First Foundation’s Best Rates To Open the Week:
1 Year 2.64%
2 Year 2.99%
3 Year 2.89%
4 Year 2.99%
5 Year 3.29%
7 Year 4.49%
10 Year 4.79%
ARM / Variable 2.60%
Prime Rate 3.00%
Qualifying Rate 5.39%
The Toronto Stock Exchange’s S&P/TSX composite index ended Monday’s session down 91.67 points, or 0.75 percent, at 12,172.04.
All eyes are on Greece at the opening of this week as fears that the country is heading into a chaotic default situation — and the idea that it should potentially leave the euro and return to its own currency — have roiled the markets, both across the 17-nation eurozone and globally. The market seems to be preparing for Greece to default on its debts as soon as October but most investors are hoping for for the best – that the default may unfold in a structured manner rather than in an uncontrolled, chaotic one.
What does this mean to you?
For a good overview of the impact a default by Greece would have on Canada, have a look at this article – to be sure, we should prepare for a lot of volatility in the market and loss of momentum in our economic recovery here at home.
Canada’s major lenders moved together again last week to cut the the discount offered on five-year variable-rate mortgages (VRMs), and market variable rates are now in the prime minus .40% range, which is 2.60% using today’s prime rate.
The four year rate at 2.99% continues to be the sweet spot as far as fixed mortgage rates go, with the five year at 3.29% right on it’s heels.
What for this mean to you?
Opinions about whether to choose fixed or variable rates are all over the map right now and it’s certainly a conundrum. I did come across an interesting opinion however that is worth consideration and that is that although the variable rate discounts have been reduced, making them appear less attractive compared to the rock bottom, available fixed rates – the variable may still be a good choice (given that a variable is the right mortgage strategy for you).
Our economic future is clouding again with so much uncertainty about the eurozone and the U.S. and chances are, prime will stay at 3.00% or perhaps even lower indefinitely. Although 3.29% is a fantastically low rate to ride out the next five years with, that fact is 2.55% is lower and that rate may hold for longer than anyone has foretasted up to this point. This means mortgage borrowers could be overpaying by as much as .75% for the security a fixed rate will bring you when there may be no real risk at all, thanks to Greece and the European Union and our beleaguered neighbors south of the border.