Money TD discounts variable mortgage rate

20:36  15 may  2018
20:36  15 may  2018 Source:

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Rates are discounts off of posted rates . 3 The Annual Percentage Rate (APR) is based on a 0,000 mortgage , 25 year amortization, for the applicable term assuming 7 Variable rates are calculated monthly, not in advance. Variable rates change when the TD Mortgage Prime Rate changes.

TD Bank Mortgage Rates . The discount /premium on the prime rate applied to the variable mortgage rate is set by the banks, based on their competition, strategy, and desired market share.

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TORONTO - TD Bank is joining a rival bank in offering a highly discounted variable mortgage rate as competition among Canada's biggest lenders heats up.

The Toronto-based bank said Tuesday it's lowering its five-year variable closed rate to 2.45 per cent, or 1.15 per cent lower than its TD Mortgage Prime rate, until May 31.

TD's special rate follows last week's move by the Bank of Montreal, which discounted its variable mortgage rate to 2.45 per cent until the end of May.

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The table below shows the latest best rates for UK Discounted Variable Mortgages . (Key* to terms is below) Read more about Discounted Variable Mortgages . Mortgage Lender*. Rate *.

What you should know about Discounted Variable Rate Mortgages . Discounted variable rate mortgages offer a discount on a certain interest rate , most commonly a lender's Standard Variable Rate .

Canada's lenders often offer special spring mortgage rates as homebuying activity picks up, but Robert McLister — founder of rate comparison website — said last week that BMO's special discounted variable rate was the biggest widely advertised discount ever by a Big Six Canadian bank.

TD's discounted rate on Tuesday brings its variable mortgage rate offer in line with BMO's.

"TD is not lying down," McLister said Tuesday. "Mortgage growth is the lowest since 2001, you've got interest rates going up, and less people getting mortgages because of that... They have the ability to match this rate and still make money."

TD spokeswoman Julie Bellissimo says its special five-year variable rate applies to new and renewed mortgages, as well as the variable rate term portion of certain TD home equity lines of credit.

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Discounts on variable rate mortgages are similar to an introductory offer, where you receive a one or two percent discount from the standard tracker rate or standard variable rate . This introductory rate usually lasts two to five years

Variable mortgage rates , as you know, are quoted by lenders in terms of their relationship to the prime rate . The premium or discount a lender applies to prime in calculating a variable mortgage rate is based on independent marketing strategy and general credit market TD Bank Mortgage Rates .

"We are confident this is a strong offer for new and renewing customers, while ensuring we remain competitive in a changing environment," Bellissimo said in an emailed statement.

The moves come amid slowing mortgage growth. The Canadian Real Estate Association said Tuesday that national home sales volume sank to the lowest level in more than five years in April, falling by 13.9 per cent from the same month last year. The national average sale price decreased by 11.3 per cent year-over-year.

Home sales have slowed due to various factors, including measures introduced by the Ontario and B.C. governments to cool the housing market, such as taxes on non-resident buyers.

Other headwinds for mortgage growth include higher interest rates and a new financial stress test that makes it more difficult for would-be homebuyers to qualify with federally regulated lenders, such as the banks.

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Discounted Variable Rates Mortgages . To tempt new customers most lenders will offer a new borrower a discount on their standard variable rate , for a set period. Your payments will go up and down, as with a standard variable mortgage , but you’re paying less.

The days of getting any sort of discount on a variable rate mortgage are over — again. Meanwhile Farhaneh Haque, director of mortgage advice and real estate secured lending with TD Canada, says she’s already seeing the effects as people shy away from variable .

As of Jan. 1, buyers who don't need mortgage insurance must prove they can make payments at a qualifying rate of the greater of two percentage points higher than the contractual mortgage rate or the central bank's five-year benchmark rate. An existing stress test also stipulates that homebuyers with less than a 20 per cent down payment seeking an insured mortgage must qualify at the central bank's benchmark five-year mortgage rate.

The tighter lending rules are making it harder for homebuyers to qualify for uninsured mortgages, and shrinking the pool of qualified buyers for higher-priced homes, CREA's chief economist Gregory Klump said in April.

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Meanwhile, Canada's largest lenders all raised their benchmark posted five-year fixed mortgage rates in recent weeks as government bond yields increased, signalling a rise in borrowing costs.

In turn, the central bank's five year benchmark qualifying rate — which is calculated using the posted rates at the Big Six banks — increased last week to 5.34 per cent. This qualifying rate is used in stress tests for both insured and uninsured mortgages, and an increase means that the bar is now even higher for borrowers to qualify.

As well, since July, the Bank of Canada has raised interest rates three times to 1.25 per cent, putting added pressure on consumers. But a rising interest rate environment also means that the margins — or profit made on loans — on mortgages for banks will improve if interest rates rise. Rising interest rates also drive up demand for fixed-rate mortgages, and banks may discount variable mortgage rates in an effort to balance the books, according to McLister.

Companies in this story: (TSX:TD, TSX:BMO)

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