Great News for Homebuyers: The Big Banks Lower Their Mortgage Rates
Winter is traditionally a slow time in the housing market. A lot of buyers and sellers decide to wait until the spring housing market when the weather is nicer and there’s typically a better selection of homes on the market.
With most of Canada in a deepfreeze, Canada’s biggest banks are trying to inject some much-needed warmth into the housing market. Four of Canada’s big banks lowered their mortgage rates this week. If you’re a homebuyer sitting on the fence, let’s take a look at how much you’ll save with the lower mortgage rates.
The Big Banks Lower Their Posted Rates
RBC was the first of the big banks to lower its posted rate. It lower rates on several of its mortgages, including its five-year fixed rate mortgage by 10 basis points from 3.79 per cent to 3.69 per cent. Three of the big banks followed suit by lowering their five-year fixed rate mortgages: ScotiaBank lowered rates from 3.59 per cent to 3.49 per cent, TD lowered rates from 3.79 per cent to 3.69 per cent, and BMO lowered its rates the most – by 20 basis points – from 3.89 per cent to 3.69 per cent.
How Much Will I Save on My Mortgage?
So what do all these lower rates mean for the average homeowner? If you purchased a home and took out a $400,000 mortgage amortized over 25 years, at 3.89 per cent your monthly mortgage payments would be $2,080. However, if you took out the same mortgage at a lower rate of 3.69 per cent, your monthly mortgage payments would only be $2,037, $43 less per month. $43 may not seem like a lot, but the savings really add up over time. At a mortgage rate of 3.89 per cent you’d pay $224,089 total interest over the life of your mortgage, but at a rate of 3.69 per cent you’d only pay $211,221 total interest, a savings of $12,868. Still sound like pocket change?
The Benefits of a Mortgage Broker
This just goes to show you that it pays to find the lowest mortgage rate. Through the assistance of a mortgage broker you can shop lenders, including the big banks, for the lowest mortgage rate. When you find your dream home you’ll be able to rest easy knowing you’ll pay less interest over the life of your mortgage and be mortgage-free years sooner.