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Posted March 6, 2014 Mortgage News

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

Canada 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.”

Posted February 26, 2014 Mortgage Rates

158% of List price! Housing market is hot!

Last month a house in Toronto’s west end made headlines when it sold for $200,000 above it’s $639,900 list price. That’s 131% of the asking price. Earlier this week, I shared some astonishing sales from the weekend. Two houses sold for 138% and 129% of asking price. Both homes were in the $1,000,000 plus price range.

Yesterday, this house at 3 Ross St, in Toronto was listed for $829,000. It sold for $1,308,880. That’s 158% of asking price or $479,880. This semi-detached house is located in the College and Spadina area of Toronto. It sits on a 20′ x 116′ lot.

We can debate whether these are sales tactics (you know, list way below market price to attract buyers and create a buying frenzy) or if this means the market has gone crazy. To me, this just reaffirms my belief that this is a seller’s market. There is a pent-up demand for housing. And when the supply is low, higher prices usually follow.

Interesting, yesterday, a report from Tourism Toronto showed in 2103, 9.22million hotel rooms were booked. Up 2.8% from 2012. I’m not sure there is a direct correlation between the visitors and house prices but Toronto has certainly become a world-class city. Maybe our prices reflect that, too?

Your best interest is my only interest. Like this article? Share with a friend. I reply to all questions and I welcome your comments.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Posted February 25, 2014 Mortgage News

2 sales in GTA this weekend went for 128% and 138% of List price!!

Wow, who said the housing market was slowing down? Check this out.. 2 sales from this past weekend in Toronto show the market is red hot!

This house at 455 Manning St is located in the College and Bathurst area of Toronto. It was listed for sale at $749,900. And it sold for whopping $1,035,000 or 138% of list price! This is a 2.5 storey semi-detached home with a 19′ x 126′ lot. Wait, it gets better. The description says, and I quote “Attention Renovators/Investors/Handymen”. A quick look at pics inside leave much to be desired. This place is need of some serious home improvements. All I can say is WOW!

How about this one at 362 Lippincott Street located in the Bathurst and Bloor area of Toronto. Listed at $895,001 and selling for $1,150,000. That’s 128% of list price. The lot is 17′ x 101′. This is a 100 yr old semi-detached Victorian with major updates and renos. It certainly looks nicer than the first. But selling for 128% of list price? I’ll repeat myself, WOW!! Continue reading “2 sales in GTA this weekend went for 128% and 138% of List price!!”

Posted February 3, 2014 Case study

Lower rate = Lower payment and a Lower balance in 5 years!

We all know that a lower interest means a lower monthly payment. But did you know that a lower interest rate means you will also owe less when your mortgage comes up for renewal? This has been overlooked by consumers and experts alike. I haven’t seen any articles covering this. And it should change how you choose your next mortgage product.

It all has to do with the effects of compounding interest. Let’s take a look at 2 borrowers, each with a $400k mortgage. Borrower 1 is Mary. Borrower 2 is Dave. Mary has today’s 5 yr fixed rate of 3.29%. Dave has the more normal rate of 5.50% (the rate most experts think we will see in the next 3 to 5 yrs). We’ll amortize both mortgage over a 25 yr term.

Dave’s mortgage has monthly payments of $2441 and a balance owing of $356,749 at the end of 5 years. Mary’s mortgage has monthly payments of $1953 and a balance owing of $343,728 at the end of the first 5 years. Notice the difference in the balance owing after 5 years. We are talking about a $13,021 difference. That’s the effects of compounding interest. Continue reading “Lower rate = Lower payment and a Lower balance in 5 years!”

Posted January 30, 2014 Mortgage News

Olympics are coming.. and so are the dumb bank ads.

I’m a huge hockey fan. I love watching Olympic hockey. It’s fast paced and every game counts. If you’re like me, then you’ll probably be glued to the TV set watching and cheering on Team Canada. GO CANADA GO!

Unfortunately, that means you’ll also have to put up with those dumb bank ads. These ads drive me nuts. They deliver a terrible message to consumers. Here’s one from RBC from the 2010 Olympics about a young couple buying a home, probably their first, and the RBC mortgage specialist recommends they ‘split their mortgage to save money…. part fixed and part variable’. Anyone get that? Sounds like some sort of magic solution. Confused? You should be.

Splitting your mortgage is probably the worst thing you can do. Here’s why the BANKS like it. There are certain BANKS that will allow you to split your mortgage into 2 or more parts. This product was introduced in the mid ’90s. Now ask anyone that took this type of mortgage it they’d ever take it again. NO WAY! Continue reading “Olympics are coming.. and so are the dumb bank ads.”