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.
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.
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 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 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.
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.
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Transcript
Full transcript of “Mortgage Rate Update 🇨🇦”. Click a timestamp to open the video at that moment. Need another video? Use the YouTube transcript generator.
0:00 Bank of Canada's done its thing dropped rates where are we at for every rate where are we at okay so let's to analyze the Bank of Canada dropped down to 3% so this means that's the that's the Bank of Canada though the Bank of Canada only lends money to Banks they don't lend money to people so there's Commercial Bank Prime and the banks react to Bank of Canada's re rate reset and today our Commercial Bank Prime is 5.2 so let's break down the categories we've got home equity lines of credit a HELOC some people call it different things home plan whatever flexi line whatever different lenders call it different things it's a line of credit attached to
0:45 your house it's secured by your house and that rate is somewhere between 5.2 which is Commercial Bank Prime and 5.7 if you're paying more for 5.7 well probably getting you yeah no you shouldn't pay any more than 5.7 unless you're with a be lender but if you're with a bank if you're with one of the big Banks you should be at no more than 5.7 and maybe less I mean there's starting to be more and more action in less than prime plus a half prime plus a half a percent to be more discounting in there so pay attention to it make sure you're at if you're no more than prime plus a half you should start be trying to negotiate with your bank to get it down because there's some better deals available
1:30 nothing better than 5.2 though so variable rates variable rates are a discount from prime rate from the bank prime 5.2 so they're a discount of anywhere between 65 and 1.15% now where's the differences coming from so let's say crime less 65 is a mortgage on a rental on an investment property but Prime less 1.15 five that's a good rate by the way very good rate that's on a cc purchase a low down payment less than 1.5 million it's got a bunch of whole other things that you got to do and hit certain ratios it's got to be more or less perfect um
2:16 that's Prime less 1.15 so your variable rates available today for Renewal or for the case of that 1.15 or purchase they range from 405 yeah you could have a 405 variable rate to 4.55 and let's just note there's one other product Advantage there's a product advantage to variable rates is the guaranteed penalty 3 months interest that's it no other calculation nothing else to think about it's just three months interest oh but Ron yeah my fixed rate's like that no it's not like that I guarantee you it's not like that you're the the bank person you got it from me have sort of
3:02 muttered that under their breath but no you have something called an interest differential penalty on any fixed mortgage and I've seen those go as high as 3% of the mortgage I'm not that's an outlier that's that's rare but I've seen an interest differential penalty run to 3% of the mortgage balance yeah huge damn well huge okay all right let's talk about fixed rates fixed rates were sort of down in the fall September October went up fixed rates started going back up again we saw fixed rates at the end of the year last year in late December fixed rates were running up around uh as high as 459 uh every rate was in the fours mid fours uh all kinds of rates that's down
3:50 now again fixed rates nothing to do with prime rate they're to do with Canada government bond yields and those have come off they've come off substantially just in the last 10 days so we are seeing 5year fixed as low as 3.99 you're probably going to see some 389 soon if this keeps coming the way it is but 399 is achievable on a 5year fixed again that is one of the seatec purchase mortgage small down payment under 1.5 million got to be very tight on the debt ratios so not many people have in Ontario that's about 8% of 6 to 8% of administration depending on the time of year of origination Depending on time of year so yeah it's a small subset uh in Alberta it's a lot more and Alberta it's
4:36 still about 20% of all uh new purchase mortgages but that's the rate but the good news is for a conventional mortgage that's not catc there's a lot of 4.19 4.14 that's around for a fiveyear threeyear is about five bips higher maybe 404 409 again that's for a CMC purchase uh 4 424 419 um maybe maybe 414 again on a three-year fix just for regular transfer renewal refinance you name it so it's come back down into the low fours that's where we're at today function of bond yields why are bond yields falling lots of reasons uh quantitative uh tightening
5:21 ended today uh yesterday sorry sorry last week last week I get my dates right last week quantitative tightening don't bother worrying about it that ended that's a bit of a stimulus to lower bond yields uh but also there's there's lots there's just so much volatility and Chaos in the international sale of government bonds today I'm I'm sure if I got a bond salesman in here they'd give me an answer but I don't have an answer today just telling you those rates are definitively lower than they were a month ago like significantly so what's the final what is the final summary of all this final summary of on all this is if you got a renewal notice for
6:06 February last month in January is probably going to be higher than you could get today so get out there get shopping and push back on those rates that have come down in if you got a renew a letter in uh January 1st for a renewal in the middle of April middle of uh February there's room to push back on those rates you can negotiate with your bank and push them down so get at it if you got to Renewal you got to shop you got to push you got to negotiate you got to threaten almost to leave that's important to do right now
