Bank of Canada December Update
As you know, variable rate mortgages, lines of credit and/or student loans are all based on the prime rate and here is an update from me on the recent Bank of Canada announcement on changes to their Overnight Lending Rate which in most cases impacts your Prime rate.At 10:00 am EST, Wednesday December 4th, 2013 the Bank of Canadaagain did what we expected them to do... they continued to maintain their overnight rate.What this means to you is that once again the prime rate on your mortgage, line of creditor student loan willnotchange and remains at 3.00%. This is fabulous news but don't forget to make themostof the low payments you still have, as the ratewill increase in the future. Theholiday season is upon us which often means ourpersonal spendingon gifts and celebrations will potentiallyblow our budgetsas we spend more than we maybe should... let me help you get back on track with a review of your financial situationwhichmight be a savings plan,purchasing anincome property or debtconsolidation topay off high interest loans or credit cards. If you would like to chat about some budgeting and saving strategies - let me know as I would be happy to assist.Here is an excerpt from the announcement from the Bank of Canada and what they had to say about their decision:"The global economy is expanding at a modest rate, as the Bank expected.Although growth in several emerging markets has continued to ease, growth in the US during the 3rd quarter of 2013 was stronger than forcasted.Even if some of this pickup was due to temporary factors, the data is consistent with the Bank's view of gathering momentum in the US economy. In Canada,the housing sector has been stronger than expected but is consistent with updated demographic data and a pulling forward of home purchases in light of favourable financing conditions. The Bank continues to expect a soft landing in the housing market. Non-commodity exports continue to disappoint and the price of oil produced in Canada has eased further.Business investment spending is up from previous low levels, but is still recovering more slowly than anticipated. On balance, the Bank sees no reason to adjust its expectation of a gradual return to full production capacity around the end of 2015"Based on this news and continued slower level of economic activity in Canada, the Bank does not expect to increase their rate in the foreseeable future with any change most likely to occur in late 2014 or even not until 2015! Remember that any increase to the prime rate since 1992 has only been by 0.25% at anyONE time, so you won't see a large significant increase all at once.Fixed rates did go up but then have come back down since. Right now they are sitting at around 3.39% to 3.59% for a five year fixed term.Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now, unless you feel otherwise, I'd recommend that you remain with your current variable rate product as the interest is lower than a fixed term rate right now. However if having a fixed payment is important to you, call me so I can calculate what your new payment would look like and also if it is suitable for you. The next announcement on any change to the prime rate is January 22, 2014.
A good credit report and credit score are important factors in determining whether or not you will be approved for a mortgage. Here are some simple steps you can take to maintain a good credit history, and improve your chances of being approved.
What is a Credit Score
Your credit score is a number that illustrates your financial health at a specific point in time. It also serves as an indicator of your financial past, and how consistently you pay off your bills and debts. This is one of the factors mortgage professionals consider in qualifying you for a mortgage.
How to Check Your Credit Score
To find out your credit score, contact Canadas two credit-reporting agencies: Equifax Canada at www.equifax.ca and TransUnion Canada at www.transunion.ca. For a fee, these agencies will provide you with an online copy of your credit score as well as a credit report a detailed summary of your credit history, employment history and personal financial information on file. You can also obtain a free copy of your credit report by mail. If you find any errors in your report, notify the credit-reporting agency and the organization responsible for the inaccuracy immediately.
If You Do Not Have a Credit Score
Its important to begin building a credit history as early as possible. You can begin to build one by applying for and responsibly using a credit card. Your financial institution or mortgage professional can help.
How to Improve Your Credit Score
Demonstrating your ability to manage credit is key to maintaining a good credit score. There are a number of things you can do to improve your credit score. These include: Always pay your bills in full and on time. If you cannot pay the full amount, try to pay at least the required minimum shown on your monthly statement. Pay off your debts (such as loans, credit cards, lines of credit, etc.) as quickly as possible. Never go over the limit on your credit cards, and try to keep your balances well below the limits. Reduce the number of credit card or loan applications you make. Once your credit score has improved, work with your mortgage professional to obtain a mortgage that works for you.
Find Out More
To find out more about credit scores and reports, visit the Financial Consumer Agency of Canada website and download or request a free copy of their guide, Understanding Your Credit Report and Credit Score. This guide provides practical, straightforward information on how to obtain and understand your credit report and score, as well as how to build and maintain a good credit history.
CMHC’s 2017 Mortgage Consumer Survey
In March 2017, CMHC completed an online survey of 3,002 recent mortgage consumers, all prime household decision-makers who had undertaken a mortgage transaction in the past 12 months. Sixty-five percent had undergone a mortgage renewal, 15% had refinanced their mortgage, and 20% had purchased a home with mortgage financing (11% First-Time Buyers and 9% Repeat Buyers). CMHC has conducted this survey since 1999. It is the largest and most comprehensive survey of its kind in Canada.
The Home Buying Process
Sixty-four percent of First-Time Buyers indicated they were renting before purchasing, and 34% lived with family.
Wanting to buy their first home (37%) and feeling financially ready (31%) were the most important reasons First-Time Buyers gave for purchasing a home in the past year. Low interest rates was the most important reason noted by Repeat Buyers at 33%.
Fifty-three percent of buyers were aware of the latest mortgage qualification changes, and 19% noted that it impacted their purchase decision. For example, 11% of buyers said they increased their down payment, 6% purchased a smaller home, 5% purchased in a dfferent location, and 3% delayed their purchase.
Buyers interact with a wide variety of people, and are most likely to consult a real estate agent (72%), or look to a family member or mortgage lender for advice (both at 57%). Forty-one percent reported interacting with a mortgage broker. Of all interactions, real estate agents were noted as most valuable.
Seventy-one percent of First-Time Buyers accessed savings for their down payment, while 18% received a gift from a family member.
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