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The following is taken from Chris Landry’s primary website

During 2012, mortgage rates have dropped to lows not seen before in the history of Canadian mortgages. Many consumers are now considering taking longer terms such as a 10 year fixed rate at 3.89% for example. One of the major reasons for taking a 10 year term is that the Bank of Canada has indicated that more normalized rates will be seen in the market starting at the end of 2012 and onward. Historically speaking, the average mortgage rate for a 5 year fixed is around 5% to 7% while a variable would be 4% – 6%. Given the past rates we have seen not long ago in the early 2000’s, a 10 year mortgage could be very beneficial a few years from now when most consumers are renewing at 5% or 6% for example.

With mortgage portability, a 10 year mortgage can be carried to another home purchase if you sell the existing one you started the mortgage with. Most mortgages are also assumable, meaning a buyer of your home can assume the 10 year mortgage rate you have and this could be a good selling feature as well.

As the 5 year rate is about 70 basis points lower than the 10 year currently, it is also at attractive levels but a renewal after 5 years into higher rates at levels around 6% could be very possible. Obtaining a longer term mortgage would help avoid that scenario and could save a borrower some significant changes to their mortgage payments and interest charges.


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