In April 2008, our best 5 year fixed mortgage rate was 5.59%. Most banks were over 6%.
At the time, this was considered a pretty good 5 year rate from a historical perspective.
Now it is June 2012 – just over 4 years later, and we can offer our clients a 10 year mortgage with a rate as low as 3.79% (certain conditions would apply). This is the lowest 10 year mortgage rate in history.
Will we ever see a lower rate? It’s possible. There has been talk of rising rates for quite a while, and we have yet to see it. In fact, the reason this 10 year mortgage is available is because long term bonds are currently at all time lows.
Having said that, at TriDelta Financial we try to respect history. When something is so abnormally cheap from a historic perspective we find it is best to ignore the current chatter, clench your teeth and dive right in.
To us, a 10 year mortgage as low as 3.79% (subject to change) is one of those rare cases of something being so abnormally cheap from a historic perspective that you want to take advantage of it before it goes away.
Now there are some drawbacks to a 10 year mortgage. The biggest is that it is tough to predict the next 10 years of your life. If you end up moving out of town and have to sell, or for some reason you want to break the mortgage (like interest rates went down another 1%), then a 10 year mortgage will have been a mistake.
However, we believe it is ideal for those with the following characteristics:
- Risk averse. Don’t want to have to worry about interest rates for a very long time.
- See the odds as very low of you planning to move or leave your city in the next 10 years.
- Want to be able to plan around fixed mortgage costs that won’t change for 10 years (unless you choose to pay it off sooner).
There is definitely a value in certainty, and a 10 year mortgage brings that.
In addition, we believe that over the next decade, there is a very good chance that you will look back and find that a 10 year mortgage at this low rate ended up also being one of the very best financial decisions that you ever made.
If you or someone you know is interested in taking advantage of this great opportunity, please don’t hesitate to call or email.
This article was written by Ted Rechtshffen, President and CEO of TriDelta Financial. You can follow us on Twitter or leave a comment below. We’d love to hear from you!