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.”
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?”
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:
Continue reading “Banks pass on rate hikes but not the savings.. Shame on the BANKS!”
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 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 email@example.com