April 27, 2011
We believe a variable rate increase is on the horizon and this one is not connected to Prime.
This will not affect Canadians that already have a mortgage but could be a significant hit to people seeking a mortgage right now.
Yesterday, FirstLine Mortgage, a CIBC Company, announced they were moving their variable rate from P-.65% to P-.40%. This 0.25% change by FirstLine was explained by their claim that variable rate mortgages carry very little profit in the current market.
We have unofficially heard the same complaint recently by several lenders. In fact, lately, a few small lenders have moved up there variable rates. But, CIBC's FirstLine Mortgage company is the first major lender to announce this important change.
This sort of change does not happen every week. Quite the contrary, lenders will leave their variable rates discounts the same for months or even years at a time. Thus, this change represents a titanic shift in the variable rate mortgage market.
We don’t know for certain that the other major lenders will follow CIBC's lead, but it would be very rare for CIBC to be doing it alone.
Keep in mind, as a result of the 0.25% change, the average mortgage seeker will be paying about $600 more in interest costs per year.
As a result, if you are mortgage shopping, please make sure to get your variable rate hold or pre-approvals in place now.
If you have any question please give us a call.