As fixed mortgage rates decline, experts caution against longer-term mortgages
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- Опубликовано: 13 сен 2024
- Canadians aiming to purchase a home this year have a lot of decisions to juggle, and those looking to secure or renew mortgage agreements have seen rates on some longer-term products drop.
For the first time in months, some five-year fixed rates are sitting around the five per cent mark.
But as fixed-rate mortgage rates start to come down, some brokers are warning against locking-in longer-term mortgages.
Global's Kyle Benning reports.
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The same people who advised to take variable rate loans in 2021?
That's what I was thinking too haha. They said variable was the way to go 4+years ago. Nobody at our level will ever know the correct thing to do. It's all a gamble no matter what you sign.
😂 right
Only a fool signs a variable rate mortgage.
@ProJock Someone who is willing to take large chances* there are many points historically where a variable rate mortgage would have been a tremendous financial payoff. However, none of them were during periods of the overnight rate having nowhere left to drop lol
Exactly
My wife and I's monthly payment was $2415 month. We would pay an extra $500 a month towards the principal. We currently just refinanced to get a lower interest rate and to get off of PMI. Our new monthly payment is $2915 a month. We plan on still paying $3700 a month but are now going to do bi-monthly payments.
making the payments quarterly, in addition to adding, a payment each month and watch how fast the payments begin to drop on your amortization chart. I've got one more year after starting about a year ago. The timing of the payments is everything. This is the only thing that they all leave out when doing the videos.
Instead of extra payments, I suspect you would be better off putting the $782 per month into shares of Apple and Amazon. The video more or less describes how you can get out of being a debt slave When you have cash you have options. Smart people hold on to cash. They don't instantly shove it toward debt. Once it is used to pay on the debt, it is no longer accessible.
One part of this vid that I do like is the idea of not taking on a large debt in the first place. I think there should be a balance between the amount of debt you incur and the amount of cash you can invest. I would rather have a $1000 house payment and $1000 going into stocks than a $2000 house payment and no stocks. If you have cash and you’re confused I will suggest you contact a finance advisor
Market behavior can be complex and unpredictable. Mind if I ask you to recommend this particular coach to whom you have used their services?
The decision on when to pick an Adviser is a very personal one. I take guidance from Sharon Ann Meny to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
Put the rates down. No foreign buyers allowed. China does not allow foreigners too own property. So Canada should do the same
You want to be like China? 🙄
if we can't buy their property why should they buy ours?
@@ProJock canada is for Canadians. Not people who can buy many houses and sell them for big profit. Then as a young buyer can/t buy a home. The money should stay in Canada
Canada is China's puppet.
Canada is China's puppet.
Locked in at 3% in 2019 for 10 years and everyone thought I was crazy. Now who’s crazy?
Nice!!
where do you get 10 years fixed in canada?
These are the peiple who told you to sign a variable rate when it was 1.7% on 5yr and the government was handing out money like haloween candy.
That was the stupidest advice to give and I feel bad for those who listened.
Now at 5% its a 50/50 going up or down. Look at the payment, can you make it? Can you make it at 8,10, 12% etc... if you can afford it without sweating on it, maybe its worth it. But if you can make your budget fit at 5%. Why risk it? I mean over 5yr its not gonna go back down to under 2% the BOC is done handing out money for a long time. It will take a miracle for the base rate to drop at 2.50 then mortgages will be 3.50% and up.
The mortgage specialist is gonna coax you into the higher comission. The BOC will always steer you into a variable rate, because it makes you more malleable to rate changes, their decisions have more impact if everybody is on a variable mortgage. If it was up to them fixed rate mortgages would be banned.
The smart Canadians wouldn't buy a home with these prices and high interest rates. Most are buying right now is to upgrade or downgrading, no one is starting new, at least the smart people.
Monkey see monkey do in Canada.
Don't drop the rates. This is what causes artificial housing prices. Do we want houses to reach 3-10 million dollars?
Not
Narrow minded point of view. Prices have very little to do with the current rates or nearly zero interest rates of the past. It is called inflation, which has been around for more than the last 100 years. Remember when gasoline was 39 cents a gallon? Bread was 29 cents a loaf.
@@ya472 The uninformed are much like Sheeple
He's right. While inflation certainly increases the value of houses (and everything else) over time, the large increases (somewhat artificial) in the past few years are a direct result of historically low interest rates, and for a long period as well. To suggest otherwise demonstrates that one is uniformed, For those of us who have been in RE all of our lives it's clear, simply look at history. I am not young, and ive been a RE investor for over 15 years (owned a house as primary reaidence even longer). Not saying it makes me an expert, but I do have some experience here.
@@jeffreyfurtado44 I have been a real estate investor since 1975, and my first home was a cottage on 1/3 acre in Victoria BC. I bought for $42,000 and sold three years later for $62,000. I bought another home with 1/3 acre for $52,000 and sold for $66,000 two years later. The first home is now subdivided into three properties, with the original building Assessed at $800,000, HAD nothing to do with LOW Interest Rates. It was DEMAND, and people pay the prices. Only people stuck at a fixed income or low value job can't buy, as there are couples with NO kids, earning $300,000 per year, buying. (or retirees with assets) (or people moving sideways in the market.)
Do they think we're all stupid.😅
The Mortgage broker i have talked today told me literally the opposite. I can get 5 years fixed at 4.79% and a 5 years variable at 5.95%. It doesn't seem like rates will go down quickly and that's a 1.16% it needs to come down just to break even and then it needs to go down more to get back what you paid more in the beginning before starting to make any kind of gain.
Historicly rates aren't that bad it's those who figured free money would last forever who are crying.
Which bank? 🙏🏻
The reason a bank offers a lower fixed rate is because they are anticipating the rates to go down generally. That's why variable is higher, because if u go variable and it drops 3% then the fixed rate was their way to get the most money out of you in the 5 year term. Remember, banks want your money. They're not your buddy lol
@@JOIHIINI yep it's just fixed rates go down following bond yield so they keep going down while BankOfCanada didn't lowered their rates which affect variable. Consequence is called broker yesterday 4.79% 5 years fixed or 5.95% 5 years variable. So 1.16% more that it has to come down before being equal then whatever time to break even on what's been paid more at first. Depends how fast rates will go down but it seems the recent inflation reports mean its not 6 cuts will get this year but more like 1-2 and not before June. Also I wonder if inflation can go back up with all those wars Oil prices are surging again from those Houthis attacks etc. Add to this big workers association are in negotiation many without a raise since over 2-3 years. Imagine when they get that back time plus like 18-20% raise.
Mathematically it would have come down more than 1.16 and how much more depends on when during your term it decreases
who believes they are going to go up more!! i do!!
Most likely yes, because overdue house price correction needs to be done. Currently people are buying yo upgrade or downgrading their homes. A new family cannot afford to buy a home.
Homes in Canada 🇨🇦 are currently being built for the first time ever
Shorter mortgage terms mean higher mortgage payments; my own mortgage broker TOLD me this. With everything already so expensive why would anyone sign on for a shorter term? Yeah you'll pay it off faster but unless you make a stupidly high wage you'll never be able to keep up with it.
Anyone who needs MORE than 13 years to fully pay off their house is living in a house that they CAN'T reasonably afford.
Your mortgage broker is either uneducated or you're confusing mortgage term with mortgage ammortization. The term is simply the time frame that your mortgage has an either set or fixed rate before its first renewal. If you have a 5% rate on a 5 year mortgage with a 20 year ammortization or a 5% rate on a 3 year mortgage with a 20 year ammortization you do not pay more per month on the 3 year. The 3 year may be a slightly higher rate that they offer because they like the idea of locking you in for 5 years because if the rates go down you can renew at a lower rate in 3 years rather than 5 years, and if the rate is significantly lower 3 years later you don't have to spend an additional 2 years paying interest on the high rate until you can renew without exit fees. It's important that if you have a mortgage broker that you're able to understand mortgage basics which your comment implies you don't. Always good to educate yourself and not just regurgitate what someone else says.
@@JOIHIINI There's other ways to correct someone than to be condescending about it.
I admit, I don't fully understand mortgages or percentages; I only repeated what I was told, by someone who is supposed to be a professional in the field.
The five year plan I am on now was the cheapest option; she tried to convince me to do a 3-year plan but the monthly payments she quoted me were just too high for me to manage on my funds at that time. The 5-year was the shortest term I could choose while still being able to afford routine living expenses, especially land taxes and, at the time of this comment, utilities - especially heat.
@Volcanoran3 my apologies after reading my comment it was a bit rude, i was more saying that there are a lot of metrics other than the term that are more important. In this particular case it probably was based on the 3 year rate being higher because that's what is happening right now. In early 2022 3 year fixed rates were actually lower than their 5 year counterparts because 5 years was deemed safer for the banks and they saw interest rate hikes coming so they offered 3 year rates lower so that ppl would have to renew at a higher rate at the 3 year mark. The way to look at it is that 3 year vs 5 year is a gamble and the bank bases the rates off of their predictions of how they can best make money off of you. The bank wants to make the most money off of everhone period. Before hikes variable was always lower than fixed whereas now fixed are lower. What this says is the banks have reason to believe the boc will start cuttknf the prime rate for variables and even though variable is higher now there is reason to believe they are counting on them going down. So tha bank wants to lock people into a "steal of a rate" at say 4.79 when 2 years from now variable could be 3.5 we just dont know. I tjink this piece is more focused on the dilemmas people have and trying to point out to them that the boc is moving away from factoring housing costs into their inflation analysis. Because they realized theres no policy they can put in place that will offset the inflation that the federal government is causing by means of immigration and unsustainable spending. It sounds like you did what was best for you and your situation which is good. I personally locked into a 3 year on a refinance because I have a higher risk tolerance and am okay with the slightly higher rate if it means I can get out of it sooner. But everyone acting like things are black and white here are wrong. They claim these ppl don't know whatbtheyre talking about because they told people to get variables in 2021. They were right 9 times out of 10 for the entire decade and 1 time they got it wrong so now they're untrustworthy. Variable rates are great for people growing real estate portfolios because the exit fees can be peanuts compared to the exit fees of fixed rate mortgages.
@@JOIHIINI That does help explain quite a lot, and when you put it like that it makes more sense. Thank you.
If you need duel income you should not be buying a home god forbid something happens.
Poilievre’s sweater is so bad 🤦🏻♂️. The bad makeover isn’t fooling anyone.
So, PP, what is your solution? All you do is point fingers, we need some solutions.....
Somebody beleives in lower rates?
Many were thinking the interest rates were going to go negative and the bank was gonna start handing out money
those crying about borrowing costs.
Are the ones who didn't learn anything in school.
Aka math.
As I have posted on these various videos before. Advice is a good thing if the advice aligns with you and what you want to do. It's a tough choice for those seeking mortgage financing for a purchase, investment or renewal. Call your local licenced mortgage professional if you are one of the many Canadians in this position. Advice is great, but you don't necessarily have to take it.
Unlimited International students and Refugee in Canada . Justin T need to resign
My parent bought a house for 500k in 2012 our house is worth almost 1.6Million today. its more then double
more than triple lolll
I doubt rates will fall the much though
You get into longer mortgages so you can keep your house and rates longer and keep your lifestyle and budget. having to refinance some years involves stress tests and circumstances change you might not qualify. useless trudeau
Liars. Don't buy
Dude that’s amazing 🤩
Keep Printing Cash $$$$$$$$$$$$$
This is possibly the worst financial advice they could give.
Hahaha bankrupting will manifest.
😂
PP is great at pointing fingers at problems, BUT really sucks at offering concrete solutions, because there is nothing the Government should do in the short term. All we get is more regulation and taxes, but PP won't speak to that, because he would only shoot himself in the foot.
HE already talked about how the regulations and taxes are hurting Canadians. So what are you talking about?
@@EyeSee4.8 You are right, he is talking about the obvious, but the last time Conservatives were in power, they increased and introduced fees for services. Just a different name for increasing taxes. So it is easy to point to the things that obviously bother Canadians, but he won't improve the situation. Sorry I had to spell it out, again.
@ya472 You could calculate which party added the most taxes, increasing the cost of living. Could see which party spent the most money with nothing to show for it.
@@EyeSee4.8 So could you, instead of believing the media.
We need ultra-low interest rate 100 year mortgages in Canada so that people can afford homes. Japan did it. Why can't we do it? Houses should be banned from being used as an investment medium. It hasn't worked out well and people are homeless because of it. Meanwhile, in their great wisdom, the many property owners in our government and their Richie Rich REIT friends are cashing in on population density due to rampant unchecked toxic immigration and trading away Canadian prosperity for it. We need cheap, easily accessible mortgages at ultra-low rates, now please. Nobody that can afford rent right now should be without a mortgage that would end up saving them money in the long run if they would rather own a home. People are stuck in a rent hole forever and the concept that someone who inherited a rental property should be allowed to cash in forever is absurd. There need to be some checks on capitalism. The Oligopoly cannot be allowed to continue to have us all in debt forever and ever - we need to be able to build prosperity - and I mean EVERYONE - especially whilst renting.
why would u want 100 year mortgages? the amount of interest you'll be paying would be insane. terrible idea
We have to many sheeps in Canada and nothing will happen. Sheeps that own houses that were bought 30 years ago and sheeps are happy and sheeps that arrived 10-2 years ago, no return ticket and hope to own a house with 5 other famles.
Meanwhile the WEF says, "you'll own nothing and you'll be happy." I wouldn't buy because it sounds like they're going to take property off people in the end.
@@Justice4x ultra low interesting rate 100 year mortgages - was what I meant to say
Sorry this isn't China and I don't want my grandkids paying my debts when they didn't ask for them...