While everyone is busy keeping an eye on real estate prices, I would like to suggest that keeping an eye on INTEREST RATES is equally important. I know this first hand since once upon a time in 1981, my husband and I had a mortgage with an interest rate of 21.5%! Our little $40,000 mortgage cost us $641.00 a month back then whereas today, that same amount would carry for less than $250.00 a month. Wow.
In an email last week, local mortgage agent, Kelly Adam sent along a rather interesting chart showing rates over the last few years.
A quick calculation on my favourite calculator site shows something very worth paying attention to.
According to the chart, the average mortgage interest rate in 2005 was 4.98%. In the three years since then, rates have crept up to an average of 5.67% for a five year term. Look at the impact:
A $200,000 mortgage today, amortized over 25 years, would cost the borrower $6,647.00 more over the five year term and if it were equally level over 25 years, the difference would amount to paying $23,912.00 more.
Economists seem to be predicting some downward pressure on rates in the short term but increases in the longer term. Depending on your own risk tolerance (that’s what I call how well you sleep at night), you may want to think about taking a variable rate mortgage in the short term and locking in a few months from now. No guarantees but hey, every penny counts if you call it right.
Related Posts:
Credit Ratings and Mortgages
Changes To Canadian, Government Backed Mortgage Rules
When it’s time to buy or sell real estate in the Collingwood, Blue Mountain or Georgian Triangle area, contact Marg, an experienced and competent Broker who’s ready whenever you are!
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[...] Original post by Finance, Economy-Business News, Stock Market [...]
[...] Original post by Finance, Economy-Business News, Stock Market [...]