rate that I killed a guy with a trident.

[Wookie]

Originally Posted by Tron_fdc

I have a couple rentals, and this is what my banker at RBC just emailed me this morning.

Good morning Matt, fixed rates have gone up. For example a 5 year fixed closed rate would be 4.55% Currently you have open variable for two segments at prime less.55% currently 1.7% For the new open variable segment it is Prime + 1% or 3.25% The payments would go up if we locked in and stayed at the same amortization. The Bank of Canada has said their prime lending rate should remain the same until next June at least, however this can always change. I would suggest to stay at the lower rate in the open variable. At any time we can make a lump sum payment to keep the same amortization on track. Let me know what you think.



I have no idea what the guy is talking about, but he's usually pretty good with me.

Probably because he sent you some random email meant for someone else, whoever this "Matt" is, he'd probably be able to decipher this confusing message.

[ken0042]

Originally Posted by Tron_fdc

I have no idea what the guy is talking about, but he's usually pretty good with me.
[/SIZE]

What he's saying is you have 1.7%, and his crystal ball says that rate will remain the same for another year. If you "locked in" now your rate would go up a bunch.

So what he recommends you do is figure out now how much that will be going up, and start "pretending" that is what you have to pay each month. That way 1 year from now you will owe less and pay less interest.

So some random numbers here using www.mortgage-calc.com
$200K house, 25 year amortization @ 1.7% interest - total payment is $818 per month.
$200K house, 25 year amortization @ 4.45% interst - total payment is $1117 per month.

So at the current rate of 1.7% you will be putting about $530 per month against the principal. By paying the $1117 you will be putting $829 per month against the principal.

So take advantage of your currently low rate, pretend it's higher, and work towards paying off your house quicker.

[Slava]

Originally Posted by ken0042

What he's saying is you have 1.7%, and his crystal ball says that rate will remain the same for another year. If you "locked in" now your rate would go up a bunch.

So what he recommends you do is figure out now how much that will be going up, and start "pretending" that is what you have to pay each month. That way 1 year from now you will owe less and pay less interest.

So some random numbers here using www.mortgage-calc.com
$200K house, 25 year amortization @ 1.7% interest is $818 per month.
$200K house, 25 year amortization @ 4.45% interst is $1117 per month.

So at the current rate of 1.7% you will be putting about $530 per month against the principal. By paying the $1117 you will be putting $829 per month against the principal.

So take advantage of your currently low rate, pretend it's higher, and work towards paying off your house quicker.

Right, and the rates would need to rise by 2.85 for your variable rate mortgage to be even with the current locked in. According to the BOC that move towards a 2.85% increase doesn't begin until June 2010 barring unforeseen circumstances.

[Mike Oxlong]

Originally Posted by macker

http://www.macquariefinancial.com/WSCM_MFLCanada/ Pretty sure these guys are but I think the only shop in town that has them is Mortgage Alliance? http://www.mortgagealliance.ca/

No Macquarie is up at 4.49% as well with everyone else. There are many brokers in the city that use them not just Mortgage Alliance.

They give rates breaks based on the size of the mortgage usually. Over $500,000k will be a lower rate, and it keeps lowering the higher the mortgage amount.

One of the only lenders I have seen who do that.

[Mike Oxlong]

Originally Posted by Bring_Back_Shantz

Totally. I was so worried about my mortgage rate that I killed a guy with a trident.

I've been meaning to talk to you about that. You should find yourself a safehouse or a relative close by. Lay low for a while because your probably wanted for Murder.

[Mike Oxlong]

Originally Posted by Draug

Do you think there is any chance they'll drop back down a bit in the next month or two, or longer? Or are we guaranteed to slowly climb until inflation becomes a problem and forces a huge climb?

I have a couple rental properties that I was hoping to refinance at under 4% 5 yr Fixed. I was just waiting until I moved into our new place at the end of this month to make sure there was no possible way to ruin my current approved mortgage ... unfortunate timing on these drastic rate hikes.

Unfortunately I don't think they are going to be dropping again anytime soon. The bond yields which affect long term rates have been rising for quite some time now and the banks held off on raising rates. Looks like the last 2 days was to make up for lost time.

I'll watch to see what the bond yields are doing and let you know but 5 year fixed under 4% was just too good to last for very long.

At least you got one of your places at a good rate.

[macker]

Originally Posted by Mike Oxlong

No Macquarie is up at 4.49% as well with everyone else. There are many brokers in the city that use them not just Mortgage Alliance.

They give rates breaks based on the size of the mortgage usually. Over $500,000k will be a lower rate, and it keeps lowering the higher the mortgage amount.

One of the only lenders I have seen who do that.

Fair enough. I ran into one of their brokers yesterday and she was saying that they were the only shop in town that has Macquarie and that the 5 year fixed with them was at 3.75%. She was also talking about a similar rate with First Capital but if you check their web sites directly there is conflicts to what she was telling me....Maybe she has some favors that are being paid back from those two lenders...Anyways, if that ATB rate that others were mentioning is still available that is an outstanding 5 year rate!

[Mike Oxlong]

Originally Posted by macker

Fair enough. I ran into one of their brokers yesterday and she was saying that they were the only shop in town that has Macquarie and that the 5 year fixed with them was at 3.75%. She was also talking about a similar rate with First Capital but if you check their web sites directly there is conflicts to what she was telling me....Maybe she has some favors that are being paid back from those two lenders...Anyways, if that ATB rate that others were mentioning is still available that is an outstanding 5 year rate!

To be fair to her, those rates all went up in a matter of a few hours yesterday. They could have been at 3.75% when you spoke with her and if she wasn't around her email or wasn't aware they increased she could have been in for a surprise when she got back to the office.

It was a crazy day.......

[Tiger]

So my mortgage is up in november. Do I pay the $1650 fee (I checked, that is the fee) and lock in to a 3.5%, or do I wait until the 90 days when I can lock in? By that time I suspect the rates to be up a little more even.

[albertGQ]

Originally Posted by Tiger

So my mortgage is up in november. Do I pay the $1650 fee (I checked, that is the fee) and lock in to a 3.5%, or do I wait until the 90 days when I can lock in? By that time I suspect the rates to be up a little more even.

That is all your fee is? Pay it and get the 3.50% rate NOW.

My payout penalty was over $12,000