Take advantage of low mortgage rates while you can, because it appears as though mortgage rates are going to be on the rise in the coming months. Rates are currently at 5.59 percent for a five year fixed-rate mortgage and 2.25 percent for a five year variable-rate mortgage. Those numbers are going to rise according to experts who feel that mortgage rates will go up several percentage points in the next year.
Right now is the perfect time to take advantage of low mortgage rates. Just this past week, the Royal Bank, Bank of Montreal and TD Bank all cut the fixed-rate mortgage by .25 percent.
If the variable-rate mortgage goes from 2.25 percent to five percent, you can end up paying hundreds of dollars more per month and that can hit some new homeowners hard. Between January and June this year being variable-rate (60 percent of them), this was because of the recession and the tough time that the real estate market was having at the time. However, as things began to turn around, roughly 60 percent of the mortgages from June to November of 2009 were for fixed-rate, as many consumers wanted to take advantage of low interest rates while they could. With a fixed interest rate, consumers would be paying low interest for the next five years.
This does not mean that the interest rates are suddenly going to shoot up in 2010. In fact, it will be a slow climb from their present levels to probably double what they now, by the end of 2010. That means that many consumers who have a mortgage rate that is variable, will be able to switch to a fixed-rate mortgage, and thereby capitalize on the low interest rates before the rates get too high.
The amount of residential mortgages are forecasted to increase by seven percent between 2009 and 2011, eventually passing $1 trillion in value by 2010. In October of 2008, the average mortgage rate was 5.41 percent, while in October of 2009 it was 4.55 percent.
If you are looking to buy a home, it would be best to do it in the beginning part of 2010. Currently there are more people buying homes than there are homes for sale and that has driven up prices. By the beginning of 2010, this trend will reverse and there will be lower-priced homes, with good interest rates, making for a perfect scenario for potential homeowners.
Posted: 2009-11-24 08:57:02
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