Changing rates and lots of uncertainty

Following up on our post earlier this week prior to the Bank of Canada's (BOC)announcement ... not much happened!
The "Fed" in the USA dropped it's rate by .75% in an effort to spur their ecomony and faltering housing market. At least we don't have to worry about the housing market in Canada! We continue to enjoy strong sales of both single family and condominium units and we don't have the same rising default rate as our neighbours do either.
Our rate reduction was a little less - .25% - however we aren't in as bad a condition as our south of the border friends. There is noise already being made that on the next meeting and announcement by the BOC (March 4/08) there will be another .25% reduction.
The effect on institutional mortgage lending rates was minimal. Some lowered their "prime" interest rates by the same .25% so if you are currently in or investigating a variable rate mortgage, that is good news to you. Generally you can obtain a variable rate mortgage at "prime minus .50%" which means that is equal to 5.25%. For all the details on a variable rate mortgage see Spencer Group Mortgages or email me at marshall@spencergroupmortgages.ca Unfortunately all lenders did not follow with rate drops in the prime category however we'll give them the benefit of the doubt and hope they catch up right away.
Fixed rate mortgages also dropped at some lenders but again not all followed suit. For example, posted 5 year mortgage rates are currently 7.49% which remains largely unchanged from pre announcement days. Using the services of a mortgage professional will get you access to 5 year mortgage rates of approximately 5.89% (on approved credit). For a more complete review of rates please click here. We did notice some slight rate reductions of .10% so it looks like some of those analysts were correct in their predictions that the banks would cushion some of their losses through increased lending rates. This time they didn't have the optics of raising their rates ... but accomplished the same results by not lowering them as much as they could have done.
Check back with us next time when we suggest a list of "don'ts" when applying for financing.