# Prime minus ?



## sagsal (Apr 7, 2009)

Are we getting back to the good old days soon?

I see Resmor now offers a variable at prime

Any thoughts


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## Shayne (Apr 3, 2009)

Bold prediction, maybe by spring.


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## sagsal (Apr 7, 2009)

The refinancing frenzy would be unprecedented....


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## Shayne (Apr 3, 2009)

I don't think we will see P-.08 or P-.1 for a long, long time! You are correct, if those did show up things would be busy.


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## sprocket1200 (Aug 21, 2009)

why would I refinance. already at prime minus... have been for years, isn't everyone?


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## CanadianCapitalist (Mar 31, 2009)

Not sure if we'll see P - 1% anytime soon. But I do think we'll see Prime minus pretty soon. After all, it was just this past April that I ran this post (http://www.canadiancapitalist.com/bucking-the-conventional-wisdom-on-a-fixed-rate-mortgage/) and variable rate mortgages were at Prime _plus_ 0.8%!


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## mhd (Apr 7, 2009)

I just closed on my 2nd home and got a 5 yr variable rate of prime - 0.3% through ING. It was a blended rate from my mortgage on the home I just sold at prime- 0.9% rate and today's rate. I am told that this blended rate product is fairly new for ING.


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## sprocket1200 (Aug 21, 2009)

did you just talk to them on the phone to get this deal?


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## firsttimehomebuyertips (Oct 3, 2009)

Mhd,

I was wondering about these blended mortgages... I was wondering if they have extra fees? I heard that the banks charge more for fees if you end your mortgage early. Is this true?


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## Mockingbird (Apr 29, 2009)

Even Investors Group is now offering a variable [Prime-0.10%] mortgage.

Investors Group Mortgage Rates


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## Shayne (Apr 3, 2009)

I eat my words. Prime-.1% is available pretty much everywhere and you can find up to Prime-.25% Good for all!!


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## jason26 (Apr 6, 2009)

My HELOC at HSBC is prime +1.. Time to give them a call and/or move.


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## Shayne (Apr 3, 2009)

RBC is doing HELOCs at Prime+.5%


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## John D (Oct 25, 2009)

Mockingbird said:


> Even Investors Group is now offering a variable [Prime-0.10%] mortgage.
> 
> Investors Group Mortgage Rates


Beware that that the concept of prime is not necessarily consistent across all banking institutions. Many banks modify their prime rate to adjust their lending strategies, however most out there right now are 2.25%.

Take for instance, the verbiage on the link you provided from investor's group:
"* The Annual Percentage Rate (APR) for each term listed above (with a reduced rate for an introductory period, where applicable) is based on a mortgage of $100,000, with monthly payments and a 25 year amortization. The APR was calculated using Our Mortgage Prime Rate of 2.500% set on March 24, 2009, which is subject to change"

2.5% is actually higher than the prime rate for most banks right now.

While HSBC prime rate is now 2.25%.

http://www.hsbc.ca/1/2/en/personal/todays-rates/personal-mortgage-and-credit-rates

RBC is 2.25%

http://www.rbcroyalbank.com/products/mortgages/view_rates.html

Bottom line, compare the rate, not prime minus X.

Cheers


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## Shayne (Apr 3, 2009)

A 3 year variable with P-.25% just became available.


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## Mockingbird (Apr 29, 2009)

John D said:


> Take for instance, the verbiage on the link you provided from investor's group:
> "* The Annual Percentage Rate (APR) for each term listed above (with a reduced rate for an introductory period, where applicable) is based on a mortgage of $100,000, with monthly payments and a 25 year amortization. The APR was calculated using Our Mortgage Prime Rate of 2.500% set on March 24, 2009, which is subject to change"


You are quoting their "Our Mortgage Prime Rate".
However, they are also offering Special Variable-Rate Mortgage of "Prime less 0.10%" as well (under Promotions)

Special variable-rate mortgage*
> 2.15% (Prime less 0.10%)
60 month closed adjustable rate adjustable payment (ARAP) mortgage
A great, longer term option for both rate and payment. 
> 2.15% (Prime less 0.10%)
60 month closed variable rate mortgage
Features a fixed monthly payment.

But I agree - Big banks (institutions) do not necessarily have to follow the Bank of Canada lending rates; thus, you actually need to look at the rates.


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## mcu (Dec 6, 2009)

TD sent me a letter on my two HELOCS and said they were raising their rates to prime +1% from prime. Can they do this? I have spoken to people that have prime - 1%, but they got that a while ago.

I don't have balances on them now but plan to use then in 2010 to possibly buy some real estate and want to get the best rate

What should I do?

Thanks


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## Dr_V (Oct 27, 2009)

mcu said:


> What should I do?


Read the contract?


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## jason26 (Apr 6, 2009)

I just had my HELOC at HSBC increased. The rate changed from prime +1 to prime +.5%.


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## MSteve (Dec 8, 2009)

You can get P-0.25% for 3 years through Valueland Mortgages at http://www.valueland.ca. I had a positive experience with them, they were easy to work with and got me a very competitive rate.


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## sprocket1200 (Aug 21, 2009)

Dr. V, you are the best and i totally agree! read? why would some one who is going to get rich in real estate ever read a contract? or think about the future?? haha

can't wait until that house comes up for sale....I'll give them 40 cents on the dollar for it...


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## houska (Feb 6, 2010)

Be careful in comparing apples to oranges here. One issue is of course what is the base rate, as mentioned. The other is the type of loan:

A HELOC will generally have interest only payments and can be repaid at any time, but is a demand loan, which means the bank can unilaterally change the conditions, like they did when they raised rates from P to P+1 a while back.

A closed term VRM will generally have interest and principal payments and be restrictive how much extra principal you can repay, but the bank (and you) needs to stick to the terms of the loan for the duration. Due to there being less flexibility for you, the rate on this will be lower. The repayment privilege conditions may vary between institutions and may be worth more to you than a few tenths difference in rate.

An open term VRM is like a closed term, but you have complete flexibility to pay back how much you want whenever. In return, you'll generally have a slightly worse rate.


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## Racer (Feb 3, 2010)

houska said:


> An open term VRM is like a closed term, but you have complete flexibility to pay back how much you want whenever. In return, you'll generally have a slightly worse rate.


Another great post by houska. I would add that sometime the rate for open mortgages is more than slightly worse. I haven't been rate tracking or anything, but the MCAP rate for open was something like 7%.


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## Racer (Feb 3, 2010)

mcu said:


> TD sent me a letter on my two HELOCS and said they were raising their rates to prime +1% from prime. Can they do this? I have spoken to people that have prime - 1%, but they got that a while ago.
> 
> I don't have balances on them now but plan to use then in 2010 to possibly buy some real estate and want to get the best rate
> 
> ...


mcu, houska explained it well. Demand loans can be changed by the lender at any time. 

I've mentioned this in other threads (sorry for the repetition folks), but we got the same letter and replied with a letter of our own. I told them I recently transferred my banking to them because my husband said that they were a stable and fair-minded institution. I told them I was now questioning that and invited them to reconsider their proposal, as I would be happy to reward their loyalty with ours (i.e. by not switching all of our accounts to another bank). 

They called us three days later and offered us Prime+0.5. Not a huge change, but there you have it. 

Good luck!


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