Toronto real estate and Toronto mortgage. Mortgage Interest Rates, Up or Down?

The interest rate gap between variable rate mortgages and fixed rate mortgages is narrowing. 

The rate difference is now under 1%, down from 1.50% a month or so ago.

Although the prime rate of 3.00% may not change for a year or so it is now more tempting to lock in a 5 year term fixed rate, especially since it it unlikely that fixed rates will come down much more.  So the choice for a new mortgage, on average, is between a 5 year term 2.70% variable rate and a 3.49% fixed rate at most banks.

If you already have a 2.25% (prime minus 0.75%), mortgage there is less incentive to move to a fixed rate at this time.

Fixed Mortgage Rates:

Move up and down every 6 months or so with bond rates.  Recently they have been moving down and are now the lowest they have been for many, many years.

5 year term fixed rate:

• 3.39% if closing in 30 days
• 3.49% for closings and pre-approvals with rate holds to 120 days
• rates apply to both 20% down payment and 5% down payment CMHC insured mortgages

Variable Mortgage Rates:

Prime rate to bank borrowers is 3.00%

The prime rate affects business loans, car loans, etc and is not likely to move up in the next year unless the economy improves both in Canada and the United States.

The variable mortgage rate has moved up from prime minus 0.75% to prime minus 0.50%, so 2.25% up to 2.50%. 

5 year term variable rate:

• 2.50% for closings and pre-approvals with a non bank mortgage lender 
• 2.70% with a bank rates apply to both 20% down payment and 5% down payment CMHC insured mortgages, the borrower must qualify using a rate of 5.39%

Open Mortgage Rates:

• Home Equity Line of Credit available at prime plus 0.50% for a rate of 3.50%.
• Open to repayment any amount, anytime.
• Payments as low as interest only
• Monthly payments only
• Minimum down payment 20%, no CMHC

Higher Mortgage Rates:

• Credit Beacon Score 600 or less, rate about 1% higher, 15 to 25% down payment and a 1% lender fee
• Business for Self, stated income, less than 2 years or Commission Income, same as above.

If you have questions, call mortgage agent and real estate sales representative

Alex Malkhassaints at (416) 723-9383.