The question of whether to lock into the current low mortgage interest rates or continue to stay short term is a question that I often get asked.
The answer depends upon many factors including your ability to tolerate risk.
I've written many times in the past that the best route was to go short term on your mortgage, for at least the past 20 years or so. Mortgage rates are predicted to increase beginning about the middle of 2010 and some are predicting that the Bank of Canada will increase the prime rate by as much as 2.75% over the period from the middle of 2010 to the end of 2011.
If this happens, then it's likely mortgage interest rates will also increase by about the same or even more than 3% over the same period.
Once we come out of this recession and the economy starts to improve, rates will increase and we may never see these low rates again for many decades to come. It could be time to lock in for 5, 7 or even 10 years at the current rates to take advantage of these all time low mortgage interest rates.
This would indicate with almost certainty that you should lock into long term mortgages.
I wish you and your family a Merry Christmas and all the best in the New Year!
Jimmy
0 comments:
Post a Comment