Dreyer Group Mortgage Brokers

604-688-6002

101 Series- 4 Strategies to Deal with today’s Uncertain Housing Market – Ask a Vancouver Mortgage Broker

Canadian Mortgage News

CMI 101 Series

Dreyer Group 101 Series

First Time Buyers

Home Buying 101

Home Insurance

Latest News

Mortgage Rates

Refinancing

Self Employed

4 Strategies to Deal with today’s Uncertain Housing Market

Vancouver Mortgage BrokerIf you are a bit worried or concerned  how to deal with today’s volatile housing market, here are 4 strategies you can use to help you feel more confident and feel more at ease.

 1. Live in your home for at least 10 years.

Housing forecasters are predicting everything from a softening in the housing market to a sharp decrease in home prices. There are also those who believe that housing prices will just keep rising well into the foreseeable future. Most of these predicators center around what is being forecasted for the both the near term and the medium term.

So, this means that if you are planning to stay in your home for the next 10 years or more than you will have a better chance of seeing the current volatile economic market make a recovery from any declines and you begin to see an improvement which will also have a positive boost of house prices rising once again when things improve.

It might take a bit longer in larger markets like the Vancouver or Toronto housing market, but if you look at the last major recession of the late 1980’s when the housing market did pick up, it took off like the proverbial rocket.

From a market perspective, even if prices do fluctuate and home price increases don’t occur as dramatically as they recently have been doing so, you will still be able to build equity in your house simply by paying down your mortgage over that 10 year time frame

2. Prepay your Mortgage in Lump Sum Payments

Any money which you pay towards your mortgage payment which is above and beyond your regular mortgage payment is immediately applied to paying down your outstanding principal. Over time this will also raise the equity you have in your home and reduce the amount of overall interest you will pay for the remaining portion of the life of the mortgage.

It doesn’t matter if you can’t make a big prepayment as the majority of lenders will allow you to “double-up” your payments. This means that you can add an extra payment in any month that it is financially convenient for you to do so.

There are some lenders who will even allow an extra payment as small as a $100. And, what about your tax refund? If you’re not too sure what to do with it then consider using it as an additional prepayment towards you mortgage.

3. Save for a 20 % Down Payment.

There is no question that this is a tough task for anyone to do. The average Vancouver detached home was valued at $1.116 million dollars in April of this year. This means that a mere 5% down payment would cost you $55,800 dollars while a 20 percent down payment would run you at a whopping $223,200 dollars.

If you did have the ability to save up the 20% down payment then it would be to your advantage because you would automatically have a significant amount of equity built into your home. On the other hand, if you can only manage a 5% down payment, and if prices to drop you could end up owing more than the actual market price of your home.

Additionally, if you can manage to save the 20 percent down payment then you have the added advantage of not having pay for mortgage insurance which is generally added on top of what you have to borrow if your down payment is less than 20%. This would save you additional money on the interest you borrow.

4. Get a 10-year Mortgage.

Although a 10 year mortgage costs more than a 5 year mortgage, the advantage of getting a longer mortgage will give you added long term protection as the international economy continues to crawl out from it current global economic mess. You also won’t have to worry about re-qualifying if lenders become increasingly nervous later on. You’ll be covered for the entire decade which should be adequate enough time for the world economy to stabilize and begin a period of prosperity.

How to Prepare Your Home for Viewing – Consult with Bruce Coleman

Canadian Mortgage News

CMI 101 Series

Dreyer Group 101 Series

First Time Buyers

Home Buying 101

Home Insurance

Latest News

Mortgage Rates

Refinancing

Self Employed

How to Prepare Your Home for Viewing

Vancouver Mortgage BrokerPlanning to sell your Vancouver home?

If you answered yes then these tips should help sell your home more quickly.

First, you want to get a pad and pen and start a checklist of what needs to be done beforehand. Break your home into areas and rooms. Put yourself in the shoes of the buyer and ask yourself what your first impression would be if you were touring your house for the first time.

Selling a home quickly is all in the details.

Fix the Exterior and Put out the Welcome Mat

The first thing anyone is going to see when they step out of the car to view your home is the front yard. Curb appeal creates a first impression and puts the buyer in a mindset even before they step inside your home.

You want to make sure the grass is mowed and raked, and the flower and shrub beds are weeded. Sweep or use the hose on the both the driveway and walkway. Trim away all the dead foliage and add a little colour with some flowers to give the place a more homey appeal.

Get the details right and get the buyer thinking that the people who own this house care about their home’s maintenance.

What Are They Going to Smell and See?

Ask yourself what scent are they going to take in with the first breath when a prospective buyer steps inside. You want clean and not musty or cooking odours. Before you have your first buyer inside, you want to clean so that the house is spic and span clean. You want your home to smell fresh.

If your walls are showing a bit of wear and tear, then think about doing some prep work and a paint job. It might be well worth your while to replace a few faucets if they’re showing their age.

Focus especially on the washrooms and the kitchen as they are 2 key areas that a prospective homebuyer looks at when they’re viewing a home.

Get Rid of the Clutter

A cluttered home looks cramped and detracts from a room’s perspective of having space.  Pack up your bric-a-brac and memorabilia and pack them away. You want to think “show home.” Have a professional shampoo the rug or do it yourself if you’re on a budget.

Tidy up those closets. If they look too cramped them maybe pack away some of your winter and fall clothes.

And, don’t forget to tidy up the garage, basement, and laundry room as well. Make every room look neat and organized.

If you’re not going to be around when the home is being shown then you should also give thought to putting your valuables in a safe location and not accessible to viewers.

When you leave, make sure the place is well aired and put out fresh line, clean dish towels and bath towels.

Get the details just right because they make all the difference in how quick or how slowly you the home will sell. Your realtor will also have a lot of great advice about prepping your home so take note because if you want to sell quickly, it’s always the little things that stand out.

Toronto real estate: Cottage country sales rebound from wet spring

Canadian Mortgage News

First Time Buyers

Home Buying 101

Home Insurance

Latest News

Mortgage Rates

Refinancing

Self Employed

2013 heralded as turnaround point for market that’s been flat since 200

By:  Business Reporter

Vancouver Mortgage BrokerThe impact of a soggy spring continues to be felt across Ontario cottage country, where sales — and prices — in many regions are down slightly from last year.

Yet 2013 is being heralded as a possible turnaround year for the recreational market, which has remained essentially flat since 2007, according to a new report by ReMax.

The rebounding real estate market south of the border, and the arrival — finally — of summer, have led to a surge in both Canadian and international buyers looking for sun or ski properties, says the report released Tuesday.

“The U.S. was on sale for a long, long time, but now that house prices have picked up dramatically over the last six or eight months, and the dollar has softened somewhat, Canadian recreational properties are looking more attractive,” says Gurinder Sandu, executive vice president and regional director of ReMax OntarioAtlantic Canada

Realtors have reported an uptick in the purchases of cottages, second homes and ski-resort properties by both international buyers and out-of-province buyers in Bracebridge/Gravenhurst (mainly Europeans and Asians), Whistler (buyers from Hong Kong and Singapore) and Nova Scotia’s south shore (buyers from the U.K.), notes the report.

Recent blips in the stock markets and concerns that interest rates are starting to creep up are expected to have just a short-term impact on the recreational property market, said Sandu. In fact, because prices are down or unchanged in 77 per cent of the markets examined in the report, and the for-sale inventory is higher than usual, buyers seem to be biting again, he noted.

Recreational sales remain on a par or ahead of last year in 70 per cent of the markets studied, and Ontario realtors say the arrival of summer seems to be making up for some of the time lost to cold weather and flooding in the spring.

“It used to be that January and February were the really busy times, but it’s basically becoming busier over the summer and fall now, and especially the fall the last three or four years,” says realtor Rick LaFerriere, who sells mainly in the Lake Simcoe and Lake Couchiching area north of the GTA.

LaFerriere is seeing a surge in demand from Muskoka cottage owners, and other buyers who’ve grown weary of Highway 400 traffic and are looking for properties closer to Toronto.

“With travel time playing an increasingly important role in the recreational lifestyle, properties in close proximity to the Greater Toronto Area are experiencing a renaissance,” the report says.

Prices are still averaging under $600,000, for the most part. But baby boomers, in particular, have helped push the price of properties on the western shore of Lake Simcoe up to an average $910,000 in the Innisfil area and $680,000 around Oro, it notes.

That’s still about 20 to 25 per cent less than the price of Muskoka real estate, says Sandhu, and means an hour or so less time spent in traffic.

“We’ve seen some interest from international buyers, but baby boomers are still a huge part of the market here,” says LaFerriere.

“Over the last two to three years, we’ve seen a lot of people who are buying the cottage for the family — not so much for themselves, but for their kids and their grandkids.

“They are people who’ve worked hard, maybe too hard, and maybe missed a lot of time with their family and are now bringing them back together. It’s kind of nice to watch.”

 

Enhanced by Zemanta

Should you Lock in your Mortgage? – Contact Bruce Coleman

Canadian Mortgage News

CMI 101 Series

Dreyer Group 101 Series

First Time Buyers

Home Buying 101

Home Insurance

Latest News

Mortgage Rates

Refinancing

Self Employed

Should you Lock in your Mortgage?

Vancouver Mortgage BrokerMany analysts are of the opinion that it wouldn’t be such a bad idea to lock in your mortgage for the next 5 – 10 years.

However, they also suggest that you shouldn’t overlook a variable rate even with today’s somewhat turbulent interest rates. It might sound somewhat risky to do so as some international markets continue to be unpredictable and volatile.

Whenever one country appears to be approaching a critical level, interest rates tend to be lowered, but the question remains whether this trend can be depended upon to continue.

The banking regulators continue to tinker with the mortgage rules especially when it comes to high-down-payment mortgages.

Most savvy borrowers seem to be of the mindset that the trend will eventually come to an end so the question is how can you keep your mortgage cost low and protect yourself against future rate increases.

One approach that you could take is to lock in your mortgage. If you have a variable mortgage you can change it to a fixed-rate mortgage at no cost to you and go with either a 5 year or ten year fixed mortgage. Some lenders have increased their 5 year fixed mortgages by 0.2 of a percentage point just recently.

The reason is that they were reacting to an increase on the 5 year Government of Canada bonds. Bond yields as you know often impact how mortgage rates perform, but the market is still so competitive that lower rates are still to be found. But, it still might not be a bad idea to lock in your rate.

On the other hand, other analysts say there is no immediate rush to do so because the international economy is still somewhat wobbly and it wouldn’t take too much to cause rates to be lowered further. The main area of concern centers on certain economies in Europe. Both Japan’s economic practices and slower growth in China may also be impacted by the sluggish recovery of the U.S. economy.

Another factor which impacts interest rates is the inflation rate. The inflation rate continues to remain low and that also puts the breaks on potential rate increases. However, there is a possibility that the Bank of Canada may be more interested in seeing that the inflation rate rises instead of the reverse.

If the Bank of Canada does adopt an approach of increasing the rate of inflation, this is another argument that some analysts still think that it might be better to lock in your rate now as opposed to later on.

The prime rate is governed by the Bank of Canada and that rate has remained at 1% since September 2010 and is expected to remain so until the later portion of next year. The prime rate isn’t impacted like bond yields which are affected by large institutional investors and the rise and fall of the stock market which affects bonds.

Many see the 5 year bond yield as moving towards more normal levels but they may continue to increase for about another year or so before doing so.

With such volatility in the air, many experts feel you simply can’t go wrong if your lock in your mortgage for either a 5 or ten year period.

Low interest rate party may be ending – Consult with your Vancouver Mortgage Broker

Canadian Mortgage News

CMI 101 Series

Dreyer Group 101 Series

First Time Buyers

Home Buying 101

Home Insurance

Latest News

Mortgage Rates

Refinancing

Self Employed

Watch the bond market and QE moves for early warnings that interest rates will start to rise in Canada.

By:  Building Wealth, Published on Sun Jun 23 2013

Vancouver Mortgage BrokerThe interest rate party for borrowers is almost over. After almost five years of historically low rates, we’ve started to see some upward movement in the cost of money.

Most people watch the central banks for indications that rates are about to take off. But that’s not where the real action is. It takes place in the rarefied world of the bond market where institutional traders like banks and pension plans operate. By the time the Bank of Canada gets around to acting, the bond market will have left it in the dust.

The first warning shot occurred a couple of weeks ago after some governors of the U.S. Federal Reserve Board indicated that the time has come to consider scaling back the quantitative easing (QE) program that is pumping $85 billion a month in new money into the economy.

Professional bond traders took that as a signal that interest rates would start moving higher. Bond prices dropped sharply (as yields rise, prices fall). The rate on 10-year U.S. Treasuries shot through the 2 per cent barrier and kept on climbing. On June 19, they spiked to 2.35 per cent after the Fed confirmed that it plans to begin dialling back QE later this with a view to ending the program by mid-2014.

Stock markets around the globe sold off. Interest-sensitive securities of all types plunged, leaving investors shell-shocked. Besides bonds, defensive stocks such as utilities, REITs, and preferred shares were all hit hard, as were the mutual funds and ETFs that invest in them. I was deluged with emails from worried readers asking what had happened.

I think the stock market sell-off was overdone and that the bond market will rally. But as far as bonds go, it will only be a temporary respite. If the economy continues to improve, interest rates are going to move higher in the next few years, perhaps more quickly than many people expect. The impact will be significant, both for borrowers and investors.

Anyone with a variable rate loan will see carrying costs move higher. Former Bank of Canada Governor Mark Carney repeatedly warned of the danger this would create for households on tight budgets. For every $100,000 in debt, interest costs increase by $1,000 annually with every 1 per cent rise in rates. Currently, most big banks are charging prime plus 1 per cent for a five-year variable rate mortgage. With prime at 3 per cent, that means the cost to you is 4 per cent.

When rates start to move higher, the trend normally continues for a long time — perhaps several years. As recently as the fall of 2007, the prime rate was 6.25 per cent, meaning that a variable rate mortgage would cost 7.25 per cent to carry. That’s an increase of more than 80 per cent in your interest cost.

How high can rates go? Well, in the early 1980s prime actually peaked at 22.75 per cent! That was an era of high inflation and I don’t expect to see anything even close to that again. But it gives you an idea of the risks involved. One solution is to lock in a longer term mortgage now. Another is to keep the variable rate loan but increase the monthly payments. You’ll reduce the principal faster and create a cushion in your budget for when rates rise.

For investors, higher interest rates will mean more downward pressure on the prices of the defensive securities that have performed so well in recent years. That’s because as rates rise, low-risk alternatives like new government bond issues and GICs become increasingly attractive. If you can get 5 per cent from a guaranteed investment certificate that’s covered by deposit insurance, you’re going to expect to receive more from riskier REITs and dividend stocks. For that to happen, they have to increase their payouts or watch the market price decline. For example, RioCan REIT lost 14 per cent of its value between April 30 and June 13. During that period, the yield on the units increased from 4.76 per cent to 5.54 per cent, based on an annual payment of $1.41 per share.

In this case, there are a number of steps you can take to protect your money. The most obvious one is to increase your cash position by selling some vulnerable assets. As rates rise, so will the returns on high interest savings accounts and short term deposits.

Bond fund investors should consider shifting more money into short-term funds and ETFs (maturities of less than five years). They are not immune to losses but the downside is minimal compared to the risk inherent in, say, a 20-year bond. Alternatively, if you own bonds directly (not through a fund) keep it until maturity when you’ll be reimbursed at face value. In that case, you can ignore price fluctuations.

None of this is going to happen overnight. Despite the recent rate shock, this is likely to be a gradual process so you have time to make adjustments. Just don’t make the mistake of assuming the low interest era will last forever. It’s already started to wind down. Take whatever action is necessary before the trend starts to accelerate.

Gordon Pape is editor and publisher of the Internet Wealth Builder newsletter. His website is www.BuildingWealth.ca

Bank of Canada will raise overnight interest rate in July 2014: Bruce Coleman, Vancouver Mortgage Broker

Canadian Mortgage News

CMI 101 Series

Dreyer Group 101 Series

First Time Buyers

Home Buying 101

Home Insurance

Latest News

Mortgage Rates

Refinancing

Self Employed

By: Alexandra Posadzki The Canadian Press, Published on Wed Jun 19 2013

Bruce Coleman Vancouver Mortgage BrokerThe Bank of Canada is likely to start raising its benchmark interest rate in July 2014, a full year before the U.S. Federal Reserve, BMO’s chief economist Douglas Porter said Wednesday.

Porter predicts the overnight rate will go up by half a percentage point, which could put upward pressure on the Canadian dollar until the U.S. raises its interest rates the following summer.

“If the currency gets too strong then the bank will likely stand back and won’t raise interest rates as much as what we’ve predicted,” Porter said following a speech he gave at the Toronto Region Board of Trade on Wednesday.

The strong Canadian dollar has been a major impediment to Ontario’s manufacturing sector, said Porter, combined with weaker demand for goods from the U.S. and fierce competition from China.

“While I think the (manufacturers) that have survived are very competitive, that doesn’t mean that it’s an easy ride from here on out,” said Porter.

“They likely need the combination of either a weaker Canadian dollar or a better U.S. economy to continue to thrive.”

Overall, Porter predicts the global economy is headed for a better year in 2014 on the back of growth in the United States and more stable conditions in Europe.

The U.S. economy will grow at a faster pace than Canada’s for the next few years, said Porter, helped by a comeback in house prices south of the border.

“For a number of years Canada was outpacing the U.S., and now we’re in a situation where there’s just a lot more pent-up demand in the U.S. than there is in Canada,” said Porter.

“Our consumer has tapped out, there’s not a lot of room for domestic spending to grow, and we think that the tables have turned and that’s going to be the story for the next number of years.”

The U.S. growth should help boost the economy north of the border, said Porter, and “put a floor under” commodity prices, but they’re unlikely to reach the peaks they have seen over the past years.

Mortgage rate hikes shouldn’t torpedo the housing market – Bruce Coleman, Vancouver Mortgage Broker

Canadian Mortgage News

CMI 101 Series

Dreyer Group 101 Series

First Time Buyers

Home Buying 101

Home Insurance

Latest News

Mortgage Rates

Refinancing

Self Employed

LARRY MACDONALD- Special to The Globe and Mail

Bruce Coleman Vancouver Mortgage BrokerMany housing bears think that the recent increase in mortgage rates is the beginning of the end for the Canadian housing market. I’m not convinced; here are some reasons why.

Fixed-mortgage rates have gone up because they are tied to bond yields, which have been rising lately. That’s because investors are selling bonds and other defensive holdings on signs the North American economy is gaining momentum. In such an environment, they would rather have more of their portfolios in cyclical and growth investments.

What’s also to be expected as the economy gathers steam is growth in employment and household incomes. Importantly for housing, this will serve as an offset to the drag of rising interest rates.

Fears about tumbling house prices at the national level thus seem overblown at this stage. In fact, a recent empirical study found that the majority of increases between 1980 and mid-2010 did not undermine house prices.

Furthermore, variable-rate mortgages, which are linked to the Bank of Canada’s lending rate, won’t be increased until late 2014 according to Bay Street forecasts and futures markets. This should help keep housing affordable while employment and income move into a more supportive position.

Actually, mortgage rates hikes are initially positive for the housing market. They encourage prospective buyers to get off the fence and buy a home in hopes of avoiding further increases.

But it’s premature to say an uptrend in fixed-mortgage rates has started. Usually more than one or two upticks are required. And whether or not we get many more jumps in bond yields is debatable. For one thing, the Federal Reserve will be working hard to head off such increases (or rein them back in) through announcements and actions that allay bondholder jitters over too-rapid an uptake in economic activity. The U.S. Federal Reserve has already started the process by jawboning about its plans to taper off monetary stimulus.

Even if an uptrend were to emerge, Canada has a greater capacity to absorb increases than the U.S. had in 2007. Close to three-quarters of Canadian homeowners now have fixed-rate mortgages, so rate increases feed slowly into the market since only a portion come due each year. In 2007, about 75 per cent of U.S. mortgages had variable rates and the Fed was aggressively driving them up.

Larry MacDonald is a retired economist who manages his own portfolio and writes on investing topics.

He tweets at @Larry_MacDonald

 

2013 housing sales off to better start than expected – Bruce Coleman, Vancouver Mortgage Broker

Canadian Mortgage News

CMI 101 Series

Dreyer Group 101 Series

First Time Buyers

Home Buying 101

Home Insurance

Latest News

Mortgage Rates

Refinancing

Self Employed

Canadian Press | 13/06/17 |

Sorry to inform you, but ‘The Great Real Estate Crash of 2011…no…2012…no…2013′ has been postponed

First Time Home BuyerOTTAWA — The number of Canadian homes sold so far this year is slightly higher than projected and it looks as if 2014 will show a rebound, according to a new forecast by the Canadian real estate industry’s main association.

The Canadian Real Estate Association said Monday it still expects fewer sales this year than in 2012 but says the decline will be smaller than what was predicted in March. It also projected that next year will show more sales than in 2013 or 2012.

“Until recently, it seemed that the only debate on Canada’s housing market was whether the landing was going to be of the soft or rough variety. Well, it appears that housing may not be so keen on landing at all at this point,” said BMO Capital Markets chief economist Douglas Porter.

“Sorry to inform you, but “The Great Real Estate Crash of 2011…no…2012…no…2013” has been postponed until 2014, or until further notice. More seriously, we believe housing remains on track for a fabled soft landing.”

CREA is now estimating 443,400 units will be sold in 2013, a decline of 2.5% from 454,573 in 2012. It had previously projected a decline of 2.9% from 2012.

CREA says the sales activity began to pick up at the end of the first quarter and accelerated in the second quarter.

The association also says 2014 will see a strong rebound, with 464,300 units of housing sold — about 9,700 more than last year.

The number of transactions dropped off in the second half of 2012 after new mortgage rules for lenders and buyers were introduced by the federal government last summer.

CREA reported there were 51,764 residential properties of all types sold across Canada last month, down 2.6% from May 2012.

On a month-to-month basis, May showed a 3.6% increase from April with 37,792 units and 36,473 units sold on a seasonally adjusted basis in the first two months of the second quarter.

The association’s home price index was up 2.3% in May, compared with a year earlier. That was slightly better than April’s HPI of 2.2% but still near two-year lows.

The May national average price, for all types of property in major markets across Canada, was $388,910 — up 3.7% from a year earlier. Almost all of the local markets that make up the average saw year-to-year increases.

The case for locking in your mortgage – Bruce Coleman, Vancouver Mortgage Broker

Canadian Mortgage News

CMI 101 Series

Dreyer Group 101 Series

First Time Buyers

Home Buying 101

Home Insurance

Latest News

Mortgage Rates

Refinancing

Self Employed

ROB CARRICK – The Globe and Mail

Bruce Coleman

A variable-rate mortgage entails a vulnerability to possible short-term rate increases by the Bank of Canada.
(RAFAL GERSZAK FOR THE GLOBE AND MAIL)

You can’t go wrong if you respond to this week’s mortgage rate increases by locking in for five or 10 years.

But at least consider the alternative: Variable-rate mortgages sound risky in today’s volatile interest rate environment, but they’re actually a quiet corner of the mortgage world right now.

We’ve had several rising-rate episodes in the past few years, but they’ve invariably fizzled. In each case, one of the many global economic trouble spots has gone critical and caused rates to retreat. Will this latest rate spike unwind itself, too? Can our low-rate utopia last indefinitely?

Smart borrowers today work on the assumption that the answer is no. The question, then, is how to best keep mortgage costs low today while also protecting against future increases.

Let’s consider the lock-in option, first. That’s where people with variable-rate mortgages convert at no cost into a fixed-rate mortgage, and new home buyers go with a five- or 10-year fixed rate mortgage. It happens to be an excellent time to lock in, even if some banks have boosted their special five-year fixed mortgages rates by 0.2 of a percentage point this week.

The banks were responding to a big runup in the yield on the five-year Government of Canada bond, which sets the trend for five-year mortgages. But thanks to a highly competitive mortgage market, lower rates are still available. Kim Arnold, a broker with Dreyer Group Mortgages in Vancouver, said earlier this week that she was able to get a very competitive five-year rate of 2.89 per cent for clients.

“Rates are phenomenal, even with this latest increase,” she said. “It’s certainly not a bad time to lock in.”

David Larock of Integrated Mortgage Planners in Toronto sees zero urgency for locking in, mainly because of the potential for yet another global economic scare to send rates lower. Europe’s problems with high government debt levels and slow economic growth could do it. So could Japan’s rickety economic fundamentals, worry about weakening growth in China or uncertainty over the sturdiness of the U.S. economic recovery.

Low inflation is another constraint on rate increases, Mr. Larock said. “I think the Bank of Canada is probably more concerned about getting inflation to go up as opposed to going down.”

It’s this line of thinking that leads Mr. Larock to make a case for the variable-rate mortgage, where your rate rises and falls along your lender’s prime rate.

The prime, in turn, is guided by the Bank of Canada’s benchmark overnight rate of 1 per cent, which hasn’t moved since September, 2010, and is expected to remain steady until the latter half of next year.

“The prime rate moves when the Bank of Canada changes their rates, and they’re not going to jump around like the market does in terms of what happens with five-year Government of Canada bonds,” Mr. Larock said. “These bonds are subject to the vagaries of large institutional investors, and to the ebb and flow between the stock market and bonds.”

Another reason to look at variable-rate mortgages is that the discounts have improved recently. Mr. Larock said it’s now possible to get a variable-rate mortgage with a discount of as much as 0.5 of a point off prime in some provinces.

That means a rate of 2.50 per cent, which compares to a range of 2.72 to 3.29 per cent for discounted fixed-rate mortgages over five years, depending on which lender you deal with.

If you go with a variable-rate mortgage, you’re vulnerable to the short-term rate increases the Bank of Canada will eventually start using to keep economic growth under control.

Toronto-Dominion Bank’s economics department expects a half-point rise in the overnight rate in the fourth quarter of next year.

As for five-year fixed rates, they could retreat again in the weeks and months ahead if there’s another global economic scare. But TD chief economist Craig Alexander said the broader trend in the bond market is the start of a move toward more normal levels. Next year, he sees the five-year Canada bond yield at 1.85 per cent, up from 1.60. “I think bond yields are going to grind higher, but 1.85 per cent on a five-year Government of Canada bond is still incredibly low.”

The best strategy for most people today is to lock in quickly to today’s best five- or even 10-year rates (read my case for the 10-year mortgage online at tgam.ca/DqYG). As Ms. Arnold, the Vancouver mortgage broker, put it, “I don’t honestly think anyone can make a mistake by locking in.”

———-

Mortgage Rate Survey

A range of best rates available from banks and through mortgage brokers

Type Best rates available (%)
Variable rate 2.50 to 2.60
One-year 2.39 to 2.59
Two-year 2.49 to 2.69
Three-year 2.49 to 2.69
Four-year 2.69 to 2.89
Five-year 2.72 to 2.89

 

Source: RateHub.ca

What your parents didn’t teach you about money – Bruce Coleman, Vancouver Mortgage Broker

Canadian Mortgage News

CMI 101 Series

Dreyer Group 101 Series

First Time Buyers

Home Buying 101

Home Insurance

Latest News

Mortgage Rates

Refinancing

Self Employed

Let’s face it, Baby Boomers haven’t set the greatest example for those who are just starting out.

By Gail Vaz-Oxlade | Online only

familymoneyAs I crossed the country earlier this year promoting my latest book, Money Rules, I spoke with thousands of university and college students about what it takes to not make the mistakes their parents made. Let’s face it, my generation has done a gawd-awful job of setting an example for the young’uns who are just starting out. Here are some important lessons your parents likely didn’t teach you, at least not in practice:

Don’t spend money you haven’t earned yet. If you let yourself get distracted by new and shiny as your parents have, you’ll end up carrying a whack load of consumer debt just like mommy and daddy. Show you have some self-control. Demonstrate that you know how to prioritize. Live within your means.

Your income and your stuff don’t say jack about you. My generation has bought into the branding tomfoolery like no generation before. If you define yourself by the labels you wear, by the model of the car you drive or the amount of money you make, you’re walking in the wrong footsteps. Let’s face it, a guy who makes $100,000 a year selling stuff people don’t need isn’t a better person than the guy who makes $35,000 helping an autistic child integrate into a classroom and learn to socialize. Your actions define who you are.

How much you make doesn’t matter as much as what you do with your income. Sure, you may not make bundles of money, but if you can live a worthwhile life and make your money do what you need it to do, you’re way smarter than the Ritchie Rich with the flashy lifestyle and debt-rot at the root of his financial foundation. Live a real life and keep track of every penny.

Watch who you choose for your peer group. Once upon a time we measured ourselves against our family, friends and neighbours. (Hey, you can say we shouldn’t measure ourselves against anyone, but that’s just not reality!) My generation decided to measure how we’re doing against the people we see on TV and in magazines.  If there were no décor-porn, we’d all feel a little less like our homes constantly need upgrading. You don’t need granite counter-tops to turn out healthy and delicious meals for the family. Build a life of substance and focus on what’s really important: stability, happiness and a sense of belonging.

SEO Powered By SEOPressor