These tips from the UK’s MSN.com might sound familiar but there some subtle differences….. First, here are the 4 tips.
1. Overpay when possible (make prepayments)
2. Get the best possible mortgage deal.
3. Check out an offset mortgage (All in One mortgage in Canada)
4. Switch to a better deal when your Capital increases….(shop for a better deal as your pay down your mortgage)
Nothing earth shattering…. simple but good advice. Now here is my additional advice …. #2 suggests we get the best deal…and we all want to pay the least amount of money…but being in the right product is just as important as going for the lowest rate…a good example is today’s variable rate mortgage of 1.95%… it’s the lowest rate available.. but is it the right product for everyone? Probably not…
#3 was also interesting… the All in One mortgages are becoming more popular and there are a few different lenders offering these now….these products are also known as Australian Mortgages…
#4 is great advice… when your mortgage comes up for renewal…shop around… speak to a broker… most financial institutions won’t offer you their absolute very best rate at renewal… this is a fact… and we understand… after all, it is a business and Banks want to make a profit. But let’s not contribute too much to the lender’s bottom line.
January stats are in… According to a report in CBC News, the average price of a home sold in Canada on MLS was $328,537. This is up by 19.6% from January 2009. But sales seemed to taper off from December’s record high by declining 2.8%. The supply of homes for sale is also down around 18% with 170,000 homes listed for sale on MLS.
It’s amazing how statistics can be tossed around and can be manipulated or misunderstood… If you look deeper, you will see that 2009 started off very rough for house sales as the U.S. Mortgage crisis was just starting to take it’s effect… but then as we approached May and June, interest rates dropped and house sales started to increase…. A sort of pent-up demand was being fulfilled.
Watch for a traditional Spring market with good resale figures as buyers take action to benefit from record low interest rates and before the new HST comes in effect this summer.
As we reported last week, the speculation about possible Mortgage Rules changing has become a reality…. the Federal government is going ahead with changes in Mortgage lending policies…..and these will come into effect April 19, 2010. Here are the 3 changes as reported on CBC.ca:
- all borrowers will now have to qualify using a 5 year fixed rate even if they choose a shorter term or a variable rate mortgage. (3 years fixed was the standard qualifying rates)
- refinancing your mortgage is now capped at 90% of the value of the home instead of 95%.
- investment properties will now require a 20% down payment instead of the current 5% down.
This last change will probably have the greatest impact in my opinion… It’s designed to discourage buying condos and houses for speculation purposes. However, ask anyone how their RRSPs are doing lately… the answer will probably not be good… A great many Canadians starting turning to real estate as means of buying a safe, long term investment… this could be done with as little as 5% down… but no more.
Early reaction is that these rule changes will create a small surge in house sales and then we should see a cooling off in the market…. only time will tell if these measures will have the desired effect or if they will simple force Canadians to get back into the Mutual Fund and Stock Market…. stay tuned as we follow this story..
TIGHTER MORTGAGE RULES
Too many articles this week about possible changes coming from the Minister of Finance, Jim Flaherty, on budget day March 4th. Globe and Mail and CTV.ca Where there’s smoke, there’s fire… or at least there is some serious consideration being given to changes in mortgage lending. If you’re a first time homebuyer that’s looking to buy this year, you may want to get your mortgage preapproved sooner than later… talk to your Mortgage Broker.
HIGHER HOME SALES AND HIGHER HOUSE PRICES
And how about the effect of CREA making the MLS public or more accessible? Will this affect house prices? Some think it will fuel house price increases…. Read this article from the Financial Post.
Here’s an article from The Star that shouts out ‘home sales skyrocket 87%’. Wow, that’s a scary number…And here’s another article from The Star that paints a clearer picture… ‘Some encouraging news and numbers’ they say…it can be confusing … but here’s an article with a good graph from The Financial Post .. look at the figures.. we are still below pre-recession figures… January 2010 sales were about the same as January 2008 sales.. maybe the market isn’t on fire, maybe it’s just active?
Lots of talk about the MLS being challenged to go public or at least become more accessible…. Currently, it’s only available through members. The Competition Bureau is concerned it may be a monopoly. … read more in the Globe and Mail. There is talk of a $400 flat fee offer to list your home.
We all want to save money, but be careful…. there is a saying..’You get what you pay for’.
There is also concern that a potentially cheaper MLS will drive house prices higher…. Globe and Mail.