The lowest floating rate mortgage in Canadian history is here

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GLASGOW - DEC 6: In this photo of an illustration of a mortgage application form, the shadow of a house key held by a woman falls on a form on December 6, 2007 in Glasgow, Scotland.  The British economy is starting to feel the impact of the credit crunch that began this year.  Home prices have started to fall and the retail sector is forecasting a difficult Christmas period.  (Photo by Jeff Mitchell / Getty Images)

The gap between variable and fixed rate mortgages has widened. (Photo by Jeff Mitchell / Getty Images)

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 percent, which he said is the lowest five-year variable rate mortgage in Canadian history.

The rate is available through CanWise Financial’s in-house lender site and is open to home buyers with less than 20% down payment or those with less than 20% down payment.

It comes with a 20 percent upfront option, 120-day 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 clients so much interest,” 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.

Also see: The latest real estate news: home prices, mortgage rates, markets, luxury real estate and more from Yahoo Finance Canada.

The overnight rate is unlikely to be raised anytime soon, as the Bank of Canada has indicated, 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 sustainably met. According to the Bank’s April forecast, this will happen sometime in the second half of 2022, ”the message says. Bank of Canada in issue 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 receives a monthly mortgage payment of $ 1,744.

In the first year, it is $ 20,927, of which $ 16,463 is the principal and $ 4464 is interest. Over a 5-year period, $ 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

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