Real Estate

The Official Mortgage Rates Thread

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The new rules apply to any institution, bank or not.
Andre Oliveira - Mortgage Agent at Valuemortgage
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FFWD wrote: Of the few lenders I spoke to, only one charges a higher interest rate due to my current mortgage being a refinance vs. a switch, and this was the only broker I was dealing with. All others said there is no difference, and their rates were better than the broker's. As I already mentioned, one of them told me that these "new rules" only apply to brokers, so if you're a broker, maybe that's why you only see it from this perspective? I have nothing against brokers, and have used them in the past, but it seems that you guys are being burdened with an unfair disadvantage for some reason.
Yes. And no. The truth is, ALL lenders are affected by the new rules, big banks included. The difference is the degree to which it affects their product offering. For example, Scotiabank does not have a premium for refinances. Their regular 5 year fixed rate right now is 2.74% (or 2.64% through brokers). It doesn't matter if it's a purchase, refinance, or switch. That's the rate. They will also qualify it based on contract rate (the rate you are paying) and will offer amortization up to 30 years (providing you have 20% down / equity position). So far, it doesn't seem as though they are affected. With rental properties however, they have added a 25 point premium to all rates, as have most lenders. This is due to the new regulations and them not being able to securitize these mortgages. Therefore, increased cost of funds which forces the lender to charge a rate premium.

Most big banks aren't securitizing 'most' of their mortgages, which means most of their mortgages can be offered under previous regulation. There are a very small number of non-bank lenders that can do the same. First National is the only one I can think of off the top of my head. Their 'regular' 5 year fixed rate for conventional mortgages is 2.94% however. Out of the market due to the fact that they can no longer securitize mortgages.

Now let's take a look at how it affects you. The borrower in a collateral mortgage with a maturity date approaching. Sure, you could go and get a 5 year fixed rate at 2.64%. However, if you didn't have a collateral mortgage, then we would be able to offer you a 5 year fixed at 2.39%. On a $300,000 mortgage amortized over 25 years, this results in a difference in cost of $3,656.23 over the 5 year term. This doesn't factor in the legal and appraisal costs to switch out of a collateral mortgage, which can amount to over $1,000.

All that being said, getting out of a collateral mortgage is now pricier than ever. It would have to be one heck of a great deal to justify going with a collateral mortgage over a standard charge these days.

Unfair to brokers? Yes, because we cannot be as competitive as we used to be on these types of transactions. Unfair to the consumer? Hell ya. It will cost anyone refinancing or anyone requiring a mortgage on a home valued at over $1 million THOUSANDS in interest compared to what they would have been able to get had these new regulations not being implemented.
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gs1905 wrote: I hereby would like to give my sincere gratitude to Paul Meredith by his tremendous help during our mortgage application process.

As a first time home buyer, we were very nervous at the beginning as we did not know much about mortgage regulations and whole home ownership process and did not know whom to choose for our first mortgage in our life.
At first, we wanted to play safe and deal with one of those big banks and indeed we gave it a shot. Although, it was a referral from a friend, our first impression we had from that representative of that big bank was really disappointing. I won’t get into too much details here but he verbally committed to something that he did not grant a week later. We immediately stop dealing with that person and start looking for different alternatives.

As a huge fan of RFD, I start reading the mortgage forum of RFD to learn further about mortgage process and start asking certain questions then I started seeing replies from a few different people as well as Paul Meredith`s prompt replies to my questions … I would never imagine that I would have dealt with someone that I met on the internet for the biggest financial decision of our life and yet it has been just over 2 months that we moved to our first home and still did not meet Paul in person yet...
Paul was very patient with all of our questions from the beginning to the end and each day Paul gave us more and more confidence by just doing great at his job . He always cared and followed up with us and he naturally built that confidence with us.

I have recommended Paul Meredith to the real friends around me and I decided to do this here as well because Paul definitely deserves it! If anyone has any questions about my dealing with Paul please PM me.

Thank you very much Paul for making our life easier!
All the Best to you and your family and Happy New Year!
Thanks so much for the post! It was a pleasure working with you. :)
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FFWD wrote: One more thing - everyone seems to be scared of collateral mortgages, but if you can find one that offers a better interest rate and/or cash back that saves you more than it would cost to refinance at the end of your term, then what difference does it really make?
Yes, for sure, if the benefits of the collateral charge outweigh the costs, go for it!

But for the most part, going with TD, National Bank or Tangerine (who all register mortgages as collateral charges) won't offer much benefit...their rates are usually not the best in the market and you have to pay the refinancing costs if you ever want to switch lenders. But if one of those lenders is offering something special (maybe they are the only lender willing to loan you a mortgage), then for sure they should be considered.
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I have 1 year left in my mortgage term, and my amortization left is only 2 years and 10 months with my current payments.

I currently am paying 2.89% from a 5-year fixed, and that will mature in December of this year. Is there any point in trying to do a blend and extend with my bank to try to lock in a 2-year rate, blended to a total three years? Or shall I expect them to most definitely charge a significant penalty to refinance at this time, even if it's with the same bank?

The reason I ask is I'm thinking that it would be reasonable to ask for a 2.29% full frills rate (or lower) from my bank, which would mean if blended with no penalty, I'd be paying something like 2.44% average over the remaining ~3 years, but I'd lock in that 2.29% rate now, since the pundits are predicting the rates are going to increase this year. If I lock in in the fall (3 months before the maturity of the mortgage), I'm thinking the rates would be higher.

It'd probably be pointless trying to go to a different lender though, because then I'm guaranteed to pay a significant penalty plus other refinance costs, with only so much time left in the mortgage and a rate already below 3%.
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EugW wrote: I have 1 year left in my mortgage term, and my amortization left is only 2 years and 10 months with my current payments.

I currently am paying 2.89% from a 5-year fixed, and that will mature in December of this year. Is there any point in trying to do a blend and extend with my bank to try to lock in a 2-year rate, blended to a total three years? Or shall I expect them to most definitely charge a significant penalty to refinance at this time, even if it's with the same bank?

The reason I ask is I'm thinking that it would be reasonable to ask for a 2.29% full frills rate (or lower) from my bank, which would mean if blended with no penalty, I'd be paying something like 2.44% average over the remaining ~3 years, but I'd lock in that 2.29% rate now, since the pundits are predicting the rates are going to increase this year. If I lock in in the fall (3 months before the maturity of the mortgage), I'm thinking the rates would be higher.

It'd probably be pointless trying to go to a different lender though, because then I'm guaranteed to pay a significant penalty plus other refinance costs, with only so much time left in the mortgage and a rate already below 3%.
I'm curious to hear people's answer to your question, as the bug of extending my term while rates are still low has occurred to me.

That said, I'm guessing it might not be worth it in your case. With 34 months to go, I'm guessing you're under $100k in mortgage balance? I'm guessing even if rates go up a whole 2% for those final ~22 months, you'd still pay less than $1,000 more in interest versus locking in a 2.29%, meaning any legal fees would eat that up pretty quickly.
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Mike15 wrote: I'm curious to hear people's answer to your question, as the bug of extending my term while rates are still low has occurred to me.

That said, I'm guessing it might not be worth it in your case. With 34 months to go, I'm guessing you're under $100k in mortgage balance? I'm guessing even if rates go up a whole 2% for those final ~22 months, you'd still pay less than $1,000 more in interest versus locking in a 2.29%, meaning any legal fees would eat that up pretty quickly.
We're currently at well over $100000, but less than $150000. (We pay a lot every month.) I'd actually try at the same bank only, since that's the only way I can see that would keep refinancing costs to a minimum.

I think I'll just call them. Not optimistic, but it can't hurt to try.
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EugW wrote: We're currently at well over $100000, but less than $150000. (We pay a lot every month.) I'd actually try at the same bank only, since that's the only way I can see that would keep refinancing costs to a minimum.

I think I'll just call them. Not optimistic, but it can't hurt to try.
Indeed, can't hurt to ask.

That's definitely a sizeable monthly payment! I just ran the math on $140k, 2.89% for 34 months (i.e., if a 2YF renewal rate a year from now is also 2.89%). $5,942 total interest paid over remaining amortization. If you can blend it to 2.44%, that's $5,011.

My previous hyperbole was off though. If you pay the 2.89% for 12 months and then get a 4.89% for the final 22 months (I sure hope not!) that's $7,714 in interest, with an $80/mo higher payment to boot. The balance made the difference (e.g., at $70k balance it would have held true).
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MY mortgage is up first week of April . Is it 90 days before I can lock in a rate ? The mortgage is very low compared to the equity of my house . I want to ad 12k to the mortgage to pay of a major purchase on my power line . Is there additional costs by adding the 12k ?
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Mike15 wrote: Indeed, can't hurt to ask.

That's definitely a sizeable monthly payment! I just ran the math on $140k, 2.89% for 34 months (i.e., if a 2YF renewal rate a year from now is also 2.89%). $5,942 total interest paid over remaining amortization. If you can blend it to 2.44%, that's $5,011.

My previous hyperbole was off though. If you pay the 2.89% for 12 months and then get a 4.89% for the final 22 months (I sure hope not!) that's $7,714 in interest, with an $80/mo higher payment to boot. The balance made the difference (e.g., at $70k balance it would have held true).
So, I called CIBC. If I want a blend and extend, they will charge me the full penalty, which works out to almost 1.8% of my remaining mortgage. So well over $2000 - definitely not worth it. (I don't think rates will go up 2% this year.)

Back when I was with Scotia, I managed to bargain them down a lot on the penalty when I threatened to leave, but at that a point I had a much bigger mortgage (and thus they made more interest), and the rates I was getting elsewhere were much better. So I had leverage to bargain. They were willing to reduce the penalty if I stayed with Scotia, and they were willing to match the competing full-frills rates. At this point, I have no leverage to bargain with CIBC, since the rates are in the same ballpark as when I first got the mortgage, and I get the impression CIBC just isn't as willing to bargain in general. Not sure if it's the bank, the specific agents, or if it's just a change in practice industry-wide.

I'll try to do an early renewal with CIBC again in the fall for a decent rate. The reason I looked into it now is I see that CIBC-backed PC Financial has a special rate of 2.29% right now for 2-year fixed. Full frills and backed by a major lender, but competitive with some no frills rates. Oh well, here's hoping 9 months from now the rates are still OK.

In the meantime I just lowered my monthly payment by a few hundred bucks. (I've been paying a lot every month, so I'm currently way, way ahead of the amortization schedule, so no penalty there.) Gonna do some big buck maintenance jobs in the spring, so it will be good to have a bit of extra cash.
Last edited by EugW on Jan 3rd, 2017 1:09 pm, edited 1 time in total.
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EugW wrote: We're currently at well over $100000, but less than $150000. (We pay a lot every month.) I'd actually try at the same bank only, since that's the only way I can see that would keep refinancing costs to a minimum.

I think I'll just call them. Not optimistic, but it can't hurt to try.
Where did you get the 2.29% 2 year fixed number from? Rates have risen and I think you would be hard pressed to find this rate now. Your bank really doesn't have any incentive to give you any discounts as they know it's going to cost you to leave them at this time, both penalty and refinance charges.

There is also know way of knowing for sure where rates will be later this year. All we can do is speculate. What we do know is that rates have already risen significantly over the past couple of months.
Paul Meredith
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pfbmgd wrote: MY mortgage is up first week of April . Is it 90 days before I can lock in a rate ? The mortgage is very low compared to the equity of my house . I want to ad 12k to the mortgage to pay of a major purchase on my power line . Is there additional costs by adding the 12k ?
Most lenders require 90 days before you can lock in a rate on a switch / refinance, however there is a small number that will allow 120 days.

If you want to increase the mortgage amount by $12,000 then it would be considered a refinance and not a switch. With a refinance, there are legal and appraisal fees on top of your discharge fee. Around $1,300 all together. Also, with new regulations you'll pay a higher rate to for a refinance as opposed to a switch. Lowest 5 year fixed rate on a switch or a purchase would be 2.39%. If completing as a refinance, the rate jumps to 2.69%. Most lenders are higher than this with some being as high as 3.14% right now. These new regulations are ridiculous.
Paul Meredith
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PaulMeredith wrote: Where did you get the 2.29% 2 year fixed number from? Rates have risen and I think you would be hard pressed to find this rate now. Your bank really doesn't have any incentive to give you any discounts as they know it's going to cost you to leave them at this time, both penalty and refinance charges.

There is also know way of knowing for sure where rates will be later this year. All we can do is speculate. What we do know is that rates have already risen significantly over the past couple of months.
2.29% for 2-year fixed at PC Financial. "Fresh Cut No Points only" whatever that means, but it's got 20% regular and 25% lump sum prepayments, so pretty good full frills features.

EDIT:

APR is 2.32%.

Fresh Cut means you get PC points when the mortgage closes, so for this mortgage rate it seems you don't get this feature, which is effectively is a cash back incentive.
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I early renewed with CIBC about 6 weeks ago at 2.09% for 2 yrs. They didn't even offer me 2 yrs initially. Not sure how much the 2 yr rate increased but I think you can do better than 2.29% for 2 yrs at CIBC. At very least ask them for a lower rate and/or another term like I did. CIBC mtg retention dept approved it in 5 minutes. It was a 1 yr term I early renewed and they early renewed it ~4 months before due date so I would call them maybe 5-6 months before due date.
EugW wrote: So, I called CIBC. If I want a blend and extend, they will charge me the full penalty, which works out to almost 1.8% of my remaining mortgage. So well over $2000 - definitely not worth it. (I don't think rates will go up 2% this year.)

Back when I was with Scotia, I managed to bargain them down a lot on the penalty when I threatened to leave, but at that a point I had a much bigger mortgage (and thus they made more interest), and the rates I was getting elsewhere were much better. So I had leverage to bargain. They were willing to reduce the penalty if I stayed with Scotia, and they were willing to match the competing full-frills rates. At this point, I have no leverage to bargain with CIBC, since the rates are in the same ballpark as when I first got the mortgage, and I get the impression CIBC just isn't as willing to bargain in general. Not sure if it's the bank, the specific agents, or if it's just a change in practice industry-wide.

I'll try to do an early renewal with CIBC again in the fall for a decent rate. The reason I looked into it now is I see that CIBC-backed PC Financial has a special rate of 2.29% right now for 2-year fixed. Full frills and backed by a major lender, but competitive with some no frills rates. Oh well, here's hoping 9 months from now the rates are still OK.

In the meantime I just lowered my monthly payment by a few hundred bucks. (I've been paying a lot every month, so I'm currently way, way ahead of the amortization schedule, so no penalty there.) Gonna do some big buck maintenance jobs in the spring, so it will be good to have a bit of extra cash.
Last edited by Speedy1 on Jan 3rd, 2017 1:43 pm, edited 1 time in total.
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pfbmgd wrote: MY mortgage is up first week of April . Is it 90 days before I can lock in a rate ? The mortgage is very low compared to the equity of my house . I want to ad 12k to the mortgage to pay of a major purchase on my power line . Is there additional costs by adding the 12k ?
You may be able to do it without new legal/appraisal fees if you do it thru your current lender and you have a collateral mtg. It's one of few benefits you get with collateral mtg.

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