HSBC offers mortgage rate below one per cent

A pedestrian passes a branch of HSBC bank in London, U.K., Feb. 27, 2012. (AP / Kirsty Wigglesworth, File)

TORONTO — HSBC says it will offer rates below one per cent for some mortgages, which rate comparison website RateSpy.com says is a record low for Canada.

The bank is advertising a 0.99 per cent rate on its website for new five-year variable closed term mortgages, with the annual percentage rate, or APR, based on a $200,000 mortgage.

The deal applies to high-ratio residential mortgages, which means the homebuyer has a down payment of less than 20 per cent of the purchase price.

Rates.ca and RateSpy editor Robert McLister says that's an important point, because the low down payment means the homebuyer will also have to pay for default insurance.

The rate is also variable based on changes in HSBC's prime rate, which now sits at 1.46 per cent, so the rate could rise over the next few years as the economy mends and the Bank of Canada raises the borrowing rate.

Mortgage rates are currently low, after the Bank of Canada dropped its overnight rate amid the COVID-19 economic downturn.

This report by The Canadian Press was first published Dec. 4, 2020