Now that we’re squarely into 2011 and all the major banks have served up their forecasts for the coming year, where exactly are Canadian mortgage rates going?
If you believe in the experts, rates are going to continue to rise during 2011 with the majority of opinions right now looking at an across the board interest rate increase of approximately 2% (Example: a current variable rate of 2% rises to 4%).
The current spread between fixed and variable is expected to continue, but with a 2% increase in both the fixed and variable rates, the people with variable rates today would see their interest costs increase to what the current fixed rate holders are paying right now. Thus continues the discussion as to fixed and variable and what if anything should be done with your mortgage term in 2011.
For those individuals on a fixed income budget, a 2% increase in the variable interest rate could double their interest cost by the end of the year. Then again, if you lock in now and the interest rates don’t increase then many people would consider that to be money wasted.
And in the end, the forecasts are only as good as the assumptions they are based on. If the assumptions don’t hold true then its unlikely the forecast they are based on will either. The really difficult aspect of looking into the crystal ball to determine what the future holds with respect to mortgage rates is knowing what major events are going to happen in the world, when they’re going to happen, and the economic impact they will directly and indirectly create.
That all being said, we are once again sitting at the beginning of a year where rates are more likely to go up than down and it only makes sense that one’s existing mortgage term should be reviewed to see if everything is still in keeping with your short and long term financial goals and personal views of what’s likely to transpire in 2011.
If you’re on a fixed income, have a mortgage term coming due, or are in the process of acquiring a new mortgage, the potential for mortgage rates to significant increase over the next twelve months is something to consider before making any decisions.
One of the best ways to make an informed decision with respect to your mortgage is to consult and experienced mortgage broker who is prepared to sit down with you and discuss your situation and the best options that are available at a given point in time.
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel