No Change-No Surprise
The Bank of Canada is maintaining the “overnight rate” at its current level. It’s no surprise and conventional wisdom sees short term rates will remain unchanged for some time yet in face of weak Global and Canadian economic growth. Right in step with economic weakness is a pull-back in longer term rates.
There has been slight drop in the Canada Bond yields which has been feeding the Spring mortgage market with some aggressive rates. Interestingly, the Banks are reaping headlines with 5 year rates below 3.0%, while Mortgage Brokers are able to offer their clients rates as low as 2.84% (as at June 4, 2014).
Best Rate Not Always The Best Mortgage
Almost always, when rates are offered at substantial discount to the norm, you should be aware that restrictions and special conditions may apply. That’s where the value of a Mortgage Broker works in your favour.
Not only will a good Mortgage Broker find you the best interest rates in the market, but with knowledge and expertise about available products in the market, he can save you cost over the long term. Mortgage borrowers faced with high penalties, mortgage portability issues, limited pre-payment options, conversion restrictions and lender fees could end up paying a lot more with a “low rate discounted mortgage” than with a flexible mortgage product with a slightly higher rate.
Our advice? Think long term when you make that mortgage decision. Know what you are getting into before you sign.
Rates first…Prime interest rate remains stable and recent Fixed Rate decreases have seen our lowest 5 Year Fixed Rate down to 3.45%. Some “Experts” are now predicting that we could even see further declines in interest rates.
Now with interest rates out of the way, HAVE YOU THOUGHT ABOUT…your involvement in your local cultural activities?
What IS the connection with business and the arts? Our firm has recently become involved with the Kamloops Symphony Orchestra with one of our staff as a member of the Board. We’re slowly acquiring a greater appreciation for the role of Orchestral and Classical Arts in our community. Why? Perhaps the quotes of some interesting people can explain.. Continue reading
Wow, a couple of weeks off for vacation and fixed rates have increased as much as 1/2% by some lenders. Rates though, are still historically low. However, the last few weeks have been a good lesson for all of us as to how fast rates can change. We appear to be in a rate increasing environment and our advice continues to be, “STAY SAFE!”
Here are a few mortgage related news items to peak your interest: Continue reading
Bond yields are continuing to rise globally since the Fed mentioned an imminent exit from its bond purchasing program last week. The US Federal Reserve set off a dramatic spike in US borrowing costs last week after indicating a beginning withdrawal from their quantitative easing program.
This will most likely translate into higher fixed mortgage rates across the board – a continuation of last week’s rate increases. Continue reading
It’s no secret by now that mortgage rates–particularly the 5 year fixed rate terms–have risen in the last week by as much as 20-30 Basis Points (.2% to .3%). While minor in nature compared to historical norms, affordability is being affected.
This rate increase is primarily due to falling bond market prices resulting in increase yields for quality bonds and mortgages. This, together with recent rule changes by government, has had an effect on borrowing ability for most real estate buyers and refinancers. Here are some examples of changes in today’s mortgage market:
- Fixed rates increasing (although variable rate mortgages are slightly decreasing)
- Lenders are tightening criteria for qualification, e.g. if you have a credit line, you may find that you no longer qualify for as much of a mortgage.
- Properties that are not “prime” and readily saleable may present problems for financing.
- Lower Credit Scoring and credit blemishes on a borrower’s record may prevent qualifying
- Self Employed Borrowers are facing more stringent criteria than before
The obvious conclusion is that these and other policy changes will reduce the number of qualified buyers, thus reducing housing demand across the country and eventually softening house prices–clearly our government’s strategy.
Will these trends continue? I can’t find anyone that knows for sure, but my recommendation remains the same. In this market, with regard to acquisition and maintenance of debt….STAY SAFE!