It’s war. Mortgage Rate Wars. You could win with Big Rate Cuts!

We’ve seen mortgage rates drop steadily over the past three months. At the beginning of this year, we saw fixed rates approaching 4%. And, today, we’re seeing them sit around 3%.

WARNING: These rate wars could come to an end as recent employment figures skyrocketed all estimates… stay tuned!

This is like the perfect storm. Fewer mortgage transactions across Canada + Declining investor confidence + Inverted bond yield curve. Put it all together and you get a rate war. And for a refreshing change, consumers aren’t the victims. The banks are settling for a smaller profit margin.

Now, don’t get me wrong, it’s not like the banks are your friends and just decided to cut their rates as a good deed. They really don’t want to give you lower rates. Not a chance. It’s about market share. They must lend money out in order to offset their deposit costs that they pay to customers with savings accounts.

Close mortgage rate spreads

Earlier this year, both Canada and the US experienced an inverted yield curve. That’s when short-term yields (three-month T-bills) have higher rates than long-term yields (10-year bond yields). This has resulted in mortgages rates being priced very closely across the board.

Best rates today for everything from variable rate to one- to five-year fixed rates are between 2.94% and 3.25%. This is likely the closest spread I’ve ever seen in my 30 years as a mortgage professional!

Do you know which product is best for you? This is an important question. Choosing the product with the wrong maturity date could cost you. An experienced Mortgage Broker can help guide you into the right product.

Beware the banker who gives you their shirt!!

Did you get a call from your banker? Did you fall for that “special renewal offer” or “early renewal?”

If you were one of the unfortunate bank victims who received a call from the friendly banker offering a “special deal”, chances are it wasn’t so special after all. I’ve had many people contact me with stories about their bank calling to help them take advantage of the low rates… except those “low rates” have not stopped falling.

Here’s what you need to do to protect yourself and take advantage of the low rates: Speak with an experienced Mortgage Broker and get yourself an approval with a 120-day rate hold. This is easily done and it will buy you time to see where rates go over the next few months.

Brokers monitor rate activity daily. If rates go down further, your broker will notify you and automatically adjust your rate to the new lower rate.

No one else can monitor all lenders and provide this sort of rate and product variety.  And, oh yeah, did I mention that qualified borrower pay nothing for this service? Yup, it’s free to the consumer as the financial institution that funds the mortgage pays the broker.

What are you waiting for? Is it time to buy… or what about a complimentary mortgage checkup to ensure you’re saving the most money?

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114; steve@canadamortgagenews.ca