Tim's Mortgage News / Rates and FAQ's

[TimLacroix]

This quote is hidden because you are ignoring this member. Show Quote

Might be a silly question, but why is the high ratio rate lower than the conventional rate? I would have assumed the conventional rate would be preferred from a risk perspective, or do the mortgage companies just rather take on more risk and have a higher return?

Yes this is what most would think from a risk view, larger down payment less risk! However, the government made changes for conventional mortgages January 2018 that impacted lenders and why rates are different.

The government decided that lenders required to hold more capital for conventional mortgages in order to share in the risk. In a nutshell, if the lenders have to hold more capital on their books, they are not making as much money which means their costs for that money goes up. The end result is that lenders needed to make up the losses by passing the cost to consumers... and in this case as it is related to mortgages, the rates are slightly higher.

And the rates are potentially higher for refinances and rental properties...

This has complicated the "what is your lowest rate" question. It is not one rate fits all anymore.

[ExtraSlow]

EDIT: I see Tim has replied above while I was typing. Use his answer not mine.....

[killramos]

Thanks Obama...

Fun question, do below prime HELOC not exist any more? I feel like people used to brag about them all the time but seems like they are unicorns? Never opened one but seems like a good idea to have one on standby?

[Disoblige]

So, stupid question, excuse my ignorance.

High ratio mortgage means exceeding 80% of purchase price right?
So is there any benefit to someone who only puts a 19.9% down payment or something, then gets CMHC/Genworth insurance, and come out ahead because of the lower interest rate?

[Mitsu3000gt]

This quote is hidden because you are ignoring this member. Show Quote

So, stupid question, excuse my ignorance.

High ratio mortgage means exceeding 80% of purchase price right?
So is there any benefit to someone who only puts a 19.9% down payment or something, then gets CMHC/Genworth insurance, and come out ahead because of the lower interest rate?

High ratio is just a down payment less than 20%, so you're right.

If you can make more than the mortgage % with your money though, which is not difficult with these crazy low rates, that is the other side of the debate.

[spike98]

This quote is hidden because you are ignoring this member. Show Quote

So, stupid question, excuse my ignorance.

High ratio mortgage means exceeding 80% of purchase price right?
So is there any benefit to someone who only puts a 19.9% down payment or something, then gets CMHC/Genworth insurance, and come out ahead because of the lower interest rate?

Depending on the mortgage amount, yes its cheaper to pay the insurance vs the extra interest over the term. This is also compounded by putting the money in a 1yr GIC then dumping the remainder on your mortgage the next year via a lump some. You will have to marth out the scenarios to see if it works. In my situation, i would have saved about 10k in interested over the 5 year term doing the 19.9% and lump sum route.

[realazy]

This quote is hidden because you are ignoring this member. Show Quote

So, stupid question, excuse my ignorance.

High ratio mortgage means exceeding 80% of purchase price right?
So is there any benefit to someone who only puts a 19.9% down payment or something, then gets CMHC/Genworth insurance, and come out ahead because of the lower interest rate?

https://www.cmhc-schl.gc.ca/en/finan...insurance-cost

You decide if it's worth it based on those premiums. The premium is for the life of the loan, not just the term.

For conventional, I've been told every 5% down brings the rate closer to the insured rate up to 35% down. So 20% down (80% LTV) is the worst rate, and 35% down (65% LTV) is the best rate (which will equal the high ratio rate).

So in short, you save 0.20% interest on your loan amortized over 25 years but you pay 2.8% of the loan value in insurance premiums up front (for your 19.9% down, 80.1% LTV example). But in reality as you pay down your loan, you'll have access to better rates relative to insured rates as you renew/refinance because you'll have a lower LTV every time you renew.

I can't really see the benefit.

[civicHB]

Did some quick math, over 5 year term even with the higher rate it is better to put 20% down and save the CMHC fees.

$450,000 purchase price and 20% vs 19.90% Down payment

2.49% 2.64% Rate
$450,000 $450,000 Price
19.90% 20.00% Downpayment
$89,500 $90,000 Downpayment
$6,489 $- CMHC
$366,989 $360,000 Loan

$1,642 $1,638 Monthly
$42,084 $43,824 Term interest
$310,506 $305,551 End of term balance

[Disoblige]

Thanks all for the explanations.

[JoniBoy]

Another disadvantage to keep in mind is by going with CMHC insurance your mortgage is no longer non-recourse.

[TimLacroix]

** Rates are on the Rise - Some lenders have increased Rates - 5-Year Bond Yield continues to rise **


Current Rates to Open Week Sept 9, 2019

Prime Rate - 3.95%

Special Rate Offers

5 Year Fixed - 2.39% High Ratio Purchase or Switch Only, Owner Occupied, Close in 60-90 days (some restrictions)

5 Year ARM/VRM - 2.70% High Ratio Purchase or Switch Only, Owner Occupied, Close in 90 days (some restrictions)


Full Feature Rates -- 90 to 120 day rate protection
Starting at:

3 Year Fixed - 2.89%
4 Year Fixed - 2.94%
5 Year Fixed - 2.39% to 2.69% * High Ratio
5 Year Fixed - 2.59% to 2.79% * Conventional

5 Year ARM/VRM - 2.70% - 3.05%

HELOC Rates Prime +0.50%

Refinance Rates
5 Year Fixed - 2.79% - 2.89%

Call or PM for MORE "UnPublished" rates or other term information.

OAC, some terms and conditions may apply, rates subject to change without notice

[TimLacroix]

Current Rates to Open Week Oct 7, 2019

Prime Rate - 3.95%

Special Rate Offers

5 Year Fixed - 2.54% High Ratio Purchase or Switch Only, Owner Occupied, Close in 60-90 days (some restrictions)

5 Year ARM/VRM - 2.70% High Ratio Purchase or Switch Only, Owner Occupied, Close in 90 days (some restrictions)


Full Feature Rates -- 90 to 120 day rate protection
Starting at:

3 Year Fixed - 2.69% * High Ratio
4 Year Fixed - 2.69% * High Ratio
5 Year Fixed - 2.54% to 2.79% * High Ratio
5 Year Fixed - 2.69% to 2.89% * Conventional

5 Year ARM/VRM - 2.70% - 3.05%

HELOC Rates Prime +0.50%

Refinance Rates
5 Year Fixed - 2.89% - 2.99%

Call or PM for MORE "UnPublished" rates or other term information.

OAC, some terms and conditions may apply, rates subject to change without notice

[TimLacroix]

Current Rates to Open Week Oct 14, 2019

Prime Rate - 3.95%

Special Rate Offers

5 Year Fixed - 2.54% High Ratio Purchase or Switch Only, Owner Occupied, Close in 60-90 days (some restrictions)

5 Year ARM/VRM - 2.70% High Ratio Purchase or Switch Only, Owner Occupied, Close in 90 days (some restrictions)


Full Feature Rates -- 90 to 120 day rate protection
Starting at:

3 Year Fixed - 2.69% * High Ratio
4 Year Fixed - 2.69% * High Ratio
5 Year Fixed - 2.54% to 2.79% * High Ratio
5 Year Fixed - 2.69% to 2.84% * Conventional

5 Year ARM/VRM - 2.70% - 3.10%

HELOC Rates Prime +0.50%

Refinance Rates
5 Year Fixed - 2.89% - 2.99%

Call or PM for MORE "UnPublished" rates or other term information.

OAC, some terms and conditions may apply, rates subject to change without notice

[TimLacroix]

Current Rates to Open Week Dec 9, 2019

Prime Rate - 3.95%

Special Rate Offers

5 Year Fixed - 2.54% High Ratio Purchase or Switch Only, Owner Occupied, Close in 60-90 days (some restrictions)

5 Year ARM/VRM - 2.70% High Ratio Purchase or Switch Only, Owner Occupied, Close in 90 days (some restrictions)


Full Feature Rates -- 60 to 120 day rate protection
Starting at:

3 Year Fixed - 2.69% * High Ratio
4 Year Fixed - 2.69% * High Ratio
5 Year Fixed - 2.54% to 2.74% * High Ratio
5 Year Fixed - 2.69% to 2.84% * Conventional

5 Year ARM/VRM - 2.70% - 3.10%

HELOC Rates Prime +0.50%

Refinance Rates
5 Year Fixed - 2.89% - 2.99%

Call or PM for MORE "UnPublished" rates or other term information.

OAC, some terms and conditions may apply, rates subject to change without notice

[redblack]

Bump

Hi Tim

What are the current 5yr conventional rates?

My mortgage is up for renewal in 3 months and was offered 2.69

[ExtraSlow]

This quote is hidden because you are ignoring this member. Show Quote

Bump

Hi Tim

What are the current 5yr conventional rates?

My mortgage is up for renewal in 3 months and was offered 2.69

Good timing, I'm 4 months out from renewal. Haven't heard what current place will offer, but they were really disorganized last time.

[TimLacroix]

This quote is hidden because you are ignoring this member. Show Quote

Bump

Hi Tim

What are the current 5yr conventional rates?

My mortgage is up for renewal in 3 months and was offered 2.69

Hi Redblack...

That is a pretty descent renewal rate... we are seeing rate drops as the bond market is down for the past week. Currently we are able to obtain 2.64% at the moment. I'll send a PM and gather more details.

[ExtraSlow]

Hey Tim, I have your team working on my renewal, but thought I'd ask here anyway. Think the central banks curing rates in the near future as a reaction to Coronavirus will translate to lower mortgage rates?

[TimLacroix]

This quote is hidden because you are ignoring this member. Show Quote

Hey Tim, I have your team working on my renewal, but thought I'd ask here anyway. Think the central banks curing rates in the near future as a reaction to Coronavirus will translate to lower mortgage rates?

Yes, the coronavirus has had an impact on the markets and interest rates, especially the 5-year fixed rates. The 5-year bond yield has plummeted in the past few weeks due to this. This has affect longer term rates too (7-year, 10-year).

However, Bank of Canada hasn't indicated whether or not they are going to lower the central bank rates. The next meeting is March 4 (next week) and from what I am reading... they may hold fast once again and not change. Note that this rate primarily affect variable rate mortgages, student loans, lines of credits etc.

[z24_wheels]

I've got a variable mortgage at prime - 0.7% that is up for renewal in July. Should I try to get the same from my bank, or look at something else?