TagMortgage Rates

Posted June 9, 2013 Bank News

Banks raise mortgage rates

RBC 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

Posted May 13, 2013 Bank News

Fixed mortgage rates could move up this week.

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

Posted January 24, 2013 Interest rates

Interest rates to stay low for longer than expected…

The, soon to be, ex-Bank of Canada Governor, Mark Carney, is leaving us with a present… During yesterday’s Rate Announcement, the first of eight regularly scheduled rate meetings this year, Carney said the economy is growing at a slower pace than expected…. we having a cooling housing market….. inflation remains low and is not an immediate concern…. Last but not least, he expects the economy will not reach it’s full capacity in late 2014 and that withdrawing any monetary policy stimulus is less imminent than previously anticipated.

End result, no rate hikes are expected til 2014… These comments come as a bit of a surprise given the Bank of Canada has wanted to raise rates for the past 2 years. Well, maybe it’s Carney’s way of giving us a departing present….Let’s not look a gift horse in the mouth. Continue reading “Interest rates to stay low for longer than expected…”

Posted December 2, 2012 Case study

Giving up the Bank Kool-aid.

Recently, 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

Posted July 31, 2012 Interest rates

Lenders chop rates again… 2.99%… and Variable rates at Prime less 0.35%!

Today we saw 2 announcements…. For the first time ever, we saw a 5 yr fixed rate being offered for 2.99%. This is not a No Frills mortgage… so you don’t have to worry about minimal prepayment privileges, or restricted payout options, and no monkey business when it comes to penalty calculation…. You probably won’t see a lot of publicity about this because of the mainstream media was quick to promote the BMO NO FRILLS mortgage as the first 5 yr fixed mortgage under 3.00%….earlier this year. But I can tell you, it’s a significant milestone.

And we also saw the introduction of the lowest Variable rate mortgage in almost a year… Prime less 0.35%, or 2.65%. This isn’t one of those NO FRILLS Variable rate mortgages that is full of restrictions… you have all the regular options including being able to lock into the BEST discounted fixed rate at any time.

These 2 offers are very special… They don’t come with hidden clauses or back door penalties, or exit fees. These products are legit!

The driver behind the pricing is competition, the increased spread in profit margins and a slowing housing market.. The thirst to grow a business and keep the business on the books is going to see a lot of competition…. and the winners are us… the borrowers…

If you want more info on these rates or other mortgage related issues, call me anytime.

Steve Garganis

416 224 0114