Bank of Canada increases Bank Rate to 4.50% and banks follow. Prime now 6.25%

[Bill Bumface]

Originally Posted by MacDougalbry

That is conventional wisdom, but 2 yrs. ago when I locked in my rate for 7 years @ 4.8%, I was "in the money" versus the floating rate by the end of the first year.

Well it looks like you had perfect timing, but locking in now might not pay off.

[mykalberta]

I got 5.15 locked for 10 years last June.

Anyone who took a floating mortgage has no one to blame but themselves.

Calgary real estate IMO is diametrically skewed towards the downtown core which creates the burb nightmare as well as the current traffic nightmare.

I work downtown and because I dont want to pay 400+ to park, I decided to spend a bit more and buy a place close enough so I can walk to work. I dont think any residence within walking distance to downtown will go down so much as it makes financial sense to exit the mortgage. I think the people who will be hurt are the people paying maybe 20-40k less for the same sized residence but they live at the axis points connected via the CTrain.

Since I moved in last June, purchased in April, similar units in my building have sold for 100-130k more than what I paid. I as one person make a smidge above the average median income for Calgary, and if i were married it would be very likely that the income would double. The only correction the markety has realized is that now that married couples have two similarily sized income, the residences have a larger ceiling.

MYK

[BlackEleven]

Sure glad to be locked in a 4.5% for the next 3.5 years!

[ericschand]

Previous mortgage was 5 years at 3.25%, by far the best rate
I've ever seen.

I just renewed, open mortgage at 6%, now going up it seems.

ers

[Bill Bumface]

Originally Posted by mykalberta

I got 5.15 locked for 10 years last June.

Anyone who took a floating mortgage has no one to blame but themselves.

Calgary real estate IMO is diametrically skewed towards the downtown core which creates the burb nightmare as well as the current traffic nightmare.

I work downtown and because I dont want to pay 400+ to park, I decided to spend a bit more and buy a place close enough so I can walk to work. I dont think any residence within walking distance to downtown will go down so much as it makes financial sense to exit the mortgage. I think the people who will be hurt are the people paying maybe 20-40k less for the same sized residence but they live at the axis points connected via the CTrain.

Since I moved in last June, purchased in April, similar units in my building have sold for 100-130k more than what I paid. I as one person make a smidge above the average median income for Calgary, and if i were married it would be very likely that the income would double. The only correction the markety has realized is that now that married couples have two similarily sized income, the residences have a larger ceiling.

MYK

Historically those who float have always saved over those who lock in, so really you don't need to blame yourself.

Also, I foolishly purchased well outside walking distance to downtown and my place sells for 180% of what I bought it for. That was sure a dumb move on my part

[Sylvanfan]

I have a floating rate and for the first year and a half I was well below any rate I could have locked into at the time. Two years in and now I'm getting above the posted rate, but I still don't think it's time to panic, I mean I have 3 more years and a lot of rate changes will occur in that time frame. Right now my rates are going up, but I have my payment set at a 9% interest rate right now so the BOC would have to raise prime by 4% until I would have the bank coming to me screaming for more money. If you don't have the flexibility to handle the floating rate than you should lock in. But what the hell historically it's been good practice to go with the floating rate, and so far I haven't lost anything yet and if I do, well hardly the end of the world.

Realistically I think the B.O.C. would like to have regionalized rates and would have lower rates out East and higher ones in Alberta. But that would be impossible to enforce so they're stuck using a national rate that has to take the whole country into account. So we may have a couple rate increases due here in the short term and that will certainly cool the housing market, but something really drastic would need to occur to get a crash.

[Cowperson]

Originally Posted by hulkrogan

Historically those who float have always saved over those who lock in,

Not always, but generally.

Short term rates are usually underneath long term rates. An inverted yield curve (long rates higher than short rates) is a rarity.

Secondly, rates have returned to a fairly normal range, historically, after the inflation driven 70's, 80's and early 90's. While there is some upward pressure right now, an expectation of markedly higher rates is probably out of line.

The determination of whether or not you should float is actually better fielded by asking yourself whether you can afford the higher mortgage payment if rates were to rise. . . . . if not, then you should aim for the certainty of a fixed rate you know you can actually pay.

Cowperson

[Slava]

I think that you're right on the money here Syl. In Canada the average prime rate including the early 80's is 7.64%. I have a pure floating rate and I won't go with a locked in for the foreseeable future. Sure, my payment just rose a touch, but as soon as the rates come down (and they will eventually) I pay less interest. Plus, when I made that switch a few years ago I saved a pile of money...so it all evens out in the end as far as that goes.

[Bill Bumface]

Originally Posted by fotze

Hey when you know it all you know it all. If you have never made a mistake and every decision was the right one, why not spread the word about it. Grey area is for suckers.

Just curious if you mean me or the other guy I was responding to. I clearly don't know it all, because at the time I thought about buying 2 of my units and flipping one right away, but decided the profit likely wouldn't be worth the investment. That was a $40,000 mistake.

Also, I thought about getting a loft downtown, but it was near the limit of my price range and needed a lot of work so I didn't get it. I'm sure if I looked at the price now I'd regret that one too. If I would have stretched myself I would have gained more because of it.

[cal_guy]

There also fixed rate variable mortgages where the monthly payments stay the same each month but the amount of interest to principle you pay off changes as the interest rates changes (i.e if the interest rates increase you pay more interest and less principle).