“Sometimes it is new relationships forming where someone buys a condo, gets a five-year fixed-rate, but then they meet someone and get married... That usually dictates a change in the residency that they have and the mortgage is broken,” Laird said, as quoted by The Canadian Press.
He added that the penalties involved in terminating fixed-rate loans are harsher than those for variable-rate violations. Going for a longer term can protect borrowers in case of interest rate hikes, but conversely, a prevailing environment of low interest rates—such as the present era—make variable-rate options more appealing (despite these being more expensive at the onset).
Bond yields (which influence fixed-rate products) have seen steady growth since the 2016 U.S. elections.
Mortgage Brokers Ottawa managing partner Frank Napolitano noted that the rate difference between a 5-year and a 10-year mortgage has been hovering between 1.5 to 2 per cent.
“That's a big jump in rate, especially in that initial five-year period, to have to pay just to get that rate for the following five years,” Napolitano said.
However, while irreducible uncertainty does exist when securing loans, observers emphasized that this shouldn’t stop borrowers from going for the option they prefer.
“Ultimately, choosing the right mortgage type and term length is a matter of personal preference and what option best suits customers and their personal needs,” TD Canada Trust associate vice president of real estate secured lending Marc Kulak said.
CREW
We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market.
Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome!
No comments:
Post a Comment