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Posted Mortgage News

National Home Ownership Week April 12-16

Genworth Financial is kicking off the traditional Spring housing market with a week of Online seminars…  Each day has a different theme….The goal is to educate prospective homebuyers and borrowers so they can make informed decisions….

The website is Homeownershiphelp.ca and here’s the schedule of events…

MONDAY
APRIL 12		 TUESDAY
APRIL 13		 WEDNESDAY APRIL 14 THURSDAY
APRIL 15		 FRIDAY
APRIL 16
Credit Day Reality Check Homebuying Basics Test Your Knowledge Tips on Purchasing and Owning a Home
Learn the importance of good credit and how your credit history is established Find out how to reconcile what you want with what you can afford Understand the steps of home purchasing in Canada Take the Homebuyer 101 course Find out the fast facts that will help make your dream home a reality
Posted Mortgage News

Canadian$ at par with U.S.$….Bonds over 3.00% first time since Oct. 2008

Canadian $ at par with the U.S. $

Today, the Canadian $ hit 100.12 cents briefly this morning…. A clear signal that the rest of the world is viewing Canada as having a very stable and solid economy…. Here’s an article with forecasts of the dollar remaining at these levels into next year….

But if the Canadian $ remains at these high levels, it puts pressure on the Bank of Canada not to raise the Bank rate as high or as quickly…. Any increase in the Bank rate will drive the Canadian $ higher…

5 Year Bond yields over 3.00%

The 5 year Canadian Bond yields jumped to over 3.00% for the first time since October 2008… That’s the same time the U.S. Sub-Prime mortgage crisis hit and the world fell into a recession.   Bond yields affect fixed rates…..current 5 year fixed rates are hovering between 4.19% and 4.39%… today’s Banks and Mortgage Lenders are looking for a 1.20% to 1.30% spread and we are that level… Further increases in the Bond yield will cause fixed rates to go up….

Posted Mortgage News

Bank horror stories might explain their $Billion profits..

I’ve debated whether I should share some of these incredible nightmares with you….but there are just so many of these coming up that I had to report them….If you have a similar story, please send me a note so that I might review and share and maybe even try to help.

Bank Horror Story 1

Last year, I had the pleasure of helping out a young family….. They have 5 kids and were in the wrong mortgage product with a short amortization and the bank had recently given them a consolidation loan to help out…  The banker did not do this family any favours…

Their monthly payments were still totaling around $2900/mth….A simple review would have revealed that this family had plenty of equity in their home to leverage…. After all, the cheapest money is mortgage money.

I recommended they roll that loan into the mortgage, break the current mortgage, extend the amortization and the end result would be a much lower and manageable payment with a lower overall interest rate….3.75% vs 4.94% and their monthly payment would be $1600/mth...saving them over $1300/mth.

The bank quoted a $5k penalty.. that’s ok… it was still well worth it… the interest savings would be around $13k over 5 years… but then they charged him over $10k in penalties at closing...  well, with the help of Ellen Roseman of the The Star newspaper, he got his $5k back…..

Bank Horror Story 2

Here’s another story with a happy ending that just occurred this year… A single mother with disabled son needed to get their payments lower and pull out some money for a new roof….Her mortgage was coming up for renewal so no concerns with penalties, right?  WRONG!!

This Bank ( a Big Six bank) decided to renew the mortgage into a closed 6 month term…even though they had been informed by the client that she was paying them out… and informed by her lawyer that they were paying them out….   WHY?  I have no idea….but they ended up charging and collecting a penalty for $1600…

Once again, with the help of Ellen Roseman from The Star, the bank refunded the entire $1600 to that client some 3 months later….   The worst part about this story is that the Branch Manager refused to return any calls to the client or her lawyer…..  Quite Pathetic.

The Big Banks are reporting $Billion quarterly profits

Have you read some of the financial reports from the Big Banks?  Do you know where they are making most of their money?  From Domestic Banking…  The above stories are just 2 examples where clients are being gouged and ripped off….how many more of these situations exist?

Posted Mortgage News

HST is coming this summer…

We received an update from the Independent Mortgage Brokers Association informing us that they are still unclear about the effects of HST on the housing and mortgage market…..  that it was still somewhat confusing…so they have engaged a consultant to get some answers… watch for our updates on this.

I was sent this interesting link the other day…. http://www.unfairtaxgrab.com/home.html.    It’s a site with the Provincial NDP leader sharing her thoughts on the impact of the HST for Ontarians…. A sobering message but one worth reading……

Posted 1 Comment on And the credit tightening continues…. Mortgage News

And the credit tightening continues….

It’s official… CMHC just announced further changes to their mortgage rules along with more details of the rule changes announced February 16.

-Qualifying mortgage rates…..up til now, borrowers were qualified on the contract rate of the mortgage or the 3 year rate ….on April 19, that will change to qualifying at the posted rate of the chartered banks …..Effectively, the govt has increased the rate without increasing the rate….quite a magic act…

Let’s think about this for one minute… we have been hearing about the devastating affect to consumers and the housing market should interest rates increase by 1.00% or more… well, the new qualifying rate is 5.39% as of today vs. 3.79% or 3.89% for a 5 year fixed contract rate….  but there’s more.. read on..

-Business for Self individuals will now have to qualify with traditional income validation if you are in business for more than 3 years… the logic is that the majority of self employed individuals can provide traditional income documents and that the business for self programs were for a small segment of the population…

This new change really leaves me scratching my head…. With 20 years experience in the Financial Services industry, I can tell you that the trend is for more Canadians to become self employed.. more contractual workers, less ‘Employees of a company’…  And one of the benefits of being self employed is that there are certain tax advantages that are not available to employees…resulting in a lower net income…

A lower net income will mean you better be able to come up with a 20% down payment because you won’t qualify under these new Mortgage rules that will be administered by CMHC…. I can only hope that the govt will be able to act just as quickly if they see the housing market slow down…