It came to my attention that on January 13th, 2012, ING announced that it would be lowering the rate on its 10 year fixed mortgage to a record low of 3.99%. As it stands, other lenders will be following this and allowing borrowers to access 3.84% through mortgage providers on none other than RateHub.
In fact, RateHub notified BankNerd of the mortgage rate change.
This is the first time that the 10 year mortgage has been a real consideration amongst average mortgage shoppers. According to the Canadian of Accredited Mortgage Professionals (CAAMP), in 2010, only 8% of Canadians held a mortgage term of over 5 years and only 1% more than 10 years. That being said, the difference between the best discounted 5 year fixed mortgage rates and 10 year mortgage rates sits less than 1%.
As you are probably aware of, the 5 year fixed mortgage has traditionally been the most popular in Canada, but with the change in the mortgage rate to the 10 year mortgage rate, there is definitely a new appeal to it.
A 10 year rate of 3.84% is well below the long term 5 year fixed rate mortgage average; therefore if homeowners were looking for the market to normalise to long term averages, then the 10 year rate could easily come out on top amongst other mortgage rates. Also, the 10 year mortgage rate is a great choice for anyone looking to have a long term rate while trying to avoid the mortgage rates increase in the future.
What kind of rates are banks giving?
After reading about the 10 year mortgage rate change, I started looking into what other banks were offering, particularly the Big Six.
I found that BMO Bank of Montreal (BMO), TD Canada Trust, and the Royal Bank of Canada (RBC) are offering mortgage rates as low as 2.99%. BMO is offering the mortgage rate of 2.99% on their 5 year low rate mortgage. Both TD Canada Trust and RBC is are offering a four year fixed rate mortgage of 2.99%. TD Canada Trust and RBC are also offering a seven year special 3.99% fixed rate mortgage offer.
TD Canada Trust is offering a 6 year special of 3.79% as well.
Keeping these rates in mind, the 10 year mortgage rate change is definitely a game changer for homeowners. With an interest rate of 3.84% on a 10 year mortgage rate, then it is definitely something you need to consider when purchasing your home.
What do you think of the new 10 year mortgage rate?