What is REALLY happening with Rates?
March 27 2020 Posted by Mary Poburan
The question I get on a daily basis is “My mortgage is up for renewal in a year, a few months, in 3 years etc…with rates so low should we look at renewing now or refinancing to get an even lower rate?' These are strange times. Although the bank of Canada has dropped its key lending rate 3 times now, the rates have actually been increasing over the last week or 10 days. Competitive 5 yr fixed rates are now between 2.69% and 2.89%( this is for insured purchases) Rates vary for different situations so not all clients will be eligible for all rates. Lowest rates go to insured mortgages( less than 20% down), followed by some rates being as low if the loan to value is 65% or less, followed by uninsured mortgages, refinances and then lastly rental properties. Variable rates have also gone “up” in the sense that although the prime rate has already dropped by 1%, lenders have now removed their 1% discount and in many cases are charging a prime + premium. Easy to understand…right? In addition to this tiering of interest rates, we have unprecedented world and economic events influencing interest rates. We are not even close to understanding the long term effects of this worldwide catastrophe or what it means for lending rates. Clients have choice.
1) Ride out their term and renew with existing lender at hopefully a competitive rate.Im always here to define what competitive means and to guide you. Even if it means keeping you with your existing lender.
2) Securing a rate to transfer their mortgage to another lender ( I can hold rates up to 120 days if we transfer your mortgage to another lender but you do still need to qualify). During this period of time I am in a position to shift lenders if the rate climate changes to protect you if rates drop further.
3) Refinance to access any equity if eligible. Currently you can only access up to 80% of the current value of your home less the existing mortgage amount. Refinance according to the government rules do not qualify for best rates so please keep this in mind.
It is a VERY unusual time right now. No one knows what is going to happen. Small changes can happen with very small windows of opportunity working with a broker is more important than ever. Waiting to rate shop or sit on the sidelines can backfire as rates are moving daily behind the scenes. We cannot hold rates based on a discussuin so getting teh necessary paperwork to me is imperative. Some lenders will have slightly better rates if the size of the mortgage is 65% or less of the value. I have built my business on long-term relationships and will always do whatever I can to get you the best rate based on what is realistic. My job is to provide professional guidance to my clients for the long term. I’m here to answer questions and concerns, alleviate stress and provide logical, truthful and sound financial advice. Thank you to all of my clients who have stayed loyal over the years and continue to support me by referring me to their family and friends. This is a difficult time. We will get through this…Together.
Mary Poburan
Senior Mortgage Consultant
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