Variable Rate Mortgage Spreads Expected to Get Better

Posted by Anuj Gupta, AMP, BComm of Alberta Mortgage

In 2008, it appeared that Variable Rate Mortgages had changed forever. The consensus opinion among industry experts was that Canadian Home Owners would not see "Prime - " for a long time. The prediction was that it would at least be a few years before the market would even see variable rate mortgages @ Prime. However, with increased competition and returning stability it appears that Canadian Homeowners can expect a much sooner return to the days of deeply discounted Variable Rate Mortgages.

Shortly after the initial "market meltdown of 2008" in early 2009, many Canadian mortgage lending institutions either increased their variable rate spreads as high as Prime + 1.00%, or abandoned variable rate lending terms altogether. It appeared that things had changed forever. However, in the 3rd Quarter of 2009 we saw heavy competition in the Variable Rate Market return. Lenders began aggressively pricing their Variable Rate Mortgage Products, and have continued the trend. Presently, Variable Rate Mortgage terms have fallen to Prime - 0.30%*, and swing of 1.30% in 12 months!

As 2010 continues, I would expect to see this trend continue. Of course, anything can happen --but the market is indicating a return of deeply discounted variable rate mortgage terms.

For more information regarding variable rate mortgages, or to be prequalified call one of the qualified mortgage professionals at Alberta Mortgage @ 780-479-2222 or Apply Online @ http://www.albertamortgagecentre.com.

*subject to qualification criteria.