Real Estate

The Official Mortgage Rates Thread

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Sep 29, 2002
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GreenMortgages wrote:
Hi there,

Unfortunately, it is extremely unlikely that this mortgage broker has 3.09% from Scotiabank, obtained a week ago. Do you have anything in writing? Their rates have been well over 3.29% for quite some time. You may want to double check with the broker you're using. As for the costs to lock in - there usually aren't any, in some cases there is an administration fee. It's worth noting that you wouldn't get the highly discounted rates that the same lender is offering. Instead you would get their standard fixed rate.

Regards,

Connor
CdnRealEstateGuy wrote: 100% agreed Connor. That is why I asked if it was via a mortgage specialist or broker. 3.04% 5-year fixed isn't happening with BNS.
Hmm okay, I will double check with the broker tomorrow. If he says it is from Scotiabank, I would feel hesitant to proceed. I will inquire about the variable rates as well - hoping to see if he can get me somewhere in the area of p-0.90% for a 5-year term.
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xdragus wrote: Question for all the brokers here. When a client submits a mortgage approval for a 5 year fixed, are you already using the stress test to determine how much they can borrow or are you using 2.89% ?

Also if I get approved now (not pre-approved) will the 2.89% 5 year fixed still be honoured past Jan 1, 2018.
Hi there,

For the lowest rates in the market, brokers must qualify borrowers on the benchmark rate (the current stress test rate). I'll explain a bit. There are currently three types of mortgages, generally speaking:

1. Insured: Mortgages where there is a borrower paid insurance policy already in place. This policy protects the lender against borrower default. If the mortgage is insured, the borrower would have had to pay an insurance premium at some point (most common is when a borrower buys a property with less than 20% as a down payment). Since these mortgages are either already insured, or the borrower is paying for the insurance policy up front, the mortgage is less risky, and easy to securitize. This leads to the mortgages having the best interest rates in the market. In order for a borrower to qualify for a mortgage with less than 20% down, they must qualify at the benchmark rate - the stress test, and a max amortization of 25 years.

2. Insurable: Mortgages where the mortgage isn't currently insured (if it is an existing mortgage), or isn't insured because the borrower has 20% or more as a down payment for a purchase, but still meets insurable guidelines. These mortgages can be insured at the lenders cost, which limits their risk, and allows the lender to securitize the mortgage along with similar mortgages. This mortgage 'bucket' is eligible for the 2nd best rates in the market generally speaking. One of the guidelines that must be met in order for the mortgage to be considered insurable is that the borrower qualify at the benchmark rate - the stress test, and a max amortization of 25 years.

3. Uninsurable: The are mortgages that mortgage insurers don't recognize as insurable products, since one variable or another doesn't meet their guidelines. 30 year amortizations, qualifying at the contract rate (like 2.89%), 1 unit rentals, etc are uninsurable variables. Since these mortgages are not insurable, they are inherently riskier to lenders, and are more difficult to securitize. This leads to them having higher rates. Many people tak uninsurable mortgages because the criteria available allow borrowers to extend their borrowing power, at the expense of the interest rate. The products do not require that you qualify at a stress test.

Now, as of JAN. 1, every mortgage will be subject to a stress-test. The uninsurable products will now have a stress test as well. They will have to qualify at the benchmark rate, or 2% higher than the contract rate, whichever is greater.

In your situation, if you're looking for 2.89%, you will have to already qualify at a stress tested level, as that rate would only be available for insured, and insurable mortgages (which require stress tests). The second part of your question. If you are approved before Jan 1, the current understanding is that your mortgage will be honoured if it closes after January 1. If you elapse your rate period (say you're approved for a 90 day product, and you don't close within that 90 days), and you need to requalify after Jan 1, you will need to be stress tested at the rates available at that time, with the stress test rate that applies to you given your situation.

Hope that helps,

Connor
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Connor Green
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First time home buyer. Close to 50% down. Possession date is Dec 07 (100% completed new single family detached house, spec home)
Looking for 5 yr fixed mortgage with preferably 30 yr amortization (will consider 25 yr if rates are more competitive). Not interested in collateral mortgages

Have been phoning the banks and best I have been offered for a non-collateral mortgage for 30 yr amortization is 3.14% (these are primarily through the big 5 banks). Wondering if the brokers here can get me a better rate, hopefully through an A lender
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pakaveli wrote: Hmm okay, I will double check with the broker tomorrow. If he says it is from Scotiabank, I would feel hesitant to proceed. I will inquire about the variable rates as well - hoping to see if he can get me somewhere in the area of p-0.90% for a 5-year term.
Hello,

It's best to ask for some sort of confirmation that the rate is actually available to you. Perhaps ask when the application was submitted - the last time 3.09% was available from Scotiabank was late August/very early September. So if you didn't have a rate/product held since then, then I don't see how it would be possible.

Regards,

Connor
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adilh53 wrote: First time home buyer. Close to 50% down. Possession date is Dec 07 (100% completed new single family detached house, spec home)
Looking for 5 yr fixed mortgage with preferably 30 yr amortization (will consider 25 yr if rates are more competitive). Not interested in collateral mortgages

Have been phoning the banks and best I have been offered for a non-collateral mortgage for 30 yr amortization is 3.14% (these are primarily through the big 5 banks). Wondering if the brokers here can get me a better rate, hopefully through an A lender
Hi there,

For a product with a 30 year amortization, 3.14% is pretty close to as good as you're going to find. Is there a reason you're looking for a 30 year amortization? If you were willing to take a 25 year amortization, there are much better products and rates available to you.

With 50% down, as low as 2.94% - 2.99% 5 year fixed would be available to you, and p-.90% variable.

Regards,

Connor
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Connor Green
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GreenMortgages wrote: Hi there,

For a product with a 30 year amortization, 3.14% is pretty close to as good as you're going to find. Is there a reason you're looking for a 30 year amortization? If you were willing to take a 25 year amortization, there are much better products and rates available to you.

With 50% down, as low as 2.94% - 2.99% 5 year fixed would be available to you, and p-.90% variable.

Regards,

Connor
Hi Connor,

I'm seeing rates such as 2.99% through smaller lenders such as CMLS - are these not B lenders? We are willing to consider 25 yr amortization but is it through an A lender, non collateral?

Thanks!
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The difference in interest between an insurable mortgage (max 25y amortization) and an uninsurable mortgage (if you need amortization longer than 25y) will be considerable. Between 2.94% and 3.14%, you would be paying 0.20% per year.. over a 5y term it translates to a full 1% in additional interest. On a $500k mortgage that means $5000.00 in additional interest.
adilh53 wrote: First time home buyer. Close to 50% down. Possession date is Dec 07 (100% completed new single family detached house, spec home)
Looking for 5 yr fixed mortgage with preferably 30 yr amortization (will consider 25 yr if rates are more competitive). Not interested in collateral mortgages

Have been phoning the banks and best I have been offered for a non-collateral mortgage for 30 yr amortization is 3.14% (these are primarily through the big 5 banks). Wondering if the brokers here can get me a better rate, hopefully through an A lender
Andre Oliveira - Mortgage Agent at Valuemortgage
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adilh53 wrote: Hi Connor,

I'm seeing rates such as 2.99% through smaller lenders such as CMLS - are these not B lenders? We are willing to consider 25 yr amortization but is it through an A lender, non collateral?

Thanks!
Those are 'A' lenders, absolutely. B lenders are lenders who offer higher rate products because the borrowers do not qualify in a conventional manner. Either the credit is poor, or their income is not verifiable etc. CMLS is certainly an 'A' lender.

Regards,

Connor
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valuemortgage wrote: The difference in interest between an insurable mortgage (max 25y amortization) and an uninsurable mortgage (if you need amortization longer than 25y) will be considerable. Between 2.94% and 3.14%, you would be paying 0.20% per year.. over a 5y term it translates to a full 1% in additional interest. On a $500k mortgage that means $5000.00 in additional interest.
I thought anything above 20% down payment is considered an uninsurable mortgage (not insured through CMHC)? I am willing to consider 25 yr amortization if it means more competitive interest rates and depending on the lender. We are also thinking about HELOC - after down payment will be looking at $312 k mortgage. I am on a fixed annual salary of 79k/yr - so I believe I would qualify at the 4.99% for the home line of credit. If we go with the home line of credit, can we still get competitive rates or would we then be looking at higher rates as well?
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On the contrary.. CMLS is an excellent lender, with great terms and conditions, they dont use collateral charges, offer a full service online portal, etc.

The "B" lender concept is often something that banks try to convince their clients about. As they often cant compete in the rate game, they label pretty much anything that is not a bank as "B", "C", "unregulated", or any other derogatory term, in an effort to put fear n the client's heart.

You wont get AAA rates form B lenders... B lenders are other companies that focus on niche markets, such as clients that cannot show income, have really bad credit, dont file taxes, etc.
adilh53 wrote: Hi Connor,

I'm seeing rates such as 2.99% through smaller lenders such as CMLS - are these not B lenders? We are willing to consider 25 yr amortization but is it through an A lender, non collateral?

Thanks!
Andre Oliveira - Mortgage Agent at Valuemortgage
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Having 20% down payment only means the mortgage is uninsured, not uninsurable. As long as the purchase price is below the $1 million mark, the property is not a single rental unit and the amortization is kept to 25y or less, the mortgage could be insurable - meaning the lender will pay for "bulk insurance".. at their expense.

Regarding the Heloc.. if you get a Heloc and mortgage combined under a single charge (this is what TD, National Bank, Tangerine, Scotia Bank and other banks do) you will end up with a collateral charge. There is no way to get a Heloc and it not be a collateral charge. The option is to keep the mortgage and Heloc separate, as 2 individual charges. That way you can get a mortgage with an excellent rate, and keep your freedom to move it around at the time of your renewal. The Heloc would be independent from the mortgage. My own mortgage is setup this way.. I have a mortgage with a monoline lender and a Heloc with a bank.
adilh53 wrote: I thought anything above 20% down payment is considered an uninsurable mortgage (not insured through CMHC)? I am willing to consider 25 yr amortization if it means more competitive interest rates and depending on the lender. We are also thinking about HELOC - after down payment will be looking at $312 k mortgage. I am on a fixed annual salary of 79k/yr - so I believe I would qualify at the 4.99% for the home line of credit. If we go with the home line of credit, can we still get competitive rates or would we then be looking at higher rates as well?
Andre Oliveira - Mortgage Agent at Valuemortgage
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Monoline lenders such as :

First National
CMLS
ICICI Bank
Industrial Alliance
Street Capital
Merix
Mcap
RMG
Alterna

these are all A lenders.. in fact they are sometimes very picky in their underwriting model. What they want is exactly the AAA client, that will qualify for insurable mortgages. These lenders are not interested in the B market, although some of them own other lenders that may cater to certain market niches.
Andre Oliveira - Mortgage Agent at Valuemortgage
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adilh53 wrote: I thought anything above 20% down payment is considered an uninsurable mortgage (not insured through CMHC)? I am willing to consider 25 yr amortization if it means more competitive interest rates and depending on the lender. We are also thinking about HELOC - after down payment will be looking at $312 k mortgage. I am on a fixed annual salary of 79k/yr - so I believe I would qualify at the 4.99% for the home line of credit. If we go with the home line of credit, can we still get competitive rates or would we then be looking at higher rates as well?
Hello,

I posted about insurable, uninsurable, and insured rates a few posts ago. Check back one page for the explanations on the difference between them all. A lenders have insured, insurable, and uninsurable mortgage products.

Connor
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Connor Green
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Also there are situations where you "insurable" deal could become "uninsurable". For instance, imagine someone who purchased a property for $500k planning to put at least 20% downpayment to avoid default insurance, and learned he will not qualify for the mortgage needed, even with the 20% down payment... the debt ratios are just too high. Even though this would normally be an insurable deal, (primary residence, client wanted a 25y amortization, thought he qualified under the stress test rate, etc) as he now learns he cannot get approved for that mortgage, a possible solution would be to extend the amortization to 30y or 35y, and/or use the 5y fixed rate to calculate the debt ratios. All these requirements (longer amortization, using the 5y fixed rate to calculate the debt load) would make the same transaction now an uninsurable deal.

If client proves adequate income - he could get an insurable deal and get better rates
If he cannot show adequate income - he could still qualify for the mortgage, just not under the criteria needed to make this an insurable deal.. so he would be "forced" to get an uninsurable deal.

One of the new changes to the mortgage rules has to do with that part - using the 5y fixed rate to calculate debt ratios. For now, clients getting 5y fixed rate terms can still explore this "loophole" and avoid the stress test rate... but as of January 1st 2018, all mortgages will be subject to the stress test.
Andre Oliveira - Mortgage Agent at Valuemortgage
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Hi there,

I'm a first-time home buyer, close to 40% down, closing date Dec 1. Looking for a 5yr-fixed mortgage with 25 amortization.

Two questions:

i) I'm pre-approved with RBC at 3.04% for their Homeline plan (mortgage+HELOC). BMO is offering me 2.99% for their restrictive mortgage product.

I don't think I'll need a HELOC, so am considering BMO's option, but am worried about the flexibility of switching out later on. My original understanding is that BMO's restrictive mortgage does not allow me to switch to another lender (even at the end of term) without penalty. However, the BMO agent claims that a way to circumvent that is to switch to a variable open mortgage upon renewal and at which point I can immediately switch out without penalty. I'm still a little sceptical, and would like to get some advice/feedback/experience on the BMO restrictive product.

ii) Also, I was wondering what will be the range of rates I can currently get if I a) stick with big banks; or b) go to A lenders.

Thanks in advance for everyone's feedback.

Cheers,
Buddy

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