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Tangerine

Tangerine - 1.84% Posted Mortgage rate - 5Y Fixed, Uninsured for New or Moved mortgages

Deal Addict
Feb 14, 2019
1424 posts
1703 upvotes
leolozon wrote: I feel SO dumb for listening to my mortgage broker. I told him I was thinking about taking a variable rate about a 1 year ago (interest was at 2.79 back then). He told me the variable was about the same as the fixed, so it wasn't worth it. So I listen to the more experienced person even thought my thoughts were : "If they are the same... isn't it because the banks expect the interest rate to keep falling?"

It's always tough to go against someone who's supposed to be an "expert", but why didn't I trust myself? It's so much money.
Trust your gut. At least if you make a mistake it's on you. My bank kept pushing fixed saying "rates are going up", which they were back then, but variable was still cheaper at the time. I just asked them if they could predict the future. Then Covid hit and I'm saving a ton of money so glad I didn't listen to them.
Sr. Member
User avatar
Jul 10, 2003
727 posts
468 upvotes
Toronto
IslandDeal wrote: I couldn't find anything online at all about this but my Tangerine rep told me that after 3 years on any fixed term, the penalty would be only 3 months of interest.

As per the contract Tangerine offered me :

(This is in the Prepayment Charges section, and does Not appear anywhere else)

The penalty you will be charged, calculated on the applicable amount, will be the
greater of:
a) three months interest, or
b) the interest rate differential, which is calculated by taking the difference in your mortgage’s Annual Interest Rate and the Interest Rate for a mortgage that is closest to the remainder of your mortgage term, multiplied by the outstanding balance for the time that is left on your
mortgage term, and calculated on the amount being prepaid.



I'll try to get something in writing and will report back.
Thanks for checking. I spoke to a Tangerine mortgage specialist and they confirmed that the mortgage penalty would be calculated as you posted, the greater of 3 months interest or the IRD.

There are other features that make Tangerine enticing... eg. 120 day rate hold with a mortgage rate lock float down, 25% lump sum prepayment, 25% annual payment increase, blend & increase w/no penalty and blend & extend (180 days before renewal). However, the one that made it better than the other banks was the fair penalty calculation. Now I'm not sure, it might just be rate chasing between the banks.
Sr. Member
Mar 12, 2017
579 posts
430 upvotes
Majokito wrote: Trust your gut. At least if you make a mistake it's on you. My bank kept pushing fixed saying "rates are going up", which they were back then, but variable was still cheaper at the time. I just asked them if they could predict the future. Then Covid hit and I'm saving a ton of money so glad I didn't listen to them.
It's true that COVID wasn't expected, but I told him that I read that it would keep falling during the summer (we were in May) and he told me that the rate was as low as it's going to get... Well the rate kept falling during the summer even pre-covid.

For sure you have to trust your gut. It's weird to "lose-win money" on your mortgage depending on when you renew. I don't want to calculate, but it's for sure many thousand dollars.

I also know that variable rate has been the winner most of the time in the past. Oh well... can't keep punishing myself for it. Nothing I can do now. 4 years left on the mortgage and the penalty for breaking it isn't worth it (other thing I regret, my broker made me sign with MCap and the penalty is too much, I never thought I would be in a situation to break a 2.79% that soon). At least 2.79 is better than a friend of mine who re-upped at 3.29 a month before me.
Deal Fanatic
User avatar
Jul 4, 2005
7615 posts
1532 upvotes
Ottawa
Is there a handy calculator out there to determine if the interest rate is worth it for the penalty? Eg. My penalty is 12k and I have 30mths left @ 3%, 400k balance.
Deal Addict
Feb 14, 2019
1424 posts
1703 upvotes
leolozon wrote: It's true that COVID wasn't expected, but I told him that I read that it would keep falling during the summer (we were in May) and he told me that the rate was as low as it's going to get... Well the rate kept falling during the summer even pre-covid.

For sure you have to trust your gut. It's weird to "lose-win money" on your mortgage depending on when you renew. I don't want to calculate, but it's for sure many thousand dollars.

I also know that variable rate has been the winner most of the time in the past. Oh well... can't keep punishing myself for it. Nothing I can do now. 4 years left on the mortgage and the penalty for breaking it isn't worth it (other thing I regret, my broker made me sign with MCap and the penalty is too much, I never thought I would be in a situation to break a 2.79% that soon). At least 2.79 is better than a friend of mine who re-upped at 3.29 a month before me.
Yeah, obviously no one knew Covid was coming a year or two ago. My logic was that variable tends to do better almost always. When I signed I think it was a just a bit more than a full percent less than fixed, so it would've needed 4-5 quarter point increases in a short time just to even out, then another 4-5 for me to lose money over the term.

I had a friend who went fixed around the same time for 3.4ish. I'm now at 1.4, huge difference especially with rates likely to stay low for a couple years.

Really you need to evaluate over the full term of your mortgage to see how you do since most mortgages are 25 or so years. At lot changes in that amount of time. You win some years you lose some.
Sr. Member
Mar 12, 2017
579 posts
430 upvotes
Majokito wrote: Yeah, obviously no one knew Covid was coming a year or two ago. My logic was that variable tends to do better almost always. When I signed I think it was a just a bit more than a full percent less than fixed, so it would've needed 4-5 quarter point increases in a short time just to even out, then another 4-5 for me to lose money over the term.

I had a friend who went fixed around the same time for 3.4ish. I'm now at 1.4, huge difference especially with rates likely to stay low for a couple years.

Really you need to evaluate over the full term of your mortgage to see how you do since most mortgages are 25 or so years. At lot changes in that amount of time. You win some years you lose some.
Oh 1%? I would have taken it too. When my mortgage was up, the variable was just 0.1% behind the fixed... something you rarely saw before, but you see more often now. That's why I was convinced by the broker. I didn't want to take the risk for 0.1%, even if I thought that I could lock at lower than 2.79 down the line. Sometimes saving thousands is often just a question of timing.
Deal Addict
Jul 30, 2012
1438 posts
1892 upvotes
leolozon wrote: Oh 1%? I would have taken it too. When my mortgage was up, the variable was just 0.1% behind the fixed... something you rarely saw before, but you see more often now. That's why I was convinced by the broker. I didn't want to take the risk for 0.1%, even if I thought that I could lock at lower than 2.79 down the line. Sometimes saving thousands is often just a question of timing.
There are a number of moving parts when considering a Variable vs Fixed Rate Mortgage and generally it's not to compare a Variable vs Fixed rate in absolute terms. Compare the Fixed rate to Gov't Bond Yield + spread. Compare Variable to BOC "overnight rate" + spread / discount to bank prime rate.

Fixed Rate Mortgage
Based off of a spread (typically 5Y Gov't yield+1.25%>1.5%) for a 5Y Fixed Term Rate. At today's 5Y Gov't Bond Rate that would equal 0.35%+(1.25%>1.50%).
This equates to a "possible" 5Y Mortgage Rate of 1.60%>1.85% depending on institution(s) need to compete / borrower risk, etc.

Variable Rate Mortgage
Based off of a spread (Bank of Canada overnight rate+1.25%>1.5%). At today's BOC rate that would equal 0.25%+(1.25%>1.50%).
This equates to a "possible" Mortgage Variable Rate of 1.50%>1.75%
Banks determine the Variable rate by a discount to "their" Prime (i.e. 2.45% / higher for TD mortgages). This is currently in the P-0.70>0.75% range (i.e. 1.70%>1.75% Variable Rate Mortgage).

Banks / FI staff(s) / Brokers have no clue about interest rate directions and simply quote based on the current environment.
One would pick a Variable Rate today if...
1) They believed the Bank of Canada rate is going to "0%" or negative (which would indirectly lower the Bank Prime rate / thus one's Variable rate)
2) The rate has a very low probability of going up during one's term
3) Possibility of selling or wanting to refinance before term is up (much lower "break" penalties)

One would pick a Fixed Rate today if
1) They believed the Bank of Canada rate has a greater probability of (sustainably) going higher than 0.25% (which would indirectly raise the Bank Prime rate / thus one's Variable rate)
2) The rate has a "higher" probability of going up during one's term
3) Unlikely to sell or wanting to refinance before term is up (much higher "break" penalties)

Today's decision to go Fixed or Variable is much less clear cut than in the past because of the ultra-low current Bank of Canada Overnight rate. Because Bank/FI Primes are independently set (i.e. +2.20% over BOC rate), they do not necessarily have to pass on full rate cuts of the BOC. They are however generally known to immediately raise when the BOC does (i.e. if BOC went back to 0.5%, you can bet Bank Primes would go to 2.70% - ex-TD). This would ultimately raise a Variable rate.

When Banks/FIs widen the Variable discount to "their" Prime (i.e. P-1.0%>P-1.25%), it is more likely they believe rate direction (BOC) is higher (i.e. they can "afford" to give up more of the spread). When Prime discounts tighten (P-0.6%>0.75%), financial institutions generally believe rates are "bottoming" or consolidating.
Jr. Member
Jul 21, 2017
147 posts
30 upvotes
DealRNothing wrote: There are a number of moving parts when considering a Variable vs Fixed Rate Mortgage and generally it's not to compare a Variable vs Fixed rate in absolute terms. Compare the Fixed rate to Gov't Bond Yield + spread. Compare Variable to BOC "overnight rate" + spread / discount to bank prime rate.

Fixed Rate Mortgage
Based off of a spread (typically 5Y Gov't yield+1.25%>1.5%) for a 5Y Fixed Term Rate. At today's 5Y Gov't Bond Rate that would equal 0.35%+(1.25%>1.50%).
This equates to a "possible" 5Y Mortgage Rate of 1.60%>1.85% depending on institution(s) need to compete / borrower risk, etc.

Variable Rate Mortgage
Based off of a spread (Bank of Canada overnight rate+1.25%>1.5%). At today's BOC rate that would equal 0.25%+(1.25%>1.50%).
This equates to a "possible" Mortgage Variable Rate of 1.50%>1.75%
Banks determine the Variable rate by a discount to "their" Prime (i.e. 2.45% / higher for TD mortgages). This is currently in the P-0.70>0.75% range (i.e. 1.70%>1.75% Variable Rate Mortgage).

Banks / FI staff(s) / Brokers have no clue about interest rate directions and simply quote based on the current environment.
One would pick a Variable Rate today if...
1) They believed the Bank of Canada rate is going to "0%" or negative (which would indirectly lower the Bank Prime rate / thus one's Variable rate)
2) The rate has a very low probability of going up during one's term
3) Possibility of selling or wanting to refinance before term is up (much lower "break" penalties)

One would pick a Fixed Rate today if
1) They believed the Bank of Canada rate has a greater probability of (sustainably) going higher than 0.25% (which would indirectly raise the Bank Prime rate / thus one's Variable rate)
2) The rate has a "higher" probability of going up during one's term
3) Unlikely to sell or wanting to refinance before term is up (much higher "break" penalties)

Today's decision to go Fixed or Variable is much less clear cut than in the past because of the ultra-low current Bank of Canada Overnight rate. Because Bank/FI Primes are independently set (i.e. +2.20% over BOC rate), they do not necessarily have to pass on full rate cuts of the BOC. They are however generally known to immediately raise when the BOC does (i.e. if BOC went back to 0.5%, you can bet Bank Primes would go to 2.70% - ex-TD). This would ultimately raise a Variable rate.

When Banks/FIs widen the Variable discount to "their" Prime (i.e. P-1.0%>P-1.25%), it is more likely they believe rate direction (BOC) is higher (i.e. they can "afford" to give up more of the spread). When Prime discounts tighten (P-0.6%>0.75%), financial institutions generally believe rates are "bottoming" or consolidating.
Good analysis . But the million dollar question remains unanswered : If one has to get the mortgage today , keeping in view current rates , spread between fixed and variable being only 0.1% and potential 2nd covid wave already started , what is the best bet - Fixed or variable , keeping break penalties aside ?
Deal Addict
Jul 30, 2012
1438 posts
1892 upvotes
DealRNothing wrote: There are a number of moving parts when considering a Variable vs Fixed Rate Mortgage and generally it's not to compare a Variable vs Fixed rate in absolute terms. Compare the Fixed rate to Gov't Bond Yield + spread. Compare Variable to BOC "overnight rate" + spread / discount to bank prime rate.

Fixed Rate Mortgage
Based off of a spread (typically 5Y Gov't yield+1.25%>1.5%) for a 5Y Fixed Term Rate. At today's 5Y Gov't Bond Rate that would equal 0.35%+(1.25%>1.50%).
This equates to a "possible" 5Y Mortgage Rate of 1.60%>1.85% depending on institution(s) need to compete / borrower risk, etc.

Variable Rate Mortgage
Based off of a spread (Bank of Canada overnight rate+1.25%>1.5%). At today's BOC rate that would equal 0.25%+(1.25%>1.50%).
This equates to a "possible" Mortgage Variable Rate of 1.50%>1.75%
Banks determine the Variable rate by a discount to "their" Prime (i.e. 2.45% / higher for TD mortgages). This is currently in the P-0.70>0.75% range (i.e. 1.70%>1.75% Variable Rate Mortgage).

Banks / FI staff(s) / Brokers have no clue about interest rate directions and simply quote based on the current environment.
One would pick a Variable Rate today if...
1) They believed the Bank of Canada rate is going to "0%" or negative (which would indirectly lower the Bank Prime rate / thus one's Variable rate)
2) The rate has a very low probability of going up during one's term
3) Possibility of selling or wanting to refinance before term is up (much lower "break" penalties)

One would pick a Fixed Rate today if
1) They believed the Bank of Canada rate has a greater probability of (sustainably) going higher than 0.25% (which would indirectly raise the Bank Prime rate / thus one's Variable rate)
2) The rate has a "higher" probability of going up during one's term
3) Unlikely to sell or wanting to refinance before term is up (much higher "break" penalties)

Today's decision to go Fixed or Variable is much less clear cut than in the past because of the ultra-low current Bank of Canada Overnight rate. Because Bank/FI Primes are independently set (i.e. +2.20% over BOC rate), they do not necessarily have to pass on full rate cuts of the BOC. They are however generally known to immediately raise when the BOC does (i.e. if BOC went back to 0.5%, you can bet Bank Primes would go to 2.70% - ex-TD). This would ultimately raise a Variable rate.

When Banks/FIs widen the Variable discount to "their" Prime (i.e. P-1.0%>P-1.25%), it is more likely they believe rate direction (BOC) is higher (i.e. they can "afford" to give up more of the spread). When Prime discounts tighten (P-0.6%>0.75%), financial institutions generally believe rates are "bottoming" or consolidating.
aaleemm wrote: Good analysis . But the million dollar question remains unanswered : If one has to get the mortgage today , keeping in view current rates , spread between fixed and variable being only 0.1% and potential 2nd covid wave already started , what is the best bet - Fixed or variable , keeping break penalties aside ?
Much depends on when one has to "sign"... A true significant 2nd Wave involving shut-downs greater than previous would likely drop rates on the short-end (BOC Overnight) & Medium-end (5Y Gov't of Canada) bond. The Bond market yield is more correlated to the stock market (i.e. panic selling in the markets usually leads to the safe "haven" of bonds - raising bond prices & lowering bond yields). The drop would likely be realized (immediate on) Variable & (a few to several weeks later on) Fixed products. Of course, signing on a Fixed Term before such an event would not capture a lower Fixed mortgage rate.

The issue isn't so much what happens in the next 3-6 months, but more for the entire term of the mortgage. Do rates go up the next year / year after, etc? (which would affect a Variable negatively) Or does the Overnight Rate / Bond prices go lower to negative because of a longer term recession, lack of an effective vaccine, US election issues, etc?

No one has a crystal ball (and I wouldn't expect anyone to accurately predict for you) primarily because this is uncharted waters. We simply haven't been anywhere close to these rate lows. Additionally, one should consider income security as current interest rates are flashing a signal of an anemic economy ahead.
Deal Addict
Aug 5, 2015
3412 posts
3475 upvotes
Montreal, QC
DealRNothing wrote: Much depends on when one has to "sign"... A true significant 2nd Wave involving shut-downs greater than previous would likely drop rates on the short-end (BOC Overnight) & Medium-end (5Y Gov't of Canada) bond. The Bond market yield is more correlated to the stock market (i.e. panic selling in the markets usually leads to the safe "haven" of bonds - raising bond prices & lowering bond yields). The drop would likely be realized (immediate on) Variable & (a few to several weeks later on) Fixed products. Of course, signing on a Fixed Term before such an event would not capture a lower Fixed mortgage rate.
Panic in the credit market could actually make funding for banks more expensive thus pushing fixed rates *higher*. This is what happened at the beginning of the crisis before governments moved to stabilize the credit market. We can't assume that a second wave will push fixed rates lower, there's a lot of variables in the equation. One thing is certain, Prime Rate won't be moving up anytime soon.
Happy Koodo Public Mobile customer :-)
Deal Addict
Jul 30, 2012
1438 posts
1892 upvotes
willy0275 wrote: Panic in the credit market could actually make funding for banks more expensive thus pushing fixed rates *higher*. This is what happened at the beginning of the crisis before governments moved to stabilize the credit market. We can't assume that a second wave will push fixed rates lower, there's a lot of variables in the equation. One thing is certain, Prime Rate won't be moving up anytime soon.
Yes, initially the Bond market reacted inverse for a few periods, but eventually adjusted down along with the BOC rate (that's why I suggested weeks for Fixed to adjust). The Fixed rates eventually dropped once Feds reacted with liquidity and Bond buying. I would expect a similar pattern again. Additionally, several countries in Europe & Japan actually have 0 to negative Sovereign Bond yields now, so I would not rule this out in N. America in the event of an ongoing recession.
Newbie
Sep 21, 2020
4 posts
2 upvotes
1.84% 5 year fixed, has anyone heard of anything lower than
This and if so which bank????
Jr. Member
Mar 6, 2018
116 posts
139 upvotes
Ontario
Georgestone1313 wrote: 1.84% 5 year fixed, has anyone heard of anything lower than
This and if so which bank????
Pmed you my contact
REALTOR®
Newbie
Mar 23, 2016
20 posts
Tangerine is offering me 1.79 fixed 5 years. TD is offering 1.74 fixed 4 years. Can someone please tell me which one is better? Thank you!
Newbie
Aug 20, 2016
50 posts
32 upvotes
FYI EQ has 5yr fixed lower than 1.64
Jr. Member
Jul 21, 2017
147 posts
30 upvotes
ojastejo wrote: Tangerine is offering me 1.79 fixed 5 years. TD is offering 1.74 fixed 4 years. Can someone please tell me which one is better? Thank you!
TD is offering 1.69 on 4 year fixed as well with some negotiation

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