The mortgage rate dilemma

Everyone who has a mortgage experiences the fixed or variable dilemma. When your renewal date comes around you must become a psychic futurist with a specialty in economic trends.

Now Canadian lending rates are at record lows (I remember these rates in 2003-5 too).

This is the best advice I've ever heard for a homeowner or an investor who is not cashflow driven but hoping for captial gains and banking on a huge equity paydown:

Gordon Pape thru BrighterLife.ca

Did you ever imagine a scenario where a fixed mortgage was a loss-leader?

"If I was in the mortgage market right now I’d be locking in 10 years at 3.99 very happily. Even the five-year at 2.99 is very attractive. I’ve always been a believer in paying the lowest interest rate possible. I always advised my kids to choose a variable-rate mortgage, and then to pay as if you were carrying a 5% rate or something like that. So you’ve got some built-in flexibility in terms of the household budget and at the same time you’re paying down the principal faster than you normally would. But given the unusual circumstances we find ourselves in right now, and the fact that it won’t go on forever, this is perhaps the classic time to move away from the pay-as-little-interest-as-possible and lock in a very low rate for a very long time."

Mortgage rates to rise - Peter Kinch

Peter Kinch, one of Canada's leading mortgage lenders, thinks that some fixed mortgage rates are on the rise.

"Say what?  How can rates be rising when the media keeps telling us that there won't be a change in rates until 2014?

Well the media is talking about the Bank of Canada Prime Lending Rate and yes, there is no change there - But that doesn't mean that there won't be a change in the 5 year fixed rates.

Fixed rates are governed by the BOND YIELDS - and they have jumped up significantly.  As the bond yield goes up - so too does the long term fixed rate.

Translation:  Look for a jump in the 5, 7 and 10 year rates over the next 72 hours" Watch his video blog HERE

What does this mean for you? Lock in to one of these products now with your lender if you have a property in your sights. It's such a simple step to avoid decreased cashflow. We are locking into 10 year rates now on select properties.