With the heavy speculation of economists forecasting inflation within the next year, for some people it’s a tough decision on whether to go fixed or variable with their mortgage. With Prime as low as it is (0.25% at the BoC), the allure of variable savings is definitely there, especially with fixed rates climbing back up again after record lows in the spring.
Firstline Mortgages has a solution with their Auto 6/12 mortgage. This product offers clients the ability to select either a 6 month or 1 year fixed rate closed mortgage at a low rate (like around 2.75%) with the option to convert to a longer term mortgage at any time with no pre-payment charge.
A rate of 2.75% is close to what you’d be paying for a regular variable closed these days, so you can take advantage of similar savings but be protected from any volatilty in Prime. The idea is that once you have a better grasp on where you think rates might be going, you can act accordingly…In the meantime, enjoy a year of low rates.
I like this product in that can provide peace of mind to particularly a new buyer who might want to save on rate for the first year. I don’t like it because in my opinion, a client should have a solid game plan going into a mortgage. It could be that if they’re on the fence about rates, then perhaps they haven’t thought the purchase through enough. Plus, as history has shown, it’s never a good gamble to try and predict rates. Sure, you get a 2.75% for 1 year, but when the term is up, where are rates going to be? “Higher than now”, based on recent record lows, would be the educated guess, n’est pas?
Anyway, Firstline is a great lender who specializes in unique mortgage products and solutions. They’ve got a million options. Need to talk shop? Send me an e-mail to wright@mortgagegrp.com.
