Fixed versus variable interest rates

Canada, 21st September: Real estate market of Calgary, like any other place, is getting affected by current rates of interest.

Canada, 21st September: Real estate market of Calgary, like any other place, is getting affected by current rates of interest.

Benefits of low interest rates in Calgary–Calgary’s real estate market was quite favorable and profitable for banks, lenders and brokers alike in the past couple of months and the onus goes to highly competitive interest rates. It was instrumental in easier approval for any average person in Calgary.

Interest rates are unlikely to change in the coming times due to external economic factors despite indications by Bank of Canada’s governor Mark Carney regarding the need for increasing interest rates.

According to a lender of TD Canada Trust, Michael Piper, interest rates in Calgary were around 7 percent way back in 2005.

As compared to an interest rate of 5.89 percent for a great deal, the rate for a great deal currently is 3.2 percent while variable interest rates are 2.55 percent now as compared to 2.2 percent in 2006. And as per Piper’s forecasts, any increase, if it happens at all in spring next year, will not be more than 25 i points (an increase of only a quarter percentages).

Another benefit of Calgary’s low interest rates—If you are living in Calgary, you seem to be fortunate enough to reap benefits of low rates in Calgary real estate. You need to pay less interest on your mortgage and more towards premium.

So, what it means is consumers in Calgary can pay around one-half of their payments towards interest and the remaining half towards premium which is quite profitable keeping in view the fact that way back in 1980s, consumers had to pay around $950 towards interest out of the total mortgage payments to the tune of $1000.

And, the record-low interest rates also enable more consumers to clear off their mortgage debt at the earliest possible time by paying back big portions of their mortgage.

What is good- fixed versus variable rate of mortgage—When buying any real estate or property, what should one opt for, fixed mortgage rate or variable rate.

Well, this depends on individual choice of the concerned customer. Those with high incomes and interested to pay back their mortgage debt at the earliest by making increased payments should opt for variable rate.

However, young couples or those reaching their retirement age must go for fixed rate of interest for the peace and stability offered by the deal.

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