The Investors Group is making waves with a 1.99% 3 year variable mortgage.
Here’s a story about it over at the CBC.
The offer comes with strings attached — namely that you can’t break the mortgage for any fee during the three-year term, unless you sell your home. But the offer does come with the ability to double up monthly payments, or pay a 15 per cent lump sum once a year.
In real dollar terms, it could knock a lot of money off a mortgage payment, at least over the short term. A standard 25-year $500,000 mortgage at a five-year rate of 2.99 per cent works out to $2,364 a month. That mortgage under IG’s new terms would be $2,115 a month — savings of $249 monthly, at least for the first three years, and as long as the variable rate doesn’t increase.
This is from ‘the first one’s free’ school of marketing. It looks like Investors Group is willing to lose money on mortgages in order to make it up with more business in the future.
It will be interesting to see if offers like this give a bump to the market and to see where we are with rates in 3 years.