Variable rate discounts are disappearing in 2011

Posted April 2011

We believe variable rate increases are on the horizon — and this one isn't connected to the Bank of Canada Prime Rate. It won't affect Canadians who already have a mortgage, but this increase could be a hit to people seeking a mortgage right now.

Yesterday, FirstLine Mortgage, a CIBC Company, announced they were moving their variable rate from P-.65% to P-.40%. According to their release, this 0.25% change is in response to their variable-rate mortgages carrying very little profit in current market conditions. We've heard similar grumblings from smaller lenders in the past few weeks, but FirstLine is the the first major lender to announce a formal rate increase.

Overall, this announcement and buzz regarding variable mortgage rates are slightly unusual. In fact, lenders will typically leave their variable-rate discounts the same for months, or even years, at a time. Thus, this change represents a titanic shift in the variable-rate mortgage market.

While we at True North Mortgage don’t know for certain that the other major lenders will follow CIBC's lead, it would be quite rare for CIBC to be going it alone.

What does this mean for you?

With an increase of 0.25%, the average Canadian mortgage seeker will look to pay about $600 more each year in interest costs. If you're in the hunt for a home or property — now's the time to get your variable-rate hold or pre-approval in place. Then, you can go about house-hunting with peace-of-mind that you've secured your best rate.

Our highly-trained mortgage brokers can quickly and easily handle your pre-approval process. We're here to help (a lot), anywhere you are in Canada — online, over the phone or at one of our convenient store locations.