MonthOctober 2014

Posted October 28, 20148 Comments Consumer Debt

When this guy can’t qualify for a mortgage, you know the mortgage rules are too tight!

FORMER US FED CHAIRMAN CAN’T GET A MORTGAGE.

Anyone remember this guy? Ben Bernanke. He’s just the former Chairman of the US Federal Reserve Bank. He served two terms from 2006 to 2014. Earlier this month, he revealed that he was declined for a mortgage refinance. Now, just to put this in perspective, he used to make a nice 6 figure salary. And today, he is paid an estimated $250,000 per speaking engagement.

How can he not qualify? Clearly, the mortgage rules tightening process has gone waaaaaay overboard. But this isn’t just happening in the US. Canada’s mortgage lending rules have always been tighter than the US. And over the past 6 years, the Canadian govt has brought in numerous changes to tighten the rules even further. (Actually, experts agree that they went way overboard. And we are only now seeing the effects of the rule changes.. Look out. You’re in for a big surprise the next time you need mortgage money).

CANADIAN MORTGAGE RULES ARE EVEN TIGHTER!!

Canada’s Banking industry has been the envy of the world. We came out of the 2008 US sub-prime mortgage crisis with no visible scars. Continue reading “When this guy can’t qualify for a mortgage, you know the mortgage rules are too tight!”

Posted October 27, 20141 Comment Mortgage News

Bi-weekly payment myth…. it won’t pay your mortgage off faster.

Bi-weekly payments won’t pay your mortgage off faster. Yup, it’s true. Around 4 yrs ago, I wrote an article showing some simple but effective math to explain this. Recently, I’ve had several readers and clients ask me about bi-weekly payments.

I thought I’d repost that article as it seemed to get a lot of attention and answered a great many questions on what it really takes to pay your mortgage off faster.

Repost from July 2010….

Back in the mid 90’s, there was a huge marketing blitz by the Big Banks that promoted making bi-weekly payments instead of the traditional monthly payments. The sales pitch was that you could save huge amounts of money and pay your mortgage off much faster….save 4 or 5 years off your amortization…. Sound familiar? Well, BI-WEEKLY PAYMENTS DON’T REALLY SAVE AS MUCH AS YOU THINK!

And I’ll prove it…. here’s the straight facts! Continue reading “Bi-weekly payment myth…. it won’t pay your mortgage off faster.”

Posted October 21, 20143 Comments Bank News

RBC charges homeowner $8900 penalty, or 15 months interest charge!

Picture this… Your mortgage is with the biggest Canadian Bank in Canada. You feel safe. You got a great rate at the time… 2.99%. What could go wrong? Well, for these clients, and hundreds others, plenty!

Check out the RBC Discharge stmnt oct 2014 showing an Interest Rate Differential (IRD) prepayment penalty of $8912 on a mortgage balance of $213,562. Now, $8912 is a lot of money, but you’ve seen me expose even higher penalties in the past. Penalties as high as $35,000 and $40,000. But, put another way, that’s over 15 months worth of interest penalty being charged. And that’s just ridiculous!

NEWS FLASH! This type of inflated prepayment penalty calculation isn’t exclusive to RBC, the rest of the BIG SIX BANKS use a similar calculation. And they’ve been getting away with these outrageous penalties for over 14 years! (actually, this isn’t a new story.. I’ve been writing about these nightmare, or bankmare, penalties for years.)

Let me put this another way…. Continue reading “RBC charges homeowner $8900 penalty, or 15 months interest charge!”

Posted October 8, 20142 Comments Bank News

Senior Deputy Governor says lower rates are the new normal.

In her first public speech as Senior Deputy Governor for the Bank of Canada, Carolyn Wilkins brought some good news to Canadians with mortgages. Interest rates should remain low for some time….. and we can expect lower rates to be the “new normal”.

Ms. Wilkins went on to say that “the recovery has had repeated false starts and still faces considerable headwinds.” This seems to be the new message coming from the Bank of Canada. And I must say, it’s a refreshing change from the previous high-profile Governor, Mark Carney.

UNPOPULAR COMMENTS

Remember our previous Bank of Canada governor? Mr. Carney earned high praise for helping Canada avoid any U.S. style recession. But in the years leading up to his 2013 departure, his repeated warnings of pending interest rate hikes never materialized. In fact, we now know they were way off. Interest rates went down and have stayed down. Looking back, Carney’s rate hike warnings sounded more like ‘the boy who cried wolf’. Continue reading “Senior Deputy Governor says lower rates are the new normal.”