There was a time not that long ago when fixed mortgage rates would be priced about 1.20% higher than a Government of Canada Bond with the same term. For example, when the 5 year bond was at 2.5% you would be able to get a 5 year fixed-rate mortgage at 3.7%. Enter the Mortgage Meltdown: When the “mortgage crisis” hit in the USA the spread between the bond and the mortgage rates increased quite a bit. The consensus was that it would probably return to its traditional spread of about 1.50%.
It seems like people have forgotten about this spread with the current low level of fixed mortgage rates. Most people would think that a 3.5% 5-year mortgage rate is a great deal, and it is. I just think more people would be frustrated with their banks if they knew that the 5-year bond yield is currently sitting at 1.4%. This means they are charging more than 2% above the bond.
While bankers will tell you a sad story about how they are losing money on their Variable Rate Mortgages (more on that in a future Rate Watch) I think they are profit grabbing. The average consumer is not informed like we are so; if you want to make sure you (or any of your friends and family) are paying the least amount of money to the banks please give us a call. We’d be happy to help!
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
Toll Free 1-866-838-4366 x1003
www.mortgageconcierge.ca
Monday, December 12, 2011
Tuesday, October 4, 2011
Zero Down Mortgages Still an Option
Down Payment Money Available to Qualified Applicants (OAC)
With the sweeping mortgage reforms that have taken place in the past 2 years most people think that they need to have at least 10% of their purchase price saved up for the down payment. Although the actual rule is that buyers need at least 5% for the down payment, it is a little known fact that they don’t need to have saved that money.
Yes, you read that right. You don’t have to have the 5% saved up. Here are a couple of options for people who don’t have the 5% saved:
• Gifted Down Payment: There’s nothing better than free money, so if your parents or your kids want to give you a gift for part or all of your 5% down payment take it if it won’t change your relationship with them;
• Cash Back Mortgage: Some lenders offer the 5% in the form of Cash Back on closing. During your 5 year fixed rate term mortgage you will have a higher rate than the best on the market, but you get the 5% down so you can buy;
• Personal Loan: You can borrow your down payment from a bank, trust company, credit union, or any other party that is arm’s length. That means you can borrow the down payment from a private person too, as long as they aren’t related to you. All we need to do is take the payment from the loan into account when figuring out your affordability ratios to qualify for the mortgage.
Here are a few types of people who might be having a hard time saving their down payment that would really like to own a home: A single mom or dad, a recently married couple who have some of their down payment saved but not all of it, or someone who has recently graduated from post-secondary school and has just obtained a good job with a good company (maybe a year on the job).
If you know anyone who laments that they’d like to buy a home but they think they can’t because they don’t have their down payment saved please tell them to call us. They might just be in their new house by Christmas!
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
With the sweeping mortgage reforms that have taken place in the past 2 years most people think that they need to have at least 10% of their purchase price saved up for the down payment. Although the actual rule is that buyers need at least 5% for the down payment, it is a little known fact that they don’t need to have saved that money.
Yes, you read that right. You don’t have to have the 5% saved up. Here are a couple of options for people who don’t have the 5% saved:
• Gifted Down Payment: There’s nothing better than free money, so if your parents or your kids want to give you a gift for part or all of your 5% down payment take it if it won’t change your relationship with them;
• Cash Back Mortgage: Some lenders offer the 5% in the form of Cash Back on closing. During your 5 year fixed rate term mortgage you will have a higher rate than the best on the market, but you get the 5% down so you can buy;
• Personal Loan: You can borrow your down payment from a bank, trust company, credit union, or any other party that is arm’s length. That means you can borrow the down payment from a private person too, as long as they aren’t related to you. All we need to do is take the payment from the loan into account when figuring out your affordability ratios to qualify for the mortgage.
Here are a few types of people who might be having a hard time saving their down payment that would really like to own a home: A single mom or dad, a recently married couple who have some of their down payment saved but not all of it, or someone who has recently graduated from post-secondary school and has just obtained a good job with a good company (maybe a year on the job).
If you know anyone who laments that they’d like to buy a home but they think they can’t because they don’t have their down payment saved please tell them to call us. They might just be in their new house by Christmas!
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Thursday, September 22, 2011
USA Housing Still in Turmoil
For those who thought that things were getting better in the USA, have a look at these sobering numbers: The median sale price for resale homes is down more than 5% compared to last year; distressed sales accounted for more than 31% of all transactions; and depending on the source there are anywhere between 3 and 4 million homes that will hit the market as foreclosures in the next 18 months.
The U.S. economy isn’t on strong footing, and the government and Fed Reserve there are doing everything they can to keep borrowing costs low and drive money into the economy to keep people employed.
Flip over to Canada and you can’t help but think that we are in a much better situation, but we would be fooling ourselves if we thought that the U.S. problems won’t spill over to us in some way. For example, as the U.S. GDP shrinks, there’s less demand for imports, including ours from Canada. So that will make it harder on our exporters. Think big ticket items like cars, and you start to see where this can go. For every automotive job that gets lost another 4-6 jobs in the same community are lost.
There’s a distinct worry that we can fall into another recession, and it is well founded when considering the U.S. situation. The good news is that borrowing costs should remain low for some time as a result of weak economic factors here, in the USA and Europe. This means mortgage rates should stay low into 2013.
While the USA’s housing market will continue to weaken we are fortunate to have ours remain flat. That will be the theme in housing prices and number of sales in the coming year, in Canada.
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
1-866-838-4366 x1003
www.mortgageconcierge.ca
The U.S. economy isn’t on strong footing, and the government and Fed Reserve there are doing everything they can to keep borrowing costs low and drive money into the economy to keep people employed.
Flip over to Canada and you can’t help but think that we are in a much better situation, but we would be fooling ourselves if we thought that the U.S. problems won’t spill over to us in some way. For example, as the U.S. GDP shrinks, there’s less demand for imports, including ours from Canada. So that will make it harder on our exporters. Think big ticket items like cars, and you start to see where this can go. For every automotive job that gets lost another 4-6 jobs in the same community are lost.
There’s a distinct worry that we can fall into another recession, and it is well founded when considering the U.S. situation. The good news is that borrowing costs should remain low for some time as a result of weak economic factors here, in the USA and Europe. This means mortgage rates should stay low into 2013.
While the USA’s housing market will continue to weaken we are fortunate to have ours remain flat. That will be the theme in housing prices and number of sales in the coming year, in Canada.
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
1-866-838-4366 x1003
www.mortgageconcierge.ca
Tuesday, August 9, 2011
Is Opportunity Knocking?
Is Opportunity Knocking?
Every once in a while opportunity seems to come knocking on our doors. Most of the time it goes unnoticed and other times it may seem that the opportunity is actually a threat. Every few years that opportunity is actually a big one.
Take the recent crash in the stock market. There’s a lot of people running to the safety of the bond market, or cashing out. What a shame! If you don’t need this money for more than 10 years you really should be buying these undervalued stocks. And if you needed the money in less than 10 years, you need to ask yourself why you were in the stock market in the first place. But I digress….
Back to the matter at hand: The current decline in stock prices may continue for a little while longer. If you would like to take advantage of the “sale” prices that many of these stocks are trading at you should be paying careful attention to the market, and get in when you think they’re near bottom.
So what do you do if you aren’t sitting on a stack of cash? Many people are sitting on thousands of dollars worth of equity in their homes that can be put to use towards buying investments. You can use that money to buy rental properties or stocks and bonds, and the interest is tax deductible. If you think you have 25% or more equity in your home and would like to use some of that money to buy investments, please give us a call. Secured lines of credit run at an interest rate of Prime + 0.5% (on average), and cost about $350 to set up. If the markets come back just 10% you will be “in the money.”
One thing is certain, the current decline has most economists predicting Variable Rates will remain low well into 2012, and it is likely we will see low fixed rates well into 2012 too. This is a great time to be borrowing money, especially if the money is invested.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Every once in a while opportunity seems to come knocking on our doors. Most of the time it goes unnoticed and other times it may seem that the opportunity is actually a threat. Every few years that opportunity is actually a big one.
Take the recent crash in the stock market. There’s a lot of people running to the safety of the bond market, or cashing out. What a shame! If you don’t need this money for more than 10 years you really should be buying these undervalued stocks. And if you needed the money in less than 10 years, you need to ask yourself why you were in the stock market in the first place. But I digress….
Back to the matter at hand: The current decline in stock prices may continue for a little while longer. If you would like to take advantage of the “sale” prices that many of these stocks are trading at you should be paying careful attention to the market, and get in when you think they’re near bottom.
So what do you do if you aren’t sitting on a stack of cash? Many people are sitting on thousands of dollars worth of equity in their homes that can be put to use towards buying investments. You can use that money to buy rental properties or stocks and bonds, and the interest is tax deductible. If you think you have 25% or more equity in your home and would like to use some of that money to buy investments, please give us a call. Secured lines of credit run at an interest rate of Prime + 0.5% (on average), and cost about $350 to set up. If the markets come back just 10% you will be “in the money.”
One thing is certain, the current decline has most economists predicting Variable Rates will remain low well into 2012, and it is likely we will see low fixed rates well into 2012 too. This is a great time to be borrowing money, especially if the money is invested.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Tuesday, July 19, 2011
Bank of Canada Stands "Pat"
As anticipated, the Bank of Canada left rates unchanged Tuesday. Due to an uncertain future for the economies in Europe, a USA trading partner who is struggling to keep its economy afloat, and an overall global recession that doesn’t seem to want to go away, it is no wonder that they are taking a “wait and see” approach.
You can expect the short term rates impacted by the Bank’s rates to remain at these levels for some time, likely into mid 2012, so anyone with a variable rate mortgage is going to experience stability for the near-term.
Even the bond market is priced so low that fixed mortgage rates are at very attractive levels. When you can get a 5-year fixed rate mortgage at 3.65% you can see why more and more people are opting for a fixed-rate mortgage. Whenever the spread between fixed and variable falls below 1.50% it makes the fixed rates seem more attractive due to their stability, hence the reason for more people choosing fixed than 2 months ago.
No matter how you slice it, rates are very attractive, and one of the reasons why housing has remained strong here in Canada.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
You can expect the short term rates impacted by the Bank’s rates to remain at these levels for some time, likely into mid 2012, so anyone with a variable rate mortgage is going to experience stability for the near-term.
Even the bond market is priced so low that fixed mortgage rates are at very attractive levels. When you can get a 5-year fixed rate mortgage at 3.65% you can see why more and more people are opting for a fixed-rate mortgage. Whenever the spread between fixed and variable falls below 1.50% it makes the fixed rates seem more attractive due to their stability, hence the reason for more people choosing fixed than 2 months ago.
No matter how you slice it, rates are very attractive, and one of the reasons why housing has remained strong here in Canada.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Thursday, July 7, 2011
Will the USA Default?
It’s quite amazing that the President of the USA makes a plea to government officials to raise the debt limit in order to meet its debt obligations due August 2nd and the media is focusing more on the sale of Nortel patents. In the simplest of terms, Obama is telling people that the U.S. will default on its debt obligations in less than a month unless the government there agrees to increase the amount it can borrow.
In a way it’s a good thing that this isn’t widely publicized. Imagine the panic in the markets that would ensue. Or perhaps the market is unfazed by this because it believes that the government wouldn’t possibly throw itself onto a sword; that it will increase its borrowing limit in order to keep order and money flowing in the markets.
The above is significant in our eyes because it underscores just how fragile the USA’s economic recovery really is. It is highly likely that the U.S. is years away from a full recovery, making the possibility of high inflation in the next few years unlikely. Variable Rate loan products, like Variable Rate Mortgages, should enjoy low rates for some time as a result. That isn’t to say that the Fixed Rate products are any less attractive: With 5-year fixed rate money trading hands below 4%, we’re currently near the 60-year low.
No matter how you slice it, this time in history will also be known as one of the cheapest times to borrow money. I just hope it is also known as a time when people and governments figured out a way to balance their bankbooks.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
In a way it’s a good thing that this isn’t widely publicized. Imagine the panic in the markets that would ensue. Or perhaps the market is unfazed by this because it believes that the government wouldn’t possibly throw itself onto a sword; that it will increase its borrowing limit in order to keep order and money flowing in the markets.
The above is significant in our eyes because it underscores just how fragile the USA’s economic recovery really is. It is highly likely that the U.S. is years away from a full recovery, making the possibility of high inflation in the next few years unlikely. Variable Rate loan products, like Variable Rate Mortgages, should enjoy low rates for some time as a result. That isn’t to say that the Fixed Rate products are any less attractive: With 5-year fixed rate money trading hands below 4%, we’re currently near the 60-year low.
No matter how you slice it, this time in history will also be known as one of the cheapest times to borrow money. I just hope it is also known as a time when people and governments figured out a way to balance their bankbooks.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Tuesday, June 28, 2011
What’s Happening with Rates?
Interest rates are a factor of several things, but perhaps the largest influencers are the expectations people have for inflation, and recent actual inflation. In the end, many things impact people’s expectations for, and the actual inflation figures, but no two other things impact interest rates more.
Expectations for inflation mostly impact the bond market. And whether the bond market thinks inflation will rise or fall, it is said that it is always “right”. So when you hear on the news that the unemployment rate is up, and that people are losing jobs, typically two things happen: 1) Investors will think that companies will have less profits and usually prices of stocks drop. 2) Investors will think that inflation will decrease (which normally happens in a shrinking economy) so they are willing to accept lower returns on bonds. As I have mentioned in previous columns, it is the interest rates on bonds that largely impacts today’s fixed rate mortgages. If the yield on a 5 year Canada Bond goes down there is usually an ability to lower 5-year fixed mortgage rates. The same can be said for all mortgage terms. If the 1 year bond yield decreases, the 1-year fixed mortgage rate can decrease.
So whenever you hear news that changes people’s expectations for inflation you can normally count on a change in rates in the short-term unless there is another piece of news otherwise, that would offset people’s original thoughts. An example would be an announcement that 30,000 jobs were created last month, making people think there will be more money floating around in the economy, and then a day later it was revealed that 28,000 of those jobs were for part-time workers at low paying jobs.
Recent Actual inflation normally has a direct impact on what the Bank of Canada does with its short-term lending rates (to banks) which in turn directly impacts the Prime Rate charged by banks. If figures for the last quarter show inflation tracking well above the Bank’s target it will normally raise its rate to slow the economy and curb inflation. If they are right on target, or within their acceptable range they are normally slow to change their rate. In recent times the Bank has maintained its current rate, leaving the Prime Rate unchanged. They are currently holding steady for a number of reasons: 1) Core Inflation is under its target; 2) worldwide problems in the financial sectors; 3) GDP growth in the USA is anemic; and the list goes on.
Unless we see some big jumps in economies you can expect the Bank to keep its rate steady for some time. That’s probably why so many people are looking for Variable Rate Mortgages, however a similar amount of people are chosing 5 year fixed rate mortgages with the rates as low as they are. It is expected that the Bank will raise its rate a couple times by mid 2012, so expect to see Prime at 3.50% this time next year: two small increases in 12 months.
The same logic applies to all fixed and floating rate loan products. The next time you pick up the paper and read about what’s happening in the economy you can make your own predictions about what will be happening with lending rates. See how accurate you can get!
Cheers,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Expectations for inflation mostly impact the bond market. And whether the bond market thinks inflation will rise or fall, it is said that it is always “right”. So when you hear on the news that the unemployment rate is up, and that people are losing jobs, typically two things happen: 1) Investors will think that companies will have less profits and usually prices of stocks drop. 2) Investors will think that inflation will decrease (which normally happens in a shrinking economy) so they are willing to accept lower returns on bonds. As I have mentioned in previous columns, it is the interest rates on bonds that largely impacts today’s fixed rate mortgages. If the yield on a 5 year Canada Bond goes down there is usually an ability to lower 5-year fixed mortgage rates. The same can be said for all mortgage terms. If the 1 year bond yield decreases, the 1-year fixed mortgage rate can decrease.
So whenever you hear news that changes people’s expectations for inflation you can normally count on a change in rates in the short-term unless there is another piece of news otherwise, that would offset people’s original thoughts. An example would be an announcement that 30,000 jobs were created last month, making people think there will be more money floating around in the economy, and then a day later it was revealed that 28,000 of those jobs were for part-time workers at low paying jobs.
Recent Actual inflation normally has a direct impact on what the Bank of Canada does with its short-term lending rates (to banks) which in turn directly impacts the Prime Rate charged by banks. If figures for the last quarter show inflation tracking well above the Bank’s target it will normally raise its rate to slow the economy and curb inflation. If they are right on target, or within their acceptable range they are normally slow to change their rate. In recent times the Bank has maintained its current rate, leaving the Prime Rate unchanged. They are currently holding steady for a number of reasons: 1) Core Inflation is under its target; 2) worldwide problems in the financial sectors; 3) GDP growth in the USA is anemic; and the list goes on.
Unless we see some big jumps in economies you can expect the Bank to keep its rate steady for some time. That’s probably why so many people are looking for Variable Rate Mortgages, however a similar amount of people are chosing 5 year fixed rate mortgages with the rates as low as they are. It is expected that the Bank will raise its rate a couple times by mid 2012, so expect to see Prime at 3.50% this time next year: two small increases in 12 months.
The same logic applies to all fixed and floating rate loan products. The next time you pick up the paper and read about what’s happening in the economy you can make your own predictions about what will be happening with lending rates. See how accurate you can get!
Cheers,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Tuesday, June 14, 2011
Mixed Messages
There is so much conflicting data floating around that it is no wonder that interest rates have been bouncing around like a ping-pong ball. Let’s look at some data that you can get off the Statistics Canada website (but which is rarely reported):
1) We hear relatively good news about employment here in Canada. In April the number of people employed went up by a net of 22,000, and the unemployment rate dropped to 7.4% that seems pretty good until you dig a little deeper;
2) Manufacturing employment decreased by 23,000 in April;
3) 30,000 people started their own businesses;
4) Core Inflation is tracking to end the year around 1.6-1.8% above last year, while total CPI is tracking for 3.25% because of the increase in energy and gas prices.
So while the total employment figures would give you the impression that our economy is ticking along, some of the other figures tell me that things aren’t exactly as they seem. For example, the majority of the 30,000 people that started their own businesses probably won’t earn anywhere close to what they earned while they were employed elsewhere (like in the manufacturing sector). The fact that GDP growth is an anemic 0.3% year over year tells me that they aren’t earning the same amount yet.
The biggest concern for me is the 23,000 people who lost their manufacturing jobs. These tend to be good paying stable jobs, which makes it easier for people to buy things and then pay for them.
The USA is in the tank too, so it is unlikely they will increase demand for our products (which are a lot more expensive now due to the exchange rate).
The net result is that we won’t see mortgage rates go too high any time soon. There isn’t enough positive economic news in the works that will keep rates up for any great length of time. If they pop up it will likely take less than 3 months for them to come back down.
And that is the theme for the rest of 2011, and perhaps all of 2012.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
1) We hear relatively good news about employment here in Canada. In April the number of people employed went up by a net of 22,000, and the unemployment rate dropped to 7.4% that seems pretty good until you dig a little deeper;
2) Manufacturing employment decreased by 23,000 in April;
3) 30,000 people started their own businesses;
4) Core Inflation is tracking to end the year around 1.6-1.8% above last year, while total CPI is tracking for 3.25% because of the increase in energy and gas prices.
So while the total employment figures would give you the impression that our economy is ticking along, some of the other figures tell me that things aren’t exactly as they seem. For example, the majority of the 30,000 people that started their own businesses probably won’t earn anywhere close to what they earned while they were employed elsewhere (like in the manufacturing sector). The fact that GDP growth is an anemic 0.3% year over year tells me that they aren’t earning the same amount yet.
The biggest concern for me is the 23,000 people who lost their manufacturing jobs. These tend to be good paying stable jobs, which makes it easier for people to buy things and then pay for them.
The USA is in the tank too, so it is unlikely they will increase demand for our products (which are a lot more expensive now due to the exchange rate).
The net result is that we won’t see mortgage rates go too high any time soon. There isn’t enough positive economic news in the works that will keep rates up for any great length of time. If they pop up it will likely take less than 3 months for them to come back down.
And that is the theme for the rest of 2011, and perhaps all of 2012.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Monday, June 6, 2011
Fixed Rates Should Drop!
The headlines in the paper last week were advertising that Wednesday was a terrible day in the stock market. Odd as it may be, this made me smile.
I hate losing money just as much as the next person, but these big drops are often overlooked for what they really are: Buying Opportunities. When the herd is running in one direction it is normally a signal to look at doing the opposite thing. So don’t hesitate looking at the opportunities that are out there. I myself can’t believe that RIM is trading at a P/E Ratio of less than 7.
The other reason I smiled is that this decline allows Fixed Mortgage Rates to drop down even lower. Rates in the bond market have declined 0.3% over the last month, and the 0.1% drop that occurred yesterday will likely push the 5-year fixed rate mortgage to 3.85% across the board if they hold steady for a few days.
The stock market drop was due to bad economic news out of the USA, which we have been covering for some time now. We still believe that the USA is years away from a recovery. This will make it very hard for our government to raise short-term rates as it will make our Loonie too expensive and put pressure on manufacturing. The government wants people working, so they will err on the side of “wait and see” rather than try to be pro-active and raise the rates. With that being said don’t expect Variable Rates to rise much in the next 18 months.
Have a great week!
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.mortgageconcierge.ca
I hate losing money just as much as the next person, but these big drops are often overlooked for what they really are: Buying Opportunities. When the herd is running in one direction it is normally a signal to look at doing the opposite thing. So don’t hesitate looking at the opportunities that are out there. I myself can’t believe that RIM is trading at a P/E Ratio of less than 7.
The other reason I smiled is that this decline allows Fixed Mortgage Rates to drop down even lower. Rates in the bond market have declined 0.3% over the last month, and the 0.1% drop that occurred yesterday will likely push the 5-year fixed rate mortgage to 3.85% across the board if they hold steady for a few days.
The stock market drop was due to bad economic news out of the USA, which we have been covering for some time now. We still believe that the USA is years away from a recovery. This will make it very hard for our government to raise short-term rates as it will make our Loonie too expensive and put pressure on manufacturing. The government wants people working, so they will err on the side of “wait and see” rather than try to be pro-active and raise the rates. With that being said don’t expect Variable Rates to rise much in the next 18 months.
Have a great week!
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.mortgageconcierge.ca
Friday, May 20, 2011
Finally, Fixed Rates Moving Down
I’ve been predicting that Fixed Mortgage Rates should be lower for a few weeks, and finally that prediction is coming true. It looks like most banks, trust companies and credit unions will be lowering their 5-year fixed rates to just under 4.00%. That’s cheap money and will make it a little more difficult for people to decide to go with a Variable Rate Mortgage as the spread between the two decreases.
The main reason for the drop is that the yield on the Government of Canada 5-year bond has been around 2.50% for 3 weeks, and lenders are finally passing the savings onto the consumer. Although the TSX has been up all week, overall it is near its low for the year, making some people take flight to the security of bonds. When this happens the yield on bonds goes down, and so should the rates on products tied to the bond yield, like mortgages.
Expect fixed rates to hover near these levels for some time, as there seems to be an equal amount of good and bad news stories about the health of the USA and Canadian economies.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
The main reason for the drop is that the yield on the Government of Canada 5-year bond has been around 2.50% for 3 weeks, and lenders are finally passing the savings onto the consumer. Although the TSX has been up all week, overall it is near its low for the year, making some people take flight to the security of bonds. When this happens the yield on bonds goes down, and so should the rates on products tied to the bond yield, like mortgages.
Expect fixed rates to hover near these levels for some time, as there seems to be an equal amount of good and bad news stories about the health of the USA and Canadian economies.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Wednesday, May 11, 2011
Why Haven't Fixed Mortgage Rates Come Down?
Why aren’t the banks moving rates down? It would appear to me that they are hoarding a bit of “margin” on their fixed rate mortgages in order to make up for very small margins on their variable rate mortgages. But there comes a time when Canadians should get a little vocal, and demand a better deal. Frankly, the people that lock in shouldn’t be penalized because other people are floating…the banks should price the variable products in a way that makes them profit on that side of their product line too.
To give you some perspective on this, the fixed mortgage rates are driven off the bond yields. The bond yields are down approximately 0.25% from 3 weeks ago, which gives the banks to option of lowering the fixed mortgage rates by the same amount to maintain the spread, or leave them the same and earn even more profits.
The fixed rates are quite good; however the variable rate of 2.3% that most lenders offer is attractive too. If you need help figuring out which would be right for you please pop us a note or give us a call. We’d be happy to help!
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
To give you some perspective on this, the fixed mortgage rates are driven off the bond yields. The bond yields are down approximately 0.25% from 3 weeks ago, which gives the banks to option of lowering the fixed mortgage rates by the same amount to maintain the spread, or leave them the same and earn even more profits.
The fixed rates are quite good; however the variable rate of 2.3% that most lenders offer is attractive too. If you need help figuring out which would be right for you please pop us a note or give us a call. We’d be happy to help!
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
Tuesday, May 3, 2011
The Results Are In!
Election Day is done. The votes are in and the Conservative Party has a majority government. Whether you vote Liberal, NDP, Green or Conservative, the one thing that will benefit all of us is the stability a majority government brings. Majority governments, by their very nature, are able to ram through whichever policies they want. They have to be cautious enough to implement good policies that resonate with the people, but they don’t have to worry about making the other parties happy.
The result of this stability usually translates into opportunities for business, for employment, and stable interest rates. That’s good news for most people thinking of buying a home, or finishing school and looking for jobs.
The current market would suggest that variable rates will remain low for some time as the USA gets its financial house in order. Count on low variable rates and stable fixed rates for the next year. Fixed rates will likely rise before the variable rates do, so if you think you might lock-in eventually, pay closure attention to the fixed rates.
With the Conservatives winning a majority expect a slight reprieve in fixed rates, with the likelihood they’ll drop by 0.15% in the next couple of weeks.
Call us if you need help refinancing or getting advice on your mortgage financing for a purchase you might be thinking about. We’d be happy to help!
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
The result of this stability usually translates into opportunities for business, for employment, and stable interest rates. That’s good news for most people thinking of buying a home, or finishing school and looking for jobs.
The current market would suggest that variable rates will remain low for some time as the USA gets its financial house in order. Count on low variable rates and stable fixed rates for the next year. Fixed rates will likely rise before the variable rates do, so if you think you might lock-in eventually, pay closure attention to the fixed rates.
With the Conservatives winning a majority expect a slight reprieve in fixed rates, with the likelihood they’ll drop by 0.15% in the next couple of weeks.
Call us if you need help refinancing or getting advice on your mortgage financing for a purchase you might be thinking about. We’d be happy to help!
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Wednesday, April 27, 2011
Fixed Mortgage Rates Poised to Drop?
The TSX has been on a bit of a decline in recent days. While most people who hold stocks aren’t thrilled to see their investments decrease in value there’s a silver lining for people looking to buy homes: Normally a dip in the Stock market translates into lower fixed mortgage rates.
Fixed mortgage rates are set based off the bond yield for a similar term mortgage-backed security. As people jump out of the stock market and into the bond market the increased demand for bonds drives their interest rates down (and their price up). In the last week these rates (yields) have decreased by about 0.25%, which means that there is room for the banks to lower fixed mortgage rates. Expect a change in rates in the next few days if the bond yields hold steady.
Variable rates are also attractive, so make sure you talk with one of us about all your options before you make a decision. For example, there’s a type of mortgage that allows you to split it up into 2 parts, where one chunk of your mortgage will have a fixed rate, and the other will have a variable rate. When making your decision it’s wise to talk with an expert, like some who has their AMP designation. Do you want to get advice from someone who spends most of their day processing car loans and setting up bank accounts or a mortgage expert? I certainly wouldn’t get heart surgery from a dentist.
Call us to see why more and more Canadians are using a mortgage broker to arrange their mortgage for them!
Cheers,
Chris
--
Christopher Bisson
Mortgage Broker
The Mortgage Centre
1-866-838-4366 x1003
www.mortgageconcierge.ca
Fixed mortgage rates are set based off the bond yield for a similar term mortgage-backed security. As people jump out of the stock market and into the bond market the increased demand for bonds drives their interest rates down (and their price up). In the last week these rates (yields) have decreased by about 0.25%, which means that there is room for the banks to lower fixed mortgage rates. Expect a change in rates in the next few days if the bond yields hold steady.
Variable rates are also attractive, so make sure you talk with one of us about all your options before you make a decision. For example, there’s a type of mortgage that allows you to split it up into 2 parts, where one chunk of your mortgage will have a fixed rate, and the other will have a variable rate. When making your decision it’s wise to talk with an expert, like some who has their AMP designation. Do you want to get advice from someone who spends most of their day processing car loans and setting up bank accounts or a mortgage expert? I certainly wouldn’t get heart surgery from a dentist.
Call us to see why more and more Canadians are using a mortgage broker to arrange their mortgage for them!
Cheers,
Chris
--
Christopher Bisson
Mortgage Broker
The Mortgage Centre
1-866-838-4366 x1003
www.mortgageconcierge.ca
Tuesday, April 19, 2011
StatsCan says Inflation on the Rise
Statistics Canada announced on Tuesday this week that Canada’s annual inflation rate shot to a two and a half year high in March, prompting speculation about an interest rate hike from the Bank of Canada.
The report showed annual inflation was 3.3% in March, while core inflation, which factors out volatile items such as energy and food prices, was 1.7%. Economists had been expecting an annual inflation number of 2.8%, and a core rate of 1.2%.
Given the Bank’s target for Core Inflation is 2% they will keep a sharp eye on the next CPI report from Statistics Canada as it comes just before the next Policy Announcement to be issued at the end of May. If Core inflation jumps above 2% this might prompt them to raise their overnight lending rate, which in turn will increase the Prime Rate.
The bank last raised its interest rate in September from 0.75% to 1%. Most economists expect the bank will keep interest rates unchanged during its policy decision at the end of May as it will likely prefer to err on the side of inflation rather than stall the economy and send our Loonie to $1.05 USD territory. That would cause a lot of lost jobs in Canada, which is the last thing the Bank wants.
If you are wondering if you should go fixed or variable make sure you talk to one or our Mortgage Specialists as we can provide you with historical information that will help you make your decision!
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
The report showed annual inflation was 3.3% in March, while core inflation, which factors out volatile items such as energy and food prices, was 1.7%. Economists had been expecting an annual inflation number of 2.8%, and a core rate of 1.2%.
Given the Bank’s target for Core Inflation is 2% they will keep a sharp eye on the next CPI report from Statistics Canada as it comes just before the next Policy Announcement to be issued at the end of May. If Core inflation jumps above 2% this might prompt them to raise their overnight lending rate, which in turn will increase the Prime Rate.
The bank last raised its interest rate in September from 0.75% to 1%. Most economists expect the bank will keep interest rates unchanged during its policy decision at the end of May as it will likely prefer to err on the side of inflation rather than stall the economy and send our Loonie to $1.05 USD territory. That would cause a lot of lost jobs in Canada, which is the last thing the Bank wants.
If you are wondering if you should go fixed or variable make sure you talk to one or our Mortgage Specialists as we can provide you with historical information that will help you make your decision!
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Wednesday, April 13, 2011
Markets Down
A little known fact is that when the stock market drops the way is paved for fixed mortgage rates to drop. When the stock markets drop there is generally a flight to safer havens, like cash and bonds. The greater demand for bonds the lower their rates go. (Since the "return" in the stock market is less they can provide less of a return.)
Bond yields are what influence fixed mortgage rates, so as they decrease there is more and more room for fixed mortgage rates to drop too.
If we have a few more days like yesterday the fixed rates will drop by 0.10-0.25%.
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
Toll Free: 1-866-838-4366 x1003
www.mortgageconcierge.ca
Bond yields are what influence fixed mortgage rates, so as they decrease there is more and more room for fixed mortgage rates to drop too.
If we have a few more days like yesterday the fixed rates will drop by 0.10-0.25%.
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
Toll Free: 1-866-838-4366 x1003
www.mortgageconcierge.ca
Tuesday, April 12, 2011
Surprise! The Bank Isn’t “Moving”
The Bank of Canada left its overnight lending rate unchanged which many had anticipated. It is unlikely that the Bank of Canada will increase the rate until the end of the year, or even next spring, with too much uncertainty in the air.
Japan is going to see severe impacts to its economic output this year, and as a result that will have a ripple affect due to supply chains that rely on Japanese parts.
Europe isn’t without its challenges along with the USA, who will likely see another 3 million homes hit the foreclosure market in the next 18 months. The US Fed won’t be moving their rates anytime soon, which leads me to believe the Bank of Canada’s hands are tied. We can’t afford to have our Loonie increase in value compared to the US dollar, which is what an increase in the Bank Rate would facilitate. A higher exchange rate makes it harder for us to sell our exports south of the border...
Interestingly, the Bank predicts core inflation to track under it’s target of 2%, which is another reason why the Bank Rate can stay put for a while. Total inflation has some people scared, hence the rise in Bond Yields (and fixed mortgage rates as a result) but I would let that scare me out of my variable rate mortgage. Every time we get good news the bond yields jump, and every time we get negative news they drop. Expect this trend to continue and as a result fixed rates will track close to 4.1% for the next 6 months.
Please feel free to contact us if you are thinking of buying property or refinancing your mortgage. We’ve got the experience and knowledge that can help save you thousands.
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
Toll-free: 866-838-4366 x1003
www.mortgageconcierge.ca
Japan is going to see severe impacts to its economic output this year, and as a result that will have a ripple affect due to supply chains that rely on Japanese parts.
Europe isn’t without its challenges along with the USA, who will likely see another 3 million homes hit the foreclosure market in the next 18 months. The US Fed won’t be moving their rates anytime soon, which leads me to believe the Bank of Canada’s hands are tied. We can’t afford to have our Loonie increase in value compared to the US dollar, which is what an increase in the Bank Rate would facilitate. A higher exchange rate makes it harder for us to sell our exports south of the border...
Interestingly, the Bank predicts core inflation to track under it’s target of 2%, which is another reason why the Bank Rate can stay put for a while. Total inflation has some people scared, hence the rise in Bond Yields (and fixed mortgage rates as a result) but I would let that scare me out of my variable rate mortgage. Every time we get good news the bond yields jump, and every time we get negative news they drop. Expect this trend to continue and as a result fixed rates will track close to 4.1% for the next 6 months.
Please feel free to contact us if you are thinking of buying property or refinancing your mortgage. We’ve got the experience and knowledge that can help save you thousands.
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
Toll-free: 866-838-4366 x1003
www.mortgageconcierge.ca
Tuesday, April 5, 2011
Mortgage Rates Rise!
The bond yield is back to where it was a month ago for the 5-year bond, which has prompted most banks to increase their mortgage rates after having dropped them.
With renewed concerns over inflation the bond yields have increased about 0.3% during the last week. The variable mortgage rates have stayed the same, and the outlook for the next 12 months is that variable will outperform fixed-rate holders.
Just wait for the next piece of news that shows things aren't so rosy in the USA or here, and those fixed rates will drop back down.
If you need help arranging your mortgage please give me a call. I would be happy to help!
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
With renewed concerns over inflation the bond yields have increased about 0.3% during the last week. The variable mortgage rates have stayed the same, and the outlook for the next 12 months is that variable will outperform fixed-rate holders.
Just wait for the next piece of news that shows things aren't so rosy in the USA or here, and those fixed rates will drop back down.
If you need help arranging your mortgage please give me a call. I would be happy to help!
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
Wednesday, March 30, 2011
Keep Your Eye on the Employment Rate
An interesting number that I think some people haven’t seen much of is the Employment Rate. We usually hear a lot about the Unemployment Rate, which doesn’t take into account those that are unemployed but who aren’t actively looking for work. Currently the Unemployment Rate is 7.8%, down from a high of approximately 8.65 in late 2009. So either more people have found jobs, stopped looking for both, or a mix of both.
The Employment Rate, on the other hand, measures how many adult aged people are working for pay, and thus in a position to take care of themselves and their families. Since the recession, every job lost has been made back up in our economy. Some of them may be different jobs, paying more, less, or the same as the old job, and some people got their old jobs back. The important thing is that the number of jobs that were lost have been made up in the last 12 months.
It is likely that most of those jobs were at companies that export goods and services, and a lot of people started their own businesses. The question is: How does this affect our economy? The answer to that question is mixed because of a couple of factors: 1) The more people working in Canada, the more income available to be spent in the economy. 2) If the bulk of the jobs that people found who had lost their jobs in the recession pay less than their old jobs there will be less money available to be spent than there was previously. So which one is it?
The inflation and GDP figures would make me lean towards the latter, as both have been subdued. That’s good news for people getting mortgages or who have mortgages coming up for renewal. The lower those numbers (inflation and GDP) remain, the more that mortgage rates will remain stable. So while rates will bounce around over the next 12-18 months don’t expect them to leap higher and stay there. We will likely be in this low-rate environment for a while.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
The Employment Rate, on the other hand, measures how many adult aged people are working for pay, and thus in a position to take care of themselves and their families. Since the recession, every job lost has been made back up in our economy. Some of them may be different jobs, paying more, less, or the same as the old job, and some people got their old jobs back. The important thing is that the number of jobs that were lost have been made up in the last 12 months.
It is likely that most of those jobs were at companies that export goods and services, and a lot of people started their own businesses. The question is: How does this affect our economy? The answer to that question is mixed because of a couple of factors: 1) The more people working in Canada, the more income available to be spent in the economy. 2) If the bulk of the jobs that people found who had lost their jobs in the recession pay less than their old jobs there will be less money available to be spent than there was previously. So which one is it?
The inflation and GDP figures would make me lean towards the latter, as both have been subdued. That’s good news for people getting mortgages or who have mortgages coming up for renewal. The lower those numbers (inflation and GDP) remain, the more that mortgage rates will remain stable. So while rates will bounce around over the next 12-18 months don’t expect them to leap higher and stay there. We will likely be in this low-rate environment for a while.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Friday, March 25, 2011
Kitchener/Waterloo Home Show is Free (this Weekend)
I just found out the the Kitchener Waterloo Home & Garden Show is now a free event. To find out more about the show please visit their website.
I'm not a big fan of these types of events because I typically rely on referrals from people I trust to people who can help me with my project. What I do like about these shows is that you can get a lot of information from different vendors in a short period of time.
One thing you aren't likely to get at a home and garden show is mortgage advice. If you want to get some advice on your situation and what type of mortgage is best for you please give me a call. I would be happy to help!
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
I'm not a big fan of these types of events because I typically rely on referrals from people I trust to people who can help me with my project. What I do like about these shows is that you can get a lot of information from different vendors in a short period of time.
One thing you aren't likely to get at a home and garden show is mortgage advice. If you want to get some advice on your situation and what type of mortgage is best for you please give me a call. I would be happy to help!
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
Tuesday, March 22, 2011
Core Inflation helps Variable Rate Mortgage Holders
Core inflation is low, and playing right into the hands of people who have Variable Rate Mortgages (VRMs). When inflation is low the Bank of Canada keeps short-term rates low in order to "grease" the wheels of commerce. Low rates normally insent more people and businesses to borrow because it is cheap.
Some people worry that the current low-rate environment will lead to high inflation. These expectations will affect the fixed-rate mortgage market. In fact, just about every time we hear news that the economy is humming the fixed mortgage rates rise, and just about every time we hear things aren't so rosy the rates drop. I've seen the 5 year fixed rate gyrate back and forth between 3.80% and 4.40% three times since November.
The outlook for the next 2 years is that the USA is going to have tough times. With us shipping about 70% of our exports to the USA we will see a lag too. Even if we change gears and find new markets for our products it is unlikely our short-term rates will move much out of step with the USA's short-term rates. The greater the spread the higher our Loonie will soar. And that will hurt manufacturing... I can't see the government wanting to put people into Unemployment lines on purpose...so count on VRM rates to hold pretty steady.
With Variable Rates down near 2.3%, it's no wonder so many people are going variable nowadays!
Cheers,
Chris
--
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
Some people worry that the current low-rate environment will lead to high inflation. These expectations will affect the fixed-rate mortgage market. In fact, just about every time we hear news that the economy is humming the fixed mortgage rates rise, and just about every time we hear things aren't so rosy the rates drop. I've seen the 5 year fixed rate gyrate back and forth between 3.80% and 4.40% three times since November.
The outlook for the next 2 years is that the USA is going to have tough times. With us shipping about 70% of our exports to the USA we will see a lag too. Even if we change gears and find new markets for our products it is unlikely our short-term rates will move much out of step with the USA's short-term rates. The greater the spread the higher our Loonie will soar. And that will hurt manufacturing... I can't see the government wanting to put people into Unemployment lines on purpose...so count on VRM rates to hold pretty steady.
With Variable Rates down near 2.3%, it's no wonder so many people are going variable nowadays!
Cheers,
Chris
--
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
Wednesday, March 16, 2011
Last Chance to Refi to 90% of your Home's Value
The new mortgage rules being implemented by the Government of Canada come into affect on March 18th, 2011. One of the changes to the rules limits the amount of money someone can pull out of their home for a refinance.
The new rule allows home owners to refinance up to 85% of their home's value, compared to 90% that is currently possible.
If you or someone you know has a large amount of consumer debt they would probably benefit from a refinance because it usually means lower payments AND lower rates. Make sure the application is submitted by 3pm on the 17th to ensure it can be submitted for approval by the end of day in order to meet the deadline!
Apply on-line at www.mortgageconcierge.ca to speed up the process!
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
The new rule allows home owners to refinance up to 85% of their home's value, compared to 90% that is currently possible.
If you or someone you know has a large amount of consumer debt they would probably benefit from a refinance because it usually means lower payments AND lower rates. Make sure the application is submitted by 3pm on the 17th to ensure it can be submitted for approval by the end of day in order to meet the deadline!
Apply on-line at www.mortgageconcierge.ca to speed up the process!
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
Wednesday, March 9, 2011
Condo Fees and Down Payments
I have had a few clients ask me if there is going to be a change in the way the banks calculate affordability numbers for people wanted to get a mortgage. Specifically, I've had people ask me if the new minimum down is 10% as well as those thinking that you have to use the entire condo fee payment when calculating the "affordability" numbers.
Let me provide you with a short answer to these two items: Neither is true. In fact, although the banks can't approve you for a mortgage that is worth 100% of the value of the home you may want to buy, you can still buy with nothing down. How's that possible? The answer is that you can still borrow your 5% down or get a cash back mortgage to cover the down payment. Certain conditions apply so talk with us to find out how you or someone you know might be able to take advantage of these programs.
And one last thing: When you want mortgage advice, make sure you are getting it from an expert like someone at our office.
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
Let me provide you with a short answer to these two items: Neither is true. In fact, although the banks can't approve you for a mortgage that is worth 100% of the value of the home you may want to buy, you can still buy with nothing down. How's that possible? The answer is that you can still borrow your 5% down or get a cash back mortgage to cover the down payment. Certain conditions apply so talk with us to find out how you or someone you know might be able to take advantage of these programs.
And one last thing: When you want mortgage advice, make sure you are getting it from an expert like someone at our office.
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
Friday, March 4, 2011
Inflation Subdued?
Total Inflation for January came in at 2.3% higher than the previous year. Core inflation came in at 1.3% for the same period. Core Inflation strips out highly volatile items like food and energy. That’s good news for those who are afraid that inflation is getting out of control.
While keeping interest rates as low provides stimulus for the economy that may result in inflation, the risks of increasing the short-term rates is too great. Besides, without the USA doing the same we can’t have our rates rise much without sending our Loonie higher, which would hurt manufacturing. The last thing that the government wants is a large group of workers lose their jobs because of the exchange rate.
Bond Yields have been holding steady around 2.6%, which allows fixed rates to remain the same.
Expect rates to stay very close to where they are for the remainder of the year. It is unlikely that they will swing by more than 0.5% either way by December.
I arrange mortgages for people and would be happy to help you. Please feel free to contact me if you'd like help saving time and money!
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
While keeping interest rates as low provides stimulus for the economy that may result in inflation, the risks of increasing the short-term rates is too great. Besides, without the USA doing the same we can’t have our rates rise much without sending our Loonie higher, which would hurt manufacturing. The last thing that the government wants is a large group of workers lose their jobs because of the exchange rate.
Bond Yields have been holding steady around 2.6%, which allows fixed rates to remain the same.
Expect rates to stay very close to where they are for the remainder of the year. It is unlikely that they will swing by more than 0.5% either way by December.
I arrange mortgages for people and would be happy to help you. Please feel free to contact me if you'd like help saving time and money!
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Monday, February 21, 2011
Long-term Outlook for Short-term Rates
I've been asked if I think Variable is better than Fixed when choosing a mortgage. Generally speaking I think that variable rate mortgages will leave a person better off financially, but they aren't for everyone.
If you think you might lay awake every time the Bank of Canada is close to making a statement about it's overnight lending rate (which affects the Prime Rate) you probably aren't a good candidate for this type of mortgage. If you can stomach the ups and downs you may have heard a lot of people discussing that inflation is on the rise, and as a result we will likely see rates go up. This is true, however there is a limit to how high the Prime Rate can go because of the Loonie.
You see, if the Prime Rate in Canada rose another 1% without the USA moving their rate up, we would find ourselves in the great position having our dollar worth more than the US dollar. At the same time this seemingly good thing would hurt our manufacturers because the USA still accounts for well over 60% of our exports. A loonie at 1.20 US dollars would crush manufacturing in central Canada, and with it there would be a lot of lost jobs. Seeing how our government doesn't want that you can bet on the Prime Rate staying low for a while because the US has a long way to go before it's out of the woods, and at the same time we will see the fixed rates rise as inflation takes hold.
So the long-term outlook for short-term rates is that they will stay low, which makes keeping your variable rate mortgage (or switching over to one) all the more beneficial.
Call me if you'd like more details. I'd be happy to help!
Chris
--
Christopher Bisson
866-838-4366 x1003
www.mortgageconcierge.ca
If you think you might lay awake every time the Bank of Canada is close to making a statement about it's overnight lending rate (which affects the Prime Rate) you probably aren't a good candidate for this type of mortgage. If you can stomach the ups and downs you may have heard a lot of people discussing that inflation is on the rise, and as a result we will likely see rates go up. This is true, however there is a limit to how high the Prime Rate can go because of the Loonie.
You see, if the Prime Rate in Canada rose another 1% without the USA moving their rate up, we would find ourselves in the great position having our dollar worth more than the US dollar. At the same time this seemingly good thing would hurt our manufacturers because the USA still accounts for well over 60% of our exports. A loonie at 1.20 US dollars would crush manufacturing in central Canada, and with it there would be a lot of lost jobs. Seeing how our government doesn't want that you can bet on the Prime Rate staying low for a while because the US has a long way to go before it's out of the woods, and at the same time we will see the fixed rates rise as inflation takes hold.
So the long-term outlook for short-term rates is that they will stay low, which makes keeping your variable rate mortgage (or switching over to one) all the more beneficial.
Call me if you'd like more details. I'd be happy to help!
Chris
--
Christopher Bisson
866-838-4366 x1003
www.mortgageconcierge.ca
Wednesday, February 16, 2011
What's Your Number?
Some people would be amazed at how much money they could save by having their mortgage connected to their bank account, and treat it like a line of credit.
I will be the first to point out that this type of mortgage isn't for everyone: If you can't balance your budget you shouldn't take this mortgage. For those that can they would be well served to visit www.manulifeone.com and test drive their little calculator.
While the ManuOne Mortgage isn't the best of its class, the website helps people figure out what would happen if they put their whole paycheque against their mortgage on each payday, and then draw against it a little at a time as needed. Depending on the example, I have seen the savings range from $5,000 to $114,000. Give it a whirl and call me to find out more.
The best product in this class is offered by another lender. Their rates are lower and fees are non-existent compared with the ManuOne.
If you've got 20% down or equity in your home you owe it to yourself to give us a call.
Bond yields are up compared with last week, which is why fixed mortgage rates have risen. Variable remains low, and will likely rise in the coming weeks if the employment reports keep coming in stronger than expected.
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
519-763-3900 x1003
866-838-4366 x1003
www.mortgageconcierge.ca
I will be the first to point out that this type of mortgage isn't for everyone: If you can't balance your budget you shouldn't take this mortgage. For those that can they would be well served to visit www.manulifeone.com and test drive their little calculator.
While the ManuOne Mortgage isn't the best of its class, the website helps people figure out what would happen if they put their whole paycheque against their mortgage on each payday, and then draw against it a little at a time as needed. Depending on the example, I have seen the savings range from $5,000 to $114,000. Give it a whirl and call me to find out more.
The best product in this class is offered by another lender. Their rates are lower and fees are non-existent compared with the ManuOne.
If you've got 20% down or equity in your home you owe it to yourself to give us a call.
Bond yields are up compared with last week, which is why fixed mortgage rates have risen. Variable remains low, and will likely rise in the coming weeks if the employment reports keep coming in stronger than expected.
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
519-763-3900 x1003
866-838-4366 x1003
www.mortgageconcierge.ca
Thursday, February 10, 2011
The RRSP "Flip"
Most first-time buyers have heard that they can use their RRSPs towards their down payment if they are buying a home. Under the First Time Home Buyer's Plan (HBP) the income a first-time buyer withdraws from their RRSP is not taxable. The amount withdrawn must be paid back over a 15 year period starting the second year after the withdrawal was made.
A little known manoeuvre, however, is for people who have been saving to buy a home, and who have lots of RRSP contribution room. The RRSP Flip, as some call it, involves the first time buyer (and spouse/partner if applicable) taking out a loan to buy an RRSP. Given the maximum each person can take out or their RRSP under the HBP is $25,000, the maximum loan a person takes out should be based on getting them to a $25,000 balance in their RRSP.
The next step in the process is to ensure that the money remains in the RRSP for 90 days. During that time frame 2 things should happen: 1) You hopefully have filed a tax return and should be getting a tax credit as a result of the RRSP purchase, and 2) you find a house with a closing date beyond the 90 day window needed for the RRSPs purchased to remain in your RRSP account.
So here's the FLIP. Most people take out the money from their RRSP to put towards the down payment. Under the HBP you can use the money any way you wish (a fact few people realize). Instead of doing that, you take the money out of the RRSP and pay off the loan you received. You then take your tax return money that you get back from the government, and use that money towards your down payment. So you get to top up your down payment savings for "free."
The catch? You have to pay that money back into your RRSP over the 15 years. Some people view this as a good thing anyway, as we should all be putting money away for that "rainy day" in case it ever comes
There are lots of ways to use financial strategies for your benefit. Call me if you want to find out about more of the options that are available to you!
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003 toll free
www.mortgageconcierge.ca
A little known manoeuvre, however, is for people who have been saving to buy a home, and who have lots of RRSP contribution room. The RRSP Flip, as some call it, involves the first time buyer (and spouse/partner if applicable) taking out a loan to buy an RRSP. Given the maximum each person can take out or their RRSP under the HBP is $25,000, the maximum loan a person takes out should be based on getting them to a $25,000 balance in their RRSP.
The next step in the process is to ensure that the money remains in the RRSP for 90 days. During that time frame 2 things should happen: 1) You hopefully have filed a tax return and should be getting a tax credit as a result of the RRSP purchase, and 2) you find a house with a closing date beyond the 90 day window needed for the RRSPs purchased to remain in your RRSP account.
So here's the FLIP. Most people take out the money from their RRSP to put towards the down payment. Under the HBP you can use the money any way you wish (a fact few people realize). Instead of doing that, you take the money out of the RRSP and pay off the loan you received. You then take your tax return money that you get back from the government, and use that money towards your down payment. So you get to top up your down payment savings for "free."
The catch? You have to pay that money back into your RRSP over the 15 years. Some people view this as a good thing anyway, as we should all be putting money away for that "rainy day" in case it ever comes
There are lots of ways to use financial strategies for your benefit. Call me if you want to find out about more of the options that are available to you!
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003 toll free
www.mortgageconcierge.ca
Wednesday, February 9, 2011
Rates Are Moving
Most lenders have already moved their fixed rates but there remain a few still down around 3.8% for a five year fixed-rate mortgage. Make sure you get pre-approved if you are thinking of buying in the next 4 months!
Cheers,
Chris
--
Christopher Bison
The Mortgage Centre
519-763-3900 x1003
www.gulphmortgagecentre.com
Cheers,
Chris
--
Christopher Bison
The Mortgage Centre
519-763-3900 x1003
www.gulphmortgagecentre.com
Thursday, February 3, 2011
Fixed Rates Likely to Rise this Week - BETTER GET PRE-APPROVED NOW
THis might be one time to get busy and get yourself pre-approved. Fixed mortgage rates could soon be headed higher. Fears about the impacts of the turmoil in Egypt on oil prices have sent the bond market higher. Given the amount of oil that is shipped through the Suez Canal thee fears are well founded.
Other news has also sent bond yields up: More reports from the USA that production levels are up and companies there have added more jobs to their regular payrolls. Given the current pace, it will still take years to get all those who lost their jobs from the recession back to work. It is a little early to tell if the economy has its legs but one thing is certain: Obama won’t let the short-term rates rise much. Better to have inflation than it is to cut the growth off.
For most people in variable rate mortgages the rising fixed rates won’t impact them at all. Given the unlikelihood that our short term mortgage rates (like the variable rates) will rise much those people should hold steady, and stay in the variable rate mortgage. The rates are still well below 3% on a variable.
The fixed rates have been bouncing around in the 3.75-4.25% range for some time now. They will continue to do so for the next six months, so treat these small ups and downs as normal.
If you need help choosing a mortgage product please feel free to give us a call or check out our website at www.mortgageconcierge.ca. We’d be happy to help.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Other news has also sent bond yields up: More reports from the USA that production levels are up and companies there have added more jobs to their regular payrolls. Given the current pace, it will still take years to get all those who lost their jobs from the recession back to work. It is a little early to tell if the economy has its legs but one thing is certain: Obama won’t let the short-term rates rise much. Better to have inflation than it is to cut the growth off.
For most people in variable rate mortgages the rising fixed rates won’t impact them at all. Given the unlikelihood that our short term mortgage rates (like the variable rates) will rise much those people should hold steady, and stay in the variable rate mortgage. The rates are still well below 3% on a variable.
The fixed rates have been bouncing around in the 3.75-4.25% range for some time now. They will continue to do so for the next six months, so treat these small ups and downs as normal.
If you need help choosing a mortgage product please feel free to give us a call or check out our website at www.mortgageconcierge.ca. We’d be happy to help.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Monday, January 31, 2011
Canada Mortgage Calculator
There are dozens of mortgage calculators for Canadian mortgages. If you ever need to use one I recommend you try the ones on my company's website at www.mortgageconcierge.ca.
Specifically, I like the Mortgage Isolator calculator and the Mortgage Qualifier calculator.
When you start looking for a home it makes sense to play with these mortgage calculators a bit, and then to contact one of the mortgage professionals at our office. We can help people across Canada thanks to technology, and would be happy to help.
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
bisson.c@mortgagecentre.com
866-838-4366 x1003
Specifically, I like the Mortgage Isolator calculator and the Mortgage Qualifier calculator.
When you start looking for a home it makes sense to play with these mortgage calculators a bit, and then to contact one of the mortgage professionals at our office. We can help people across Canada thanks to technology, and would be happy to help.
Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
bisson.c@mortgagecentre.com
866-838-4366 x1003
Thursday, January 27, 2011
40 Year Mortgages Come to Roost
Hopefully you didn't "have" to take a 40 year amortization for your mortgage if you bought a house a couple of years ago. If you were, you've barely paid down your mortgage balance in the last 2 years.
Worse yet, you might have your heart set on a house that's for sale and are coming up to your closing date and you find out the vendor has a 40 year amortized mortgage. The challenge for you in this case is that it is VERY likely that there won't be enough money to pay off the mortgage and penalties for breaking the mortgage before the end of the term. This means that the vendor can't close the transaction and you'll be left looking for a place to live, and a place to store your boxes.
I am just in the middle of this situation with a great client who wants to buy a house. The vendor put very little down, has a long amortization, and when the early payout penalty is added into the mix they end up owing substantially more than the house is worth. They can't close.
If you are thinking of buying a house make sure your real estate agent has asked for proof that the mortgage on the vendor's house will not become an issue down the road. You can even ask your lawyer to do a search for you to find out how much of a mortgage was registered against the property when the house was purchased. For the $50.00 it could be the best money you spend for a long time!
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
phone: 519-763-3900 x1003
toll free: 866-838-4366 x1003
www.mortgageconcierge.ca
Worse yet, you might have your heart set on a house that's for sale and are coming up to your closing date and you find out the vendor has a 40 year amortized mortgage. The challenge for you in this case is that it is VERY likely that there won't be enough money to pay off the mortgage and penalties for breaking the mortgage before the end of the term. This means that the vendor can't close the transaction and you'll be left looking for a place to live, and a place to store your boxes.
I am just in the middle of this situation with a great client who wants to buy a house. The vendor put very little down, has a long amortization, and when the early payout penalty is added into the mix they end up owing substantially more than the house is worth. They can't close.
If you are thinking of buying a house make sure your real estate agent has asked for proof that the mortgage on the vendor's house will not become an issue down the road. You can even ask your lawyer to do a search for you to find out how much of a mortgage was registered against the property when the house was purchased. For the $50.00 it could be the best money you spend for a long time!
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
phone: 519-763-3900 x1003
toll free: 866-838-4366 x1003
www.mortgageconcierge.ca
Monday, January 17, 2011
New Mortgage Rules by Jim Flaherty
The Finance Minister, Jim Flaherty, revealed changes to mortgage lending rules that will see Ottawa stop backing home loans with amortization periods greater than 30 years and make it more difficult for households to use their property as an ATM.
The changes have emerged because of worries among leaders and the Bank of Canada about the record levels of household debt and how conditions could worsen unless action was taken.
“We want to make sure we don’t have the kind of medium-term problem that has been experienced elsewhere because of this tendency by some to assume large indebtedness at low interest rates,” Mr. Flaherty said in a statement. “People need to demonstrate that good Canadian trade of prudence and reasonableness in terms of their debt assumptions.”
The Finance Minister said mortgages with amortization periods longer than 30 years will no longer qualify for government-backed mortgage insurance, which is required for buyers with less than a 20% down payment on a home. The previous limit was 35 years.
The Government also lowered the maximum amount Canadians can borrow against the value of their homes from 90% down to 85% on a refinancing; and removed federal government backing for home equity lines of credit.
HELOCs are of particular concern and an key factor in the rise in household debt. Mr. Flaherty said some banks were insuring, through Canada Mortgage and Housing Corp. (CMHC), their exposure to HELOC liabilities and he wants to put an end to that situation.
“That’s particularly risky,” Mr. Flaherty said. “Some of those loans are not used to create housing in Canada. They are used to buy boats and cars and big-screen TVs. That’s not the business mortgage insurance was designed for.”
The changes will start being implemented on March 18th (maximum amortization to 30 years and refinances to 85%), and end on April 18th (no insured Lines of Credit).
This will have a small but definite impact housing prices, on the softening side, with some people looking to get into the housing market having to choose a smaller home. A little short-term pain for long-term stability.
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
The changes have emerged because of worries among leaders and the Bank of Canada about the record levels of household debt and how conditions could worsen unless action was taken.
“We want to make sure we don’t have the kind of medium-term problem that has been experienced elsewhere because of this tendency by some to assume large indebtedness at low interest rates,” Mr. Flaherty said in a statement. “People need to demonstrate that good Canadian trade of prudence and reasonableness in terms of their debt assumptions.”
The Finance Minister said mortgages with amortization periods longer than 30 years will no longer qualify for government-backed mortgage insurance, which is required for buyers with less than a 20% down payment on a home. The previous limit was 35 years.
The Government also lowered the maximum amount Canadians can borrow against the value of their homes from 90% down to 85% on a refinancing; and removed federal government backing for home equity lines of credit.
HELOCs are of particular concern and an key factor in the rise in household debt. Mr. Flaherty said some banks were insuring, through Canada Mortgage and Housing Corp. (CMHC), their exposure to HELOC liabilities and he wants to put an end to that situation.
“That’s particularly risky,” Mr. Flaherty said. “Some of those loans are not used to create housing in Canada. They are used to buy boats and cars and big-screen TVs. That’s not the business mortgage insurance was designed for.”
The changes will start being implemented on March 18th (maximum amortization to 30 years and refinances to 85%), and end on April 18th (no insured Lines of Credit).
This will have a small but definite impact housing prices, on the softening side, with some people looking to get into the housing market having to choose a smaller home. A little short-term pain for long-term stability.
Cheers,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003
www.mortgageconcierge.ca
Thursday, January 13, 2011
Canadian Dollar Flying High
The Canadian Dollar is flying again…that is to say we get more US Dollars per Canadian Dollar at the present time. This is good and bad news.
First the bad news: for Ontario and Quebec, whose economies are largely manufacturing and (USA) export driven, it means it will be harder for them to compete as their products will be more expensive compared to US based manufacturers. This does not bode well for people in the automotive industry and might indicate that fewer people will be called back to work than originally expected.
The good news is twofold: 1) With the stronger dollar it is less expensive for our companies to buy capital equipment that can make them more productive. The more productive we get the less expensive our goods can become and/or the larger the profits our companies can make. Profitability and efficiency are the cornerstones to a company’s long term health. 2) The strong CDN dollar means the companies that are commodity suppliers will see a strong future. No matter where a company makes its products, they will need the raw materials that go into them. Canada is a worldwide supplier of commodities, so watch for the western provinces to have a great year.
The result for real estate is that it will do will out west this year, while central Canada will see flat prices.
Mortgage rates are expected to rise this year, but don’t expect them to jump up too much.
Call me if we can be of help to you.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
First the bad news: for Ontario and Quebec, whose economies are largely manufacturing and (USA) export driven, it means it will be harder for them to compete as their products will be more expensive compared to US based manufacturers. This does not bode well for people in the automotive industry and might indicate that fewer people will be called back to work than originally expected.
The good news is twofold: 1) With the stronger dollar it is less expensive for our companies to buy capital equipment that can make them more productive. The more productive we get the less expensive our goods can become and/or the larger the profits our companies can make. Profitability and efficiency are the cornerstones to a company’s long term health. 2) The strong CDN dollar means the companies that are commodity suppliers will see a strong future. No matter where a company makes its products, they will need the raw materials that go into them. Canada is a worldwide supplier of commodities, so watch for the western provinces to have a great year.
The result for real estate is that it will do will out west this year, while central Canada will see flat prices.
Mortgage rates are expected to rise this year, but don’t expect them to jump up too much.
Call me if we can be of help to you.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Sunday, January 9, 2011
USA Property for Sale
Many people talk about how cheap real estate is in the USA. Although there are many markets in the dumps, which will be there for quite a while, there are many markets performing well enough.
I recently spent time in Sedona, Arizona, and found the prices to be near the levels they were 2 years ago. They are a little lower mind you, but they aren't 40% less than they were in 2006.
So while the prospects of getting a good deal on property in the USA are still fairly strong you need to do your homework before jumping in. In fact, if you haven't thought of it, maybe a timeshare is better suited to your purposes. Check into it as it gives you the opportunity to visit many cities and continents, without the property taxes, maintenance, etc.
If you are looking for rates and options don't hesitate to give someone at my office a call. No matter where you are in North America you can reach us at 1-866-838-4366.
Happy New Year,
Chris
--
Christopher Bisson
President and Broker of Record
The Mortgage Centre (Guelph)
343 Waterloo Ave,
Guelph, ON, N1H 3K1
www.mortgageconcierge.ca
I recently spent time in Sedona, Arizona, and found the prices to be near the levels they were 2 years ago. They are a little lower mind you, but they aren't 40% less than they were in 2006.
So while the prospects of getting a good deal on property in the USA are still fairly strong you need to do your homework before jumping in. In fact, if you haven't thought of it, maybe a timeshare is better suited to your purposes. Check into it as it gives you the opportunity to visit many cities and continents, without the property taxes, maintenance, etc.
If you are looking for rates and options don't hesitate to give someone at my office a call. No matter where you are in North America you can reach us at 1-866-838-4366.
Happy New Year,
Chris
--
Christopher Bisson
President and Broker of Record
The Mortgage Centre (Guelph)
343 Waterloo Ave,
Guelph, ON, N1H 3K1
www.mortgageconcierge.ca
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