Your Mortgage Strategy
As you know the fixed rates have had 2 significant jumps over the past 10-14 days. This is a result of the bond market activity and shrinking spreads for the lenders.
The Bank of Canada has held rates as is and will continue to do so for another year most likely. Anyone in "old" variable rate mortgages will have a significant discount below prime and should likely stay floating. I would recommend however, that if you are not already on an accelerated payment plan where the payment you are making is the equivalent of making a mortgage pament @ 5% you should make this change.
Variable rate mortgages can save you a lot of interest, but they have a greater impact when you also increase your payments instead of taking the lower "float down" payment. Currently old contracts allow the borrower to pay a negligible amount of interest as many of these contracts are priced at 1.3-1.45%. This means that you are paying roughly $120 in interest per month per $100,000 of a mortgage. Imagine if you increased your payments from your current payment to one equivalent to paying 5%. You would shave off almost 9 years from your mortgage pay off date.
Please take a moment to review with us where we can improve your mortgage strategy. You may contact us @ 604-351-7438 I am at local 4, Shannon is at local 5 and David is at local 6.