Home owners nowadays tend to choose a fixed-rate mortgage since rates are at a remarkable all time low! Even though the prime rate lowered during the financial crisis in 2007-2009 and has not gone up since, the popularity of a variable-rate mortgage hasn’t gone up because of the low fixed-rates in today’s market.
The great news today is that people can save thousands of dollars on a fixed-rate mortgage. Many borrowers gladly take a 5 year fixed rate. They know that payments would be consistent, regardless if interest rates were to rise, as opposed to a variable rate mortgage where monthly payments may increase.
The biggest thing that gave the variable-rate mortgages an edge was the price change set by the banks a few years back. The banks offered as much as prime minus 0.90 %.
After a couple years of “prime minus” variable rates, the bank then offered prime and prime plus variable rate mortgages. With this rise in variable rates, the fixed rate mortgage became the most popular and still is at the present time.
Since there have been many ups and downs in the market, it is obvious why people want to lock into a fixed mortgage rather than pay the consequence if the prime rate was to rise.
With the fixed rate being this low it is a great time for new home buyers looking to borrow money, as well as existing homeowners looking to refinance, switch to a lower rate mortgage or consolidate debts.
Call a Maple Leaf Mortgages representative today or apply online to find out how much money you can save!
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