Victor's Life Journal
travel log, pictures, personal finance, news and ramblings

Got a Variable Rate Mortgage?

If so, you may want to seriously, seriously consider locking in your mortgage now.

First, we now have one of the lowest prime rates EVER in Canadian history. The oldest data I was able to find for the prime rate goes back to 1974. In the 35 years shown on that chart, the prime rate has always been higher than it is now. The lowest it has gotten is 4% in 2002 and 2004, but the highest is 22% in 1981! According to another site I read but could not verify, today's rate of 2.5% is the lowest Bank of Canada prime rate ever. The average has apparently been around 9-10% from 1950 to 2005.

http://www.fin.gov.bc.ca/PT/bcm/ref/cibcHistoricalPrime.pdf

Second, there is a decent chance that we are in for a period of hyperinflation or at least high inflation. In order to try to fix the world economy, trillions of dollars are being printed, created from thin air like magic, and that will drive prices up. You can read about this anywhere by doing a quick search.

In other words, historical precedent tells us that this is a great time to lock in as prime is not likely to go lower, and current economics tells us that this is a great time to lock in because prime could go much higher very quickly. I've tried to keep this positive by focusing on what individuals can do to take advantage of current conditions and to safeguard against possible future conditions.

0 Comments:

Post a Comment

<< Home



    Click here for older entries...