Dirt cheap rates, limited time offer

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.

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UBC in crisis mode
Guest
UBC in crisis mode

This creates competition for the bank? Little effect on SFH market in Metro Vancouber. You just cannot borrow $1 million no matter the rate.

King Lear
Guest
King Lear

Will the Banks be like the Auto Dealers? They’ll call you up to say you’re underwater and to come in and refinance at a lower interest rate..all the way to Zero? Unfortunately the Banks can’t take your old house and give you a new one.

paulb
Member

New Listings 250
Price Changes 102
Sold Listings 234
TI:16745

http://www.paulboenisch.com

tedeastside
Member
tedeastside

vancouver is a tiny city, not much of anything there

mac
Member
mac
I have an answer for space899 from other post. The locals in Tobago absolutely hate the tourists. If you keep your ears and eyes open, seething with resentment. The authorities makes sure violence doesn’t erupt. On Trinidad, the authorities have less control. But if you read the morning papers there’s usually one tourist a week that gets a machete. As for my inlaws who used to visit family in Wales in the 70s, they never bought a cottage because those held empty by foreigners, mainly English and some European, were often burnt down. So one of your points is mute. This isn’t hypocrisy. It’s an economic problem that is often dealt with with violence if it goes on too long. But Canadians are sheeple. They’ll move to Winnipeg before speaking up for themselves. Please stop confusing economic problems with racism.… Read more »
#thisisadisaster
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#thisisadisaster

Ponzi, 102 price reductions, 234 sales. Can you please interpret for us? Thanks!

Johnny-boy
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Johnny-boy
Depressing. Getting rid of Carney, we get Poloz, a bigger money whore. We get rid of Flaherty (RIP) and Oliver big-banks-man-in-Ottawa shows up. At least Flaherty kicked the occasional Millionaire bankers ass. The CMHC gets some restraints, then then the Government gives guarentees to private insurers We get rid of IPP, but the flow of HOT money keeps coming. TFW goes on hold – then IG slashes rates. The Economist, Schiller, Mish Shedlock, Wall street bankers, even the economists who work for the banks all say we are in a bubble and just blowing it up bigger. Our Mayor is worried about getting a bike lane past his house. Our Premier doesn’t care. Our PM is busy worrying about what is happening on the other side of the world. We are screwed. Fools for believing we live in a sane… Read more »
Joe Mainlander
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Joe Mainlander

@#2 UBC

The amount of homes sold that are worth over $1 mil is small. They are not driving this market.

In Greater Van:

Last year; units sold for over $1 million = 2,505
Last year; total units sold = 28,524

Almost 90% of sales are below $1 million. So, it is crap like super-low interest rates that help fuel those sales.

Sources:

http://www.bcbusiness.ca/real-estate/million-dollar-home-sales-rebound-in-2013
http://www.rebgv.org/monthly-reports?month=December&year=2013

would-be buyer
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would-be buyer
An Observer
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An Observer

@8, your numbers are wrong – link:

http://www2.topproducerwebsite.com/users/34449/downloads/Greater%20Vancouver%20April%202014%20rebgv_area_charts_-_2014-04_greatervancouver_graphs-listed_sold_dollarvolume.pdf

This is for first 4 months of 2014, 21.7% of sales are above $1 million not the 9% you are quoting. I think those 2 sources of yours are measuring different slightly different samples

So still, almost 80% are under $1 million so your general point stands

Observer

Johnny-boy
Guest
Johnny-boy

Whistler court ordered sale- wonder what went on here??

8316 Valley Drive, Whistler MLS® V1064133
3 Bedrooms 1 Full Bathroom 3,952 Sq Ft 12,000 Sq Ft Lot Built 1974

Court Ordered Sale of a Whistler 12,000 square foot lot. Home is no value and no one is allowed inside due to health & safety reasons.

Roy
Guest
Roy

Hey, who would have thought

http://globalnews.ca/video/1332519/low-mortgage-rates-could-lead-to-higher-vancouver-home-prices

LOL at 0:45s
80 grand in mortgage interest over 5 years =
$1,333 a month!

Now that’s a good Canadian banking slave

Ulsterman
Member
Johnny-boy, you’re right. Year after year after year renters like myself keeping clinging to the logic that the relentless boosting must stop and reality will prevail. For those around since 2006 – ouch – it just isn’t happening. The americans want to make it easier to get a mortgage, rates in Canada heading to 1.99%. I’m of course looking at houses being a family man myself, so the condo plateau doesn’t interest me. My strategy has been a failure. I haven’t become a gazzilionnaire investing the thousands and thousands of dollars “saved” by renting in Mr Market like most of the posters here. If you are one of those people that have made so much investing the difference in the market when it bottomed in 2009 then all-power to you. You have some great investing chops. Go buy that SFU… Read more »
Burt
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Burt
No one made those returns, because no one uses that much leverage in the equities markets. While bears like to point to 30% annual gains in the markets last year, that looks impressive in a $35,000 TFSA. Unfortunately, if you’re leveraged to the hilt, with a mortgage helper, and your $1,000,000 tear down went up 10% last year, guess who made more money? Meanwhile the renter in your basement (or two) paid the interest portion of your mortgage to make the total gains quite decent. Real Estate is near impossible to beat in a bull run because it enables the average person to leverage up more so than any other commonly available financial instrument. You can’t beat that. I should point out, I’m well aware as to what happens when a market turns and the leveraged get destroyed. Unfortunately after… Read more »
Yunak
Guest
Yunak
@space889 #114 The only diff is that it’s always hard to look in the mirror and realize that you aren’t that much different/better from what you critize. Everyone think their race is better or morally superior or more ethical than others, even if they are causing the same harm to other groups. Hey spacey, read this and shut the fuck up for once and all and especially before again you decide to compare Canada to China and lecture us on racism, immigration, culture, medicine and the other bullshit… Racial discrimination fuels worse mental health among African migrants living in China. Discrimination and stigma affect health by increasing stress and depriving access to needed services and protective resources. Many Chinese people maintain stereotypes toward Africans partly due to the minimal contact they have with them but also because of the colour… Read more »
Joe Mainlander
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Joe Mainlander

@#10 An Observer

Not my numbers – just presenting them. But the figures I quoted were for last year. The ones you link to are for this year. So sales of +$1 mil are up. Interesting. Still majority of great majority of sales are below $1 mil.

Egg Hunt
Guest
Egg Hunt

If you buy $700K 2BR condo with 20% downpayment,
25Y Amor, your monthly payment is $2,638 with @1.99% mortgage rate.

But if you are paying $500 monthly strata fee,
it is equivalent of $120K more mortgage.
(like you are 100% financed on $700K)

I don’t count property tax, because with homeowner grant,
it is not very big (less than $100 /month, so like your cell phone contract), but strata fee IS.

There is no homeonwner / senior strata fee discount, plus it will for sure increase every year.
You cannot refinance strata fees either.

This will hurt many over-stretched condo owners….

Joe Mainlander
Guest
Joe Mainlander

@#12 Roy. Wow. Like, is that the first time Global made that connection? It’s not just because Vancouver is the best place on earth?

crikey
Guest
crikey

On the one hand the powers that be are very slowly seemingly unwinding the party, but at the same time theyre now turning a blind eye to drunk bank execs leaving low-interest rate upper deckers in the toilet, pretending it won’t be a shiatshow down the road?
And when asked the powers that be are now saying say, ‘Its not my business what the drunk bank execs are doing in the toilet…’
Even Flaherty had the common decency to realize he should do his best to leave this place in somewhat reasonable shape when they hand the keys over to the next government…

Oh Grow Op!
Guest
Oh Grow Op!

There should be no surprise that someone is wiling to wring the last few bucks out of this bubble. You’re gonna have a few buyers at the peak, might as well make some money off them right?

space889
Member
space889

@Burt – you can get extreme leverage using options without even getting into margins. It’s possible just not a lot of people have the guts to do it.

Also, using a LOC to invest in stocks would be 100% pure debt with no equity so infinite leverage.

southseacompany
Member
southseacompany

More international bubble news from Time; “China’s Great Property Boom May Be Coming to a Desperate End.”

http://time.com/98814/china-property-apartments-developers/

“A sharp downturn in the country’s property market could ripple through the entire global economy”

“Falling apartment prices spell bad news for China’s economy. Real estate is one of the main drivers of China’s growth, with property investment accounting for 16% of GDP by Nomura’s calculations. A downturn could dash hopes for a recovery of the world’s second largest economy, already suffering through its worst slowdown in more than a decade, and the impact would be felt across the world. “

space889
Member
space889

@Yunak – Seems like no different from what you are trying to do….if most of non-Chinese population here starts thinking the same as you, treat all Chinese as locust, scums, etc, likely to have same outcome.

btw, African migrants are treated badly everywhere, not only China. Heck, ever been to southern US? Not exactly an African friendly place even now 100+ years after the civil war.

space889
Member
space889

@mac – it is that…outside come in and ruin or at least make life very difficult for locals, locals get mad and starts make generalization about outsiders, regardless of whether the behavior is widespread or limited to less than 0.01% of the general population (eg. corrupt officials), and starts taking matter/justice into their own hands…

Seriously, how is it that much different? Ok, Canadians are less violent, yah of us Chinese. But underlying issues and symptoms are still there. Racism is about making generalization, often negative ones, of a race regardless of merit. Calling Chinese locust, scums, evil, and China hell on earth, etc fits the classic racism bill pretty well. Economic problems tend to lead to racism, us vs. them.

space889
Member
space889

@mac – Also, isn’t Wales part of England???

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