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CategoryMortgage News

Posted Interest rates

Variable rate increases again..

Lenders have begun to raise their Variable rate mortgages again…. The second increase in less than a month.  A look at the Bank websites and you will Variable rate pricing is now at Bank Prime less 0%….  that’s 3.00%…   And although ‘3.00%’ sounds like a good rate, a Variable rate at Bank Prime less 0% is not good.

The Banks have gone from an advertised rate of Prime less 0.65% to Prime less 0% in about one month’s time.   Of course, the best wholesale rates through mortgage brokers now sit at Prime less 0.50% and will probably go to Prime less 0.40% after the dust settles.

So what’s causing the Banks to increase their Variable rate mortgages?   They tell us there are “profitability concerns”.   In simple talk, that means they simply want to increase their profit margins now that rates are expected to stay low for some time to come.   They also want to force us to take the much mortgage profitable 5 year fixed rate mortgage, now sitting at 3.99% (RBC website special rate)..    Keep in mind, there are better rates to be had in the wholesale market…. 3.49% seems to be the best 5 year fixed rate today.

But even 3.49% is too high.  The spread between the 5 year govt of Cda bond (1.45%) and 3.49% is still over 2.00%.   Historically, this spread has been between 1.10% and 1.40%..    It’s simply math…. the Banksters are saying ‘ka-ching, ka-ching”.

Posted Money saving tips

A look back at Oct 2008 and the Bank’s kool-aid..

October 2008 will be remembered for a few reasons….. First, it was Obama’s rise to the presidency… the first black American president…. next, it was also the end of Lehman Brothers investment bank and the beginning of one of the biggest global recessions in modern history…

That’s how most of us will remember October 2008….. but  there was also another very memorable event that took place.  You see, it was around this time that I heard some borrowers were getting calls from their Bank to lock-in their Variable rate mortgages…. or to take a long term fixed rate mortgage to ‘protect themselves from the uncertainly’ that surrounded the markets at the time…. I warned mortgage borrowers to expect a call  from their Bank offering a ‘safer mortgage option’ or some ‘special offer’ to lock into a fixed rate or a long-term rate…and NOT to take such offers or deals….

Can you imagine a Bank advising or recommending that you lock in your Variable rate or to take a long-term Fixed rate at that time?    At the time, Variable rates were are at around 3.35% and 5 year fixed rates were at around 5.75%.   Uh, no thank you… I’ll pass on the bank kool-aid.

The funny thing about uncertainty is that it usually brings us lower interest rates…..not always, but during this time we knew the World Banks would work together to lessen the economic impact of the Lehman Brothers collapse.   Unfortunately, there were far too many borrowers that listened to their banker and locked into the much higher Fixed rates…

The moral of the story is that Bankers and their ‘Mortgage Specialists’ work for one company, one Bank… they can only offer you one set of products and MUST do what’s in the BEST interests of their BANK…. They have to drink the Bank koolaid….   Mortgage Brokers can offer the products from dozens of lenders and can also compare the benefits and differences between Banks… Remember to ask questions and opinions from neutral, unbiased professionals.

Don’t drink the kool-aid…

Posted 2 Comments on Your mortgage is paid? Beware of mortgage fraudsters…. Mortgage News

Your mortgage is paid? Beware of mortgage fraudsters….

“You’ve worked hard all your life… your house is finally paid off.  You decide to it’s time to get a smaller house, maybe a condo or you just want travel.  Does this sound like someone you know?  You sell your home but discover that someone has registered a mortgage on your house without you knowing it.  Sound impossible?  Guess again… this is Mortgage Fraud and it’s happening now.”

I wrote that back in 2006.  Since then we have seen some provincial governments step in with laws to protect unsuspecting homeowners….  You can also purchase Title insurance to protect you as well.    But once you have been victimized by the crooks, you still need to make a claim and go through the hassle of clearing things up…. Who wants to go through making a claim? This takes time and can be a big paid in the rear. 

What if there was a way to make yourself less of a target?   The good news is there is a better way to protect yourself….. The criminals go after homes that have no mortgage.  This is PUBLIC information.  Anyone can find out if you have a mortgage just by going to the Land Registry Office and doing a search.   So what should you do?

The solution is to register a mortgage on your home.  This doesn’t mean you need to borrow money.  By getting a secured line of credit you will have a collateral mortgage registered.  The criminals will not know if you have a balance on that mortgage or if it’s $0.   And they will probably go searching for the next home that has no mortgage.

What makes this product unique is that it is available to both salaried and self-employed individuals that cannot prove their income.  If you don’t use it, it doesn’t cost you anything.  

Let me know if you would like more details about this.

Posted Interest rates

Mortgage refinances are down nearly 40%.

Mortgage refinances are down in Canada according to CMHC…. No big surprise to those of us in the Mortgage industry…   The govt has made it more difficult to access money over the past 3 years with all the Mortgage rule changes.    They have accomplished their goal of trying to discourage us from borrowing more.

Here’s a look at some of the rule changes that made an impact:

-mortgage refinances are capped at 85% loan to value from 95% loan to value just a few years ago.

-maximum amortization for hi-ratio mortgages (over 80% loan to value) is 30 years.  Down from 40 years.

-variable rate mortgages and mortgages with terms less than 5 years must be qualified at the Bank’s POSTED 5 year fixed rate… this too will squeeze out many more borrowers as it forces us to qualify at the much higher POSTED rate…. 5.39% vs a discounted fixed rate of 3.49%….

The Banksters are happy to see you take the much higher 5 year fixed rate vs the lower, Variable rate (current Variable is hovering around 2.40%… RBC is advertising their  and Bank’s are advertising their 5 year fixed rate special offer at 4.24%…..).   Banks make more money on the 5 year fixed vs the Variable rate.  Remember that when choosing your next mortgage term.

Oh, and by the way, there are better Fixed rates out there…  we are currently seeing 3.49% for 5 years from the wholesale market.

Posted Mortgage News

U.S. govt suing banks for $196billion for bad mortgages.

FHFA, the US housing agency, is suing 17 banks for selling toxic mortgage backed securities.  Another sign that the fallout from the October 2008 mortgage crisis is not completely behind us.    The lawsuit is for is for a staggering $196 billion.

Just to give you an idea of what that number compares to…. In Canada, it is estimated that we have around $1 trillion in outstanding mortgages…

The reality of these types of lawsuits is that it will cause some uncertainty in the market… and remember, uncertainty usually means a low-interest rate environment..