Low rates helped fuel the real estate rally and today Ratehub.ca reports that best 5 year variable rate on their site fell to 0.98%, which he said is the lowest floating rate mortgage rate in Canadian history.
The rate is available through CanWise Financial’s in-house lender site and is open to homebuyers with less than 20% down payment or those with less than 20% down payment.
It comes with a 20 percent prepayment option, 120 days withholding, carry-over and presumptive, and a violation penalty of three months of interest.
“We are thrilled to be able to offer the lowest rate in Canadian history because it will save our customers so much,” Ratehub.ca said.
Today’s announcement means that the gap between fixed and floating rate mortgages has widened. Ratehub.ca reports that the best fixed rate on its site is 1.74 percent, which is 0.76 percentage points higher than the best variable rate.
The Bank of Canada has embarked on a series of cuts in its key overnight rate to help the economy cope with the fallout from the COVID-19 pandemic. Ratehub.ca reports that the central bank of Canada will need to raise rates three times to bring this variable rate in line with the best fixed rates. For the variable rate to be higher, you must continue to work.
The overnight rate is unlikely to be raised anytime soon, as indicated by the Bank of Canada, and only after its inflation targets are met.
“We continue to strive to keep the policy interest rate at an effective low until the downturn is overcome so that the 2 percent inflation target is sustained. In the Bank’s April forecast, this will happen sometime in the second half of 2022, ”the Bank of Canada said in its release when he announced his latest betting decision…
Ratehub.ca reports that a homeowner who pays 10 percent on a $ 500,000 home with today’s new 5-year variable rate amortized over 25 years ends up receiving a monthly mortgage payment of $ 1,744.
In the first year, it is $ 20,927, of which $ 16,463 is the principal and $ 4,464 is interest. Over a 5-year term, $ 104,633 is paid, of which $ 83,947 is principal and $ 20,686 interest.
Jesse Baines is a senior reporter for Yahoo Finance Canada. Follow him on Twitter @jessysbains…