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TORONTO – HSBC Says It Will Offer Interest Rates Below One Percent For Some Mortgages That Rate Comparison Site RateSpy, Com says is a record low for Canada

The bank is promoting a 099 percent interest rate on its website for new variable term mortgages with a term of five years, with the annual percentage (APR) on a mortgage being 200000 USD based

The deal is for high-rate residential mortgages, meaning the buyer has a down payment of less than 20 percent of the purchase price

The ca and RateSpy editor Robert McLister says this is an important point as the low down payment means the buyer will have to pay for the default insurance as well

â ???? When you ask yourself, ‘Is it better or worse to cut less than or more than 20 percent?’ It’s better to cut more than 20 percent, although the prices are a little worse says James Laird, co-founder of RateHubca

â ???? Even if that means their mortgage rates are not quite as good as the best out there The savings are on the insurance sideâ ????

According to HSBC, receiving the interest rate depends on meeting a variety of qualifications, including a loan approval, a loan period with a payback period of 25 years or less, and a property that is owner-occupied

The interest rate is also variable based on changes in the HSBC policy rate, which is now 1.46 percent, so the interest rate could rise in the next few years as the economy improves and the Bank of Canada increases the interest rate

Mortgage rates are currently low after the Bank of Canada cut its overnight rate in the wake of the COVID-19 economic downturn. The Bank of Canada’s overnight rate is 025 percent, while the base rate is 245 percent and the traditional mortgage rate is for five years is 4 percent 79 percent

As the Canadian government states, this is “conventional” Five-year mortgage rate is the “stress test” rate to qualify for a mortgage. A stress test requires the borrower to demonstrate that they can afford payments at an interest rate that is usually higher than the actual interest rate on the mortgage contract

However, banks often offer low interest rates, especially on less risky insured mortgages, to attract new customers, says McLister

“HSBC expects these customers to buy other financial products” says McLister The mortgage is a gateway into your walletâ ????

Laird notes that the Bank of Canada would only have to raise rates a few times before the floating rate exceeded the fixed rate HSBC is also promoting a five-year fixed rate of 139 percent for high-rate mortgages under similar terms

â ???? Most people are in the process of being fixed, and they’re extremely attractive too. There are plenty of offers in and around 15 percent – in some cases lower – for the five-year fixed rate which is just absurdly low says Laird

All in all, given its terms, the HSBC offering is likely to appeal to the minority of borrowers, says Laird

But McLister says it may be worth checking out guidelines set by individual banks regarding penalties for breaking mortgages, as statistics on his websites suggest that many people will pull out after three or four years of these Punishments can be “brutal” For fixed-rate mortgages in particular, McLister says, it’s worth checking out the floating rate

McLister also advises against the strategy of moving from a floating rate to a fixed rate mortgage in order to protect yourself a lower rate

â ???? This is one of the biggest mistakes that variable rate mortgage lenders make. It is extremely difficult to time locks says McLister

â ???? If you are that good at timing the bond market you should be a money manager managing billions of dollars I can’t do it and have been watching prices for 13 years ”

HSBC Mortgage Rates

World News – CA – HSBC Offers Mortgage Rates Below One Percent – BNN Bloomberg

Source: https://www.bnnbloomberg.ca/hsbc-offers-mortgage-rate-below-one-per-cent-1.1531979