TagVariable rate

Posted December 17, 2013 Money saving tips

Top 10 Mortgage Tips for 2014

A peek at the year ahead: Our Top Ten Mortgage Tips for 2014!

Your home may be the biggest investment you’ll ever make. That means you want to be smart with your mortgage. Although we can’t say for sure what mortgage rates will do – or how the housing market will shift – we have compiled our top tips for the year ahead; sensible strategies for today’s homebuyers and owners.

1. Variables are back. Several lenders are offering strong “prime minus” rates that could save you thousands in interest. And the Bank of Canada is still holding their key “overnight rate” very steady and very low… making variable-rate mortgages a sensible option right now. Fixed versus variable has always been a challenging mortgage decision. Let us help you decide which financing option best meets your needs.

2. Don’t sleepwalk through your mortgage renewal. Don’t miss out on an opportunity to save thousands on your mortgage. When your lender sends you a letter saying it’s time to renew… then it’s time to get an expert second opinion. We’re independent and we have access to over 50 lenders. If there’s a better deal, we’ll find it.

3. Pay your phone bill on time!Paying your bills on time has always been the most important credit habit. Equifax recently started to include phone companies on credit bureau reports – so your lender can see if you have any delinquencies with your phone bills. Look like a good borrower.

Continue reading “Top 10 Mortgage Tips for 2014”

Posted November 11, 20131 Comment Mortgage News

Long term is almost always more expensive.

Ever wanted to change cell phone providers? How about internet providers? Move your investments or rrsps? Cancel that hydro or gas contract because you moved?

And how about mortgages? When interest rates started heading down about 4 years ago, thousand of borrowers in fixed rate mortgages wanted to get out of their higher rates and start benefiting from the record low interest rates.

But borrowers were shocked to hear of unbelievably high early prepayment penalties… Penalties of $15,000, $20,000, $30,000. One recent situation had CIBC charging a $33,000 penalty on a $500,000 mortgage. I’ve seen dozens and dozens of situations like this. Almost all of these high penalties were from one of the BIG SIX BANKS… Continue reading “Long term is almost always more expensive.”

Posted October 31, 2013 Mortgage News

You heard it here first!… Rule of thumb for choosing Variable over Fixed.

For the past few years, the Bank of Canada has warned us about the imminent interest rate hikes. Reminds me of the boy that cried wolf. “Interest rates are going up… soon!… real soon…. really, really soon!!” But last week, the new Bank of Canada Governor, Stephen Poloz, surprised many experts when he said rates would remain low for quite a while.

This announcement prompted many advisors to jump on the Variable Rate bandwagon and start recommending Variable rate over Fixed rate. I agree… Variable rate is the obvious choice for most of us today. But I also noticed a familiar rule of thumb being quoted in the media. So I wanted to set the record straight. Continue reading “You heard it here first!… Rule of thumb for choosing Variable over Fixed.”

Posted July 16, 2013 Case study

Looking back 5 years.. which mortgage product did your Banker recommend in 2008?

Remember 2008? It was almost 5 years ago that the U.S. sub-prime mortgage scandal erupted. October 2008, to be exact. That’s almost 5 years ago… And with October and November 2013 renewals being less than 120 days away, we can now lock in some rates for those upcoming renewals. So I thought this would be a great time to see what sort of advice and recommendations the Banks were giving to their mortgage customers.

THE BANK’S ADVICE

The funny thing is, Banks have never changed their advice or strategy. ‘Take a 5 year fixed rate’. That’s all the Banks seem to want to promote. And with good reason… it’s the most profitable product FOR THE BANKS. But historically, it’s NOT the best product to take. There is no historical data that I am aware of that shows taking a 5 year fixed is the best strategy. But I’ll get into that in more detail later. Continue reading “Looking back 5 years.. which mortgage product did your Banker recommend in 2008?”

Posted September 5, 2012 Interest rates

Bank of Cda doesn’t change rate…U.S. Fed not to raise rates until 2015?

Bank of Canada announced they were keeping the Target Rate unchanged today, during their 6th of 8 regularly scheduled meetings for 2012. (This is not a recording..Lol!)

A more interesting topic is the U.S. Fed. There was an article last week that caught my eye. The article quotes the San Francisco Federal Reserve Bank president as saying he doesn’t believe the U.S. Fed will raise rates until 2015. And even if you don’t agree with that forecast, we must acknowledge that US Fed Chairman Ben Bernanke has stated he doesn’t forecast any increases until 2014.

Why is this important for Canadians to follow? They say when the U.S sneezes, Canada catches a cold. There’s a lot of truth to that statement. The U.S. is our biggest trading partner. History tells us we follow U.S. economic policies and trends.

CANADA MAKES IT’S OWN PATH

But something changed in 2008. The U.S. had a financial meltdown. The entire world was impacted and pushed into a global recession. Somehow, Canada came out of this with minimal damage. No housing crash. No Bank failures. No meltdown. In fact, many sectors our industry have flourished including our housing industry. We don’t have any mortgage default problem. Our unemployment rate is 7.3% compared with the 30 yr average of 8.4%. And our Banks are reporting $billion quarterly profits. We are the envy of the world….financially speaking.

CDA GOVT CONTINUES TO FOLLOW US GOVT

Still, the Cda govt continues to follow the U.S. Fed with regards to any rate increases or decreases. After all, we are still a very small economy compared with the U.S. and the rest of the world. The Bank of Canada has not increased the Target Rate for 24 months. Bank Prime currently sits at 3.00%. And many economists believe we won’t see any increase until late 2013 or even 2014. This leads me to believe mortgage rates will remain low for some time to come.

BUT WHICH MORTGAGE TERM SHOULD YOU CHOOSE?

The big question is which mortgage term to choose today… short or long? fixed or variable? The answer depends on you…. your goals, plans, financial strategy, risk tolerance, etc. Each of us has different needs… Product selection is very different today. There is an interested Variable rate product at Prime less 0.35% that has my attention. 5 yr fixed at 3.19% and 3.09% are still available… not a bad option for most of us…. My best advice is to get some advice. Speak with a qualified, unbiased professional. Speak with a Mortgage Broker. A Mortgage Broker doesn’t work for any one Bank.. they can offer a wide variety of products from a large number of Lenders….

As always, if you have any questions or comments, feel free to contact me.

Steve Garganis

steve@mortgagenow.ca

416 224 0114