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CategoryMortgage Trends

Posted 1 Comment on Rates hikes may be stalled Mortgage Rates

Rates hikes may be stalled

Bad news is good news for borrowers…  problems some European economies and other parts of the world could stall the much talked about and anticipated rates hikes..

Bank of Canada Governor, Mark Carney, said the timing of future interest rate hikes is not ‘pre-ordained’.

This just goes to show that even the best Economists don’t have a magic crystal ball….    Fixed rates are still very low, and Variable rates are even lower… 5 year fixed rates are hovering at around 4.39% and Variable rates are at around 1.90%…

This all adds up to good news for borrowers…  Enjoy the low rates!

Posted Mortgage News

2010 CMHC Survey shows Mortgage Broker share is stable

45% of First Time homebuyer’s said they would seek advice from a Mortgage Broker… according to the CMHC’s Mortgage Consumer Survey.

The study also found that internet usage was on the rise…no surprise there… 69% of First time buyers…

And 92% agree that Home ownership was a good, long-term investment.

68% of recent Homebuyer’s believe they will pay off their mortgage sooner than their current amortization.

All this adds up to a high level of confidence in our Housing market…   Enjoy those low interest rates…

Posted Mortgage Rates

Bank of Canada raises rates by 0.25%

As expected, the Bank of Canada raised it’s Target lending rate to 0.50% from 0.25%.   This prompted most Banks to raise their Bank Prime lending rate to 2.50% from 2.25%.    But there is some uncertainty about when the next increase will take place as reported in The Star.…. and oh yes, the increases will happen.. not ‘if’, but ‘when’.

Economists have said repeatedly that the Bank of Canada must raise their rate to slow the economy and keep inflation in check… The Target inflation rate is 2.00%.    Most Economists agree that they only need to raise this by 2.00% to 3.00% to have the desired effect.  (See a full report)

Posted Mortgage News

Expecting a June 1st rate hike

It seems like a rate hike is almost certain for tomorrow’s Bank of Canada meeting.. but we need to put this in perspective… The Bank of Canada has not raised rates since July 2007… and Mr. Carney has never raised the Target rate since he took his place as Governor…. (he should be a popular person among Canadian borrowers).

But let’s put it in perspective…even if the Variable rate doubles to 4.50% from it’s current 2.25%, we would still be in historically low interest rate territory when it comes to variable mortgage rates…

A 25bps or 50bps or even a 100bps increase should only slow the housing market and not kill it….. Remember, these are EMERGENCY RATES…. The Emergency is over.. and we should want it be over…  We should be happy that we’ve been able to enjoy these record low rates for so long…..  the sky isn’t falling…  we won’t be seeing rates of 9% or 10% or anything near that level…

Posted Mortgage News

Ben Tal, Senior Economist, CIBC shares his thoughts

Last week, we had the privilege of listening to Ben Tal, Senior Economist with CIBC.   He said we can expect rate hikes of between 1.00% to 3.00% over the next 2 years… but he also said that there is no straight line when it comes to interest rate hikes… so we will see staggered rate movement…  Mr. Tal said that he does not see the need for anything above this given that the motivation for any rate hikes by the Bank of Canada is slow the economy and keep inflation in check.

There were 4 charts in particular that caught my eye..

1-The Gap between Consumer Confidence and Consumer Capability.. this chart shows why the Government is concerned about our personal debt levels… The chart shows our confidence is higher than our capabilities…

2-Share of Household with Mortgages has fallen…this chart shows that more Canadians own their homes without mortgages… and that’s great news.. it means more Canadians are paying their mortgage debt down…

3-Size of Average Mortgage on the rise… this chart shows that while more Canadian own their homes without mortgages, the mortgage size has increased and this should be monitored and reviewed…

4-Hosing Affordability…. saving my favorite for last… I’m a big believer in tailoring the mortgage around your affordability.. and this chart shows us that on average, we have a lot of capacity when it comes to absorbing interest rate hikes… this is a chart that should make all Canadians feel good..