Mortgage Rates in Ontario

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    Mortgage rates in Ontario have been hiking up since the start of this year, especially in hot zones of real estate, mainly the larger cities of Ontario and British Columbia such as in Toronto and Vancouver. The rising of these rates along with the ‘stress tests’ set by the OSFI have left a blow on the real estate markets of these regions.

    After around 10 years of keeping the interest rates low, the Central Bank of Canada finally increased its rates from 0.5% to 1.25%, in last July.Their rates remained constant even in the last month. This,however, was not the only increase in mortgage rates that the market witnessed since then.

    In the last week of April this year, all major banks of Canada decided to hike up their rates including the Canadian Imperial Bank of Commerce, the Toronto Dominion Bank, and the Royal Bank of Canada.

    According to Ratehub.ca, the offers on the rates for the five-year fixed mortgage, which previously were below 2.5%, have gone up by 3%. This is one of the reasons why people prefer taking out a five-year variable mortgage, over a five-year fixed mortgage. In fact, CompareMyRates.ca has confirmed that Canadians generally prefer five-year variable mortgage overthe five-year fixed mortgage. Another reason for this preference is the fall in the five-year variable rates, witnessed in the recent years. However, whether this preference will remain or not, it all depends on the current and future variable rates.

    Anyone planning to apply for a mortgage in Ontario, in the light of these things and the new rules set by the OSFI, needs to work extra hard to score good rates. This can be done mainly through two ways –improving their credit history, and doing yourresearch.

    Spend time and energy on researching online and knocking on the doors of various financial institutions, so you can compare the rates being offered to you. Mull over the rates and see what type of loans suits you best, to get a better deal on your mortgage. Even a small difference of 20 to 30 basis points between deals can add up to thousands of dollars in a couple of years, which is why the comparison is necessary.

    After browsing through multiple mortgage deals and rates on CompareMyRates.ca, we concluded that currently HSBC, Home Trust, and Canada Trust are offering the best mortgage rates on variable loans. The lowest mortgage rate being offered was 2.52% by HSBC, on a five-year variable loan. While Tangerine, HSBC and Canada Trust are offering the best rates on fixed loans.The lowest rate being 2.79% by Tangerine on a two-year fixed closed loan.

    None of Canada’s largest banks made it to the list of financial institutions offering the lowest and most competitive rates on mortgages. This being said, it is a bad idea for applicants to take out a mortgage from one of the top banks. In fact, it is recommendable to wait this period out until there is either a drop in prices or rates.

    Information source(s):

    http://business.financialpost.com/real-estate/financial-strain-interest-rate-angst-most-severe-for-homebuyers-in-ontario-and-b-c

    https://www.thestar.com/business/personal_finance/2018/05/07/mortgage-up-for-renewal-read-this-first.html

    https://www.comparemyrates.ca/best-mortgage-rates-ontario/

    https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-bmo-latest-canadian-bank-to-hike-mortgage-rates/