It’s no secret that banks have been looking to increase their profit margins for some time. With interest rates lower than they’ve ever been, the banks needed to come up with new ways to make money. While it might not sound like that’s great for the consumer or homeowner looking to refinance their home or purchase a mortgage; it turns out it is! In order to increase their profits, banks need to lure new customers. In order to do that, they need to give them an offer they just can’t refuse. And that’s just what the banks are doing now.
The Bank of Montreal was the first one to make the move, lowering their interest rates on five-year fixed rate mortgages to 2.99% – a rate that’s been unheard of in the past. Just a day later, TD Canada Trust started offering the same 2.99% rate on their four-year mortgages. Sure, it’s not as popular as the five-year term, but it’s still a great product for some homeowners. And in addition to that discount, TD is also now offering six-year fixed rate mortgages at 3.79% and seven-year mortgages at 3.99%. RBC is offering the same discount (2.99%) on their four-year fixed rate mortgages and they have also matched TD’s offer of 3.99% on seven-year fixed rate mortgages.
Of course, there are certain restrictions on these mortgage deals, but they’re really nothing more than you’d expect any time the banks are seemingly giving away their mortgages. At RBC and TD, customers have until February 29 to apply for the discount, while mortgages must be funded by April 30, 2012 (customers can still take advantage of the low rates by applying for pre-approval and locking in those rates for 90 days.) Over at BMO, the first to make the move, the promotion goes on only until January 25, and the bank has said that they will not be offering an extension on the time frame.
What’s the other difference between the different products other than just the terms of the mortgage? Marcia Moffat, manager of home equity financing at the Royal Bank said that the rate is being offered on 30-year amortizations while at BMO they’re saying that the discounts are being offered on 25-year amortizations, something that’s going to mean more to homeowners if they’re looking to avoid having a mortgage for longer than they need to.
So what does it mean to the Canadian who wants to get not only the best rate, but the best deal for them? It’s true, different rates and different terms mean different things for different people. So how are you supposed to know? An Ottawa mortgage broker is your best bet in trying to sort out the new deals from the banks and sorting through the different products. Best of all, a broker will be able to tell you what the deals actually mean for you once they look at your situation and compare the banks, and their different offers, straight across the board.
