If one goes, they all go!  After Friday’s rate announcements from BMO, TD and RBC, Scotiabank joined the battle by also offering a four year fixed special at 2.99% in addition to the 2.89% three year fixed special that they have previously announced.

The features for these special rates:
-          15% prepayment
-          Increase payments by 15%
-          Amortization is to be negotiated with the agent
-          Rate hold for 120 days

You can view all of Scotiabank mortgage rates here or compare the best mortgage rates in the market here.

We looked at the Best of the Best for Chequing Accounts and the Best of the Best for Savings Accounts, now we’re reviewing the bank websites and their special educational content.

All the big five banks include details about their various accounts, current mortgage rate info, tools like mortgage calculators and budget planning strategies, branch locators, and a search function to help you find what you’re looking for. But not all sites are created equal. Here’s what I think about each of the sites and their special features.

Bank of Montreal (BMO)

The site starts on a very busy home page that includes a search function at the top left and, below that, tabs for rates and “tools and calculators.” The later includes calculators for mortgage payments, TFSAs, loan payments, and retirement planning. Click on any and you’ll get a pop with a basic calculator tool that’s pretty easy to use.

For more detailed info, you’ll have to delve into the “Personal” section or select one of the somewhat cluttered options on the screen, like “Buying my first home,” which leads to a trove of information from a “Mortgage Basics” glossary to PDF worksheets you can printout for offline number crunching.

Special Feature - BMO customers can sign up for the bank’s MoneyLogic Guide, a free online budgeting tool that allows you to sync all your BMO accounts to track your monthly budget and savings goals. You can view your progress in charts and graphs, or download a PDF to print off.

Canadian Imperial Bank of Commerce (CIBC)

A cleaner homepage includes key links stacked at the left (Bank Accounts, Credit Cards, Mortages, Investing), a search at the top right, and timely reports from CIBC experts, like the four-page PDF, “Year End Tax Tips.”

Special Feature - CIBC’s Advice Centre – reached via a prominent tab at the top centre of the homepage – includes multiple video clips and articles on a broad range of topics, from “Reducing Your Debt” and “Home Ownership” to “Family Finances” and “Retirement Planning.”

Royal Bank of Canada (RBC)

RBC’s global reach (it’s the biggest of the Big Five) is evident right from the homepage which has separate tabs at the top for operations in Canada, the U.S., International, and Caribbean (which apparently isn’t considered “international”), and its various divisions – RBC Insurance, Capital Markets, Wealth Management, and so on. For all that, it lacks a search function on the homepage. The downside for users is that you have to dig deep to get the info you want.  The advice center is pretty good, but the videos are a bit too sales focused for my liking.

Special Feature - Most of us worry about our online security, but probably don’t do enough to protect ourselves. RBC has prominently placed a “Privacy and Security” section on the main page, with detailed advice on how to protect yourself online, avoid common scams, and prevent identity theft. There are even easy links for reporting a suspected phishing scam. (Though the guy who automatically pops up in the lower-left and starts telling you more…can be a bit jarring if you’re doing some late-night research.)

Scotiabank

Scotia’s site features the cleanest design – when visited in early December, the page was dominated by an image of an elderly gentleman with his grandkids. Above that, are seven dropdown menus, including credit cards, borrowing, and rates, that bring up multiple relevant tools and explanatory articles.

Special Feature - Scotia Online employs a mix of short articles and embedded YouTube clips to explain things, but it does seem a little more geared to specific details on the company’s products as opposed to more generic personal finance education. That said, highlights include an accessible glossary of banking terms, and a Future Value Calculator that lets you see how much a regular investment contribution will grow over 20 years at various estimated rates of return.

TD Canada Trust (TDCT)

If you have an aversion to green – the colour, not U.S. dollars – this site is not for you. (I counted four different shades.) But we’re here for financial advice. And TDCT does provide a lot; you just have to discover the “Planning” tab on the home page to find the info you’re looking for.

Special Feature - TDCT’s Planning section is the go-to part of their website for a broad range of financial advice. Articles range from overviews on how to organize your finances – and what you hope to achieve – to savings calculators to help you reach your goals. Back on the homepage, TDCT also includes a News link if you’re interested in getting the bank’s Daily Morning Market Update or signing up for RSS feeds.

Highlights from the not-so-big banks

Customers of PC Financial (a CIBC subsidiary, run through Loblaw grocery chain) can sign up for a monthly Financial Aisle Newsletter that includes tips like: “Remember that legitimate institutions will never ask you to confirm or to disclose personal financial information like PIN numbers or social insurance numbers over the internet.”

ING Direct has a number of online tools, including the Rent Translator that quickly shows what your monthly rent payment would equate to in terms of a mortgage, including a table that shows how much you’d pay it down year-by-year.

Anyone who’s opted to bank with Ally Canada will appreciate the icon at the top left of the page that tells you the wait-time for the telephone help line. It’s a lot quicker to log onto the site than punch in all your account info and follow the phone prompts only to discover “we’re currently experiencing higher than normal call volume…”

Shopping for the best credit card just got a whole lot easier with the new RateSupermarket.ca credit card comparison engine. Following feedback from our fantastic visitors, we recently relaunched our Credit Card Comparison Tool to allow customers to easily select their preferred card options while the results automatically filter.

Whether you’re looking for travel rewards, cash back, a low interest rate, or no annual fees (or any of those in combination), now you can quickly find the perfect card for you.

We’ve also created something called the Reward Return Rate since let’s face it not all rewards are created equal (what’s the true value of a point or a mile anyway?). The Reward Return Rate calculates the true rate of return so that you can compare like for like.

And if that wasn’t enough we also added 7 Scotiabank credit cards to our search engine. If you’re a satisfied Scotiabank customer here’s a quick way to compare the card options offered by your bank.

So if you’re walking around with a credit card in your wallet from years ago, maybe it’s time to reassess your credit needs. Credit card features have changed so much recently, why not start to take advantage of the new offers?

It seems that the major banks come up with a new and different mortgage product all the time. While it’s good that they’re trying to create new products for different types of consumers, the products themselves aren’t always easy to understand. Let’s take a closer look at two unique products, a blended mortgage and a rate capper mortgage.

What is a blended mortgage?

You’ve been diligently paying your mortgage down for years. Over the years, you have made renovations that have substantially increased the value of your home. You are thinking about purchasing a cottage. You have minor credit card debt, and a line of credit. You are also saving for your daughter’s post-secondary education. All this, and you hope to pay off your home within the next fifteen years.

Does this sound like you? A blended mortgage could be the solution – but first let’s explore just what it is and whether or not it’s the right option for you.

A blended mortgage allows you to borrow against or increase the amount of your present mortgage. It allows you to free up equity, so that you can make necessary renovations, or purchase a second property. This is a particularly good option if your present mortgage has a low interest rate, or you wish to avoid the mortgage penalty incurred by switching.

With a blended mortgage you keep the balance of the mortgage interest rate you have at present, while the new total is charged at the current rates. Because you are still following the terms of your mortgage contract, there is no penalty. There are a number of different types of blended mortgages, but typically they fall into one of two categories: blend and increase, or blend and extend.

Blend and Increase

This blend allows you to increase your existing mortgage. It lets you to use the equity you’ve built through paying your mortgage down or increasing the value of your home. Funds you receive will be at current mortgage rates. With the extra funds you can pay off high-interest credit card debt or your car loan.

Blend and Extend

After you have decided to increase your mortgage, you may also think about renewing to a five-year term earlier than expected. This is known as a blend and extend. Say you have a mortgage of $125,000 at 3.69% for a term of 3 years. Current rates are 5.69%, so you decide to extend your mortgage term to 5 years. This extension gives you an interest rate of 4.49% for a new five-year term. Ask your mortgage specialist about this option. It may save you money.

Scotia Total Equity Plan (STEP)

Scotiabank’s STEP program allows you to split your mortgage between fixed and variable rate products, or between short and long-term products. They tout it as a “great way to take advantage of low interest rates in the short term, while protecting against increases over the long-term.” STEP allows you to turn your mortgage into usable income by making it easier to free up funds for your personal needs. Once the program is in place, it allows you to borrow up to 80% of the value of your home, while choosing from the range of Scotiabank products. You can even split your mortgage into 3 different mortgages, allowing you to manage your interest rate risk. The purpose is to help you lower your overall borrowing costs.

The downside: Scotiabank’s STEP mortgage is reportedly difficult to get out of penalty-free. There are a number of consumer reports which detail hard-luck stories about enormous penalties charged to those who want to get out of their contracts early. For the undisciplined consumer, freeing up space on credit cards could lead to further over-spending. If you fall into either one of these categories, Scotiabank’s STEP product might not be for you. Before making any major financial decisions, it’s always a good idea to evaluate what type of spender you are and make sure you read the fine print before signing any contract.

Rate Capper Mortgages

Basically, a rate capper mortgage combines a low short-term interest rate with the security of a capped long-term interest rate. For a period of five years the interest that you pay will fluctuate with Prime (the same way that a variable mortgage does), but this interest is capped at certain rate, so you know what your maximum payment could be. Your monthly payments stay the same throughout the term. Your interest rate varies on a monthly basis and is calculated based on your bank’s Prime Rate terms. Each bank has different terms, so it’s always a good idea to compare rates. Here are a couple of examples of rate capper mortgages:

RBC’s RateCapper Mortgage

With RBC’s RateCapper mortgage, your payment amount remains fixed, but the interest rate itself will fluctuate with changes to their prime interest rate. This means that the amount that goes toward paying your principal changes monthly, but your payment remains the same. The benefit is that you always know what you have to pay, allowing you to budget better. It also allows you to take advantage of the lower rates offered to variable rate mortgage clients.

The downside: It’s more difficult to keep track of exactly how much of your payment is going toward your principal. The current variable rate offered is Prime + 0.00%, which is higher than a full variable mortgage that you can currently get for as low as Prime -.90%. Also, the 5 year capped rate is at 6.75%, which is also higher than current 5 year fixed rates at roughly 3.65% – 4.04%. So you certainly pay a premium for this type of product flexibility.

National Bank’s Capped-Rate Mortgage

National Bank of Canada has a very similar product to RBC. Its product features a closed, 5-year term at prime +0.00%. The main difference is that the capped rate is the 5-year rate at the time of signing (5.69% today), which is lower than RBC’s RateCapper. If the capped rate is reached and the rate continues to rise, your rate will stay at the capped rate. This product is said to facilitate better budgeting and allows you to pay more toward your principal.

The downside: Similar to RBC’s downside, it’s more difficult knowing how much of your principal you’re paying down and you’ll always pay a premium on the rates offered for this type of flexibility.

Conclusion

Whatever your preference, it’s always a good idea to do your research, compare mortgage rates and products, and talk to a mortgage professional. Most importantly, you need to know yourself and the type of spender you are. You shouldn’t have to accommodate your mortgage – choose a mortgage that’s specifically tailored to meet your needs.

Melanie
Writer for RateSupermarket.ca

Banks tighten their belts

There’s nothing like a bit of mortgage rate activity to get Canadians out of a post turkey daze.

This week, all of the big banks have announced decreases to fixed mortgage rates. RBC was the first one to drop rates by 10 basis points, quickly followed by Scotiabank, TD and BMO. CIBC announced today that they would follow suit as well. This puts the popular 5 year fixed rate at 5.29%.

Fixed mortgage rates are affected by the Bank of Canada bond yields for the same term. Since the middle of September we’ve seen bond yield drop steadily. At the beginning of October, it was evident that yields had decreased, but few experts expected the banks to react by lowering fixed mortgage rates.

Our Mortgage Rate Outlook Panel of experts felt strongly that lenders had already tightened their belts enough by squeezing margins, and that any extra decreases were unlikely.

Since then, the US has confirmed sinking consumer confidence, decreased job creation, soaring commercial vacancies, and a decision by some of the largest mortgage lenders to freeze foreclosures on residential properties. The Canadian outlook seems to be moving along (albeit at a slow pace), but without decent recovery from our largest trading partner, we’re limited in terms of growth.

So as the banks pull their belts a little bit tighter this week (most of us would find that very difficult following the Thanksgiving weekend), consumers are rewarded with incredibly low fixed mortgage rates.

PS. RateSupermarket.ca is currently showing a 5 year fixed rate of 3.39% (Oct 13th, 2010). This is a full service mortgage offered by a chartered bank. Get it now – we don’t know how long it will last!

Well some good news today for first time home buyers and home owners as fixed mortgage rates dropped again as RBC, CIBC, Scotiabank and Laurentian Bank announced the latest mortgage rate changes of -0.10% for most fixed rates. These new lower rates take effect today, August 17, 2010.

This comes on the heels of the latest CREA report that showed national home sales and house prices declined significantly last month. Seasonally adjusted home sales activity across Canada declined 6.8% from June and down 30% than July 2009.The Prairies and Quebec were level while BC (-14%) and Ontario (-8%) accounted for 85% of the change across the country.

Year to date transactions are still up 5.6% compared to the first 7 months of 2009, although it’s believed that many transactions were brought forward due to HST in BC & Ontario as well as lower mortgage rates. This gap is expected to close and eventually decline through the rest of the year. CREA’s President commented, “Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals.”

Average home prices in Canada in July 2010 was $330,351 (+1% year on year) edging up one% from the same month last year.
Supply has also increased based on the number of months of inventory it would take to sell houses listed on MLS based on the current sales rate, as this stands at 7 months last month which is up from 4.5 months last year.

Fixed mortgage rates are heading lower as Government of Canada bond yields have been declining recently. We’ve seen the benchmark 5 year bond yield drop by 14% in the past month and 6.6% just in August.

You can read about what our Mortgage Rate Outlook Panel of experts believe mortgage rate trends are heading.

Here’s a run down of the updated rates by bank:

RBC fixed mortgage rates changes

CIBC fixed mortgage rates changes

Scotiabank fixed mortgage rates changes

You can these bank compare mortgage rates against the rest of the market here.

Here’s a snapshot of the lower fixed mortgage rates offered by two of the banks (all rates decreased by 0.10%)

Rate term
6 month convertible	4.85%	4.95%
1 year closed	3.60%	4.40%
2 year closed	3.95%	4.25%
3 year closed	4.60%	4.80%
4 year closed	5.54%	5.64%
5 year closed	5.89%	5.89%
7 year closed	6.95%	6.90%
10 year closed	7.00%	7.25%

Lower bond yields

Fixed mortgage rates ware mainly influenced by government bond yields and we’ve seen the benchmark 5 year yield come off by 14% since the beginning of June, and is even down by 3% today to 2.35%.

Here is a chart of the 5 year bond yield over the past 3 months.

If this continues we could see fixed mortgage rates continue to drop next month as well.

RBC was the first to move again and increased most of their fixed mortgage rates by 0.25%. Coupled with the 0.60% hike we saw on March 30th, results in a huge 0.85% increase in the popular 5 year fixed rate in the past 2 weeks. The higher fixed rates are due to increased borrowing costs for the big banks, as fixed rates are influenced mainly by long term government bonds, and these yields have been rising over the past few weeks.

The speed of rising rates has taken some industry experts by surprise as even the head of ING DIRECT remarked, “I would have thought it (rate increases) would have been a bit more gentle”.

RBC fixed mortgage rate increase

Effective today, April 14, 2010.

Six-month convertible      4.90%      (+0.25%)
One-year closed      3.65%     (+0.25%)
Two-year closed      4.00%      (+0.25%)
Three-year closed      4.60%     (+0.25%)
Four-year closed      5.59%     (+0.25%)
Five-year closed      6.10%      (+0.25%)
Seven-year closed      6.90%      (+0.25%)
Ten-year closed      7.05%      (+0.25%)

Special Fixed Rate Offers*

Four-year closed      4.44%      (+0.25%)
Five-year closed      4.70%      (+0.25%)

* The rates indicated are special discounted rates and are not the posted rates of Royal Bank of Canada. To calculate a rate discount compare the Special Offer rate against the posted rate for the applicable term.

Scotiabank fixed mortgage rate increase

Effective today, April 14, 2010.

six-month flexible closed      4.90%      (+0.25%)
two-year closed      4.20%      (+0.25%)
three-year closed      4.75%     (+0.25%)
four-year closed      5.59%      (+0.25%)
five-year closed      6.10%      (+0.25%)
seven-year closed      6.85%     (+0.25%)
ten-year closed      7.20%     (+0.25%)

Scotiabank offers the following special discounted rates(*) on residential mortgages:

one-year fixed closed      2.49%      (no change)
five-year fixed closed      4.70%     (+0.25%)

* The special discounted rates are not the posted rates of Scotiabank.
Rates are subject to change without notice. Offers may be withdrawn or
extended without notice and cannot be combined with any other rate
discounts, offers, or promotions. Mortgage funds must be advanced within
120 days of the application date. Other conditions may apply.

CIBC fixed mortgage rate increase

Effective tomorrow, April 15, 2010.

Six-month convertible      4.90%     (+0.25%)

Six-month open     6.70%     no change

One-year open      6.45%     no change

One-year closed      3.60%     no change

Two-year closed      4.00%     (+0.25%)

Three-year closed      4.60%     (+0.25%)

Four-year closed      5.59%     (+0.25%)

Five-year closed      6.10%     (+0.25%)

Seven-year closed      6.90%     (+0.25%)

10-year closed      7.05%     (+0.25%)

See how these rates compare to the rest of the market now.

Other lenders are starting to follow RBC, TD & Laurentian Bank’s fixed mortgage rate increases yesterday, as Scotiabank, National Bank and CIBC announced their own changes to their posted residential mortgage interest rates, effective March 31, 2010.

The biggest increases were all the 5 year posted fixed rates going up by 0.60% to 5.85%.

Here are the rate changes:

Scotiabank

– 3 year closed      4.50%      (+0.20%)
– 4 year closed      5.34%      (+0.40%)
– 5 year closed      5.85%      (+0.60%)

Scotiabank’s discounted rates changed as follows:

– 5 year fixed closed 4.55%      (+0.60%)    

CIBC

CIBC changed their fixed mortgage rates as follows:

3 year closed      4.35%,     (+0.20%)

4 year closed      5.34%,     (+0.40%)

5 year closed     5.85%,     (+0.60%)

Expect more and more of these announcements this week.

You can compare these mortgage rates against other banks and brokers to see what the best mortgage rate is in your area.

“Bond yields and mortgage rates could head higher before the Bank of Canada’s pledge to hold interest rates steady expires in July. There’s a very good chance long-term rates will head up before then,” Warren Jestin said in Toronto at a briefing sponsored by the Investment Funds Institute of Canada.

He also said that homeowners and variable rate mortgage holders shouldn’t take the Bank of Canada’s bland announcement about keeping rates steady last week at face value, but read the “fine print” as he believes it’s likely 3 & 5 year fixed mortgage rates will be higher before July 2010.

Although this is a longer view than our Mortgage Rate Outlook Panel, you may want to see what short term view our panel of experts have on mortgage rates.