Why is it important to shop for Alberta's best mortgage rates?
There is a wide range of low mortgage rates in Alberta available on the market with a variety of terms and conditions. Institutions such as banks, credit unions, and private lenders have specific mortgage solutions and advice to fulfill an array of financing needs. It is important to investigate the lowest rates available for your financing needs by doing some research about current Alberta mortgage rates. By looking around and comparing the various offers, you are more likely to get the rate type and term that suits you best. And that's a sweet deal for anyone.
Current Housing Market in Alberta[1]
The housing market in Alberta is directly linked to the Albertan economy. With the recovery of oil prices, the Alberta economy is picking up. As a consequence of the provincial crown petroleum and natural gas rights being auctioned off at record-breaking levels, we can forecast that drilling and energy exploration will increase in the near future. Investment increases in the oil sands projects will benefit the Albertan economy. These economic pick-ups are expected to result in a reduction of the unemployment rate. Migration both at an interprovincial and international level will continue to grow in the next couple of years. These positive surges in the Alberta economy and migration will result in an overall positive effect on the housing market.
[1] Canadian Mortgage and Housing Corporation (CMHC)
Open vs. Closed mortgage rates in Alberta
The main differences between open and closed mortgages are the value of the interest rates as well as the terms and the conditions that apply.
In terms of interest rate values, open Alberta mortgage rates are usually higher. However, this is offset by the advantage of allowing borrowers to make unrestricted adjustments to their mortgage payments. With an open mortgage, it is also possible to make lump-sum payments which reduce the principal of the mortgage. These payments are unrestricted and are a good choice if you know that you are going to come into a considerable sum of money in the near future, possibly through an inheritance or a raise.
In Alberta, since closed mortgages usually have lower interest rates, they are generally the preferred choice. There are prepayment options available with closed mortgages. It is possible to increase monthly payments or make lump sum payments; however, the amounts are limited and overpayment will result in penalties which you want to avoid.
Alberta variable and fixed mortgage rates
Alberta fixed mortgage rates are constant for the length of the mortgage term whereas variable Alberta mortgage rates fluctuate with the prime lending rate set by the Bank of Canada.
At the beginning of a term, a variable mortgage rate will generally be lower than a fixed mortgage rate. However, it may rise and this is the risk component of the variable rate option. Since fixed rates offer stability and allows for consistent, predictable budgeting, it is a popular option to many homebuyers. Statistically, in Alberta 66% of all mortgages are fixed mortgage rates. The most popular are the 5-year fixed mortgage rates.
However, with a variable mortgage rate, it is possible to save considerably on interest paid over the amortization period or even over a term. Examined historically, variable rates have proven to be less expensive over time. Still, it is important to consider your risk tolerance when deciding on what type of mortgage rate to choose.
Mortgage Rate Holds
Mortgage rate holds allow a homeowner to lock in a current mortgage rate for a defined number of days. Rate holds provide the opportunity for a homeowner to take advantage of today's low mortgage rates. For instance, a 120-day rate hold allows 120 days for you to hold on to the current mortgage rate before your date for mortgage renewal or closing.
Alberta Mortgage Brokers
Mortgage brokers can help in a variety of ways, from providing advice on the best mortgage rates to your credit history. Brokers also deal with special mortgage types such as Home Equity Lines of Credit (HELOC) or Alberta cash back mortgages, and provide information on home purchases, lenders and good mortgage solutions. It may be beneficial to consult a mortgage broker as they can provide a platform for comparing mortgage rates and finding the best solution for your individual situation.
Comparisons of some of the best mortgage rates in Alberta can be found on rate comparison platforms like RateHub.ca.
By: Nadha Hassen
Tags: pick ups, Lowest rates, monthly payments, Bank of Canada