AuthorSteve Garganis

As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.

Posted January 4, 201188 Comments Case study

Mortgage Penalties exposed…. an in-depth study reveals unjust penalties.

On November 26, 2010, we reported that a good source told us the govt would not follow through on their promise to standardize mortgage penalties until this spring, at the earliest.

On December 15, 2010, we also reported that discounted Fixed mortgage rates were going up but Posted mortgage rates were staying the same… we stated that your mortgage penalty would not decrease as it normally does when rates go up.

We received some inquires about this article. Questions like ‘shouldn’t my penalty go down if rates are going up?’ and ‘how could a mortgage penalty be more expensive if the Bank’s didn’t increase their posted rate?’

Okay, here’s my shocker statements…. A $200,000 mortgage taken in December 2008 will cost you $16,800 to get out of today…. but 12 years ago it would have cost you approximately $8,340 and even today, it should only cost $11,640. Got your attention? Please read the entire report to better understand. Continue reading “Mortgage Penalties exposed…. an in-depth study reveals unjust penalties.”

Posted January 3, 2011 Uncategorized

Bank of Canada dates for 2011

Happy New Year! Wishing you all the best in 2011….

Here’s the Bank of Canada’s schedule for key interest rate announcements in 2011.

January 18, March 1, April 12, May 31, July 19, September 7, October 25, December 6.

The Bank meets eight times a year to set the Target Interest rate. This rate directly affects the Bank Prime rate and Variable rate mortgages. It also affects Fixed rate mortgage indirectly.

Historically, the Bank adjusts this rate up and down between 2 and 3 times a year. In 2010, we had 3 rate increases of 0.25% each after a full 12 months of no changes. And most experts were forecasting for even greater rate hikes… This all changed when the economic recovery stumbled in many parts of the world, raising fears of a double dip recession.

Even today, there is still uncertainty about the economy in many parts of Europe and the U.S. At home, in Canada, we seem to be doing well….not great, but okay.

This uncertainty is delaying the expected interest rate hikes that so many experts were calling for in 2010…. Best guess now is for rates to remain stable until April or even July.

Enjoy the low rates…!

Posted December 23, 2010 Uncategorized

Everyone deserves a break

Yes, everyone needs some time off, including me. I am taking a little break. Back in January 2011.

But before I go, I want to say thank you for making our first full year at CanadaMortgageNews.ca a great one! My personal goal was to write 2 posts a week and get the word out to as many Canadians as possible… 122 posts later, we had tens of thousands of hits… the site has really taken off in the past 3 months… all thanks to you… no advertising, no sponsors… all word of mouth…it’s all you… Thank you. I hope you have found the info and opinions helpful.

Let me take this opportunity to wish you and your loved ones a safe and happy holiday at this festive time of the year.

Steve Garganis

Editor, CanadaMortgageNews.ca

PS. Watch for more breaking news in the coming year.. including possible changes to mortgage rules (yes, more), the long-awaited standardized prepayment penalty calculations (sounds like it’s coming) and a real estate market that is expected to be flat, but that’s not everyone’s opinion. Oh, and of course, mortgage rates…where are they going? We’ll bring you the latest… but right now, rates are expected to remain flat for the next little while…

Posted December 15, 20101 Comment Mortgage Rates

Higher Bond yields are bringing higher fixed rates..but that’s not all.

Some of Canada’s major banks have raised their 5 year fixed mortgage rates… but not their posted rates. It’s become common practice for the Big Six Retail banks to show a posted 5 year fixed rate ….but in the past few years the Banks have also started to advertise their so-called ‘special’ rate.

The ‘special’ rate has increased by 0.25% to 4.19% to 4.29%, depending on which Bank you visit. Of course, these rates are still much higher than the true discounted rates available through Mortgage Brokers. Wholesale 5 year fixed rates are still around 3.69% to 3.79% (these will probably go up in a few days by 0.25%). But this is nothing new.

What’s different this time is that the Posted Rates didn’t go up. We’re not sure why, but here is one definite result of this move…your mortgage prepayment penalty will not decrease, which is the usual effect of an interest rate hike. That’s right, if you have a closed fixed rate mortgage to payout, your penalty is either 3 months interest or Interest Rate Differential (IRD).

IRD is calculated many different ways now and we are hoping the Federal Govt’s announcement of a standardized prepayment penalty will come soon (we hear it could come this spring). Currently, Banks use formulas that include the Posted rate to calculate your penalty. This calculation has become a lucrative source of revenue for the Banks. Reports of 6, 10 and even 14 months worth of interest have been charged to unsuspecting borrowers. Record low rates means record HIGH penalties. Come on Federal Govt, we need this change now.

As an aside, Variable rates are still around 2.25%…. this larger gap between fixed and variable is going to make Variable more attractive.

Posted December 14, 2010 Mortgage News

Social networks, internet and Personal referrals….The test of time.

Information is hitting us at an astounding rate… Used to be radio, TV and newspapers ….then came the internet…now it’s social network like twitter and facebook or personal blogs…. Mortgage info and opinions are everywhere…It’s as simple as doing a Google or Bing search on your iPad or mobile phone..

But how reliable is the info you are getting and can you find what you really want online? After all, we’re not buying a new TV or appliance…. this is a mortgage, a huge debt…

I did a search on ‘mortgage’ and got 3.5million possibilities. I narrowed it down to ‘mortgage rates canada’ and still got 1.3million sites…how could anyone know which site is best for them? Or credible?

I tried one more time…‘ best mortgage product for married couple buying their third home with one child in Ontario’… there, that’s quite specific.. only got 5,710 possibilities…

Many of the sites were small businesses but a lot were blogs, and that’s ok…I like blogs… Some of the sites are great. But how many of these sites really know what they are talking about? I was quite disappointed to see that many of these sites were being run by unqualified people with little or no practical experience in the Mortgage or Financial Services industry. And this really troubles me.

So here are a few tips to finding a credible site or blog expert:

-is the writer or editor easily found and identifiable?

-how many years of experience does this person have in this industry?

-what makes that person an expert or an authority?

-how much practical time does this person have in the business? (are they all theory and no practical experience?)

-is the site or blog personally managed by the creator or editor?

-are there any sponsored links or banner ads on the site and if so, is there any possible conflict by having that sponsor?

-would that sponsor still allow for impartial writing or distribution of information? (careful, the answer isn’t always that easy)

THE TEST OF TIME…..In the end, I find that most of us still value the opinion of a trusted friend, a colleague or business associate or a family member. These people’s opinions, within our circle of trust, still carry more weight than any internet site… The internet is great for gathering info and opinions but be sure you know where that info is coming from and what the motives are behind that info…