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BIG SIX BANKS aren’t passing along the Bank of Canada rate cut to consumers?

banksters monopolyToday, the actual BANK PRIME rate should be 2.50%, not 2.70%.   What am I talking about?… follow me on this and let’s see if this makes sense.

It’s been a few weeks since the Bank of Canada cut the rate.  I’ve been waiting to see how this would play out… First, let’s get the terminology clear.    Bank of Canada overnight rate, or Key rate as it’s referred to, directly affects the Retail Bank Prime rate and Variable rate mortgages.   This does not have a direct impact on fixed rate mortgages.

Last January, the Bank of Canada Governor, Stephen Poloz, surprised most economists and financial experts when he cut the rate by 0.25% (well, not all experts, I called for a rate cut just a week earlier).
Continue reading “BIG SIX BANKS aren’t passing along the Bank of Canada rate cut to consumers?”

BIG SIX BANKS finally cut Prime rate.. Well, sort of…!

banksters monopolyLast week, the Bank of Canada (BoC) cut their overnight rate by 0.25%.  The move surprised all the so-called ‘Financial Experts’…  (well, not me… As I had suggested rates were likely to drop in the previous week’s article and also in the previous month).

Our BIG SIX BANKS had their own surprise for us.   Instead of passing along the usual rate cut to consumers, they sat on their hands and did nothing.   In fact, TD Bank felt good about it and made public statements about how their Bank Prime rate wasn’t fully influenced by the BOC rate.     (That’s such a load of bull, you can almost smell it coming out of your screens!)

And also last week, the Banks immediately cut the rate they pay you on your savings by that same 0.25%.   Continue reading “BIG SIX BANKS finally cut Prime rate.. Well, sort of…!”

The Star article on private lenders

Some comments I made about the changing lending landscape.  Click on the link below.

Private lenders step into Mortgage void left by banks.

The article was good and shed some light on just how much the federal government has tightened the Mortgage rules in Canada.  But the article excluded one very important fact.

loan sharkYes, I agree that the govt has gone overboard with their rule changes, and has forced qualified mortgage borrowers to pay higher rates and fees by having to go to alternative lenders.  But, consumers don’t necessarily have to go from an “A” lender with the best rates (currently at around 3.00%),  to a “C” lender with rates of around 12% to 15%.

There are “B” lenders that offer mortgages with only slightly higher rates. Usually 1% to 2% higher than “A” lenders.   I think it’s important to point this out.

A recent example is where one client was self employed, had a slightly bruised credit score of 602 (a good score is between 680 and 720), and his net income was not high enough to qualify (remember, self employed show a lower net income because they can write off more expenses). We found this client an 80% loan to value mortgage at 4.00% with some fees.   His net annual rate was 4.25%.  

So the message is, ‘There are ‘B’ lenders to fill the void left by the BANKS’…. and their rates are only slightly higher..  There are also ‘C’ lenders that fill a need for even harder to place mortgages…. These products come with much higher rates and fees.. But most consumers will either fit into an ‘A’ or ‘B’ product.   Only a small handful of applicants need to go to a ‘C’ Lender..

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

Steve Garganis 416 224 0114 steve@mortgagenow.ca

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