CategoryMortgage News

Posted September 8, 20143 Comments Bank News

Federal govt finally takes action on Collateral mortgages.

Almost 4 years ago, I reported that TD was about to make one of the biggest changes in mortgage history. They were about to register all their mortgages as a collateral charge. Consumer advocates spoke out against the collateral charge as they recognized it would limit a borrower’s future options.

A collateral charge is always used for secured lines of credit products. The charge does not require an amortization which allows the credit balance to go up and down. Using a collateral charge for ALL mortgage products gives the Banks more power. It allows them to attach other unsecured debt to your mortgage… Unsecured credit products such as loans, credit cards, unsecured lines of credit or other unsecured Bank debt. I bet most people don’t know that? Continue reading “Federal govt finally takes action on Collateral mortgages.”

Posted September 4, 2014 Consumer Debt

News stats..Higher debt, but lower defaults

Saw this article today about higher consumer debt levels BUT lower defaults. Equifax Canada is quoted as saying that consumer debt rose by 7.2% in the second quarter 2014 to $1.45 trillion ,compared with $1.35 trillion from a year ago. This includes credit cards, loans, lines of credits and mortgages.

The average Canadian now has $20,759 in personal debt, excluding mortgages. That’s a 1.5% increase since last year. So that means mortgage debt has risen by around 7%. Here’s a heads up… you will see and hear articles sounding the panic alarm… again.

Well, before we hit that panic button, there was one more stat that we should pay attention to. DEFAULTS. Defaults are at their lowest level since 2008. If higher consumer debt levels and lower defaults sound strange to you, it shouldn’t. I’ll explain… Continue reading “News stats..Higher debt, but lower defaults”

Posted August 13, 20143 Comments Interest rates

Variable or Fixed? an update on how to choose.

FIXED OR VARIABLE?

The debate over fixed vs variable never seems to end. For the past 5 years, the Federal govt and the BIG SIX BANKS have been doing everything in their power to force us into choosing a 5 year Fixed rate. The govt says it gives us security and protection against the anticipated interest rate hikes. BANKS jumped on this bandwagon because 5 yr fixed is the most profitable mortgage product.. and with fixed rates hovering at 3.00% for the last 3 years, it’s been an easy sell.

On the surface, it’s not bad advice. Fixed rates were supposed to go up. The spread between Fixed and Variable has been less than 1.00% over the last 3 years. My rule of thumb is that Variable rates should be 1.00% lower than 5 yr fixed in order to benefit from the possible rate fluctuations. So naturally, 5 yr fixed was a better choice.

DO YOU TRUST YOUR GOVT AND YOUR BANK? Continue reading “Variable or Fixed? an update on how to choose.”

Posted August 8, 2014 Money saving tips

But it came in a beautiful box?!

If I gave the option of choosing between 2 cell phones, which would you choose? Both phones had similar specs and were identical in almost every way… except PHONE 1 came in a nicely gift wrapped box with a bow on it. PHONE 2 came in brown paper bag but was less expensive and also had slightly better options.

Most of us would choose PHONE 2 right? Wrong! When it comes to mortgages, most of us are focusing too much on the beautiful gift box and not paying enough attention to the contents. They say around 47% of all mortgages go through a BANK and 39% go through a Mortgage Broker. Broker share is up, but not enough in my opinion.

When it comes to mortgages, the BIG SIX BANKS have been charging higher rates than what can be had from MORTGAGE BROKERS (see Bank of Canada study ‘competition in the Canadian mortgage market). And their inflated prepayment penalty calculations are now infamous (typical BIG SIX BANK penalties are around 4 times higher than other lenders).
Continue reading “But it came in a beautiful box?!”

Posted July 11, 2014 Money saving tips

Mortgage renewal opportunities missed.

DON’T SIGN THAT RENEWAL AGREEMENT BEFORE SPEAKING WITH YOUR BROKER!

Summer is a great time. Vacations, time off, no school, sun and fun. It’s also a time when most of our mortgages come up for renewal. This year, things are a little different. The loooong winter is really making us cherish the precious few months of summer. We want to soak up as much of this warmer weather as possible.

This relaxed mindset appears to be making us easier prey for the BANKS mortgage renewal departments. Mortgage renewals will typically follow the same process. You get a renewal offer anywhere from 120 to 30 days prior to maturity. The BANKS will offer you a rate that may be lower than their posted rate but, it’s much higher than the market rate, and some of us will go back and negotiate, some will call a mortgage broker to get unbiased and true market rates, and some of us will just sign that renewal and send it back in.

In the old days, most of us would just sign and return that renewal to our BANKS. But that trend started to change over the last 10 years. Consumers were shopping, calling mortgage brokers and seeking out better products. Until this summer…. Continue reading “Mortgage renewal opportunities missed.”