The B of C's Effect on Variable Rates

Speculation is that the Bank of Canada is planning at least two rate hikes this year of 1/4% each.

Here's a table that shows approximately how much payments would increase on a typical variable rate mortgage with a 1/4 point rate hike.  It's based on the current average variable rate of 5.15%, amortized over 25 years.

Mortgage Amount	Payment Increase
$100,000	$590.17 to 604.58 = $14.41
$200,000	$1180.35 to 1209.17= $28.82
$300,000	$1770.52 to 1813.75= $43.23
$400,000	$2360.69 to 2418.33= $57.64
$500,000	$2950.87 to 3022.92= $72.05
$600,000	$3541.04 to 3627.5= $86.46

Some lenders offer a "hold your payment" feature to keep your variable rate mortgage payment from increasing if rates rise.  However, the portion of your payments going to interest will jump--decreasing the amount you pay towards principle.

Comments

[Van]

My broker quote us a variable of prime - 0.9%. He said that was the best rate available today. Anyone know if there are any lenders below that?

[Melanie]

Hi Van, If your credit profile is good you can get better than Prime - 0.9%. Feel free to call me for specifics.

[Asad]

I currently have 5-year fixed @5.2% which is up for renewal March 08. What are the forecasts for next 9 months on 5-year fixed rates?

[Dennis]

FWIW, my "guess" is 6.25-6.50% based on how the economy and housing keep chugging along.

Dennis

[Demitri]

It'll probably be 1/2-3/4 point above the variable rate if history is a guide.

If the Bank of Canada raises 1/2 point this year then that means 6 1/4% or so.

[jen]

What mortgage product is out there with the lowest interest rate besides prime - 0.9%?

[Online Mortgage Broker]

Hi Jen,

There are a few good products out there with better rates than P - 0.90%. Feel free to call me for details. You should be able to get over 1.00% off prime if your credit profile is good.

Melanie

Melanie McLister
Mortgage Planner
Mortgage Architects
(800) 280 - 2460

[Andrew]

My broker recently quoted me a 5-year variable mortgage @ 5.62%. Is this a good rate or should I continue to look around?

Thanks,

Andrew

[Canadian Mortgage]

Hi Andrew,

Thanks for the post. You'll find there are a lot of "variables" to a variable mortgage. The best rate will depends, for example, on the features you need, your credit profile, the property, etc.

However, if all you're looking for is a basic 5-year variable rate mortgage--and you have a good lending profile--then you might very well find a better deal elsewhere. Again, it depends on a lot of things. If you're at all unsure, it may pay to get a 2nd opinion. You can find another mortgage planner online or feel free to drop me an email as well.

If, after researching it more, you find your original broker is on the money, then reward him with your business.

Good luck!
Melanie

[Gajinder Singh]

I currently have a 5-year fixed mortgage @4.5% which is up for renewal in June 09. I also have a secured line of credit full available and sufficient to pay off the mortgage at Prime.

Is it worth to break one year earlier and payoff through my LOC (at current prime)? I can lock up my LOC then (from TD).

Please advice.

[Canadian Mortgage]

Hi Gajinder,

Just curious (maybe I'm missing something). Why would you want to break a 4.5% fixed mortgage (and pay the penalties) to pay it off with a floating LOC at 4.75%?

Rob

[Gajinder]

Hi Rob,

According to TD you can lock-in any part of your LOC. So, locking at 4.75% as compare to current fixed rate should not be a bad decision!!

Am I right?

Gajinder

[Canadian Mortgage]

Hi Gajinder,

4.75% is TD's prime rate. Prime rate fluctuates so it is not a "locked-in" rate in a strict sense. It changes as the Bank of Canada changes it's overnight rate.

A fixed rate, however, is locked-in. It does not change for the entire term. TD's discounted fixed rate is listed at 6.09% as of today. If you moved your LOC into a fixed rate mortgage today you would not get anything near 4.75% (unless TD is giving away money--in which case, call me up!).

Cheers,
Rob

[Jad]

What is the best rate available for an Open Variable rate today? My mortgage is up for renewal in 110 days.

thanks/

[Don]

What is the best rate available for a closed 5-7yrs term today?
I have an open variable mortgage.
Is it a good idea to lock it?

Please advise me.

Thanks/

[Gerry]

One month ago,I locked my mortgate for 5 year fixed term @5.15 from bank.Earlier I have closed variable @Prime-.75 from same bank.
I am first time buyer & also new to Canada,so I opted for Fixed term although my own experience & insticts were advising me for variable.
Now fixed rate are around 5.8 from banks,but some friends of mine told me that rate of around 5.4 from non banking institutions is still available.
Let C what is ahead...with true or false rumours of Inflation ,Ontario's economy,gas prices and so many other factors.

Thanks!
Gerry

[Canadian Mortgage]

Hi everyone,

Just getting settled in the new office. Sorry for the delay in responding.

Hi Jad: We'd be happy to research a rate quote for you. Please shoot me an email whenever you have a chance.

Hi Don: As with Jad, I'd need just a little info on you before suggesting a gameplan that's suitable for your situation. Feel free to call or email us any time.

Hi Gerry: If a fixed fits your profile then that's a very decent deal. Anywhere near 5% is outstanding these days.

Cheers,
Rob

[Lisa]

With the market upset in the U.S. is this the time to lock in my variable rate mortgage?

[Canadian Mortgage]

Hi Lisa, Thanks for the question. The best bet is to call a good mortgage planner for this answer. It really depends on a lot of factors, especially your own personal financial situation. - Rob

[LUCY]

Hi,
I live in calgary,
I currently have a 5-year fixed mortgage @5.2% which is up for renewal in June 2011,also have a secured line of credit full available and sufficient to pay off the mortgage at Prime.

Is it worth to break 2.5 year earlier and payoff through my LOC (at current prime)? I don't have any lock up LOC yet.

I will use my HELOC, what the risk of using HELOC with mortgage term?

Please advice.

[Underwriter]

The rate on your HELOC is not guaranteed. That is the rate your bank is charging at the time. Nothing is set in stone and they can change what they want you to pay at any time, so it's a risky road if the prime rates start going up, or if they decide to start charging a premium on the prime rate.