A common question I am getting these days relates to interest rates. Clients want to know whether to go with a variable (ie prime +.60% or 4.60%) or a fixed rate (ie 5.55%). Generally speaking (based on history) going with a variable rate will save you money over the long term. You will save about 1% or more per year right away, and you can lock into a fixed rate at anytime. However, this is not for the faint of heart and there is a risk that if the prime rate goes up substantially you could be paying more overall. For those clients wanting to know their rate will not change throughout the term, then I would suggest going with a fixed rate. As a mortgage broker I constantly monitor rates and will provide notifications to my clients when rates start to rise. Under normal market circumstances I usually recommend going with variable rates, but as of today I believe fixed rates are the best choice. However, the choice is ultimately yours to make.
Another popular question these days pertains to the housing market situation in BC. Prices have dropped 10% and more in some areas. Could the market dip further? Yes. Will you save money by waiting until next year to buy? Maybe. Interest rates could go up in 2009. Even if you manage to purchase a discounted house in the future, there is a good chance you will be paying more interest on it. Your total monthly cost (principal + interest) could be the same if not more. It’s very difficult to predict the future, but Vancouver is probably always going to be the most expensive city in Canada. If you’d like me to help you secure a mortgage please give me a call anytime @778.861.3336.
Happy House Hunting!
