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Blog by | March 5th, 2009

Prime Rate Cut

Will fixed rates drop as well?

As many people are aware, we have recently seen a drop in prime from 3.00% to 2.50% bringing a standard 5 year variable rate mortgage down to 3.30% from the previous 3.80%. With all the recent drops in prime, many people are left wondering if fixed rates will fall accordingly as well.

Although there has been talk of fixed rates starting drop, many people are not so sure. Variable rates are connected to the bank of Canada, but fixed rates are usually tied to bond yields which have not changed since the Bank of Canada's rate cut.  Although the 1 and 2 year fixed rates have dropped a fair amount, the longer term fixed rates have yet to see a cut so for now, we wait and see. With that being said, however, if you are a fixed rate shopper then get out there and get your rate hold. If rates drop, most lenders will accommodate this change and it they go up you're home free.




Pre-Payment Privileges 

Is it always about the lowest rate?

Many mortgage shoppers are so focused on finding the lowest rate that they neglect to look into other options that can save them money.

Pre-payment privileges can be significant to some while completely insignificant to to others depending on how much additional disposable income you have through out the year. It's not for everyone, but if you have the money to make pre-payments they're one of the best zero risk investments you can make.

Making pre-payments on your mortgage allows you to pay down your principal faster, saving you on interest.This means that even if you rate is slightly higher, if you are able to make additional pre-payments at the end of the day you could actually be paying less interest!

Larger pre-payment privileges can also save you money if you want to get out of a mortgage contract early because they can reduce the interest penalty. Just be sure to make your pre-payment before requesting the discharge.

For further information on pre-payment privileges, contact me today.

Stephanie Ostash 
The Mortgage Centre

Express Mortgage Services
PH 250.861.4222
CE 250.801.6467
FX 250.861.4322