Gap between variable and fixed rate mortgages shrinks

By
Millicent Wong
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0
17

Variable-rate borrowers got their holiday bonus from the Bank of Canada on Wednesday: a half-percentage point reduction in their borrowing costs.

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This means that more and more mortgage buyers are looking for affordable variable offers. Lowest nationally advertised prices now start at:

  • 4.25 percent if insured, or Prime minus 1.20 percent (from Pine.ca)
  • 4.75 percent if uninsured, or Prime minus 0.70 percent (also from Pine.ca).

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The top advertised home equity lines of credit (HELOCs) are down to 5.95 percent and Prime Plus 0.50 percent, respectively. But if your credit is shinier than a banker's shoes, you can often negotiate a Prime Plus rate of 0.25 or even Prime (5.45 percent) at major banks.

Hybrid mortgages, where half of the loans taken out have a five-year fixed mortgage and the other half have a variable mortgage, have now fallen to 4.76 (uninsured) and 4.51 percent (insured), respectively. Scotiabank eHOME is a leader in this product and is well suited for commitment phobics.

In fixed rates, the Bank of Canada's rate cuts this week have left variable rates within 36 basis points or less of the lowest nationally advertised fixed rate offerings. That's the smallest spread between the two since November 2022. We'll see if that's enough to generate significant interest among borrowers given the interest rate uncertainty that awaits us next year.

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Finally, if you're looking for an insured fixed price in British Columbia, Vancity's spectacular 3.89 percent offer will turn heads faster than a Ferrari at a minivan convention. In Alberta, ATB Financial is offering a below-market special of 3.99 percent, and in Ontario, online discounter Butler Mortgage leads the way at 4.09 percent.

Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.

Mortgage interest rates

The interest rates shown below are updated at the end of each day and come from MortgageLogic.news' Canadian Mortgage Rate Survey. Postmedia and imagination. Online Inc., parent company of MortgageLogic.news, will be compensated by certain mortgage providers if you click on their links in the charts.

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