Thursday, August 23, 2012

Rate Update

                                                          SUMMER Rate Update! 

Build Rates
5 Year Fixed              3.99% (9 Months)    4.24% (12 Months)
5 Year Variable          Prime  (9 Months)    Prime  (12 Months)


Still have the 2.99% 5 year fixed rate (insured). Mortgage must close withing 45 days, not available for pre approvals.


3.19% for 120 day rate hold, 5 year term!

2.49%    1 Year Rate
2.59%    2 Year Rate
2.69%    3  Year Rate
3.09%    4  Year Rate
3.69%    7  Year Rate
3.89%   10 Year Rate * this rate is fully portable, and with  full pre payment options!
This is a great rate for those that are looking long term
                                                                for their mortgage options*
                    
                       Still have CASH BACK mortgages as well! Please call for details! 

POSTED is still 5.24% and the Bank of Canada Rate announcement is due Sept 5th, 2012



Friday, August 3, 2012

Why Do Rates Contunue to fall???


Taken from the TMG Mortgage BLOG...

Friday, August 03, 2012


What can we make of the low interest rate environment we are now seeing? Fixed rates are dropping and one lender has dropped its variable rate. Will more lenders follow suit?

When the five-year fixed rate fell to under 3% earlier this year, Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney cautioned consumers and warned lenders to be careful with debt loads. Clearly it didn’t slow the robust housing market – purchases and refinances continued at a pace not seen since 2007.

Then Flaherty announced some changes to the mortgage rules to slow down the pace of rising debts. So what happened? We had a couple of weeks of quiet as the summer was also upon us.

It appears both lenders and investors are not comfortable with a lull. They have been taking advantage of lower bond yields, which accounts for lowered fixed rates. Even the seven and 10-year rates are looking very good. At the time of this writing a seven-year rate can be had for 3.69%. The spread between the posted rate on a five-year mortgage of 5.24% and a government of Canada five-year bond is almost 400 basis points — the highest it’s been since the financial crisis in 2008.

Also, a few monoline lenders – lenders who specialize in mortgage lending only -- are now offering their variable rate under prime --something we have not seen consistently since last Fall. Clearly, these lenders have an appetite for funding right now. It will be interesting to see if this initiates a mini-price war in the variable rate market. But there is always the threat that the government will step in and introduce even tougher rules.

These rates continue to tempt consumers. This may be the best time to consolidate even if it’s only to 80% of the value of your property.  On the other hand, the challenge is the increasing debt loads that a low interest rate environment can create.

Craig Alexander, chief economist at Toronto-Dominion Bank suggested in a recent news article that consumers should not abuse this opportunity by taking on new debt but should take advantage of it.

The Canadian Real Estate Association had previously forecast housing sales in 2012 and 2013 that were roughly on par with the 10-year average for annual activity. The updated forecast now predicts activity slightly above the long term average. The national average price is also forecast to rise modestly in 2013, edging up two per cent to $378,200.

It’s hard to heed the warnings from government when the economy, the job market and the housing market seem to be doing so well.


Fixed Rate Mortgage Accelerator Strategy

From The Mortgage Group Mortgage Blog

Tuesday, July 03, 2012

By Mark Kerzner, President, TMG The Mortgage Group Canada Inc.

When I worked as a lender we saw a lot of Adjustable Rate Mortgages (ARMs) - variable rate transactions. From the early-to-mid-2000s that product seemed to be the mortgage product of choice by the brokers we worked with.

Many brokers devised strategies to demonstrate how the ARM was more advantageous to the homeowner than a standard fixed rate mortgage. The "pitch" ranged from paying less interest, to having lower payments, to aggressive principal reduction, and so on. With the benefit of hindsight, for those consumers who chose variable rate products throughout the last decade, they have, for the most part, come out well ahead.

With fixed interest rates continuing to hover at historical lows (5-year fixed rates are approximately 3.09% to 3.29% at the time of this writing) and the small spread between discounted ARMs and fixed rates right now, consumers are choosing fixed rate mortgages. The main advantage for choosing a fixed rate is that payments and rates do not change over the term of the mortgage. The most popular term is the 5-year fixed, although the 10-year fixed rate is starting to take on some momentum of its own.

A couple of years ago the Government of Canada began changing mortgage qualification criteria. One change was to use a benchmark interest rate to qualify buyers for ARMs and for fixed terms less than five years. The benchmark rate is tied closely to the bank’s posted 5-year rate, which is currently 5.24%.

The reason for this change is that ARMs and shorter term mortgages are vulnerable to higher interest rates when the mortgage renews. By building in a buffer, in this case making sure clients qualify at the higher benchmark, then at renewal, if the interest rates have increased, there is less payment shock. It also ensures that mortgage holders would be able to afford higher payments. That interest rate buffer now sits at more than 2% for clients taking out ARMS for terms less than 5 years. That means if you choose to take one of those products you have to be able to make payments on them if rates were to rise by 2%.

Once a client has decided to take a fixed term mortgage as opposed to an ARM then the next question is what term to take. Generally speaking, the longer the term you choose, the higher the interest rate. The rate for a longer fixed term may be higher but it also offers greater security against a  future rise in interest rates. My advice to all mortgage consumers today would be to set your payments as if you took the 10- year term whether or not you select that product.

If selecting a fixed rate product is similar to purchasing interest rate insurance, then purchase the insurance that is likely to pay you back in the end. If the amount of “insurance” you pay during a term results in a lower principal balance at the end of the term than that is like being paid back at the expiry of your mortgage term.

Here is an example:

Let’s take a conventional 5-year mortgage, which is under 80% loan-to-value, which also means there are no additional mortgage insurance premiums. Let’s assume a mortgage amount of $250,000 amortized over 25 years. Payments are monthly, compounded semi-annually. The seven and 10-year terms illustrated below are examples if you were to set your payments on your 5 year fixed term at the corresponding rates of each of the 7 and 10 year terms. The Total Payments and Balances at Maturity are the amounts at the end of five years.


Term        Rate        Monthly P&I       Total Payments         Balance at Maturity
5-year        3.29         $1,220.63          $73,237.80               $214,863.60
7-year        3.69         $1,273.38          $76,402.80               $211,430.47
10-year      3.89         $1,300.19          $78,011.40               $209,685.57

As illustrated above you are paying more over the life of the term but you are also accelerating the principal repayment by an even greater amount.  More aggressive strategies would have you setting your payments at the benchmark rate, which is the rate that the government is suggesting all consumers should be qualified at. If you choose, and can afford this option, you will benefit by aggressively paying down your principal during the current term. That will create numerous options for you down the road including;

1. Greatly reducing the amount of interest you pay over the life of your loan.
2. Significantly reducing the number of years it will take to repay your mortgage in full.
3. Providing you with options at (term) maturity. For example, you may decide to change the amortization to free up cash flow.

There is also another way to get the benefits without burdening your cash flow-- simply choose the accelerated bi-weekly payment options. This means you are making set payments every two weeks, which comes out to 26 payments a year.

If cash flow permits, consider combining the 10-year payment option with accelerated bi-weekly payments for added savings and balance reduction.

These options do require necessary cash flow and in many cases money may be tight right now. The beauty of a fixed rate mortgage option is that you can start this strategy at any point. If times are tight right now you can start in a year or two.

There are so many options to consider when dealing with mortgage products and there is an option that fits your individual need and situation. Talk it over with your mortgage broker.

The rate vs compensation chat: link..MCAP Chops 1- and 2-year Comp

So this link below is interesting, as well as the 1st comment. However as my clients know I do put them first, and not just stating it as a "...walk on water" comment; I did however love the quotes in the comment section. Back to the point... which is why I would be asking "why they want or prefer a short term mortgage" to see if it is just rate based or if they truly need the rate/mortgage for short term. The RMG Mortgages 2.59% for the 2 year is awesome for short term buyers, with full pre payment options, portability, quick turn around - client is still #1. AND with rates going to go on the rise (as that is what history shows) client takes advantage of the bit longer rate if their "short" term goes a bit longer than expected. Which most times is the case.
MCAP however has an A1 10 year program as well! with full options on it as well, for those that want AAA rates and want the security longer.
Really at the end of the day, a good Mortgage Broker/Agent will ask the right questions to find out what mortgage product is the BEST for the client and advise and educate accordingly. For myself, the way I make my income (and everyone wants/needs to make a living) is on the referrals I get from all my happy clients for a job well done.

Happy Friday Everyone!

Here is the LINK:

MCAP Chops 1- and 2-year Comp



                                  "Everyone working together"