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