Canadian Mortgage Rates Rise

We saw all the banks raise the posted mortgage rates by .20% today. The banks are citing the credit crunch and the potential further loses from US sub prime market as the reason for the increase. If we look at today's bond rate for a 5 year Canadian mortgage the rate is 3.95%. The banks are now charging the consumer 7.54% for a 5 year term. As you can see there is a large gap in the Canadian 5 year mortgage rate. We can currently access a discount of around 1.55% off of that posted rate, which means the banks are still earning a 2.00% spread on the best mortgage rates. Now is a time to be looking at a variable rate mortgage as prime has dropped by.25% and expected to go down again by .25% in the new year.

Refiance Your Mortgage

I do get asked a lot about when is a good time to look at refiancing your mortgage. I believe you should review your mortgage at least once year, preferably twice year. This will give you two benefits; first is to make sure you have the current lowest mortgage rate along with the right mortgage product. The second will be to make sure your finacial picture is on track to match your family goals. You may wish to consolidate some accumlated debt and/or look at using your equity for other investment purpose's. By following this strategy you should be able to stay on top of your financial goals.

Prime Rate Drops

Well we knew this was coming. On Tuesday Bank of Canada dropped the prime rate by.25% to 6.00%. This is good news for the mortgage customers on variable rate products as they will see there payments drop. Based on the current economic data we should look at the prime rate going lower by .25-.75% heading into 2008. Watch for economic data to see the trends appear in the coming months.

Mortgages For Buying Homes

In today's marketplace we are seeing more people buying homes without having the mortgage in place. This really dangerous for clients. Once clients have bought a home and made the deal firm, they are under legal obligation to purchase that home. Clients need to make sure that they can fiance two homes before they go out buying another home. We need to help clients arrange mortgages for both purchase. we are finding in today's marketplace homes can take longer then 90 days to sell, so even with a long completion date, your home needs to be listed with a professional realtor that can advise you on the right price to move your home.

Buying Rental Properties

There is now the availability to purchase rental properties with only 5% down payment. That means on $200,000 purchase price, clients only need $10,000 as a down payment. Mortgage insurer with use 80% of the rental income for qualifying. There is also the potential to go with a 40 year amortization as well. Based on the above example mortgage payments would be $1089 per month. This a great product for investors to start accumulation an investment portfolio.

Mortgage Fixed Rates Lower?

Right now we are seeing the fixed rates being artificially higher for consumers. Fixed mortgage rates are determined by the bond market. Today, the 5 year bond rate is 3.89% and the best discounted mortgage rate is 5.89%. This means there is a 2.00% override for the banks. Normally the spread is about 1.40% above the lowest bond rate. So in theory the 5 year fixed rate should be 5.29%. Watch for lower fixed rates in the future or higher bank profits.

Bank of Canada To Lower Rates?

The tide is changing direction's as we speak. In June we thought the Prime rate set by the Bank of Canada was going to keep increasing and cause a lot of pain for consumers, Now with the Cdn dollar rising 25% this year against the US dollar, the calls are now coming for the Prime rate to be lowered. Today we had several economists from the major banks and financial securities calling for rate cuts. We also heard from the deputy governor of the bank of Canada saying the rising dollar is curbing inflation. Look for Prime rate to be lowered from .50-1.00% in the next six months. Now more then ever consumers need the help of independent accredited mortgage professionals to help make the best mortgage decision for them.

Sub prime Mortgages In Canada

We saw today the banks in Canada announcing there loses due to the crises in the US. Good news is that the Canadian banks had income from the upcoming VISA ipo to offset against the losses. This is good news for the Canadian mortgage market and consumers. We do not wish any major losses for the banks as this could make them lees likely to continue offering great mortgage products at still historic low level interest rates. The flip side is our US counterparts are still going through the crises and all signs point to getting worse before better. Watch for more news in the upcoming months regarding losses in sub prime mortgages.

Tax Deductable Mortgages

There is a lot of talk about making your principal home mortgage tax deductible. This can be a good tax advantage for the right people. In essence you need to re borrow against the equity in your home, and then take that money, reinvest in with a financial planner. You would then be able to deduct the interest from the mortgage on your personal taxes. In theory this can be great if you can tolerate the risk and you have the right financial planner that is not going to lose your principal. I would make sure before doing anything to contact a CA and make sure to have the right structure set up for CRA. Then you will need to find the right financial planner, to invest your money with. You want to do all your homework before you go leaping into this type of a product.

Variable Rate Mortgages

There is a lot more variable rate mortgages available in today's landscape. Every lender offers some form of the mortgage and usually 2-5 different versions. This can make the task of choosing the right one for you very difficult. There are standard prime-? for the entire term or deep discount for a short period of time. There are also various mortgage penalties, if you wish to pay out earlier then the committed mortgage term. As we always recommend, you should look at your own risk tolerance when taking a variable rate mortgage first. After that you will need to review all the major details with your accredited mortgage professional. Together you can work through the highlights and terms of the mortgage that meet with your personal needs. Once the mortgage is chosen you should keep in touch with your mortgage professional to make sure when or if the time is right to convert the mortgage to a fixed term.

100% Fiancing on Rental Properties

Cmhc announced a new program which will now allow investors to buy a home with no money down. If you are looking to buy real estate for rental, this is a great new program. This is a true 100% financing option. Investors will only need to pay for legal fees and property purchase tax where applicable. Longer amortization are available, up to 40 years. All of the fixed interest mortgage rates are available. If you would like to go variable interest mortgage rate, you will need to put 10% down payment. This program is available for 1-4 units.

Mortgage Rates

Fixed mortgage rates are determined by the bond market. The bond market rates are determined by the demand for bonds from the very large money institutions. The banks and mortgage lenders charge a spread that varies on a daily basis. Normally the spread between the bonds and discounted 5 year fixed rate is around 1.40. Currently the spread is around 1.80, so we could be seeing the 5 year fixed rate coming to a lower level then today.

Bank of Canada

Today, we saw the Canadian dollar slide lower due to the comments of our bank of Canada governor. How is this relevant to interest rates? My opinion the Bank of Canada is doing everything to not lower the prime rate as the US did. They are hoping to drive the dollar lower and slow down the housing market by making negative comments. My opinion we should be at a 6.00% prime rate right now with the talk of going lower. The US is still sorting out the sub prime mortgage troubles, which is going to force lower rates in the US. Watch for comments in the coming weeks before the next interest rate announcement.

Will Low Mortgage Rates Stay?

Today, we are seeing all the lenders increase the 5 year mortgage rates by .25%. At this point in time the lenders are taking advantage of the current uncertainty in the marketplace. The mortgage bonds that the lenders get their money from is still really low and we are now seeing a priemum being charged from the previously low mortgage rates. That being said we still have 5 year mortgage rates below 6% and with the new extended amortization period's, payments can be made affordable. The Bank of Canada was very cautious on their comments about the economy moving forward, this could mean lower mortgage rates in the future?

Mortgage Broker

The mortgage broker of today is geared to help the client with thier overall finanacial picture. The mortgage broker does this by going through a detailed application and asking the important question's to the client. By shopping over 400 different mortgage option's, the client is assured that they are recieveing the best option's avaliable from an independent accredited professional mortgage broker. Working with the right financial planner, real estate professional, and tax accountant, today's independent mortgage broker can help achieve their financial dreams.

Best Mortgage Rates

Today, we saw the interest rates climb .25% on a 5 year mortgage term. Historically speaking we still have the best mortgage rates avaliable. Now with longer amortization's, consumers can still benefit from low monthly payments that are offered on historcally the best mortgage rates. Consumers today have over 400 different best mortgage rate option's to choose from.

Canadian Mortgage Renewal

The Canadian Mortgage Renewal market is now under assult from the lenders in Canada. In most circumstances, your current mortgage provider will send out a renewal notice with the highest intererst rates that lender can charge you. Do not sign that canadian mortgage renewal, without first checking with an accrediated independent mortgage professional. They can shop the canadian mortgage market for you at no cost.