There are low mortgage rates and then there’s this one. A credit union has shaken up the spring buying season by offering a rate of just 1.49 per cent and is marketing it as “the lowest known posted mortgage rate in Canadian history”. The Toronto based Meridian’s fixed rate is however only a short loan, just 18 months, and is only available to those in Ontario through the credit union’s 67 branches, not online. Rob McLister, founder of ratespy.com, told the Financial Post that it will save buyers $1,609 of interest for every $100,000 borrowed.
The concern is that at the end of the eighteen months of super-low repayments buyers may emerge into a very different climate; interest rates could have increased by then leaving them with a hefty hike. Meridian’s Bill Whyte says that the loans will be offered only to those passing a strong stress test and they work with borrowers to ensure they understand all the implications.