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Tagfixed mortgage rates

Banks raise mortgage rates

RBC-BankRBC is raising their rates… As expected, fixed mortgage rates have gone up.  RBC is the first of the BIG SIX to raise their rates.  RBC’s 4 yr rate special will go to 3.09% from 2.99% and their 5 yr rate special will go to 3.29% from 2.99%.

Of course, these are NOT the best rates in the wholesale mortgage market, nor are they the best fixed rate products.  But RBC is the largest mortgage lender in Canada, so we must take note.   This rate increase is no surprise.  As reported on May 13th and May 28th, bond yields had increased over 30bps in May.  A rate increase was imminent.

Wholesale mortgage rates started to go up a few weeks ago.  And as of June 10th, all Lenders will have increased their rates by around 10bps.

Remember, 5 yr fixed rates are still below 3.00%.  I don’t think there is any reason to panic.  We can expect the other BIG SIX banks to follow with their own rate increases.  Fixed rates are closely tied to the Canadian govt bond yields.   And with the stock market in the U.S. hitting unexpected record highs, and the our own Toronto Stock market making significant gains, it was only a matter of time before rates moved.  Economists still believe rates won’t go up quickly.  It will take time for rates to go up significantly.

Your best interest is my only interest.

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

Steve Garganis 416 224 0114 steve@mortgagenow.ca

5 yr Bond yields up significantly.. expect fixed rates to go up..!

big news 5 yr Govt of Canada bond yields are up over 30bps in May.   We should expect fixed mortgage rates to increase if they hold at this level.  If you are thinking of buying, refinancing or if your mortgage is coming up for renewal, I suggest you contact your mortgage broker and get some rates held.  This could be the beginning of the long-awaited mortgage rate hikes.

There is another chart you should look at if you want to see where Fixed mortgage rates are headed over the next 6 months.   The 2 year Govt of Canada bond yields are a good 6 month indicator of where rates are going…. and this chart shows the 2 year bond yields jumped over 25bps in May.

We’ll report any changes as they get announced.

Your best interest is my only interest.

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

Steve Garganis 416 224 0114 steve@mortgagenow.ca

 

Fixed mortgage rates could move up this week.

graph trend up Guess I shouldn’t have talked about the record low interest rates last week…   Today, 2 small lenders increased their fixed mortgage rates and another Lender warned of a potential increase coming sometime this week.  What’s driving the higher rates?   A jump in the 5 year bond yields.  Fixed mortgage rates are directly affected by the Govt of Canada bond yield.

With bond yields jumping 20 basis points in the past 1o days, it’s only logical to assume mortgage rates will go up.   click here to see bond yields.   But hey, with interest rates at record low levels, it’s no reason to panic.  Rates are still great…. if you want to protect yourself against a possible increase, get a rate hold… it’s free and there’s no obligation.   Most Lenders will hold rates for 120 days..

Need help to get a rate hold?  Call me.   I can help.

Your best interest is my only interest.

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

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Giving up the Bank Kool-aid.

Big six banksRecently, I’ve had several new clients contact me about getting out of their higher rate BANK mortgage… No surprise here… with interest rates reaching new all-time lows, it only makes sense to look into this further…

But I’ve noticed a very familiar pattern developing….See if this sounds familiar:

1-First, you hear about these record low fixed rates… maybe online, from a friend, or from one of my current clients…

2- You contact your Bank to see what they can do…

3-Your Banker gives you 2 options… 1- pay an inflated prepayment penalty (BIG SIX BANKS make you pay for any rate discount) and get into a new 5 yr fixed rate of 3.29% (this is the best advertised rate today by a BIG SIX BANK).  OR 2- they’ll blend the penalty into a new mortgage but your rate will be higher… (this never works to your advantage.. there is NO assurance the Bank will offer you the absolute best discounted rate when calculating your new rate.. it’s been a favorite tactic of the Banks for decades…don’t drink this kool-aid… it will cost you $$thousands). 

Most of us will stop right there and go no further…We’ve consumed so much Bank kool-aid that it’s turned us into a flock of sheep… But if you’ve started to become immune to the Bank tactics and want to explore further, then read on…

4- You call a Mortgage Broker, maybe me… you discover that today’s best 5 yr fixed rate is under 3.00%…   (That’s today’s best 5 year wholesale mortgage rate with NO ADDITIONAL RESTRICTIONS OR LIMITATIONS…It’s important to understand this fine point.)  And you discover it’s now worth paying the penalty to get into this new mortgage.

5- Everything is going great… but come payout time, your Banker contacts you… They make a last-minute plea to save your business… Somehow, they miraculously offer to match the Broker rate…

Every heard of this before?  What would you do?

Most of my clients, that go through this process, quickly discover who has their best interests at heart.  They realize it’s better to deal with ‘rate-setters’ vs ‘rate-matchers’.    But oddly enough, I have seen some clients stick with their Bank… Like other addicts, they can’t seem to explain it..   Even after going through the entire mortgage review and approval process (or what I refer to as the  Bank detox process).   When asked why they stayed, they couldn’t give any logical reason.  They just keep going back to the Bank for another fix.

10 years ago, this happened more often.  But times have changed.  Kool-aid is out.  Protein shakes and Red Bull are in.  Today’s consumer is more educated… information flows faster.  Even the Bank of Canada said “borrowers who use a mortgage broker pay less, on average, than borrowers who negotiate with lenders directly”. (February 2011 entitled ‘Competition in the Canadian Mortgage Market’’).

As always, if you have any questions or comments or are just looking for a better mortgage, please free to contact me anytime.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Bond rates up 0.30%…and 5 yr mortgages at 2.99% disappear.. for now.

Last week we saw 5 yr fixed mortgage rates hit 2.99% for the first time ever (these are full featured mortgages, not No Frills products).   But these rates didn’t last long… just 3 days later, bond yields spiked up and mortgage rates followed…  5 yr fixed rates now sit at 3.09%.

The 5 year Govt of Canada bond yields are up 0.30% since July 24th, and are currently sitting at 1.42%.  That’s a 26% increase in 2 weeks.  These bond yields have a direct effect on 5 yr fixed mortgage rates.     If bond yields continue to go up, we could see mortgage rates go up further.    Looking further ahead, the 2yr Govt of Canada bond yields provide us with a 6 month outlook…  they have also gone up from 0.93% to 1.16%, a 20% increase… if the yields stay at this level, we should look for rates to go up slightly…

Still, these are historical low rates… anything under 4.00% is ridiculously low…  We haven’t seen 5 yr fixed rates under 4.00% for over 40 yrs..  This isn’t time to panic…it’s still a great time to borrow money…

This seems to be an ongoing pattern.  Rates go up temporarily, then they drop… they go up, then they drop…    We’ve been stuck in this cycle for over 2 years.  But hey, who’s complaining?  Not anyone with a mortgage….not any real estate investors… this means money is cheap….. and it makes investing in real estate a very attractive option.

For those of us with a pension or if you are heavily invested in stocks, bonds or mutual funds, then you won’t like these low rates as they are keeping your Return On Investment very low……  Personally, I have some money in mutual funds and some stocks…..I started with my RRSP in 1990…. they were supposed to be a safe, long-term investments…. The only problem is, I’ve never made any positive return… Sound familiar?   The only ones making money are the Fund Managers (with their 2% Management fees) and Investment Advisors (with their 5% or 6% Deferred Sales Charges).

I lost my appetite for stocks and mutual funds, in 2000… the year of the dot com, dot bomb, internet stock market crash… the markets have been a roller coaster ride ever since… I got off that ride in 2004 and have never looked back.

If you’re looking for investment strategies in mortgages and real estate, drop me a line or give me a call… I’d be happy to share some of my knowledge and experiences of others that are enjoying positive returns elsewhere.

Steve Garganis

416 224 0114  steve@mortgagenow.ca

 

 

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