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International Mortgage Trends…. first edition

Consumer confidence is everything…  If you feel confident about your job, the economy and housing market, then you probably feel confident about buying a home and being able to pay your mortgage.   Measuring consumer confidence isn’t easy to do…   How about measuring the attitudes of homebuyers from 8 different countries?

Here’s the first edition of International Mortgage Trends, by our friends at Genworth Financial.  This report assesses homebuyer’s attitudes and sentiments from 8 countries spread out over 4 continents.

Surprisingly, the report puts India in the top of most categories, but Canada, Australia and Mexico also shared top spot in many categories.  Ireland, UK, Italy and the U.S. homebuyers were not as optimistic about home ownership and mortgage debt.   Here are some highlights from the report:

  • India and Mexico felt the most confident about how their national economies would do in the next 12 months…Canada and Australia were not far behind.  Ireland and the UK were at the bottom (no surprise there).
  • India and Mexico were also the most confident about their personal financial situation….Australia and Canada were next…Italy and Ireland were most concerned.
  • Rising fuel costs and living expenses seemed to be top concerns for many in almost all countries except Mexico.
  • India and Mexico had fewer problems paying their mortgage debt over the past 12 months… Canada was in the middle of the pack (this was a surprise to me).
  • Living with your parents stat … (reminds me of that movie ‘Failure to launch’… I have a cousin that’s in this situation)… But this can save you money… Over 80% of First time homebuyers (FHB) in India and Mexico share the home with more than one generation… and it’s also more common in other European and Asian countries…..   Canada, UK, and the US are much less likely to house multiple generations under one roof.
  • Average age of the FHB keeps going up… it’s now 31.58 years of age… compare this with 26.6 years of age in the 1970’s… (in Canada, it’s 30.26 years of age).
  • Affordability…42% of FHB feel it’s a good time to buy a home…. 47% for Canadian FHB…and only 6.4% for India (this stat puzzled me after all the other positive outlooks by India’s FHB)
  • Only 30% of all those surveyed were positive about the state of the economy… In Canada, it’s 38%…

There’s a lot of data in this report… I recommend taking a few minutes to review…. Scroll to 18 to see each country’s summary stats and see how Canada compares… In short, Canada seems to have a cautiously optimistic outlook.  Our conservative reputation stands out in most categories.

Posted Mortgage News

U.S. looking at Canada’s mortgage and banking yet again..

Found this article interesting….

Canada is the envy of the world when it comes to our mortgage and banking regulations.   This article in the Huffington Post questions why is there a 30 year fixed rate mortgage term and points to Canada’s mortgage and banking system as a better, more viable option.

In case you didn’t know, 30 year fixed rate terms are the norm in the U.S.   5 year Variable rate mortgages are the more common mortgage product around the world, including Canada.   200 U.S. Banks have failed since 2008… NONE in Canada… and in 1985, almost 3,000 U.S. banks failed but only 2 Canadian Banks closed their doors....

Go ahead Canada, feel good about yourselves…!

Posted Mortgage News

TD is not able to accept collateral mortgage transfers.

Last October, we reported one of the biggest changes by a major bank in recent history…. TD Canada Trust changed how they would register mortgages…  Quietly, TD announced they would now register all mortgages as a collateral charge…  Most borrowers won’t know what the difference is, but for us in the financial industry, we know this will have huge ramifications and limitations and could end up costing the average borrower $$thousands.   Click here to read what the experts say.

And then in December, we heard a rumor that TD was looking at ways to transfer in collateral mortgages…. They wanted to give us the impression that there were few limitations to taking a TD mortgage… uh, let me say that again… that’s TD collateral mortgage.

We just heard that this has been put on the shelf.   They just can’t figure out a way to transfer in collateral mortgages…  If this doesn’t make you think twice about taking a TD mortgage, then I don’t know what will.   I’ve never heard of any bank accepting a collateral mortgage for transfer……Just isn’t possible with today’s real estate and mortgage laws.

Oh and by the way, if you’re wondering.. TD will allow you to transfer in your mortgage from any other financial institution…  But be warned, once you are there, I think you’ll have a hard time getting out.

Posted 4 Comments on NDP polls up and Variable rate mortgages more costly… coincidence? Mortgage News

NDP polls up and Variable rate mortgages more costly… coincidence?

This week, we saw two major mortgage lenders raise their Variable rate pricing from Prime less 0.75% to Prime less 0.65% and Prime less 0.50%…

This is really quite unexpected…. We cannot ignore what is happening…  The explanation given for the prices changes is ‘profitability concerns’.  But the cost of Variable Rate funds hasn’t really changed.  We believe there are a few other possible explanations. 

First, we are seeing more borrowers flock to Variable rate mortgages again…. With a 2.20% difference between a 5 year fixed rate and a Variable rate, it’s been much easier to choose to Variable.  Banks make more money on 5 year fixed rate mortgages and would rather push you into these products….     And yet another reason is the possible gains in the recent polls by the NDP.

According to this article in the Globe and Mail, we should brace ourselves for more costly mortgages if the NDP keeps moving in the polls.  Here’s a quote from the article that says it well, “This interest rate premium on social democratic governments is unfair and tragic. But dismissing it is unrealistic.”


Posted Interest rates

The effect of an NDP win or coming in 2nd place and mortgage rates.

We don’t normally get involved in politics on this site… not unless it can affect mortgage rates, the housing market or the economy…One of the more infamous examples was in 1995 during the Quebec Referendum.   Does anyone remember that?

Just before the referendum, a new poll had suggested that Quebecers’ could win a majority vote to separate.  This sent the Canadian stock market and the Canadian dollar plunging.   You might also remember that the Bank of Canada rate jumped 1.00% over night along with mortgage rates.  It’s the single biggest increase that we have ever seen.  It forced many of us to lock into a 5 year fixed rate… (something the Banks loved as the 5 year fixed rate product is the most profitable).

I’m not saying this will happen again but there was a report in The National Post that says BMO put out a warning to investors that things could be shaky if Jack Layton and the NDP  continue to gain ground in the polls.

Another recent development this week is that a few major Lenders have increased their rates on new Variable rate mortgages.  We have seen them go from Prime less 0.75% to Prime less 0.50%.   They say it’s due to profitability pressures…. but I wonder if has more to do with the election next week?