However, experts say the rock-bottom rate comes with costs of its own.
The bank is advertising a 0.99 per cent rate on its website for new five-year variable closed term mortgages, with the annual percentage rate, or APR, based on a
The deal applies to high-ratio residential mortgages, which means the homebuyer has a down payment of less than 20 per cent of the purchase price.
Rates.ca and RateSpy editor
"If you're wondering, 'Is it better or worse to put less than or more than 20 per cent down?' It's better to put more than 20 per cent down, even though the rates are a little bit worse, " says
"Even if it means their mortgage rates aren't quite as good as the best available. The savings is on the insurance side."
The rate is also variable based on changes in
Mortgage rates are currently low, after the
As the Canadian government notes, that "conventional" five-year mortgage rate is the "stress test" rate to qualify for a mortgage. With a stress test, the borrower needs to prove they can afford payments at a rate which is typically higher than the actual rate in the mortgage contract.
But banks often offer low rates, particularly on less risky insured mortgages, as a way to draw in new customers, says McLister.
"
Laird notes that the
"Most people are going fixed right now, and they are extremely attractive as well. There's many offers in and around 1.5 per cent — in some cases lower — for the five -year fixed rate, which is just absurdly low," says Laird.
All said, the
But McLister says it can be worth looking at the policies set by individual banks in terms of penalties for breaking mortgages, since his sites' statistics suggest many people pull out after three or four years. These penalties can be "brutal," especially for fixed-rate mortgages, McLister says, making the variable rate worth looking into.
McLister also recommends against the strategy of trying to switch from a variable rate to a fixed-rate mortgage to "lock in" a lower rate.
"That's one of the biggest mistakes variable-rate mortgagers make. It's extremely difficult to time rate locks," says McLister.
"If you're that good at timing the bond market, you should be a money manager managing billions of dollars. I can't do it and I've been watching rates for 13 years."
This report by
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