—The Happy Canada Day Report: July 1— Fixed or Bust: Canada’s lowest nationally available conventional variable rate is just nine basis points cheaper than a comparable 5-year fixed rate. That minuscule “fixed-variable” spread is now 80% narrower than its 10-year average. In other words, the market is no longer compensating new borrowers for the risk of a floating-rate mortgage. And...

— The Mortgage Report : June 18 — For Better or Worse: When you take a bank’s 5-year fixed you’re married to it for half a decade. That is, unless you file for divorce, so to speak (i.e., discharge or transfer the mortgage to a new lender early). But as unwedded people find out, splitting up has a financial price....

The Mortgage Report – June 1 Penalty Boxed: Despite a horrid mortgage market in Q2, banks still booked $5 billion in profits. But they aren’t cutting people much slack on mortgage penalties, even folks who break their mortgage early due to COVID-related income loss—as this CBC story chronicles. Banks have some great mortgage products (e.g., BMO’s Cash Account, Scotiabank’s STEP,...

The Daily Mortgage Report – May 4 Variable Advantage Fades: The lowest widely available 5-year fixed rates are now just 20 basis points more than the lowest variable rates. That differential has shrunk considerably in the last month or so, causing some would-be variable takers to give up and go fixed. RateSpy simulations confirm it would now only take two...

More than 4 out of 5 borrowers stay with their bank when their mortgage renews. And of all the reasons to do so, the least valid is probably this: because they want to keep all their finances at one institution—for “convenience.” Some people like that their mortgage payment comes out of their bank account automatically each month — that they can...

For some people, minimizing their monthly payments outweighs minimizing interest expense. These people happily pay higher rates to improve their cash-flow. That’s precisely why interest-only (I/O) mortgages exist. And since the beginning of time, they’ve always sold for a premium above conventional mortgages. Today, however, that premium is near a record low. Whereas Canada’s most aggressively priced interest-only mortgage (the...

Many of you know that the lowest mortgage rates in Canada often require default insurance. Insurance reduces credit risk and losses for lenders, and lenders often pass that savings through to consumers. What many don’t know is how to get insured rates if you already have a mortgage. Consider this example… Suppose you bought a $900,000 home a few years ago...

Five-year fixed rates have dominated consumer mindset all year, but that dominance may start waning in 2020. If you believe unemployment has bottomed out in this country, and you believe an inverted yield curve is rate-bearish, and you’re a financially secure borrower, you’re probably going to steer clear of a 5-year fixed. Instead, you might focus on terms that cost...

There’s no industry-wide data on this, but whenever prime rate starts climbing, lenders tell us that at least 1 in 20 variable-rate borrowers lock in (convert) their variable rate to a fixed rate. And a good number of those borrowers are getting one stinky bum biscuit of a rate. One poor mortgagor I spoke with recently asked his lender to lock in....

Knowing the future wouldn’t help you pick the right mortgage. Unless you knew all the future. Imagine a fantasyland case where it was 100% certain that all mortgage rates would be higher in five years. With that priceless information most people would take a 2.49% five-year fixed over a 2.59% one-year fixed. But initial rates and ending rates are only two...