Updated Interest Rates

SNAP-SHOT of my BEST RATES Principal Residence   QUICK CLOSES in 30 days or less & SPECIAL OFFERS (some conditions apply)   Fixed Term Specials 2.74% = 3 Year Fixed Term 3.39% = 5 Year Fixed Term (90 day rate hold) ***3.34% = Mortgage Over $300,000 -  5 Year Fixed Term Variable Term Specials 2.50% = Variable Closed is prime MINUS 0.50% (matures March 2017) 2.50% = Variable Closed is prime MINUS 0.50% (60 day rate hold) ***2.45% = Mortgage Over $300,000 -  Variable Closed is prime MINUS 0.55%   Other Mortgage Term Specials 100% FINANCING = 4.85% to 5.35% 5 Year Fixed Term with 5% cash back on closing   STANDARD MORTGAGES AND RATES   Variable Mortgages & Lines of Credit 2.70% = 3 Year Variable Closed is prime MINUS 0.30% 2.55% = 5 Year Variable Closed is prime MINUS 0.45% 3.50% = Line of Credit at Prime Plus 0.50% 3.80% = Variable 5 Year Open is prime plus 0.80%     * Prime rate is currently 3.00%   Fixed Term Mortgages (Four Month Rate Holds)   1 Year Fixed Term = 2.89% to 2.99% 2 Year Fixed Term = 2.79% to 2.99% 3 Year Fixed Term = 3.09% to 3.19% 4 Year Fixed Term = 3.34% to 3.39% 5 Year Fixed Term = 3.45% to 3.59%   Fixed Term Mortgages (SIX Month Rate Holds) 1 Year Fixed Term = 3.09% 2 Year Fixed Term = 3.14% 3 Year Fixed Term = 3.24% 4 Year Fixed Term = 3.49% 5 Year Fixed Term = 3.74%

Fixed Vs. Variable Mortgage: A Quick Comparison

Let's take a look deeper look at the age old question my clients ask...."So, Variable or Fixed?".  First, let's make some assumptions: 1) You can handle fluctuation in your mortgage payments and you will NOT loose sleep wondering if your rate will sky rocket because your parents keep telling you how they paid double digit interest rates in the 80's. 2) You qualify for a variable rate with acceptable debt-to-service ratios at the qualifying rate of 5.35%  3) Let's assume the Bank of Canada will start to raise the overnight rate by 0.25% in July and September of 2015, January and March of 2016, in July and September of 2017, and two more in July and September of 2018.

Here's a summary of how a $300,000 mortgage at a five-year fixed rate at 3.35% compares to a five-year variable rate at 2.45% (prime minus 0.55%):

A great strategy for variable-rate mortgage borrowers to set their monthly payment at the 5 year fixed rate payment amount. In this case, that would mean their initial monthly variable-rate payment of $1,336 would actually be $1,474. This would equal an extra payment of $138 per month going directly towards their mortgage principal. This allows you to get 'used to paying a higher rate' while enjoying the principal pay down. As the variable rate increases throughout the term, you simply adjust the $138 extra payment down so that your total monthly payment remains constant. Here is a summary of the effects when using this strategy on our comparison.

You will notice this strategy does not save you much in interest paid, however your balance after 5 years has lowered substantially...best of all you won't even notice the extra payment. Our assumption of the rate increases by the Bank of Canada may be considered aggressive - what if rates do not rise as fast as we assumed?. But, some may rightfully say that this small saving is not worth the risk inherent in the variable rate choice. Here's a great tool that I'd like to share. One of our lenders has prepare this Fixed vs Variable Comparison Calculator. Feel free to download and let the numbers speak for themselves. At the end of the day, you need to know what your risk tolerance is. We can only make an educated guess at what will happen to mortgage rates over the next 5 years.  We want you to be comfortable with your mortgage choice however in our comparison, today's variable rate would be the better option over the next five years … assuming that you can sleep at night. Mark Kupina  |  www.KupinaMortgage.com

Variable Rate Update

Good morning As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate and here is your personal update from me on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate. At 10:00 am EST, Wednesday December 4th, 2013, the Bank of Canada again did what we expected them to do … they continued to maintain their overnight rate.   What this means to you is that once again the prime rate on your mortgage, line of credit or student loan will not change and remains at 3.00%.  This is fabulous news but don't forget to make the most of the low payments you still have, as the rate will increase in the future.  If you haven't done so already, give me a call and we can chat about helping you get set up with a great GIC, Tax Free Savings Account, or Retirement Savings Plan as your payments continue to remain low.    The holiday season is upon us which often means our personal spending on gifts and celebrations will potentially blow our budgets as we spend more than we maybe should… let me help you get back on track with a review of your financial situation which might be a savings plan, purchasing an income property or debt consolidation to pay off high interest loans or credit cards.  If you would like to chat about some budgeting and saving strategies – let me know as I would be happy to assist. Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision: "The global economy is expanding at a modest rate, as the Bank expected. Although growth in several emerging markets has continued to ease, growth in the United States during the third quarter of 2013 was stronger than forecast. Even if some of this pickup was due to temporary factors, the data are consistent with the Bank's view of gathering momentum in the U.S. economy.  In Canada, the housing sector has been stronger than expected but is consistent with updated demographic data and a pulling forward of home purchases in light of favourable financing conditions. The Bank continues to expect a soft landing in the housing market. Non-commodity exports continue to disappoint and the price of oil produced in Canada has eased further. Business investment spending is up from previous low levels, but is still recovering more slowly than anticipated. On balance, the Bank sees no reason to adjust its expectation of a gradual return to full production capacity around the end of 2015".  Based on this news and continued slower level of economic activity in Canada, the Bank does not expect to increase their rate in the foreseeable future with any change most likely to occur late 2014 or even not until 2015!   Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so you won't see a large significant increase all at once. Fixed rates did go up but then have gone down a bit since at around 3.49 to 3.69% for a five year fixed term. Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now, unless you feel otherwise, I'd recommend that you remain with your current variable rate product as the interest is lower than a fixed term rate right now.  However, if having a fixed payment is important to you, call me so I can calculate what your new payment would look like and also if it is suitable for you. The next announcement on any change to the prime rate is January 22^nd, 2014 at which time I'll be in touch again. I wonder if I can ask a favour – this is a great time for first time home buyers who are thinking of purchasing in the New Year to start with a pre-approval plan now to get them on track and save unnecessary interest.  Also if you hear a friend or family member talk about going thru a financially tough time – maybe I can help with some budgeting and debt consolidation options for them.  In either of these cases, would you mind passing my contact information on to them – this is very much appreciated. Yours truly, Mark Kupina  |  www.kupinamortgage.com