What is Prime Minus and The Current Rate

Remember!

As the rates change, we need to remember the difference between our options before we start slamming numbers into our mortgage calculators.

Fixed rates are more straight forward so let’s look at variable rates. Here’s the deal, when the BOC announces 3.2-3.25%, that’s not the rate you, the client pays, that’s the overnight lending rate for the big banks. That’s what the rate the BOC lends money to the big banks at. These big banks need to add to that otherwise it wouldn’t be worth anything to them.

So the actual lending rate for you is 5.2%. That’s “prime.” THEN, the big banks will discount that based on the individual client, great credit, downpayment, history, etc., that discount is where you hear “Prime minus 1%” or prime minus -whatever.

With the current rate reductions, from the big banks we’re seeing 4.5%-4.9% pending on the client.

I can’t stress this enough, if you’re curious about what you can afford, if you’re ready to pull the trigger or a buy or sell, if you feel your 6 months or 3 years away, just get in touch with a mortgage broker now! There’s no downside. This is how you get prepared and a head of the game. If you fail to plan, you plan to fail.

HERE’S A MORTGAGE CALCULATOR:

https://realintro.com/andrewmclellan