Savings opportunities abound for homebuyers

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For the past four weeks or so, fixed interest rates dropped down to new lows. One new Canadian lender even had a five-year fixed of 3.39%, while most of the larger banks were in the 3.49 – 3.69% range.

These extremely low rates below the 3.50% threshold had a very short ride as the increase of the bond yield (fixed rates are based on this figure, call it the lenders’ cost of funds for simplicity) had jumped up 0.40% in October and we’ve recently seen fixed interest rates “skyrocket” all the way up to 3.69 – 3.89%.

It’s amazing that the super low fixed interest rates don’t get any attention from the media nationwide, but I guess neither does “1,000 planes landed safely at the Calgary Airport today!” Good news just doesn’t get much attention.

These super lows do create a short buying frenzy, which in effect heats up the market, and around the country the “heating up” effect is essentially getting the market to normal buying activity in the housing sector. Around the country, there are thousands of people armed with a pre-approval that is in the 3.49-3.69% level and if they don’t take advantage of them in the next 90-120 days they may miss out on their gift from the banking gods.

One of my lender representatives mentioned to me that they couldn’t profit on the level of these interest rates, meaning that they were simply buying market share so as to not lose credibility with their mortgage originators. And since there is so much competition out there for mortgages these days, the lenders that are buying up market share and not making any money on them will have to find more creative ways to make it up somewhere else. I estimate that the non-bank lenders will be offering up credit cards, insurance products and other forms of services to make up for those losses.

Here we are in the middle of Movember (yes I’m supporting the prostate cancer cause with a beautifully coifed ‘stache), it’s -25C outside, and fixed interest rates are still below the 4.00% level.

We are still at historically low levels in the 3.69-3.89% range, and even I took advantage of the low rates by blending my rate and extending my term on my own mortgage.

As much as we’d all like to see these mortgage prices around forever, we all know that that is an impossibility as interest rates are likely to increase in the all too predictable spring market. We are going into the busy retail season, oops I mean holiday season, and most of us are bombarded with having to do our Christmas shopping, having family visit or vice versa, year-end networking parties and the like that we put shopping for our biggest investment of our lives on the backburner.

Even though rates have gone up an average of 0.25% in the past week, fixed interest rates are still tremendously low and cost saving opportunities abound for those that are thinking of buying a home, just don’t wait until the next run up to get your pre-approval!

Jean-Guy Turcotte is an Accredited Mortgage Professional with his partners at Regional Mortgage Corporation and can be reached for appointments at 403-343-1125, emailed to jturcotte@regionalmortgage.ca or texted to 403-391-2552.

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