CategoryInterest rates

Posted November 24, 20154 Comments Interest rates

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

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

Posted November 5, 20152 Comments Interest rates

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

Yesterday, 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

Posted October 22, 2015 Interest rates

Have Fixed mortgage rates hit the bottom?

Earlier this year, Fixed rates hit new all-time lows. This must sounds like a broken record, or for those in the modern error, sounds like a glitch or a skip (somehow, ‘broken record’ sounds better).

5 year fixed rates hit 2.59%. This is the lowest we have ever seen. (before you start emailing me that you’ve seen lower rates, yes, I know.. I see them too and have access to them.. but those products are full of restrictions, limitations and inflated prepayment penalty calculations… for our purposes, I’m only discussing quality mortgage products with no gimmicks or strings attached).

Now, looking at the 5 yr govt of Cda bond yields (this is where fixed rates are closely priced from), we have seen this drop down to as low as 0.70%… it’s been holding steady in the 0.80% range since July. Normally, the 5 fixed rate is priced 1.10% to 1.50% above the 5 yr bond yield.. but the spread has been at or over 1.79% for quite a while. So, why haven’t the fixed rates gone down further? Continue reading “Have Fixed mortgage rates hit the bottom?”

Posted October 9, 2015 Consumer Debt

Personal debt level concerns are overblown…!

There’s a lot of talk in the media about Canadians carrying too much debt. We’re getting hammered with messages of ‘record high personal debt levels’. It’s true. Our mortgage balances are higher, car loans are higher, student loans are higher, personal loans and lines of credit balances are higher.

Is this a problem? Are Canadians in trouble? Is this a reason to panic? Let’s try to answer…

Well, here’s one very interesting stat that might crush that statement once and for all. Canadians, on average, spend 14% of after-tax income on personal debt.

Did I surprise you? I’ll bet most people thought that number would be way higher given all the negative reports in the media. Continue reading “Personal debt level concerns are overblown…!”

Posted September 2, 2015 Interest rates

It’s September, sharpen your pencils!

It’s September…and as green turns to gold we return refreshed to the rhythm of our daily routines. It’s our seasonal cue. Autumn is the perfect time to “get back to business” with a fresh look at your finances. Maybe you spent a little extra on that summer vacation, or the little home reno job that grew. That’s okay. Get out your calculator and get back on track.

TAKE ADVANTAGE OF RECORD LOW RATES!

Mortgage rates have hovered around historic lows for longer than anyone thought they would or could. That’s created a golden moment of opportunity for Canadian homeowners. In fact, the right mortgage can build your wealth… and save you thousands of dollars.

Thinking about a cottage or investment property? Wondering if it’s the right time to expand your space… or find a new one? Looking at ways to reduce your debt? Talk to an experienced Mortgage Broker. A good broker will provide a free, no-obligation review of your situation – wherever you are in your current mortgage journey.

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