EXISTING VARIABLE RATE BORROWERS

• Sit tight – your rate likely includes a large discount to the Prime rate.
• Banks & Mortgage Lenders have dropped their Prime Rate to 2.45%.
• If you are considering converting to a fixed rate (aka ‘locking in’), enjoy your newfound savings for a while fixed rates settle down, which they have been doing.
• Contact me to learn how to create some simple rules so you will lock in at the right time.

NEW/RENEWING BORROWERS

• Ensure flexibility when selecting your mortgage product.
• Variable rates can be converted (locked in) to Fixed at any time, and the Variable product comes with the smallest penalties for early payout, being 3-months interest as mandated by federal regulations.
• Conversion rates (from Variable to Fixed are not always the best rates in the market, so expect to pay a bit of a premium when you convert (lock in).
• Do the Math with your Mortgage Broker: compare costs of shorter-term fixed rates to 5-year fixed rates with penalties included (the results may surprise you).

EXISTING FIXED-RATE BORROWERS

• The 5-year Government of Canada Bond yield is at an all-time low, currently just under 0.40%. This bond yield is a major factor normally in pricing 5-year mortgage loans for Canadians.
• Fixed rates moved higher in early April as liquidity tightened up for the banks and began slowly dropping by mid-April.
• We are now in early May they are still dropping and may have a bit of room to go lower yet, although we are very close now to the very low rates of early March before the world was turned upside down.
• Rate competition typically intensifies during the spring real estate market, which may well be delayed into summer this year.

STRETCHED BORROWERS

• Cash-flow may be your most important imperative to get you through this.
• Refinance if it improves your cash-flow or if it reduces your risks.
• Don’t wait until it’s really raining hard to reach for your umbrella – it will be harder to borrower as we get further into this economic down-turn than it is now.