Variable-rate Odds ImproveDecember 11, 2018
There’s been an enormous change of sentiment in the mortgage market this month.
The financial markets are now signalling that the economy may not require as many rate hikes as it thought in November. Whereas last month the market anticipated 3-4 hikes in 2019, with the first one in January, traders are now pricing in just one or two, with the first one in July.
If you’re interested, intelliMortgage co-founder Robert McLister wrote about it in his Globe and Mail column on Wednesday. See: “The bond market is now sending a clear signal: Go with a variable-rate mortgage”
What it means is simple. For anyone that’s suited to a variable-rate mortgage, the market’s change in outlook implies that the probability of paying less in a variable (vs. a long-term fixed rate), has just improved.
Variable Rates at intelliMortgage
For most of this year, we’ve featured Canada’s lowest variable rates for a variety of loan-to-value categories as verified by RateSpy.com. Today is no different. intelliMortgage’s effective rate of 2.58% (prime – 1.37%) on a default-insured adjustable-rate mortgage leads the nation, as does our rate for those with 20% equity.
In each of these cases, the rate spread between a 5-year fixed and 5-year variable is almost 3 rate hikes. That gives you a reasonable head start versus a fixed-rate borrower, simply by floating your mortgage with prime rate.
What’s different about intelliMortgage (apart from rates, of course) is that we’re passionate about saving your time. And that’s not just marketing-speak. We put our money where our mouth is by enabling fast one-stop shopping via the Mortgage Builder. This unmatched tool shows you the lowest mortgage rates in Canada from all of the top 100 lenders, not just those who pay brokers.
Why this Matters
It matters because mortgage providers don’t like to quote their competition, so customers miss out on great deals. For example, brokers seldom quote rates from lenders like HSBC, RBC, BMO and other non-broker channel lenders.
At this very moment, however, Canada’s best variable rate for refinances is 3.04% from HSBC. You’ll find this rate in our Mortgage Builder—which helps you compare mortgage rates objectively, without worrying about how much your banker or broker is getting paid to push a given product.
Test this theory by asking your bank or broker who has the best variable rate for refinances. See if they quote HSBC. We’ll bet you a coffee that they don’t (and not just a tiny cheap cup of java, but a nice Startbucks Venti or equivalent!).
Embracing transparency like this costs us lost business every single day, but it also confirms that we’re here for one reason: to find you mortgages with the lowest borrowing costs.
That matters in this market more than ever. Because if you’re going to play the odds and float your mortgage rate, you need every small edge you can get.