HawthorneVillager.com

While bond yields were starting to spike last month they have started trending back downwards once again, taking the upward pressure off fixed mortgage rates. Fixed mortgage rates are determined by bond yields. You can track them yourself here: http://www.investing.com/rates-bonds/ca ... bond-yield

2 year fixed mortgage rates have now dropped back down to 2.49% and variable rate mortgages are now as low as prime -0.50% (2.50%). Does it make sense to go variable now that we are seeing deeper discounts on them once again? In most cases... I would say no. You would be much better off with a 'guaranteed' rate of 2.49% for two years. At the end of two years, you would always re-visit variable once again as there may be better discounts off them once again at that time.

For mortgage borrowers who are a little more risk-adverse, the 5 year rates are really not a great deal more for the peace of mind in knowing you have a great rate locked in for the next 5 years. 5 years still aren't for everyone, so make sure you know all your options.

For anyone with a mortgage closing within the next 120 days, or anyone looking to refinance, I would be happy to go over the different options with you to see what is going to make the most sense financially for you and your family.

_________________
Paul Meredith
Mortgage Broker
CityCan Financial (est 1976)
416-409-8009
http://www.easy123mortgage.ca
paulm@citycan.com
Lic#10532

Follow me on Twitter! http://www.twitter.com/paulmeredith

Paul,

To take your quoted 2 year rate (or 5 year) likely involves moving the mortgage from one lender to another. What are these typical "switching costs" and at what point does this stop making fiscal sense?

If I take you up on the 2 year fixed rate I likely pay a penalty to leave my mortgage which nows means the 2 year rate is likely not as attractive and I am in the same boat in 2 years. Appreciate your insight.

It may or may not make sense, depending on what your penalty amount is to break, as well as the difference in payments, etc.
Typical switching costs (in addition to your penalty) would be your legal cost to register a new mortgage (approximately $800 - $1,000) and 'possibly' an appraisal cost of approx. $300.

If you can provide the following information I can crunch the numbers for you.

- Current monthly or biweekly payment
- Current mortgage rate and term
- penalty to break your mortgage (if you tell me what lender you are with, I may be able to figure this out from the info provided)
- Original amortization
- Current mortgage amount
- Original mortgage amount

From that info, I can run the numbers to and see how much you will actually save by switching and we'll see whether it makes sense or not to make a move.

_________________
Paul Meredith
Mortgage Broker
CityCan Financial (est 1976)
416-409-8009
http://www.easy123mortgage.ca
paulm@citycan.com
Lic#10532

Follow me on Twitter! http://www.twitter.com/paulmeredith