Good morning Tania, As you know I follow both the Bank Of Canada overnight rate, and the Canadian Bond rates very closely, in an effort to best predict what rates will be doing in the near future. This can be useful for clients in making decisions pertinent to both buying or selling a home. My research has indicated a couple things over the last few weeks. First, the Bank Of Canada did not make any changes to the overnight or Key rate, also known as prime. They are still at 1%, and most lenders will then add on 2% as their mark up, making bank prime 3%. Most clients having a variable rate mortgage should be in the prime -.5 or lower range, making their current rate 2.5%. If they are any higher than that they really need to have their mortgage evaluated as they can likely break that mortgage and save thousands of dollars. The other common product tied to prime, is a HELOC, or credit line attached to your house. The most common rate on this product is prime PLUS 1, or 4% currently. Again, anyone in this product really needs to do an analysis as they are typically paying 25%-30% more in interest than is needed. I have a very strong, yet simple strategy that will again save thousands, and not affect cash flow. Next, the misconception is that when the Bank Of Canada makes an announcement that they are leaving the Key rate unchanged, people mistakenly assume that means fixed rates will not be changing either. The flaw in this thinking is that fixed rates are not directly tied to prime rate. Rather, it is the bond rate that dictates increases or decreases for these products. The bond rate will generally move upwards well before the Bank of Canada raises the Key rate, and as such it can be difficult for most people to keep track of. Currently, the bond rates have been trending upwards. About 2 weeks ago we saw a fairly substantial increase in the bond rate resulting in an average 5 year fixed rate moving from 3.49% to 3.79% . I do still have 1 lender with a 3.49% available for 30 day quick closes, which I expect to disappear any time now. After watching the bond rate over the last 2 weeks, we feel there is a real possibility we will see a very similar increase again, within the next week to 2 weeks, and certainly by the new year. this would make sub 4% a thing of the past. What is important about all of this, is that if one is in a position right now where they are thinking they will wait until the new year to think about these things and then begin the process, it could potentially cost them thousands of dollars. This can all be easily avoided by simply putting in application for a rate hold. There are many options from 30 days to 6 months available, and if for some reasons rates do drop again in that time they would receive the lower rate again. I am more than happy to speak with any client that would see this as a benefit, and help them save as much as possible on their next move. The process is very simple, and takes very little time. Thanks!! Dave Alberda Mortgage Associate Mortgage Alliance-S&R Mortgage Group 4620 Macleod Trail SW Calgary, AB, T2G 5E8 Phone: (403)803-4675 Fax: (403)226-4622 Follow me: http://twitter.com/Dave_Alberda Website: www.alberdamortgage.com
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