CategoryMortgage Trends

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

Posted June 4, 2013 Bank News

Poloz in, Carney out as Bank of Canada Governor…3 major changes in less than a year!! Anyone else find this strange??!.

Stephen Poloz was announced as Mark Carney’s replacement as the new Bank of Canada Governor. The announcement was a surprise for many… Most thought the Deputy Governor, Tiff Macklem, would have been a more likely candidate. But Jim Flaherty, Minister of Finance, chose Poloz…. probably because he shares the same vision as Flaherty… tighter lending rules, higher rates.. etc..

But this article isn’t about why Poloz is in, and Macklem is out. I want to bring something else to your attention. Did you know that we have had 3 major changes in less than 6 months? Mark Carney is leaving Canada to head the Bank of England. Then, within 6 months, the head of OSFI, Julie Dickson, announced she will be leaving in 2014. And now Karen Kinsley, CEO of CMHC, has announced she is stepping down. I’ll add in a fourth.. Robert P. Kelly has come in as Chairperson of CMHC… You’ll need to read this to understand why this is relevant.

These are major changes folks. OSFI, CMHC and the Bank of Canada Governor. 3 major players that run and regulate Canada’s Financial and Banking sectors. Has anyone asked why they are all leaving now? Continue reading “Poloz in, Carney out as Bank of Canada Governor…3 major changes in less than a year!! Anyone else find this strange??!.”

Posted May 31, 20135 Comments Mortgage News

Top Banking regulator stepping.. OSFI’s Julie Dickson leaving in 2014

Julie Dickson, the head of OSFI (Office of the Superintendent of Financial Institutions) will not be back when her term expires in July 2014. She’s decided to not to stick around after making more lending rule changes in 2012, than I have ever seen, during my entire 23 year career working in financial services. OSFI is a regulatory body that provides regulation and supervision to 152 Banks, Trust companies and other Lenders. In short, they are auditors. Here’s a link to the major changes made just last year including putting CMHC under OSFI control.. more on that later..

Some say her claim to fame is that she was in charge during the worst banking and mortgage crises in history. And that Canada came out of this global financial collapse way better than any other country. It’s true, we did come out of this very well compared with the rest of the world… But what does Ms. Dickson and OSFI have to do with it? For me, this had more to do with luck, govt intervention and Canadians being our normal conservative selves. We were a little slower to adapt to U.S. style lending policies… Ask any financial expert and they will tell you we were just a few years behind the U.S. with regards to their wild mortgage lending guidelines… Continue reading “Top Banking regulator stepping.. OSFI’s Julie Dickson leaving in 2014”

Posted March 27, 2013 Consumer Debt

BMO caves in to Federal govt pressure and raises mortgage rate.

It was bound to happen. BMO announced their so-called ‘low-rate’ (NO FRILLS) 5 yr fixed rate mortgage would be increasing to 3.09% from 2.99%. This comes shortly after the Federal Minister of Finance, Jim Flaherty, said that he called BMO and asked them to pull their 2.99% ads. Last week, the Minister’s office asked Manulife Bank to withdraw their recent ad promoting a similar low rate.

While, 2.99% isn’t the best rate today, it was the lowest advertised rate from the BIG SIX BANKs. It was somewhat symbolic. Of course, Mortgage Brokers have access to even lower rates through the wholesale mortgage market, but these lenders don’t have the deep advertising pockets that BMO or the other BIG SIX BANKs have. So the publicity surrounding this rate and the increase will get much more air-time. You can actually find full-featured 5 year mortgages at 2.89% today, through a good mortgage broker (a word of warning.. I’ve seen lower rates offered, and I have access to these products… but these products are not full-featured and come with some limitations that make them less attractive… just be careful when choosing your mortgage and your mortgage broker)… Continue reading “BMO caves in to Federal govt pressure and raises mortgage rate.”

Posted February 27, 2013 Interest rates

Does 10 yr fixed rates make sense now?…

Fixed rates are still low… and a question I seem to get asked more often these days is, “when does it make sense to take a 10 year fixed rate?” And the answer, for me, is almost never.

Today, you can find a good 10 yr fixed rate under 3.70%. That’s a historical low rate for a 10 yr term. When you hear ‘record low’, it’s worth taking a look.

THE GOOD:

peace of mind… there is something to be said for knowing what your payments will be for the next 10 years. It’s like buying insurance.
we are at historical low 10 year rates.
if you paid your mortgage out after the 5 year mark, your penalty is capped at 3 months interest (a hidden provision in our mortgage laws…. I’m sure the Bankers are trying to get this removed too). Continue reading “Does 10 yr fixed rates make sense now?…”