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Rate Cuts and Pending Deals – A quick note

As the dust starts to settle on yesterday’s Bank of Canada rate cut, here’s some clarification on what happens next.

To all my pending clients or clients with something on the go, your rates will be automatically adjusted downward.

For new clients, prospective purchasers, or people that want to take advantage of these falling rates, don’t hesitate to reach out to my office today. I am happy to discuss how you can take advantage of this.

Your best interest is my only interest.

As always, I welcome your comments, calls and questions.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Important week for mortgage rates

Important week for mortgage rates could cost or save you thousands.

Important week for mortgage rates

Mortgage rates fell by about 1% since January of this year. That rate drop has created a surge in real estate sales across Canada, with September and October seeing a greater than average number of real estate transactions.  We also saw consumers taking advantage of these low rates by refinancing their mortgages early.

The Five-Year Government of Canada bond yields have been going up and down like a yo-yo over the last three months, with a low point being 1.13% and a high of 1.58% just this past week. This uncertainty/volatility forced financial institutions to raise their interest rate by about .2% to .3%.  Having said that, interest rates are still very low. In my discussions with the major lenders, they are all telling me that it’s busier than usual for home purchases and refinance purposes. Continue reading “Important week for mortgage rates could cost or save you thousands.”

Why didn't the Bank of Canada Gov cut rates last week

Why didn’t the Bank of Canada Gov cut rates last week?

Why didn't the Bank of Canada Gov cut rates last week

WAS THIS A BIG MISTAKE?

Last week, Stephen Poloz, the Bank of Canada Governor, kept the Prime Rate as is during the 6th of their eight scheduled meetings for 2019.  The Current Target rate is 1.75%.  (Bank Prime rate is derived from this rate.  Today’s Bank Prime rate is 3.95%.  Over 99% of time, when the Target Rate is cut, the Banks will reduce the Bank Prime Rate by an equal amount).

This was a very calculated decision that has politics written all over it.  While the rest of the world banks have been cutting rates to combat a looming recession due to growing global trade wars and slowing global economies, our Government did nothing.  Apparently, the Canadian economy is ‘resilient’.  The next Bank of Canada meeting is set for October 30, 2019.  Oh, and there’s a Federal election on Oct 21, 2019.  Yeah, this has politics written all over it.

WHAT YOU SHOULD KNOW ABOUT MORTGAGE RATES TODAY.  Continue reading “Why didn’t the Bank of Canada Gov cut rates last week?”

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

Continue reading “Banks pass on rate hikes but not the savings.. Shame on the BANKS!”

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. Continue reading “Mortgage rates going up a little.. for now. What should you do?”

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

Enjoy the low rates..No rate hike with Bank of Canada

The Bank held their third, of eight, scheduled meetings this week.   As widely predicted, the Bank of Canada announced that it is holding the key rate steady.

While noting that “economic growth has been faster than expected”, the bank said it’s too early to determine if the economy is on a “sustainable growth path”, citing weakness in export growth, business investment and employment.

The Bank’s three measures of core inflation, taken together, continue to point to material excess capacity in the economy. While there have been recent gains in employment, little growth in wages and hours worked continue to reflect economic slack in Canada, in contrast to the United States.

The bank also took into account uncertainties that include the potential impact of U.S. trade policies. The next rate-setting day is May 24.

This announcement means there should be no change to the prime rate. Great news if you have a variable-rate mortgage or line of credit, need a new mortgage, are renewing, or want to save thousands by consolidating debt at the lowest-cost funds. Or perhaps you are thinking of using home equity to invest in a rental property or second home, or cost effectively complete renovations.

Given the uncertain economic outlook, we continue to expect interest rates to stay low in Canada well into 2020, although the new mortgage rules have caused mortgage rates to be very complicated. Quick rate quotes are not very reliable! That’s why it’s so beneficial to work with an experienced mortgage broker who has access to a wide range of lenders and knows the right questions to ask to assess your situation and provide the best mortgage for your needs. Save yourself time and stress; don’t just ask what the rate is, have a conversation instead.

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

US election year… low rates today, but higher rates tomorrow.?

US electionLooking at this pic, aren’t you happy to be living in Canada?    Ok.. back to the article…

September 7th is the sixth of eight scheduled meeting dates for 2016.  The Bank of Canada governor, Stephen Poloz, is expected to leave the rate unchanged.  The Bank of Canada rate affects Bank Prime rates and Variable mortgage rates.  It also affects Fixed mortgage rates, indirectly.stephen poloz

Historically, Canadian mortgage rates have followed the US election year.  As we lead up to an election, rates tend to lower than normal.   And in the months after the election, rates go up.  Not always, but this happens often.

Will this happen in 2017?   Hard to say… however, we’ve seen the US Fed Reserve Chair, Janet Yellen, state that the US rate could go up as soon as Sept 21.

This may or may not happen.   Ms. Yellen has hinted at a looming rate hike for months.   (sort of reminds me of our previous Bank of Canada governor, Mark Carney, making numerous statements of a pending rate hike that didn’t materialize for years).   Be careful, she could be known as “The woman who cried wolf”?

Stay tuned.. the next few months could be a bit of a roller coaster..   And as always, don’t panic.  If you’re not sure, contact an experienced Mortgage Broker for neutral, unbiased advice.

Oh, by the way, did you know we are experiencing the lowest fixed rates in history?  For those that have a mortgage, congrats.  You should be paying less interest than ever before.

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

Mortgage Brief…Bank of Canada doesn’t change rate..

stephen polozThis week, the Bank of Canada Governor, Stephen Poloz, held rates steady.  No increase or decrease. click here for BoC report.

The Bank of Canada meets 8 times a year, at preset meeting dates.   The Target Rate is used by Canadian Banks to set their Prime rate.  This also affects Variable rate mortgages and even influences short term rates.

Bad news is good news for mortgage rates.  Inflation is under 2% (well below the 3% max that is needed before rates climb)..  And the Canadian economic outlook is still not strong enough to support a potential rate increase.

So, for now, enjoy the low rates… actually, they’ll probably be around for a lot longer..

Remember, we are experiencing record low rates.. but this doesn’t mean we should all jump into a 5 yr fixed rate product..  We all have different wants, needs and goals..  Speak with a Mortgage Broker to get professional advice.

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

US Fed rate hike doesn’t mean Bank of Cda rate hike!

Janet YellenLast month, the US Fed Reserve Bank Chairperson, Janet Yellen, raised rates for the first time since 2006.    Historically, Canada follows the US with rate movement..  However, times are changing…Don’t expect Canada to follow the US move anytime soon.

stephen polozDivergence.  That’s the new buzz-word.  Bank of Cda Govr, Stephen Poloz said, “Usually you think of the Canadian economy following the U.S. economy fairly closely. This will be one of those places where it really doesn’t.”   “But as a macro statement, there will a divergence there. We’re already seeing it, and so you should expect a divergence in policy too,” he said. Continue reading “US Fed rate hike doesn’t mean Bank of Cda rate hike!”

TD green or TD GREED?!. as they refuse to lower the Prime rate!!

greedy banker Yesterday’s rate cut announcement by the Bank of Canada (BOC) governor, Stephen Poloz, caught all Economists by surprise.  The BOC cut their overnight rate by 0.25%.   Historically, and traditionally, this meant that the Bank Prime rate would follow.  Bank Prime rate is 3.00% and we expect it to fall to 2.75%TD.

But HOLD ON!…Today, it’s the BOC governor, Poloz, that will be surprised as TD Bank says they WON’T  be cutting their Bank Prime rate!  The BOC cut the rate to help stimulate the economy.  Businesses borrow commercial funds priced against Bank Prime… and consumers borrow lines of credit and Variable rate mortgages against Bank Prime. Continue reading “TD green or TD GREED?!. as they refuse to lower the Prime rate!!”

Bank of Canada Rate cut is positive news… don’t listen to fear mongers.

fear FEAR..!  They say fear motivates us to do things we shouldn’t.  If you’ve been reading the News Headlines for the past several weeks, you’ve been hammered with RATE HIKE FEARS!  Everyone was saying rates were gonna go up.

It wasn’t just speculation, it was a foregone conclusion.  Almost factual!   There were headlines even reporting how much of an impact these new ‘higher rates’ would affect our lives, our budgets, our house values, our savings, etc.    We saw so-called ‘Experts’ recommending we lock into long term Fixed rates!   There was one articles telling us we should consider selling out homes!   I mean if you didn’t know better, you would think the sky was falling!

Panic was starting to set in for thousands of Canadians.  I was getting calls from concerned consumers asking if they should be doing anything with regards to their mortgage, their investments, and other personal finances. Continue reading “Bank of Canada Rate cut is positive news… don’t listen to fear mongers.”

Interest rate surprise? Not to our readers! : Bank of Canada drops key lending rate to 0.75%

big newsLast week, I made a bold statement about interest rates.   I said rates will remain low for some time.   And they could even decline.

That forecast was met with a certain degree of criticism.    Well, no surprise for CanadaMortgageNews.ca followers, the Bank of Canada cut the rate by 0.25% to 0.75%.

This means Variable Mortgage rates will fall by 0.25%.   It also means we’ll probably see fixed rate mortgages also fall….. As I predicted.

Stay tuned for more details on this…

http://www.ctvnews.ca/mobile/business/key-interest-rate-unexpectedly-lowered-1.2198493

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

So, you think rates are gonna spike up this year? Who says?

Variable rate mortgage Here we go again…  The beginning of a new year, and the same annual forecasts for interest rates to go up!   Before I share my thoughts.. Here’s some of the recent headlines that I’ve seen….

  • a report by CBC News sharing 4 ways to prepare.. including selling your home, waiting to buy and locking into a Fixed rate mortgage!    (Can you say panic?)
  • Here’s another from The Globe and Mail telling us it’s “Bad News for Borrowers: The economy could improve this year”.  Really?  Tell that to the people in Alberta, Newfoundland and Saskatchewan.
  • And this one from last week says Get ready for Interest Rate Shock in 2015.

Wow, reading this means rates are certain to up this year…right?  So let’s see.. we should sell our home, put off buying (yet again) and lock in our Variable rates into Fixed rate mortgages..

Now let’s look at the most recent headlines.. Continue reading “So, you think rates are gonna spike up this year? Who says?”

Senior Deputy Governor says lower rates are the new normal.

Carolyn Wilkins In her first public speech as Senior Deputy Governor for the Bank of Canada, Carolyn Wilkins brought some good news to Canadians with mortgages.    Interest rates should remain low for some time….. and we can expect lower rates to be the “new normal”.

Ms. Wilkins went on to say that “the recovery has had repeated false starts and still faces considerable headwinds.”  This seems to be the new message coming from the Bank of Canada.  And I must say, it’s a refreshing change from the previous high-profile Governor, Mark Carney.

UNPOPULAR COMMENTS

Remember our previous Bank of Canada governor?  Mr. Carney earned high praise for helping Canada avoid any U.S. style recession.   But in the years leading up to his 2013 departure, his repeated warnings of pending interest rate hikes never materialized.  In fact, we now know they were way off.  Interest rates went down and have stayed down.    Looking back, Carney’s rate hike warnings sounded more like ‘the boy who cried wolf’. Continue reading “Senior Deputy Governor says lower rates are the new normal.”

Bank of Canada says no rate hikes, but possible rate drops!!

stephen poloz  Last week, the Bank of Canada governor, Stephen Poloz, held the first of 8 scheduled meetings to set the Target Rate.    This is the rate used to set the Bank Prime rate which currently sits at 3.00%.   No surprise, no change in the rate.  It has been the same since Sept 2010.

From 2011 to 2013, the previous Bank of Canada governor, Mark Carney, continually announced of a pending rate increase.   But late last year, Poloz changed the tide when he announced it could be a few years before rates go up.   One of the key drivers for rate hikes is inflation.  The BoC target for inflation is between 1% and 3%.  If inflation goes above 3%, we can expect rate hikes.

Inflation is not a concern.  In fact, there are concerns about deflation as the current inflation rate sit at 1.2%.  Some experts believe we could see the BoC rate drop.  Great news for anyone in a Variable rate.   We are also seeing the govt of Cda bond yields drop.   Friday’s close was down to 1.59% for 5 yr bonds.  Haven’t seen that level since June 2013.   This means Fixed mortgage rates will probably go down further. Continue reading “Bank of Canada says no rate hikes, but possible rate drops!!”

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