About Canadian Mortgages – Interest rates in Canada are at an all-time low right now, making it challenging to decide what kind of mortgage to take out. A fixed-rate mortgage offers security, providing peace of mind, significantly if rates rise sharply. In contrast, a variable rate enables you, the homeowner, to instantaneously reap the rewards of any decrease in the interest rate. But whether rates are low or high, the choice between a fixed rate and variable mortgage should be carefully considered. Depending on where you are in the world, mortgages vary, and that is certainly the case in Canada and the United States of America, with the main difference being how the interest, or compound interest, is calculated. For example, mortgages in the United States have interest compounded monthly and differ from mortgages in Canada, where interest is compounded semi-annually. This means that monthly mortgage payments on identical loans are higher in the United States than in Canada because the number of compounding periods per year is higher, with mortgages in Canada having just two compounding months, compared to those of the United States, which have 12.
About Canadian Mortgages
So what are the current rates of interest on mortgages in Canada? Mortgage interest payment continues to decline in Canada right now, mainly due to the strength of the Canadian Dollar. The prime rate is currently at 3.0% and has stayed the same since November last year, and is expected to stay the same for the foreseeable future.
If you have a variable-rate mortgage, you will continue to enjoy extraordinarily low-interest rates, and brokers recommend that homeowners increase their payments to take advantage of such low rates.
The best interest rates on the market currently are 2.64% for a 1 Year Fixed Rate Mortgage the Safebridge Financial Group offers, ranging up to 3.92% for a 5 Year Fixed Rate Mortgage, which Safebridge again provides.
The 1 Year Variable Rate is currently being offered as low as 2.60% by the True North Mortgage Company. Still, the 5 Year Variable Rate is even softer and is now just 2.10%, with the True North Mortgage Company again topping the charts with the best available rates.
If you are looking to buy your first home, this rate is particularly eye-catching, and should you choose to take True North up on their current rate, treat it like a fixed-rate mortgage and adjust your payments accordingly.
You can use our free Canadian Mortgage Calculator to determine your monthly payments. It’s easy; you only need to fill in 3 fields and click on a mouse.