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Have Interest Rates Bottomed? A Mortgage Lender Says They Are Begining to Move Up

By
Real Estate Agent with Sutton Group-Capital Realty Ltd.

In St. John's Newfoundland, a local lender, Mr. John Woodford with the Royal Bank of Canada just sent me an email last evening to say that interest rates have moved up for the major lenders in Canada.  It appears that he knew this was coming since Monday but was not permitted to release it to the public.  I always knew John was a man of principal.  Turns out he is actually a man of principal and interest.  OK, bad pun. 

Here is the latest news according to John.  "The 5 year fixed closed rate is now 4.54%.  The 5 year variable open rate is prime + .70 (2.25 + .70 = 2.95%) and the 5 year variable closed (the shining star!) is prime + 0...ie: 2.25%.  The latter is proving to be very popular these days!" 

Yes, I should say so.  A five year floating rate at prime is very nice indeed!  I just might like to take advantage of that myself.  I wonder if the prime rate will float past 5% in the next five years.  Hmmm.  I must ask John as he probably has an opinion about that.

There is no doubt that the rising home prices in St. John's, Newfoundland can be attributed in part to the strong economy in the province and as well to the very low interest rates that we have been enjoying for the last couple of years.  How long the low interest rates will last is for smarter analysts than I.  The bigger question I am interested in is, "Have interest rates bottomed?"  If so, then buying a home sooner than later would make a lot of sense, at least for those who are intending to buy a home.

If you have any desire to find and purchase a home as a residence or one as an investment property, simply get in touch with me at your earliest convenience.  I would be happy to be of assistance.  John Woodford will no doubt be happy to "lend" a hand too.  OK, I will stop with the puns now.  

R. Greg Osmond is a Platinum Award winning Realtor serving St. John’s and surrounding areas, Newfoundland and Labrador for over 20 years and can be reached at 709-895-2500. Visit http://www.rgregosmond.com/ for further information.

 

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By R. Greg Osmond, MBA

About the Author: R. Greg Osmond, MBA is a Platinum Award winning Realtor dedicated to serving the people of St. John's, Mount Pearl, Paradise, Kilbride, Goulds, Conception Bay South (CBS), Portugal Cove-St. Philips, Torbay- Flatrock- Pouch Cove, and Logy Bay - Middle Cove - Outer Cove, Newfoundland and Labrador. For over 24 years Greg has been practicing in Real Estate. He is also president of Red Maple Development Inc., a firm focused on new home construction and existing home renovations, for Greg's clients and the market.  Greg can be reached at 709-682-9670.  Greg's Associate Realtor, Andrew Macdonald BBA, may be reached at 709-749-8879.

Want to get in touch? Email rgosmond1@gmail.com. For more information, please visit http://www.rgregosmond.com. Thinking of selling your home? I have a passion for helping my clients with buying and selling real estate! If there is any way I can be of service to you today, please feel free to contact me!

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Sylvie Conde
Sutton Group-Associates Realty Inc., Brokerage - Toronto, ON
Broker, Toronto Real Estate

LOL Greg.  You had me laughing with John's principal and interest. :)

I actually have a variable rate mortgage, and have had it since the good old days, when the banks were offering PRIME MINUS HALF percent ... so I'd really not see them go up at all. :)

I know it will happen, but in the meantime, hopefully, I can continue to pay down that principal, before the John at my bank decides my mortgage payment should cover only interest. :)

 

Oct 14, 2009 04:37 AM
R. Greg Osmond
Sutton Group-Capital Realty Ltd. - St Johns, NL
MBA, Red Maple Realty

Sylive,  You are a smart lady.  An interest rate less than prime is quite something.  I have always chosen a fixed rate which has been higher than the variable rates.  If I start going to a variable rate for my next mortgage renewal, no doubt it will be a contrarian indicator that interest rates will move up sharply. ;)

Oct 14, 2009 11:22 PM
Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495

Greg,

I think they'll bounce along the bottom for awhile yet.  The United States is trashing its dollar.

Mike in Tucson

Oct 16, 2009 04:24 PM
R. Greg Osmond
Sutton Group-Capital Realty Ltd. - St Johns, NL
MBA, Red Maple Realty

Mike,  I hear you.  They are trashing the dollar to slow down the imports from China. The flow of dollars for too long has been out of the US.  When they bring some balance of trade back then they can raise rates.  And when they decide that inflation is getting out of control as it will they will raise rates. For now we bump along till the tide changes.  But maybe the bottom is in.

Oct 17, 2009 01:54 AM