Pay off your mortgage or help spur the economy?

As we all know by now, the Bank of Canada has dropped their rate to 0.25% with many of the retail lenders following suit with their rate at 2.25%. I know some people that have a Prime -1% variable rate. They should be thinking about vacation right about now. The goal of a cut like this is to put money back in the hands of the consumer. I think it will have a positive effect. As much as I’d like to think that most people will keep paying the same amount towards their mortgage to pay it of faster, I don’t think that will be the case. (the statistics don’t lie. Only about 3% of mortgage holders make pre-payments on their mortgage debt. That tells me that some money in the wallet now is more important than a lot more money in the wallet later.) Spring is here in Vancouver, and for many people, it’s time to get outside, soak up the sun and shake off the cobwebs of winter. That also equates to sitting on a patio in Yaletown sipping cold beers and watching the playoff hockey. It’s a west coast luxury that we wait all winter for, and being frugle in May just isn’t that much fun. I heard a rumour the other day that the Canadian Government will begin to become active in bonds to keep fixed rates low as well. That is excellent news for the risk adverse home owner/home shopper looking to get into a new home. It’s also great news for those currently in a fixed mortgage paying rates above 5%. If you lot can swing it, the numbers might just gel to buy you out of that old clunky mortgage and get you into something like a smooth and slick 3.69%. I should be selling cars, maybe. (Beware the IRD) Send me a message below if you’d like me to run the numbers. Why just this afternoon I saved a man about $5,000.00 by switching him away from his current rate.