Anyone else noticing what's happening to Canadian mortgage rates?

[ParisApril]

They are going up, way up.

Last summer we refinanced our house to get a better interest rate because rates were at historic lows. We got a 5 year fixed rate mortgage at 3.75% We are making extra payments and will pay off sooner because of it.

Mortgage rates now are at 5% and they are forecasted to hit 7% by the end of summer 2010!

I'll be keeping my eye on it for sure.

[yeahwhat]

We got 3.95% for 5 years a few weeks ago, but advertised rates have gone way up just since then. Under 5% for 5 years is fantastic though, if you look at rates over the past 20 years.

[Novella]

Yes, but historically most people would have been better off with a variable rate mortgage. On a fixed rate, the bank is building in adequate buffer in case their prediction on rates is wrong.

There is also the issue that you pay stiff penalties for breaking a fixed term. When I was lending at a chartered bank, I saw many, many people get caught by this. Even the ones who swore they were "doing nothing" for the next 5 years. Big renovations come up more suddenly than lots of people imagine, unexpected moves, family changes, etc.

[yeahwhat]

Dh and I spent a long time talking about variable vs. fixed rate this winter since our mortgage (5 year term) just came up for renewal. We decided to go fixed if we could get less than 4% this time around (paying at 15 year rate with technically 20 years left on amortization) and then we'll reconsider and likely go variable rate in 5 years time considering interest rates at the time. 4% is fairly low even for variable mortgages historically speaking.l

[GuildJenn]

You can negotiate pretty well still, but they are definitely going up. The posted rate was 5.8 for a 5 year fixed when we went in, but we negotiated below 4. I prefer fixed because it works for us and how we like to plan and budget and so on. This is our second home and we've been in a house about 14 years, so. We did have minor penalties on our last home because we sold at 3.5 years into a 5 year mortgage - but they were really minor, and we weren't even going into a new mortgage right away. All we had to do was agree to keep our line of credit open (which we rarely use anyway).

If you are going into another mortgage with the same bank they'll often waive fees.

Historically over the last 30 years (or something like that; I heard a discussion on the radio but missed that detail) the average rate has been 8 per cent for a 5 year fixed so everyone doing mortgages right now is still doing quite well.

[colsxjack]

We just got a mortgage at 3.79% for 5 yr fixed. We were first looking at 2.79 for 3 yr variable. We decided on the fixed because we think interest rates will rise over next few years.
It is our first mortgage with only 5% down.

[HeatherAtHome]

I've been hearing for awhile that interest rates are expected to rise in Canada over the summer. We have a 5 year variable rate through ING so I've been keeping an eye on it. Right now we're at 1.75% (ING Prime -.50%). I feel fine for now but we're thinking of locking it in at some point.

So, totally stupid question, but once you lock in, that's it, right? You can't refinance without paying big fees? What are "big" fees? We are going to need to put in a new septic tank/leach field in a couple years and are hoping to save most of the money ahead of time... but this little voice in the back of my head says 'what if we need to refinance?!' Choices, choices.