Fixed Vs. Variable Rate Mortgages: the debate

Since late in 2008, the Canadian Mortgage Lending market has been experiencing a dramatic period of change. From fluctuations in interest rates to the emergence and disappearance of home financing products, the past 24 months have provided potential and existing home owners with a wide range of opportunities and challenges. Now, as the markets begin to settle, a new debate has emerged for the Canadian Home Owner: Fixed vs. Variable. Over the course of the coming weeks, we will discuss some of the potential benefits and challenges associated with both Fixed and Variable rate mortgages. We'll start of with Fixed Rate Mortgages.

5 year fixed rate mortgage have continued their downward trend through the first 2 weeks of December. Many are expecting to see even further decreases in rates over the course of the coming winter months, as buyer activity shrinks in the face of subzero temperatures, and a general post holidays slump in real estate activity. Fixed rate mortgage interest rates remain at or near historical average lows, and provide an excellent opportunity for existing and potential home owners to secure a great interest rate for the next 3 - 5 years. By taking advantage of a historically low mortgage interest rate, home owners can have peace of mind knowing that at least one component of their home ownership cost will be a constant for the near future.

However, while security is always great, variable rate mortgages are once again becoming increasingly attractive. As Canadian mortgage lenders become more confident in the market, and credit becomes more abundant, look for even more attractive Variable Rate Mortgage products to come out. In fact, over the past 12 months we've seen a tremendous shift in Variable Rate products --from Prime + 1.25% earlier this year, to now Prime - 0.25%! With Prime currently sitting at 2.25%, home owners can take advantage of as low as a 2.00% interest rate, and significantly increase their interest savings.

The debate will continue with next week's blog post, but for more information in the meantime call one of the qualified Mortgage Associates at Alberta Mortgage at 780-479-2222 or visit http://www.albertamortgagecentre.com.

5 Year Fixed Rates Falling --Closer to September Levels

As predicted a few weeks ago, 5 year fixed mortgage interest rates have fallen. From a high of 4.39% in mid-October down to 3.99% today, the situation for home buyers is improving. We might not see rates fall much (if any) lower, but look out for a relatively long stretch of continuously low mortgage interest rates. For homeowners looking to take maximize their savings over the course of their mortgage term, a Variable Rate Mortgage may be the solution, as home owners will be able to take advantage of a historically low Prime interest rate for the time being, and then lock before rates go up.

For more information regarding mortgage interest rates and trends, contact one of the qualified mortgage professionals at Alberta Mortgage today @ 780-479-2222 or visit us online @ http://www.albertamortgagecentre.com.

"Prime -" Variable Rate Mortgages Are Back!

This week, "Prime -" came back. Today, a few of our mortgage lenders announced the return of "Prime -" mortgage products in Canada. Existing and potential Canadian Homeowners can now get a 3 or 5 year Variable Rate mortgage at Prime - 0.10%!* Considering just 8 months ago we were looking at variable rates as high as Prime + 1.50%, the new rates are very welcome news.

To find out how much you could possibly save by switching to a new variable rate mortgage through Alberta Mortgage, call one of the qualified mortgage professionals at Alberta Mortgage today, or apply online.

*Subject to qualification criteria

Five Year Fixed Rates Continue Slide

Five Year Fixed Rate mortgage interest rates continue to fall this week down to 3.89%,* further increasing affordability for existing and prospective Canadian home owners. Similarly, recent downward pressure on the Variable Rate side has led to the resurrection of the "Prime -" mortgage.

As the Canadian economy continues to recover from the economic downturn, look for even more competition in the Variable Rate market, further increasing affordability for Variable Rate Mortgage holders. However, many are forecasting that a recovered market will also mean significantly higher fixed mortgage interest rates. For more information about interest rates, and to get pre-qualified, contact one of the qualified mortgage professionals at Alberta Mortgage at 780-479-2222 or Apply Online @ www.albertamortgagecentre.com
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* subject to qualification criteria.

On New News, Variable Rates Looking Attractive

Variable Rate Mortgages are looking more and more attractive. With a combination of the recent news that the prime rate will remain unchanged until at least the second quarter or 2010, and no reason to expect a dramatic rise through the year and the fact that Canadian mortgage lending institutions are once again competing for variable rate business, Variable Rate Mortgage holders are seeing significant savings. Considering that the same homeowner can see savings of over 1.5% on their mortgage interest rate between going with a variable rate over fixed rate mortgage today(a savings of $4,385.96 over a 12 month period!), the Variable Rate Mortgage is once again looking like a viable home financing alternative.

For more information about Variable Rate Mortgages, or to see what you could save, call one of the qualified mortgage professionals at Alberta Mortgage at 780-479-2222 or Apply Online at www.albertamortgagecentre.com.

BOC Sees Recession Turnaround in 3rd Quarter

It looks like we have finally reached the promise land. After nearly 2 full years of a slowing economy, it appears that things have turned around. The Central Bank of Canada predicted that Canada would be heading out of the the recession in the 3rd Quarter of 2009. The data is not out yet, but it is likely that the Bank will have forecast correctly, as many of the market indicators reflect a once again growing economy(visit my blog entry about market indicators here). Even with this news, the Bank remains prudent and has not yet raised its key interest rate from 0.25% --meaning variable rate mortgages are still safe.

For homeowners with existing Variable Rate Mortgages in place, this may be the time to convert to a Fixed Rate Mortgage. As the economy recovers, fixed rates will continue their upward trend and the Prime rate is sure to rebound. For instance, since January, the 5 year fixed rate has gone from 4.99% to 3.29% to 4.09%* today. As the market recovers, expect to see higher five year fixed rates --as the market compensates for government cash infusions over the past 24 months.

For more information about interest rates, or to discuss the available options with a mortgage broker, call Anuj Gupta, AMP, BComm, Mortgage Associate with Alberta Mortgage @ 780-479-2222 ext 14 or visit http://www.albertamortgagecentre.com.

Variable Rate Market Heating Up

It looks like the Variable Rate Mortgage market is getting competitive. In mid-2007, Variable Rate Mortgages seemed like they could become a thing of the past. Products went from Prime - 0.9% to Prime + 1.50% within 1 week, and many lenders discontinued the programs altogether. But now, as the market has regained some confidence, competition has returned to the world of the Variable Rate Mortgage. Over the past 45 days, Variable Rate Mortgage products have fallen as low as Prime + 0.25%, and this morning, out came news that Canadian homeowners now have access to a Variable Rate Mortgage with an interest rate of Prime + 0.15%.

If the trend continues, it is possible that we will see an at-Prime Variable Rate Mortgage before the end of 2010 --and possibly even a return to the days of Prime -. But for now, I'll take whats on the table.

To learn more about Variable Rate Mortgages, call Anuj Gupta, AMP, BComm of Alberta Mortgage @ 780-479-2222 ext 14 or visit http://www.albertamortgagecentre.com today.

The "NO FEE REFINANCE": save between $1,000-$2,000 and still get the best rates!

Wednesday, July 22, 2009
The "NO FEE REFINANCE": save between $1,000-$2,000 and still get the best rates!
Canadian homeowners looking to use the equity trapped in their homes now have an excellent, cost effective option. Alberta Mortgage is proud to be able to offer the new "No Fee Refinance" mortgage product to Albertan home owners, which is a program specially designed to reduce the cost(s) of refinancing a home.

In particular, this new program has been designed to eliminate the cost of: a lawyer, an appraisal, transfer fees and title registration at the time of refinance, saving homeowners anywhere from $1,000.00-$2,000.00 at the time of refinancing their home. The best part about this program, is that borrowers still get the best available mortgage interest rates on any available mortgage term!

At a time when money is tight, Alberta Mortgage is proud to be able to offer home owners yet another money saving home financing solution. Take into account the fact that mortgage interest rates remain well below historical averages, and homeowners can be looking at significant savings by simply by replacing their existing home mortgages and securing a historically low mortgage interest rate for the next 5 years. In combination, a terrific interest rate and the "No Fee Refinance" could save you thousands. Take it a step further, and home owners can save even more.

By consolidating their consumer debt (credit cards, car loans, personal loans) into their mortgages, homeowners can maximize their savings. Learn more about debt consolidation mortgages here.

To learn more about this amazing money saving mortgage financing solution, contact one of the qualified mortgage professionals at Alberta Mortgage at 780-479-2222 or visit www.albertamortgagecentre.com today.

New Mortgage Term Lengths

In an effort to provide your clients with even greater choice and product selection, Alberta Mortgage is proud to introduce the following mortgage term length options for prospective and existing home buyers:

1. 18 month term @ 2.75%. This option provides some rate security for home buyers who are not looking to stay in their homes for even 2 years.

2. 42 month term @ 3.75%. This option provides a home buyer with a great rate (0.34%) lower than a conventional 4 year term, and is only 6 months shorter.

Another excellent mortgage product allow for homeowners to get both a fixed and variable rate mortgage at the same time --allowing for a home owner to take advantage of the great variable rates on the market today in combination with the security of a fixed rate. For more information about any of these products, or to discuss any other financing related issue, call Anuj Gupta, AMP, BComm @ 780-479-2222 ext 14 or visit www.albertamortgagecentre.com.

Are we turning the corner? My predictions:

Over the past month, some interesting things have happened; the Canadian Mortgage Bond Market has inched its way up, the Canadian Dollar appears to be leveling off, real estate sales have strengthened across the country, Oil is up (from where it was in February), the financial indexes aren't moving as drastically as they had been earlier this year, and job loss numbers have decreased month over month. What does all this news mean? is Canada out of the woods yet, or is this just the type of statistical anomaly to be expected in the economic climate we live in today?

To be completely honest, I don't know what all this news means. However, what I believe is that many factors that would indicate prolonged stability returning to the Canadian economy are here. Many financial analysts around the Globe are forecasting that the Canadian economy should recover in late 2009. If we are in fact beginning to climb out of the chaos that was the later half of 2008 and first half of 2009, things will be changing --almost all for the better, but not only for the better. In Particular, a recovering economy could mean higher interest rates, and larger accompanying monthly mortgage payments for Canadians looking to purchase a home, and for existing homeowners with Variable Rate mortgages. We have already seen fixed rate mortgage interest rates move up by nearly 0.8% since May as some albeit muted confidence has returned to the market. For those with variable rate mortgages who are wondering when to lock in their mortgage interest rate --this may be a time to look at rates and evaluate their situation. Of course, what we are seeing could simply be that statistical anomaly many expected to see, meaning we maybe haven't reached the end of this 'gray rainbow' just yet. It would certainly seem to be a good time to prudently evaluate your finances.

For more information, or to discuss the pros and cons of locking in a variable rate mortgage at this time, call Anuj Gupta, AMP, BComm, Mortgage Associate with Alberta Mortgage at 780-479-2222 ext 14 or visit www.albertamortgagecentre.com today.

5 Year Fixed Rate Mortgage Interest Rates Fall...Slightly

5 year fixed rate mortgage interest rates have fallen slightly after experiencing upward movement by as much as 0.6% over the previous 45 days.

As of today, 5 year fixed rate mortgages are available with an interest rate as low as 4.29%, subject to qualification criteria.

For more information, call Anuj Gupta, AMP, BComm of Alberta Mortgage @ 780-479-2222 ext 14 or visit us online at www.albertamortgagecentre.com.

Mortgage Rates: June 29th, 2009

Here are today's mortgage interest rates:

Term Mortgage Rates
1 Year 2.75%
2 Year 2.95%
3 Year 3.65%
4 Year 4.09%
5 Year 4.34%
7 Year 5.50%
10 Yrs 5.50%
ARM 2.65%
HELOC 3.00%

All rates posted are subject to qualification criteria and can change. Be sure to discuss your client's situation with me to see what kind of financing product would be most suitable for your client.

Anuj Gupta, AMP, BComm
Mortgage Associate
Alberta Mortgage
780-489-2222 ext 14
www.albertamortgagecentre.com