Rates-a-Changin

Rising-Variable-Mortgage-RatesRBC has matched most of TD’s recent rate increases. Other banks may be close behind.

Here’s what’s happening at RBC, the nation’s top bank:

  • 5-year posted:  Up 10 bps to 5.29%
  • 5-year “special”: Up 10 bps to 4.09%
  • 3-year posted:  Down 30 bps to 4.05%
  • 5-year variable: Up 15 bps to prime – 0.10%
  • Open variable:  Up 30 bps to prime + 1.00%

These changes happened to coincide with today’s Canadian and U.S. jobs reports, which far exceeded forecasts. North America’s surprise employment growth is boosting bond yields (which reduces lenders’ profit on longer-term fixed mortgages, other things being equal).

Some will be tempted to speculate we’re near a bottom in mortgage rates (at least short-term). But economic risk remains in Europe and North America. The latest example was Italy and Spain being downgraded again today. Bond yields can still fall off a cliff if more bad eurozone news drives traders into treasuries for “safety”.

The only bright spot in mortgage rates this week is falling 2- and 3-year posted fixed rates.

Then again, the deep dark conspiracy theorist in us notes how “convenient” it is to have 2- and 3-year rates drop in the midst of well-publicized 5-year fixed and variable rate hikes. Rate increases are certainly scaring some people into refinancing before the opportunity is “lost.”

That combination is effectively jacking up IRD penalties on people wanting to break their existing fixed mortgage and lock into a new rate. One of our refi clients, for example, just saw his breakage penalty jump $4,000 in the last two days.

In any event, if you’re mortgage hunting and you haven’t already, it’s a good time to protect yourself with a rate hold.


Rob McLister, CMT

  1. Tried to lock in to Scotiabank 2 yr fixed with a ratehold through a broker and they would only provide 60 days. Broker couldn’t source anyone else providing a matching 2 yr rate. Going to walk into the local bank branch and see if they can do better. Yes, I am a nervous nellie and it might cost my broker some business…

  2. You can get 2.99% for a 4 yr fixed at First National Financial. I think this is on par with ScotiaBanks best 4 yr rate. So, if you’re worried about rate increases then go fixed as it would take just 2, 25 basis point moves to reach this rate based on a prime – .5 variable rate

  3. wow the greedy ol canuck banks look for even the slitest change to jack rates….gee, i am so surprised….the yanks drop 30 year rates to their lowest ever below 4 per cent and our gang jacks the rates…….shucks, who knew

  4. What your broker is telling you is accurate. That 2.49% rate is a promotion and Scotiabank’s latest broker bulletin says it has a 60 day rate guarantee. I can’t speak to what the policy is at branches.
    Banks almost never make exceptions to their rate hold policies. It’s not your broker’s fault that he/she can’t get you more than 60 days.

  5. Really np, you’re comparing the Canadian financial system to the American financial system and suggesting the latter is better? How’d that work out for the Americans over the past few years? Do you have anything to offer any of these threads besides your constant whining about “greedy banks”?

  6. the bank can hold the rate for 120 days. Things can of course change in the meantime (before mortgage maturity date).

  7. Both worried about rates and wanting to preserve flexibility; there’s a slim chance we’ll retire and move at the 2 year point so don’t want to be caught with massive IRD…

  8. we canucks are so bogged down with huge taxes and high mortgage payments its no wonder we cant accomplish anything of an exceptional nature, like our american counterparts, other than paying half of our earnings to banks and taxes…i mean, its so obvious buddy, like duh….to those of us who are deluged with taxes and hi mortgage payments….we plead uncle….

  9. and were it not for sites like this i prob would have taken out a mortgage with a greedy ol bank, instead of a broker, and be even more strapped…

  10. just curious mr. reality check which bank you work for — I’m guessing rbc which is always one of the first banks to jack up rates…

  11. Spoke to CIBC today and they will apparently be increasing their five year fixed rate tomorrow, but no change to the two year rate. I’m moving to RBC (4 year fixed at 2.99 50/50 with 5 year p-.65 variable to hedge my bets) so I was worried that the IDR penalty would increase if the CIBC followed the others by reducing their short term rates. Not so deep dark after all!

  12. Hi everyone..im forced to stay with my current bank (td), they said the best (5yr variable-rate) they can offer me is prime-.25
    does anyone know if they can do better than that?or what is the known best prime- rate that td is giving as of the last 48 hrs?
    thanks in advance!

  13. Give them time. I bet CIBC matches TD and RBC within a week or 2.
    BTW, be prepared for a screwjob when u try to negotiate your renewal in 4 years with 1 year left on your variable.

  14. Are you implying a bank would not fully disclose its best rate up front? What kind of business would stoop to that devious level???

  15. Best 5 year rate TD was willing to offer me was 3.39 on fixed.
    Glad I went with ING 2 months ago at Prime – .75
    TD can eat it

  16. Al it would be good to know why TD is telling you that is the best they can do, I have much lower rates than that and I am sure most other brokers on here have similar rates as well.
    [Edited. Appreciate the post! Just one little request: To keep the site from being overrun with spam we must ask folks to please limit their links and contact info to the “URL” box. Thank you. – Elizabeth, CMT]

  17. ty for the reply…
    they said discounts on variable are not the same anymore….all they can do is .25% off of prime,,my main ? was if someone knows of td giving more than that? as of 2 days ago
    thanks in advance:)

  18. As a Scotiabank broker I resent that it would offer 120 day rate holds at the branch but not to brokers. That makes me inclined to take my business elsewhere.

  19. I still have the choice between P-.85 for 5 years or fixed 4years@2.99. I think variable would better for a year or so but I think the back half would end up costing me more than just sticking with 2.99 fixed… hard decision either way.

  20. Nothing devious when any business try’s to maximize the price of their product and services. As a consumer in open markets you are free to openly shop around and negotiate the price on just about anything.
    I can think of many industries that are a lot less transparent than banking.

  21. Hi,
    I have been offered P-0.85 for 5 yrs or 2 yr fixed @ 2.05 or 3 yr fixed at 2.55. not sure which one is good one to take. can anyone please suggest which is a good one?

  22. Thanks mike. But what’s in your opinion do you think is a good one. would it be safe to go with 2 Yr fixed @ 2.05. Appreciate your response.

  23. Can anyone else confirm that there is a 2 yr fixed rate being offered @ 2.05. I thought Scotia’s 2yr fixed at 2.49 was the best thing out there. Please post any info if this is true. Thank you in advance.

  24. Well it was through my agent. Why? is it a good one or the variable is good? Please share your opinion. All your suggestions are greatly appreciated.

  25. In early September, 1.85% 2-yr fixed and 1.99% 3-yr fixed was available through National Bank MDM’s, with long rate holds. But that was only in the Greater Toronto Area and for a minimum mortgage amount, 250k+ I believe. Rates have gone up since then.

  26. I’m so sick of these banks favouring their own sales forces. I say piss on National Bank if they want to give MDMs better rates than brokers. I hope brokers boycott them.

  27. It’s not a new practice and all the major banks that work with brokers are engaged in it. On one hand they come to your office (those who actually bother coming) with these professionally designed portfolios and a shiny smile about why you should send them your “A” deals. But behind your back they’re underpricing you big time through their own sales force and creating more confusion for their own clients. Some do it more than others but ultimately, with the exception of a very small group of lenders, everyone is looking to get business on the books in the most cost effective way. The only thing you can do is simply avoid sending business, whenever possible, to lenders that consistently undermine you. I don’t believe it will accomplish anything but at least you’re supporting lenders who support your business.

  28. Wow – whine, whine; excuses, excuses; blah, blah. Why don’t you just move to the states np and see first hand how much better it is down there with all of their foreclosures and unemployment? Lower tax rates and mortgage payments don’t mean a whole lot when you don’t have a job or a house.

  29. Sorry to disappoint you but I don’t work for a bank. I do, however, own a piece of some of them via common shares, so my net worth certainly has a vested interest in their profitability. Oh, and RBC actually isn’t one of them, thanks.

  30. np, I’m genuinely pleased that you were (presumably) able to use the free market to your advantage. That’s the point of it all, but that doesn’t mean you have to complain about other competitors in the market. Every company has its own business model. Just because you feel the banks’ models don’t line up with your needs doesn’t mean they can’t serve a purpose for others and provide their shareholders with profitable returns.
    You’d be far more effective in getting your point across if you’d stop with the incessant whining and complaining, blaming the external environment for your problems.

  31. Vulgarity aside, I think OMA reflects the sentiments of many brokers. National Bank and other banks who provide preferential pricing to road reps may be shooting themselves in the foot. Brokers will not stand by and repeatedly be stabbed in the back. They will shift business to one of many lenders who are more broker friendly.

  32. I am potentially looking for a ~70% LTV (80% would be better but I know it’s difficult on larger loans) floating rate loan (5y closed term). Required loan amount about 1.1 million (purchase price anticipated to be about 1.5 before closing costs, in Toronto).
    Income (pre-tax) about $600,000/year in each of the past two years.
    Only problem: I already have four outstanding mortgages, each in various levels of paid-off-ness, with LTV between ~35% and 75%, even when using (lower) original acquisition prices, and LTV between 25% ~ 60% (average about 45%) using current market prices. Total current mortgage balance about 1.75 million, with weighted average mortgage rate (mix of fix and floating) of about 2.5% at current BoC rates.
    Am I being crazy? What kind of terms should I expect?

  33. Hi there, I have almost 2 years left in my current closed, fixed rate at 5.1%, We are shopping around for a variable to get into and pay out the penalty to BMO. I looked into it a few months ago and the best I got was prime -0.7% on a 5 year closed variable which ended up at 2.3%. I seem to be getting really mixed results as to how much the banks can take off of the posted rate, if you have any good suggestions can you let me know. Also, we are looking at getting a rate guarantee for a few months and buying a different place int he spring and porting the remaining of our mortgage. I know i screwed up with the 5 year 5.1% before and am fuming every time I hear someone talk of the rate in the low 2’s any advise would be appreciated.

  34. Is there a site that compares all the rates? Also, any tips on the best online mortgage calculator? I found a good one at CMHC but is there any other good ones?
    Tim

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