Fixed-Rate Mortgage Predicted to offer the Best Mortgage Rates over the Next Five Years
Fixed Mortgage Rates
According to recent forecasts laid out by a CIBC economist, selecting a fixed-rate five year mortgage term over a variable rate mortgage could grant Canadian mortgagors the best mortgage rates over the next five years.
CIBC’s Benjamin Tal presented a chart at last week’s CAAMP forum to illustrate the savings a five-year fixed rate mortgage could potentially garner over a five-year variable rate mortgage.
Typically, economists and financial experts find that variable rate mortgages always end up costing less over a longer term. Tal shows that given forward swap rates, and posing that the mortgage deal is closed by January of next year, a fixed-rate mortgage could provide marginal savings over a variable rate mortgage loan.
The predictions are not meant to be taken as a firm recommendation. Some financial experts pose that the expected three per cent rise in prime market rate will take longer to occur than previously thought. If such were true, it could be wiser to prolong your variable rate mortgage term for one to three more years before locking into a fixed rate mortgage term.
A Canadian mortgage broker can ascertain and find you the mortgage product that best suits your current financial situation with the best mortgage rates possible. If a rate rise of three per cent or greater could dry out your monthly budget, it could mean that locking into today’s still low fixed-rate mortgage rates will give you the peace of mind of knowing that for the next five years, your payments will comfortably suit your financial capabilities.
Utilize the plethora of online mortgage calculators to compare today’s best mortgage rates, and to determine what your monthly mortgage payments would look like at various incremental rises in rates. If you are confused or require clarification and recommendation, contact a mortgage broker.