# RBC 10 yr



## tygrus (Mar 13, 2012)

I am getting a special offer of 3.99% for a 10 year mortgage and 3.5% for a 7 year mortgage. Just for comparison, my first mortgage in 2001 was 4.75% for 3 years. 

This a really an amazing low rate. I am betting that if the BoC lowers rates again next month, you will get that 10 yr in the mid 3% range. That could be the rate of a life time.


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## Davis (Nov 11, 2014)

I thought I was getting a great deal in 1992 when I got 5 years at 9.50%. You kids have it easy. Some of my friends were paying 11.75%, and that was uphill and in the snow!


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## birdman (Feb 12, 2013)

Between 15% and 20% in the early to mid 1980's. We had a small mortgage at somewhere around 7% and managed to pay it off when it renewed. These rates resulted in lots of bankruptcy to people who thought they were millionaires. I was in the banking business at the time. If I recall correctly deposit rates were pushing 17% at times and lots of people made good money in the bond market. These high rates were the tool the government used to battle inflation. Hec, i remember get a promotional increase to a new job, then a merit increase, and then a 9% cost of living increase all within 12 mos.


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## My Own Advisor (Sep 24, 2012)

Why not go 5-year variable tygrus?


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## andrewf (Mar 1, 2010)

Davis said:


> I thought I was getting a great deal in 1992 when I got 5 years at 9.50%. You kids have it easy. Some of my friends were paying 11.75%, and that was uphill and in the snow!


Unfortunately, the price of housing in some cities has risen more than enough to offset this. I would rather pay a high rate on a low purchase price. At least then I can aggressively pay-off the loan to reduce total cost.


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## tygrus (Mar 13, 2012)

I have been on open variable for about 6 years now and paying in the mid 3% range, but locking in for 10 years at about that same rate is tempting me.


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## sags (May 15, 2010)

There is no incentive to save anymore. Might as well spend the money before it is worth less. Buy that new car............it will cost more next year.

Negative returns in stocks, lousy returns on a GIC ........better to load up on debt and buy an overpriced house in Toronto and earn $60,000 a year the easy way.

I don't know if it can continue. I don't even know if it is wrong. I just know it is crazy.


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## Davis (Nov 11, 2014)

andrewf said:


> Unfortunately, the price of housing in some cities has risen more than enough to offset this. I would rather pay a high rate on a low purchase price. At least then I can aggressively pay-off the loan to reduce total cost.


Fair enough. But people make decisions based on the size of their mortgage payment, then the rise in price is offset be the fall in the rate. A 25-year mortgage is paid off in 25 years, whether it is a high-rate, small-principal mortgage or a low-rate, large-principal mortgage. The only difference is whether you're paying a lot of money to the bank under the former or to the vendor under the latter. Accelerating payments would have the same impact on the duration of the mortgage under either scenario.


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## My Own Advisor (Sep 24, 2012)

You could likely get 2.3% for a 5-year variable at any big bank right now, without haggling. That's pretty good I think.


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## Curiouscreature (Jan 3, 2016)

I'm a huge fan of ratehub.ca to see what's going on out there, under the 10 year, you see the rate RBC offered you at 3.99%. If you prefer to stay with the big banks, you can save by getting a 10 year with Bank of Montreal @ 3.74, and 7 year is at PC Financial for 3.24. BMO is also offering a 5 year @ 2.89 which is also quite good if you are looking for the predictability of a fixed rate. At worst, I'd go into the bank with these numbers and ask your bank to match. They usually will match any big bank competitors rates if you have a decent credit history.


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## tygrus (Mar 13, 2012)

I worry a bit about rates. Most countries are dropping them as stimulus now but a lot are devaluing currencies and some pumping cash and QE in like crazy still. The central banks to me seem like they dont have a handle on things and stimulating is not the same as supply-demand. That cash and stimulus has to come out of the system somewhere.


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## Islenska (May 4, 2011)

Good point Sags, better to buy now,

the old days of scrimping to save interest $$ are gone, That could change?

The chickens will come home to roost...


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## CPA Candidate (Dec 15, 2013)

I wouldn't lock in for 10 years. I don't see rates going up in Canada for a long, long time.

For perspective, in 2004 I got my first mortgage, a 5 year for 5.2%, which was considered really good in the moment. Now, 12 years later, I pay half that rate.


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## tygrus (Mar 13, 2012)

CPA Candidate said:


> I wouldn't lock in for 10 years. I don't see rates going up in Canada for a long, long time.


The parallels with the 1970s are pretty striking. Oil war, commodity and currency crashes, global recession, fiat cash pumped into the system to no end, huge personal and sovereign debts, war debts etc.

Nixon unhooked money from the gold standard and less than 5 years later we had rate spikes. Whats to say this can't happen again?


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## Just a Guy (Mar 27, 2012)

My last rental I got 10 years at 3.2%. I couldn't turn that down, price stability for a decade. Of course if it were a home, where I'm likely to move every seven years according to statistics, I may have thought about it more.


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## tygrus (Mar 13, 2012)

Canada has only so much influence over rates. They can't keep it so low it destroys the currency and the US bond market has an indirect influence as well. Also if ol yellen and crew are intent on a few more increases, that puts upward pressure on our rates as well.

I think if you asked some old timer if they could have locked in 10 @ 3.5% in the past they would have jumped at it. I think we may have forgotten what is normal when it comes to rates.


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## Ruski (Feb 21, 2014)

My Own Advisor said:


> You could likely get 2.3% for a 5-year variable at any big bank right now, without haggling. That's pretty good I think.


Just signed a 2.15% on a 5yr variable with a one of the big 5 a few weeks back. IMO, its variable all the way unless you are extremely risk averse and just want peace of mind.


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## My Own Advisor (Sep 24, 2012)

Agreed Ruski. I got a 1.95% a month ago, _very happy with that_. That should help us kill our mortgage sooner, hopefully by the end of 2020. That's the plan!


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## dadaswell (Jan 6, 2016)

My Own Advisor said:


> Agreed Ruski. I got a 1.95% a month ago, _very happy with that_. That should help us kill our mortgage sooner, hopefully by the end of 2020. That's the plan!



Okay, we have a stellar credit rating. Where can we get this rate?


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## Karen (Jul 24, 2010)

It's all rather meaningless, isn't it? My first mortgage was at 7.5% BUT the total price of the house was $15,500. It was located in Coquitlam, BC, a suburb of Vancouver. That was back in 1965; I just looked up the new assessed value of that house online; as of last July, it was assessed at $864,000.


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## GreatLaker (Mar 23, 2014)

Karen said:


> It's all rather meaningless, isn't it? My first mortgage was at 7.5% BUT the total price of the house was $15,500. It was located in Coquitlam, BC, a suburb of Vancouver. That was back in 1965; I just looked up the new assessed value of that house online; as of last July, it was assessed at $864,000.


A bit off topic, but for reference, that's about 8.4% annual rate of return. Calculation from Excel =RATE(50,0,-15500,864000)

For comparison purposes a portfolio of 50% TSX and 50% Canadian Universe Bonds would have returned 8.8%. Source: Stingy Investor Asset Mixer

Obviously there are significant differences between the 2:

The house return would be tax-free if it was a principal residence, and leverage is easier with a mortgage compared to stocks/bonds. On the other hand a home has a lot of operating and maintenance costs that a stock portfolio does not have
The return on stocks only includes benchmark returns and ignores investing costs and taxes.
There are probably not very many municipalities in Canada other than Greater Van and GTA that would have had such appreciation in house prices.


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## Mortgage u/w (Feb 6, 2014)

tygrus said:


> I am getting a special offer of 3.99% for a 10 year mortgage and 3.5% for a 7 year mortgage. Just for comparison, my first mortgage in 2001 was 4.75% for 3 years.
> 
> This a really an amazing low rate. I am betting that if the BoC lowers rates again next month, you will get that 10 yr in the mid 3% range. That could be the rate of a life time.


Worst mistake people make is taking a long term fixed rate mortgage. Why would you commit to knowingly pay a higher rate for an unknown period of time when the shorter terms are much less?? Paying 3.99% is absurd when you know that a 5 yr is more than 1% less. Consider the penalty you would have to pay should you break your term on a 10 year mortgage. 

If your looking for savings and best long term strategy, stick with variable rates or renew 1 year fixed terms annually.


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## tygrus (Mar 13, 2012)

In normal times, I totally agree variable is the way to go. But are these normal times. So much stimulus has been pumped in something has to give eventually.

RBC 7 year now at 3.5% - wonder what they can get to if BOC goes neg.


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## My Own Advisor (Sep 24, 2012)

Rates are not going anywhere, anytime soon. Sure, maybe a small 25 basis point increase in a few years, but really, this is absolutely nothing. Just my $0.02!!


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## dadaswell (Jan 6, 2016)

Quote Originally Posted by My Own Advisor View Post
Agreed Ruski. I got a 1.95% a month ago, very happy with that. That should help us kill our mortgage sooner, hopefully by the end of 2020. That's the plan!

Okay, we have a stellar credit rating. Where can we get this rate?

Still wondering where this rate is??


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## My Own Advisor (Sep 24, 2012)

I used my mortgage broker *but I got very lucky* with timing. Best I've seen is about 2.3% now. I would recommend working with the folks at intelliMortgage. Excellent people.


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