Canadalend.com, The Most Trusted Private Mortgage Brokerage in Canada, Weighs in on Mortgage Rate Falling Below 2%, the Lowest Level in Four Years
Toronto, Canada (PRWEB) May 16, 2014 -- Canadalend.com, the leading low-cost private mortgage solution provider in Canada, is releasing its expert opinion on a financial services firm that dropped its mortgage rate to 1.99%; the lowest level in four years.
On Monday, May 12, the Investors Group announced a mortgage rate of 1.99%, well below the 2.99% threshold that drew criticism from former finance minister Jim Flaherty. The 1.99% rate applies to a 36-month closed, variable-rate mortgage. Many speculate the 1.99% is the company’s effort to increase the brand’s visibility and improve market share. (Source: Maurino, R., “Canada's mortgage market abuzz as rate lower than 2% surfaces,” CTV News web site, May 13, 2014; http://www.ctvnews.ca/business/canada-s-mortgage-market-abuzz-as-rate-lower-than-2-surfaces-1.1819827.)
“With the Canadian spring real estate market heating up across the country, many potential home buyers may be looking at the 1.99% rate as the perfect opportunity to jump onto the property ladder,” says Bob Aggarwal, president of Canadalend.com. “There’s more to the Investors Group’s 1.99% rate than meets the eye.”
Aggarwal explains that back in 2010, Canada’s then-Minister of Finance, Jim Flaherty, initiated a number of tighter lending rules to help prevent potential home buyers from taking on more mortgage debt than they could afford. To that end, consumers who take out an insured mortgage of less than five years have to show they can afford a five-year fixed mortgage rate.
“In this scenario, that means home buyers looking to take advantage of the 1.99% mortgage rate who don’t have a down payment of at least 20% have to basically qualify for a mortgage rate of 4.99%,” he adds.
Another condition is that home buyers can't break the mortgage unless they sell the property for the three-year period. This comes at a time when most Canadians looking for stability are focused on moving to fixed-rate mortgages because they believe mortgage rates will start climbing higher. (Source: “CIBC Poll: Canadians locking into fixed rate mortgages this spring on expectations that low rates can't last forever,” The Wall Street Journal web site, April 16, 2014; http://online.wsj.com/article/PR-CO-20140416-909620.html.)
“Getting in at 1.99% might sound like a great idea, but it’s important to remember that variable mortgage rates fluctuate with the prime rate throughout the mortgage term,” Aggarwal observes. “It’s tough to predict where mortgage rates will go in the next three years, but chances are good they’ll move higher, which means more money going to interest and less being used to pay off the principal each month.”
“Mortgage rates are important, but there’s more to take into consideration when it comes to buying a home. Unfortunately, Canada’s big banks only recommend their own lending products, whether it’s right for their client or not,” Aggarwal concludes. “The licensed, independent agents at Canadalend.com, on the other hand, draw from hundreds of banks and lenders, ensuring their clients get the mortgage best suited to their long-term financial and lifestyle needs.”
Canadalend.com is one of the largest, most trusted private mortgage brokers in Canada, with skilled independent, licensed professionals helping Canadians coast-to-coast. Canadalend.com provides its clients with residential and commercial mortgages, home equity credit, debt consolidation, and addressing financing concerns. To learn more about Canadalend.com, visit the web site at http://www.Canadalend.com.
Bob Aggarwal, Canada Lend, http://www.canadalend.com/, +1 (416) 278-0278, [email protected]
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