Marilee Pott, AMP
Want someone who is looking out for your best interests? I work hard for you to find the best products and services to suit your mortgage needs. Whether it be to purchase a new home or cottage, a rental property, or to refinance your existing home, I will put my expertise to work for you! Finding a mortgage that best suits your needs and situation can be time consuming, with access to over 30 mortgage lenders, I will ensure you get the best, unbiased mortgage plan. With over 15 years of customer service experience, I pride myself in the excellent cu ...
Are variable mortgages worth it if lenders don't follow the BoC?
Date Posted: March 5, 2015
This January, when for the first time on record, major banks failed to match a one-quarter percentage point rate cut by the Bank of Canada was a rude awakening for millions of variable-rate borrowers. Many, if not most people thought that lenders had to follow the Bank of Canada's lead. Has this shock made variable rate mortgages any less attractive?
At the end of the day, what lenders do is entirely their call. Lenders set their own prime rate based on short-term funding costs and competitive pressures from other banks. As much as it was a surprise that most lenders didn't follow the full quarter point drop, some in fact did. One such credit union matched the rate drop within 48 hours of the news coming out, while most other lenders made the market wait a long 6 days before announcing their surprising 0.15 point drop.
Granted, it's rare to see lenders not pass through central bank rate cuts in full, and it will stay rare. The surprising move by lenders in January aren't enough justification to avoid variable rates altogether. Today’s variable rates over fixed rates could save many homeowners thousands of dollars in the long run.
To see which product suits you best, it is advised that you go speak with a mortgage broker, who will be able to offer you their expert opinion based on your financial scenario and future plans.