One broker has gone on the offensive to combat Investors Group’s 1.99 per cent three-year variable rate by outlining the product’s drawbacks.
"With the Canadian spring real estate market heating up across the country, many potential home buyers may be looking at the 1.99% rate as the perfect opportunity to jump onto the property ladder," Bob Aggarwal, president of Canadalend.com says in an official release. "There's more to the Investors Group's 1.99% rate than meets the eye."
The financial planning firm made headlines last Tuesday with its Prime – 1.01 per cent 36 month closed variable-rate.
"Getting in at 1.99% might sound like a great idea, but it's important to remember that variable mortgage rates fluctuate with the prime rate throughout the mortgage term," Aggarwal says in the release. "It's tough to predict where mortgage rates will go in the next three years, but chances are good they'll move higher, which means more money going to interest and less being used to pay off the principal each month."
Aggarwal also points out that homebuyers who do not put 20 per cent down will have to qualify for a mortgage rate of 4.99 per cent.
Of course, he isn’t the first broker to point out the rate’s shortcomings.
“The product is a fit for someone who knows 100 per cent that they will not move and is 100 per cent sure rates will not move,” Jake Abramowicz of Mortgage Edge told MortgageBrokerNews.ca last Thursday. “If someone can accurately predict the future they should take it – it’s a great rate.”
Monolines surprised by IG rate; clients curious