• Navigating Mortgage Trends in Hamilton, Ontario: Fixed vs. Variable Rates

    In our Hamilton-based mortgage broker office, clients frequently inquire
    about mortgage rates, seeking clarity on whether rates are on the rise or
    decline. While rates are a crucial aspect, various factors influence them,
    such as credit status, refinancing needs, or the desire for extended
    amortization for more affordable payments.

    In this article, we delve into the dynamics of variable/adjustable versus
    fixed mortgage rates, shedding light on the surprising trend of decreasing
    rates that many Hamilton clients might not be aware of.

    Understanding the Rate Perception:

    Clients in Hamilton are often taken aback by the revelation that rates have
    been on a downward trajectory. This surprise stems from the prevalent focus
    on the prime rate in the news. Despite the Bank of Canada’s intermittent
    increases in the prime rate, recent cycles have maintained stability. The
    constant chatter about a potential increase contributes to the misconception
    that rates are continually on the rise.

    However, the reality is that rates,
    especially fixed mortgage rates, have experienced a recent decline.

    The Dichotomy of Fixed Mortgage Rates:

    In the past few months, fixed mortgage rates, including 3, 5, and 10-year
    terms, have witnessed a favorable decrease. Unfortunately, this positive
    trend often goes unnoticed in discussions about mortgage rates. Opting for a
    fixed rate not only means benefiting from current favorable rates but also
    impacts your qualification, making it an essential factor for potential

    Navigating Variable and Adjustable Rates:

    For those currently committed to variable or adjustable rate mortgages, the
    past year has seen a considerable increase in rates. While transitioning to
    a fixed rate might seem tempting, it’s essential to consider the existing
    high variable rate. Moving to another high fixed rate might not provide
    significant advantages. Unless confident in the continued rise of the prime
    rate, waiting it out might be a prudent choice. Variable rate mortgages
    offer flexibility, allowing minimal penalties for exits, a valuable feature
    in volatile markets.

    Distinguishing Between Adjustable and Variable Rates:

    Adjustable rate mortgages (ARM) and variable rate mortgages (VRM) are indeed
    distinct. In an ARM, payments immediately adjust with changes in the prime
    rate, potentially leading to significant payment fluctuations. Conversely, a
    VRM maintains constant payments even when the prime rate adjusts. This is
    achieved by allocating more of the payment to interest when rates rise,
    keeping payments affordable. However, the trade-off is a longer amortization
    period, impacting the time it takes to pay down the mortgage.

    Understanding these nuances is crucial for making informed decisions in the
    ever-changing landscape of mortgage rates in Hamilton, Ontario.

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