Long term Fixed Rates dropping as well

[RobMacdonald]

Hi Everyone,

I heard the cheer from across Canada when the banks followed suit with the decrease in the prime rate to 3.00%. Now the mortgage lenders across the country are following with decreases in the long term fixed rates. There are several lenders with 5 year fixed rates down to the 4.5% range and some lenders even lower.

This is basically what`s been predicted at many of the REIN meetings and by our good friend Benjamin Tal with CIBC. Remaining flexible in your long term mortgage strategy is still a great plan, and you`re going to have some good options over the next several months.

 

[JoefromTO]

Ok, how is it possible that some people have variable rates lower than 3%??? I talked to one of my friends today. He negotiated a -8 off prime, open mortgage for 5 years... He is not in the real estate investing business but this is for his primary residence.

What kind of variable rates do some of you have now?

 

[RobMacdonald]

If he`s managed to get Prime - .8% on a new mortgage today, I`d love to find out what lender. Every lender I know of is either at Prime + .8% or Prime + 1%.

If you got a VRM in the past, up to probably 4 months ago, you could still get Prime - .75%. But those days are gone, and not soon to return. The prediction is that the pricing will adjust in the future, but will probably get down to Prime +/- .25%.

From what I`ve heard from the banking industry, is that the spreads on VRM`s have all but disappeared. If you friend got that rate, then he`s dealing with a `rogue` branch, because the bank is most likely losing money on the deal.

 

[JoefromTO]

Yes he did get that mortgage about 6-8 months ago. He also did tell me that the bank told him that they are losing money

Oh well.

However, he also told me that if he had to get a new mortgage today, he would pay around 4.15%...thats still pretty good.

He definitely lucked out by getting that rate in writing for 5 years...