Current market :
Well it looks like the low fixed rates are gone and maybe gone for good. The bond yields keep going up and up, which means the lenders fixed rates follow. Generally there is a gap of about 1.5-1.6% between the current five year yield and pricing in fixed rates. I usually have this site up and running all the time to monitor.
As these go up so does the MQR or mortgage qualifying rate for any term less than a five year or the variable.
The variable is looking very good today as we’re still well under 3%, however, the MQR rate is 5.34% (usually the banks 5 year posted rate)
For someone making $60k a year, and wanting variable, the purchase power goes down about $45,000 (based on a 25 year AM or less than 20% down). This is a big enough gap to completely change the mind set of what to buy in my opinion. However, it may make a ton of sense as the difference in interest costs can run up in the high thousands…of course depends on what the variable does.
This is a conversation that has to be made and I do make, with every client that comes in. I will always give them a ‘fixed purchase price’ and a ‘variable purchase price’.