Limited-time variable rate offers substantial savings and payment flexibility
Toronto-Dominion Bank has launched a competitive variable mortgage rate promotion, but appears to be keeping it relatively under the radar.
The offer, 6.19% for uninsured mortgages, is currently the lowest among major lenders, offering a discount of 101 basis points below the national prime rate of 7.20%.
“From time to time, we offer special rates to win more business,” a TD spokesperson said in a statement. “In this case we are offering a limited time, two-week uninsured special to kick off the spring market.”
Best uninsured variable mortgage deal
Mortgage strategist Robert McLister said TD's deal is the best widely available uninsured variable discount since 2021.
"It's a cool 54 bps below the next lowest rate from a nationally advertising variable-rate lender," McLister wrote.
The two-week variable rate promotion expires on May 14th and is available through mortgage brokers and TD's own mortgage specialists. As an added incentive, TD offers cash bonuses of up to $4,100 to new mortgage customers, reducing the rate by another 10 basis points over a five-year term.
Keeping a low profile
However, three days into the rate promotion, the offer was nowhere to be found on TD's website. When asked directly why the rate was not being publicly advertised, the bank declined to provide an explanation.
McLister speculated that TD might be intentionally keeping the rate low-profile to avoid potential heat from policymakers in Ottawa, who are wary of anything that could inflame the country's housing market and household debt levels, especially amidst stubbornly high inflation.
"A TD insider speaking on background tells me that the bank may want to keep the rate low profile given potential heat from Ottawa," McLister said. "Policymakers don't want to see anything inflame the housing market and debt levels."
Lack of transparency
The mortgage strategist lamented TD's lack of transparency, stating, "In the age of 24/7 media and tweetstorms, everyone can find out what you're doing as a bank, including regulators. Maybe it's time banks skipped the masquerade and embraced transparency—good for PR, if nothing else."
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McLister noted that TD is not alone in its reluctance to publicly advertise its most competitive rates, describing it as a common practice among major banks seeking to maximize profitability. "All the big banks play these games—i.e., refuse to show their lowest rates publicly—because it's more profitable for them that way," he stated.
Additional perks
The mortgage expert highlighted additional perks of TD's variable rate offer. Borrowers have the option to fix their payments to protect their budget against potential rate increases while still allowing for accelerated payoff if rates drop. Alternatively, customers can request an adjustable-rate mortgage (ARM), where payments decrease as the prime rate falls.
For buyers with at least 20% home equity, TD's "FlexLine" product enables splitting the mortgage between a portion at the low variable rate and a portion at a higher fixed rate. This hedges interest rate risk while reducing prepayment penalties.
According to McLister, TD's variable rate promotion is the first major bank rate promotion of the spring season. It "tosses a firecracker into the spring housing market."
He anticipates it will force other major lenders, particularly TD's arch-rival Royal Bank of Canada, to sharpen their pencils in the heated battle for mortgage market share.
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