Welcome to 2012. We have had a couple of weeks to get used to the New Year and we have gone from spring to real winter in a matter of hours and back. I am sure we are all back to getting our normal routines in order and hopefully tackling new challenges.
The news from the Bank of Canada is not a huge surprise as rates stay the same and the Prime rate remains at 3%.
I am sure everyone has heard about the deals in the news and while some of them come with some real hitches I cannot argue with the rates. The interesting thing is that these days the range of rates for mortgage terms of 1 - 5 years and even the variable is 0.44%, so while you might be edging out a slightly better deal at one lender or another on the rate, please remember the fine print also counts for something when it comes to your options down the road.
The really interesting deal right now is a 10 year mortgage at 3.89%. Talk about stability. If you are planning to stay put and worried that increased rates in 5 years might make things a bit uncertain then this is the term for you. Honestly, if you look at historic rates this is an unheard of opportunity. While it may not be for everyone it is a great option for many. Here is what Rob Carrick from the Globe had to say.
"Let's get back to the housing market for a moment. The biggest support for prices right now are the low mortgage rates we've been talking about here. When rates rise, that support crumbles. Things could get ugly.
Why consider buying now? Because you can borrow money at 3.99 per cent or a bit less for 10 years. It's like freezing time at the exact best moment ever to finance the purchase of a house. If the price of your home declines, it's bound to be on the rise again a decade from now. Meanwhile, you'd have the chance to put a decade's worth of salary increases to work in ramping up your payments and making periodic lump-sum payments."
So consider your plans and your options. Note that after 5 years the penalty to break a mortgage is only 3 months interest - just like a variable rate loan.
it would seem the banks may have done the heavy lifting for now on the economy so the rates are holding for now. Global stability is still not on the horizon and $100/ barrel oil is really going to drain disposable income.
While Canada still seems to be strong, largely related to our resource and financial services sectors. However our labour market is not doing very much and is pretty flat and the housing market in some areas is showing signs of cooling. The US economy is looking a bit better but everyone is affected by the events in Europe and even China is slowing.
In Europe, Germany is seen to be weakening and doubts are being raised about its ability to support the weaker members of the EU, or at least the effects on Germany may be more than expected. Whatever happens in Europe, they seem to be taking it as slowly as possible. My main hope is that whatever they decide to do that they keep their minds open to new ideas, since old ones seem to have created the problem and recession and more banks collapsing is still possible.
The effect in Canada though of the low rates may reboot the housing sector a bit, and despite the December over spending many seem to be getting their debts under control.
