The big interest rate news this week came from the fact that bond yields were up a bit causing lenders offering the 4 year promotional rate of 2.99% to withdraw this “unpublished” offer. It happened to conveniently coincide with the end of Bank of Montreal’s recent campaign of a 5 year rate for 2.99%. That offer came with a few more restrictions, but undoubtedly got them some attention and certainly
some new business for the bank.
Even after the removal of the promotional rates by the major lenders, there are still a few offers below 3%, but they are only available for high ratio insured deals.
With the recent announcement from CMHC that they are reaching their limit on non-high ratio insured mortgages, it is causing some non-traditional lenders to rethink their business strategy, and that means offerings that were once available for all deals are now only being offered to high ratio insured deals. It’s a matter of risk and the lenders ability to package these mortgages up and get them off their books. Without some kind of portfolio insurance, like that offered by CMHC, it makes it impossible for lenders
to move the mortgages off their balance sheets, and this reduces interest in this business from the lenders.
The end result is that there are less promotional rates available to non-high ratio mortgages. This will hopefully be a temporary setback as the mortgage community watches to see if CMHC has the limit increased for this type of business. Once the verdict is out, we’ll report it here.
In the meantime, there are some great fixed rates available and we’ll highlight the best ones here. With regards to variable, they have fallen out of favour while the sovereign debt crisis continues in Europe. The cost of short term money is too high, reducing the once plentiful spreads with variable rates. The best variable rates now are now very close to the best 3 to 5 year fixed rates. My recommendation to clients is that it doesn’t make sense to take a variable rate which we know will inevitably have to rise over the term of the mortgage, when I can offer you a comparable fixed rate with no fear of the rate increasing for the remainder of the term. Which makes more sense to you?
1 yr – 2.50%
2 yr – 2.59%
3 yr – 2.79%
4 yr – 2.89%
5 yr – 3.09%
VRM – 2.80%
Lee Welbanks is a Mortgage Broker with The Mortgage Centre and trusted Spring Realty mortgage expert. To learn more about your funding options please Contact Lee today. Lee will be posting these informative “Market Minutes” each Wednesday for you to enjoy. Please remember to subscribe to the Spring Realty Insider list to receive new blog post notifications right in your inbox!