Real Estate

The Official Mortgage Rates Thread

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  • Aug 19th, 2017 10:15 pm
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valuemortgage wrote:
Aug 4th, 2017 7:04 pm
Also make sure the person offering you that is doing a proper calculation of the so called "effective rate". For instance, if the difference between rates is 0.10% on a 2y term, it means he/she would have to reimburse you 20bps of the entire mortgage. Based on your mortgage amount, that would be $1080.00 in cash.

I have seen a million times people offering those "cash back" deals with effective rates, only to find out that instead of $1000.00 the client was getting $250.00... often, these people dont even bother explaining to the client how that amount was calculated, and will only say "this is the amount you get...". Also, make you you ask how pays the appraisal.
I missed where the $540k balance was stated, but assuming that's correct then see my post above, the total cashback should be $1058.40.
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I could use some expert advice. In the past I have always traditionally gone variable and it has worked out very well. In the past two years, I have gone with successive 1 year fixed as the rate I got has been so good. Now with renewal time coming up in about 4 months, I have to decide on a term again. It seems most are not recommending the variable now due to the very low spread between the variable and the 5 year fixed now and the further imminent rate hikes in the next year. Everyone is talking about 5 year fixed rates right now but to me, 5 years seems like an awfully long time. I did a 5 year fixed just once at the very beginning and regretted it completely back then and thought, never again. What do others think about a 2 or 3 year fixed instead? Or is a 5 year fixed vs the 2 or 3 just about right for everyone at this point. Thanks for any advice.
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DentDude wrote:
Aug 5th, 2017 9:46 am
I could use some expert advice. In the past I have always traditionally gone variable and it has worked out very well. In the past two years, I have gone with successive 1 year fixed as the rate I got has been so good. Now with renewal time coming up in about 4 months, I have to decide on a term again. It seems most are not recommending the variable now due to the very low spread between the variable and the 5 year fixed now and the further imminent rate hikes in the next year. Everyone is talking about 5 year fixed rates right now but to me, 5 years seems like an awfully long time. I did a 5 year fixed just once at the very beginning and regretted it completely back then and thought, never again. What do others think about a 2 or 3 year fixed instead? Or is a 5 year fixed vs the 2 or 3 just about right for everyone at this point. Thanks for any advice.
I've never done >1 yr fixed since first mortgage nearly 2 decades ago. Always took the lowest rate available since then which has been in the form of 1-yr fixed or 5-yr variable (about 4-5x 1-yr and 2x 5-yr variables).

Rates went down/up/down/up... during that time. I think even in an increasing rate environment you come out ahead unless you take a 5-yr variable with a tiny spread - but that's what the 1-yr fixed rates were for ... to say 'no' to crappy P-0.5 or 0.6% 5-yr variable discounts and wait for ones like P-0.9% or 0.95% :)

If you can get P-0.96% at HSBC or comparable I'd go for that. Even with 4 more hikes evenly spread out you'd be at 2.99% and have come out with a weighed average lower than the 2.49% mid-point since rates earlier in your term have more weight since the principal is higher then.

If the rates increase more steeply or more than 4 times you MIGHT lose. Or if rates stay low or go down again after increasing you will win. That's the risk/benefit of the variable. People who want certainty pay the "insurance premium" of the higher starting rate with a 5-yr fixed. Usually, "optional" type extra insurance is a waste of money and you can safely save by skipping out on it. Insurance against disaster is certainly not worth skipping out on, but the rates increasing by a percent or more I wouldn't put into the "disaster" camp. Disaster is car written off or house burns down. Buy insurance for that.
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ace604 wrote:
Aug 5th, 2017 1:07 pm
I've never done >1 yr fixed since first mortgage nearly 2 decades ago. Always took the lowest rate available since then which has been in the form of 1-yr fixed or 5-yr variable (about 4-5x 1-yr and 2x 5-yr variables).

Rates went down/up/down/up... during that time. I think even in an increasing rate environment you come out ahead unless you take a 5-yr variable with a tiny spread - but that's what the 1-yr fixed rates were for ... to say 'no' to crappy P-0.5 or 0.6% 5-yr variable discounts and wait for ones like P-0.9% or 0.95% :)

If you can get P-0.96% at HSBC or comparable I'd go for that. Even with 4 more hikes evenly spread out you'd be at 2.99% and have come out with a weighed average lower than the 2.49% mid-point since rates earlier in your term have more weight since the principal is higher then.

If the rates increase more steeply or more than 4 times you MIGHT lose. Or if rates stay low or go down again after increasing you will win. That's the risk/benefit of the variable. People who want certainty pay the "insurance premium" of the higher starting rate with a 5-yr fixed. Usually, "optional" type extra insurance is a waste of money and you can safely save by skipping out on it. Insurance against disaster is certainly not worth skipping out on, but the rates increasing by a percent or more I wouldn't put into the "disaster" camp. Disaster is car written off or house burns down. Buy insurance for that.
Thanks, that does help. I haven't done greater than a 1 year fixed (was always previously variable) for a while now too. But now there is all this talk that these low current rates for the past little while we have not seen before so this is a different situation and that now fixed, especially longer fixed, is the way to go. I guess like you said it depends on how much P minus I can get. If only P-0.5 then maybe look at the 1 year fixed again and see if the P-0.95's come back again in the next couple of years.
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DentDude wrote:
Aug 5th, 2017 2:04 pm
Thanks, that does help. I haven't done greater than a 1 year fixed (was always previously variable) for a while now too. But now there is all this talk that these low current rates for the past little while we have not seen before so this is a different situation and that now fixed, especially longer fixed, is the way to go. I guess like you said it depends on how much P minus I can get. If only P-0.5 then maybe look at the 1 year fixed again and see if the P-0.95's come back again in the next couple of years.
HSBC has an advertised 1.99% 5-yr variable rate currently.
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ace604 wrote:
Aug 5th, 2017 2:42 pm
HSBC has an advertised 1.99% 5-yr variable rate currently.
I wonder though, as for all the cheaper rates I have seen advertised, is this most likely only for high ratio mortgages plus for properties under $1 million. My situation is a renewal for a property over $1 million and a low-ratio mortgage.
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DentDude wrote:
Aug 5th, 2017 3:10 pm
I wonder though, as for all the cheaper rates I have seen advertised, is this most likely only for high ratio mortgages plus for properties under $1 million. My situation is a renewal for a property over $1 million and a low-ratio mortgage.
I think the big banks tend to have more of the same rate across the board whereas the monoline lenders who rely more on bulk insurance would have different rates adjusted to reflect their higher cost of funds when they have to insure on their own or can't insure at all.

You should contact HSBC and find out... and a broker too.
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ace604 wrote:
Aug 5th, 2017 1:07 pm
I've never done >1 yr fixed since first mortgage nearly 2 decades ago. Always took the lowest rate available since then which has been in the form of 1-yr fixed or 5-yr variable (about 4-5x 1-yr and 2x 5-yr variables).

Rates went down/up/down/up... during that time. I think even in an increasing rate environment you come out ahead unless you take a 5-yr variable with a tiny spread - but that's what the 1-yr fixed rates were for ... to say 'no' to crappy P-0.5 or 0.6% 5-yr variable discounts and wait for ones like P-0.9% or 0.95% :)

If you can get P-0.96% at HSBC or comparable I'd go for that. Even with 4 more hikes evenly spread out you'd be at 2.99% and have come out with a weighed average lower than the 2.49% mid-point since rates earlier in your term have more weight since the principal is higher then.

If the rates increase more steeply or more than 4 times you MIGHT lose. Or if rates stay low or go down again after increasing you will win. That's the risk/benefit of the variable. People who want certainty pay the "insurance premium" of the higher starting rate with a 5-yr fixed. Usually, "optional" type extra insurance is a waste of money and you can safely save by skipping out on it. Insurance against disaster is certainly not worth skipping out on, but the rates increasing by a percent or more I wouldn't put into the "disaster" camp. Disaster is car written off or house burns down. Buy insurance for that.
Every time I've looked into it (which is only a few times admittedly), 1-year fixed has cost more than 2-year fixed, or else has been about the same. However, I'm not including buy-down rates from small brokers.

BTW, does any lender ever have any decent 6-month fixed rates? When my 2.29% 2-year fixed finishes, I will have less than a year left in the amortization.
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PaulMeredith wrote:
Aug 3rd, 2017 5:48 pm
Lowest rate on a 5 year fixed right now is 2.64% which can be held up to 120 days. Better terms and conditions than HSBC as well.
What lender is this?
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EugW wrote:
Aug 5th, 2017 7:01 pm
Every time I've looked into it (which is only a few times admittedly), 1-year fixed has cost more than 2-year fixed, or else has been about the same. However, I'm not including buy-down rates from small brokers.

BTW, does any lender ever have any decent 6-month fixed rates? When my 2.29% 2-year fixed finishes, I will have less than a year left in the amortization.
Did you look into it outside of just CIBC?

My 1-yr fixeds were 2-3 with Scotia, one with London Life, and one with RMG.
I always took a 1-yr when it was lower than variable, and the 2-yrs were never better for me.
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ace604 wrote:
Aug 6th, 2017 3:47 am
Did you look into it outside of just CIBC?

My 1-yr fixeds were 2-3 with Scotia, one with London Life, and one with RMG.
I always took a 1-yr when it was lower than variable, and the 2-yrs were never better for me.
Mainly banks this time. Last time more lenders though.

I don’t know what RMG is.

Edit:

Ah I see. Small Toronto lender. Are you talking about no frills mortgages BTW? I never get no frills mortgages.
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RMG is not a "small Toronto lender". They lend across the country, and are a fairly large lender. RMG is owned by Mcap.
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valuemortgage wrote:
Aug 6th, 2017 11:04 am
RMG is not a "small Toronto lender". They lend across the country, and are a fairly large lender. RMG is owned by Mcap.
Yes I see that now. Thx. However I didn’t mean that they just lend in Toronto, but that they were a smaller lender and based in Ontario. But how big are they and what is their focus?

I also just read that this year RMG had sent out letters to brokers encouraging them to go after low credit score borrowers so that makes me wonder if they might be more heavily weighted towards no frills mortgages.
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EugW wrote:
Aug 6th, 2017 2:47 pm
Yes I see that now. Thx. However I didn’t mean that they just lend in Toronto, but that they were a smaller lender and based in Ontario. But how big are they and what is their focus? I read that MCAP’s aborted IPO last year was only targeting $275 million and RMG is just a part of them.

I also just read that this year RMG had sent out letters to brokers encouraging them to go after low credit score borrowers so that makes me wonder if they might be more heavily weighted towards no frills mortgages.
Low credit score borrowers and no-frills mortgages are two completely different things. People with low credit scores would be suited to a B type lender. Many A lenders now have B sides as well. MCAP, RMG, Merix, B2B and Street Capital all have B sides to handle this type of borrower. Completely different from what you are looking for.

A no-frills mortgage is just a mortgage with lower prepayment privileges and quicker closing dates. Often 30 days closing and prepayment privileges of only 5%. This would still allow you to prepay up to $20,000 per year on a $400,000 mortgage... more then most ever use. Other than that, they are still full-featured mortgages for the most part, so the term 'no-frills' is a little misleading. No-frills mortgages haven't been very common in the past couple of years however.
Paul Meredith
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CityCan Financial Corp (lic. 10532)
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bprintz wrote:
Aug 5th, 2017 10:00 pm
What lender is this?
The lender offering the 5 year fixed at 2.64% does not like us posting this rate with their name publicly as it is a special rate and not their general offering. It's a large credit union lending primarily in the GTA and Ottawa areas.
Paul Meredith
Mortgage Broker
CityCan Financial Corp (lic. 10532)

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