CategoryMortgage Trends

Posted October 2, 20132 Comments Interest rates

Another US Govt shutdown… could mean lower mortgage rates for Canada.

Remember the U.S. Debt ceiling crisis in the summer of 2011? Panic was an understatement. That story dominated headlines for close to 2 months. Stock markets dropped, but mortgage rates dropped, too. In fact, fixed wholesale mortgage rates dropped 0.50% in the months leading up to the Debt Ceiling deadline, from June to August…. And continued to drop another 0.70% into 2012.

Mortgage rates hit all-time lows in the fall of 2011 and just kept right on dropping. We hit our the all-time low in May 2013 before rates jumped almost 1.00% to our present 3.69%. (This is for 5 year fixed mortgages. Variable rates did not budge… Bank Prime rate has changed since Sept 2010…that’s important to remember as I will explain later) Continue reading “Another US Govt shutdown… could mean lower mortgage rates for Canada.”

Posted September 5, 2013 Interest rates

Real estate sales up 21% and 52% due to end of low fixed rates.

August real estate resale numbers are in…. and what a jump! Up 21% in the Greater Toronto Area and an incredible 52% in Vancouver. And here’s another interesting stat. The average home price in Toronto is $505,000. That’s a 5.5% increase from the previous month.

REAL ESTATE SALES DRIVEN BY HIGHER RATES..

But here are my thoughts on what caused the increased sales. I think it has more to do with the steady mortgage rate increases that we’ve seen since May. You see, most Lenders and Banks will offer rate holds of 120 days. So that means you could have got a 5 year fixed rate mortgage preapproval in May for under 3.00%…. Those record low Fixed rates definitely forced many homebuyers to buy for fear they could miss out on the low rates. Continue reading “Real estate sales up 21% and 52% due to end of low fixed 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 31, 2013 Interest rates

Choose short term money for long term gains.

Only recently has 5 year fixed rate become a product worth considering when it comes to paying the least amount of interest on your mortgage. Studies prove that short term mortgage funds are the cheapest way to finance a house.. this includes Variable rate mortgages.

Historically, Variable rate and short term fixed rates have had lower rates than long term rates. And yet, the BIG SIX BANKS, the Federal govt, and several popular finance experts have preached 5 yr fixed. ‘You must take 5 year fixed so you know what your rate is.’ That’s a load of nonsense. It’s true, that over the past 2 years, 5 yr fixed did make more sense given that the spread between Variable and Fixed was less than my target of 1.00%. (I like to see a 1.00% spread between Variable and 5 yr fixed before recommending Variable). Continue reading “Choose short term money for long term gains.”

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.”