January 2019 - Latest Market Update

Bank of Canada Held Its Benchmark Interest Rate

Last week the Bank of Canada held its benchmark interest rate at 1.75% and the expectation is that we should not see many increases in the mortgage rates this year.  Some of the banks have already started to reduce their fixed rates this week.  The New Year has started with plenty of anxiety and predictions about real estate and mortgage lending.  Last year was a challenging period with the rise of interest rates, mortgage lending constraints and the introduction of many new taxes and policies on local real estate.  Our political landscape hasn’t helped drive much confidence either.   As are result Metro Vancouver home sales last year were the lowest annual total in the region since 2000.  This has led to a reduction of mortgage originations and a softening of home prices.  

It has been recently reported that over ¾ of our country’s wealth is represented by real estate.  Although a housing crash is not expected it does have many economists worried about the vulnerability of Canadians economic health.   In Vancouver alone, there has been over $60 billion drop in the net worth of home owners.

2018 seemed to have been the perfect storm against real estate but the prediction for this year is much rosier.  Interest rates are not expected to rise significantly and the inventory levels of homes listed for sale ended the year trending lower.  This should help stabilize prices. The Mortgage environment is starting to improve with new products and relaxing of lending criteria.   Buyers appear to be jumping of the fence and taking advantage of market conditions which for the most part is considered to be ‘balanced’.

Mortgage rates:

• Prime lending rate: 3.95%

• Five year fixed rates range from:  3.59% to 3.79%

• Five year variable rate range from:  3.10% to 3.70%

• Line of credit mortgage:  4.45%

October 25 2018 - Latest Update

Bank of Canada Increased Borrowing Costs Again

On Oct 24th and indicated that more increases are on the horizon.   Lenders immediately increased the prime rate to 3.95%. This is certainly not helping with mortgage qualifications nor housing affordability.   Market conditions have made many borrowers and home owners feel a bit uneasy and it’s warranted given the policies introduced by our Governments over the past few years in their effort to collapse real estate prices.  The latest stats on real estate reports that sales are falling dramatically and inventory levels are rising significantly.  Last month’s sales were 36% below the 10 year September sales average and the total number of properties currently for sale increased 38% compared to the same period last year.  

It is a great time for investors and first time home buyers to consider a purchase.   Many properties for sale across Lower Mainland have reduced prices and have been on the market for an extended period of time.  This positions a buyer to pick up a great deal.   Existing homeowners should review their financial position now before things deteriorate further.   It is a great time to consider refinancing to payout other debts and consider locking into a fixed rate term.   Most mortgage borrowers elect to lock into a 5 year fixed rate; however; other terms can be considered such as a 3 year fixed rate offered at 3.64%.

One of the best ways for variable rate mortgage holders to beat increasing interest rates is to pay their mortgage as if it was a fixed rate mortgage.  This will dramatically cut your interest costs over the mortgage term and its lifetime.  Many lenders are offering variables as low as 3.15%. 

Home owners considering selling their home should ensure they get the right advice and hire the right realtor.  Not all realtors are cut from the same cloth.  In my years as a realtor I’ve experienced many sloppy and reckless business practices.   Hard work, honesty and integrity should be the top criteria when selecting your listing agent.   Want to know more, click here.   

October 2018 - Latest Update

Is Canada on the precipice of a recession?

Some economists believe our Country is at a risk of a household led recession being caused by constrained lending and higher interest rates.   The chief economist at TD Canada Trust expressed her concerns: “Consumers no longer have the capacity to lead Canada through another recession the way they did after the global financial crisis a decade ago.  While Canada’s fastest population growth in decades provides some support to demand for housing, high debt levels remain a problem that could exacerbate the next recession.”

 Economic growth in the US and here at home have been positive and both inflation and lending rates have increased as a result. Mortgage rates have been rising steadily over the past months and many fixed term rates are now pushing towards 4%, a rate not seen in a very long time.  Mortgage borrowers should review their financial position and take advantage of locking into a fixed rate now before it’s too late.   Variable rate mortgages provide the best interest savings, but only if you can handle the risk of higher payments over the next few years.   As rates rise, it becomes even more important to take advantage of your pre-payment privileges.  If you would like to discuss; click here to send me an email. 

Real estate in Lower Mainland is starting to see downward pressure on prices as inventory for all property types have increased and in some areas the rise has been very significant.  This along with a substantial decline in sales will continue to support softening prices.  The Greater Vancouver Real Estate Board says home sales across the region in September plunged more than 40 percent compared with the same month last year.   Affordability becomes further constrained with rising mortgage rates and with tightened lending conditions.   It’s a great time to consider making a purchase.  Although it’s easy to say: ‘buy low and sell high’ it’s hard to execute.  Being a mortgage broker and a realtor allows me to better execute a purchase and can provide a huge benefit to a buyer.   If you would like to discuss: click here to send me an email. 

Rate specials to consider:

• 5 year fixed at 3.64%

• 5 year variable at 2.90%

• Secured Line of Credit:  4.20%

• 2nd mortgage; 8.95%

September Mortgage Promotion

Sale: Second Mortgage

Loan amount available: $25,000 - $250,000

Maximum equity take out:

• Up to 95% for detached homes
• Up to 85% for condos and townhouses

Property types:

• Principal residence
• Rental property
• Multi-unit

Term details:

• 1 year term (renewable)
• Open with $1,000 penalty to payout early
• No upfront lender fee (fee is added to the amount borrowed)
• Monthly interest only payments

August 2018 - Latest Update

Mortgage Lending Solutions

Getting access to cheap money in our current lending environment is not easy and lenders today often look for reasons not to do a deal.  This can be very frustrating and can often lead to lengthy delays and expenses.  With interest rates on the rise, it becomes even more important to consider your options. Below is a quick review of the many ways to borrow the funds you need and save money and time.

Prime rate mortgages:  Banks, Credit Unions and Monolines dominate this category.  All of these lenders can offer different rates at different times and it can often mean a difference of up to 70 basis points in the rate.  This can make a huge difference in the cost of interest.  Many of these lenders sell the benefits of their products, but at the end of the day, it money in your pocket that matters.  Banks will never tell you about another lender’s rates; unless it’s worse than theirs, but mortgage brokers will do so.  Prime rate mortgage have also become more complicated with the new lending rules.  An insured mortgage, high ratio mortgage and conventional mortgages are all offered at different rates.  It’s hard to believe, but someone buying a home with 10% down payment can secure a better rate than someone putting 35% down.   

Line of credit mortgages:  Currently the prime lending rate charged by most lenders is 3.70%.  Your mortgage line of credit rate is set based on the prime rate and many clients are being charged as high at 4.70% (Prime plus 1%).  Lines of credits can offer lots of great benefits, but when you compare this to a variable rate which is being offered as low as 2.70% and the rate savings is very obvious.  

Alternative mortgages:  These mortgages normally fall into two categories of Subprime and Private financing. 

• Subprime mortgages are offered by lenders other than the banks and credit unions.  They usually require significant paperwork; have a rate much higher than prime lenders and fees are normally applied. They can be slow and tedious to complete. They are usually a good solution for borrowers with tainted credit history or business for self-clients requiring flexible income verification.    
• Private financing can be done with minimal questions and paperwork. You can obtain a commitment within 24 hours and are quick to complete.  Rates are higher than the subprime deals, but not much greater.  In some cases you can access up to 95% of the properties equity. 

Rate update:  The Bank of Canada will announce rates again on Sept 5th and they are expected to increase rates.  Customers should now consider locking into a fixed rate.  

• Variable rate (uninsured): 3.20%
• Variable rate (insured): 2.70%
• 5 year fixed rate (uninsured): 3.64%
•  5 year fixed rate (insured): 3.34%