Real Estate

The Official Mortgage Rates Thread

  • Last Updated:
  • May 25th, 2018 6:29 pm
Sr. Member
Sep 18, 2008
501 posts
82 upvotes
Woodbridge
CdnRealEstateGuy wrote:
Feb 13th, 2018 4:06 pm
120 days before closing to get a competitive rate.
Called builder, they said decision on my lot being delayed or not will be made next month, So if I don't get a notice or anything by mid March I will start shopping around. I am inclined to go with variable though. My guess is with 20-25% down I won't get P-1.1 or something.
Newbie
Feb 13, 2018
1 posts
Hi everyone, Im seeking advice on rolling a progress draw construction mortgage into a conventional mortgage.

I just finished building a house in NS financed with a variable rate construction progress draw mortgage at Scotiabank. Total loan amount is $405k. We have about $130k in equity (own the land and put additional cash into the project) plus we can out down upto $60k more. I was planning to target a conventional mortgage of about $350k.

I am ready to enter negotiations to roll into a fixed rate mortgage. If I stick with ScotiaBank, they'll waive any prepayment fees (3 months interest, ~$4500) to close the existing mortgage.

The problem is Scotia's published closed fixed rates are quite high. We built this house with the intention of staying long term. I had always considered a long fixed rate mortgage given the recent trend for rate hikes.

I called Tangerine and they will hold a 10yr @ 3.79 or a 5yr @ 3.34. Scotia's rates are 6.39 & 5.14 respectively. If I take the hit and leave Scotia the payback period would be <1 yr for the 10yr fixed and about 16mos for the 5yr. That is if Scotia only offers the published rates. Perhaps they will come down? I meet with them later today so I will find out.

After browsing around this forum and others I'm starting to get the impression that long fixed rate mortgages are not necessarily the best move, even in today's climate.

Other option is to go with a short term (e.g. 3 yr) term with ScotiaBank then have some negotiating position at the end of the term and take advantage of annual prepayment privileges. I certainly can't guess what's going to happen with mortgage rates given the uncertainty with NAFTA, oil prices but BOCs recent moves point to increases.

Anyway thanks for reading and I woul appreciate any thoughts or advice.
Newbie
Apr 26, 2012
17 posts
1 upvote
VERDUN
rateconnect wrote:
Feb 13th, 2018 8:39 pm
No owner occupied only

Best rental rates currently available are :

3.44% with 20% downpayment

3.39% with 25% downpayment

Hope this helps

Phil
This is for an early renewal though, so I was wondering if it was better to pay the penalties to get out of the variable mid term or stay with TD. But if this is the best I can get, I might as well stay with TD.
Sr. Member
May 1, 2017
847 posts
184 upvotes
ivylai wrote:
Feb 13th, 2018 2:28 pm
If any one know which TD specialist can match BMO 4 year 3.19% please share with me


Thanks
Hi there,

It's unlikely as TD's rates are a bit higher than that at the moment. They may be willing to if they consider you a valued client of the bank, etc. but I wouldn't get my hopes up. There are 5 year rates that are more attractive than 3.19% at the moment anyway!

Best,

Connor
_________________________________
Connor Green
Mortgage Agent
Concierge Mortgage Group
#12179
Sr. Member
May 1, 2017
847 posts
184 upvotes
akalic wrote:
Feb 13th, 2018 10:54 pm
Just an update regarding my scenario:

295k home. first time home buyers
25 year amortization
downpayment: 35% (uninsured)
Credit/Employment: Very Good
Province: BC

Been quoted 3.14% with MCAP 5 year fixed or First National 5 year variable (2.50% prime-0.95). How much better of a rate can I get for the 5 year variable? I do question whether 5 years on a variable is more risk adverse than say a 3 year term..

I know I should be able to make my mind up on my own on whether to go variable vs. fixed. But what if there is a disparity of 0.64% ? Opinions?
Hi there,

You would be eligible for at least prime minus 1.10% for a full featured variable rate mortgage given the info you've supplied. As others have mentioned, you would certainly also have better fixed rates available to you via MCAP and other lenders.

Best,

Connor
_________________________________
Connor Green
Mortgage Agent
Concierge Mortgage Group
#12179
Deal Addict
Feb 2, 2014
4758 posts
971 upvotes
Toronto
erexa wrote:
Feb 14th, 2018 8:45 am
Called builder, they said decision on my lot being delayed or not will be made next month, So if I don't get a notice or anything by mid March I will start shopping around. I am inclined to go with variable though. My guess is with 20-25% down I won't get P-1.1 or something.
With 25% down, you can get Prime -1.00% or 2.99% 5-year fixed.
Kevin Somnauth, CFA
Mortgage Agent and Real Estate Sales Representative
Newbie
Feb 13, 2018
1 posts
What are the current refinancing rates available? Currently have 359k $ left to go and 20 yrs remaining

Any brokers on here deal in the Edmonton area?
Sr. Member
May 1, 2017
847 posts
184 upvotes
Daytonahemi wrote:
Feb 14th, 2018 12:00 pm
What are the current refinancing rates available? Currently have 359k $ left to go and 20 yrs remaining

Any brokers on here deal in the Edmonton area?
Hi there,

Are you looking to refinance, or switch at maturity? The rates are drastically different depending on the transaction type. A refinance is when you're looking to increase the mortgage balance to access equity (for investment, debt consolidation, renovations, etc) or if you need to extend the amortization to reduce you monthly payments.

A switch/transfer is when you're simply transferring the mortgage balance to a new lender at maturity (or not at maturity) dollar for dollar, keeping the amortization the same or reducing it, to take advantage of lower rate offerings.

The rates vary greatly between the two transactions as refinances are no longer considered insurable by mortgage default insurers, whereas switch/transfers are. Insurable mortgages are eligible for much better rates than uninsurable mortgages.

The best refinance rates would be around 3.29%-3.39% 5 years fixed, and prime minus 0.70% variable, whereas the best switch transfer rates could be under 3% 5 years fixed, and prime minus 1.24% variable, depending on the specifics of your mortgage and qualifying.

Rates for switches are dependant on a number of variables. In order to know what rates would be available for a switch, we would need to know the following at a minimum:
- Current approximate property value
- property type
- maturity date
- is the mortgage currenty insured or uninsured (did you originally have more, less, or exactly 20% down when you purchased?)
- current mortgage lender and type of charge
- some income qualifying info

Any of the regular posting brokers/agents on this forum should be able to assist you as most brokerages are licensed nationwide!

Best,

Connor
Last edited by GreenMortgages on Feb 14th, 2018 2:09 pm, edited 1 time in total.
_________________________________
Connor Green
Mortgage Agent
Concierge Mortgage Group
#12179
Sr. Member
Sep 18, 2008
501 posts
82 upvotes
Woodbridge
CdnRealEstateGuy wrote:
Feb 14th, 2018 11:29 am
With 25% down, you can get Prime -1.00% or 2.99% 5-year fixed.
We may end up selling this place in 2-3 years. I would still think variable is a better choice than locking ourselves.
Newbie
May 3, 2013
20 posts
Ontario
This explains very well why the LTV affects the rate.
How does the house value affect the cost? and why?
The lender is insuring the mortgage not the entire house value.

Thanks

valuemortgage wrote:
Feb 13th, 2018 1:44 pm
Paul already replied, but I want to add a few more details, to help you understand this.

When a client purchases a property with less than 20% down payment, default insurance is *mandatory*, so the client will always pay that insurance, through CMHC/Genworth/Canada Guaranty. So it means that the lender does not incur any costs to have that mortgage insured. On the other hand, when you have 20% or more, as several lenders want to obtain a similar type of insurance, often referred to as bulk insurance, this insurance cost falls on the lender, since they are the ones choosing to have the mortgage insured. Up until some 2-3 years ago, the cost of bulk insurance was fairly low and most lenders would simply treat a deal at 80% LTV (Loan To Value) the same way as deal at 60% LTV. But recently, with the endless new mortgage rules that changed in the last 2 years, the cost of bulk insurance went up significantly, particularly in the higher LTV brackets. So, if the lender has a deal at 80% LTV, the cost of insuring that mortgage is MUCH higher than a deal at 75%, or 70%, 65% LTV, etc. The result is that lenders will factor this cost in the calculation of what rates they can offer.

Imagine 4 brothers, all working for the same company, all with excellent credit, but different amounts for down payment, all getting a 5y fixed rate

John has 10% down payment - his mortgage must be insured, and that cost is his responsibility (as any insured mortgage). He would get 2.94%.
Michael has 20% down payment - at 80% LTV, the lender offers him 3.29%.
Anthony has 25% down payment - at 75% LTV, the lender offers him 3.19%.
Josh has 35% down payment - at 65% LTV, the lender offers him 2.99%.

All of these rates were influenced by the cost of having the mortgage insured. There are lenders that will not differentiate between a deal at 95% LTV or 50% LTV. Some will not offer a different rate at 75%, only at 80% or 65%. So, there are cases where lender ABC has the best rate, for a deal at 75%, while lender XYZ would have the best rate, at 80%.

Nowadays, with so many brokers with an online presence and posting the lowest rates they have available, the rate you see posted online may be completely irrelevant to you. My advice : Always talk to a mortgage professional to see what options are available to you.
Sr. Member
May 1, 2017
847 posts
184 upvotes
slahaz wrote:
Feb 14th, 2018 2:24 pm
This explains very well why the LTV affects the rate.
How does the house value affect the cost? and why?
The lender is insuring the mortgage not the entire house value.

Thanks
Essentially the insurance policies are cheaper at lower loan-to-values as the loss-risk associated with the mortgage is lower. If borrowers default on their mortgages it will be easier to recoup the mortgage balance from the sale of the property when there is more equity in the property. There is less risk that the insurer will be unable to recoup the full mortgage balance + fees associated.

That was a great explanation that Andre and Paul provided describing the modern pricing.

Connor
_________________________________
Connor Green
Mortgage Agent
Concierge Mortgage Group
#12179
Newbie
May 3, 2013
20 posts
Ontario
I am still not able to understand why a house that is valued over 1 Million would have a higher rate or higher risk even if the LTV is lower.

a. Home A valued at 1.2Million LTV 30%
b. Home B valued at 900k LTV 75%


GreenMortgages wrote:
Feb 14th, 2018 2:36 pm
Essentially the insurance policies are cheaper at lower loan-to-values as the loss-risk associated with the mortgage is lower. If borrowers default on their mortgages it will be easier to recoup the mortgage balance from the sale of the property when there is more equity in the property. There is less risk that the insurer will be unable to recoup the full mortgage balance + fees associated.

That was a great explanation that Andre and Paul provided describing the modern pricing.

Connor
Sr. Member
May 1, 2017
847 posts
184 upvotes
slahaz wrote:
Feb 14th, 2018 2:43 pm
I am still not able to understand why a house that is valued over 1 Million would have a higher rate or higher risk even if the LTV is lower.

a. Home A valued at 1.2Million LTV 30%
b. Home B valued at 900k LTV 75%
Oh I see what you mean - properties over $1m! There is some debate on the reasoning for which insurers won't insure properties valued over $1m. Basically it boils down to the the government/insurers reducing their exposure to these property price ranges but more-so because the government felt that borrowers were taking advantage of a program build to assist people with low savings to be able to purchase a property to become home owners. The intention of the program was never to help people buy $1m houses with 5% - 19.99% down. It's less of a risk pricing issue in this scenario and more of a reaction to the perceived misappropriation of the original intentions of the program. The ceiling of $1,000,000 is more or less arbitrary. Now, the lack of available insurance for these types of properties has led to lenders only being able to lend on these properties when they have funds that are not earmarked for bulk insurance. Most lenders do not have allocated funds for uninsured use, and the funds they do have available require a larger rate of return.

Connor
_________________________________
Connor Green
Mortgage Agent
Concierge Mortgage Group
#12179
Newbie
Oct 31, 2012
74 posts
8 upvotes
Toronto
Hey brokers ,

Bought a new house and was wondering what kind of rates are currently available.

Purchase price - 607k
Down payment - 210k
Annual income - 58 k aprx yearly income
Great credit rating. No other debts.

Thx in advance.
Sr. Member
May 1, 2017
847 posts
184 upvotes
sdanny wrote:
Feb 14th, 2018 3:16 pm
Hey brokers ,

Bought a new house and was wondering what kind of rates are currently available.

Purchase price - 607k
Down payment - 210k
Annual income - 58 k aprx yearly income
Great credit rating. No other debts.

Thx in advance.
Hi there,

It's going to be difficult to get qualified for a $397,000 mortgage with $58,000 in income as qualifying has gotten tighter as of recent. Did you have a pre-approval before purchasing? If so what amount were you pre-approved for and which institution is it with?

Best,

Connor
_________________________________
Connor Green
Mortgage Agent
Concierge Mortgage Group
#12179

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