By Remitbee - Feb 15, 2022
In the face of the COVID-19 pandemic, the Canadian real estate market has weathered the storm and posted impressive growth. According to figures from the Canadian Real Estate Association, a whopping 666,995 homes changed hands in 2021. This increase surpasses 2020 home sales by over 20%. It's also 30% above the 10-year national average.
Even though 2022 has started off on a low note with only a handful of home seekers, the appetite for new homes is not going away anytime soon. In this post, we present mortgage rates in Canada from different lenders so you can choose the best deal.
A mortgage is a contract between a homebuyer and a lender that gives you the right to a property and provides for repayment of the debt plus interest.
Interest is the mortgage rate and is an important aspect that determines the cost of borrowing. Other factors such as the application fee, legal fees and down payment also play a role.
Most people have the misconception that the lowest interest rate is the best solution. In contrast, the best interest rate is the one that helps minimize your borrowing costs. Researching the market is the first step to finding an ideal mortgage rate that will optimize your borrowing.
When choosing a mortgage rate, you should also consider the term and amortization period and carefully review the terms.
RBC Royal Bank is the largest bank in Canada with 20 million-plus customers locally and internationally. It also offers affordable lending rates in the market, thereby controlling up to 30% of total mortgages.
RBC offers 2.74% and 3.19% on its 2-year and 5-year fixed-rate mortgages, respectively. The 5-year variable loan is also subject to the prime rate, which is currently 2.450%.
Most RBC mortgage plans feature a 10% lump sum, a 10% payment increase, prepayment penalties and a 120-day fixed rate. They also offer a skip-a payment and optional double-up payments.
Toronto Dominion Bank is a Canadian lender offering a wide range of financial products including home loans.
In 2021, it caused a stir when it became the first bank to raise its 5-year fixed mortgage rate from a historic low during the pandemic.
Currently, the bank offers the Fannie Mae HomeReady loan for homebuyers with a 3% down payment. If you have a weak credit rating, you will be required to make a 3.5% down payment.
Currently, TD's special mortgage rate options for homebuyers, which includes 2.89% for 3-year fixed, 3.04% for 5-year fixed and 2.94% for the 5-year fixed high ratio rate. The bank's prime rate is 2.450%.
Canadian Imperial Bank of Commerce (CIBC) is a respected Canadian bank with over 10 million customers. Currently, its mortgage portfolio is worth more than $200 billion.
The lender offers 5-year fixed loans at 3.02%, 5-year fixed loans at 3.19%, and 7-year fixed loans at 3.59%. As you can see, the interest rates for the 5-year fixed are slightly lower than those offered by RBC and TD.
Clearly, owning a property involves a significant amount of money, so a small change in mortgage rate can result in huge savings.
Scotiabank is one of Canada's oldest banks operating throughout the Caribbean, Latin America, parts of Asia and Central America. It's also a respected institution in precious metals trading.
Besides that, the lender is a major provider of mortgages sold through branches, mortgage brokers and home financing advisors.
Scotiabank mortgage rates for 3-year fixed, 5-year fixed, 5-year variable and 7-year variable loans are currently 3.490%, 4.790%, 2.650%, and 5.290%, respectively.
So far, the bank has higher mortgage rates as compared with RBC, TD and CIBC.
LoMo offers a wide range of financial services such as home loans, auto loans, education loans and personal loans. However, interest rates are not publicly available. Prospective homeowners can contact the bank to get the best deals depending on their needs.
Tangerine Mortgage is a popular Canadian bank with over 2 million customers. It offers mortgages among other banking products. The variable mortgage rate depends on the prime rate, while the fixed options can have a term of 1 to 10 years.
Tangerine offers 2.64%, 2.89% and 1.45% rates for 3-year fixed, 5-year fixed and 5-year variable loans respectively.
From the numbers, there is no doubt that Tangerine has some of the most competitive interest rates in the Canadian mortgage industry today.
Mortgage rates can change at any time, sometimes daily, weekly or even monthly. Most Canadian mortgage providers offer daily low pricing plans and advertise rock bottom rates. You can often negotiate a lower interest rate, especially if you are solvent and have a good credit rating.
If you are looking for a low mortgage rate in Canada, you may have to haggle for different options to get a better deal. Most importantly, check the comparable interest rates and use the data as leverage.