Experts Questions and Answers

Hi John,

Today’s ever changing mortgage environment has really been a challenge to keep up
with. As a mortgage agent it is enough of a challenge and this is my full time
job.

Let me take a few minutes of your time to talk about the trends that we are seeing
in the mortgage interest rates and hopefully answer some questions along the way.
There are three questions that are on everyone’s mind. They are, where are interest
rates going? Should I consider a variable rate mortgage? And, is now the time to buy
a home?

To answer the first question I think everyone agrees that interest rates are going
up, in fact they have already started the climb and the real question is how far
will they go? Let’s have a look at the 5 year fixed rate for the last three years.
In May 2007 the rate was 5.09%. May 2008 it was 5.59% and then in 2009 the
interest rate was 3.89%. Today’s rate is 4.6%. I think it is reasonable to make
the assumption that rates could return to the 2007 and 2008 rates in the next 12
months.

The variable rate mortgages are really an individual decision. Historically
variable has always been the cheapest way to borrow. However if you have trouble
sleeping at night because your worried about the mortgage rate going up, then
variable is not for you. It should be noted that there are mortgages that have both
a variable and fixed term component if you want to take that option and have some
money in both forms of borrowing. As a note on variable the economists that I
follow are saying that the prime rate by the end of 2011 could be as high at 5.25%.

So with the 0.5% discount that is available currently by the end of 2011 your
interest rate would be 4.75% and very near the same as today’s fixed term rates.
I think with rates at, or near historical lows and home prices on the rise, the
answer to the question of is now the time to buy, is a resounding yes.

If you are sitting on the sidelines and unsure of what to do next, I would
encourage you to give me a call and lets work through some numbers and get you the
answers you are looking for. You may be surprised at the answers you find and the
options you have.

Cheers,

Mark Leibold
Power Mortgages
Senior Mortgage Agent Lic#M08006216
Direct: 519-590-3389