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Land Pimps: Lock in fixed or stay variable? NTSFW

April 22, 2015, 2:45 p.m.
Posts: 2368
Joined: Dec. 31, 1969

Have to decide pretty quick what to do with The Mortgage for the next 5 years, so where better than NBR?

Lock in at 2.7 for five years or variable for five years.

Thanks in advance:

April 22, 2015, 2:50 p.m.
Posts: 1732
Joined: Nov. 23, 2002

prime minus 0.7 is readily available from most brokers these days and most lenders will give you terms that allow you to switch to a fixed rate if you want. considering that rates are going to stay low for the near future, at prime minus 0.7 rates would have to move a fair bit before you're at the rate of 2.7.

if possible i would see if i could get prime mins for 3 years instead of 5.

Luck is what happens when preparation meets opportunity ~ Seneca

April 22, 2015, 5:18 p.m.
Posts: 15163
Joined: Nov. 20, 2002

Right now ING's best rate is on a 5yr variable advertised at 2.85 but I am only paying 2.25% on a 5 yr variable, variable was a good choice for me 4 yrs ago and the way things look I will probably go 5yr variable again

April 22, 2015, 5:27 p.m.
Posts: 1029
Joined: Feb. 12, 2009

If you take the lower rate and pay down at the higher rate, it might take you out ahead either way.

I think that studies have shown that, over time, you win with a variable rate (because inevitably, at some point, you lock in at the top of the market). However, the real question is how much is stability worth to you?

April 22, 2015, 6:34 p.m.
Posts: 623
Joined: Sept. 7, 2011

Been on a variable rate for my last two mortgage terms. Came out ahead.'
Go variable and lock in if or when rates go up which wont be for quite a while.
If the oil had not crashed rates were slated to go up but now with lower oil prices feds will keep interest rates low for some time.

April 22, 2015, 7:25 p.m.
Posts: 1915
Joined: Nov. 21, 2002

The US Fed keeps hinting at a rate hike this year, but whenever they talk about, they seem to backtrack. Even if they do hike, it will be by a small amount just to get them off of ZIRP. If the US hikes, I would expect other nations to follow suit, but I'd also agree that rates will likely stay low for the next year or two, IMO. If rates ever go up significantly, it will have a HUGE impact on mortgage borrowers.

:canada: :england:

April 22, 2015, 7:54 p.m.
Posts: 14403
Joined: Feb. 19, 2003

Great site when setting up for mortgage renewal is here: http://www.canadianmortgagetrends.com
Worth keeping them in your RSS feed.

Short term, rates look flat. http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2015/04/the-boc-home-prices-mortgage-rules-2.html

Markets even thinking rate cut possible in next 12 months. Variable probably better play in short term, has usually proven to be better choice in most periods…. but take your own risk tolerance into consideration.

April 22, 2015, 10:42 p.m.
Posts: 2368
Joined: Dec. 31, 1969

Thanks!

April 22, 2015, 11:51 p.m.
Posts: 10010
Joined: March 11, 2003

4yrs at 2.25 now 2.15 has been pretty kickass.

Is there a Vancouver in Taiwan?! I had no idea!!

Nothing sums up my life's achievements like my stuffed corpse, suplexing a cougar.

April 23, 2015, 7:20 a.m.
Posts: 18109
Joined: Oct. 28, 2003

So who's in the - It's cheap, so let's pay It off quickly camp, vs it's cheap, let's max It out and take 25 years camp?

We've alway been the former, no matter what the rate.

(It capitalized for Nat)

April 23, 2015, 7:33 a.m.
Posts: 368
Joined: March 2, 2010

We were going to pay It off this summer, but we might let It ride for a final 5 with some lump sums to pay It off sooner.

We've had good luck with variable rate mortgages and accelerated payments.

Ride: Ibis Mojo HD
Club: CMBA
Talent: None
:beer::canada:

April 23, 2015, 9:17 a.m.
Posts: 549
Joined: Sept. 2, 2010

I paid It (not getting joke but meh) off as quickly as I could. Then was able to refinance to purchase a bit of a business and a commercial building - I am now working to pay It off quickly again. I was in when It was a bit more expensive (although everyone at the time was saying it was cheap -5.5% or so) I have never changed our bi-weekly payment though. My sage and wise and old advice would be go with the variable, but make payments at the fixed rate. You a) pay It off faster (all principal baby); and b) you are "used" to the higher payment if you ever have to start making it.

I find that it is just a real easy investment - lots of other things might give a better return - but I like to keep life simple. If I have an extra $, I can go and research and come up with all sorts of strategies on asset mix and on where to invest- or I can plop a bunch down on the ol'mortgage before I have a chance to spend it.

April 23, 2015, 9:31 a.m.
Posts: 955
Joined: Oct. 23, 2006

If banks thought the interest rate was going even moderately higher in the next 5 years, they wouldn't be offering such low 5 year rates.

If you're winning by 0.5% for half of your 5 year term, they need to go up by 1% for the other half of your term.

My thoughts are this… The central bank has lost its ability to fine tune things. After 6 years of emergency rates, our economy is now based around an overnight rate of ~.75% and it's just holding on. Simply raising by .25% is a 33% increase in the cost of money. Going up by 1% is more than doubling the cost of money and would not be unlike giving a large number of Canadians an ARM. I really can't see that happening without a considerable increase in average wages, which is pretty unlikely in the near term. They reduced rates to get the country to spend, and they did. And now they are tapped and very susceptible to rate increases.

I just signed on to variable two weeks ago.

April 23, 2015, 10:08 a.m.
Posts: 15163
Joined: Nov. 20, 2002

So who's in the - It's cheap, so let's pay It off quickly camp, vs it's cheap, let's max It out and take 25 years camp?

We've alway been the former, no matter what the rate.

(It capitalized for Nat)

5yr Variable is the cheapest right now so IMO keep an eye on rates and save $ specialy if its early in the amortization sched where you are paying mostly interest cuz you can always lock in at the drop of a hat but you gotta keep an eye on what the rates are doing.

Back in Peeg I had dealt with a mortgage broker who was on contract with RB, I ran into him in a bank buddy said "hey rates are going up Monday lock-in!" I locked in a 5yr fixed that afternoon and it wasn't hard

Personaly I need to not work/ski/bike/paddle/buy lots of skis/eat steak/drink good booze more than I need to be mortgage free

Besides the tennant is covering almost all of the bills SO I went long, 30yr amortised 5 yr variable low.

April 23, 2015, 10:45 a.m.
Posts: 1732
Joined: Nov. 23, 2002

So who's in the - It's cheap, so let's pay It off quickly camp, vs it's cheap, let's max It out and take 25 years camp?

We've alway been the former, no matter what the rate.

(It capitalized for Nat)

i used to be in the former but am now in the later and activities in the later will actually make me the former.

use free cash, and equity if you want, to invest. money earning even just 6% is better than paying off debt at 2.5%.

Luck is what happens when preparation meets opportunity ~ Seneca

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