Variable rate mortgages and good information are still by far the best two ways to ensure you are saving money on your mortgages. The Bank of Canada meets tomorrow and most economists forecast an increase in our country’s overnight rate. This is probably the safe bet. However, I believe that there is a strong argument for the Bank of Canada to hold rates as they are. Continue reading →
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 →
Interest rates have been steadily increasing over the past few weeks. This should come as no surprise to anyone reading these newsletters. We do anticipate that rates will increase further before slowing down and probably heading back down to lower levels. Royal Bank is increasing their rates tonight, on the back of stronger bond yields which telegraph the mortgage market moves.
The consensus at the major Canadian Banks is for an increase of the prime rate by 2.5% over the next year and a half. Some banks feel that rates will increase faster than others, but the consensus has changed dramatically. It is entertaining that the group that previously believed that we were in the worst recession since the 1930’s; now sees growth from Canada and the United States coming in at record levels.
We don’t scare that easily. Continue reading →
The Bank of Canada is the nation’s central bank. Established in 1935 through the Bank of Canada Act, the BoC’s main goal is to promote the economic and financial interests of Canada.
Before the 1930’s there was no need for central banking due to Canada’s scattered and primarily rural economy. The branch bank network that existed in Canada was able to meet the nation’s needs. The larger banks were able to deal with government business with ease and the branch network developed a system for clearing cheques between banks.
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As part of the Government of Canada’s Economic Action Plan, the ecoEnergy Retrofit – Homes Program has been expanded to aid 200,000 homeowners in covering the cost of making their homes more energy efficient. The time-sensitive program includes a $300 million increase in funding over two years. In other words, the program provides non-taxable grants to those that have carried out renovations that improve the energy efficiency of their property.
The question is: Does your property qualify? The grant is offered to owners of low-rise residential properties. For example; single detached and attached homes, small multi-unit residential buildings (including apartment buildings of three storey’s or less), mobile homes that are on a permanent foundation and floating homes that are permanently moored all are eligible for the grant. The only restrictions on the types of homes mentioned are the age of the home so make sure your home is not newly built and has been occupied for more than six months. Even if you are in the process of building a house you will not be entitled to the program because the idea behind the grant is to help older homes adhere to a greener energy condition.
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An insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan is known as mortgage insurance. This type of insurance can be private or public depending on the insurer. Continue reading →
Several conditions apply so before you delve into your RRSP make sure you meet said conditions.
When it comes to your mortgage there are several payment frequencies you can choose from. The payment frequency refers to how often you will make mortgage payments. Not all payments offer savings on interest or will help you pay down your mortgage faster. Here is a simple breakdown of each payment type to help you choose the option that most suits your situation.