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A mortgage rate war is enough to put a big smile on the face of
anyone needing a mortgage for purchase, renewal or refinancing and that
is exactly the situation we are in right now. It's actually crazy out
there right now!
Bond yields, which are how fixed mortgage rates
are determined, have been trending downward steeply once again and have
been doing so since mid-march and are just now starting to level off.
The drop in the yields has placed downward pressure on fixed mortgage
rates and has sparked a new rate war amongst banks and other mortgage
lenders.
The problem banks are having right now as they can't
promote lower rates without coming under scrutiny by our beloved finance
minister Jim Flaherty (okay, maybe 'beloved' is a little strong). He
lashed out at Manulife Financial last month for offering 2.89% for 5
year fixed even though TD had dropped their 5 year fixed to the same
rate weeks before. Other lenders have had lower than the 2.89% even
before that.
By castigating banks for dropping their rates
below the three percent threshold, it forces them to keep their rates
artificially high which of course comes at the expense of many
unsuspecting consumers and can significantly boost profits for banks. I
am sure the banks aren't complaining.
2.99% for a 5 year fixed
is something that many consumers still get excited about, however this
is a rate that has been available for over a year now and is nothing
special in today's market. To the unsuspecting mortgage shopper, it can
seem like their bank is giving them a 'discount' if they don't do their
due diligence and at least take a small peak around. It isn't hard to
find rates much lower than 2.99% and can currently be found as low as
2.64% on a 5 year fixed. Who would have ever thought we would have
seen them quite that low?
