Money Matters Toronto

Recently I have been getting a lot of questions and interest regarding the Merix 50/50 mortgage available for financing in Toronto. This product is only available through select mortgage brokers in Canada. The current effective rate for this mortgage is 3.37% for 5 years… an amazing deal!

The Merix 50/50 Wise Mortgage is a closed mortgage that lets borrowers take advantage of low fixed rate and low adjustable rate products all in one mortgage. 50% of the mortgage is in a 5 year fixed rate and 50% of the mortgage is in a 5 year Adjustable rate. The Adjustable rate can be locked in at any time to a fixed rate for the remainder of the term of the mortgage.

If you would like to find out more about this product and how you can use it, please call Christopher Molder, Toronto Mortgage Broker at 416.461.0204ext2.

Fixed rates are like one bullet.

Have you been burnt with a variable rate mortgage in Toronto in the past? Don’t think of variable rate mortgages as a long term strategy. There is a feature built into variable rate mortgages which allows you to lock into a fixed rate mortgage with no penalty and no extra cost.

Think about fixed rate mortgages like having one bullet in a gun. The moment you fire that bullet you forfeit the ability to lock in at any other rate. If you lock in off the get go, yes you are protected from rising rates but you also lose the ability to lock in at a lower rate… so lets look at the trend. At the beginning of July the fixed 5 year rate was 4.49%, at end of July the fixed 5 year interest rate was 4.39%, by the time August rolled around the rate was 4.29%, today most banks are posting a rate of 4.19%, today I can get you an approval  at 4.09%, and some banks are comfortable enough to sell you 3.99%… what does that tell you? Rates are coming down… so much so that the bank is comfortable enough to sell you 3.99% because they know that by the time you close your mortgage 3.99% is going to be the new norm.

If you had closed at any point during the last 2 months you would have forfeited the ability to lock in at a lower rate today or tomorrow.

Talk to me about our fantastic 3 year variable special 2.40%! Christopher Molder 416.461.0204ext2

If you are tossing and turning every night trying to figure which way mortgage interest rates are moving join the club. My impression is that nobody knows exactly which way rates are moving and what the long term trend is. I certainly wouldn’t rely on the sound bytes that come out of the media on a daily basis… you’ll drive yourself crazy!

Take this morning’s paper. The Globe & Mail and Toronto Star each ran an article in their respective business sections about mortgage interest rates. In the Globe & Mail article the author interviews an Ottawa mortgage broker about what he is personally doing. The broker is locking in his ridiculously low variable rate mortgage to curb the risk of higher rates in the future due to inflation.

Then you read the Toronto Star article where numerous economists are interviewed about their predictions for the future. They feel that the recent increase in fixed rate mortgages due to an increase in bond yields was an over reaction by bond investors and that we are certainly not at a critical point where rates will be increasing with speed. We are still far away from inflation and the high interest rates that are associated with it.

My feeling echos that at the end of the Star article… take your time before making any rash decisions. If you are in a variable, have a good long look before you give up your low effective rate. Just because rates have increased doesn’t mean that they won’t come back down. If you are in the market for a new mortgage you may still want to consider a variable because there exists the potential for fixed rates to decrease again… maybe not as low as we saw two weeks ago. If you are really on the fence consider a product like the Merix 50/50 mortgage where you get half your mortgage as a fixed mortgage and the remainder as a variable.

Do you have a question about your mortgage?  Tridac Mortgages has been helping clients for over 30 years. Call our Toronto office at 416.461.0204. Chris Molder. We’re here to help you.