The days of getting a variable rate of prime minus .75 to .85 are going to be gone with in the next few weeks. All Lenders are going to only offer prime minus .50bps in the next few weeks as they are losing profit because consumers are buying too much of the variable rate product versus the 5 year closed mortgage. To Offset this, lenders are offering heftier discounts on the 5 year closed product and we have seen this start happening with some banks offering 3.39% for a 5 year closed.
Consumers should get informed and educated on the variable versus 5 year closed product because in actuality, if the variable rate climbs .50bps per year with a VRM at p-.75bps. you actually lose out versus taking the 5 year fixed rate even at 3.59%. You will save approx. $3000 with a 5 year fixed mortgage versus the variable rate and have less worries and stress.
The 5 year rate of 3.39% is the lowest I have seen in my 17 years in the Mortgage Industry and clients should really think about taking that over the variable rate.