The Bank of Canada (B.O.C.) raised its key policy rate 25 bps to 0.75%, as was expected. This will mean an increase in variable rate mortgage rates by the same amount. In a statement released, The B.O.C. echoed its previous sentiments:
“Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.” Continue reading →
When it comes to mortgages there is a very strong focus on rates and how and where to get the lowest rate in the market. We have stood behind our guarantee that we offer the lowest rates in the market but we would like to stress the fact that there is more to the mortgage story. Although the rate determines the amount of interest you will be paying over the course of the term there are other factors to consider that will potentially save you thousands of dollars over the entire life of your mortgage. Continue reading →
1. Balance Sheet vs. Non-Balance Sheet Lender
There are two different types of lenders that exist in Canada; Balance Sheet Lenders and Non-Balance Sheet Lenders. A “Balance Sheet Lender” is any chartered bank in Canada. They are referred to as “Balance Sheet Lenders” because they hold your mortgage on their books as an asset. These Lenders can only increase the value of their asset (your mortgage) by increasing the spread between their cost of funds and the rate at which you pay interest on your mortgage. A “Non Balance Sheet Lender” is a mortgage servicer that has the same motivation as you, they want you to be their client and stay as their client based on rate alone. Since your mortgage is guaranteed by the Canadian Government there is only one rate that you can be charged, there is no ability for the lender or servicer to increase your interest rate, and due to the efficiency of the market they cannot make more money by selling you a higher rate when you lock into a fixed rate mortgage from a variable, or when you renegotiate your mortgage at maturity. Continue reading →