February Mortgage Update

Rate Update

Bond Yields have been hovering around the 1.4% mark since last Wednesday.  When these increase, the cost of funding fixed rate mortgage also increases.  Should there be further upward pressure on bond yields we could see a bump in the fixed rate market.  We recently saw some of the major banks pull their 4 and 5 year specials, while some of the smaller lenders are still offering some very competitive quick close deals.  That being said, we are still in an ultra low rate environment, making this an ideal time to consider early renewals and refinances.

Changes at CMHC

We’re all familiar with CMHC, the government backed agency that provides insurance to lenders on mortgages with less than 20% equity.  Borrowers with less than a 20% down payment are required to pick up the tab for the insurance premium on these mortgages.  What most borrowers don’t realize is that lenders will often bulk insure mortgages that don’t require this insurance.  Their reason for doing this is that it allows them to mitigate risk and sell these mortgages off in the secondary market, which lowers their capital cost requirements.  Right now the government is debating whether they should allow CMHC to increase its current insurance cap, which stands at $600 billion, click here for the National Post article.  Since many lenders rely bulk insurance to balance their books and keep their funding costs low, this could potentially be a game changer in the mortgage market.  We’re all paying close attention to see what transpires next.

BJ Block

604-916-0390

bj@mortgagebrokerteam.ca

January Mortgage Update

2012 has started out with a bang.  Here are some highlights!

NO CHANGE IN OVERNIGHT/PRIME RATE

The Bank of Canada Rate stayed unchanged yesterday for the 16th straight month in a row.  This is has been the longest stretch on record without a rate change.  In it’s official statement the BOC stated that they do not anticipate the economy to reach its fullest capacity until Q3 of 2013.  Those in variable rate mortgages will see no change in their monthly payments.  Lenders have responded in kind by cutting discounts previously offered on variable rates, but as we have seen over the past week, this is has driven up competition in the fixed market.

RATE WARS

I’ve received numerous emails this week about Bank of Montreal and their 5 year “no frills”  fixed mortgage at 2.99%.  This is certainly an impressive rate, but comes with several catches.  Click HERE for an excellent comparative article on this product.

It didn’t take long for other lenders to step up and compete with 5 year terms matching this rate, and 4 year terms as low as 2.89%. This kind of fierce competition is great for borrowers, we are truly seeing the lowest fixed rates in history.  One thing that is crucial when dealing with rates this heavily discounted is to make sure that borrowers are not giving up important terms in the mortgage that could save them money.  Often times borrowers are better off paying 10 basis points more on the rate and having a full feature 5 year term.  Through all the promotions, gimmicks and rate drops,  having an independent mortgage professional advise you can save money as well as some unwelcome surprises down the road.

MAKE  MONEY ON YOUR HOME THROUGH REBATES

Most people are familiar with First Time Home Buyers rebates, but few realize how many opportunities exist to claim other rebates associated with your home.  In the same way we work with clients to make sure they are saving every penny on interest payments, we also want to make sure the investment of your home is providing opportunity as well.  Click here for a great overview on the available rebates on your home.

Whether you’re a first time home buyer, or are well into a current mortgage, my phone is always on for any questions or inquiries you may have.

BJ

bj@mortgagebrokerteam.ca

604-916-0390

December Mortgage Update

No Rate Increase from the BOC

No big surprise here, but in its recent announcement on Dec 6th the Bank of Canada left its policy rate at 1%, which means Prime will remain at 3%. Those holding variable rate mortgages will see no change in their monthly payments.  The general consensus is that there will continue to be no change on the next announcement coming up on January 17th.  Lenders have continued to adjust their pricing on variable products to reflect the low Prime rate, some even charging premiums on 5 year variable rate mortgages.  Recently, the most popular terms have been in 4 and 5 year fixed mortgages, with pricing being very competitive across the board.

What the huge profits from the Big 6 tell us

One of the most important things a broker can do is make sure clients are paying as little interest as possible on their mortgage.  Reported Q4 earnings on the Big 6 banks range from $294 million for smaller institutions to $1.6 billion.  Looking at these figures, it’s no surprise so many are over paying on interest and IRD penalties, and under utilizing allowances meant to save them money.

As this year comes to a close, I’ve been connecting with all my clients for our annual review, making sure we’re making the most of our pre-payment privileges and not taking the first offer when a mortgage comes up for renewal.    20% of people do not take the time to shop and negotiate at renewal.  Many lenders seize this opportunity to increase the cost of borrowing through the convenience of ‘sign here and you are renewed’ while spiking up the rate.   Given the aforementioned profits from the big 6, borrowers should take note and be sure to consult a trusted advisor annually and upon renewal to make sure they are keeping their cost of borrowing as low as possible.

BJ

604-916-0390

September Mortgage Update

Fall is coming into full swing, and we’re starting to see more activity as people get back to work and start to look at their housing and finances.  The Fall market typically sees an increase in activity, and with mortgage rates remaining low, home buyers can expect to see some opportunities come their way.

RATE NEWS

In a recent announcement the Bank of Canada kept its key lending rate at 1%, so this means that Prime will stay put at 3%.  Those who have variable rate mortgages will see no change in their monthly payments.  Most analysts agree that there will be no change on the next interest meeting on October 25th, some even speculate a rate decrease.  Though this is unlikely, we can expect rates to stay put for the remainder of the year.  5 year bond yields, which influence fixed rates, sit just over 13 basis points above their all time low.  As a result we’re seeing extremely competitive 5 year fixed rates – check the website for updates.

“BUT I’VE BEEN A CUSTOMER FOR 25 YEARS?!”

This video really sums it up….

This is a statement I hear often from clients who feel they will get better service and pricing from their banks.  A recent study by the Bank of Canada shows that existing customers pay more than new customers at their bank.  In a business driven by market share and new business this comes as no surprise.  What this study reveals is that  no lender is consistently priced below all others – pricing is very dynamic.  Whether you’re taking on a refinance, renewal or purchases, be sure to take on some independent advice.  I recently experienced this first hand with my own bank, where my family has done business for 30 years – despite a long standing relationship, when it comes right down to it, the bank works for the bank.  With hundreds of thousands of customers, it’s no surprise when people feel they aren’t getting appropriate consideration when a corporate office in Toronto is deciding how they should be treated.

TO FIX OR NOT TO FIX

This is the most common question asked of brokers.  This recent article in the Financial Post takes a look at this question.    In recent months the 5 year variable mortgage has increased in popularity, driven by long term projections that rates will remain low.  But with fixed rates close to historical lows, many borrowers hesitate to take on a variable when they can lock in for 5 years. Hybrid mortgages offer a unique solution to this dilemma.  Hybrid mortgages allow borrowers to put a portion of their mortgage in a fixed rate, and a portion in a variable rate.  The amount can be weighed towards one side or the other – this provides a creative solution for borrowers who would like to take advantage of low variable rates but would also like to mitigate their risk.

Whether its a Purchase, Renewal or Refinance my phone is always on to help!

BJ

604-916-0390

May Mortgage Update

The Canucks are winning and Spring is in full effect!  The housing market is showing signs of a positive season to come, all in all there is much to celebrate!

Our office was recently nominated for ‘Best Customer Service in Canada‘ for the Canadian Mortgage Professional Awards.  Huge congrats to everyone for making it happen!

Benjamin Tal, one of Canada’s leading economists recently weighed in on the future movement of interest rates.  It is his prediction that we will not see any significant movement in rates in then next year, largely due to a sluggish economic recovery in the US (click here for full report). Those currently in variable rate mortgages can expect their payments to remain stable over the next year, but should remain diligent in communicating with a mortgage professional to make sure a game plan is in place for the future.

65% of People who renewed their mortgage in the last 12 months are paying lower interest than they were previously.  While the Prime Rate has remained relatively unchanged, we have seen some incredibly competitive pricing in 3 and 5 year fixed mortgages.  This is an ideal time to take a good honest look at your mortgage, and make sure you positioned in the best possible product.

Interested in using Equity to increase the Value of your home? I recently collaborated with Kevin Brown and Lance Holcombe of Infinity Home Construction .  We’ve devised an excellent strategy where home owners with equity in their home can re-invest those gains back into their home and improve their quality of living…..(read more)