Banks pass on rate hikes but not the savings.. Shame on the BANKS!

On January 2015, the Bank of Canada cut the prime rate by 0.25%.  But the BIG SIX BANKS didn’t cut the Prime rate as they normally do.  Instead, they waited a week… tried to justify why they couldn’t cut the rate… and finally caved in and cut it.. but ONLY by 0.15%.

That’s right, they pocketed the remaining 0.10%.  And in case you haven’t heard, the BIG SIX BANKS have been posting record profits, year after year after year after year after year.   In 2016, the 5 most profitable corporations were:

  1. RBC
  2. TD
  3. SCOTIABANK
  4. BMO
  5. CIBC

Read the rest of this entry »

Bank of Canada rate hike.. it’s really not a big deal.

BREAKING NEWS… BANK OF CANADA RAISES RATE BY 0.25% AND THE SKY HASN’T FALLEN!!

Stephen Poloz, the Bank of Canada Governor, raised the Target rate by 0.25% to 0.75%.   Maybe now the media will move on to other news.

Seriously, aren’t we all kinda tired of hearing how rates are going to skyrocket,…how this is going to make our mortgages unaffordable… how we have record debt levels.. how we are going to default our mortgages, lose our homes and go into a recession…it’s doom and gloom?  This isn’t happening.

SOME FACTS ABOUT THE RATE HIKE Read the rest of this entry »

Mortgage rates going up a little.. for now. What should you do?

Happy 150th Canada!  Mortgage rates are going up.  Hooray!  Ok, yes, I’m being sarcastic.

This isn’t the cheery message you wanna hear if you have a mortgage coming up for renewal soon. But, hold on.  What does this really mean?  It’s a great attention grabber.  And now that you’re reading, let’s cut through the bull!

It’s true.  Wholesale fixed mortgage rates have gone up.. around 0.15%.  Yup, that’s it.  Yet, reading all the media headlines would make you believe mortgage rates went up 1.00% or something like that!!   This just isn’t the case.   And Variable rates haven’t changed as of yet.. Mind you, we could see an increase of 0.25% on July 12.. That’s still putting most Variable rate borrowers at 2.25% and 2.40%.. That’s a ridiculously low rate.

Here’s what’s happening…We’ve seen the media take little snippets of the Bank of Canada Governor, Mr. Stephen Poloz’s comments and turn them into front page headlines.  Great for headlines but short of full disclosure.  Here’s a more complete picture. Read the rest of this entry »

Bank of Canada hints of rates hikes.. bond yields spike up

Bank of Canada Senior Deputy governor, Carolyn Wilkins, made headlines this week when she hinted of pending rate hikes.

The reaction by investors was swift.  Bond yields were up 20bps. Fixed mortgage rates are priced from Gov of Cda bond yields.  Variable mortgage rates are priced from Bank of Canada rate.  And the next Bank of Canada meeting is scheduled for July 12th, the fifth of eight scheduled meetings.  Many are betting we could see a rate hike then.

DON’T PANIC…. RATES ARE STILL RIDICULOUSLY LOW…   The media was quick to find ‘so-called’ experts to quote.  I’ve seen some saying we should all lock in our variable rate mortgages into fixed rate products.  And others say you should brace yourself for payment shock.

Here’s a reality check..   Variable rate mortgage are around 2.20% .. Some are higher, some are lower..    EVERY Canadian must qualify for a Variable rate, using the POSTED 5 year fixed bank rate.  That rate has been at or near 4.64% for several years.

If rates go up, we can expect a slow gradual increase..  around 0.25% at at time.  And here’s the thing..If you can qualify at 4.64%, what makes you think you can’t afford your mortgage at 2.45% or 2.70%??

The sky isn’t falling.   Many Canadians are already paying more than they have to by increasing their regular payments to accelerate the amortization and retire their debt sooner.  In fact, most of my clients are doing this because they can.   Don’t believe everything you hear or read in the media…  We are experiencing record low interest rates and yet, we’re made to feel like it’s a horrible time to have a mortgage..  Anyone else seeing something wrong with this?

By the way, I still like Variable rate mortgages today.

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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