MORTGAGE RATES DROP AGAIN, NOW WHAT????
As the mortgage rates continue to fall, many economists are having trouble predicting what the rates will do in the future, however, the consensus is that rates will remain unchanged for the short term. Simply, the Bank Rate set by the Bank of Canada is increased when the economy is doing well but if there is a recession then low rates are used to cushion the economy. As the economic forecasters don’t know what’s going to happen, they’ve split the difference and predicted everything will remain unchanged for now……. What has changed since last year when warnings of significant higher mortgage rates would be in effect by now? A year ago, most economists expected the bank rate to be between 2.0% and 2.5%. They were wrong by a quarter to three quarters of a percent. That difference sounds small but could mean having a monthly mortgage payment that is 20% higher! Basically, forecasts are educated guesses and are not always accurate. Last year’s forecasts did correctly predict three rate hikes last year, but they didn’t anticipate an economic cool down that would put a pause on any rate hikes What you can take away from these forecasts is that rates will likely be the same or higher than today, but they are unlikely to drop lower than today’s rates unless there’s a recession.
This serious drop in the mortgage rates whether it is short term or a little longer presents a prime opportunity for both buyers and existing homeowners. For those of you wanting to stop renting, these rates are the most affordable interest rates since September 2017. Renters, why do you want to pay down your landlord’s mortgage when you can pay down your own?!?
With these pesky new stress test rules, if one can qualify, a large number of fixed rate mortgages funded in 2018 could see a rate drop by refinancing. Homeowners could save at least 75 basis points or approximately $268 per month. Less than two months ago, just 1/3 of these same homeowners could see these kinds of savings. Though, before you sign on the dotted line, ensure your mortgage professional has calculated any pay out penalty costs to determine if it still makes financial sense to break your term early. If you do decide to move your mortgage to a different lender some of them will even allow you to add some or all of your pay out costs to the original mortgage balance.
Now is the time to improve your finances if you have any other type of debt such as a car loan, credit cards, student loan by using the equity in your home to pay off these other higher-interest loans Based on my 36 years mortgage underwriting experience, do be aware, there can be a significant difference in mortgage rate offers between the many lenders competing for your business. A borrower’s credit, debts and other factors all play a role in mortgage rates as well. In order to get the best rate possible, shopping around is key which can be done for you by a licensed Mortgage Broker.
Consensus is the average buyer can save around $1,500 up front by getting just one additional mortgage quote. Over the life of a 25- year amortization, shopping around can save buyers tens of thousands!
Contact Jackie Woodward – the MortgageGirl.ca today by calling 780-433-8412 email jwoodward@mortgagegirl.ca Follow us on Facebook (MortgageGirl.ca), Twitter (MortgageGirlca) or on Instagram (MortgageGirl.ca) for up to date information.