What's Happening with Rates?

Heading into 2023, rates are remarkably higher than anyone would have predicted at the outset of 2022.  Fixed rates are now lower than variable rates and borrowers are flocking to short term fixed rates to try to shorten the amount of time spent in higher than necessary mortgage fixed rates.  

Variable rates, once the darlings of the mortgage world have fallen out of favour for anyone looking for more stability.  In most cases, I would recommend a five-year variable rate over locking into a five-year fixed rate.  Rates will come down eventually and the penalty to get out of a five-year fixed rate early makes switching untenable. 

For purchases over $1M and all refinances, five-year rates are currently about 6.05% for variables and 5.24% to 5.89% for fixed rates.  For purchases under $1M with less than 20% down, the five-year variable rate is Prime minus .90% (5.55%) and five-year fixed rates are 4.99% to 5.19%.  For rental properties, expect a premium on the rate no matter the purchase price, lowest rate options are approximately Prime minus .40% or 5.39% for five-year fixed rates.  Expect higher rental rates for borrowers with large rental portfolios that need to squeeze out as much borrowing power as possible.  

Alternative lender rates are north of 6% with fees of 1-2%.  Private lenders rates are 7-9% or more for 1st mortgages, and 2nd mortgages are in the 9-12% range.  Expect fees of 4%+.  

If your renewal is coming up, ask me if you qualify for the 3-year fixed rate mortgage at 4.99% or the five-year variable rate at prime minus .90%.  All costs to switch are covered.