HOMEBUYING Step-by-Step

RBC to the rescue … of brokers?

Mortgage rates: Time to opt for fixed, not variable rate, BMO says!

Are You Financially Ready for a Mortgage?

 Flaherty to bankers: Pull the other one :

The irony that bankers dangling some of the lowest rates in history are also asking Ottawa to tighten mortgage rules hasn’t been lost on the Finance minister, now suggesting he’d rather sit pat.
“I find it a bit off that some of the bank executives are taking the position that the Minister of Finance or the government somehow should tell them how to run their business,” Jim Flaherty told reporters just outside Ottawa Thursday. “It’s their market. It’s not my market.
“They decide what they want to charge in interest rates.” Continue
http://www.mortgagebrokernews.ca/news/breaking-news/flaherty-to-bankers-pull-the-other-one/123573/

Is a 2.99% mortgage too good to be true?
January 17, 2012 By Madhavi Acharya-Tom Yew

Bank of Montreal made headlines with the 2.99 per cent five-year mortgage it unveiled last week.

Most of the other big banks have followed suit, but before signing on the dotted line you should read the fine print. These mortgages have  restrictions that you won’t find on other products.

“It’s the lowest rate available but I would only recommend it to people who are very sure of their circumstances for the next five years,” said Kerri-Lynn McAllister of RateHub.ca, a Web site that compares mortgage rates.   “You may want to look at a slightly higher rate that offers all the flexibility of a standard mortgage.” Read More.Follow Link: http://www.moneyville.ca/blog/post/1117336–is-a-2-99-mortgage-too-good-to-be-true

Market Commentary

As expected, the Bank of Canada held its overnight rate steady at 1%, citing an uncertain global economic backdrop an expectations that recent growth in the US will moderate in the months ahead. Should the economic picture deteriorate further, the Bank of Canada has the flexibility to decrease its overnight rate, and in fact, markets are actually assigning a very high probability of a 25bp cut in the overnight rate at some point in 2012.Notwithstanding the downward pressures on short rates, the bond market has sold off a bit this morning at the five and ten year maturities, taking yields higher. Stronger than expected Chinese GDP growth for 2011 (8.9% vs. 8.7% exp.) and a good reading in the Empire Manufacturing Index in the US providing the impetus.

Mortgage rules should be stricter
TD chief Ed Clark, the chief executive officer of Toronto-Dominion BankMr. Clark believes cutting the maximum length on federally insured mortgages to 25 years, from 30 years, would be a good step to slow rising household debt, which hit a new record this week, surpassing that of the United States and Britain.

“If you thought the Canadian economy was strong enough to take another adjustment, then we would say take the 30 [year amortization limit] down to 25 and get this back to where it originally was,” Mr. Clark told The Globe and Mail.

Mortgage Professionals respond!

Geoff Charkow • Ed Clark’s advice is designed to pad profits for TD…plain and simple. Pay off your lowest interest rate debt…by the way, which has the smallest margins, and then maybe tackle the high interest loans, LOC’s, credit cards. Oh and the HELOC’s which are on the “never, never” payment plan. Peter makes some good points above, but that ain’t going to happen as the “war on the mortgage” is way to easy.
Peter Edwards-It is not mortgage debt that is the problem, it is the non-secured consumer debt. But the large financial institutions will not permit restrictions on this lending as it is so profitable for them. Would you want a 21% revenue maker reduced to 3 or 4%? If the federal government wants to get consumer debt under control then there are a number of steps they can follow:
1) permit refinances of mortgages back to the 90% level
2) increase the amortizations back to 35 years
3) limit credit card companies in that they cannot issue a new card if the customer’s limits on their non-secured consumer debt as per their credit bureau comprises more than say, 25% of their annual gross salary. This would require some adjudication on the part of the credit card companies and some managing of an individual’s personal credit by the individual.

ING now has the in-fa-mous collateral mortgage – like TD and RBC.

Recently another one of Canada’s major lenders has announced that they will begin putting a collateral charge on their new mortgages. This comes ahead of their impending Home Equity Line of Credit Option that ING has been talking about for over a year.

ING will join TD Canada Trust as the two Canadian Lenders who will be operating their mortgage business with collateral charges. However, there is one glaring difference between TD and ING. TD currently offers their clients the option to NOT take the collateral charge (but the client has to request to NOT have a collateral charge). ING clients will NOT have any option. They must have a collateral charge on their new ING mortgage. What does this mean to the consumer?Starting December 9th all newly registered ING mortgages come with a collateral charge. A collateral charge allows a customer to ask for more money via a Line of Credit without having to spend money on legal fees (typically $800-$1000) on a refinance. This is a benefit to those who want that ability to do so despite the fact it goes against the “Un-mortgage” slogan that ING uses to sell clients on paying their mortgage quicker.

The draw back for consumers is that they will lose their negotiating power. When their mortgage comes up for renewal they will have to PAY legal fees on a refinance to leave ING. If a client chooses to not pay those fees, they will be at ING’s mercy and have to accept whatever rate is being offered at that time no matter how high it is. The other draw back for consumers is that there is a charge put on the clients property for 100% of the value of the property. That means if a client decides they need secondary financing applied to their property then they would HAVE to go to ING and pay the going rate for their Home Equity Line of Credit OR pay legal fees to refinance their entire mortgage (which also means paying a penalty to leave the current mortgage contract prior to renewal).

ING (along with TD) appear to be hedging future profits on the fact that most Canadians simply sign their renewal form and send it in without shopping around for the best rate possible.If you have any questions about collateral mortgages or any other mortgage options remember to always consult a Mortgage Agent for professional advise.
Posted by John Greenlee www.durhammortgage.com/jgreenlee

 

 

Bank of Canada – Flat economy makes interest rate increases less likely.

The Bank of Canada is no longer as worried about inflation Until the global economy is on a more solid track, the Bank of Canada is being very patient in raising rates. It hinted at rate hikes for July and September, neither of which materialized. Now the Bank is no longer as worried that low interest rates will trigger inflation, and therefore the need to withdraw monetary stimulus
has diminished.

Why CIBC is being sued over mortgage penalties

October 13, 2011 By Ellen Roseman 16 Comment(s)   CIBC is being sued in a class action suit over mortgage penalty fees. Tony Bock/ Toronto Star

I don’t like the unfair way that prepayment penalties are calculated for borrowers who break a closed mortgage. Lenders don’t follow a standard formula, nor do they make full disclosure in their contracts….Continue!

VARIABLE RATE MORTGAGES:

Now is not the time to consider a variable rate mortgage. Don’t get me wrong I like Variable Rate mortgages but in my opinion they have to come with a good discount. The Bank of Canada rate is 3%, with a discount of say -60 you start paying 2.4% and if prime moves up you’re still safely below the fixed rates. Today there is no discounting which means you pay 3.% with the ability to go higher and fixed rates can be as low as 3.4 so why take the RISK!!

Mortgage Consumers Seek Out and Value Advice From Mortgage Professionals

Over three-quarters of recent buyers noted they received advice on mortgage terms and conditions, as well as whether to take a variable or fixed interest rate. More than 40% also received a recommendation to accelerate their mortgage payments in order to pay off their mortgages sooner.

81% of recent buyers, at some point, relied on a mortgage professional (either a mortgage lender or mortgage broker) for advice and consultation.

 

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