Mortgage discounts turn to premiums

For those that missed it, there’s an interesting article over at Canadian Mortgage Trends – the major banks have done away with their variable rate discount mortgages and are now charging a premium over prime.

Prime + 0.10% (i.e., 3.10%) is an interesting number. A few months ago consumers thought that fat variable-rate discounts were here to stay. Variables above prime will now come as a shock to some people.

The banks are well aware of that. They know that pricing above prime impacts consumer psychology.

They could have priced at prime. Spreads are not that horrendous. But pricing above prime makes more of an impact. It makes higher-profit fixed rates more appealing and it mentally prepares consumers for potentially higher VRM premiums down the road.

That said, banks are not just arbitrarily sticking it to borrowers. The main reason variable rates are worsening is that banks’ costs are rising, and they want to recoup those costs.

Read the full article for more on the factors at play in this move.

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WS
WS
8 years ago

I can give you a number of cities I think most of the world would much rather live in before Vancouver. Let's just start with the anglo Pacific Rim: San Diego, Orange County, Auckland, Melbourne.

Others that one could consider but don't make the cut for me personally: Seattle, Portland, SF, Sydney, Brisbane

fixie guy
fixie guy
8 years ago

61 DEFAULT NAMEe Says: “Smug, but also 100% correct.”

That Vancouver is better than Detroit? Sports events and friendliness aside, no question. Also 100% irrelevant.

Anonymouse
Anonymouse
8 years ago

@fixie guy:

Smug, but also 100% correct. Detroit housing is affordable by any metric. So why not live there if that's your requirement?

Anonymouse
Anonymouse
8 years ago

@Anonymous:

Obviously somebody thinks its nicer now. It's an opinion. There's no right or wrong. Do you get it?

Anonymous
Anonymous
8 years ago

@at least my mandarin is improving: … .http://www.vancouversun.com/ne…..story.html...

Lord knows, nobody that speaks English reads the Vancouver Scum anymore, I guess it makes sense. They should really print a 'fish' edition and cover two bases at once.

Anonymous
Anonymous
8 years ago

@Insanity: …. I have lived in Vancouver well over 30 years and I think it is much nicer now. ….

Obviously a liar, deluded, mentally ill or all three. Nobody who really lived here 30 years ago thinks it's nicer now.

Anonymous
Anonymous
8 years ago

@patriotz: …I have a feeling you haven’t been in the city all that long. It really was a fantastic place 25-30 or so years back. …

Truer words have never been uttered on this blog!

The problem is all the dicks that moved here from Toronto to speculate on RE.

Anonymous
Anonymous
8 years ago

@jesse: ….. His comment about not giving much of a fig about someone not being able to afford the west side is an interesting one. Can’t say I entirely disagree…..

But don't you get it? The reason the east side is becoming so unavoidable is because all of the Doctors and lawyers that should be living in the west side can't so they're going the the east side, displacing you.

Anonymous
Anonymous
8 years ago

@Potential Buyer: ….and lived overseas for over a year and I really don’t think Vancouver is all that bad. ….

That's just an indication that you haven't liver here long enough. Patience my son, patience.

Anonymous
Anonymous
8 years ago

@Best place on meth: ….And that sums up the collective mental state of Vancouverites, referring to this place as paradise with a straight face…

If it rained this much in paradise, they would have named it 'Dunbar'.

Anonymous
Anonymous
8 years ago

#48 wtf = what the fu$k?

i am in grade 1.

Anonymous
Anonymous
8 years ago

patriotz,

where do you move to next? since ottawa is not affordable anymore.

at least my mandarin
at least my mandarin
8 years ago
Insanity
Insanity
8 years ago

@Devore:

"If there are polls asking New Yorkers whether New York is the best place to live, you should link at least a couple of the 100s of them."

Here you go.

http://www.youtube.com/watch?v=V7GwcSqzAxc

patriotz
8 years ago

@Potential Buyer:

"Having said that its pretty obvious metro Van changed a lot since then, considering we added over a million new residents."

Since the mid 80's? Nope, you have to go back another 10 years or so. You might also like to note how slowly the population has been growing since 2000.

http://housing-analysis.blogspot.com/2008/01/vanc

Anyway, population growth is not the problem, Calgary has grown a lot more than Vancouver (% wise) during the same period and I like it better now than when I lived there.

WFT?
WFT?
8 years ago

@Anonymous:

You need to learn how to write. Go back to grade 3.

Anonymous
Anonymous
8 years ago

income ~ assistance

Anonymous
Anonymous
8 years ago

patriotz,

get a job, get a life. i dont think you are qualified for income in ottawa yet. so, get out there instead of sitting there typing about this stuff for many years. do you wish you are back here like the north van realtor?

paulb.
paulb.
8 years ago

New Listings 96

Price Changes 44

Sold Listings 97

TI:13824

http://www.laurenandpaul.ca

chip
chip
8 years ago

@space889:

California is in bad shape but its per capita debt is just a tenth of Ontario's. Cally is screwed, I have no doubt, because the culture and political class can't comprehend cutting entitlements.

But Ontario, that's a place where real pain is going to come. Their Auditor General's searing criticism of the province's wasted billions on green energy is case in point. And here again you have a people seemingly dedicated to committing economic suicide.

fixie guy
fixie guy
8 years ago

29 jesse Says: "The author then gets to the crux of the matter: what is “affordability”, really?"

How about we go with percentage of median household income to own a place? No need to reinvent the wheel. Leave those grifts to paid marketeers and other industry 'economists'.

"By which Somerville's friend meant, if you want affordable housing, live in Detroit."

Textbook definition of smug asshole and cultural reason #1 Vancouver deserves in part what's coming.

Potential Buyer
Potential Buyer
8 years ago

@patriotz: I've been in the metro Vancouver area since 87 so I'm definitely don't consider myself a short term resident. I was a kid then and I grew up living most of my life here. I did go through a phase when I wanted the hell out, and did for a bit, but now that I have my own family and a good network of friends and colleagues, I really do like living here. I can't really tell you if it was better back then cause I was so young but honestly, unless people are closer to 50, it wouldn't be fair to compare our views of Vancouver as kids in the 80s to our views as an adult now. Having said that its pretty obvious metro Van changed a lot since then, considering we added over a million new… Read more »

Anonymouse
Anonymouse
8 years ago

@space889:

"What if the guy don’t like skiing?"

That's exactly my point. The place that's best for you is different for everybody.

Devore
Devore
8 years ago

@Insanity:

You can’t be serious? These type of polls are done all the time including places like NYC. Just google it and you come up with 100s of polls on where is best to live.

If there are polls asking New Yorkers whether New York is the best place to live, you should link at least a couple of the 100s of them.

Insanity
Insanity
8 years ago

@patriotz:

"It really was a fantastic place 25-30 or so years back."

Yes kind of like cars, music and fashion. LOL you are living in the past. I have lived in Vancouver well over 30 years and I think it is much nicer now. I also like modern cars, music and fashion. All are subjective but obviously when people age they tend to always have a vision of the past with rose coloured glasses.