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CategoryMortgage Trends

Posted Mortgage News

U.S. looking at Canada’s mortgage and banking yet again..

Found this article interesting….

Canada is the envy of the world when it comes to our mortgage and banking regulations.   This article in the Huffington Post questions why is there a 30 year fixed rate mortgage term and points to Canada’s mortgage and banking system as a better, more viable option.

In case you didn’t know, 30 year fixed rate terms are the norm in the U.S.   5 year Variable rate mortgages are the more common mortgage product around the world, including Canada.   200 U.S. Banks have failed since 2008… NONE in Canada… and in 1985, almost 3,000 U.S. banks failed but only 2 Canadian Banks closed their doors....

Go ahead Canada, feel good about yourselves…!

Posted 2 Comments on Spring market means lower mortgage rates..and some more creative financing. 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 3 Comments on Economic and Real Estate Outlook from Annual Mortgage Broker’s conference. Interest rates

Economic and Real Estate Outlook from Annual Mortgage Broker’s conference.

On April 14, I attended the annual Independent Mortgage Brokers Association (IMBA) annual conference.   We were fortunate to have Canada Mortgage and Housing Corporation’s (CMHC) Regional Economist, Ted Tsiakopoulos, share his outlook on the economy, real estate and interest rates.

Click here for the entire presentation.    This is a summary of CMHC’s outlook:

  • No evidence of housing bubble.
  • housing market is stabilizing in Ontario.
  • we won’t see the growth in prices as in years past.
  • this outlook is still uncertain given all the global events, both political and economic.
  • credit growth is slowing.
  • Interest rates will rise as economy improves.

The good news is that there doesn’t seem to be a housing bubble.  Interest rates will gradually return to normal.  And we don’t seem to be taking on as much personal debt as the government and media has led up to believe in the recent months.

Posted 4 Comments on NDP polls up and Variable rate mortgages more costly… coincidence? 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 Interest rates

The effect of an NDP win or coming in 2nd place and mortgage rates.

We don’t normally get involved in politics on this site… not unless it can affect mortgage rates, the housing market or the economy…One of the more infamous examples was in 1995 during the Quebec Referendum.   Does anyone remember that?

Just before the referendum, a new poll had suggested that Quebecers’ could win a majority vote to separate.  This sent the Canadian stock market and the Canadian dollar plunging.   You might also remember that the Bank of Canada rate jumped 1.00% over night along with mortgage rates.  It’s the single biggest increase that we have ever seen.  It forced many of us to lock into a 5 year fixed rate… (something the Banks loved as the 5 year fixed rate product is the most profitable).

I’m not saying this will happen again but there was a report in The National Post that says BMO put out a warning to investors that things could be shaky if Jack Layton and the NDP  continue to gain ground in the polls.

Another recent development this week is that a few major Lenders have increased their rates on new Variable rate mortgages.  We have seen them go from Prime less 0.75% to Prime less 0.50%.   They say it’s due to profitability pressures…. but I wonder if has more to do with the election next week?