Best Mortgage Rates in Canada Sept 19th

1 yr – 2.74%  3 Yr – 2.64%  5 Yr – 2.89%  VRM – 2.65%

There have been a couple of highlights for the Canadian housing market in the past week: the U.S. Federal Reserve announcement that it is committed to low interest rates until 2015 and the latest global housing outlook that puts this country in better shape than most.

Anyone looking for a new mortgage or a needing to renew will likely be happy by the American central bank’s interest rate pledge. The commitment to low rates makes it harder, but not impossible, for the Bank of Canada to move on its desire to increase rates.

However, that desire got a boost from Canada’s economic think-tank, the C.D. Howe Institute. It says the central bank needs to change the way it calculates inflation to take into account rising house prices. The institute says the current calculation keeps inflation lower than it really is and puts the Bank of Canada at risk of keeping rates too low for too long.

Of course, if you’re watching your investments, these low rates aren’t going to speed up your retirement plans any.

As for the global housing outlook, it shows Canadian prices continue to rise, albeit more slowly than a year ago. But around the world, countries showing price declines outnumbered gainers by more than two to one.

Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Heard about our awesome new home search tool? We’ve opened up the MLS just for you. Make sure you login to our custom Spring Realty Homefinder Tool and give it a spin! Find us on Facebook and Twitter too!

 


Best Mortgage Rates Sept 13th, 2012 & Some HELOC Changes.

1 Yr – 2.74 – 3 Yr – 2.64 – 5 Yr – 2.89 – VRM 2.65%

The new guidelines (B-20) announced by the Office of the Superintendent of Financial Institutions (OSFI) kick in at the end of October and many lenders are changing policies now in anticipation of this.  Not ideal, especially for those that decide they would like a home equity line of credit (HELOC), or want to buy a home with 100 percent financing.

That doesn’t mean that you can’t get a HELOC, but the new guidelines limit the maximum amount that you can take out of your home.  Under current rules, you were able to take up to 80% of the value of the home as a HELOC.  The new guidelines cap this at 65%.  The intention is to reduce the ATM effect that was occurring with many homeowners, and contributing to the record household debt levels.  We can still refinance to 80% as a traditional mortgage – phew!

The next notable change is that the government now requires a borrower to have a 5% down payment.  No longer can the client use 100% financing in the form of a 5% cash back offer to finance their purchase.  Some people have great credit, but life happens and they just can’t save enough money for that 5% down and still pay all the household bills.  This represents a very small part of the market and for some reason the government thought it would be a good idea to target these borrowers.

So for the majority of Canadians that go to their bank to arrange their mortgage, these options are no longer available.

But, if you deal with a mortgage broker, or a credit union, you will still have access to these products.  Since OSFI governs federally regulated institutions (i.e. banks), most lenders fall under this purview.  But, credit unions are provincially regulated so they can dodge this bullet and continue to offer HELOCs to 80% loan-to-value, as well as 100% financing.

If you or someone you know is considering any of these borrowing options, then I’d encourage them to talk to their mortgage specialist soon before the major lenders have all changed their policies to comply with B-20.  But if the need arises after October 31st, rest assured, we can still explore options.  You just need to consult your local mortgage broker.

Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Heard about our awesome new home search tool? We’ve opened up the MLS just for you. Make sure you login to our custom Spring Realty Homefinder Tool and give it a spin! Find us on Facebook and Twitter too!

 

 


Best Mortgage Rates August 8 2012: Bye bye sub 3%?

It’s a quiet week for economic news, coming off a long weekend.  The unemployment report is out on Friday, but that’s the only real noteworthy item this week.

Best Mortgage Rates Canada 5yr fixed 10yr fixed variableWhat will be making more headlines will be the increase in bond yields we’ve seen the last week or so, as much as 25 basis points (bps).  At these levels lenders are starting to increase their rates and we’ve already had a few send us notice.  This could mark the end of the sub-3% five year rates.  We still have a few but unless yields reverse, more lenders will increase.

If you were sitting on the fence about whether or not to jump in now, this could be your wake-up call before all the rates bump.

Best to contact your mortgage professional and talk to them about getting pre-approved so they can lock in these rates for 120 days.

BEST RATES

1 Yr – 2.39

3 Yr – 2.64

5 Yr – 2.89

VRM – 2.65

Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Heard about our awesome new home search tool? We’ve opened up the MLS just for you. Make sure you login to our custom Spring Realty Homefinder Tool and give it a spin! Find us on Facebook and Twitter too!


Fixed or Variable Mortgage? All the Rates look good!

We’ve had some interesting data recently that has some Canadians wearing smug looks. The most gratifying is the hotly-debated report from Environics which indicates Canadians are richer than Americans. It says the average Canadian household was worth about $363,000 in 2011, compared to almost $320,000 in the U.S., a difference of more than $40,000 – dollars that are pretty much at par. Of course, home prices had a lot to do with it. Canada didn’t see the collapse that the U.S. did and skyrocketing values in Vancouver and Toronto did a lot to jack up the national average.
The big credit monitoring firm, Equifax, says Canadians have slowed the speed at which they are driving themselves into debt. It says the rate of debt-growth dropped to 3.1% from 4.4% on a year-over-year basis. Credit card debt is down 3.8% and Canadians are sticking with their existing debt vehicles and not opening new accounts. Mortgage debt isn’t included.
And one dire sounding report that isn’t as bad as it seems from the Canadian Institute of Chartered Accountants. It suggests 48% of the people surveyed would find it “challenging” to meet their mortgage or debt payments if there was a “significant rate hike”. By “significant”, they appear to mean a 3.5% increase over what they are paying now. Rate increases will surely come but, given the current state of affairs, that sort of bump is highly unlikely. Also, keep in mind that “challenged” is not the same as “unable”.

BEST RATES

1 Yr – 2.39%

3 Yr – 2.64%

5 Yr – 2.89%

VRM – 2.65%

Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Please remember to the Spring Realty Insider Club list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox. Find us on Facebook and Twitter too!

 


Bank of Canada says goodbye to the 30yr Amortization

Say goodbye to the 30yr amortization. The Bank of Canada in a surprise announcement on Wednesday June 20th tightened its belt once again by axing the 30yr amortization and capping the amount of equity borrowed against a home at 80% (down 5%) in an effort to “cool” a heated Toronto Real Estate market. On the plus side, looks like our friend Mr. 2.99% is back for a visit.

It’s official, Canadians are still piling on debt, just at a slower rate. The latest numbers from Statistics Canada put the debt-to-disposable-income ratio at 152% as of the end of the first quarter this year. That’s up from 150.5% in the last quarter of 2011. However, borrowing growth actually slowed in Q1 to 0.9%. The increase in the debt-to-income ratio is the result of income growth which slowed even more and a decline in disposable income brought on by lower investment earnings and higher taxes. At the same time household net worth increased by 1.8% based largely on rising real estate prices.

So, even as the numbers move around, on the whole, the story remains the same and the federal government and the Bank of Canada continue to call household debt the number one domestic threat to the economy. The central bank’s latest semi-annual report says about 6% of Canadian households fall into the category of “most vulnerable” to financial changes — higher than the average for the past decade. And, by the reckoning of at least one analyst, the slowdown in indebtedness and the slowdown in the appreciation of property values has more to do with tighter mortgage rules than “a responsible attitude” by consumers.

Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Please remember to the Spring Realty Insider Club list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox. Find us on Facebook and Twitter too!


Mortgage Minute for June 14, 2012

The latest interest rate announcement and policy statement from the Bank of Canada make it pretty clear there’s unlikely to be any increase this year (great news for you variable rate mortgages). While the economy appeared to be making all the right moves early in the first quarter, in the end, the results didn’t meet expectations. The resurgence of the Greek problem, the growing troubles in Spain (euro zone finance ministers agreed to lend Spain up to $125-billion (U.S.) to shore up its struggling banks), slowing in the rest of Europe, China and the U.S., and weaker than expected growth at home have the central bank backing away from hints about a hike. Nonetheless the Bank remains concerned about the risk of a housing bubble and a high level of household debt.

Canada’s banking regulator has stepped in with changes that may take some of the edge off the central bank’s worries about household debt. The Office of the Superintendent of Financial Institutions (OSFI) plans to cut the amount of debt available through home equity lines of credit (HELCOs). The current limit of 80% of value will be chopped to 65%, but it seems like the idea of requiring balances to amortize is off the table,  Which is some good news in a bad news situation.

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Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Please remember to the Spring Realty Insider Club list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox. Find us on Facebook and Twitter too!


Mortgage Minute for June 7, 2012

The Bank of Canada did what everyone expected this week and left the overnight rate unchanged at 1%.  This marks the 14th straight month with no change in prime.

For those with variable rate mortgages, this means you get to enjoy your low rates a little longer and in all likelihood, well into 2013.

The general tone of the announcement changed from being hawkish to more cautious as a serious sovereign debt crisis continues to loom over Europe, potentially pushing the region back into recession.  These concerns, along with a domestic economy that underperformed the bank’s expectations in the first quarter will largely subdue the need for the more immediate removal of economic stimulus.

All this goes against what OSFI is hoping to hear as they are likely to announce their proposed changes for banks later this month.  This will increase the due diligence required to ensure that borrowers can afford their mortgage payments now, and a few years later when rates inevitably increase.  Not the news that borrowers and brokers alike want to hear.

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Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Please remember to subscribe to the Spring Realty Insider list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox.


Midweek Mortgage Minute for May 30th, 2012

Another voice has chimed-in on the state of Canada’s residential housing market. DBRS triggered a lot of chatter with a report that makes the assertion that most Canadian households could survive a 40% decline in property value, based on net worth. It seemed a shocking figure given the various concerns that have been raised if there were just a 20% – 25% drop in home values.

Still the debt-rating service doesn’t stray too far from previous warnings from the finance minister and the Bank of Canada. DBRS says expanding household debt is a concern because it reduces the ability to absorb by other financial shocks. It says a combination of interest rate hikes, property value declines and a big increase in unemployment would be a major concern because mortgage defaults are closely tied to employment.

An article in today’s Globe and Mail also speaks to an example where rates increase 1.25%.  The overall impact for most Canadian families that aren’t already overwhelmed by debt is shockingly good.  There’s nothing for those in fixed rates to worry about now, but when those mortgages renew a few years down the road, the changes aren’t so large that the average family couldn’t adjust.  Certainly budgets will need to change to account for the increased mortgage payments, but it shouldn’t be large enough that it would force most families to sell.
Contrary to the federal government’s wishes, interest rates seem to be heading in the opposite direction they would intend. Diminishing bond yields have all of the big banks dropping their rates for 5-year money.  It wouldn’t be surprising to see another rate war occur as bond yields continue to drop.

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Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each Wednesday for you to enjoy. Please remember to subscribe to the Spring Realty Insider list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox.

 

 

 


Mortgage Minute for May 10, 2012

Another quiet week but some housing numbers came out higher.  Most analysts expect those numbers to ease so they aren’t giving much attention to the results at this point.

The unemployment rate is announced on Friday and that may provide more of an indication of the strength of the improvement.

There has also been continued talk for the need to increase rates at some point as household debt continues to strangle families.  Other sources are noting that when it comes to borrowing, numbers are still in line and don’t appear to be over extended.

It will be interesting to watch over the upcoming months how the economy plays out and if Mark Carney will ever actually pull the trigger and increase rates.  Even if he did, he could only do it a little as Canadian manufacturing would go into a tailspin once the Canadian dollar increases further from its lofty price.

Todays Top Rates

Fixed – 1 year
Fixed – 3 year
Fixed – 5 year
Variable
2.74%
2.94%
3.05%
2.8%

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Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each Wednesday for you to enjoy. Please remember to subscribe to the Spring Realty Insider list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox.

 


Mortgage Minute for May 2nd, 2012

Last Friday Finance Minister Jim Flaherty had suggested Canada Mortgage and Housing Corporation could be pulled out the mortgage insurance business. No timetable was offered, but said as long as “affordable mortgage insurance is available” it’s “not essential” it be offered by the government.

This comes as Ottawa puts CMHC under closer scrutiny and tighter control, in light of how big a player the agency really is in the overall Canadian economy. Through CMHC and its two private-sector competitors (backed 90% by the government) Canadians are approaching $1 Trillion in exposure to insured mortgages.

Oversight of CMHC is being moved to the country’s top banking regulator, The Office of the Superintendent of Financial Institutions. Control shifts from the federal human resources department to the finance department, which gets representation on the agency’s board through a deputy minister.

Finance Minister Jim Flaherty said that this will “contribute to the stability of the housing market and benefit all Canadians”.

Interest rates haven’t moved much over the past week.  Most of the current best rates are still available, although there are fewer lenders offering the lowest rates available.

 

Todays Top Rates

Fixed – 1 year
Fixed – 3 year
Fixed – 5 year
Variable
2.8%
2.99%
3.15%
2.8%

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Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each Wednesday for you to enjoy. Please remember to subscribe to the Spring Realty Insider list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox.