The BoC (Bank of Canada) reduced its over night interest rate from 0.75% to 0.5% on July 15 back in the middle of our great summer weather run. In turn these cuts made for even more attractive mortgage rates. These cuts were not designed to help mortgage borrowers but ultimately what helps the economy, in this case, helps mortgage holders.
Experts are predicting that this may further stimulate the real estate market, which we have seen already locally, with more buyers being able to qualify for a mortgage.
If you are thinking about buying a home or are close to needing to renewing your mortgage – here is what you need to know about choosing between a Fixed vs Variable Mortgage. (As per our Verico Monthly Newsletter)
“This latest rate cut will peak the interest for a variable rate mortgage because of the immediate benefits consumers will see in their mortgage payments. Markets are also predicting another rate cut in September if the economy remains stagnant, meaning variable rates could be lowered even further.
If you are considering this type of mortgage, I highly recommend that you review your financial situation. If you are comfortable with a 2% rise in interest rates, then a Variable Rate Mortgage could be a good choice for you.”
To offset some of the risk of increase in mortgage rates for Variable Rate Mortgages we also recommend setting your payment at a higher level equivalent to what you would pay as a Fixed Mortgage. This enables you to payoff significantly more of your mortgage balance when rates are low and gives you a buffer against change.
We feel one of the risks to having a variable rate mortgage is the ability you have to making higher payments when a rate hike occurs. The strategy above helps protect you from this in many ways.
If you or a family member is thinking about getting a mortgage, expecially a variable rate mortgage, contact me so I can help you review your financial situation.
By Referral Mortgage Consultants* “Click, Call, Chat – Award Winning Brokers”
1 – 32540 Logan Ave
Mission BCV2V 6G3 & 360-3033 Immel St AbbotsfordBCV2S 6S2 & 8387 Young Rd ChilliwackBCV2P 4N8 Dave 604 897 2741 Jordi 604 615 1312
www.AbbotsfordsMortgageBroker.com www.BRMC.ca www.PeaceOfficeMortgageBroker.com Connect with us on!
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