Mortgage Puzzles & Looking Ahead….

Hey Everyone, yep me again, your Friendly Neighbourhood Mortgage Broker… and no, I do not wear a red suite and shoot string from the cuffs of my shirts, let along stick to buildings. Although as a side note that would be pretty cool. But before I go off on a tangent, I do want to write a bit about mortgage rates. As you all know rates are on leap frogging upwards daily with the lenders it seems. Every other day I am getting a rate increase email…. I did say it would happen. We are soon I think, going to see all lenders over that 3% marker, heading towards mid threes shortly… which will slow down our summer market. Which for all cases has been insane these last three weeks!

Everyone tends to freak out when this happens, but it happens every year. For myself, with two small kids, I tend to think it follows the school year (although I know it is way more complicated than that, IE Bond Market Cause and Effect etc etc) … however in Simple terms, I see May till the end of June being busy, but it starts to slow down come the beginning of July but it is still chugging along, come the end of July most things peter off to again be picked up come the end of August/September. School ending and school gearing up again.
                                                     
Using my non-existent crystal ball to look into the future….

Rates I believe, are going to eventually start balancing themselves out, that is, they are going to raise and start to get back to what were our normal rates. I am not saying this will happen tomorrow, but it will happen probably before the end of your current mortgage term… and what are your future plans going to be then? Our ‘bubble’ of the lower than low rates will not self sustain for ever, they are more of a blip in the bigger picture of economy, rates etc (however amazing the blip is, a blip by definition is “A temporary or insignificant phenomenon, especially a brief departure from the normal“… and in the case of mortgages, which are longer term financial obligations, we need to start thinking into the future. If you are the type of person that wants extended stability, then 10 year rates are currently where it is at, at 3.69% with all the bells and whistles, it is a no brainer. Think on this, most people do not have their mortgage paid off in 5 years… remember I said ‘most’ as I do have a handful of clients that will do just that, pay off their mortgage in 5 years flat. However back to the point, me like most others, will not accomplish that awesome feat. The 10 year rate allows you cost certainty. You know exactly what your payments will be the whole time, and can really concentrate on hammering it down!

Of course the other way to look, is the great 5 year fixed rates as well & just renew it in the 5 year term. Therefore taking advantage of the super low current rates and take your chances in the future renewal. This allows you to have the lowest possible monthly payment obligation and to hopefully start to utilize all the bells and whistles on your mortgage. Meaning, the 15-20% pre payment options, payment frequency options etc etc… Tip: just changing your mortgage monthly payments to biweekly or accelerated weekly will drastically change your amortization. In a good way! Which means, YOU will be mortgage free sooner!  Variable seems to be off the table for now as the spread between variable and fixed is not that great yet, about 35bps. When the spread is around 100bps then you will see the Variables picking up in popularity again! However for now Variables are only great in the HELOCS, which are still going strong with the Prime +0.50%

We all need to seriously start looking at mortgages, the debt we carry and finding what long term solutions are going to work for either yourself as an individual or for your family as a whole. Mortgage payments, types of mortgages, types of rates, types of pre payment options, owner occupied vs rental, types of properties, down payments etc etc – where you get all these from are going to be important. You should go to the experts that can help explain all the differences as well as help guide you to the right mortgage path for yourself. Mortgages are not just about one thing, rate, but a whole bunch of puzzle pieces that once put together will give you a great picture…….Of course I am always available for a free consultation… look ahead into your eventual “Mortgage Free” Future…the grass is greener there but you have to plan to get there in order to actually cross that finish line.

Think Outside the Box!!!