Variable Rate Mortgages Are on the Rise

April 29, 2011

Many have noticed that variable rates are on the rise. The discount to prime rate has been reduced dramatically in the last few days.

Most banks have reduced the discount from 0.75% to 0.50%. So, the current variable rate is at prime rate minus 0.50%. Effectively, a homeowner's rate will be at 2.50% (3% - 0.50%). This reduction on discounts is based on a mortgage lender's cost of operation. Many lenders do not make a profit on the variable rate mortgages.

There are only a handful of lenders that still offer some good discount. We expect those to disappear early next week.