# Fixed rates hit the basement



## v_tofu (Apr 16, 2009)

http://business.financialpost.com/2012/01/12/bmo-rates-hit-all-time-low/


So.. is this good/bad for real estate? Worth changing over for those currently with a 5 year fix at 3.5% and up?


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## Quotealex (Aug 1, 2010)

It depends on the expiry date of your mortgage.


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## jamesbe (May 8, 2010)

Wow 2.99%. Makes me wonder if it is worth breaking my rental mortgage which is fixed at 4.3% I believe with 2 years left. Still doing better on variable thoug ph I'm at 2.15% on my principal residence.


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## v_tofu (Apr 16, 2009)

jamesbe said:


> Wow 2.99%. Makes me wonder if it is worth breaking my rental mortgage which is fixed at 4.3% I believe with 2 years left. Still doing better on variable thoug ph I'm at 2.15% on my principal residence.


Makes me wonder as well, but mostly if the RE in canada is going to poppity pop. My initial thoughts are perhaps in places like ON and BC, but how bout the other provinces?


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## Jon_Snow (May 20, 2009)

When I go mortgage shopping in a few months I'm going to be like the proverbial kid in a candy store.


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## Homerhomer (Oct 18, 2010)

10 year fixed year under 4%, unheard of.
http://www.theglobeandmail.com/glob...f-rate-for-a-10-year-mortgage/article2304460/

Two years ago the rates were suppose to go up quickly so I renewed 5 year fixed at 3.5%, big mistake.


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## drip99 (Aug 27, 2009)

Homerhomer said:


> 10 year fixed year under 4%, unheard of.
> http://www.theglobeandmail.com/glob...f-rate-for-a-10-year-mortgage/article2304460/
> 
> Two years ago the rates were suppose to go up quickly so I renewed 5 year fixed at 3.5%, big mistake.


You can get that 10 year fixed rate down to 3.84% or lower........this is getting interesting........lots of options.


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## praire_guy (Sep 8, 2011)

How much lower than 3.84, and how can it be done?


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## v_tofu (Apr 16, 2009)

Would love to hear if anyone can get a 10 yr under 4% from one of the big banks.

However, are we at the point where the rates are so long the only way they can go in the future is up?


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## HaroldCrump (Jun 10, 2009)

v_tofu said:


> However, are we at the point where the rates are so long the only way they can go in the future is up?


I have been hearing that since nearly 3 years now.


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## buaya (Jan 7, 2011)

We renewed end of Oct. 2011 with a variable of 8.5 below Prime which at the moment is 2.15%. Since that time I have never seen it lower.
The funny thing is I talked to the bank in August and mentioned that we have a mortgage due. They (Scotia) offered this. Our mortgage at that time was with First National and was at 8 below. First National never called us until about 2 weeks before renewal and even then offered 6 below.
When my daughter (house in her name) went to sign the papers, it seems that the rate we were offered was within a narrow window of 1 week and we happened to be there in August and had then agreed to initiate the paperwork.
I have always used the variable rate and it had always saved me money. There was a study a while back that within the 25 year lifespan of a mortgage, a variable mortgage will always save you money over a 5 year fixed.


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## v_tofu (Apr 16, 2009)

HaroldCrump said:


> I have been hearing that since nearly 3 years now.


oops, meant to say low, not long.

But yes I agree. they're not explosive like before, but a steady increase none the less (at least where I'm at.) Perhaps for the better?

I was considering perhaps selling and taking an easy $100k profit this season. However, renting a home is almost if not more than what my current expenditure is.


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## HaroldCrump (Jun 10, 2009)

v_tofu said:


> I was considering perhaps selling and taking an easy $100k profit this season. However, renting a home is almost if not more than what my current expenditure is.


As an individual home owner, betting against the residential RE market is perhaps not a good idea (that is what you would be doing by selling now, renting, and hoping to re-buy later).

You would be up against the full might of the federal govt. and the central bank who will do anything and everything in their might to keep the RE bubble inflated and going.


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## MrMatt (Dec 21, 2011)

What type of prepayment or refinancing penalties do they have?

It does seem like fixed won't get any lower, but that's because nobody expects rates to rise anytime soon.


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## RoR (Jan 18, 2012)

We are 2.5 years into a 5 year fixed at 3.89%

I called to see if refinancing and paying the penalty (adding it to the mortgage) would be beneficial. The penalty was over 2K and less than the savings in the offered rate over a 5 year period. 

We went 5 year fixed since we needed to know what our mortgage payments would be. When this term is up, we will go variable until the house is paid for. Kicking myself for not going variable, but, at the time our income or lack thereof, couldn't handle any negative fluctuations.


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## Cal (Jun 17, 2009)

TD has 7 year at 3.99% on their site, not sure if you can get lower w them.

My mortgage is up in May, will check in Feb, to see how many days they will hold it for.


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## RoR (Jan 18, 2012)

http://invis.ca/rates/

Invis posting the same. I would kill for that variable rate right now. Would take a few years off my amortization schedule.


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## buaya (Jan 7, 2011)

RoR said:


> We went 5 year fixed since we needed to know what our mortgage payments would be. When this term is up, we will go variable until the house is paid for. Kicking myself for not going variable, but, at the time our income or lack thereof, couldn't handle any negative fluctuations.


When you have both the quoted payment i.e. monthly, weekly etc for a 5 year fixed, go with that amount when you do a variable. This way, you know your payment. We have always added $50-$100 and round off the number for our Bi-weekly payment. At the end of the term, the amount that we have reduced our principal a lot.
For example, on our other house, we started 4 years ago with $276,000 mortgage, amortised over 25 years at prime less 5.5. Payments bi-weekly was supposed to be $740+. We upped it to $800. Last year, we upped it to $1,000. We also prepaid $20,000 last year. Our mortgage statement for the end of year 2011 shows the balance as $176,000. 
By the time it is up for renewal at this time next year, we should have it down to $150.000 and it should have been paid off within the next 5 years, especially if interest rates stay low.


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## RoR (Jan 18, 2012)

Yes, our payments are now so high monthly that we have 6 years+ left, June 2018. Next spouse's raise I will increase it again. My goal is June 2016. 

It's nice to see other people doing the same. I find it hard to talk about money and not have it feel like bragging. I want to throw a party when we pay off the house but that seems obnoxious! lol 

People don't realize that it doesn't take much per month to really reduce your amortization time.


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## houska (Feb 6, 2010)

What's peoples' sense of whether 3-5 year fixed rates will stay near/below the recent 3% levels for a few months? 

We have a (nice P-0.75) variable open whose term is up in August. Given the current interest rate environment, we've decided to go fixed rather than variable for the next few years; the question is do we lock in now or wait another few months. Locking in now means we'll actually pay a bit more between now and August (2.99 or 2.89% versus 2.25%), but would be worth it if consensus would be that the current low fixed rates are only temporary.


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## Jon_Snow (May 20, 2009)

Goin' mortgage shopping tomorrow. Great time to be in the market for one.


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## Brad911 (Apr 19, 2009)

Jon_Snow said:


> Great time to be in the market for one.


ONLY if you're not over extending yourself (mortgage), you're buying at an affordable price and you're locking into a fixed term of at least 5 years.

If you plan on putting down 5% at the maximum you quality for then good luck to ya!


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## Jon_Snow (May 20, 2009)

No worries about that Brad... our mortgage is up for renewal at less than 90k. We have 200k in a HISA .... the only question is whether we pay it off, pay off a portion, or pay off none of it.... it all depends on the rate we can get. I like the idea of getting 1 year rate at around 2.75% with a remaining mortgage amount of 60k. That means payments of less than 300 bucks a month, with lots of savings still on hand (this is important for my wife and I). I can make this work.


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## houska (Feb 6, 2010)

Jon_Snow said:


> No worries about that Brad... our mortgage is up for renewal at less than 90k. We have 200k in a HISA .... the only question is whether we pay it off, pay off a portion, or pay off none of it.... it all depends on the rate we can get.


Make sure you explore paying down the mortgage with the HISA and then reborrowing to refund to the HISA - to make the mortgage interest deductible as an investment expense. If you're not doing this already, read up on it since there are specific steps to follow to establish the right paper trail.


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## Cal (Jun 17, 2009)

Funny, the bank actually called today to offer the rates I was looking into to renew early, no penalties. They just wanted to lock me in. Haven't committed yet.


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## Financial Cents (Jul 22, 2010)

Jon_Snow said:


> Goin' mortgage shopping tomorrow. Great time to be in the market for one.


Let us know what you find Jon, and from who! Hopefully you get an awesome deal


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## Guigz (Oct 28, 2010)

RoR said:


> We are 2.5 years into a 5 year fixed at 3.89%
> 
> I called to see if refinancing and paying the penalty (adding it to the mortgage) would be beneficial. The penalty was over 2K and less than the savings in the offered rate over a 5 year period.
> 
> We went 5 year fixed since we needed to know what our mortgage payments would be. When this term is up, we will go variable until the house is paid for. Kicking myself for not going variable, but, at the time our income or lack thereof, couldn't handle any negative fluctuations.


Since you have 2.5 years left, you should really be comparing your current 5 year rate with the going 2 or 3 year rate to determine if you will save anything.

We were also about 2.5 years in a 5 years fixed at 3.65% and refinanced and went with a 2 year and 4 year fixed hybrid mortgage. The rate were 2.2% and 2.84% respectively. This saves us about 6,000$ in interest, even accounting for our penalty and lawyer fees.

You should re-run your numbers, I am surprised that you are not coming out ahead by refinancing given your high rate.


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