3.09% 5 year fixed rate mortgages still exists but not at the Big Banks!

As all the big chartered banks announce their quarterly profits this week two things will be clear:

1. They will have made some hefty gains to their bottom line, and
2. Those big gains were not the result of the interest rate wars they have been involved with each other since the beginning of the year.

In fact, if you take a look at the mortgage promotions going on at Canada’s major banks, each one of them has their “Special 5 year fixed mortgage rate” listed at 3.60% or higher.

What does this mean to the mortgage shopper?

The mortgage market in Canada is caught up in a lot of noise and will be through the Fall months, some of it as result of its own doing and some of it as a result of continued uncertainty in economies around the globe. For those of you that read this blog or receive our newsletters you have heard us talk about the fact the powers that be in Canada seem to be looking for ways to create a housing market correction. Add on the challenges in Europe and for the average consumer looking for a mortgage it can be even more stressful than usual.

How do consumers make their way through all the noise?

1. Make sure you use a trusted mortgage advisor, remember their service is free and they will have access to multiple options that you can consider.

2. Interest rates are still at historic lows and they will stay low, so make sure your advisor makes you aware of all the key terms and conditions of the various mortgage products that are available to you, yes getting your hands on a 5 year fixed 3.09% interest rate is fabulous, but make sure that the terms and conditions that come with that mortgage is right for you.

3. If you are purchasing your home, have a good understanding of your Loan to Value, in this market you never know what your property will be appraised at, so have a good sense of what that will be so that you know what type of mortgage you can qualify for, your mortgage advisor can help with this.

4. Finally, consider the variable rate mortgage. With bank’s wanting to increase their profitability on mortgages and rates continuing to stay low over the next few year, the variable rate mortgage will likely be a very good option again as the discount between a 5 year fix rate and a variable rate mortgage looks to be creeping back up again, at some banks the spread between their 5 year fixed rate and their variable rate is almost 1%.

So even with the banks increasing their five year fixed rate mortgages and ending their rate wars, there are still very good mortgage options available to you if you know how to find them.