|TERM||OUR RATES||BIG 5 BANK RATES|
|1 Year||3.54%||3.54% - 3.79%|
|3 Year||3.54%||3.74% - 4.34%|
|4 Year||3.64%||3.94% - 5.04%|
|5 Year||2.94%||5.14% - 5.59%|
|7 Year||4.04%||5.80% - 6.20%|
|10 Year||3.99%||6.10% - 6.60%|
|5 Yr VRM||2.75%||3.95% - 4.15%|
Why banks post very high interest rates.
The banks post very high interest rates and flatter their customer with the promise of a discounted rate, suggesting the client somehow deserves a better rate. If that client should ever need to break that bank mortgage an IRD will apply. Interest Rate Differential. The bank will charge the client a penalty based on the difference in interest between their posted rate and the discounted rate.
Please understand that very few, if any, pay the posted rate and further understand that the discounted rate received was well above lower rates that were available outside the bank.
The interest spread is enormous and multiplied by the number of years left on the mortgage and the size of the mortgage the penalty to vacate the mortgage could be $50,000 or much more.
Why rates vary from mortgage broker to mortgage broker.
Basically it comes down to the quality of the product.
- 30 day quick close.
- 60 day close.
- 90 day close.
- 120 day close.
- Pre-approval or no pre-approval.
- Pre-payment privileges
- Conventional or High Ratio
In the end you have to be able to live with a quality product. Discounted rates usually mean that you get what you paid for. And this is interesting, often a rate that is discounted by 10 or 15 basis points often only amounts to $10 or so a month in savings. There are clients that shop for the lowest possible discounted rate however, in the end they may save a few dollars a month and have an inferior mortgage product.