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Posted 1 Comment on Credit counselling, Consumer proposal or Bankruptcy? I only like one of these options. Case study

Credit counselling, Consumer proposal or Bankruptcy? I only like one of these options.

debt aminationA couple, in their 30’s, contacts me for a mortgage.  They want to buy a new home.  She is a teacher, he is a Manager at a computer firm.  Incomes are good.  I check their credit.  Let’s stop here for a minute..   If they had good credit, an approval is simple and we would provide the clients with several mortgage options.

But let’s assume that this couple ran into some debt and credit issues 3 years ago… and they made 3 different choices about how to resolve those credit problems.  Credit counselling, Consumer Proposal and Bankruptcy.  And I’ll bet the results will surprise you…I want to take you through each scenario and show you how long each of these 3 options affect your ability to finance a home.. Continue reading “Credit counselling, Consumer proposal or Bankruptcy? I only like one of these options.”

Posted Consumer Debt

Rising personal debt levels.. but how about rising asset levels?

net worthEver notice how all economic news is bad?  Seriously, when was the last time you heard Canadians were doing well, financially?   Even when we came out of the October 2008 U.S. sub-prime mortgage crisis (notice I’m very specific about the cause of that recession) with flying colours, we kept seeing the same negative messages about how lucky we were to come out of this as strong as we did.

But here we are, 5 years later (hard to believe it’s been 5 years) and all we keep hearing and reading is how the economy is fragile… the housing bubble is coming… personal debt levels are at record highs…  housing affordability index has increased (this measures how much of your income is used for housing)…   This all sounds terrible and depressing.. maybe we should sell everything, move to another country and herd sheep? Continue reading “Rising personal debt levels.. but how about rising asset levels?”

Posted 1 Comment on 58% of Canadians have a mortgage.. is that a big number? Mortgage News

58% of Canadians have a mortgage.. is that a big number?

No MortgageSaw this article in the Montreal Gazette quoting a National Housing Survey.   It says 58.9% of Canadian homeowners have a mortgage.  Slightly up from the 57.9% of 2006 census.

So does this mean mortgage Canadians are taking bigger mortgages?  Or are we borrowing for longer periods of time? Probably, yes…. but we are also becoming more financially savvy.  Experts are finally recognizing that Canadians are taking advantage of the record low rates to consolidate our debts.   Something I have been preaching for the past several years.  Borrowing at lower rates means you save money.

Here’s some other info:

  • over 40% of Canadians have no mortgage.
  • more than 30% of all household debt is non-mortgage… (credit cards, unsecured lines of credits, car loans, etc)
  • Canadians are conservative… 79% of all mortgages have a fixed rate. (CAAMP stats 2012)
  • for all homeowners, equity is equal to 70% of the value of housing. (CAAMP stats 2012).  In other words, Canada has only leveraged or borrowed 30% of the equity in their homes.
  • mortgage arrears are at or near the all-time historical low levels… 0.33% (CAAMP Stats 2012)

Add it all up and it seems Canadians are managing their mortgage debts very well.   Congrats Canada!

Your best interest is my only interest.

As always, I welcome your comments, calls and questions.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Posted Interest rates

Real estate sales up 21% and 52% due to end of low fixed rates.

home-prices-upAugust real estate resale numbers are in….  and what a jump!  Up 21% in the Greater Toronto Area and an incredible 52% in Vancouver.   And here’s another interesting stat.  The average home price in Toronto is $505,000.  That’s a 5.5% increase from the previous month.

REAL ESTATE SALES DRIVEN BY HIGHER RATES..

But here are my thoughts on what caused the increased sales.  I think it has more to do with the steady mortgage rate increases that we’ve seen since May.  You see, most Lenders and Banks will offer rate holds of 120 days.   So that means you could have got a 5 year fixed rate mortgage preapproval in May for under 3.00%….  Those record low Fixed rates definitely forced many homebuyers to buy for fear they could miss out on the low rates. Continue reading “Real estate sales up 21% and 52% due to end of low fixed rates.”

Posted Case study

Looking back 5 years.. which mortgage product did your Banker recommend in 2008?

greedy bankerRemember 2008?  It was almost 5 years ago that the U.S. sub-prime mortgage scandal erupted.   October 2008, to be exact.  That’s almost 5 years ago…  And with October and November 2013 renewals being less than 120 days away, we can now lock in some rates for those upcoming renewals.  So I thought this would be a great time to see what sort of advice and recommendations the Banks were giving to their mortgage customers.

THE BANK’S ADVICE

The funny thing is, Banks have never changed their advice or strategy.  ‘Take a 5 year fixed rate’.  That’s all the Banks seem to want to promote.  And with good reason… it’s the most profitable product FOR THE BANKS.   But historically, it’s NOT the best product to take.   There is no historical data that I am aware of that shows taking a 5 year fixed is the best strategy.  But I’ll get into that in more detail later. Continue reading “Looking back 5 years.. which mortgage product did your Banker recommend in 2008?”