Oh, by the way. I'm never too busy for your referrals!
Now that banks and lenders have raised their fixed rates across the board from .15 to .25%, the next question is... what next? Are they going to continue to rise? Quicky? Slowly? It partly depends on who you listen to and partly what you believe. The majority of people whose opinions are listened to predict that interest rates will rise sooner than later and quicker than we expect. Food prices are rising around the world fueling unrest but also attracting investment. Predictions of higher commodity prices and bond rates are causing "upward pressure" on mortgage rates. Investors in mortgages are going to place their money where it gets them the most money.
Many are locking in to protect themselves against future rate increases. And that is not a bad idea. 5 year fixed mortgage rates around 4% are a very good thing. Others who feel there is still time to work the variable rates in their favor are feeling that rates will remain where they (maybe even wiggle up and down for the next while) and bank prime will remain @ 3.00% until summer. The general consensus is that as rates do rise, it will be very gradually. A gentle massage to bring the economy back to stability...predictability. The stuff plans are made of.
I'm not sure what is going to happen in the next six to twelve months as I read conflicting reports. It seems as if everybody is looking through a different microscope.
Facts: everyone can and will be able to purchase with 5% down. Starting March 19th maximum allowable amortization (the total length of time your mortgage payments are based on) will be reduced from 35 years to 30 years. That means the same payment will qualify for 6% less in mortgage funds.
Starting March 19th any one re-financing their home for any reason will be restricted to the same 30 year amortization and only allowed 85% of the current market value of their property. That means even with rates remaining the same, someone with a $300,000 home can access $270,000 today. On March 19th the limit will be $239,700.
Most banks and lenders have declared they will follow with the same amortization limits on their conventional deals (deals with greater than 20% down payments and not needing CMHC to back the mortgage). Those lenders who have not yet announced they will also reduce amortization limits to 30 years...will. You can count on it.
Recommendations?: Take a look at your current income and payments. If you are vulnerable to any increase in rates of variable rate mortgages or lines of credit, meaning... can you afford to gamble on hoping rates won't go up any further? If you are the least bit concerned you should review your whole financial situation now, before March 18, 2011. An opportunity like this won't be around for a long time.
Bob Quinlan, Independent Mortgage Broker