CategoryMortgage Rates

Posted August 19, 2013 Interest rates

5 year Fixed rates are going up.. time to consider Variable rate.

The 5 yr Gov of Cda bond yields hit a 2 yr high on Friday reaching just over 2.00%. That’s up around 0.35% since mid July and up around 0.75% since May. The increase started in May when the U.S. Federal Bank Chair, Ben Bernanke, made some comments about possible easing of the Fed’s stimulus program beginning as early as September.

Fixed mortgage rates are closely tied to the Gov of Cda bond yield. When the yield goes up, mortgage rates are sure to follow. With 5 yr fixed rates expected to rise, it makes for an interesting mortgage market. Which product and term is best to choose today? The answer is different for everyone. We all have different needs, goals and risk tolerances. Continue reading “5 year Fixed rates are going up.. time to consider Variable rate.”

Posted July 9, 2013 Interest rates

Time to look at Variable Rates again.

With fixed rates up around 0.60% over the last 4 weeks (currently at around 3.49%.. there are some lower rates but these come with conditions so we are using the more widely available rate) we must again take a look at Variable rates. Today’s best Variable rate product is sitting at around Prime less 0.40% … there’s even a few promotional Variables at Prime less 0.50% for qualified applicants. But for this article we will stick with Prime less 0.40%. That’s 2.60% today. We are almost at that 1.00% spread that I like to see.

Two years ago, the best Variable rate was at Prime less 0.75% with the option to lock into the BEST discounted fixed rate at any time (this option is important, don’t ever settle for a variable product that doesn’t have this clause). And 5 years ago, we had Variable rate products as low at Prime less 0.90%. Continue reading “Time to look at Variable Rates again.”

Posted July 4, 20132 Comments Interest rates

Banks maximizing mortgage penalties again… but there’s a bright side..

In case you haven’t heard, Fixed rates are up around 0.50% over the last 3 weeks. But the Banks haven’t increased their posted rates… How can that be?? And how does that affect you?

The BIG SIX BANKS have played the rate guessing game for as long as I can remember.. This time, they’ve added another twist to ensure you will be paying those inflated penalties even longer.. By not increasing the posted rates, they ensure themselves any existing BANK customer will pay the same inflated penalties.

Look back to 5 years ago when fixed rate discounts we around 1.10% off Bank posted rates.. Now fast forward to May 2013. Rate discounts reached an all-time high of 2.25%. And whether it was by design or not, this inflated your penalty by the same margin. (I’ll let you decide if this is just good old BANK luck… yeah, right.) Continue reading “Banks maximizing mortgage penalties again… but there’s a bright side..”

Posted June 20, 2013 Interest rates

When the U.S. sneezes, Canada gets a cold… I’m getting the sniffles…mortgage rates are headed up.

Yesterday, the U.S. Fed Chairman, Ben Bernanke, announced he ‘could’ start to ease their stimulation of the economy later this year. That small announcement has had a huge impact on the global stock markets and bond yields. Stock Markets are down around 2.00% around the world as of 2.30pm today.

The U.S. has been buying around $85billion worth of bonds every month in an attempt to keep interest rates low. And with that simple announcement yesterday, the world’s markets have reacted. Bond yields have started to climb…

Our own 5 yr Govt of Cda bond yield is up to 1.75%. That’s up around 10bps from yesterday, and up 60bps from the beginning of May. In fact, we haven’t seen these levels since October 2011 and again in March 2012. We already received warnings from our Lenders that wholesale mortgage rates are likely to go up. Remember, bond yields affect Fixed mortgage rates.. but they will have an indirect affect on Variable rates, too. Continue reading “When the U.S. sneezes, Canada gets a cold… I’m getting the sniffles…mortgage rates are headed up.”

Posted June 9, 2013 Bank News

Banks raise mortgage rates

RBC is raising their rates… As expected, fixed mortgage rates have gone up. RBC is the first of the BIG SIX to raise their rates. RBC’s 4 yr rate special will go to 3.09% from 2.99% and their 5 yr rate special will go to 3.29% from 2.99%.

Of course, these are NOT the best rates in the wholesale mortgage market, nor are they the best fixed rate products. But RBC is the largest mortgage lender in Canada, so we must take note. This rate increase is no surprise. As reported on May 13th and May 28th, bond yields had increased over 30bps in May. A rate increase was imminent.

Wholesale mortgage rates started to go up a few weeks ago. And as of June 10th, all Lenders will have increased their rates by around 10bps.

Remember, 5 yr fixed rates are still below 3.00%. I don’t think there is any reason to panic. We can expect the other BIG SIX banks to follow with their own rate increases. Fixed rates are closely tied to the Canadian govt bond yields. And with the stock market in the U.S. hitting unexpected record highs, and the our own Toronto Stock market making significant gains, it was only a matter of time before rates moved. Economists still believe rates won’t go up quickly. It will take time for rates to go up significantly.

Your best interest is my only interest.

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

Steve Garganis 416 224 0114 steve@mortgagenow.ca