renew?
I’ve coordinated renewal of several mortgages over the past few months (you may recall we sometimes try to time renewals for US election years because of typically coinciding rate dips), and here’s what I’ve learned:
- Existing variable rates are crazy-low (as good as 1.68%), but lenders are less generous with discounts on renewal. Variable rate renewals are coming in at just over 2%, which is still very good.
- The spread between a variable rate and a 5-year fixed-rate is negligible; it’s now possible to lock in for 5 years at 2.09-2.24%. This usually translates into lower monthly payments and/or more rapid repayment of principal.
- (BTW: on a principal residence, you may do a touch better on rate)
Should a mortgage renewal be on the horizon, do whatever seems best for you. As I currently see no obvious short-term (1-3 years) reason to believe Alberta’s market will soar, taking advantage of lower rates on a 5-year fixed mortgage seems prudent.
Alberta has always been cyclical meaning: after bad comes good. It’s hard to imagine that there isn’t a light at the end of this long tunnel.
But, then again, I don’t know the future.
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