Brief Summary
This video discusses current mortgage rates in Canada, focusing on the recent changes and how they impact borrowers. The Bank of Canada has lowered its interest rate, leading to a decrease in variable and fixed mortgage rates. The video provides specific rate ranges for different mortgage types, including variable, fixed, and home equity lines of credit (HELOC). It also emphasizes the importance of negotiating with banks to secure the best possible rates, especially for renewals.
- Variable rates are currently between 4.05% and 4.55%, with a guaranteed penalty of only 3 months' interest.
- Fixed rates have come down, with 5-year fixed rates as low as 3.99% and 3-year fixed rates around 4.04% to 4.09%.
- The video encourages borrowers to shop around and negotiate with their banks to secure lower rates, especially if they have a renewal coming up.
Bank of Canada Rate Drop and Mortgage Rate Analysis
The video begins by discussing the recent drop in the Bank of Canada's interest rate to 3%. This rate is the benchmark for commercial banks, which then set their own rates for mortgages and other loans. The video explains that the Bank of Canada only lends money to banks, not directly to individuals.
Commercial Bank Prime Rate and HELOC Rates
The current Commercial Bank Prime rate is 5.2%, which is used as a base for calculating other mortgage rates. The video then focuses on HELOCs (Home Equity Lines of Credit), which are secured loans against a homeowner's property. HELOC rates are typically between 5.2% and 5.7%, but the video advises borrowers to aim for a rate no higher than 5.7% unless they are dealing with a non-bank lender.
Variable Mortgage Rates
Variable mortgage rates are a discount from the prime rate, with discounts ranging from 0.65% to 1.15%. The video explains that lower discounts (Prime less 0.65%) are typically applied to mortgages on rental or investment properties, while higher discounts (Prime less 1.15%) are available for owner-occupied properties with certain criteria, such as a low down payment and a purchase price under $1.5 million. Current variable rates range from 4.05% to 4.55%. The video also highlights the advantage of variable rates, which is a guaranteed penalty of only 3 months' interest in case of early repayment.
Fixed Mortgage Rates
Fixed mortgage rates are not directly tied to the prime rate but are influenced by Canada government bond yields. The video explains that fixed rates have recently come down due to a decrease in bond yields. Currently, 5-year fixed rates are as low as 3.99%, and 3-year fixed rates are around 4.04% to 4.09%. The video notes that these rates are typically available for conventional mortgages, not those with specific criteria like a low down payment or a purchase price under $1.5 million.
Negotiating Mortgage Rates
The video concludes by emphasizing the importance of negotiating mortgage rates, especially for renewals. It advises borrowers to shop around and compare rates from different lenders, as well as to push back on the rates offered by their current bank. The video suggests that borrowers should be prepared to threaten to switch lenders to secure a better rate.
