Beware of the Great 1-Year Mortgage Rates!

December 1, 2008  
Filed under Housing Market

Great one year fixed term mortgage rates are abundant in the Canadian mortgage market right now. At a time when most other mortgage rates are slowly rising, it’s a bit of an odd phenomena to see one year rates dropping lower and lower. It makes us question what the lenders’ motivations are behind having these rate specials.

Generally speaking, when many lenders are promoting one year fixed rates, it’s likely that they anticipate a rate change in the next year. There is speculation that interest rates could increase as much as 1.0% to 2.0% in the next year. That means that lenders will be able to renew those currently holding a one year mortgage (or entering into one shortly) at a higher rate.

That being said, there is also always a possibility that interest rates could decrease, depending on what happens with the mortgage market and the economy in general. It’s up to you, as a mortgage consumer, to weigh your risk tolerance and decide if choosing the better one year rate outweighs the risk of the rate being higher when you renew.

First Foundation is here to help you with that! Please contact us today for more information.


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