In 2009 and 2010, for the first time ever we saw mortgage rates under 2.00%. That’s right, if you were in a variable rate mortgage, you had a rate under 2.00%. We were coming off the catastrophic US sub-prime mortgage crisis. The financial US scam that cost the world trillions of dollars in lost pensions and investments. Tens of thousands of people lost everything they had. It was horrible. While we, in Canada, were largely untouched. We weren’t smarter, we were just lucky not to be exposed to the subprime mortgages to the extent the rest of the world was. As they say, Canada is five years behind the US, and in this case, we got lucky.
That said, let’s get back to mortgage rates and fast forward to 2020.
I participated in a Q & A with one of my good realtor friends, Jenelle Cameron of Remax. We had a chance to discuss the current impact of COVID-19 on mortgages and the real estate market in general. Find out the latest on mortgages, what’s happening with closings during this time, and more!
The beginning of the year is typically tough financially for most of us. Holiday bill payments, RRSP contributions, property tax bills, etc. And, if you’re self-employed, you probably have to make some sort of business tax or corporate tax payment. If December is the Holiday Season, then January and February feel like a hangover!
Banks and credit card companies love this time of year because this is when we’re most likely to carry a balance, forcing us to pay those crazy interest rates that range from 9% to 24%.
But, wait! Before you get too depressed, there may be a better option. There’s a less expensive way to manage your debt.
It’s September…and as green turns to gold we return refreshed to the rhythm of our daily routines. It’s our seasonal cue. Autumn is the perfect time to “get back to business” with a fresh look at your finances. Maybe you spent a little extra on that summer vacation, or the little home reno job that grew. That’s okay. Get out your calculator and get back on track.
TAKE ADVANTAGE OF RECORD LOW RATES!
Mortgage rates have hovered around historic lows for longer than anyone thought they would or could. That’s created a golden moment of opportunity for Canadian homeowners. In fact, the right mortgage can build your wealth… and save you thousands of dollars.
Thinking about a cottage or investment property? Wondering if it’s the right time to expand your space… or find a new one? Looking at ways to reduce your debt? Talk to an experienced Mortgage Broker. A good broker will provide a free, no-obligation review of your situation – wherever you are in your current mortgage journey.
Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.
Anyone remember this guy? Ben Bernanke. He’s just the former Chairman of the US Federal Reserve Bank. He served two terms from 2006 to 2014. Earlier this month, he revealed that he was declined for a mortgage refinance. Now, just to put this in perspective, he used to make a nice 6 figure salary. And today, he is paid an estimated $250,000 per speaking engagement.
How can he not qualify? Clearly, the mortgage rules tightening process has gone waaaaaay overboard. But this isn’t just happening in the US. Canada’s mortgage lending rules have always been tighter than the US. And over the past 6 years, the Canadian govt has brought in numerous changes to tighten the rules even further. (Actually, experts agree that they went way overboard. And we are only now seeing the effects of the rule changes.. Look out. You’re in for a big surprise the next time you need mortgage money).
We’ve seen a growing trend lately… Customers calling to find out if there was any way to take advantage of today’s record low rates….. If you are buying for the first time or are renewing a mortgage, then the answer is simple… YES.. But what if you are one of the thousands of Canadians that listened to their Bankers and the media or so-called ‘Experts’ and took at Fixed rate mortgage a few years ago.
You have a rate of 4.00% to 5.50% and you keep reading about record-low interest rates in the low 3.00% range….. what can you do? Well, here are 2 recent examples…. These are real clients…. These are real savings…
So where was the Banker in all this? Why didn’t the Banker call these clients to make them aware of the huge savings? In case you didn’t know it, the Banks are a business… and they want to maximize their profit. Don’t ever forget that.
CASE STUDY #1… 6 YEARS REMAINING AT 5.45%
We had a new client contact us with a $350k mortgage… they were with a BIG SIX bank.. their penalty to exit would be $10k… that’s a lot of money, and we don’t like anyone to pay penalties…..but we did the math and found this client a 3.29% mortgage for 5 years… the end result worked out to be a gross savings of $34,000… After paying the penalty, they realized a savings of $24,000 over the next 5 years. WOW! That’s an easy decision to make.. the clients also decided to add the penalty into the mortgage…. imagine savings almost $5,000 per year!
CASE STUDY #2… 7 REMAINING AT 5.25%
Another client had a $235k mortgage… also with a BIG SIX Bank… penalty to exit was $4k…. we also found a 5 yr mortgage at 3.29% for this client… the savings worked out to $23,000…less the penalty, that worked out to $19,000 in savings over the next 5 years!… Again, a no-brainer… Clients moved on this right away… we added the penalty into the mortgage and put almost $4,000 per year, into their pockets.
CAN YOU SAVE ON YOUR MORTGAGE?
We’re seeing more opportunity to save money by taking advantage of today’s low rates…. Don’t wait for your Bank to call. These are just a few, recent examples. If you’ve been thinking about how you can save on your mortgage, then take a few minutes and look into it. Get your mortgage reviewed by an unbiased person. Call a good Mortgage Broker. It could be worth a closer look. If you don’t have a broker, then feel free to contact me and I’ll do some quick math. You might be pleasantly surprised with the results.
We’ll be sharing more of our success stories and tips on how you can save money on your mortgage.
Mortgage refinances are down in Canada according to CMHC…. No big surprise to those of us in the Mortgage industry… The govt has made it more difficult to access money over the past 3 years with all the Mortgage rule changes. They have accomplished their goal of trying to discourage us from borrowing more.
Here’s a look at some of the rule changes that made an impact:
-mortgage refinances are capped at 85% loan to value from 95% loan to value just a few years ago.
-maximum amortization for hi-ratio mortgages (over 80% loan to value) is 30 years. Down from 40 years.
-variable rate mortgages and mortgages with terms less than 5 years must be qualified at the Bank’s POSTED 5 year fixed rate… this too will squeeze out many more borrowers as it forces us to qualify at the much higher POSTED rate…. 5.39% vs a discounted fixed rate of 3.49%….