# Mortgage Rate Question Once Again.



## crazyjackcsa (Aug 8, 2010)

Alright, I'm set to renew (early) and I'm gunning for Variable, looking for the best rate... yadda, yadda,yadda. And then Scotia Bank hits me with a 2 year 2.49%.

Best variable 5 year I've found so far is 3%.

I wasn't ready for this, I was actually dumbfounded in my seat. 

What do you think? I had to come home and crunch some numbers, but here's what I've come up with: I'll use the 2.49% to really hammer down the interest in the two year time.

If I take the two year mortgage, Rates will need to rise by 2 full percentage points before I lose out. That is, variable will need to be sitting at about 5% when it comes time to renew in 18-24 months. I don't see that, but I'm not an expert.

At the same time, what's the catch for the bank? On the surface it would appear that they expect dark times for the next two years, or they are trying to grab other business from me and using the mortgage to entice me.

Any thoughts?


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## Four Pillars (Apr 5, 2009)

When you said - "best variable 5 year ... is 3%" - did you mean "fixed" instead of "variable"?

Because otherwise, the 3% is not guaranteed and the variable rate will rise (if rates go up). In that case, the two year fixed is a no-brainer.


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## the-royal-mail (Dec 11, 2009)

Wow good job. That is a really low rate. I would go for it. A lot can happen in 2 years but my guess is they simply don't know, and this rate reflects this uncertainty. I think they are pretty confident that rates won't skyrocket over the next 24 months. Take advantage of it and try to pay down some extra if you can. Never know.


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## jamesbe (May 8, 2010)

I have a 2.15% variable right now which I'm enjoying and have been for awhile.

2.49 fixed though is pretty good!


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## andrewf (Mar 1, 2010)

It's only better because lenders have been tightening pretty significantly on variable rate mortgages. The discount to prime was -0.85 a year ago, and is now at prime even of even a slight premium (prime+0.1%). And 1 or 2 year fixed mortgages approximate variable rate. So I don't think this is a bad deal at all. Go for it.

I would just set the amortization like you were paying 5%+.


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## crazyjackcsa (Aug 8, 2010)

That's just it, the variable was 3% on a five year term, and the fixed was 2.49% on a two. It caught me off guard, I didn't know what to say. I'd keep my payments the same, and shorten the amortization down of course.


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## Jon_Snow (May 20, 2009)

My term comes up in April. I am paying 5.7% now. Needless to say, I can't wait to go mortgage shopping. I am going to put the screws to the mortgage lenders... if they don't give me the rate I want, I am going to threaten to pay off my mortgage completely.


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## Four Pillars (Apr 5, 2009)

Jon_Snow said:


> My term comes up in April. I am paying 5.7% now. Needless to say, I can't wait to go mortgage shopping. I am going to put the screws to the mortgage lenders... if they don't give me the rate I want, I am going to threaten to pay off my mortgage completely.


Do you have a HELOC? You can use that to max out mortgage payments, although I'm guessing you might already be doing that.


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