I love Rob McLister! He writes the best articles about the mortgage market and in a way the the general homeowner or first-time home buyer and understand.

As Rob mentions, we have seen interest rates on the rise, but they’ve been doing so since November, not just in January. In January we saw the big banks, RBC to name but one, really increase rates but the non-bank lenders have been holding steady.

Rates are higher than we would typically expect given the current bond yields, but with the pending regulatory changes for lenders which will make lending more expensive, it’s not totally unexpected.

Why shorter term interest rates are a good bet?

Rob summarizes what to expect with variable and fixed rates very well: “The reasons Interest Rateabove will likely keep variable-rate discounts skimpy for the foreseeable future, at least at the major banks.

“For fixed rates it’s a different story. Unlike variable rates, which are funded by short-term debt and deposits, the cost of fixed-rate mortgages is tied to the bond market. That’s good news for mortgage shoppers because bond yields are near all-time lows.”

So we’re expecting status quo with some potential deals out there in terms of interest rate promotions and quick close specials in the coming months as lenders try to encourage new business.

So what term should you be looking at when it comes to your mortgage? Rob outlines everything in his article but, without giving up the whole story, he is once again encouraging borrowers to go with shorter terms.

He also gives a sage reminder: “Mortgages are like gloves: One does not fit all.”

It’s important to remember that if you employ a short term strategy, you may end up switching lenders at the end of your one year term. This can mean a bit more paperwork that is required, but legal and appraisal fees are typically covered by most lenders in this situation.

He also mentions, but in my mind it should be bold, that you should avoid collateral loans, especially if you are going with a shorter term. Collateral loans are costly to switch and only a few lenders will do so with them paying the cost. This can end up costing you far more than you saved by going with a one year interest rate.

Don’t get into the five year fixed rut, it may not be the best solution. Call me – 403-804-7002 – and we can go over all your options and discuss a strategy that fits you!