BOC Shocks the Market wth Rate Cut

At the end of last year, the BOC was putting fear into people that interest rates were on the rise. BOC Shocks the Market wth Rate Cut by 0.25% at the end of January. This is a move that the banks call 'insurance against the potentially destructive effects of the oil price collapse'. This is their attempt to shield highly indebted Canadian households from an oil induced hit to their jobs and income. Market economists and experts are saying that we won't see a rise in oil prices until the 4th quarter of 2015. The Canadian economy, however, won't return to full capacity until at least the end of 2016 which means we will see low interest rates for some time now. To prevent people from using their homes as ATM machines and over stimulating the real estate housing market, we might start seeing mortgage rule changes in the next few months. This could be an optimal time to speak with your mortgage specialist to discuss "Blend-and-extend"

Blend-and-extend option
(e.g. Old interest rate 5.5%, New interest rate 4% = Blended Rate 4.6%
Please note, these numbers are fiction. Why you would have a residential mortgage with interest rates at 5.5% is crazy talk these days!)
Some mortgage lenders may allow you to extend the length of your mortgage before the end of your term. They do this by blending your old interest rate and the new term’s rate. This is called the “blend-and-extend” early renewal option.
A “blend-and-extend” option may trigger a prepayment charge. Your mortgage lender may also charge an administrative fee to use this option. Know all the costs before doing so.

Benefits
-You get a lower rate and potentially lower payments.
-If you keep the payment the same as with your current agreement, you will be able to pay off your mortgage sooner.
-You can lock in the lower interest rate for the new term of the mortgage.

Risks
-If there are fees or a prepayment charge, the costs could be more than any savings that you might get.
-If you are planning to sell your home soon, you may not be able to realize any savings from renegotiating for a lower interest rate.
-The interest rates may continue to go down, in which case you would not lock your new mortgage in at the lowest rate possible.