Real Estate

Locked variable mortgage rate and recent BOC rate increase

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  • Mar 20th, 2022 9:55 pm
[OP]
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Apr 4, 2017
236 posts
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Internet

Locked variable mortgage rate and recent BOC rate increase

I have mortgage per-approval certificate which expires on April 5.
What will happen to the 'locked' mortgage rate considering recent BOC rate increase?
Example: HSBC offered me 0.99% rate, should the rate go to the current variable HSBC rate automatically provided that the decision regarding financing made before certificate expiry rate?
More complex scenario: Application for for financing filed on April 1, the decision to provide the financing approved on April 10, does it mean that the bank has no obligation when it comes to the approved rate?
6 replies
Deal Fanatic
Nov 22, 2015
6886 posts
7116 upvotes
dea1er wrote: I have mortgage per-approval certificate which expires on April 5.
What will happen to the 'locked' mortgage rate considering recent BOC rate increase?
Example: HSBC offered me 0.99% rate, should the rate go to the current variable HSBC rate automatically provided that the decision regarding financing made before certificate expiry rate?
More complex scenario: Application for for financing filed on April 1, the decision to provide the financing approved on April 10, does it mean that the bank has no obligation when it comes to the approved rate?
Pre-approval on variable doesn't guarantee the rate, just the discount/premium to the current Prime rate
[OP]
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Apr 4, 2017
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288 upvotes
Internet
KanataKG wrote: Pre-approval on variable doesn't guarantee the rate, just the discount/premium to the current Prime rate
Quote from the mortgate per-approval certificate:
5 years variable at 0.99%
How should I read it?
Deal Fanatic
Nov 22, 2015
6886 posts
7116 upvotes
dea1er wrote: Quote from the mortgate per-approval certificate:
5 years variable at 0.99%
How should I read it?
That was 1.46% off HSBC Prime Rate

HSBC Prime went from 2.45% to 2.7%, so your rate should be 1.24%

Should be explained in the fine print...
Deal Guru
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Oct 16, 2008
10287 posts
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Vaughan
dea1er wrote: Quote from the mortgate per-approval certificate:
5 years variable at 0.99%
How should I read it?
You can ask your bank if you have questions.
...
[OP]
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Apr 4, 2017
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teoconca wrote: You can ask your bank if you have questions.
I will definitely ask tomorrow. The offer should be signed before noon tomorrow, but from my previous experience the answer from the bank could take up to few days to get.
My concern if the following: the seller's agent won't accept anything lesser than 2.0% in the condition ".. this loan bearing interest at the current rate, which shall not exceed 2.0% per annum (calculated semi-annually and not in advance". Since my pre-approval certificate will be expired at the moment when the bank provides the answer regarding financing, the bank could offer the financing exactly at 2.00% and I'm trapped. Is my concern valid?
Deal Addict
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Jul 25, 2015
2141 posts
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Burnaby, BC
Why would the agent even care what rate you're getting? In the writing it says it shall not exceed the 2% so at 1.25 you're fine.

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