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MonthJune 2010

Personal Debt levels are now better? Happy Canada Day!

Remember those reports in the media about how our Personal Debt levels were rising at an alarming rate?  There was huge concern that we were borrowing more than we should… that we could be headed for trouble…. The Bank of Canada warned about rising household debt levels….

And remember on May 13th, I reported that this needed a closer examination… that perhaps our debt levels were higher than other G20 countries for other logical reasons…..maybe we are borrowing at these record rates to invest, to do other practical things…??

Well, oddly enough, a new report from the CIBC states that Household credit is softening… we are not running wild and spending like drunken sailors….  The sky isn’t falling… hooray!

Happy Canada Day!

G20 Toronto smashes bank windows…Big Six lower their Fixed Rates

In case you’re wondering how the G20 Summit affected Canada’s mortgage business…. Most Lenders have their head offices in the heart of Toronto… and most all of them issued notices that turnaround times and disruptions may occur…Fortunately, Lenders have back up plans because of past emergencies likes 9-11, SARS and the Blackout.

Oddly enough, the Big Six Banks all lowered their Retail mortgage rates over the past few days…. 10bps is not a big drop, but any rate drop should be welcome news to all Canadians.

  • Posted 5 year fixed rate is 5.89%.  This is also the qualifying rate for mortgages with less than 20% down payment and terms less than 5 years and for Variable rate mortgages…..
  • The best discounted 5 year fixed rates seem to be around 4.39%…
  • No changes for Variable rate pricing… Big Six are advertising Prime less 0.35% as their best but wholesale rates are at around Prime less 0.60% and sometimes better.
  • Big Banks giving big push for Hybrid mortgages….and although I’m not a fan of these products for most of us, there may be a place for them for some of us….just make sure you are fully aware of all the pros and cons of this product.

Just a personal comment about the G20 Summit… as someone who was born and raised in Toronto, I was saddened by the images that flashed across our TV set…police cars on fire…broken windows, masked protesters…This isn’t a true reflection of our city…our city has the reputation of being one of the cleanest, safest and friendliest in the world… I hope that message made it’s way to the rest of the world….

How do lenders measure your credit worthiness?

Most of us understand that establishing and maintaining good credit is important.  Beacon scores or Fico scores, as they are sometimes referred to, are generated based on many factors but the main things that influence your score are:

-number of years you have had credit (the longer the better).

-your repayment history (missing payments will hurt your score).

-the type of credit you have opened (term loan, revolving line of credit, credit card or finance company purchases).

-your balance in proportion to your available limit (don’t go over 70% of your limit).

-credit utilization overall (how much of your available credit have you used up).

-number of recent inquiries on your credit (make sure you don’t apply for too much credit).

-inquiries by finance companies (hard and soft inquiries….there is a difference).

-change in address (if you move frequently, this can affect your score negatively).

All these things affect your credit score.  Wondering what a good credit score is?  A great score is anything above 700.  Most mortgage lenders would agree and this would qualify you for any mortgage product   (recently, one lender came out with a 720 minimum score for a certain product).   Some mortgage products require a 680 minimum score and generally speaking, 650 and above is good…  620 and below is weak…and 580 and below is poor.

You can obtain your own personal credit report from Equifax to find out what your score is and it does not count against you… it will not show up as an inquiry on your report…there is a small cost for this….  let me know if you need more info…

More reckless Lending by BMO and RBC

There were 2 reports recently that made me kind of laugh…..  You may have seen the recent report about Bank of Montreal bringing formal charges for mortgage fraud against hundreds of people… including bank staff, appraisers, lawyers and mortgage brokers…

Well, last week there was a report about the BC government blasting RBC and BMO for their loose lending practices when it came to granting mortgages…they called them ‘willfully blind’ and ‘reckless’.

This week, we see a report about RBC receiving an award for Creditor of the Year award from the Credit Counselling Canada.  They won the award for ‘thinking outside the box’…  Well, they sure did think outside the box in BC…

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