Falling HELOC Rates
“Heloc or Home Equity Line Of Credit Rates Continue To Fall”
We now have a couple of major mortgage lenders offering Home Equity Line Of Credit Rates at prime minus a half while at the same time the unsecured lines of credit continue to be on the rise.
Don’t be too surprised to see more of the major mortgage lenders that offer HELOC’s to follow suit with the Prime -%0.5 rate in coming days and weeks ahead.
As borrowers, this is great news with personal capital getting cheaper and cheaper provided that you have good credit, cash flow, and some equity in your home.
If you’re wondering why this is happening now when there is still a lot of talk about rates going up and potentially further mortgage regulations being considered to limit mortgage credit risk, my guess is that the answer has a lot to do with competition.
Mortgage lenders, especially the major banks are investing heavily in attracting and keeping residential mortgage customers. Most of these lenders are integrated financial service shops that want to be selling mortgages, lines of credit, car loans, credit cards, investments, and insurance to their customers for decades to come.
So anything that helps them latch on, or stay latched on to their customers is preferred. Even with that being said, the prime minus Heloc rates would also indicate that mortgage lenders are not overly concerned about the housing market as a whole and believe that home equity leverage is a pretty secure bet.
And even though these market leading Home Equity Line Of Credit Rates are 2.5% today, they could easily be 5% in a couple of years if long term mortgage rates tend to start moving back into more of a historical posture.
But in the short term, Home Equity Mortgages in the form of a line of credit have now become the cheapest source of short term or readily available money you can get your hands on.
So how might you take advantage of these great rates?
Well, if you have a fixed mortgage that still has a number of years remaining on it, but has some prepayment options attached to it, you may want to consider paying some of it down with funds from a Home Equity Line Of Credit to cost average your interest rate down. If you’re planning to be paying down your mortgage faster than the amortization anyway, then this can be a way to get the most benefit out of the exercise by reducing the interest cost today and using your extra cash to pay down the HELOC when you have some available.
Nowadays mortgage companies are putting more and more flexibility into their mortgage programs to suit whatever repayment plan you may have. But if you presently have a mortgage that’s been in place for a couple of years already, the rate may be quite a bit higher and prepayment terms less flexible than what you could sign up for today.
So creating your own mixed rate mortgage may be an option through utilizing these great HELOC rates in the short term.
And if you have equity in your home and you’re utilizing an unsecured line of credit right now at an interest rate 2% above these top end Home Equity Line Of Credit Rates, then it may be worth moving from one to the other.
Obviously, this also represents a very flexible source of capital for all sorts of other uses.
Even if you don’t have a current use, it still can be advantageous to get something in place now at the current offering so that you have ready access capital in the future.
If you’d like to learn more about HELOC rates and terms, give me a call and I’ll make sure you get all your questions answered right away.
About the Author Joe Walsh
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