This week, oil prices, bond yields and fixed-rate mortgage rates are rising. Geopolitics is expensive.
Some mortgage lenders are positioning the shock of the Iran War as justification for the arrest – which may or may not be good advice. I hear from readers that some banks even call them six months before renewal to pitch this idea.
Sometimes the interest rates on these early extensions are quite fair and protect the borrower from future risks. Sometimes the bank just grabs your wallet with both hands and a friendly smile.
If you’re a well-qualified borrower, you can find out how good your renewal deal is by comparing them on the Best Mortgage Rates page linked to this story.
Related tip:
If you are renewing a default mortgage from Canada Mortgage Housing Corp., Sagen or Canada Guaranty and have not yet refinanced, pay attention to the “Lowest Insured Mortgage Rates.” The insured rates are the cheapest you can get and your insurance will be transferred to any major lender.
You can currently find insured fixed interest rates from Citadel (nationwide), Butler Mortgage (Alberta, BC, Ontario) and Ratebuzz (Ontario) in the 3.50 to 3.60 percent range.
I don’t know how long these deals will last, but I wouldn’t bet my lunch money on them staying for the long term – not with bond yields on the escalator.
Alternatively, if you need a leading uninsured fixed rate, you can currently get a further 35 to 45 basis points off.
And if you’re looking for interest rates that are still falling, look no further than short-term interest rates at major banks like Bank of Montreal and TD. Even though bond yields are rising rapidly, these lenders have lowered their quoted interest rates.
Why would they possibly do that?
Three words: Calculating the early repayment penalty.
“It is ridiculous that banks are able to create ‘comparison interest rates’ that are far below market rates, which in turn results in interest differential penalties that are much higher than they should be,” says penalty expert Matt Imhoff of Penalty Mentor.
This is just another reminder that you should take a close look before signing your mortgage agreement. The lowest rates are sometimes a big headache in the fine print.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
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