COMPARISON OF FIXED & VARIABLE RATES (25 YEARS)

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COMPARISON OF FIXED & VARIABLE RATES (25 YEARS)

The Bank of Canada may raise its rate by another 0.25% again tomorrow. Apparently, it is only a 50/50 chance because the economy is now stuck in neutral, although the possibility of a double dip is not out of the question, but unlikely. Below is the most current charts for a comparison of fixed and variable rates in Canada for the last 25 years courtesy of FirstLine Mortgages, a division of CIBC Mortgages Inc.

Although fixed mortgage rates have been dropping in recent days (you may be able to get a 5-yr fixed rate at less than 3.5% for a 30-day quick closing), you should still be cautious if you are a first time home buyer with no more that 5 to 10% down payment. Why? Because the trend for mortgage rates is still up. In 5 years’ time, if rates are close to double what they are now, can you still afford that mortgage?

My advice is: if you really want to buy that dream home, see if you can qualify for a variable rate mortgage. If you can, that means you pass the stress test with the BoC benchmark rate (currently at 5.39%). So why wouldn’t you take advantage of lower variable rates?

Flm historical- rate-sheets-august-2010

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On September 7th, 2010, posted in: Interest Rates in Canada, Mortgages in Canada, personal finance by LeoLee

Tags: Bank of Canada, benchmark rate, dream home, economy, first time home, first time home buyer, FirstLine Mortgages, fixed mortgage rates, fixed rate, stress test, variable rate mortgage, variable rates

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