Categories for Mortgage Rate Tips

Interest-Only Flex Mortgages at Near Record-Low Premiums

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...

An Insurance Trick to Get Better Rates

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...

2-Year Fixed Mortgage Rates. Looking Good

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...

Conversion Rates Reek…Often

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....

The Power of Short Terms

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...

When Porting a Mortgage Goes Wrong

Your mortgage is portable, right? Almost all mainstream lenders claim their mortgages are portable. But portability clauses have more caveats than a prenuptial agreement—so many that people hoping to port are routinely disappointed. Back in 2011, about 3 out of 8 home sellers used to port their mortgage. But the percentage who port has been steadily sinking since then. We’d...

Don’t Trust Prime Rate

Remember the days of: VCRs Paper maps Beepers Being able to rely on banks lowering prime rate when the Bank of Canada cut its overnight rate? Well, times change. And so has the pressure on banks to grow earnings each quarter. Falling rates and a flattening yield curve have squeezed bank profitability, leading them to resort to unconventional earnings tactics....

Mortgage Paydown Overtakes Investing

The #1 financial priority for people with a mortgage is, you guessed it, paying down their mortgage. 42% of Canadians with mortgages say that is their top money goal, according to Manulife Bank’s latest Canadian Debt Survey. And it’s a number that may rise. Fuelling the Trend The urgency to become mortgage-free could intensify further over time, for several reasons: Mortgage Balances Have Grown: Mortgage...

10-Year Fixed Rates Break Record. But Don’t Get One, Says Broker

Ever since decade-long mortgages slipped under 3% for the first time in May, those offering such rates have fielded more inquiries than ever before. And today, we saw another record breaker, with Sigma Mortgage offering the lowest 10-year fixed of all time: 2.89% (details below). But the more interesting aspect may be this: The company who just advertised that rate...

People are Locking in Variables at Lower Fixed Rates

In a normal universe, people who lock in a floating-rate mortgage lock into a fixed rate. And that fixed rate is almost always higher than their current variable rate. But this is not a normal universe. In the world we now live in, variable borrowers are actually locking into five-year fixed rates that are lower than their current rate. For...