Now’s the time to act. The ultra low variable rates we’ve enjoyed for most of the year are going into hibernation. Last week a few leading lenders tightened up their guidelines for qualifying borrowers. Over the weekend a few more lessened the discount off the prime rate they’ve been offering, by up to 15 basis points. And tonight, alas, everyone else seems to be following suit.
The rationale has to do with the tightness of the spread between government bond yields and mortgage rates – the institutional investors who lend money out through mortgage lenders can only tolerate a razor thin profit margin for so long, and apparently they’ve reached their breaking point. Coupled with that, the ongoing uncertainty in the markets, highlighted by the US Fed’s unwillingness to raise their interest rate, has made investors skittish, hence the tightening up that we’re experiencing.
It’s the 11th hour, but you still have time to act: the big discounts to prime are still available, but only until midnight tonight. We’ll be working overtime tonight to get as many deals submitted as possible.
Now is the time to act, especially if you have non-mortgage debts (CC’s, LOC’s), because now is the time to pay them out rather than carry them over into a higher rate environment.
On the flip side of the variables rising, there are some newly discounted fixed rates available. Whatever your appetite though, don’t let this opportunity slip away.
UPDATE (01/10/15): A few lenders have not yet reduced the discount on their variable rates. Surprisingly (and to our excitement!), one lender has actually offered even MORE of a discount on their variable rates: Prime -85 ! We’re not sure how long these discounts will be around, but if you’re interested, you can still give us a call!
NOTE: If you are currently in a variable rate, this is not a call for you to lock into a fixed rate. The prime rate has not changed, only the discounts that lenders are currently offering on Prime going forward. Since you currently have a variable rate, the discount on your rate will not change.