CategoryMortgage Rates

Posted May 27, 20112 Comments Mortgage Rates

Spring market means lower mortgage rates..and some more creative financing.

A funny thing happened on our way to higher interest rates…. They did an about face and went down.

Fixed Rates

The bond market drives fixed rates… and the 5 year Govt of Canada bond market has come down around 50bps in the last month… So far, we have seen lenders reduce fixed rates by around 30bps… We are seeing 5 yr fixed rates in the 3.89% from some better lenders… and we could see a few more drops.

But we are also seeing some very interesting programs for cashback deals that are worth a look at….there is a 5 year fixed rate at 4.29% with a 2% cashback.. this one is worth looking at as it puts some cash in your pocket and gives you a good rate…

Variable Rates

Fixed rates are good for those that don’t want to worry about rates going up or down and don’t mind paying a little more for the security of fixed payment. But we can’t ignore the lower variable rate mortgages… still hovering around 2.25%…

Earlier this year, most Economists and Experts believed the Bank of Canada was going to raise the rate at their next regular meeting on May 31st.. but with weak economic data coming out of the U.S., Europe and even Canada, most now believe the Bank of Canada won’t move until September or even next year in January.

Historically, Variable rate has outperformed Fixed rates…the product choice depends your risk tolerance, goals and objectives….

Posted April 28, 20114 Comments 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 April 4, 20111 Comment Interest rates

TD and RBC are first to raise fixed rates…

RBC and TD Canada Trust are raising fixed mortgage rates from 20bps on shorter terms, to 35bps for longer terms…. The new posted 5 year fixed rate is 5.69%…

The so-called ‘special fixed rate’ advertised by Retail Banks is now 4.44% at TD and 4.54% at RBC.… (Of course, Mortgage Brokers have access to even lower rates…)

Three weeks ago, Banks lowered their fixed rates after the Bond market dropped due to the Mid-east turmoil and the Japan Tsunami. Bond yields have gone up from 2.45% on March 16 to 2.77% today. That 32bps increase has prompted the Banks to raise rates. Fixed mortgage rates are affected by Bond Yields.

Variable rates remain unchanged. Not sure what’s best for you? Speak with a qualified Mortgage Broker to get some direction.

Posted March 24, 2011 Interest rates

Inflation rate drops in February and rate hikes pulled back.

It may seem hard to believe but Canada’s core inflation rate is down in February to lowest level since 1984 as reported by CBC. It’s now 0.90%.

Filling up my car at the gas pumps or buying groceries is certainly costing me more… So how can the inflation rate be lower be lower?

The Core inflation rate strips away food and energy costs resulting in a lower rate of inflation.

The Bank of Canada has a Target inflation rate of 2%. The Target range is 1% to 3%. When you combine a high Canadian $dollar that is at par with the $US dollar and this low inflation rate, the Bank of Canada less likely to raise the Target Rate….for now.

Here are a few forecasts… Citigroup says a rate hike will not take place in April but instead, July. And retired RBC Chief Economist, Patricia Croft says to watch the Bank of Canada 2 year bond yields for an indication of where the market thinks rates are headed. The yields have dropped from 1.90% to 1.68%. She says the market thinks rates won’t go up til October and only by 35bps. But she thinks we should be ready for summer rate hikes. The next few inflation reports will play a big part in the Bank of Canada’s future decisions.

I tend to agree with both forecasts… Summer rate hikes are likely…. but I’m not sure how high and how quickly these rate hikes will happen. We’ll be watching and reporting.

Posted March 23, 201119 Comments Case study

CBC news reports Scotiabank slams client with $30,000 penalty!

A word about world events the past 4 weeks… We have seen a lot of turmoil overseas…… Egypt, Libya and other middle east countries…. We need to pay attention…. Let’s hope for an immediate and peaceful resolution…

The Tsunami in Japan has been horrible… the images on TV are tough to watch…what a tragedy… Our hearts go out to the people of that nation.

Fixed rates drop slightly and Variable rates remain flat.

We have also seen how mortgage rates can be affected by these events… The uncertainty has caused the Bond market to fall…. and we even saw a very small rate reduction by the Big Banks… Posted Fixed rates are down around 10bps… 5 yr fixed is 5.34%. Continue reading “CBC news reports Scotiabank slams client with $30,000 penalty!”