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Thread: Mortgage Renewal - WWBD?

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    Default Mortgage Renewal - WWBD?

    So, 5 years ago we signed a new term for our mortgage. We went with 2.69%, fixed. Looking back, we would have saved a bit of money if we had gone for variable, but part of that is due to the pandemic which of course could not have ben predicted. And now we are up for renewal again.

    Given world uncertainty, I almost instantly figured we would be best off going fixed again. RBC is offering the same rate as 5 years ago - 2.69%. Pretty good rate - especially since the banks are already told they will be raising interest rates shortly. But they also offered me a 5 year variable at prime minus 1.1% - which seems compelling. Currently, that starts our new term off at 1.35%. Uber low. We could probably get even lower with a no-name mortgage company, but would rather stick with RBC if possible.

    Then I looked over the data:
    If we went with variable AND rates stayed where they are, we'd save about $14,000 over the course of the term. That's significant. But let's face it, interest rates are lower now than ever and it can't last forever so it's pretty guaranteed this amount would be less than 14k savings after 5 years.

    Then I happened upon this information from mortgagesandbox.com, which predicts the rates may rise noticeably over 2023. Even still, we'd still be sitting good at the end of 2023 with a variable. It's more what happens for the remaining 4 years of the mortgage that makes me wonder if it would continue at the same pace - thereby making fixed the better option.

    Then I noticed two things:
    1) It seems the rates have been kept partially low due to the pandemic, and I'm personally not confident it will end any time soon. This might actually delay the expected rise for some time.
    2) I have to go back 14 years (I believe) to find interest rates that would end up higher on a variable with prime -1.1. 14 years straight, variable has been the way to go. So from a mid-level perspective, wouldn't it stand to reason the next 5 years are at least more likely than not to follow suit?)

    Anyway, what are your guys thoughts? Anyone have any amazing insight to provide that makes the decision clear, or is anyone else up for renewal soon and are wondering the same things?

    forecast.jpg
    Last edited by Kloubek; 01-13-2022 at 04:53 PM.

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    We are in the same boat as you, and we are talking to our mortgage broker tonight. If you want, I can DM you his thoughts after the talk?

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    Do you really think the bank would be offering you 2.69 if they figured that variable would exceed that number in the next 1 year?

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    i would aks them to do a fixed at 2.89 for you.

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    Variable is almost always better, in any interest rate environment. Even though all of us smart beyond members know interest rates will be going up, the bank knows that too, and that's all factored in.

    Now if it was your first house and you were in danger of losing the place if rates changed, then fixed can be a safety net, but once you are financially established, variable wins.

    - - - Updated - - -

    Also, negotiate with your bank, AND price-check them against a broker. Beyond has a mortgage broker who is a great guy, you should talk to him, or ideally, the beautiful woman who works for him.

    If the bank offers you something, you know you can beat that.

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    Quote Originally Posted by ShermanEF9 View Post
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    We are in the same boat as you, and we are talking to our mortgage broker tonight. If you want, I can DM you his thoughts after the talk?
    Please!



    Quote Originally Posted by ExtraSlow View Post
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    Also, negotiate with your bank, AND price-check them against a broker. Beyond has a mortgage broker who is a great guy, you should talk to him, or ideally, the beautiful woman who works for him.

    If the bank offers you something, you know you can beat that.
    Thanks. I AM getting another quote, just to see if I can get better elsewhere and use it as leverage. When I asked if these rates were negotiable, she didn't outright say no, but didn't seem to want to budge. Guess that's her job.

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    Bank mortgage salespeople should be treated quite roughly. Like used car sale person treatment. Don't ask them anything, tell em. Lie to em. Fuck with them.

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    Rates are not going up materially. The Canadian gov't will go bankrupt if they do.

    CAD$ will tank.

    That's my take. It may be hot. Or not.

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    Quote Originally Posted by Kloubek View Post
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    Please!





    Thanks. I AM getting another quote, just to see if I can get better elsewhere and use it as leverage. When I asked if these rates were negotiable, she didn't outright say no, but didn't seem to want to budge. Guess that's her job.
    RBC told us the same a few years ago but when we pushed them to match posted rates online they budged and got close enough for us to not leave.

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    I'm a gambler so we never did anything but variable right from day one. If I had to do it again it would be variable.
    "Masked Bandit is a gateway drug for frugal spending." - Unknown303

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    What people write: "Should I go fixed or variable"

    What I read: "I'm really frightened of uncertainty, so it sure would be nice if someone could help me rationalize a costly decision that takes away that uncertainty."

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    P-1.1 is great, would always take adjustable vs fixed when that’s the discount… you’d need what? 6 quarters worth of increases to prime just to match? That’s 1.5yrs of heads up… if you start to worry about prime increasing to that point you have options… lock in a fixed rate with that lender… or take the 3 months interest penalty hit and lock in a fixed rate somewhere else at that point.

    Typically it’s 5yr rate cycles, so the trick there would be wait till we’re actually increasing for a year or two… lock in fixed 5yr, ride out peak rate hikes locked in, then near the bottom get back into variable and repeat.

    The worst though is fixed rate penalties. Your nickel and dime saving with rate shopping can be eroded right quick if life happens and you have to break a 5yr term

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    Quote Originally Posted by ercchry View Post
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    P-1.1 is great, would always take adjustable vs fixed when that’s the discount… you’d need what? 6 quarters worth of increases to prime just to match? That’s 1.5yrs of heads up… if you start to worry about prime increasing to that point you have options… lock in a fixed rate with that lender… or take the 3 months interest penalty hit and lock in a fixed rate somewhere else at that point.

    Typically it’s 5yr rate cycles, so the trick there would be wait till we’re actually increasing for a year or two… lock in fixed 5yr, ride out peak rate hikes locked in, then near the bottom get back into variable and repeat.

    The worst though is fixed rate penalties. Your nickel and dime saving with rate shopping can be eroded right quick if life happens and you have to break a 5yr term
    "where we're going, we don't need roads"

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    Variable always.

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    Quote Originally Posted by ExtraSlow View Post
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    Bank mortgage salespeople should be treated quite roughly. Like used car sale person treatment. Don't ask them anything, tell em. Lie to em. Fuck with them.
    Fuuuck yooouu…

    But also I don’t care, I have my little corner of the market where the clients options are: sign my commitment at the rate you qualify for based on your situation… orrrr fuck off, pay us the 5 figure penalty and get a 0.1% better rate elsewhere

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    Quote Originally Posted by ercchry View Post
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    Fuuuck yooouu…

    But also I don’t care, I have my little corner of the market where the clients options are: sign my commitment at the rate you qualify for based on your situation… orrrr fuck off, pay us the 5 figure penalty and get a 0.1% better rate elsewhere
    yous gonna end up in the art room

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    You have already put too much thought into this.

    Variable is the correct answer.

    If you don’t like that answer, go fixed.

    It’s not rocket science
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.
    Quote Originally Posted by Yolobimmer View Post
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    guessing who I might be, psychologizing me with your non existent degree.

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    Quote Originally Posted by 88CRX View Post
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    RBC told us the same a few years ago but when we pushed them to match posted rates online they budged and got close enough for us to not leave.
    I played two banks and the existing lender against each other on this round. I have all accounts with RBC and it would've been very convenient to bundle this with it, so it was RBC's biz to lose, but their mortgage guy was too busy to respond quickly enough, so I went elsewhere. I got 1.25% (P-1.20%) on variable for the next five years, plus a HELoC aside from the primary lending, plus I can abandon the variable and lock in with only 2 or 3 month's penalty (if Trudeau starts printing money printers with a 3D printer and rates go Berserk).
    I entered negotiations with an offer of P-0.4% (LoL) so while I did pretty well, I still think I could've done better, but it was becoming law of diminishing returns, and total values in the hundreds$ etc...

    Start early and work them over. Banks are not your friend and they are not "doing you a favour" by lending you a few hundred thousand. They are heartless and the second you tell them they're out, they drop you like a hooker.

    Also, what's with the "I'm on my way out the door for vacation" line? Is this their 4-Square? It's fuckin pathetic.

    Edit - this was September 2021.
    Last edited by ThePenIsMightier; 01-13-2022 at 06:03 PM.

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    Quote Originally Posted by ercchry View Post
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    Fuuuck yooouu…

    But also I don’t care, I have my little corner of the market where the clients options are: sign my commitment at the rate you qualify for based on your situation… orrrr fuck off, pay us the 5 figure penalty and get a 0.1% better rate elsewhere
    Hahaha, your corner of the market is my favourite asset class.

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    Quote Originally Posted by ExtraSlow View Post
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    Hahaha, your corner of the market is my favourite asset class.
    It’s certainly booming

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