bank increasing fixed rate

[nav1940]

Hi

I was wondering if it was time to lock into a fixed rate mortgage. I have only two properties at prime plus mortgages and the other couple are at fixed rate.
do you think prime will stay down for a while? Why would the banks start increase the fixxed rate?

Nav

 

[kboughen]

QUOTE (nav1940 @ Jun 10 2009, 06:25 PM) Hi

I was wondering if it was time to lock into a fixed rate mortgage. I have only two properties at prime plus mortgages and the other couple are at fixed rate.
do you think prime will stay down for a while? Why would the banks start increase the fixxed rate?

Nav
The Bank of Canada`s last interest rate announcement was June 4[sup]th[/sup], at that time they left the overnight lending rate alone and reiterated that they intend for it stay there for another 12 months. This indicates that Prime rates and therefore existing variable rate mortgages should stay where they are for another 12 months before they start moving up. Click here for the announcement.



http://www.bankofcanada.ca/en/fixed-dates/...ate_040609.html



5 years rates have increased twice over the last 2 weeks and are now up by 70 points. This does not come as a surprise as bond yields have been increasing for weeks.



There is no right answer to "should I lock in", it depends on your personal risk tolerance. If your intent was to lock it once the 5 year rate bottoms out, it looks like that happened last week.

 

[Rybo123]

ATB Financial is still offering there 3.5% 5 year locked in 25 y amort. Bank of Canada does say they planned to leave the rate unchange but do hint at inflation coming into effect which they are helping to trigger with there "quantitative easing." they also say the rate will increase if inflation does start to increase. I renegatied on one mortg. yesterday that I had locked in a few years back down 2 % paid out 11K in fees but increased Cashflow by $200/ month to help offset some reduced rents.

 

[Thomas Beyer]

fixed rates are based on the BOND rate .. and that is on the rise

variable is based on prime .. and that will stay low for about a year .. then rise slowly too

So, depending on your risk profile locking in at sub-4% for 5 years may be a good idea .. even if you pay a bit more for teh next year or 2 vs. variable .. as variable might jump quickly 2-3% in late 2010 or 2011 !

 

[GarthChapman]

QUOTE (Rybo123 @ Jun 11 2009, 08:26 AM) ATB Financial is still offering there 3.5% 5 year locked in 25 y amort. Bank of Canada does say they planned to leave the rate unchange but do hint at inflation coming into effect which they are helping to trigger with there "quantitative easing." they also say the rate will increase if inflation does start to increase. I renegatied on one mortg. yesterday that I had locked in a few years back down 2 % paid out 11K in fees but increased Cashflow by $200/ month to help offset some reduced rents.

The 3.5% five year fixed rate is for deals submitted by Monday June 15th. From June 16 to June 30 the rate will be 3.7%

Benjamin Tal is predicting an increase of 2% to 2.5% in the prime rate through 2010, and the same for fixed rates (which has already begun). He feels the prime rate increase will start later and go more slowly.

 

[nav1940]

Thank you for your the information.