Finance Articles

Fixed Rate Home Mortgage Loans Still the Better Option Over Adjustable Rate Mortgage Loans, Says The Mortgage Store Online (TMSO)

Toronto, Canada (PRWEB), June 5, 2007 -- A special report from The Mortgage Store Online (TMSO) concludes that although fixed mortgage rates for home loans in Canada have risen for the third time in the last two months, smart borrowers, whether purchasing or refinancing home real estate, will find them a better option than adjustable rate mortgages, which currently have a lower but much less stable rate.



Mortgage loan experts agree that it has been a highly irregular time for Canadian fixed mortgage rates to rise so consistently in the past couple months, which has drawn less experienced home borrowers to finding the lowest interest rates offered elsewhere. "The fixed rate has risen in eight weeks by 0.5% to a best rate of 5.6%," says Joseph Janovich, President of The Mortgage Store Online. "Within the past week alone, interest rates on fixed rate mortgage loans have gone up twice; and three times when counting the last two months."

Janovich explains that sudden mortgage rate increases tend to draw less experienced home borrowers to whatever other interest rates are offered as the 'lowest' to them. "Fixed rate mortgages currently have higher rates than adjustable rate mortgages, increasing the appeal of the adjustable mortgage. The fixed mortgage rate, which borrowers keep for a 1 year term, remains at 5.6%. The adjustable mortgage rate is currently .5% less, but without the security that a fixed rate mortgage loan can provide."

Janovich cautions Canadian home borrowers not to be swayed into an adjustable rate loan just because it may currently offer the lowest rate. "Inexperienced home borrowers tend to go for whatever percentage rate is the lowest at the time they're offered it. An adjustable mortgage rate is just that - 'adjustable';it could rise at any moment, and well overtake the current fixed mortgage rate. Home buyers who just look at the percentage rate they see for now may think they're getting a better deal, but without understanding how the mortgage industry works, they could very well end up paying a lot more on their mortgage than they planned."

"The fixed rate, while currently higher, is still a borrower's best option. "Fixed mortgage rates, unlike adjustable mortgage rates, stay constant; they can provide you greater security, and security is what most people need when they're borrowing on home real estate, which is a long-term thing."

Janovich recommends home borrowers also apply for pre-approval, so as to lock into the current best fixed rate. "Borrowers have an option of locking into a rate for free, before they shop for a new home or decide to refinance their current home. A borrower can lock into the current mortgage rate with any bank or broker in Canada, with no obligation to use that rate if they change their mortgage plans."

TMSO's report on fixed vs. adjustable rate mortgages shows the following:

* Three-year fixed mortgage rates have stabilized at 5.7%, while rates for five-year terms have increased to 5.69%, and 6.05% for terms of ten years or higher.
* Interest-only home mortgage rates have risen a full 0.6% in the past two months, from a low 5.09% in early April, up to the current rate of 5.69%. "This best rate for interest-only home loans is a fixed rate, and can be kept by the borrower for a full 5-year term," advises Janovich.
* Interest rates for adjustable rate mortgage loans have remained at 5.1% for an entire year, sitting 0.90% below the Canadian economy's prime interest rate. Janovich, however, reminds that fixed rate mortgage interest rates still remain a borrower's best option, because they stay constant. "Adjustable rates can suddenly go up with Canada's prime rate."

Special Offers
-- Fixed adjustable rate mortgage loan with line of credit option.

-- Adjustable rate mortgage loan with a low introductory rate.

-- Adjustable rate mortgage loan without a low introductory rate.

Recent Announcements

-- TMSO releases new rate and payment mortgage calculators.

About the Mortgage Store Online

With headquarters in Ontario, Canada, TMSO provides home and commercial mortgage loans in most Canadian provinces (excluding Quebec and the Territories). Founded by veteran mortgage broker Joe Janovich, The Mortgage Store Online couples 'real world' experience, industry relationships, customer service and secure technology with the convenience of the Web. For more information, visit www.themortgagestoreonline.com or call 866-880-2577.

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