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Posted 2 Comments on Is your banker giving you their best rate? Case study

Is your banker giving you their best rate?

greedy banker EVEN THE BANK OF CANADA SAYS MORTGAGE BROKERS WILL GET YOU A LOWER RATE.

The Bank of Canada did a study a few years ago called Competition in the Canadian Mortgage Market.   The study concluded that consumers get a lower interest rate through brokers.    They also said that higher income earners were actually paying higher rates because they are less likely to spend the time to shop around for lower rates.

Last week, I did an interview for the news media about what a broker does.   They also interviewed one of my clients.  This client owns more than one property, he’s an experienced real estate investor and a senior manager for a major corporation.  He uses my service because I save him time and money.   He trusts my advice.  It’s that simple.   Here’s a link to the article.

IS YOUR BANKER GIVING THE BEST RATE?

A simple question.  How many of us can truly answer, yes?    You walk into your branch, you see a posted rate.  Then your banker shows you the “special rate” or “discounted rate”.   And then maybe they tell you they can do a little better.  But how much better?  And why aren’t they giving this up front?   Don’t loyal customers deserve the best?  Does this game sound familiar?

Continue reading “Is your banker giving you their best rate?”

Posted Interest rates

2.99% is back… does that mean we should take it?

record low rates5 year fixed @ 2.99% is back.   This is NOT a NO FRILLS product (for those of you that saw a similar rate elsewhere earlier this year) but there is tougher qualifying.   This seems to have become an annual event.  For the past 3 years, we’ve seen 2.99% or less, being offered each Spring.   So, why haven’t rates gone up like the Bank’s economists, government analysts and other so-called ‘experts’ had predicted?

There are several reasons but, to sum it all up, the global economies haven’t recovered from the 2008 recession.    The US recovery is slower than expected.   Canada’s inflation rate is below target levels.   There were even concerns we could see deflation, which would cause the Bank of Canada to lower rates… those concerns have gone away…. for now!

WHAT’S THE FORECAST NOW?

Continue reading “2.99% is back… does that mean we should take it?”

Posted Money saving tips

Paying over list price has become normal.. but still requires a cool head.

Sold over asking

Here’s a recent article in The Star where I provided some advice and comments on bidding wars.

The trend continues.  Properties are selling for above asking price in hot markets across the country.  In Toronto, it’s becoming the norm.  Some say an epidemic.

Last month I reported on sales that sold for 128% and 138% of list price.   We’re talking about selling prices of $1,035,000 and $1,150,000.

A few days later, we saw a home sell for $1,308,808.    That’s $479,880 above asking price or put another way, 158% of list price.   Sale prices this much above asking are either a clear case of listing too low, in the attempts of attracting multiple offers, with the hope of getting a higher than normal selling price… or, someone is paying way above market value for reasons beyond my understanding.

Continue reading “Paying over list price has become normal.. but still requires a cool head.”

Posted 6 Comments on Stay away from mortgage cashback offers! Interest rates

Stay away from mortgage cashback offers!

CanadianBills It’s the Spring market…  ok, the weather isn’t saying this but the real estate market is.  You’re gonna start seeing and hearing more ads on TV, radio, news sites, even finance blogs.    So here’s a some quick words of advice.  STAY AWAY FROM TODAY’S CASH BACK OFFERS!

There are a few different types of mortgage cash back offers.   The most common offer is one where the Bank or Lender gives you 5% of the mortgage balance on closing.  That’s right they give you 5% back in cash.  For example: a $400,000 mortgage would get you back $20,000 in cash.

This type of cash back does serve a purpose.  If you are a young home buyer with little or no down payment, but you have a good job and don’t want to wait to save up that down payment, then this isn’t a bad way to get in the market.  Just ask those that did this 5 years ago.   With real estate values up by around 35% to 50% in that time, this isn’t a bad deal.   Continue reading “Stay away from mortgage cashback offers!”

Posted Mortgage News

CMHC mortgage insurance rates increasing but still cheaper than 10 yrs ago.

CMHCCanada Mortgage and Housing Corporation (CMHC) announced they will be increasing the cost of insurance premiums effective May 1st.   The premium increase is minimal and isn’t expected to slow the mortgage volumes (see below for cost changes).  The move isn’t that puzzling given that CMHC’s most recent financial statements from 2013 show their volumes are down due to the Federal govt mortgage rule changes… but interestingly, profits were up 11% for the first nine months of 2013.

CMHC made $1.27billion as of September 30th 2013.   Not bad for a crown corporation that was created to encourage home ownership in Canada. CMHC puts a lot of money in the government coffers.   Arrears are lower at 0.33%.. that’s considered extremely low.    Some would say this is just a cash grab.  But I think it’s just being proactive as taking action before the expected volumes decrease.

CMHC PREMIUMS ARE STILL CHEAPER THAN THEY WERE 10 YEAR AGO

But here’s the bright side.   Continue reading “CMHC mortgage insurance rates increasing but still cheaper than 10 yrs ago.”