No news is good news...

In an announcement earlier today, the Bank of Canada left their overnight target rate unchanged. What does this mean? The prime lending rate will stay as is, at 3.00%. For anyone with a variable rate mortgage this is welcome news as the last three rate announcements have all included rate increases. If you were to take out a variable rate mortgage today on a five year term you'd receive a discount of .70% off the prime rate. This works out to a rate of 2.30%. Not too shabby if you ask me!
If you have any questions about variable rate mortgage options please don't hesitate to contact me!

For more information on today's rate announcement, please visit the Bank of Canada's website.

Comments

  1. Great news for my buyers. I always encourage my clients to get an open mortgage as there are no payout penalties if they sell before a typical 5 year term. Thanks Natalie for your insight!

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  2. Hey Mike,
    I'm sorry but I have to disagree with you on this one!
    An open variable mortgage is currently P+0.80% (using today's prime rate of 3.00% that would work out to an interest rate of 3.80%).
    On the other hand, if you were to get a five year variable rate today you'd pay P-0.70% (using today's prime interest rate of 3.00%, you'd pay 2.30%).
    It's a huge difference between 3.80% and 2.30%! The penalty to pay out the closed, variable mortgage is three months interest if you break it before the five years. However, this mortgage is portable so if you sell and move to a new house you can just take your mortgage with you at no extra charge! Why pay 3.80% when you can pay 2.30%?
    The only time I would recommend an open is if someone is perhaps flipping a house and know they will only need a mortgage for a couple months. If you are purchasing a home to stay in for a while, an open is certainly not the most economical way to go.
    -Natalie Wellings

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