Canada Mortgage Trends for 2012 [mortgagefraud101.blogspot.com]

Canada Mortgage Trends for 2012 [mortgagefraud101.blogspot.com]

Jane Renwick, Executive Vice President at Urban Nation, speaks about mortgage trends and rates. * Mortgage trends, mortgage rates fixed vs. variable and potential penalties for renegotiating your mortgage TheInvestor Education Fund is pleased to be cosponsoring this video series with the Globe and Mail called "Lets Talk Investing." The series is hosted by renowned Globe and Mail columnist Rob Carrick and features prominent Canadian financial experts discussing topics that are relevant to investors. www.getsmarteraboutmoney.ca

mortgagefraud101.blogspot.com Mortgage trends and rates with Jane Renwick and Rob Carrick

Canadians waited all year in 2011 for Mark Carney to announce that the Bank of Canada’s overnight lending rate was going to be raised from the historic lows it had sat at for the last six months. Those six months extended to eighteen months, until the most recent announcement from Mr. Carney in January, stating the rate would be held at 1% until at least March when the next meeting will be held to determine whether the rate will be increased. So what does this mean for Canadian mortgages in 2012; and those looking to buy or refinance their home?

Firstly, it’s important to know that while the overnight rate could be raised in March, economists have forecasted that it will remain the same into the year 2013. While this might leave many homeowners and homebuyers thinking it’s okay to sit on their hands for the next several months, just because the interest rate isn’t doing a lot doesn’t mean that now is not the time to act.

In fact, it’s quite the opposite.

Variable rates still offer the best deal in today’s mortgage climate, however one has to enter into a variable rate more carefully now than ever before. A variable rate will still save you thousands of dollars in the short-term than a fixed rate. However, if you don’t think you’d be able to afford even a slight increase in your mortgage rate over the next 5 or 7 years, when rates are surely going to be higher, now is the time to lock in the low rate.

For a short time in 2011, fixed rate mortgages seemed to be the one and only answer, if only for a very short time. This was due to the low rates, but that viewpoint quickly changed in the beginning of 2012 when BMO was the first Canadian bank to offer deeply discounted on their fixed rate mortgages.

The move quickly led to many of Canada’s major lenders doing the same thing, with most pulling out of the offers early due to an increasing cost in bank bonds and a decrease in profit margins. This has led to fixed rates being increased for most major lenders as well and the argument for variable rates once again being made loud and clear.

For the very short-term, Canadians who are going to need to obtain a mortgage within the next four months should obtain pre-approval for their mortgage now, before the meeting and subsequent announcement take place in March. This is because when you have pre-approval already in place, the interest rate outlined in that pre-approval is guaranteed for 120 days. If the rates go up any time before those 120 days are expired, you will be protected. And if they go down (which they likely won’t be,) you will still get that lower rate.

Canada mortgage trends in 2012 are likely to be very similar to what they were in 2011, with very little activity actually happening. However, the historically low rates have to come to an end at some point, so now is the time to act to get in on the great deals!

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