Rates have substantially increased over the last 6 of months. We have seen 3 prime rate increases with more on the horizon. Fixed rate mortgages have also followed suit due to bond market instability and the increases are noticeable. Consumer’s have rapidly moved from Adjustable rate products to longer term Fixed rates of 5 years or greater. Fixed rate advantage is that they provide consumers with added security and stability against an unstable market without an end in sight! Questions still to be answered in the coming months. When will bond rates stabilize? Will global pressures continue to drive increases? Will we see a return to historical norms? What will be the impact of NAFTA negotiations/deterioration on the Canadian economy?
Perhaps the interim answer to all this instability and volatility is to start looking a longer “term” such as 7 & 10 year terms. These longer term mortgages help insulate homeowners against potential increases in the short to long-term – as well as provide safety and consistency with mortgage payments that won’t fluctuate with the market.
We don’t have to go back very far (6-7yrs) to a time when 10 year mortgages were a very popular option. During that time many case studies show this product didn’t work out for those borrowers who selected those 10 year terms because back then we were in a more stable rate environment and there was very little difference between the 5 & 10 year rates at the time. Shortly after this period, rates quickly dropped to even further all-time lows. Compare those details to our current market trends and it becomes quickly apparent rates have been continually rising with more increases forecasted.
Is it your time to renew your mortgage? Are you looking to move this year? Why not look at a longer term mortgage option today? It’s time to discuss your options available!