Mortgage Terms Changing

The mortgage terms are changing dramatically for today's consumer. Today client's have the choice of going up to 40 years as an amortization period. Zero down payment mortgages are available along with being able to buy a rental property with five percent down payment. You can also now have a line of credit up to ninety percent of the value of your home. This is just a small sample of the positive changes the lenders and insurers are doing to help more Canadians purchase homes. These products also allow consumers to better manage their mortgages as financial tools vs a debt tool.

Where Are Mortgage Rates Going?

After being in the mortgage business for 15 years, this question never gets boring! The reason, mortgage rates are always changing for various reason's. There is no science or magic graph to predict which direction mortgage rates will be heading. The safe est bet is they go up and they go down. Watch for trends in the financial markets to best gauge how mortgage rates are going to move. The trend right now? Lower mortgage rates are on the way. We have two prediction's of prime rate to be lower by 1.25% for 2008. Watch the markets to see if this will be true.

Oil and Gold On The Rise

We are seeing gold and oil rise to new historic levels. This is making alot people concerned about interest rates. Why? If history is any indicator, when these two factors rise, this usually means Canadian mortgage rates will rise as well. This could spell the return of inflation. On the flip side the economy in the US has unemployment rising which is calling for lower prime rate down south. These are some very interesting times in the Canadian mortgage market.

Canadian Mortgage Rates

We are seeing the credit crunch take a even worse turn for the consumer. I have talked a lot on my blog about the spread between the bond rate and the best discounted mortgage rate that is available to consumers. Today, the spread is one of the highest I have seen since covering this. The spread is currently over 2.00% in favor of the banks. This means Canadian mortgage rates are going to remain higher in the short term for consumers.

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.