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
Wednesday, April 27, 2011
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
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