I’m sure you heard that in October we had an inflation spike that was unexpected and likely not sustainable. There is still a lot of international economic uncertainty in many unsettled markets like Ireland and the U.S. so I would not be too concerned about consumer prices rising anytime soon.
In fact, the recent inflation jump was primarily a result of energy prices and the newly introduced HST. Even with this recent news, the Bank of Canada has indicated that it is not entertaining any interest rate increases until late 2011 or early 2012.
Let me remind you that fixed rates are based on bond prices that can be very volatile and jump around unexpectedly, yet they are not good indicators on what is going on with the underlying economy as a whole.
Conversely, the Bank of Canada overnight rate is far more predictable, stable, and mirrors movement in the overall economy, and for this reason we see it change typically by 0.25% about 2-3 times a year…and this is the rate variable mortgages are based on. Even if mortgage rates climb gradually over the coming years, the math still favours choosing a variable mortgage over a fixed term.
Please click on the link to view a debate regarding Fixed vs. Variable
Are you a potential first time homebuyer looking to get the keys to your first place? Well your first step is to get pre-approved for a mortgage.
How? I’ve put together a five-part free email class that spells it out, step-by-step. Sign up below: Each one gets delivered to your email inbox hot & fresh about every 3-4 days. It it you’ll learn:
- Why you should get pre-approved now
- The nuts and bolts of mortgage pre-approval
- The documents you need to organize