TD Canada Trust, RBC Royal Bank, CIBC and Scotia announced today that it is changing its Variable Closed Residential Mortgage rates, effective September 15th, 2011.
The Non-bank lenders most likely won’t be far behind in matching this change. With the profits on Variable rate spreads being so slim banks appear to be steering clients in to the more profitable fixed rate terms.
It currently appears that Variable Rate discounts will be increased by 0.20 per cent across lenders.
Note: This change is for new borrowers only. If you are a current Variable Rate mortgage holder there will be no change to your discounted rate and by no means should it be an indication that you should lock in. If you have questions contact me.
With this change it’s now more important than ever to ensure you are getting into the right mortgage product. While the discounts on a variable mortgage is increasing and fixed rates may look very appealing being at historic lows, it’s important to understand the differences of both and ensure you’re choosing the right mortgage.
The one major benefit of going Variable is you will only ever pay the 3-month interest penalty to break your mortgage. Whereas with fixed rate mortgages (even at today’s all time lows) you can potentially incur a hefty IRD if you break your term early.