CMT Team·Mortgage Rate Trends·September 14, 2011Variable Discounts Quickly Evaporating If you need a new variable-rate mortgage, call or email a mortgage advisor pronto. Multiple banks (CIBC, RBC, TD, Scotia) are slashing variable discounts again, effective tomorrow. Second-tier lenders probably won’t be too far behind. Banks seem dead-set on herding borrowers out of low-margin variable rates. Spreads are simply not profitable enough—at least compared to succulent and juicy fixed-rate margins. When the dust settles, we’re hearing estimates of variable rates on the street moving to prime – 0.40%, or perhaps prime – 0.50% for aggressive lenders. New borrowers now face a decision: A 2.50% rate that moves (i.e., variable) OR A 2.49% two-year, 2.99% four-year or 3.29% five-year rate that doesn’t (i.e., fixed). Consumer psychology being what it is, there will certainly be a giant shift into fixed-rate mortgage originations, given this new pricing. Tomorrow we’ll analyze whether that’s a good decision. Note: That “shift” refers to new borrowers only. It does not mean that existing variable-rate holders should consider locking in. Rob McLister, CMT Like news like this?Join our CMT Updates list and get the latest news as it happens. Unsubscribe anytime. SUBSCRIBE! Thank you for subscribing. One more step: Please confirm your subscription via the email sent to you.