The debate over fixed or variable rates never ends. But there are now two things that are far less debatable: 1) The Bank of Canada is telling us that prime rate has likely hit bottom, and 2) “Safer” 5-year fixed rates are now as low as “riskier” variable rates. (Safer, particularly if you choose a fair penalty lender.) Given the...
—The Mortgage Report: Saturday Edition— The Readvanceable Shuffle: Got a fixed rate above 3% in a readvanceable mortgage? Does your lender let you lock in the HELOC portion to a low-cost short-term fixed rate? If so, here’s a tip that might save you some interest. Jargon Buster: A “readvanceable mortgage” is one that has a regular amortizing mortgage linked to...
—The Mortgage Report: July 22— Rate Influencers: When people ask, “What’s the best rate?” most just want you to reel off a number with minimal complexity. Many don’t realize all the elements that determine mortgage pricing. That’s why it’s almost impossible to spit out an accurate quote on the fly. If you want a standard 5-year fixed, for example, factors...
—The Mortgage Report: July 21— A Seldom-used Strategy: Usually, it doesn’t make sense to buy default insurance on your mortgage if you have a big down payment. But there are exceptions, like when you have 35% equity and the difference between insured and insurable mortgage rates is 15 basis points or more. In those infrequent cases, you end up saving...
—The Mortgage Report: Weekend Edition— It Might as Well Have: On Wednesday, the Bank of Canada threw caution to the wind and changed its playbook. It pledged not to hike rates until “the 2 percent inflation target is sustainably achieved.” The significance of that statement is now sinking in and here’s why. Normally, the Bank of Canada doesn’t wait for...
—The Happy Canada Day Report: July 1— Fixed or Bust: Canada’s lowest nationally available conventional variable rate is just nine basis points cheaper than a comparable 5-year fixed rate. That minuscule “fixed-variable” spread is now 80% narrower than its 10-year average. In other words, the market is no longer compensating new borrowers for the risk of a floating-rate mortgage. And...
— The Mortgage Report : June 18 — For Better or Worse: When you take a bank’s 5-year fixed you’re married to it for half a decade. That is, unless you file for divorce, so to speak (i.e., discharge or transfer the mortgage to a new lender early). But as unwedded people find out, splitting up has a financial price....
The Mortgage Report – June 1 Penalty Boxed: Despite a horrid mortgage market in Q2, banks still booked $5 billion in profits. But they aren’t cutting people much slack on mortgage penalties, even folks who break their mortgage early due to COVID-related income loss—as this CBC story chronicles. Banks have some great mortgage products (e.g., BMO’s Cash Account, Scotiabank’s STEP,...
The Daily Mortgage Report – May 4 Variable Advantage Fades: The lowest widely available 5-year fixed rates are now just 20 basis points more than the lowest variable rates. That differential has shrunk considerably in the last month or so, causing some would-be variable takers to give up and go fixed. RateSpy simulations confirm it would now only take two...
More than 4 out of 5 borrowers stay with their bank when their mortgage renews. And of all the reasons to do so, the least valid is probably this:because they want to keep all their finances at one institution—for “convenience.” Some people like that their mortgage payment comes out of their bank account automatically each month — that they can...
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