If you are involved in the Real Estate market as a homeowner or investor, mortgage rates can become a lifelong game. They’re up then down, stable then unstable – it can become a vicious cycle. And those figures to the right of the decimal aren’t insignificant either. A small fluctuation can translate into thousands of dollars over the term of a mortgage.
On May 13, 2014, Investors Group announced that they would be offering a 3-year variable rate mortgage at 1.99%. Naturally, this caused quite the stir.
1. Everybody’s Talking
As a result of this reduced rate, the topic of mortgages once again became front page news and got people talking. Most importantly, with the increased attention in the press, and word of mouth spreading like wildfire, Investors Group made the industry sit up and take notice.
2. Lowest Since 2010
By offering the lowest rate on the market since spring of 2010, borrowers have begun to take notice. The ability to report such significant facts will most likely introduce new clients to Investors Group and potentially cause prospective buyers to take action where previously they may have been on the fence.
3. An “Abundance” of Funds
The Vice President of banking and mortgage operations for Investors Group said that the company was flush with an abundance of funds to lend and that these funds would be allocated to growing their mortgage business. Although Investors Group is not typically thought of as a mortgage provider, they are certainly making in-roads.
4. Still Have to Play it Smart
Even with the availability of such a low rate, it is still imperative that buyers financially stay within themselves when seeking out a mortgage. The fact is, this 1.99% rate is only applicable for a 3-year closed, variable rate mortgage which could make it uncomfortable for some. It is also important that potential borrowers be aware that this 3-year rate comes with a condition that prohibits breaking the mortgage unless you sell your property – a very important caveat indeed!
5. Should the Fed Step in?
There are some who believe the federal government should step into the fray and take some action to prevent many Canadians from going into debt with such a low rate available. Even our new Finance Minister Joe Oliver, who historically believes in letting lenders set their own rates, has mentioned that he will be monitoring the situation closely. Hopefully, it will all work out for everyone involved, the lenders, the industry and most importantly the homebuyer.