Have one eye on interest rates and another on SW Calgary Real Estate Listings? Then you already know that mortgage rates are on the rise and that SW Calgary Homes for sale are going to cost you a little bit more. As speculation grows that short term interest rates will be raised by the Bank of Canada, many people are beginning to look at locking in with a fixed rate mortgage. For some, this is the right thing to do, while for others, maybe not.
Whether looking at SW Calgary homes for sale for a first home purchase, or a 'veteran' home owner looking to refinance or renew, homeowners and home buyers almost always end up asking themselves the same question: variable or fixed?
Historically, a variable rate mortgage has won out in reducing the total amount paid. This is due to the nature of the credit system in Canada. The Bank of Canada only has control over short term credit. They primarily use this control to reign in inflation; by increasing the rate, they make it more costly to borrow money, cooling the economy and lowering inflationary pressure.
This typically prevents long term bond holders (units tied closely to mortgages) from worrying about their bonds being inflated into worthlessness. Over a ten year period, while the variable mortgage might have risen higher to match the short term credit numbers, over time they will return to lower levels. More often then not when dealing with a horizon of this length, it's less costly to have the variable mortgage.
The major exception to this rule would be times of hyper-inflation, but economists are not predicting that the current Canadian market is poised for a return to 1980s like levels.
For those of you that have experienced low variable rate mortgages, the past couple of years have been great, and a perfect time to pay off some of that principle. It remains to be seen, but variable rates are still well positioned to save you money, so if you’re considering purchasing SW Calgary Real Estate contact your lender for more information. We’d be happy to refer you to local mortgage brokers should you need one.
If you're looking to sell or buy, do not hesitate to contact us.
We are prepared to work hard ensuring that your needs are met and that the result is more than you were hoping for. Nothing gives us more pleasure than your success and being with you through major life changes.