Most of you have probably heard about the 50 basis point drop in the Prime lending rate. Although they don’t always do this, the major banks have passed that on to consumers by lowering their mortgage rates. Posted rates are now around 5.25% for a 5 year term. That’s pretty good, but not as good as the prime minus 80 points that I have on my variable rate mortgage.
With rates set to decline at least once more this year, it’s a good idea to at least weigh the option of a variable mortgage (or line of credit on your existing home, if you want/need that).
A neat feature of variable rate products is that the scheduled payment stays the same when rates go down, allowing you to chip away at the principal amount a little faster. Naturally, that works both ways, meaning that you should call your bank and increase your payment if/when rates go up.
Overall, it looks like we are finally seeing a bit of a slow-down in the economy – which is no surprise after 6 months of the media harping on about it. Nonetheless, I remain confident that Toronto will remain stable through the coming turmoil. The job market is strong, population growth (in Toronto) is steady, and interest rates are still very low.
Call or email me any time with your questions and/or comments!