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March 31, 2021

Time to lock in that mortgage?

Canadians accustomed to rock bottom mortgage rates have some thinking to do.

Although a bit sooner that some predicted, mortgage rates have finally begun to rise, with both Royal Bank and TD Canada Trust the first out of the gate. 

The biggest jump is in the five-year fixed closed rate, which moves from 5.25% to 5.85% at both banks – the level every lender will reach before the Easter holiday. 

Most mortgage specialists expect that this is just the beginning of several small jumps that will hike the cost of home ownership throughout the balance of this year.  

So, is now the time to lock in to a fixed rate? 

Probably, says Adrian Mastracci, portfolio manager at KCM Wealth Management in Vancouver. If you have a loan, he suggests, consider locking in a longer term rate over the next while – say two to six months. 

If you can stand the inevitability of higher payments, a variable rate can still make sense, Mastracci says. But if you really have no wiggle room on increased payments, then take a close look at the 5-year fixed rate, he adds.

Before you commit, keep these tips in mind, he suggests:

  • Posted rates are far different than negotiated rates.
  • Lenders will negotiate to keep or get your business.
  • Someone may see it your way so don't take "no" for answer.
  • Consult a mortgage broker to shop around for you.
  • Make sure you know your credit rating.
  • Understand all your prepayment privileges.
  • Analyze a few amortizations to get a handle on whether it makes sense to accelerate your loan.    

Are you on the cusp of such a decision? What's your plan?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...