Earlier this week, we couldn’t believe our eyes when we saw the already ground-level 5 year fixed mortgage rate drop to a record of 2.94% in Ontario. Taking into account the roller-coaster nature of these rates, we wondered: how long could this rate stay around? And could it go even lower? Our musings were answered today as rates dipped even lower to 2.89% - and this time, more provinces are getting in on the action.
Reaching Far And Wide
Offered through True North Mortgage, this full-service product gives you the option to increase your regular payment amount by 20% and apply lump sum payments up to 20% annually and is now available in Alberta, British Columbia, Manitoba, Quebec and Saskatchewan (and while Ontario has reverted back to 2.98%, who knows what tomorrow will bring). This means Canadians in these provinces can access the new rate whether they require a high-ratio (less than 20% down) or conventional mortgage with all the “bells and whistles” to help them pay off their principal faster.
And that’s not all – the previous record-breaking rate of 2.94% has indeed stuck around - over the course of the day, it's popped up in Yukon, Northwest Territories, Prince Edward Island, New Brunswick, Newfoundland & Labrador and Nova Scotia.
Let's Crunch The Savings
So what would your monthly mortgage payments look like at that rate? Using our mortgage calculator, let's put Alberta's metrics through the wringer, and say we're purchasing a home at $260,900 - the forecasted average price for 2012 for AB, according to the CMHC - with an amortization of 25 years. Monthly, you're looking at a payment of $1220. Not too shabby, right? And let's say we amp to bi-weekly rapid payments with each payment at $610. Say hello to your interest savings - $12,713 over the course of your mortgage term - and wave goodbye to 2 years off your amortization. Now let's take a look at what 2.89% would like with lump sums factored in. Assuming you're sticking with monthly payments and can manage to dig up an extra $1000 for your mortgage a year, you'll be looking at $10,809 in interest savings - and 3 years less on your amortization.
But Will It Stick?
Seeing as the 5 year fixed rate is the most popular searched mortgage rate on our site, we're sure this news is welcomed by prospective home buyers and current mortgage holders alike. However, as we witnessed when the 2.94% went live, there’s no guarantee that these new lows will stick around (or what days they could pop back up on). One thing we can take away from this, though, is that the new precedent has been set. And we can’t help but continue to wonder: how low can these rates really go?