Strong Housing Market and Weak Canadian Dollar.
If you gain any comfort in knowing that the Canadian Dollar is strong you will probably have a stressful year in 2014. The Bank of Canada may be working behind the scenes to get the Canadian Dollar weaker relative to the US Dollar. A weaker Canadian Dollar will mean that exports to the United States will increase and hopefully stimulate a lagging Canadian economy. Continue reading →
So… You want to get a Variable Rate Mortgage.
Be careful, some of the offers out there right now will end up costing you a lot more than you think.
Rates on Variable Rate Mortgages are currently ranging from 2.4% (0.60% below Prime) to 2.7% (0.30% below Prime). The difference between the lowest rate available and a slightly higher rate can mean all the difference in the world. When we hear that certain Lenders are offering really low Variable Rate Mortgages we get a little worried. Lenders will occasionally offer a discount to their peers on Variable Rate Mortgages in order to draw Borrowers in. When those same Borrowers are looking to lock into a Fixed Rate Mortgage down the road, look out! Continue reading →
The following is a summary of some important points we have drawn from the above article which was produced by the Bank of Canada.
It is important to note that this article was produced with the intent of identifying ways that Bank of Canada’s monetary policy would have a greater impact on Canadians. In short, how the lowering of rates by the Bank of Canada could be translated more directly into savings for Canadians. This report looked very specifically at the Canadian Mortgage Market, and here are few conclusions: Continue reading →
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. The opportunities to do this occur when a variable rate client is looking to lock into a fixed rate and when a client’s mortgage is maturing. Everyone realizes that there are penalties associated with breaking a variable rate mortgage (3 months interest) and that even with a maturing mortgage there is a level of inconvenience associated with collecting documentation and moving to another lender for a slight decrease in rate. “Balance Sheet Lenders” will use these barriers to exit to their advantage and charge marginally higher rates to existing clients. Continue reading →
Is the Bank of Canada hinting that we should all have Variable Rate Mortgages? Did you read our last newsletter?.
The Bank of Canada speaks a little differently than we do, so let me translate.
First, they said it by dropping one line that was in all of their reports over the past few years:
“Over time, as the normalization of these conditions unfolds, a gradual normalization of policy interest rates can also be expected…”
They replaced it with this line:
“the substantial monetary policy stimulus currently in place remains appropriate”
Then they said they were worried that prices don’t seem to be moving up as they expected despite of all the new money that was printed. Here is how they said that:
“the fact that inflation has been persistently below target means that downside risks to inflation assume increasing importance.”
The Bank of Canada doesn’t think they will have to act to slow growth until at least the end of 2015, which means no movement in the Prime Rate for at least 2 years. Continue reading →
Variable Rate Mortgages (VRM’s) are gaining in popularity in Canada, and with good reason.
Five year fixed rates have been hovering around 3.5% for the past several months and Canadians are starting to see the benefits of a nice low rate locked at prime – 0.5%. Canada’s Prime Rate is at 3% right now, and probably will be for another year or two, so maybe it’s time for you to consider a VRM?
Variable Rate Mortgages aren’t for the faint of heart. Mortgage rates move up and down on a weekly if not daily basis and if you think this may cause you to lose some sleep it might not be worth the stress. If however you feel you can handle the uncertainty, a Variable Rate Mortgage will probably save you some money over the next few years. We believe that there are some keys to saving money and protecting yourself in a VRM. Continue reading →
Yesterday we posted an article on our Facebook page discussing the next attempt to slow down Canada’s housing market. The Government of Canada, through its wholly owned Crown Corporation CMHC, has decided to begin limiting the dollar amount of mortgages Canada’s Mortgage Lenders will be able to have guaranteed by the Canadian Government. This newsletter will seek to show how we got here and what the impact on the Canadian Mortgage Market will be.
Factors that will affect mortgage rates in the short and medium term.
When my Father was teaching my Brother and me how to drive he had some great words of wisdom that I can relate to our economy. I thought it might be fun to look at what is keeping our economy driving safely on the road and what might be tugging us towards to a ditch or into an accident. I am of course cleaning up the language and not yelling at you while I write this newsletter. Continue reading →
Yesterday Marcus Tzaferis appeared on CP24 to discuss the Minister of Finance’s involvement in the Canadian Mortgage Market. Consumers seem to be a little worried that the Minister’s tinkering could increase mortgage rates. Fortunately low rates are still available through Mortgage Brokers across Canada. Have a look at the video here.
If you or someone you know is looking for a mortgage a good Mortgage Broker continues to be your best source. As a reminder MorCan Direct continues to offer a 5 Year Fixed Rate Mortgage at 2.79%, our goal is to provide sound, unbiased, mortgage advice. If we can help you we will. Our extremely well educated agents are on salary and strive to exceed any expectations you have when looking for mortgage advice.
With a movement towards lower rates for a longer period of time what should you do?
This Newsletter will explain what the Bank of Canada said at this morning’s meetings and aid you in your mortgage decision making process.
The Bank of Canada and most economic indicators suggest that our economy is struggling and we need low rates and economic stimulus to support it well into the future. Whether you have a Fixed or Variable Rate Mortgage right now, or have an impending mortgage decision to make in the next 6 to 8 months reading this newsletter could really help. Continue reading →
