For the first time in Canadian history, a mortgage with an interest rate below 1 percent can be taken out

HSBC is officially the first lender to break this barrier, offering a five-year floating rate of 099 percent, something that will likely have people who were shaking their heads with 20 percent mortgages in the 1980s

The offer only applies to purchases that are insured against failure. The bank is also promoting record-low uninsured five-year rates

It’s just the most recent riveting rate from a lender who has plagued its banking competitors with below market rates for more than three years

HSBC’s headlines go back to mid-2017 when a new online-focused model was launched The model uses mortgages as a way into your wallet for the bank to sell you other financial products, which is how those flashy rates can be justified / p>

“I didn’t think we would have a competitive market in December,” said Jonathan Bundle, director of products, wealth and personal banking at HSBC Bank Canada. “December is usually very sleepy [in mortgage business] and it usually stays pretty slow until January ”

But he says “massive November home sales,” relentless mortgage competition, ultra-low financing costs, a less secure 2021 and chance to make history all make this at the right time to test that interest rate

While the lowest fixed and floating interest rates were only 15 basis points apart on Thursday, this gap widened considerably on Friday The lowest nationally available variable is now 40 basis points below the cheapest fixed five-year variable (one percentage point contains 100 basis points)

And if this “spread” with fixed variables becomes significantly larger, the chances of success shift increasingly towards the variable, all others are the same

Rate predictions are for the person who likes to be very wrong, but you can still run logical scenarios to measure your risk / return.For example, you could hypothesize that the Bank of Canada will raise interest rates in 2023, How This Is Currently Projected It would not be entirely unreasonable to assume that rates would only rise by about 75 basis points – like after the last recession, in this scenario a 0 with a floating rate of 99 percent will save you more than a comparable fixed rate for five Years

If you’re an inflation hawk and feel like inflation and interest rates are a percentage point higher or higher, today’s record-low five-year fixed rates should serve you well.Remember that fixed rates have much higher penalties than floating rates If You Break Them Early The average five year term is only 38 years to give or take before the borrower cancels or renegotiates their mortgage

HSBC’s interest rates will no doubt force other lenders to become more competitive This could be the best news for mortgage buyers

1 Be Marquis 0 Standard insurance is required for a 99 percent listing which means you must pay an insurance premium This is normal for anyone buying a home with a down payment of less than 20 percent

3 There is no application deadline. How long these deals will take depends on the financing costs, volume and goals of the bank

4 To get 99 percent of the time, you’ll need to stress the test by showing that you can afford to pay at 4.79 percent that’s a whopping 380 basis points more than the actual price you’ll be paying – a record in itself This reflects the fact that the Treasury Department has still not cut the minimum stress test rate to match the huge cut in market rates it had promised before the pandemic broke out

5 HSBC is the only lender to: a) get out of a five-year floating rate with no penalty after just three years, and b) tie your floating mortgage to one of the lowest five-year fixed rates in the country – the best in the bank uninsured tariff that is advertised transparently on its website

6 The variable rate prepayment penalty is only three months, but the five year fixed rate comes with a potentially expensive big bank-style penalty If you want to lock yourself in and may need to change your mortgage five years ago, look for a ” Fair Penalty Lenders “Cheaper penalties can easily save you the equivalent of 0.25 to 0.050 percentage points on the interest rate

7 The bank offers 1$ 000 in cash if you have 20 percent equity and your mortgage is for a new purchase or a move from another lender This is enough to cover most of your legal and evaluation fees

8 To receive this listing, you can apply online, visit an HSBC office, or use select brokers from the Dominion Lending Center (Ontario only)

9 If you jump on that rate, don’t plan to close quickly – that is, in less than 30 days I suspect the bank will be a little busy

Robert McLister is the founder of RateSpycom and IntelliMortgage and the mortgage editor at RATESDOTCA. You can follow him on Twitter @RateSpy

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HSBC Mortgage Rates, HSBC

World News – CA – For the first time, Canadians can get mortgage rates below 1 percent

Source: https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-for-first-time-ever-canadians-can-get-a-mortgage-rate-below-1-per/