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Posted Debt

Looking ahead to 2015 rates and trends

happyholidays (1) 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.

  • Interest rates haven’t really changed this year.
  • 5 yr fixed rates are under 3.00%.
  • Variable rate pricing improved to around Prime less 0.60% (less in some cases and dropping).
  •   In fact, looking at the big picture, interest rates haven’t really changed much in the last 4 yrs.   Yet, you wouldn’t know it by reading the newspaper headlines….(sorry to my media friends…)

Let’s get to it.  MY THOUGHTS ON 2015. Continue reading “Looking ahead to 2015 rates and trends”

Posted 3 Comments on Variable or Fixed? an update on how to choose. Interest rates

Variable or Fixed? an update on how to choose.

Variable rate mortgage

FIXED OR VARIABLE?

The debate over fixed vs variable never seems to end.   For the past 5 years, the Federal govt and the BIG SIX BANKS have been doing everything in their power to force us into choosing a 5 year Fixed rate.    The govt says it gives us security and protection against the anticipated interest rate hikes.   BANKS jumped on this bandwagon because 5 yr fixed is the most profitable mortgage product.. and with fixed rates hovering at 3.00% for the last 3 years, it’s been an easy sell.

On the surface, it’s not bad advice.    Fixed rates were supposed to go up.   The spread between Fixed and Variable has been less than 1.00% over the last 3 years.     My rule of thumb is that Variable rates should be 1.00% lower than 5 yr fixed in order to benefit from the possible rate fluctuations.   So naturally, 5 yr fixed was a better choice.

DO YOU TRUST YOUR GOVT AND YOUR BANK? Continue reading “Variable or Fixed? an update on how to choose.”

Posted Money saving tips

But it came in a beautiful box?!

canadian-money-giftIf I gave the option of choosing between 2 cell phones, which would you choose?   Both phones had similar specs and were identical in almost every way… except PHONE 1 came in a nicely gift wrapped box with a bow on it.   PHONE 2 came in brown paper bag but was less expensive and also had slightly better options.

Most of us would choose PHONE 2 right?  Wrong!   When it comes to mortgages, most of us are focusing too much on the beautiful gift box and not paying enough attention to the contents.  They say around 47% of all mortgages go through a BANK and 39% go through a Mortgage Broker.   Broker share is up, but not enough in my opinion.

When it comes to mortgages, the BIG SIX BANKS have been charging higher rates than what can be had from MORTGAGE BROKERS (see Bank of Canada study ‘competition in the Canadian mortgage market).   And their inflated prepayment penalty calculations are now infamous (typical BIG SIX BANK penalties are around 4 times higher than other lenders).
Continue reading “But it came in a beautiful box?!”

Posted 2 Comments on Is your banker giving you their best rate? Case study

Is your banker giving you their best rate?

greedy banker EVEN THE BANK OF CANADA SAYS MORTGAGE BROKERS WILL GET YOU A LOWER RATE.

The Bank of Canada did a study a few years ago called Competition in the Canadian Mortgage Market.   The study concluded that consumers get a lower interest rate through brokers.    They also said that higher income earners were actually paying higher rates because they are less likely to spend the time to shop around for lower rates.

Last week, I did an interview for the news media about what a broker does.   They also interviewed one of my clients.  This client owns more than one property, he’s an experienced real estate investor and a senior manager for a major corporation.  He uses my service because I save him time and money.   He trusts my advice.  It’s that simple.   Here’s a link to the article.

IS YOUR BANKER GIVING THE BEST RATE?

A simple question.  How many of us can truly answer, yes?    You walk into your branch, you see a posted rate.  Then your banker shows you the “special rate” or “discounted rate”.   And then maybe they tell you they can do a little better.  But how much better?  And why aren’t they giving this up front?   Don’t loyal customers deserve the best?  Does this game sound familiar?

Continue reading “Is your banker giving you their best rate?”

Posted Consumer Debt

TD car loan rates at 25%!! Over 4000 comments!

cbc news

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!”