News, Views and Trends!
Much has been written about last week’s Posted rate hikes by TD and RBC. Don’t panic! This is just their posted rate – it’s not the actual rate they give to clients.
I do, however, think we’ll see a minimal rate hike in the coming weeks due to five-year Government of Canada bond yields increasing slightly. Fixed rates are priced closely to bond yields.
Continue reading “TD & RBC raised the POSTED rate… but not their REAL rates”
Fixed mortgage rates are tied closely to the Govt of Cda bond yields. And bond yields are up… Since mid April, the 5 yr Gov of Cda bond yield has gone from 0.75% to 1.07%. That’s a 0.32% jump. Normally, we would see fixed mortgage rates go up.
So far, no increase. But that’s probably more to do with a competitive Spring housing market. This is when most house sales and mortgage transactions take place. The Banks need to maintain certain market share levels in order to keep shareholders happy. They are willing to sacrifice a little profit margin (and I do mean little… they seem to make up for this with higher service fees as was recently reported, but let’s not get into that now…).
If the bond yields continue to increase, we will see fixed mortgage rates rise. That’s an automatic. The real question is how long will the bond yields continue their climb? It will be interesting to watch the next few months. We can expect to see some rate increases as the Spring market ends and Banks look to increase their profit…. A pattern that repeats itself year after year.. but here’s what you can do to protect yourself… Continue reading “Bond Yields are up… will Fixed Mortgage rates follow?”
Seasons Greetings! Happy New Year! Quick thank you for making 2014 a great year! Hope yours was just as special. And I’m wishing you much success and happiness in 2015.
I’ll make this quick as I’m sure you have some New Year’s Eve celebrations to attend to.
QUICK YEAR IN REVIEW.
Let’s get to it. MY THOUGHTS ON 2015. Continue reading “Looking ahead to 2015 rates and trends”
Last week’s Employment Stats shocked everyone when we didn’t see the expected 14,000 new jobs created as Economists were expecting. Instead, we got hit with a reported 46,000 jobs lost in December. Economists aren’t always accurate with their forecasts (news flash) but they usually aren’t this far off either. We won’t look at why they miscalculated here, but I do want to look at the effects of this bad news on your mortgage.
EFFECT ON FIXED MORTGAGE RATES
Higher unemployment and job loss is never a good thing. We’re not celebrating here. But we need to understand how it affects our mortgage rates. When it comes to rates, bad economic news is good news. And we saw the effects almost immediately. Bond yields dropped by around 0.15% to 1.73%, taking the pressure off Lenders to raise rates (fixed mortgage rates are priced closely to Govt of Cda bond yields). This means fixed mortgages won’t go up anytime soon and could even fall should the bond yields remain at this level. Continue reading “Unexpected job loss report and effect on mortgage rates.”
Last week, CBC’s Kathy Tomlinson made national headlines with her breaking story about TD charging car loan interest rates of 25%. Wow! Are you kidding me? The reaction was incredible and went viral. Over 4000 comments in just a few days.
Now, this doesn’t have anything to do directly with mortgages, but it’s relevant news given that TD is one of the largest BANKs in Canada. It also shows our Federal Govt’s lack of focus when it comes to different types of consumer debt. This should serve as a reminder that a BANK is a business. They aren’t your best friend. They want to maximize profits and are accountable to its shareholders.
The article reports that TD has approximately $14.3billion of indirect loans on its books brokered by dealers. With an estimated 25% of these loans being priced at subprime rates (subprime means higher rates for riskier borrowers), that would work out to around $500million in interest costs being collected by TD each and every year! Continue reading “TD car loan rates at 25%!! Over 4000 comments!”
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