Durham Region Real Estate Blog

Have you been listening to the reports on the European economy? It appears that they have bought themselves some time from those vicious currency and bond speculators (for a small some of one trillion dollars!). And this has all reflected by making individuals a little more relieved about their finances. Investors were lulled into a false sense of security during April as volatility fell to the lowest level since July, 2007, and May brought a spike in volatility that really shocked most people.

For now, most are over the shock and are returning their interests to thier own pocketbooks and investments. What does the job and income situation look like? Are financial plans still intact? What about that mortgage coming due next month?

Do you dread your mortgage decision? Despite the signs of an impending rise in the general level of interest rates and warning from government officials, there still seem to be a lack of conviction among Canadians as to whether they should lock in their mortgages at prevailing rates, versus holding on to a floating rate mortgage.  So what are the facts?

Despite the recent jump in rates, we still look to be in the middle of a downward trend in mortgage rates since 1981. Do you remember that year and its five year term that was in excess of 22%? It came at the same time that North America fell victim to a painful double-dip recession. Inflation was sitting around 12% at the time. Many families lost their homes, but today we are in just as precarious a situation as households are holding a much higher debt ratio than we were in the past and that makes us more susceptible to disaster.

The prime rate hasn’t budged from 2.25%, set in April, 2009, so your variable rate mortgage is still an attractive option. Many lenders are offering a variable rate that is tied directly to the prime rate, thereby saving homeowners choosing this route to really take advantage and pay down their mortgages early. The five year rate, however, has been a different story. Conventional five-year rates (posted rate) fell to a low on 5.25% in April, 2009, only to increase to 5.85% throughout the summer, then we saw a reprieve in the early months of this year. That all changed toward the end of the first quarter as the economy was looking better and inflation fears began to creep back in to the market. The mortgage rates went from a low of 5.35% in March to a high of 6.25% by late April. There has now been a 15 basis point reprieve to 6.1%.

So what is the point of all this? Whether you choose a fixed or variable rate (or a combination of the two) mortgage, there are plenty of options out there for you. And with the real estate market in the Durham Region strong, very strong; 819 sales in February, 1,110 in March and 1,185 in April, you might want to consider a move, whether it be into your first home or into your perfect retirement place. I have access to mortgage rates much lower than the posted rates. The variable rate is 1.65% and the five year fixed rate is 4.25%. Very attractive considering the current posted and discounted rates! Contact me to find out more details.

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