Time for a quick update on what is happening with mortgage rates these days from our Mortgage Guru
Time for a quick update on what is happening with rates these days. Lot's of crazy numbers out there right now so probably a good time to provide some feedback.
The going rate for a fully functioning, no restricted 5 year fixed mortgage is 2.89%. There are some deals below this that make sense and some that are absolutely scary. One lender is offering 2.79% for the same term and the only restriction is the rate is only held for 45 days. Another lender is offering the same rate with a 90 day rate hold and the only restriction is that the client can not refinance or transfer out from them before the term is over. The mortgage is fully portable, has all prepayments and does not have a crazy penalty. Not a bad product for the rate. Anything below this I would question. Some lenders are going lower but at what price.
Variables are sitting at Prime -.60 as the going rate with some specials lower than that. Prime -.70 is offered as a part of the same restricted mortgage above with the "no leave" or "bona fide sale" clause. Anything lower than this once again could be very bad for a client.
The bond market remains incredibly low which could lead to lower rates still. 5 year bonds are hovering around 0.80 for the last few days. This is a major spread for the banks and they are making very good money right now. When I was lending, depending on the cost of money at the time, we were making money with a spread of 1.59 when things were at their worst. So there is significant wiggle room. The banks have also decided to keep the 25 point drop by The Bank of Canada in their pockets.
Any questions or concerns, please let me know.