Skip to content

CategoryMortgage Rates

Posted Interest rates

2.99% is back… does that mean we should take it?

record low rates5 year fixed @ 2.99% is back.   This is NOT a NO FRILLS product (for those of you that saw a similar rate elsewhere earlier this year) but there is tougher qualifying.   This seems to have become an annual event.  For the past 3 years, we’ve seen 2.99% or less, being offered each Spring.   So, why haven’t rates gone up like the Bank’s economists, government analysts and other so-called ‘experts’ had predicted?

There are several reasons but, to sum it all up, the global economies haven’t recovered from the 2008 recession.    The US recovery is slower than expected.   Canada’s inflation rate is below target levels.   There were even concerns we could see deflation, which would cause the Bank of Canada to lower rates… those concerns have gone away…. for now!

WHAT’S THE FORECAST NOW?

Continue reading “2.99% is back… does that mean we should take it?”

Posted Mortgage Rates

158% of List price! Housing market is hot!

3 Ross St Last month a house in Toronto’s west end made headlines when it sold for $200,000 above it’s $639,900 list price.   That’s 131% of the asking price.   Earlier this week, I shared some astonishing sales from the weekend.   Two houses sold for 138% and 129% of  asking price.   Both homes were in the $1,000,000 plus price range.

Yesterday, this house at 3 Ross St, in Toronto was listed for $829,000.   It sold for $1,308,880.  That’s 158% of asking price or $479,880.   This semi-detached house is located in the College and Spadina area of Toronto.  It sits on a 20′ x 116′ lot.

We can debate whether these are sales tactics (you know, list way below market price to attract buyers and create a buying frenzy) or if this means the market has gone crazy.   To me, this just reaffirms my belief that this is a seller’s market.  There is a pent-up demand for housing.   And when the supply is low, higher prices usually follow.

Interesting, yesterday, a report from Tourism Toronto showed in 2103, 9.22million hotel rooms were booked.  Up 2.8% from 2012.   I’m not sure there is a direct correlation between the visitors and house prices but Toronto has certainly become a world-class city.   Maybe our prices reflect that, too?

Your best interest is my only interest.    Like this article?  Share with a friend.   I reply to all questions and I welcome your comments.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Posted 2 Comments on Bank of Canada says no rate hikes, but possible rate drops!! Mortgage News

Bank of Canada says no rate hikes, but possible rate drops!!

stephen poloz  Last week, the Bank of Canada governor, Stephen Poloz, held the first of 8 scheduled meetings to set the Target Rate.    This is the rate used to set the Bank Prime rate which currently sits at 3.00%.   No surprise, no change in the rate.  It has been the same since Sept 2010.

From 2011 to 2013, the previous Bank of Canada governor, Mark Carney, continually announced of a pending rate increase.   But late last year, Poloz changed the tide when he announced it could be a few years before rates go up.   One of the key drivers for rate hikes is inflation.  The BoC target for inflation is between 1% and 3%.  If inflation goes above 3%, we can expect rate hikes.

Inflation is not a concern.  In fact, there are concerns about deflation as the current inflation rate sit at 1.2%.  Some experts believe we could see the BoC rate drop.  Great news for anyone in a Variable rate.   We are also seeing the govt of Cda bond yields drop.   Friday’s close was down to 1.59% for 5 yr bonds.  Haven’t seen that level since June 2013.   This means Fixed mortgage rates will probably go down further. Continue reading “Bank of Canada says no rate hikes, but possible rate drops!!”

Posted Mortgage News

Unexpected job loss report and effect on mortgage rates.

unemployment Last week’s Employment Stats shocked everyone when we didn’t see the expected 14,000 new jobs created as Economists were expecting.  Instead, we got hit with a reported 46,000 jobs lost in December.    Economists aren’t always accurate with their forecasts (news flash) but they usually aren’t this far off either. We won’t look at why they miscalculated here, but I do want to look at the effects of this bad news on your mortgage.

EFFECT ON FIXED MORTGAGE RATES

Higher unemployment and job loss is never a good thing.  We’re not celebrating here.   But we need to understand how it affects our mortgage rates.     When it comes to rates, bad economic news is good news.    And we saw the effects almost immediately.  Bond yields dropped by around 0.15% to 1.73%, taking the pressure off Lenders to raise rates (fixed mortgage rates are priced closely to Govt of Cda bond yields).   This means fixed mortgages won’t go up anytime soon and could even fall should the bond yields remain at this level. Continue reading “Unexpected job loss report and effect on mortgage rates.”

Posted Mortgage News

You heard it here first!… Rule of thumb for choosing Variable over Fixed.

First For the past few years, the Bank of Canada has warned us about the imminent interest rate hikes.   Reminds me of the boy that cried wolf.    “Interest rates are going up…  soon!…  real soon…. really, really soon!!”   But last week, the new Bank of Canada Governor, Stephen Poloz, surprised many experts when he said rates would remain low for quite a while.

This announcement prompted many advisors to jump on the Variable Rate bandwagon and start recommending Variable rate over Fixed rate.   I agree…  Variable rate is the obvious choice for most of us today.   But I also noticed a familiar rule of thumb being quoted in the media.   So I wanted to set the record straight. Continue reading “You heard it here first!… Rule of thumb for choosing Variable over Fixed.”