Weekend Reading: Cheap Mortgage Edition

The big news this week was Investors Group taking the mortgage market by storm, offering a 3-year variable rate mortgage at 1.99%.  The rate will be offered for a limited time and is only available through Investors Group – not through brokers.

As with most limited time offers there are conditions – namely that you cannot break your mortgage unless you sell your house.  The mortgage does allow you to double up on payments and pay a 15% lump sum every year.

Investors Group is a bit player in this space, accounting for only 1% of the total mortgage market in Canada, so the deal has definitely raised some eyebrows.  Those who worry about teaser rates luring Canadians to borrow more than they can afford should note that home buyers who opt for a variable rate must prove they can qualify at the 5-year posted rate of 4.99%.

Weekend Reading

Rob Carrick says he won’t be issuing any more warnings about the dangers of high household debt levels.  Here’s why he’s moving on from that debate.

On my Earn Save Grow blog, I looked at the high cost of upgrading your house every few years.

Some gentle prodding from Preet Banerjee to start your 2014 financial spring cleaning check list.  Get on it, he says.

Friend of the blog Barry Choi highlighted some of his favourite money tips from the latest MoneySense magazine.

Advice-only financial planner Sandi Martin shares her reasons for purchasing small life insurance policies for her children.

Nelson at Financial Uproar says that you shouldn’t worry about retirement if you’re under 40.  Just keep saving.

Dan at How To Save Money shared his simple strategy for maximizing Air Miles.

John Heinzl at the Globe and Mail listed some great examples of how to know when your adviser is behaving badly.

Mark from My Own Advisor explains the dividend tax credit.

A new restaurant set to open in B.C. drew a lot of publicity for its policy of banning tipping.  Instead the restaurant will pay its servers and cooks more, which will obviously be reflected in the menu prices.  I say, it’s about time.

Speaking of restaurants, I enjoyed the story of a Calgary restaurant offering a $5 discount for well-behaved children during Mother’s Day brunch.

Chase Canada is the only credit card issuer to waive the 2.5% foreign currency conversion fee with its Amazon.ca Rewards Visa, Marriott Premier Rewards Visa, and Sears Voyage MasterCard.  Patrick Sojka of Rewards Canada explains why ‘no foreign transaction fees’ hasn’t caught on with other card issuers.

Carl Richards asked his Twitter followers what budgeting software they used to track expenses.  The overwhelming response was – an Excel spreadsheet.

Have a great weekend, everyone!

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  1. Barry Choi on May 15, 2014 at 4:24 pm

    As usual thanks so much for the shout out!

    I suspect that Investors Group is offering those killer rates so they can #1) Get media attention #2) sell clients on their high MER Mutual funds with deferred sales charges.

    Take a loss so they can sell them on the big ticket items.

  2. Rick Manjin on May 15, 2014 at 6:23 pm

    Investors Group 1.99% 3 year variable rate is a very low rate but I am concerned that this will tip more people into a debt load that is not manageable long term.

    The 2008 U.S. housing crash is a good example of what happens when too much debt is taken on and the economy goes through a rough downturn.

    Unemployment, higher debt loads, and higher property taxes, utilities, H.S.T on almost everything, insurance, gas, food etc., the general cost of living is a more important long term factor then higher interest rates.

  3. Dan @ Our Big Fat Wallet on May 15, 2014 at 10:23 pm

    Thanks for the mention Robb! I agree – the super low variable rate of 1.99% comes with lots of fine print and is a teaser rate……very similar to what happened in the US before their housing market crashed. Hopefully we don’t see the same outcome here

  4. xoxox on May 16, 2014 at 5:46 am

    Investors Group holds 1% of the market. As well, the same rules to qualify for a mortgage presumably apply. The rules in Canada are much more restrictive than what was the case in the U.S. Seems highly unlikely that this offer is going to lead us into a housing crash any quicker than would be the case if the offer were not available. By the way, one can negotiate a 3 year fixed mortgage at the big banks for around 2.5%.

  5. My Own Advisor on May 16, 2014 at 6:46 am

    Thanks for the mention Robb!

    A 3-year variable rate mortgage at 1.99% is very cheap.


  6. Kat on May 16, 2014 at 10:36 am

    While that mortgage may come with a lot of restrictions, it could end up enticing other banks to start offering even lower interest rates. After all, it has been done before. I’ll be watching this one closely…

  7. Stephen Weyman on May 16, 2014 at 6:51 pm

    Thanks for mentioning the Air Miles article Robb! I wish my mortgage had been 1.99% instead of 5.05%!

  8. Patrick S on May 21, 2014 at 6:16 pm

    Thanks for the mention Robb!

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