Prime + .60% is becoming the new norm for closed variable-rate mortgages. Prior to last week, prime + 1.00% was the average.
RBC was the first to cut last week to prime + .60%, and now other lenders are following suit. Non-bank lenders are also moving to prime + .60%, which is nice to see. (Given the recent credit crisis, smaller non-bank lenders have had the hardest time finding low-cost sources of lending capital.)
A decent variable-rate mortgage can therefore be found for about 4.60% today OAC. This rate will likely drop further following the Bank of Canada's December 9 interest rate announcement.
Keep in mind, however, that all-in-one-style HELOCs can be had for just 4.00% (with a lot more perks). The qualification criteria are more stringent though, you need 20% down, and the rate is not technically locked to prime like a regular variable-rate mortgage. [Other differences apply as well so talk to a mortgage professional for a complete comparison]
Variable rates have been easing down primarily because funding costs are improving. 30-day bankers' acceptance yields (which are usually correlated with variable-rate funding costs) have fallen from roughly 2.60% at the end of October to 2.15% yesterday.
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