Mortgage rates went up…. but why? And will they continue to go up?

fearup down graph

A month ago, I said Fixed mortgage rates probably hit the bottom.   A week later, fixed mortgage rates started to go up… around 0.20% over the past 3 weeks.  Variable rate mortgage pricing has gone from Prime less 0.65% to Prime less Prime less 0.40%.

Now, here’s the thing….  I don’t think rates will skyrocket over the next 6 or 12 months, like the pessimists would have you believe.  I think mortgage rates hit the bottom….BUT, they probably won’t go up very quickly.

In fact, the forecast now is for the Bank of Canada rate to stay the same until 2017.   This is just another example of how the world has become a smaller place.  If someone sneezes in Germany, we catch a cold.  With most of the global economies just getting by, there isn’t much reason for mortgage rates to go crazy.   They should remain low.

The key driver for rates going up recently is nothing more than profit taking.  Banks have had a great year… In case you didn’t know.  That’s right.. we seem to forget that 2015 was one of the best years on record for real estate and mortgage volume…  and house prices have never been higher.    Funny how that seems to get lost in the media reports.

Look for Variable rate pricing to fall in the new year…  Fixed rates could also come down slightly, but don’t count on them hitting the record lows that we saw this summer.   Hey, that’s not to say rates are bad.   We are still well under 3.00%.   These are ridiculously low mortgage rates.    Enjoy them while you can.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Paris attacks won’t change human kindness.. Maybe this story will help to brighten your day.

car accidentLast week, I started writing this article.. but just couldn’t find time to finish.. And then, the Paris terrorist attacks happened.  How tragic and senseless.  Well, maybe this article will lift your spirits just a bit.

About a month ago, I had an interesting experience… I was parked downtown… was walking back to my truck and noticed a note on the windshield.    It read, “I hit the front corner of your truck!!  I’m so sorry. You can contact me…  416 123 4567 (I’m blocking out the true number)  Shannon”.

I had a look at the front of my truck and sure enough the bumper had been pushed in.   I’ll admit, my first reaction was anger and bit of self pity… you know, ‘why did this happen to me?’..  That sort of thing.

But then I started to wonder… was this phone number real or did someone just write a note to make it look like they were doing the right thing?    I quickly called that number …  sure enough, Shannon was real.  She answered and was so apologetic.   She felt very bad about what happened.

I quickly stopped her and said, “it’s ok.  Accidents happen all the time.  You did what many others wouldn’t do.  You stepped up and took responsibility.  I’m so thankful that you did.   Honesty and honor are just words to some people.  You are clearly a person of honor.  Thank you for being honest.”

Shannon turned a bad situation into a good experience.  As strange as this sounds, I actually felt pretty good the rest of the day.

Last week, I brought my truck in for the repair.  Shannon was true to her word and paid the autobody shop and also paid for my car rental.

Thank you Shannon…. for showing me there are still good, honest people in this world.. taking responsibility for their actions.    Thank you for making me believe in the human spirit.   I hope I can pay it forward one day.

Hope this brightens your day, just a little.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Mortgage cost today is $1380/mth for every $300k… and sharing high net worth secrets.

percentageFixed mortgage rates went up this week on the wholesale market.   Only about a 0.10% increase…  We are still way below 3.00% for 5 yr fixed rates. Hey, that’s pretty good!  (watch for the media to blow it out of proportion soon.. they seem to love feeding on negativity).

Thought I’d share some quick numbers..    Did you know that a $300k mortgage will still carry for $1380/mth?   And that’s with a 25 yr amortization.  If we go to a 30 year amort, the payment drops to $1221/mth.

Let’s increase the mortgage to $400k.. payments are $1840/mth and $1628/mth for a 25 and 30 year amortization, respectively.   Hey, these are still incredibly low mortgage rates.   Anything under 4.00% should be considered a gift.  (I’ll get into what Canada’s wealthy are doing in a few moments) Read the rest of this entry »

Trudeau sworn in as new PM, and bond yields jump leading to higher fixed mortgage rates!

Trudeal Liberal majorityYesterday, our new Prime Minister gets sworn in.  Justin Trudeau is Canada’s 23rd Prime Minister.   Some interesting facts…  Bond yields have gone up significantly in the last 2 weeks, since the election.  Fixed rates are priced directly from the Govt of Cda Bond yields.  If the yields go up, then fixed mortgage rates go up.  If they go down, then fixed mortgage rates go down.

Since the election on Oct 19, the bond yields have made a steady climb upwards.  Going from around 0.80% to 0.97% today..     Investors seem to think the Trudeau govt will keep it’s promise and spend our way to prosperity.   The concern is that if the govt of Canada increases its borrowing, the borrowing costs will go up.  Meaning it will cost the govt more, which in turn affects personal borrowing costs.   That’s you and I.

Watch for fixed mortgage rates to climb over the next month or so.  Right now, the increase is expected to be minimal…. but that could change.

I’ll be watching and reporting how this plays out.   Let’s hope the campaign promise of increasing the deficit was one of those promises that doesn’t get honored.   If you want to keep borrowing costs low, then you also want less govt, not more.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

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