I trust this finds you and your family safe and well. Below is an update from our Friend Jake the Mortgage Specialist:
“This morning the Bank of Canada dropped rates again. This will dictate (maybe) where variable rates are going (down). As a result, the bond yields took a downturn, back to levels from a couple of weeks ago. These will dictate (maybe) where fixed rates are headed (I hope back down).
A reminder: variable rates and fixed rates don’t move in tandem. Here’s why I say maybe in both cases.
1. All of the lenders knew that variable rates would be coming down. So all of them quickly eliminated any discount to variable (even actually adding a premium to variable). So whereas 2 weeks ago we could have had Prime-1% (today 1.95%), it’s now Prime or Prime PLUS. That totally screws new borrowers who want to renew, buy, or refinance. Screws them because going variable in uncertain times is a sure-fire winner. The penalty is very cheap to break out. You’d be crazy not to go variable IMO today.
However:
1a. Nobody knows (yet – but we will soon) if the other banks will drop their variable rates by 1/2, by 1/4, or if at all. If they do then Prime Rate will be 2.45% (if by half) and 2.7 (if by 1/4).
However:
2. When the bonds are this low, technically rates should be under 2%. But they are over 3%. Something wild is going on with mortgage rates today and I sincerely hope it stops. We are also screwing borrowers who are buying, refinancing or renewing, and who want the security of a fixed rate (which may appeal to some).
So all of this is to say there’s something fishy (annoying) going on behind the scenes and we have to wait until the dust settles to make sense of everything.
In other news, I keep updating my MORTGAGE RELIEF page and now TD, Scotiabank and RFA Mortgages all have online platforms to request mortgage deferrals. I expect all lenders to follow suit and will keep adding information as I find it.
Please let me know if you have any questions as per the above.
Thanks
Jake 416-910-4448″
Thanks for reading everyone! Please contact myself or our team should you need any help at this time of unrest.
Regards,
Karen
