Variable Rate Update - December 8, 2010
All variable rate mortgages are affected by changes in monetary policy as dictated by the Bank of Canada. Generally, when the Bank of Canada (BOC) decides to move its “overnight lending rate”, chartered banks and other financial institutions react by moving their prime rate accordingly. I prepared the following summary to help you track the market:
What Happened?
As expected, The Bank of Canada announced this morning that it will leave its overnight interest
rate unchanged at 1%. It also signaled that any future changes to their rate will be carefully considered as threats to the global economy have increased. Following this decision, banks and other lenders are expected to leave their prime rate at 3%.
How Does This Affect You?
Assuming you were comfortable with being in a variable rate yesterday, today’s decision should give you even more reassurance that this is a good place to be in the short-medium term. While fixed rates have inched up over the last month, there is no apparent reason to lock-in immediately. That said, for those concerned about rising rates, a “no commitment” rate hold might be worth securing (see below).
Today’s Average Variable Rate Mortgage: Prime less 0.70% (currently equal to 2.30%)
Variable rate discounts (that is, the reduction below prime) seem to have leveled off after a year of large decreases. If you’ve entered into a variable rate term over the last couple of years, it may be worth switching into a new variable mortgage with a better discount off prime. Figuring this out involves a very straightforward calculation that I’d be happy to assist you with.
Today’s Best “No Commitment” 120 Day Rate Hold: 5 Year Fixed @ 3.79% (Other terms available on request).
Worried about missing out on fixed rates while they’re low? Securing this rate for the next 4 months is as easy as letting me know you’d like to. No obligation, no application, and no credit check necessary.
Outlook and Opinion:
Canada seems to be reluctantly married to low rates over the long term and the typical reasons to raise rates (to calm inflation, to cool off the economy, to keep up with other central banks) appear to be an afterthought at the moment. As long as the Canadian and American Dollar remain close to par, the Bank of Canada will have a very hard time justifying further rate increases. This is because a high Canadian Dollar acts as a drag on the economy while at the same time reduces inflation by lowering the cost of our imports. Today’s rate decision had very little effect on the bond market, signaling that the experts believe low rates are here to stay.
Providing you have risk tolerance and flexibility in your budget to withstand higher payments over time, variable rates will likely provide a larger interest savings over the next five years.
The next Bank of Canada meeting and decision date on rates is January 18th, 2011.
Wednesday, December 8, 2010
Thursday, November 25, 2010
Strategies for Paying Down your Mortgage
I know its a little early for New Years resolutions but when it comes to saving thousands in interest its always a good time!!
Strategies for Paying Down your Mortgage
Set a Goal – We have all heard the saying "failing to plan is a plan to fail" so you need to at least think about what you are trying to achieve and take small steps towards that goal. For instance, decide you want to pay an extra $10,000 this year towards your mortgage, then work back and see what you need to do monthly or weekly to achieve your goal.
Establish Savings Habits – It’s pretty difficult to aggressively pay down the mortgage without establishing proper saving habits. Having the ability to generate savings brings a lot of freedom and can ultimately lead to paying off the mortgage faster.
Accelerated Bi-weekly Payments – This is a common strategy that works! By simply paying the mortgage during bi-weekly pay periods (instead of monthly) can result in an extra payment by the end of the year, which ultimately means less interest. This strategy alone can reduce the mortgage amortization by 3-4 years.
Topped up Payments – I like the strategy of topping up mortgage payments as it is forced savings. Even an extra $100 per mortgage payment can make a difference in amortization. Most fixed mortgages allow payments to be topped up by as much as 20%. One of my favorites is to have my variable rate clients set their payments at the 5 year fixed rate. That way they don't even notice the extra money going straight to the principle!!
Annual Lump Sums – This goes back to having savings habits. With strong savings, it enables the homeowner to use up some of those prepayment mortgage allowances. Most mortgages allow a lump sum payment of 15- 20% of the original mortgage balance annually. Take advantage and put large amounts when cash was available. For example, if you sell another asset (ie rental property), do well on some stocks (hopefully!!) or receive an inheritance.
Most of these items are common sense, but sometimes you need a reminder to create a new plan of action. Hope this helps!
Peter McKinnon
www.peterlmckinnon.com
peter_mckinnon@centum.ca
Strategies for Paying Down your Mortgage
Set a Goal – We have all heard the saying "failing to plan is a plan to fail" so you need to at least think about what you are trying to achieve and take small steps towards that goal. For instance, decide you want to pay an extra $10,000 this year towards your mortgage, then work back and see what you need to do monthly or weekly to achieve your goal.
Establish Savings Habits – It’s pretty difficult to aggressively pay down the mortgage without establishing proper saving habits. Having the ability to generate savings brings a lot of freedom and can ultimately lead to paying off the mortgage faster.
Accelerated Bi-weekly Payments – This is a common strategy that works! By simply paying the mortgage during bi-weekly pay periods (instead of monthly) can result in an extra payment by the end of the year, which ultimately means less interest. This strategy alone can reduce the mortgage amortization by 3-4 years.
Topped up Payments – I like the strategy of topping up mortgage payments as it is forced savings. Even an extra $100 per mortgage payment can make a difference in amortization. Most fixed mortgages allow payments to be topped up by as much as 20%. One of my favorites is to have my variable rate clients set their payments at the 5 year fixed rate. That way they don't even notice the extra money going straight to the principle!!
Annual Lump Sums – This goes back to having savings habits. With strong savings, it enables the homeowner to use up some of those prepayment mortgage allowances. Most mortgages allow a lump sum payment of 15- 20% of the original mortgage balance annually. Take advantage and put large amounts when cash was available. For example, if you sell another asset (ie rental property), do well on some stocks (hopefully!!) or receive an inheritance.
Most of these items are common sense, but sometimes you need a reminder to create a new plan of action. Hope this helps!
Peter McKinnon
www.peterlmckinnon.com
peter_mckinnon@centum.ca
Tuesday, November 9, 2010
Mortgage Shopping Revealed!
Here are some recent stats on how consumers shop for mortgages:
Mortgage Shopping
1.96: Average number of mortgage quotes obtained by consumers.
42%: Percentage of mortgagorswho got just one quote.
I guess the idea of shopping around and saving money apparently doesn’t appeal to some folks.
6%: Number of borrowers who got no quotes.
This includes people who simply signed their renewal letter. What a painful thought.
10%: Share of mortgagors who got over three rate quotes.
Pre-payments
12%: Percentage of mortgagors who made a lump-sum pre-payment in the past year.
So many people want 20% pre-payment privileges and so few people use them.
16%: Percentage of mortgagors who increased their regular payments in the past year.
7%: Percentage of mortgagors who did both.
Rate Selection
66%: Chose fixed rates in the last 12 months.
29%: Chose variable/adjustable rate mortgages.
4%: Chose hybrid mortgages (part fixed / part variable).
Term Selection
66%: Took 5-year terms.
8%: Took terms over five years.
26%: Chose terms less than five years.
Professionals Consulted When Mortgage Shopping
70% spoke to a bank rep.
40% spoke to a mortgage broker.
Up five percentage points from last year.
22% spoke to a credit union.
Where People Went For A New Mortgage
40% went to a mortgage broker
39% went to a bank
21% went elsewhere
peter_mckinnon@centum.ca
http://www.peterlmckinnon.com/
Mortgage Shopping
1.96: Average number of mortgage quotes obtained by consumers.
42%: Percentage of mortgagorswho got just one quote.
I guess the idea of shopping around and saving money apparently doesn’t appeal to some folks.
6%: Number of borrowers who got no quotes.
This includes people who simply signed their renewal letter. What a painful thought.
10%: Share of mortgagors who got over three rate quotes.
Pre-payments
12%: Percentage of mortgagors who made a lump-sum pre-payment in the past year.
So many people want 20% pre-payment privileges and so few people use them.
16%: Percentage of mortgagors who increased their regular payments in the past year.
7%: Percentage of mortgagors who did both.
Rate Selection
66%: Chose fixed rates in the last 12 months.
29%: Chose variable/adjustable rate mortgages.
4%: Chose hybrid mortgages (part fixed / part variable).
Term Selection
66%: Took 5-year terms.
8%: Took terms over five years.
26%: Chose terms less than five years.
Professionals Consulted When Mortgage Shopping
70% spoke to a bank rep.
40% spoke to a mortgage broker.
Up five percentage points from last year.
22% spoke to a credit union.
Where People Went For A New Mortgage
40% went to a mortgage broker
39% went to a bank
21% went elsewhere
peter_mckinnon@centum.ca
http://www.peterlmckinnon.com/
Tuesday, October 5, 2010
Where are rates going??
Yields Close At A 17-Month Low
The 5-year government yield (which influences 5-year fixed mortgage rates) closed at 1.998% on Monday, its lowest level in 17 months.
Friday's all-important jobs reports will determine if bonds hold the 2.00% level for the short-term. Employment expectations are pretty low, so it wouldn’t take much for a positive surprise.
If yields do stay below 2%, we may see discounted 5-year rates inch a bit lower.
Lenders currently have plenty of spread (profit) in today’s typical 3.59% five-year fixed.
As usual, economic performance (both here and in the US) will influence bonds over the medium-term. BMO expects “Canadian bond yields to decline a bit further in the coming six months and then [turn higher] once the Bank of Canada resumes tightening.” (Bloomberg)
CIBC predicts “a pause in rates until May.”
The 5-year government yield (which influences 5-year fixed mortgage rates) closed at 1.998% on Monday, its lowest level in 17 months.
Friday's all-important jobs reports will determine if bonds hold the 2.00% level for the short-term. Employment expectations are pretty low, so it wouldn’t take much for a positive surprise.
If yields do stay below 2%, we may see discounted 5-year rates inch a bit lower.
Lenders currently have plenty of spread (profit) in today’s typical 3.59% five-year fixed.
As usual, economic performance (both here and in the US) will influence bonds over the medium-term. BMO expects “Canadian bond yields to decline a bit further in the coming six months and then [turn higher] once the Bank of Canada resumes tightening.” (Bloomberg)
CIBC predicts “a pause in rates until May.”
Other notable facts:
Bloomberg recently surveyed 14 major economists and their consensus is for the next BoC rate hike to come in 2nd quarter 2011. (Businessweek)
Reuters says the markets are pricing in an 89% probability of no change at the BoC’s next meeting on October 19.
TD’s latest forecast calls for a 5.50% prime rate and a 4.35% five-year yield by year-end 2014.
That’s a 250 and 235 basis point increase respectively. Based on historical spreads, that suggests the following rates in four years:
5-year variable rates: 4.75%
5-year fixed rates: 5.60%.
Of course, I don’t have to remind most readers how big the margin of error is in long-range forecasts.
Peter McKinnon
Friday, August 20, 2010
Homebuyers Shouldn't Expect Hot Deals.....
From The Canadian Press Aug 15th, 2010
Sellers are facing more empty open houses and fewer bids on their homes, but experts say
buyers shouldn't expect to see a retreat from record-high home prices when July housing data is
released Monday.
Home sales have fallen 25 per cent since reaching a peak at the beginning of the year as
demand slows and more houses come onto the market. But it will take much longer for sky-high home prices to fall and the market to enter buyer-friendly territory. And history is on the side of the seller.
"Over time, if you were to look at the last 40 years, it's much more common to see sellers'
markets than buyers' markets," said Phil Soper, president of Royal LePage.
"It comes down to the different psychology that exists between buyers and sellers. Buyers are
very quick to adjust to a down market and sellers are very slow to adjust to a down market.
Sellers stubbornly hold onto their perception of what their home is worth, whereas buyers turn on a dime."
Soper expects to see sales decline dramatically from last July's near-record activity, but predicts
there will be little change in home prices when the Canadian Real Estate Association releases its
monthly sales figures Monday.
Seasonally-adjusted home sales fell 8.2 per cent in June from the month before and shrunk 19.7
per cent compared to June 2009. However, the average Canadian home price sat at $342,662
compared to $326,689 in 2009. "You would think prices would come down more rapidly given the drop in sales," said Sal Guatieri, senior economist with BMO Capital Markets.
Guatieri expects to see as much as a 35 per cent year-over-year drop in July home sales. He
projects monthly sales figures will be around 32,600 homes, which would represent the weakest
July since 2001. However, he says price increases will weaken just slightly, and only because
they were so high last year.
"It's only in a so-called buyers' market, where there are lot more listings on the market than sales, that buyers have some bargaining power and sellers are more willing to ease up on price, that we would see prices actually falling," he said.
But Mark Weisleder, a real estate author and lawyer, says real estate agents are beginning to
notice some discernable changes as the Canadian housing market cools off. Buyers are not as rushed to make an offer and are becoming more aggressive in negotiations, while sellers are beginning to accept less than asking price for homes as interest wanes.
"(Agents) are going to open houses, sitting there for three hours, and two people come in at the
most. Right now there doesn't seem to be that level of stampede mentality to go see a house,"
Weisleder said. "I do believe there is a disconnect between some of the data that people are throwing out there every day in the numbers, and slowly you're going to see prices come down."
Many buyers hurried to close in late 2009 and the first half of this year ahead of the new
harmonized sales tax in B.C. and Ontario, new mortgage requirements, and to take advantage of
record-low interest rates.
That pulled ahead sales that might otherwise have occurred in the second half of 2010,
increasing demand and leading to bidding wars in which buyers were willing to overpay to secure
a property. As home prices crept higher and consumers became more confident about an economic recovery, more sellers put their homes on the market, which increased inventory.
Now fewer buyers are shopping for homes just as more listings flood onto the market. That has
shifted the housing balance away from the seller-friendly market into neutral territory, but it's still shy of a buyers' market. Weisleder says the market isn't poised to enter buyers' territory any time soon, as historically low interest rates and a stable economy continue to make buying a Canadian home attractive.
"Because of the interest rates being so cheap to borrow money, prices may not fall too much
because people can still afford (to borrow) probably more than they should," he said.
"But it doesn't mean the house is worth that much," he said, adding that if rates go up it could be
catastrophic for homeowners who have taken on more debt than they will be able to afford.
Meanwhile, sellers have become accustomed to fetching high home prices and want to hang onto
their properties for as long as it takes to get those prices -- although that window has stretched
from a couple of weeks to a few months.
"No seller wants to jump the gun, so a lot of people are sitting on the fence and trying to hold on,"
Weisleder said. "A lot of people are very upset they didn't sell six months ago."
Sellers are facing more empty open houses and fewer bids on their homes, but experts say
buyers shouldn't expect to see a retreat from record-high home prices when July housing data is
released Monday.
Home sales have fallen 25 per cent since reaching a peak at the beginning of the year as
demand slows and more houses come onto the market. But it will take much longer for sky-high home prices to fall and the market to enter buyer-friendly territory. And history is on the side of the seller.
"Over time, if you were to look at the last 40 years, it's much more common to see sellers'
markets than buyers' markets," said Phil Soper, president of Royal LePage.
"It comes down to the different psychology that exists between buyers and sellers. Buyers are
very quick to adjust to a down market and sellers are very slow to adjust to a down market.
Sellers stubbornly hold onto their perception of what their home is worth, whereas buyers turn on a dime."
Soper expects to see sales decline dramatically from last July's near-record activity, but predicts
there will be little change in home prices when the Canadian Real Estate Association releases its
monthly sales figures Monday.
Seasonally-adjusted home sales fell 8.2 per cent in June from the month before and shrunk 19.7
per cent compared to June 2009. However, the average Canadian home price sat at $342,662
compared to $326,689 in 2009. "You would think prices would come down more rapidly given the drop in sales," said Sal Guatieri, senior economist with BMO Capital Markets.
Guatieri expects to see as much as a 35 per cent year-over-year drop in July home sales. He
projects monthly sales figures will be around 32,600 homes, which would represent the weakest
July since 2001. However, he says price increases will weaken just slightly, and only because
they were so high last year.
"It's only in a so-called buyers' market, where there are lot more listings on the market than sales, that buyers have some bargaining power and sellers are more willing to ease up on price, that we would see prices actually falling," he said.
But Mark Weisleder, a real estate author and lawyer, says real estate agents are beginning to
notice some discernable changes as the Canadian housing market cools off. Buyers are not as rushed to make an offer and are becoming more aggressive in negotiations, while sellers are beginning to accept less than asking price for homes as interest wanes.
"(Agents) are going to open houses, sitting there for three hours, and two people come in at the
most. Right now there doesn't seem to be that level of stampede mentality to go see a house,"
Weisleder said. "I do believe there is a disconnect between some of the data that people are throwing out there every day in the numbers, and slowly you're going to see prices come down."
Many buyers hurried to close in late 2009 and the first half of this year ahead of the new
harmonized sales tax in B.C. and Ontario, new mortgage requirements, and to take advantage of
record-low interest rates.
That pulled ahead sales that might otherwise have occurred in the second half of 2010,
increasing demand and leading to bidding wars in which buyers were willing to overpay to secure
a property. As home prices crept higher and consumers became more confident about an economic recovery, more sellers put their homes on the market, which increased inventory.
Now fewer buyers are shopping for homes just as more listings flood onto the market. That has
shifted the housing balance away from the seller-friendly market into neutral territory, but it's still shy of a buyers' market. Weisleder says the market isn't poised to enter buyers' territory any time soon, as historically low interest rates and a stable economy continue to make buying a Canadian home attractive.
"Because of the interest rates being so cheap to borrow money, prices may not fall too much
because people can still afford (to borrow) probably more than they should," he said.
"But it doesn't mean the house is worth that much," he said, adding that if rates go up it could be
catastrophic for homeowners who have taken on more debt than they will be able to afford.
Meanwhile, sellers have become accustomed to fetching high home prices and want to hang onto
their properties for as long as it takes to get those prices -- although that window has stretched
from a couple of weeks to a few months.
"No seller wants to jump the gun, so a lot of people are sitting on the fence and trying to hold on,"
Weisleder said. "A lot of people are very upset they didn't sell six months ago."
Tuesday, August 17, 2010
Bank Rate goes up, 5 years come down!!
What a roller coaster ride we've had this year......
3 months ago we were looking at bond yields over 3% which drove 5 year rates to 4.59% (thanks RBC!!) and the threat of Bank of Canada increases and higher rates to come.
Skip ahead, and we've had 2 BoC rate increases, bank prime now sitting at 2.75%, but corporate bond yields have crashed to the 2.15% allowing mortgage lenders to drop 5 year fixed rates. As of today my best is 3.69%!! with the majority hovering in the 3.89%- 4.09%.
On the real estate side, we're now told by the media that we have a buyer's market in Vancouver. Cheap money and a buyers' market? Who would have guessed?
Here are the current rates as of today: OAC and subject to change of course!!
5 year fixed Quick Close 3.69% must fund within 30 days of application
5 year fixed Standard 4.09%
3 year fixed 2.90%
5 year VRM prime - 0.65% 2.10%
3 year VRM prime - 0.75% 2.00%
peter_mckinnon@centum.ca
www.peterlmckinnon.com
cell 604-506-6789
3 months ago we were looking at bond yields over 3% which drove 5 year rates to 4.59% (thanks RBC!!) and the threat of Bank of Canada increases and higher rates to come.
Skip ahead, and we've had 2 BoC rate increases, bank prime now sitting at 2.75%, but corporate bond yields have crashed to the 2.15% allowing mortgage lenders to drop 5 year fixed rates. As of today my best is 3.69%!! with the majority hovering in the 3.89%- 4.09%.
On the real estate side, we're now told by the media that we have a buyer's market in Vancouver. Cheap money and a buyers' market? Who would have guessed?
Here are the current rates as of today: OAC and subject to change of course!!
5 year fixed Quick Close 3.69% must fund within 30 days of application
5 year fixed Standard 4.09%
3 year fixed 2.90%
5 year VRM prime - 0.65% 2.10%
3 year VRM prime - 0.75% 2.00%
peter_mckinnon@centum.ca
www.peterlmckinnon.com
cell 604-506-6789
Thursday, June 17, 2010
Interview with Odlum Brown Strategist on whats to come from interest rates
If you haven't had enough opinions offered or articles about what to expect in the coming months and years, here's some great points from Hank Cunningham, Fixed Income Strategist for Odlum Brown with over 40 years experience.
These excerpts are from Canadian Mortgage Trends http://www.canadianmortgagetrends.com/
an invaluable resource for what's going on in the mortgage world!
On long-term interest rates…
Hank: I don’t see much upward pressure on rates—not in the developed world. There’s no inflation to speak of. In fact, inflation continues to recede in most places if anything.
On the European debt crisis…
Hank: The sovereign debt issue is a major problem, but it’s confined to a part of the globe where it’s not going to have a material impact on the rest of the world. Certainly not from a growth point of view.
On long-term rates one year from now…
Hank: You’re going to see a flatter yield curve looking out a year. The spread between a 1-year mortgage and a 5-year mortgage is going to be a lot narrower. The yield curve is still steep right now. I think (mortgage) clients are still better off floating than they are fixing.
One of the other things you have to think about is the amount of debt coming due by governments. The U.S. has 40% of its debt maturing in the next three years. They don’t want higher inflation and interest rates.
On inflation risk…
Hank: Inflation is just under 2% in Canada. In the U.S. it's under 1% actually.
The 5-year rate might go up a bit, but the market will get anticipatory (and discount the Bank of Canada’s future rate increases)…and then, longer-term yields should come back down. People tend to underestimate the discounting nature of the market.
Note: I have removed a great technical analysis of effect bond yields to save some of you from getting too detailed, if you'd like to read more http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/06/1-on-1-with-hank-cunningham.html
On economists’ forecasts of the Bank of Canada…
Hank: Economists generally do straight line forecasting. They don’t allow a lot of room for (unexpected) changes in the marketplace. Rate forecasts depend on your view of the world. My view of the world is one of growth with very little inflation. In that scenario there is no need for serious tightening. Market rates will rise if the demand for money rises. The market really acts independently from the Bank of Canada, as you know.
On where we go from here…
Hank: The BoC has already indicated that rates are going up. It (the hike in June) won’t be the last increase in the Bank rate. You’re going to see a flatter yield curve for sure.
The banks have been funding longer-term mortgages with short-term money. They pay nothing on savings and charge 4% for a mortgage. It’s been easy arbitrage. In 12-18 months that will be over.
In the meantime, people with mortgages will be “forced” to fix at the wrong time, right before rates come back down again. It happens, and it’s going to happen again. We’ve already had one false move in rates.
On going fixed or variable…
Hank: Money has been cheap. If people have fear of rates rising, you can fix right now and still have cheap money. I have no problem recommending that. But if you’re playing it close to the chest, I would stay floating right now.
Have a great weekend!
Peter McKinnon
http://www.peterlmckinnon.com/
peter_mckinnon@centum.ca
These excerpts are from Canadian Mortgage Trends http://www.canadianmortgagetrends.com/
an invaluable resource for what's going on in the mortgage world!
On long-term interest rates…
Hank: I don’t see much upward pressure on rates—not in the developed world. There’s no inflation to speak of. In fact, inflation continues to recede in most places if anything.
On the European debt crisis…
Hank: The sovereign debt issue is a major problem, but it’s confined to a part of the globe where it’s not going to have a material impact on the rest of the world. Certainly not from a growth point of view.
On long-term rates one year from now…
Hank: You’re going to see a flatter yield curve looking out a year. The spread between a 1-year mortgage and a 5-year mortgage is going to be a lot narrower. The yield curve is still steep right now. I think (mortgage) clients are still better off floating than they are fixing.
One of the other things you have to think about is the amount of debt coming due by governments. The U.S. has 40% of its debt maturing in the next three years. They don’t want higher inflation and interest rates.
On inflation risk…
Hank: Inflation is just under 2% in Canada. In the U.S. it's under 1% actually.
The 5-year rate might go up a bit, but the market will get anticipatory (and discount the Bank of Canada’s future rate increases)…and then, longer-term yields should come back down. People tend to underestimate the discounting nature of the market.
Note: I have removed a great technical analysis of effect bond yields to save some of you from getting too detailed, if you'd like to read more http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/06/1-on-1-with-hank-cunningham.html
On economists’ forecasts of the Bank of Canada…
Hank: Economists generally do straight line forecasting. They don’t allow a lot of room for (unexpected) changes in the marketplace. Rate forecasts depend on your view of the world. My view of the world is one of growth with very little inflation. In that scenario there is no need for serious tightening. Market rates will rise if the demand for money rises. The market really acts independently from the Bank of Canada, as you know.
On where we go from here…
Hank: The BoC has already indicated that rates are going up. It (the hike in June) won’t be the last increase in the Bank rate. You’re going to see a flatter yield curve for sure.
The banks have been funding longer-term mortgages with short-term money. They pay nothing on savings and charge 4% for a mortgage. It’s been easy arbitrage. In 12-18 months that will be over.
In the meantime, people with mortgages will be “forced” to fix at the wrong time, right before rates come back down again. It happens, and it’s going to happen again. We’ve already had one false move in rates.
On going fixed or variable…
Hank: Money has been cheap. If people have fear of rates rising, you can fix right now and still have cheap money. I have no problem recommending that. But if you’re playing it close to the chest, I would stay floating right now.
Have a great weekend!
Peter McKinnon
http://www.peterlmckinnon.com/
peter_mckinnon@centum.ca
Thursday, June 10, 2010
Housing Prices to fall in 2011??
I have had more than a few clients asking me about the recent studies released by the Canadian Real Estate Association (CREA) indicating a 3.5% decrease in the price of homes in BC by the end of 2011.
Should I wait to buy? I am asked.
Well, the same report predicts an increase of 2.3% for the balance of 2010. Assuming that there is no margin of error in these "studies" that would indicate a net decrease of approximately 1.2% if you were to wait for the next 18 months to make your purchase.
Lets do some common sense math. If I was to purchase the average Vancouver home at approx $700,000, a 1.2% savings would be $8,400. Nothing to sneeze at by any means! That would cover the land transfer tax on your eventual purchase. But, lets be realistic here.....if you are renting right now waiting to buy, you will undoubtedly spend more than $8,400 over the next 18 months. Also if mortgage rates increase by the predicted 1 -2 % over the same period you could pay $ 6,000 - 12,000 more in mortgage interest (assuming a 10% down payment).
If you are already a homeowner and are thinking of a move, you know how hard it is to time the sell and the buy, without a rental period in between to catch the best conditions of each transaction.
My advice?? If your purchase is for your home, get out with a qualified realtor and get a good deal on what you want....now.
Peter McKinnon, Centum Pacific Mortgages
Vancouver
http://www.peterlmckinnon.com/
peter_mckinnon@centum.ca
Should I wait to buy? I am asked.
Well, the same report predicts an increase of 2.3% for the balance of 2010. Assuming that there is no margin of error in these "studies" that would indicate a net decrease of approximately 1.2% if you were to wait for the next 18 months to make your purchase.
Lets do some common sense math. If I was to purchase the average Vancouver home at approx $700,000, a 1.2% savings would be $8,400. Nothing to sneeze at by any means! That would cover the land transfer tax on your eventual purchase. But, lets be realistic here.....if you are renting right now waiting to buy, you will undoubtedly spend more than $8,400 over the next 18 months. Also if mortgage rates increase by the predicted 1 -2 % over the same period you could pay $ 6,000 - 12,000 more in mortgage interest (assuming a 10% down payment).
If you are already a homeowner and are thinking of a move, you know how hard it is to time the sell and the buy, without a rental period in between to catch the best conditions of each transaction.
My advice?? If your purchase is for your home, get out with a qualified realtor and get a good deal on what you want....now.
Peter McKinnon, Centum Pacific Mortgages
Vancouver
http://www.peterlmckinnon.com/
peter_mckinnon@centum.ca
Friday, May 28, 2010
Rate Update May 28th
Mortgage Rate Update
Government of Canada bond yields have dropped to 2.60%. and 5 year discounted fixed are currently 4.39%. In March when bond yields were this low, 5 year rates were at 3.69%. Could be some room for further declines. Next Tuesday, June 1st, is the next rate announcement from the Bank of Canada so we'll have to wait and see. Earlier this week, the OCED was pressuring Mark Carney to raise interest rates in Canada to bring them back to natural levels, but it is still anybody's guess.
Fixed rate mortgages
3 year 3.75%
5 year 4.19% best discounted
5 year 4.59% standard
Variable rate Mortgages
3 year 1.65% special
5 year 1.75%
Contract qualifying rate
6.10% (applies to variable mortgages and terms of less than 5 years)
Government of Canada bond yields have dropped to 2.60%. and 5 year discounted fixed are currently 4.39%. In March when bond yields were this low, 5 year rates were at 3.69%. Could be some room for further declines. Next Tuesday, June 1st, is the next rate announcement from the Bank of Canada so we'll have to wait and see. Earlier this week, the OCED was pressuring Mark Carney to raise interest rates in Canada to bring them back to natural levels, but it is still anybody's guess.
Fixed rate mortgages
3 year 3.75%
5 year 4.19% best discounted
5 year 4.59% standard
Variable rate Mortgages
3 year 1.65% special
5 year 1.75%
Contract qualifying rate
6.10% (applies to variable mortgages and terms of less than 5 years)
Wednesday, May 19, 2010
Wednesday, May 12, 2010
Who says sandwichboard advertising is dead??
Caught Marvin Barclay of Century 21 In Town Realty trying out a new, or is it an old marketing technique!
He has created his own mini monopoly cards as his business cards. And created these larger versions to wear as he walks around downtown.
http://www.century21.ca/marvin.barclay
Time will tell if the age old sandwich board is making a comeback!
Tuesday, May 11, 2010
5 year Fixed Rates Ease with Bond Yields
Just like the weather man, economists can be wrong as well!!
After the quick jump in interest rates by the big banks forseeing their "costs" rising as the bond yields climbed to 3.00%, we now have a easing this week. We have had a number of lenders drop their 5 year rates by 15 basis points. Why?
GREECE! With the crisis is Europe unfolding in the financial markets we have had a flight back to North American assets. Have you noticed the stronger US dollar? This is because investors who are worried about their exposure to European investments, are they selling them and moving back into American and Canadian dollars. A very popular, "safe" investment is to buy our government bonds. This has led to a lowering of 5 year government bond yields..
http://www.bloomberg.com/apps/quote?ticker=GCAN5YR%3AIND
How low will they go? When will they move back up? These days that is like picking the winning 6/49 numbers! But if you are shopping now or have any mortgage renewal or refinancing to do get on with it!
Regards,
Peter McKinnon
peter_mckinnon@centum.ca
http://www.peterlmckinnon.com/
After the quick jump in interest rates by the big banks forseeing their "costs" rising as the bond yields climbed to 3.00%, we now have a easing this week. We have had a number of lenders drop their 5 year rates by 15 basis points. Why?
GREECE! With the crisis is Europe unfolding in the financial markets we have had a flight back to North American assets. Have you noticed the stronger US dollar? This is because investors who are worried about their exposure to European investments, are they selling them and moving back into American and Canadian dollars. A very popular, "safe" investment is to buy our government bonds. This has led to a lowering of 5 year government bond yields..
http://www.bloomberg.com/apps/quote?ticker=GCAN5YR%3AIND
How low will they go? When will they move back up? These days that is like picking the winning 6/49 numbers! But if you are shopping now or have any mortgage renewal or refinancing to do get on with it!
Regards,
Peter McKinnon
peter_mckinnon@centum.ca
http://www.peterlmckinnon.com/
Friday, April 30, 2010
Excerpt from Canadian Mortgage Trends.com
Typically a lender’s biggest fear is an informed consumer,” says mortgage planner, Peter Majthenyi. (See this Q&A with Rob Carrick)
That’s because informed consumers are more likely to make choices that are less profitable for lenders.
Going variable is one choice that’s yielding less lender profit these days. For many lenders, gross margins are currently over 20 basis points better in fixed-rate mortgages than in variables.
The big banks salivate at the thought of homeowners paying elevated 4.65% 5-year bank rates. (We’re talking discretionary fixed rates here. The banks’ publically disseminated “special offer” rate is even higher: 4.85%.)
At 4.65%, the average 5-year fixed bank mortgage is 156 basis points over the GoC bond yield (based on Thursday’s close). That’s a succulent spread for a lender. Remember: Five weeks ago, some lenders were selling mortgages at spreads of half that.
Not everyone’s biting, though.
The 2.9 percentage point gap between fixed and variable rates is wide enough to drive a truck through. Informed and well-qualified consumers are therefore comparing today’s fixed rates to prime - .50% variables—and many are taking their chances in a floating rate.
Read the full article at http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/04/views-on-variables.html
That’s because informed consumers are more likely to make choices that are less profitable for lenders.
Going variable is one choice that’s yielding less lender profit these days. For many lenders, gross margins are currently over 20 basis points better in fixed-rate mortgages than in variables.
The big banks salivate at the thought of homeowners paying elevated 4.65% 5-year bank rates. (We’re talking discretionary fixed rates here. The banks’ publically disseminated “special offer” rate is even higher: 4.85%.)
At 4.65%, the average 5-year fixed bank mortgage is 156 basis points over the GoC bond yield (based on Thursday’s close). That’s a succulent spread for a lender. Remember: Five weeks ago, some lenders were selling mortgages at spreads of half that.
Not everyone’s biting, though.
The 2.9 percentage point gap between fixed and variable rates is wide enough to drive a truck through. Informed and well-qualified consumers are therefore comparing today’s fixed rates to prime - .50% variables—and many are taking their chances in a floating rate.
Read the full article at http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/04/views-on-variables.html
Monday, April 26, 2010
RBC at it again pushing rates up!
Even though bond yields are taking a breather from their recent steady advance, the Royal Bank has seen fit to raise their fixed rates yet again. As of tomorrow their 5 year posted rate is increasing to 6.25% giving the discounted rate a 15 basis point rise to 4.85%.
My question is this....why do all the banks follow RBC? Just imagine if other lenders actually followed the free market system and determined their own rates based on their business parameters? Then consumers would have genuine choices in the market instead of the monopoly that is the Canadian banking system. Oh we receive praises from around the world for our banks, but there is a reason they are so profitable, we pay for it!!
My soapbox aside, be prepared for all the other members of our financial system to follow the leader and raise rates this week. Get those rate holds in place! Today's 4.59% may seem like a steal in a month or so the way things are heading!
My question is this....why do all the banks follow RBC? Just imagine if other lenders actually followed the free market system and determined their own rates based on their business parameters? Then consumers would have genuine choices in the market instead of the monopoly that is the Canadian banking system. Oh we receive praises from around the world for our banks, but there is a reason they are so profitable, we pay for it!!
My soapbox aside, be prepared for all the other members of our financial system to follow the leader and raise rates this week. Get those rate holds in place! Today's 4.59% may seem like a steal in a month or so the way things are heading!
Tuesday, April 20, 2010
BoC Holds Rates,but opens door for June hike
The Bank of Canada held the overnight rate target at 0.25%, but surprised markets by removing the conditional commitment to keep rates there until the end of the second quarter of 2010. This increases the likelihood of a rate increase in June.
The Bank of Canada has recognized stronger-than-expected near term growth in both the global and Canadian economic recovery, but remains cautious about the great amount of uncertainty that remains as monetary and fiscal stimulus unwinds.
Peter McKinnon
www.peterlmckinnon.com
peter_mckinnon@centum.ca
The Bank of Canada has recognized stronger-than-expected near term growth in both the global and Canadian economic recovery, but remains cautious about the great amount of uncertainty that remains as monetary and fiscal stimulus unwinds.
Peter McKinnon
www.peterlmckinnon.com
peter_mckinnon@centum.ca
Friday, April 16, 2010
So you've got a great rate approval.....BUT
It has come to my attention that a lot of people in the market right now who are shopping for a property purchase may be in for a rude awakening when it comes time to remove financing subjects.
For example, I met a couple at a recent open house who have a great rate from a lender that is good for 90 days and they are looking a properties in the $450,000 range based on figures provided by their mortgage specialist. When I asked if this figure was based on the old qualifying rate or the new rules which come in effect on the 19th? They weren't sure.
What realtors working with their clients and purchasers need to understand is that under the new guidelines, which many lenders are already using, the amount of money one can qualify for will be based on the Bank of Canada Contract rate, NOT the rate they will receive on their mortgage. For example, I have clients with a 3.89% rate hold, but when they make an offer to purchase and we submit the deal the lender will use the current 5.85% contract rate!
How does this effect their purchasing power?
On an income of $100,000 this couple could get a $430,000 mortgage at 3.89%, but with the 5.85% contract rate, this income will only allow a $355,000 mortgage. That's a $75,000 reduction in purchase price.
So if you or your clients have been given a price range to work with, I would strongly suggest you contact your mortgage specialist and get an update based on the coming changes.
Peter
For example, I met a couple at a recent open house who have a great rate from a lender that is good for 90 days and they are looking a properties in the $450,000 range based on figures provided by their mortgage specialist. When I asked if this figure was based on the old qualifying rate or the new rules which come in effect on the 19th? They weren't sure.
What realtors working with their clients and purchasers need to understand is that under the new guidelines, which many lenders are already using, the amount of money one can qualify for will be based on the Bank of Canada Contract rate, NOT the rate they will receive on their mortgage. For example, I have clients with a 3.89% rate hold, but when they make an offer to purchase and we submit the deal the lender will use the current 5.85% contract rate!
How does this effect their purchasing power?
On an income of $100,000 this couple could get a $430,000 mortgage at 3.89%, but with the 5.85% contract rate, this income will only allow a $355,000 mortgage. That's a $75,000 reduction in purchase price.
So if you or your clients have been given a price range to work with, I would strongly suggest you contact your mortgage specialist and get an update based on the coming changes.
Peter
Tuesday, April 13, 2010
Tips for First time buyers
I have mentioned some great web resources for mortgage information and articles, one of my daily reads is www.canadianmortgagetrends.com
Here are some great things to consider when entering the mortgage market!!
1) Allow five business days for financing in your purchase offer. Realtors sometimes ask buyers to get preapproved and write "clean" offers without conditions. But preapprovals don't guarantee a "final" approval. Preapprovals are often just glorified rate holds. Proper financing conditions give you time to arrange an iron-clad approval before you commit to buy.
2) Start with the term. The term you pick often effects the total interest you pay more than the rate itself. Consult a professional to pick the right term from the start. Have him or her run a rate simulation to show which term would save you the most money over five years.
3) Negotiate wisely.If your credit is strong, use the Globe's mortgage rate table at tgam.ca/mortgagerates as a starting point for rates. Ask your mortgage planner to find a lender who will beat the best rate for your province. Use a mortgage professional who compares all lenders; not just a handful.
4) Go short. Don't consider a long-term amortization (such as 30-35 years) unless you are confident you'll later have spare funds to make prepayments. A 35-year amortization will lower your monthly payments 16 per cent on a 4-per-cent, $250,000 mortgage. However, the total interest you'll pay increases 32 per cent versus a 25-year amortization.
5) Tap your RRSPs for a down payment. If you qualify as a first-time home buyer, you and your spouse can each use up to $25,000 from your RRSP as a down payment. CRA will not deem that money taxable income as long as you annually repay 1/15th of the amount withdrawn.
6) Don't pay for what you don't need. Paying extra for an open mortgage, a "capped" variable rate, cash back, large prepayment options, or a 10-year term is often unnecessary. Have your mortgage professional compare the estimated interest cost of the alternatives.
7) Consider a hybrid. Hybrid mortgages are part fixed and part variable. You determine how much of your mortgage goes in each part. Since no one knows how high rates will climb, hybrids nicely diversify your interest-rate exposure.
Here are some great things to consider when entering the mortgage market!!
1) Allow five business days for financing in your purchase offer. Realtors sometimes ask buyers to get preapproved and write "clean" offers without conditions. But preapprovals don't guarantee a "final" approval. Preapprovals are often just glorified rate holds. Proper financing conditions give you time to arrange an iron-clad approval before you commit to buy.
2) Start with the term. The term you pick often effects the total interest you pay more than the rate itself. Consult a professional to pick the right term from the start. Have him or her run a rate simulation to show which term would save you the most money over five years.
3) Negotiate wisely.If your credit is strong, use the Globe's mortgage rate table at tgam.ca/mortgagerates as a starting point for rates. Ask your mortgage planner to find a lender who will beat the best rate for your province. Use a mortgage professional who compares all lenders; not just a handful.
4) Go short. Don't consider a long-term amortization (such as 30-35 years) unless you are confident you'll later have spare funds to make prepayments. A 35-year amortization will lower your monthly payments 16 per cent on a 4-per-cent, $250,000 mortgage. However, the total interest you'll pay increases 32 per cent versus a 25-year amortization.
5) Tap your RRSPs for a down payment. If you qualify as a first-time home buyer, you and your spouse can each use up to $25,000 from your RRSP as a down payment. CRA will not deem that money taxable income as long as you annually repay 1/15th of the amount withdrawn.
6) Don't pay for what you don't need. Paying extra for an open mortgage, a "capped" variable rate, cash back, large prepayment options, or a 10-year term is often unnecessary. Have your mortgage professional compare the estimated interest cost of the alternatives.
7) Consider a hybrid. Hybrid mortgages are part fixed and part variable. You determine how much of your mortgage goes in each part. Since no one knows how high rates will climb, hybrids nicely diversify your interest-rate exposure.
Wednesday, March 31, 2010
Rate Update March 31, 2010
It’s all over but the crying!!
No more rate holds at 3.89%, but if you have a live deal closing in the next 30 days I have one lender still keeping a 3.89% Quick Close rate. Although I don’t expect it to last the week!
Here’s an update of the current rates:
1 Year 2.55%
3 Years 3.29%
4 Years 3.64%
5 Years 4.19%
10 Years 4.99%
5 year 30 Day Quick Close 3.89%
Bank Prime Rate as of Mar 31/10 2.25%
3 yr Variable Rate = Prime -.50% 1.75%
5 yr Variable Rate = Prime -.50% 1.75%
* Rates are subject to change without prior notice.
* OAC
Regards,
Peter McKinnon
Mortgage Broker, Centum Pacific Mortgages
Cell 604.506.6789
Office 604.609.0333 Fax 604-687-1677
peter_mckinnon@centum.ca http://www.peterlmckinnon.com
No more rate holds at 3.89%, but if you have a live deal closing in the next 30 days I have one lender still keeping a 3.89% Quick Close rate. Although I don’t expect it to last the week!
Here’s an update of the current rates:
1 Year 2.55%
3 Years 3.29%
4 Years 3.64%
5 Years 4.19%
10 Years 4.99%
5 year 30 Day Quick Close 3.89%
Bank Prime Rate as of Mar 31/10 2.25%
3 yr Variable Rate = Prime -.50% 1.75%
5 yr Variable Rate = Prime -.50% 1.75%
* Rates are subject to change without prior notice.
* OAC
Regards,
Peter McKinnon
Mortgage Broker, Centum Pacific Mortgages
Cell 604.506.6789
Office 604.609.0333 Fax 604-687-1677
peter_mckinnon@centum.ca http://www.peterlmckinnon.com
Monday, March 29, 2010
RBC and TD pull the trigger!! Interest rates head up
RBC started the week off by raising their 5 year posted fixed rate a record 0.60% to 5.85%.
TD followed shortly after with the same. We can expect more to follow as the week progresses.
What should you do?
If you are in a variable rate product and were planning on locking in to a fixed rate, better get in touch with your lender.
If you are renewing an existing mortgage soon, or in the market to buy, contact your mortgage broker and get a 3 or 4 month rate hold. ING offers a great rate hold without a full application so it is a great way to hold a nice rate with little information! Currently ING will hold a 5 year rate of 3.89% for 120 days. This could change anytime so don't wait!
Stay tuned for more rate updates!
Peter_mckinnon@centum.ca
http://www.peterlmckinnon.com
c: 604-506-6789
TD followed shortly after with the same. We can expect more to follow as the week progresses.
What should you do?
If you are in a variable rate product and were planning on locking in to a fixed rate, better get in touch with your lender.
If you are renewing an existing mortgage soon, or in the market to buy, contact your mortgage broker and get a 3 or 4 month rate hold. ING offers a great rate hold without a full application so it is a great way to hold a nice rate with little information! Currently ING will hold a 5 year rate of 3.89% for 120 days. This could change anytime so don't wait!
Stay tuned for more rate updates!
Peter_mckinnon@centum.ca
http://www.peterlmckinnon.com
c: 604-506-6789
Monday, March 15, 2010
Pre Approvals and upcoming changes April 19th
As you may have heard there are some changes coming down on April 19th from the government that will effect mortgages.
The change that will effect most buyers is the qualification rate used by lenders to determine how much money they will lend based on debt servicing ratios. In the past if a purchaser was trying to stretch their topside, you could qualify for a higher dollar amount by taking a shorter term or variable rate mortgage product. This would allow a lender to use a 3 year rate of 3.25% instead of the higher 4.09% 5 year rate. Doesn't seem like much, but that difference could mean tens of thousands of dollars on your mortgage. As of April 19th, the government will be dictating a contract rate (like the bank rate) that will be based on 5 year rates and that all lenders will be required to use in qualifying mortgage debt ratios, regardless of product.
Right now, with the threat of higher rates coming, many of my clients are looking for pre-approvals or rate holds to lock in a great rate while shopping for their new home. How does the change effect your rate hold or pre-approval?
Suppose you get pre-approved before April 19 and you’re putting down less than 20%. What happens if you don’t sign a purchase agreement until, on or after, April 19? Which qualifying rate will the lender use to determine if you can afford the mortgage?
CMHC has provided this clarification:
Pre-approval does not count as a financing agreement as it doesn’t represent a binding agreement to advance funds. So even if the borrower gets pre-approved before April 19, given that he/she would sign the purchase agreement after the cut-off date, the new rules would apply.
In practice, if you’re well-qualified, you won’t be impacted by any of this.
If, however, you are getting pre-approved and your debt ratios are near the limits, it could mean that:
a) The higher qualifying rate after April 19 might reduce the mortgage amount you’ll qualify for (assuming you haven’t signed a purchase agreement before then); and,
b) You might potentially qualify for only a 5-year fixed term.
Keep in mind that the government’s new posted qualifying rate does not apply if you are putting down 20% or more.
Hope this helps clarify this topic. Stay tuned for further updates regarding the other changes coming soon!
Peter McKinnon
www.peterlmckinnon.com
The change that will effect most buyers is the qualification rate used by lenders to determine how much money they will lend based on debt servicing ratios. In the past if a purchaser was trying to stretch their topside, you could qualify for a higher dollar amount by taking a shorter term or variable rate mortgage product. This would allow a lender to use a 3 year rate of 3.25% instead of the higher 4.09% 5 year rate. Doesn't seem like much, but that difference could mean tens of thousands of dollars on your mortgage. As of April 19th, the government will be dictating a contract rate (like the bank rate) that will be based on 5 year rates and that all lenders will be required to use in qualifying mortgage debt ratios, regardless of product.
Right now, with the threat of higher rates coming, many of my clients are looking for pre-approvals or rate holds to lock in a great rate while shopping for their new home. How does the change effect your rate hold or pre-approval?
Suppose you get pre-approved before April 19 and you’re putting down less than 20%. What happens if you don’t sign a purchase agreement until, on or after, April 19? Which qualifying rate will the lender use to determine if you can afford the mortgage?
CMHC has provided this clarification:
Pre-approval does not count as a financing agreement as it doesn’t represent a binding agreement to advance funds. So even if the borrower gets pre-approved before April 19, given that he/she would sign the purchase agreement after the cut-off date, the new rules would apply.
In practice, if you’re well-qualified, you won’t be impacted by any of this.
If, however, you are getting pre-approved and your debt ratios are near the limits, it could mean that:
a) The higher qualifying rate after April 19 might reduce the mortgage amount you’ll qualify for (assuming you haven’t signed a purchase agreement before then); and,
b) You might potentially qualify for only a 5-year fixed term.
Keep in mind that the government’s new posted qualifying rate does not apply if you are putting down 20% or more.
Hope this helps clarify this topic. Stay tuned for further updates regarding the other changes coming soon!
Peter McKinnon
www.peterlmckinnon.com
Tuesday, February 16, 2010
Banks push government for New Rules!!! And get them!
Funny how in a "free" market society our big banks have all pushed the government for TIGHTER lending rules? What happened to "competition"?? Not in the Canadian banking system! It seems lenders can't regulate themselves so they have asked the government to help them with it. And Joe Flaherty has answered the call.
As of April 19th the following changes will be implemented in mortgage lending:
1) All borrowers must meet the standards for a 5 year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term; - this basically will make it harder for people to qualify for a variable rate product. For instance right now debt servicing ratios use a 3 year rate typically 1.0% lower than a 5 year rate.
As of April 19th the following changes will be implemented in mortgage lending:
1) All borrowers must meet the standards for a 5 year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term; - this basically will make it harder for people to qualify for a variable rate product. For instance right now debt servicing ratios use a 3 year rate typically 1.0% lower than a 5 year rate.
2) The maximum amount one can withdraw in refinancing their mortgage will be reduced to 90% from the current 95% of the value of one's home; net effect of this change will be to limit owners from using their home equity to consolidate debt, do renovations, etc.
3) Non-owner occupied properties will require a minimum down payment of 20%. - this change is to reduce speculative investment in the market. Right now investors can buy a rental property with as little as 5% down. For many investors 20% might be a little "rich" and will take their money elsewhere. Time will tell if this will cause a reduction in rental inventories in the market and overall higher rents, especially in hot investment markets like Vancouver.
Now I don't mind changes to benefit the economy and some of these new rules may help. But when the motivation behind the changes seems to be the big banks trying to protect themselves from losing market share to competitors, that just doesn't sit right.
Well at least interest rates are still low!
GO CANADA GO!!
Peter McKinnon
Monday, January 25, 2010
Great article for understanding why mortgages are so cheap!! it's taxpayer money......http://ping.fm/NhapM
Wednesday, January 20, 2010
Inflation rate low, bond yields ease
The annual inflation rate rose a less-than-expected 1.3 per cent in December, said Statistics Canada, and core inflation stayed at 1.5 per cent - a half a percentage point below the Bank of Canada's target rate.
In addition, consumer prices dropped last month.
"The way markets look at it is that because inflation remains subdued, it puts even less pressure on the Bank of Canada to raise interest rates and that softens the currency," Bank of Montreal chief economist Douglas Porter told The Canadian Press. He added that business can't raise prices due to the weakness of the economy and the strength of the Canadian dollar has quashed import prices.
Bond yields continue their decline and are hovering around 2.55% this week.
What does this mean? Inflation is the driver for the short term lending rates set by the BoC so there is no reason for the bank rate to move up. 5 year bond yields drive the fixed term rates, indicating the long term rates should hold steady as well.
There is still time to take advantage of the low rates!
peter_mckinnon@centum.ca
http://www.peterlmckinnon.com
In addition, consumer prices dropped last month.
"The way markets look at it is that because inflation remains subdued, it puts even less pressure on the Bank of Canada to raise interest rates and that softens the currency," Bank of Montreal chief economist Douglas Porter told The Canadian Press. He added that business can't raise prices due to the weakness of the economy and the strength of the Canadian dollar has quashed import prices.
Bond yields continue their decline and are hovering around 2.55% this week.
What does this mean? Inflation is the driver for the short term lending rates set by the BoC so there is no reason for the bank rate to move up. 5 year bond yields drive the fixed term rates, indicating the long term rates should hold steady as well.
There is still time to take advantage of the low rates!
peter_mckinnon@centum.ca
http://www.peterlmckinnon.com
Tuesday, January 19, 2010
BoC holds steady,no rate moves til June. 5yr Bond yields easing from highs so 5yr rates should hold for now. http://ping.fm/yuDGZ
Monday, January 18, 2010
Variable rate special PRIME MINUS 0.40%!!! only 1.85% with a Nov 2012 Maturity. Click today http://www.peterlmckinnon.com
Thursday, January 14, 2010
Interest Rate Update - majors lower variable rate
We have had 3 AAA lenders drop their variable rate mortgages.
One is a 3 year term at prime minus 0.30%, that's 1.95%!!
the other 2 are offering a 5 year term at prime minus 0.20% or 2.05%!!
Both lenders have great prepayment options of 20-25%
Will this lead to more "variable rate drops"? I believe it will, simply because it makes good business sense. They gain market share with the "sale" price with the intention of moving you into the higher rate fixed products once the rates start to move up which of course we know they will, just a question of time!
Current interest rates for Thursday, January 14th, 2010
Fixed Rate
1 year 2.35%
3 year 3.25%
5 year 3.89%
5 year Quick Close 3.74%
Variable Rate
3 year Special 1.95% prime minus 0.30%
5 year 2.05% prime minus 0.20%
http://www.peterlmckinnon.com/
peter_mckinnon@centum.ca
Peter McKinnon
cell 604-506-6789
One is a 3 year term at prime minus 0.30%, that's 1.95%!!
the other 2 are offering a 5 year term at prime minus 0.20% or 2.05%!!
Both lenders have great prepayment options of 20-25%
Will this lead to more "variable rate drops"? I believe it will, simply because it makes good business sense. They gain market share with the "sale" price with the intention of moving you into the higher rate fixed products once the rates start to move up which of course we know they will, just a question of time!
Current interest rates for Thursday, January 14th, 2010
Fixed Rate
1 year 2.35%
3 year 3.25%
5 year 3.89%
5 year Quick Close 3.74%
Variable Rate
3 year Special 1.95% prime minus 0.30%
5 year 2.05% prime minus 0.20%
http://www.peterlmckinnon.com/
peter_mckinnon@centum.ca
Peter McKinnon
cell 604-506-6789
Monday, January 11, 2010
Great article on Bank of Canada, the housing market and its effects on interest rate hikes
http://ping.fm/vNih6
http://ping.fm/vNih6
Wednesday, January 6, 2010
Rates on the way up?? Jobs may tell the story...
After the rise in bond yields during December, lenders have started to rattle the chains on 5 year rates. 5yr yield is hovering precariously below the 15 month highs set in September/ October at 2.74%. See the following chart:
http://www.bloomberg.com/apps/quote?ticker=GCAN5YR%3AIND
This will be the third attempt at crossing the 2.90% mark as as most investors and chart analysts will tell you, the third times a charm! So how do we know which way things will run?
Most lenders are waiting for the US and Canadian jobs reports due out on Friday morning.
If the job numbers are good, rates will be going up!
If they are bad, rates will probably hold steady.
If I were in the market right now I would be asking my mortgage professional for a rate hold on Thursday just to hedge your bet.
Peter McKinnon
peter_mckinnon@centum.ca
www.peterlmckinnon.com
604-506-6789
http://www.bloomberg.com/apps/quote?ticker=GCAN5YR%3AIND
This will be the third attempt at crossing the 2.90% mark as as most investors and chart analysts will tell you, the third times a charm! So how do we know which way things will run?
Most lenders are waiting for the US and Canadian jobs reports due out on Friday morning.
If the job numbers are good, rates will be going up!
If they are bad, rates will probably hold steady.
If I were in the market right now I would be asking my mortgage professional for a rate hold on Thursday just to hedge your bet.
Peter McKinnon
peter_mckinnon@centum.ca
www.peterlmckinnon.com
604-506-6789
Tuesday, January 5, 2010
Monday, January 4, 2010
Happy New Year!! Well it's time to get back at it. Any mortgage renewals coming up?? Great article..http://ping.fm/YZvFO
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