Monday, January 16, 2012

What happened to our Fraser Valley Mortgage Rates?

Brad Currie RI, is a mortgage broker (Versa Mortgages),  a professional member of the Real Estate Institute of British Columbia and a long time pal of mine.  Last week, he sent me a very short and concise review of the type of mortgage market we experienced in 2011 and what to expect in 2012.  If you are planning to purchase a new home or refinance in the Fraser Valley this is important information to understand.

Brad Currie RI reports:

The year started off with Prime Rate at 3.00% and ended the same. The Bank of Canada did not change the Prime Rate at all in 2011. The last change in the Prime was in August 2010. 

What did change in the area of variable rate mortgages was the discount lenders were offering for those arranging an adjustable rate mortgage. In January 2011, a typical discount off prime was 80 basis points This past September, when both the U.S. Federal Reserve and Bank of Canada announced they see no reason to increase interest rates for at least 2 years, the Chartered Banks lead the way by slowly and methodically reducing the discounts to only 10 basis points. Other lenders have followed as well.

Therefore, in January this past year, if you arranged a variable rate mortgage your rate was 2.20%. Today, the rate would be 2.90%

This had lead to the increased popularity for a 5 year fixed rate mortgage. In January 2011 a typical 5 year rate was 3.79%. Today is is 3.49% with a number of lenders offering promotional rates of 3.19% to 3.29% for fast closing transactions.

What does 2012 have in store for interest rates?

It would appear at this time, our low interest rate environment will continue. The present economic problems in Europe are being sited as a reason our rates will remain low. Economic activity in China is also slowing. Until there are some consistent positive economic signs, we can expect rates to remain stable going forward.

Stephen Mullock RI is an award winning full-time real estate agent with 30 years of experience and hundreds of sales. Thinking of buying or selling real estate in the Fraser Cheam communities of Chilliwack, Agassiz or Harrison Hot Springs? Contact Steve (click here) of Royal LePage Wheeler Cheam Realty for experience, local knowledge and friendly service you’ll be happy you did.

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