CategoryMortgage Trends

Posted October 8, 20142 Comments Bank News

Senior Deputy Governor says lower rates are the new normal.

In her first public speech as Senior Deputy Governor for the Bank of Canada, Carolyn Wilkins brought some good news to Canadians with mortgages. Interest rates should remain low for some time….. and we can expect lower rates to be the “new normal”.

Ms. Wilkins went on to say that “the recovery has had repeated false starts and still faces considerable headwinds.” This seems to be the new message coming from the Bank of Canada. And I must say, it’s a refreshing change from the previous high-profile Governor, Mark Carney.

UNPOPULAR COMMENTS

Remember our previous Bank of Canada governor? Mr. Carney earned high praise for helping Canada avoid any U.S. style recession. But in the years leading up to his 2013 departure, his repeated warnings of pending interest rate hikes never materialized. In fact, we now know they were way off. Interest rates went down and have stayed down. Looking back, Carney’s rate hike warnings sounded more like ‘the boy who cried wolf’. Continue reading “Senior Deputy Governor says lower rates are the new normal.”

Posted August 13, 20143 Comments Interest rates

Variable or Fixed? an update on how to choose.

FIXED OR VARIABLE?

The debate over fixed vs variable never seems to end. For the past 5 years, the Federal govt and the BIG SIX BANKS have been doing everything in their power to force us into choosing a 5 year Fixed rate. The govt says it gives us security and protection against the anticipated interest rate hikes. BANKS jumped on this bandwagon because 5 yr fixed is the most profitable mortgage product.. and with fixed rates hovering at 3.00% for the last 3 years, it’s been an easy sell.

On the surface, it’s not bad advice. Fixed rates were supposed to go up. The spread between Fixed and Variable has been less than 1.00% over the last 3 years. My rule of thumb is that Variable rates should be 1.00% lower than 5 yr fixed in order to benefit from the possible rate fluctuations. So naturally, 5 yr fixed was a better choice.

DO YOU TRUST YOUR GOVT AND YOUR BANK? Continue reading “Variable or Fixed? an update on how to choose.”

Posted July 11, 2014 Money saving tips

Mortgage renewal opportunities missed.

DON’T SIGN THAT RENEWAL AGREEMENT BEFORE SPEAKING WITH YOUR BROKER!

Summer is a great time. Vacations, time off, no school, sun and fun. It’s also a time when most of our mortgages come up for renewal. This year, things are a little different. The loooong winter is really making us cherish the precious few months of summer. We want to soak up as much of this warmer weather as possible.

This relaxed mindset appears to be making us easier prey for the BANKS mortgage renewal departments. Mortgage renewals will typically follow the same process. You get a renewal offer anywhere from 120 to 30 days prior to maturity. The BANKS will offer you a rate that may be lower than their posted rate but, it’s much higher than the market rate, and some of us will go back and negotiate, some will call a mortgage broker to get unbiased and true market rates, and some of us will just sign that renewal and send it back in.

In the old days, most of us would just sign and return that renewal to our BANKS. But that trend started to change over the last 10 years. Consumers were shopping, calling mortgage brokers and seeking out better products. Until this summer…. Continue reading “Mortgage renewal opportunities missed.”

Posted June 22, 2014 Mortgage News

The Star article on private lenders

Some comments I made about the changing lending landscape. Click on the link below.

Private lenders step into Mortgage void left by banks.

The article was good and shed some light on just how much the federal government has tightened the Mortgage rules in Canada. But the article excluded one very important fact.

Yes, I agree that the govt has gone overboard with their rule changes, and has forced qualified mortgage borrowers to pay higher rates and fees by having to go to alternative lenders. But, consumers don’t necessarily have to go from an “A” lender with the best rates (currently at around 3.00%), to a “C” lender with rates of around 12% to 15%.

There are “B” lenders that offer mortgages with only slightly higher rates. Usually 1% to 2% higher than “A” lenders. I think it’s important to point this out.

A recent example is where one client was self employed, had a slightly bruised credit score of 602 (a good score is between 680 and 720), and his net income was not high enough to qualify (remember, self employed show a lower net income because they can write off more expenses). We found this client an 80% loan to value mortgage at 4.00% with some fees. His net annual rate was 4.25%.

So the message is, ‘There are ‘B’ lenders to fill the void left by the BANKS’…. and their rates are only slightly higher.. There are also ‘C’ lenders that fill a need for even harder to place mortgages…. These products come with much higher rates and fees.. But most consumers will either fit into an ‘A’ or ‘B’ product. Only a small handful of applicants need to go to a ‘C’ Lender..

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

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Posted April 14, 2014 Mortgage News

Darryl Sittler made his fortune in real estate, not hockey.

Last week, I had the privilege of attending REIN’s (Real Estate Investment Network) monthly workshop. One of my childhood idols was a guest speaker. I’m talking about Darryl Sittler, the former captain of the Toronto Maple Leafs. In case you haven’t heard of REIN, let me share some details about this group of professionals.

REIN is a group of real estate investors that get together to network and share valuable information that affects real estate in Canada. The leader of the group is Don Campbell. If you haven’t heard of him, you should. His approach to buying investment properties has proven to be very sound and profitable. His “top ten best cities to invest” is legendary. Continue reading “Darryl Sittler made his fortune in real estate, not hockey.”