February 16, 2016 Best Mortgage Rates Update


The Victoria market continues to simmer hot – with low inventory and high demand. Fixed rates are dropping and variable rates are holding steady.

February 16, 2016 Best Mortgage Rates Update:


Local Real Estate Market:

Half-way through February and the market is still simmering hot. Greater Victoria has seen 317 sales this month so far, and is on track to easily surpass last February's monthly total of 542. Inventory is still fairly low - hovering at about 4 months of inventory (2550 Active Listings).

Anecdotally, I've had a busy week with ALOT of new client meetings to figure out affordability ranges. I think buyers, more than ever are preparing themselves for bidding battles. I'm also heartened by the trend for clients to place an emphasis on what is personally affordable to them, not what the maximum amount they can qualify for.

What will happen in Victoria when the Vancouver Bubble Bursts?

-This has morphed into a entire separate opinion piece which I will publish mid-week. Read Part 1 here.

Important Dates:

New downpayment rules are taking effect February 15th. Here are some of the important dates surrounding that change. Since the banks are charged with enforcing the rules, the dates are based off when you have applied for your mortgage.

-For mortgage applications received prior to February 15th, closing before June 30th: 5% down will suffice
-For mortgage applications received prior to February 15th, closing after June 30th: NEW RULES in EFFECT
-For mortgage applications received after February 15th: NEW RULES in EFFECT

Use my new Closing Cost Calculator for First Time Homebuyers to figure out what your minimum downpayment would be under the new rules. (You don't have to be a first time homebuyer to use the calculator)

Rates:

Rates changed slightly this week with 2 mono-line lenders lowering their 5 year fixed rates to 2.49% and 2.54%. Both are 45 day quick close, with the 2.49% being high ratio only, and the 2.54% being high ration and conventional.

Variable rates have remained stuck in the mud, with the best standard rates sitting at P-0.35% (2.35%). The spread between fixed and variable rates is almost non-existent right now. This may have something to do with lenders hedging that a Bank of Canada rate drop in the months ahead will provide an increased spread, therefore relying on economic factors to create the illusion of a better variable rate, all the while their margins remain nice and fat.

Big Banks continue to lag behind the mono-line lenders. If you have a renewal notice from your big bank, you will definitely save some cash by shopping your mortgage around and switching lenders.

Some credit unions played nice this week and lowered their 5 year fixed rates. Best credit union option currently is Coast Capital at 2.79%.

5 Year Fixed Rates5 Year Variable RatesHELOC
Quick Close Specials2.49% - Must Close within 45 Days - High Ratio OnlyP-0.4% (2.3%) 90 Day CloseP +0.5%
Best Standard Rates2.64%P-0.35% (2.3%)P +0.5%
Low Rate Basic Products2.49% -Must Close in 45 Days - High Ratio Only 2.54% - Must Close in 90 Days - ConventionalP-0.5% (2.2%) - Must Close in 90 Days - High Ratio Only P-0.50% (2.2%) - Must Close in 90 Days - Conventionaln/a
Credit Unions2.79%P-0.25% (2.45%)P +0.5%
Pre-Approvals2.79%--

* Low Rate Basic Products have great rates, but have restrictions that include high discharge penalties, inability to blend mortgage rates if you sell & buy, inability to leave lender during term, etc.

Other Rates:

Lender Prime2.7%
Bank of Canada Key Overnight Lending Rate0.5%
Next Bank of Canada Rate Update March 9, 2016
Benchmark Rate4.64%
5 Year Government of Canada Bond Yield (Feb 15, 2016)0.61%

Mike Grace is an independent full-time mortgage planner and industry insider located in Victoria, BC. If you are purchasing, refinancing or renewing your mortgage, contact Mike to obtain the best available rates and terms.