Every year we see mortgage rates bounce around depending on what’s happening in the market as well as what’s happening in the fiscal cycle of the lenders. The big banks rates started a move up this past week as they have completed their fiscal year at the end of October. With a look at their pipelines I’m sure they are able to see through to the end of their slowest quarter, November through to the end of January, how well they will be doing and whether they can add to their bottom lines with some higher rate mortgages. Can’t say that I blame them it’s just good business.
Fluctuations in Variable Rate Mortgages and Adjustable Rate Mortgages
The variable rate mortgages (VRM) and the adjustable rate mortgages (ARM) all saw an increase this past couple of weeks as the bond markets moved up slightly as well. We’ve been through this cycle before where at one point the VRM and ARM were above prime or became prime plus. The cycle at this point has shrunk the discounts so where we were below 2% for these two products we now see them being not much less that 2.2% or prime minus .50%.
So this is where the mortgage broker has an advantage, the big banks had their fiscal year end on October 31 st the mono line lenders year end for many is the end of December. That means that we still have some lenders looking to make their budgets for the year and they are still offering some pretty good rates. With the big five banks moving towards raising their rates we are able to offer some top discounts to our clients by comparison one of our Bank lenders moved up to 2.79% this week and we are still getting offers of 2.49% from one monoline lender.
The understanding of how these markets move is a great advantage to the consumer. Consider how rates always seem to go up as we near the second quarter of the year, it just happens to coincide with the spring market which is also when approx. 75% of all homes are bought and sold in Canada.
So what does it really all mean…it means that’s you can still get a great deal on a mortgage, it means that we are in the slowest part of the year for real estate sales so most likely to get a deal, it means that if you’re thinking of buying now is the time…