# Highest and lowest mortgage interest rate you ever paid



## sags (May 15, 2010)

There is a lot of discussion everywhere these days about mortgage interest rates going up or staying low.

I thought it would be interesting to see how interest rates have been traditionally.

We owned homes for 30 years. Highest interest was 21%.........lowest 7.9%, all 5 year fixed terms.


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## My Own Advisor (Sep 24, 2012)

Currently paying just over 3%. I recall I did pay 4.5% about a decade ago.


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## Maybe Later (Feb 19, 2011)

Only on our second term. 2.25% currently, 4.68% fixed for the first term.


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## HaroldCrump (Jun 10, 2009)

Highest ever paid was 5% (in 2006), currently at 2.15% (actually, P - 85 bps).


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## crazyjackcsa (Aug 8, 2010)

I was paying 5.1% in 2007. Five year fixed. In 2009 I blended and extended down to 4.7% (seemed like a good idea at the time). 

That's where I am right now. Mortgage expires in May of 2014. I plan on having the house paid off in 2019, so the penalty would kill any savings at this point, so all I can really do is ride it out and hope interest rates are still low next year.


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## Sampson (Apr 3, 2009)

crazyjackcsa said:


> I plan on having the house paid off in 2019, so the penalty would kill any savings at this point, so all I can really do is ride it out and hope interest rates are still low next year.


I don't understand this logic, and it seems you might actually want to test the math on this.

Since you know you will pay off the mortgage after one more 5 year term, you would have to eat one penalty for breaking the current mortgage, but at 4.7% and fixed 5 years near 3% now, I would bet you can easily recover the penalty over the last term of your mortgage.

If you break now, you would have a fixed rate until 2018, and not bear the risk of rising interest rates come renewal time in 2014. Gives you even more certainty than your plan to pay off by 2019. I would definitely do the math in your situation because I suspect it would be worth breaking.


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## Plugging Along (Jan 3, 2011)

Highest was early 2000s at 5.25 fixed. Lowest was 1.25 with a open variable. Now, 2.15.


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## jamesbe (May 8, 2010)

5.85% and now 2.15%


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## Daryl-Manitoba (Sep 14, 2010)

We are just wrapping up our first term of our mortage and we have been as high as 4.5% and as low as 2.0%


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## crazyjackcsa (Aug 8, 2010)

Sampson said:


> I don't understand this logic, and it seems you might actually want to test the math on this.
> 
> Since you know you will pay off the mortgage after one more 5 year term, you would have to eat one penalty for breaking the current mortgage, but at 4.7% and fixed 5 years near 3% now, I would bet you can easily recover the penalty over the last term of your mortgage.
> 
> If you break now, you would have a fixed rate until 2018, and not bear the risk of rising interest rates come renewal time in 2014. Gives you even more certainty than your plan to pay off by 2019. I would definitely do the math in your situation because I suspect it would be worth breaking.


I did test the math, and I'll continue to do so, I get in touch with the bank every 3-4 months. The IRD penalty is too high. At last check, it was around $4,000.

Back of the napkin: Mortgage Balance $69k. 

Scenario #1. Break mortgage. Add $4k to balance. New balance $73k. @6.5 years at 2.8% (we'll pretend rates don't change, because damned if we know where they will be in 5-years) total payments $80k

Scenario #2. Don't break the mortgage. In 15 months I'll have paid $15,600, and have a balance of $57k. If rates stay where they are right now, that's 57k at 2.8% for 5-years. That equals $61k for a total of $76,600.

In fact, so long as rates don't rise past the 4.7% I'm currently paying, it doesn't make sense to switch.

Since I have a plan to pay my mortgage off quickly, I can't recoup the savings.

Granted, as the fee drops, it makes sense to recalculate and I'll get to the point where it will make sense to pay it and switch.


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## cman2 (Jan 14, 2011)

In the 7 % range in the early 2000s and currently 3.99 with 5 year term ending in 2014. Will go variable after that.


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## Ethan (Aug 8, 2010)

I started my first mortgage July 1, 2010. My rates have varied from 2.3% - 3.19%.


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## none (Jan 15, 2013)

Ethan said:


> I started my first mortgage July 1, 2010. My rates have varied from 2.3% - 3.19%.


Ouch.


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## RBull (Jan 20, 2013)

Had a mortgage for between 9-10 years (2 houses). No mortgage for about 18 years now- highest i can recall was about 11 1/2% mid 80'5 and lowest was around 7% late 80's


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## marina628 (Dec 14, 2010)

Highest was 8.75% back in 1991 and lowest was 1.24% when we were doing variable from 2007-2009 .Currently 2.99 -4.1%(rental mortgage)


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## chantl01 (Mar 17, 2011)

My first mortgage was back in 1989 at which point I assumed the seller's mortgage to blend down what was being offered to me and ended up with 13.5%! Happily, several houses later, I now have the lowest rate I've ever achieved - a variable at 2.3%.


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## heyjude (May 16, 2009)

My first mortgage was a 6 month term for 10.25% in 1991. After that I got a one year term for (IIRC) 8.something %. I saved like mad and paid off the balance 

More recently I have invested in rental properties and currently have a couple of fixed mortgages in the 3-4% range. I am paying off the principal as funds allow. In retrospect, it would have been better to go with variable mortgages for the rental properties. Oh well.


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## thompsg4416 (Aug 18, 2010)

I've been paying prime minus .5 for the last 5 years on a var rate. Up for reneg this summer. It's all I've ever had.


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## newfoundlander61 (Feb 6, 2011)

Highest: 13%
Lowest: 2.75%
House is now paid for :encouragement:


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## Xoron (Jun 22, 2010)

Highest: 4.4% in 2006 on a 5 year fixed term
Lowest: 2.79% in 2012 on a 1 year fixed term.

The blend and extend (TD) option always seemed like a bad option.


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## Pennypincher (Dec 3, 2012)

Highest: 4.7% on a 5 year fixed in 2004.
Lowest: 3.69% on a 5 year fixed (current) opened in 2010

Only 1 year left on the mortgage though!

Should have gone variable, but who knew?


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## none (Jan 15, 2013)

If you are looking in hindsite a better decision would have been to get as many interest-only mortgages as possible for as many houses as possible and sell it all 2 years ago, but who knew?


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## jserrg (Apr 17, 2013)

Currently still paying 5.54% on a 5-year fixed term ending in 2 months. Wehhh... That was a stupid move to sign up for 5.54% for 5 years. 
Will switch to variable now. Have an offer for 2.6% on variable.


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## Jagas (Feb 11, 2013)

Lowest - 2.3%, current variable based rate
Highest - 4.29%, current fixed portion rate - this portion will be paid off before the end of the year. I have likely had a higher rate than this in the past but can't recall with certainty.


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## PatInTheHat (May 7, 2012)

Just locked in for 2.89% 5 year fixed


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## none (Jan 15, 2013)

jserrg said:


> Currently still paying 5.54% on a 5-year fixed term ending in 2 months. Wehhh... That was a stupid move to sign up for 5.54% for 5 years.
> Will switch too variable now. Have an offer for 2.6% on variable.


I'm convinced that taking variable but paying it off at the fixed rate is the winner in almost every case.


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## jserrg (Apr 17, 2013)

none said:


> I'm convinced that taking variable but paying it off at the fixed rate is the winner in almost every case.


What do you mean?
Are you saying: Take variable rate and put extra cash towards principle?


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## none (Jan 15, 2013)

jserrg said:


> What do you mean?
> Are you saying: Take variable rate and put extra cash towards principle?


Yes. It can be difficult comparing mortgage products as sales-people manipulate the variables: payment frequency, amortization period, interest rate (all this influenced your monthly payment). The whole sale job that 'accelerated bi-weekly' somehow saves you a ton of cash is a bit of a con - you're simply putting more money on your mortgage. You mortgage payment frequency should actually be aligned with your wage payment frequency. Get paid monthly? Pay your mortgage monthly - twice a month - same same. Yearly? Pay your mortgage yearly (hard to imagine).

As per your question lets take ING rates as an example if you are considering a fixed five year or a variable. Currently, they are at 3.39 vs 2.75 respectively. So basically you choose the variable but pay it off as if you chose the 3.39%. Doing this puts an additional $640 on the principle each year which insulates you from rises in interest rates.

Of course there are risks but really you are comparing 1) lose money for sure by going fixed vs 2) maybe losing a bit of cash by going variable. I would rather take the latter.


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## Sampson (Apr 3, 2009)

none said:


> I'm convinced that taking variable but paying it off at the fixed rate is the winner in almost every case.


But of course it is better than either strategy alone, in fact, getting the lowest rate available, and maximizing prepayment options to the tune of 20% of the loan value per year is even better, but;

1. How many people can do that?
2. What is the opportunity cost of paying down debt vs. investing the difference?


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## Sampson (Apr 3, 2009)

Re: fixed vs. variable rates and fiscally optimum strategies, this has been studied. Variable rate alone wins out more often than not, but you are exposed to interest rate risk. For some people, this is not ideal.

The important distinction is why one selects the lowest rate. Is it to 'not lose money'? or is it the only way to afford the house. Option 2 is bad.


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## jserrg (Apr 17, 2013)

Sampson said:


> Is it to 'not lose money'? or is it the only way to afford the house. Option 2 is bad.


Agree. Option 2 should be avoided. I actually plan on reducing amortization by 5 years as well. I definitely have space in case my variable will go up. But man it felt awful to pay 5.54% when everybody was paying 2.5-3%.


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## Sampson (Apr 3, 2009)

jserrg said:


> But man it felt awful to pay 5.54% when everybody was paying 2.5-3%.


We were in the same boat and broke our mortgages that were >5%.

It is about risk management. Sometimes the optimal situation is not the most important factor, certainty is.


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## none (Jan 15, 2013)

And my argument is that if you choose that variable but pay it off at a fixed rate you expose yourself to very little risk of having to pay more over the long term than the fixed rate but a solid probability of paying substantially less.

You can easily set up a couple scenarios in excel to see how much 'insulation' this method provides you. It's pretty surprising.


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## Sampson (Apr 3, 2009)

The problem is many go for the cheaper rate for affordability.

Of course you 'should' buy a home where you could afford to pay 20-30% more than the minimum, but you have argued time and time again that the housing market will crash precisely because people don't do this.

The benefit of a fixed rate is simple, it is fixed. If/when rates increase, there will definitely be some people with fixed rates in 5 years better off than those that took on a variable mortgage. Example:

Day 1 - fixed vs variable rate - 3.5% and 2.7% respectively
Day 670 - fixed, variable - 3.5% and 4% respectively

For the next 3 years, rates are constant.

Both parties, if they can afford it, pay as if their rate was 5.5%. The person choosing the fixed rate wins. You are correct the impact of the rate increase is lower since the variable rate party was making pre-payments, but that argument is like saying "using a 50% downpayment means you pay less interest than if you only put down 40%".


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## none (Jan 15, 2013)

I'm not talking about what people tend to do - I'm talking about what is the likely most beneficial mortgage payment strategy is.

If we are comparing 2.70 vs 3.5 interest rates would need to go up 0.5% at the end of every year for these to be more/less equivalent. 

The fixed vs variable spread isn't huge right now so I'm not sure I'd go with that. I'd likely still take the 10 year fixed (can break after 5) because I do think rates will go up. Of course, what do I know, the banks don't give things away for free so I've always believed that at worst variable vs fixed are equivalent products and at best variable could potentially (and has been) superior.

Anyway, as you pointed out - I don't care I don't own, and don't plan on owning a house for the foreseeable future. We may need to move in the next few years just so our kid will be in the right school catchment area. It's nice to have that freedom of movement.


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## Addy (Mar 12, 2010)

Lowest, 0.084% (yes, that is less than 1%), Highest, I can't recall but I think it was around 5%.


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## Spudd (Oct 11, 2011)

Wow!! How did you get that rate?


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## fraser (May 15, 2010)

We bought at 16 3/4 in Vancouver. Actually we bought at 17 1/2 however the land titles office went on strike. Rates were dropping quickly and we were able to get the lower rate. I think we paid that for one year and renewed at 10 3/4. It was a good buy as prices were low, rates were dropping, and our house ended up being very close to the new sky train station. We had a BC Gov't second mortgage at 15 percent which saved us from going the CMHC rate and paying the insurance. Lowest was about 4 1/2 percent-it was a floating rate. 

Not once did we ever pay the appraisal fee or the mortgage renewal fees that the banks wanted to charge....thanks to competition from Canada Trust across from our bank branch. Also, other than the floating rate, we were always able to get the rate reduced by 1/4 to 1/2 percent just by asking. Not a fan of the banks.


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## Echo (Apr 1, 2011)

Here's an interesting comparison made by a broker that suggests going variable will again win out over fixed over the next 5 years - http://www.integratedmortgageplanne...ay-morning-interest-rate-update-july-22-2013/


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## none (Jan 15, 2013)

Particularly if, as he describes at the end of the article, you get the variable but pay it off at the fixed rate level.


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## dBII (Mar 12, 2013)

*I haven't had a mortgage since 1991*

I don't understand why people don't pay out their mortgages with a line of credit. I used the equity and got a PLC chequing account that was prime +1 at the time (sorry I don't remember what prime was). I made sure that I had enough breathing room in the loan, paid off the mortgage when it came due, then every dime me and my dear wife made got hammered against that PLC. Household expenses would bring the balance down, but overall we were amazed at how quickly we paid our house out. Our original mortgage was 15 years, we set the PLC up after 5 years then paid off the rest in 2 years.

Discipline, hard-*** discipline. I haven't been in the red since, and I even divorced that DW, gave her that house and built a new one with my second DW...:love-struck:


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## jserrg (Apr 17, 2013)

I wouldn't mix LOC and mortgage. For me LOC is more for emergency. Emergencies could be good or bad. Investment opportunity that is too good to let it pass by is also kind of an emergency.
But mortgage is just a big debt. Which almost everybody has. And of course the sooner you pay it off - the better.
Besides interest rates are about the same on mortgages and LOC. Probably mortgages are lower.


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## birdman (Feb 12, 2013)

The only problem with the LOC suggestion is the matter of interest rate risk. If rates go up significantly your interest costs go up compared to having a fixed rate term mortgage. Yes, I remember a 22.75% prime in 1982 or 83 and those were difficult days for homeowners. I was in the lending business at the time and had lots of friends ask me "What do I do"; the interest rate on my mortgage has gone from 11% to 17%! At prime plus 1% the LOC rate would be 22.75%. Needless to say, people sold their homes but this was difficult as the real estate market plummeted by perhaps 50% with few buyers. While I doubt if this would happen again any time soon but I suggest it is something to be aware of. As I have posted before, I think a strategy to consider is to have your mortgage split into various buckets, like variable, 2 year, 5year, and perhaps including an LOC for lump sum repayments.


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## dBII (Mar 12, 2013)

*Re: LOC vs Mortgage*

But, what is the difference between a LOC and a variable rate mortgage? Remember that you can always take out a mortgage and pay off the LOC if you are concerned that interest rates are going to go up. The problem with mortgages (as I see it) is that if you have money sitting in a bank account while still having a mortgage, that money is doing nothing. Instead, if that money is applied to a LOC, it instantly knocks back the principal. As long as your LOC is large enough that it can cover any emergencies, it is still a better bang for your buck, I think. This method only works though if you are a slave to discipline. If you are looking at your free credit and thinking that you can splurge, it probably is best to stick to a mortgage.


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## Andrew (May 22, 2009)

Have yet to officially purchase real estate, but have been pre-approved at 2.84% for a 5 year fixed term mortgage.


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## My Own Advisor (Sep 24, 2012)

@Andrew, how new is the message board? #cool


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## birdman (Feb 12, 2013)

You are correct dBII that there is no big difference except that with variable rate products you have the interest rate risk if rates go up. If you are comfortable with the risk then its fine.


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## AltaRed (Jun 8, 2009)

Seems not many here had mortgages in the 1970s when mortgage rates hit 20% or so for a limited time. I don't remember the highest rate I paid but it was in the order of 10-11%. I was able to skate through those peaks with corporate transfers and assuming the remaining term of 5 year mortgages. No idea now the lowest rate I paid. It probably in the 6-7% range. Felt good to pay off the mortgage for good in 1989 or 1990 (not quite sure now which year).

Folks today with 3-5% mortgages have no idea now they wil be hammered if inflation gets ugly and rates climb back to 10% or so. Pay off those mortgages as quickly as possible.


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## KrissyFair (Jul 8, 2013)

AltaRed said:


> Folks today with 3-5% mortgages have no idea now they wil be hammered if inflation gets ugly and rates climb back to 10% or so. Pay off those mortgages as quickly as possible.


Ya people my age (early 30's) are unbelievably stupid with their mortgages. I had friends a few years ago who had a <2% variable rate and were constantly in knots about it because they bought so much house that they couldn't afford it at fixed rates. 

Then there are the friends who can't correctly calculate their ROI and think they're making lots of money house-hopping every 3-5 years...

We're not aggressively paying ours down right now because it is so low (3.34%), but we're aggressively saving into our TFSA and plan to roll that onto the mortgage if/when the mortgage rate comes up in the same range as the return on the portfolio. Plus we bought a house we could afford to pay off in <20 years to begin with.


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## YYC (Nov 12, 2012)

My parents signed a quit claim on a house in 1981, I think the mortgage was around 19%. Personally, the highest I've paid was 5.9%, lowest 3.5%.


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## Ponderling (Mar 1, 2013)

Bank mortgage early 00's was lowest around 3.75% I think, for 1 year open. 

Most I paid was 5.5%, in my self written self directed mortgage. 

Fastest way to get eetra money into an RRSP is do one of these mortgages. 

Then day to day you pays interest that once went to the bank into your own RRSP.


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## Oldroe (Sep 18, 2009)

At 19 I started looking for acreage up north, just a party place. At the time I was working near a older guy maybe 40 he convinced me to buy and rent a house.

So at 19.5 and I owned a house with 10% mortgage for 5 years. 1977. That I rented until 1981.

Mortgages went crazy about 1981-2 up to 21%. Just when my mortgage came do I signed for 5year amortization 5 year term at 13%.

I put the 60 monthly payments on a print out beside my bed and every month I stroked another payment off. Drove the wife crazy waking her up to tell how much we owed.


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## coptzr (Jan 18, 2013)

Was Lowest for 5 yr term variable = Prime - .75%
Now Highest for 5 yr term fixed = 2.69%


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