Mortgage rates in Canada are derived from the Bank of Canada Rate, both the bank rate and mortgage
rates over the past year have been at decade lows.
– Bank of Canada rate currently at .25%, bank prime rate at 2.25%
– 5 year posted mortgage rates at 5.25%
– Decade average for 5 year rates is 6.76%
Who is taking advantage of these rates?
New home buyers
– Following the market crash of 2008, deflated home prices as well as great mortgage rates convinced many Canadians to purchase new homes.
– Unfortunately for our new home buyers, there were demand factors working against them
* New housing starts did not dramatically increase. January 2009 in Ontario there were 54,700 new home starts. In January 2010 there were 55,500
* 800 additional new houses per month were not enough to satisfy the demand so resale prices rose. In January 2009 the average MLS resale price in the GTA was $343,632. In January 2010 the average price rose to $409,058.
– Although new home buyers are receiving great mortgage rates, the prices they are paying for homes are inflated due to increased demand.
Home owners refinancing or renewing mortgages
– The greatest opportunities lie with exiting home owners looking to renew or refinance existing mortgages.
– This group enjoys the savings associated with the lower rates but does not faced with increased prices of new homes.
Let’s look at an example
Mr and Mrs Smith have a balance of $250,000 on their mortgage. They have 2 years remaining on their term with 15 years remaining in their amortization. They currently have a rate of 5.54% and their penalty for breaking the deal is 3 months interest. Redwood Capital Management has found them a rate of 3.64%.
| Option 1, Refinance | Option 2, Stay with existing deal | |
| Rate | 3.64% | 5.54% |
| Balance + Penalty | $250,000 + $3375 | $250,000 + $0 |
| Payment | $2048.02 | $2048.02 |
| Balance after 2 years | $221,572.85 | $227,369.08 |
| Balance after 5 years (assume renew in 2 years at 4.5%) | $169,317.82 | $181,387.25 |
If the Smith’s refinance their mortgage now, over 2 years they will have increased their net worth by $5,796.23, over 5 years they would have increased their net worth by $12,069.43.
If you are currently paying a mortgage with a rate greater than 3.64% fixed or any variable rate contact us to see if there are savings available for you.
Daily Rate Update
Rates Effective as at: April 23, 2010
| Financial Institution | 3 Year | 5 Year | 5 Year Variable |
| CENTUM Primo | 3.75 | 4.34 | 1.85 |
| Concentra | 3.95 | 4.64 | 2.25 |
| First National | 3.85 | 4.64 | 1.85 |
| FirstLine | 3.95 | 4.60 | 1.85 |
| Home Trust | 3.29 | 4.54 | 1.85 |
| ING | 3.99 | 4.59 | 1.75 |
| MCAP | 3.95 | 4.39 | 1.85 |
| Scotia | 3.95 | 4.64 | 2.10 |
| Street Capital | 3.85 | 4.64 | 1.85 |
| TD | 3.85 | 4.64 | 2.05 |
| Xceed | 4.14 | 4.64 |
Information provided by Centum Financial Group Inc.
*Rates subject to change without notice. E&OE.