MORTGAGE: Looking to take advantage of lower rates? Be careful, bank cautions

Many people are tempted to take advantage of low mortgage rates before they start rising again, and before housing prices recover completely from the slide they took in 2009. But those rates aren't here to stay, warns the Bank of Montreal. Homebuyers need to proceed with caution and keep in mind that renewal rates will likely be substantially higher in coming years, says Sal Guatieri, senior economist with BMO Capital Markets. Mr. Guatieri says mortgage rates will start coming back up when the Bank of Canada's overnight rate starts climbing in July. Here are some things to consider to keep you mortgage affordable:

- Shortening the life of the mortgage cuts down on the amount you pay in interest.

- Pre-payments can save you money: pay weekly or biweekly instead of monthly.

- Variable rates could save you money over the long term, but fixed-rate mortgages could give you peace of mind.

(Source: National Post)