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Chris Simpson
Mortgage Broker
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109 - 3550 Saanich Road, Victoria, British Columbia
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BLOG / NEWS Updates
What is your Best Rate?
Recently I had some good friends of mine ask what the going interest rates are and more
importantly what is the best rate could I get them. Obviously not an uncommon question in my
line of work but this is no longer a quick and easy question. Last year if I wanted to be a little
cheeky (depending on who was asking) Id respond with a question of my own, like whats your
credit score? 9 times out of 10 there would be an awkward pause and blank stare followed by a
does it matter? Yes, yes it does. Once we got through that portion of the conversation Id then
begin talking about the rates. But that was 2016, and now that it is 2017 the rate game has
become a little like the did you see what Trump just tweeted conversation that is making people
yearn for the days of old.
Last October Finance Minister Bill Morneau announced significant changes* to our industry
which included new securitization rules and qualification requirements. These changes forced
lenders to adjust their pricing models to account for the increased costs of doing business and
those costs have been handed down to you the borrower. Prior to that announcement I had a
nice simple rate sheet that told me what every lender was offering. Now my rate sheet could
easily be 5 pages long and it would still be incomplete. Credit scores were once the driving
factor in your interest rate, now Mortgage Brokers should be asking you a laundry list of
questions to determine what mortgage is best suited for you long before they tell you the best
rates.
Here are some questions you need to be prepared to answer before you can start asking about
the interest rate. Is this a purchase or refinance? What is the loan to value percentage? What
term and amortization would you like? What type of property are you wanting to
mortgage? Can you prove your income? Can you stomach the idea of a very large penalty if you
need to break the term? These are just a few of the questions your Mortgage Broker needs to
ask when you to properly evaluate what the best rate for you is.
Do you want to know where you fit into the new world of mortgage rates? Please give me a call
or send me an email and I would be happy to help.
*Industry Changes: Department of Finance and Article from the Globe and Mail
Mortgage Tip: Do you know what is on your credit report? Check your report for free.
Bank of Canada increases policy interest rate by 75 basis points, continues quantitative tightening
The Bank of Canada today increased its target for the overnight rate to 3%, with the Bank Rate at 3% and the deposit rate at 3%. The Bank is also continuing its policy of quantitative tightening.
The global and Canadian economies are evolving broadly in line with the Banks July projection. The effects of COVID-19 outbreaks, ongoing supply disruptions, and the war in Ukraine continue to dampen growth and boost prices.
Global inflation remains high and measures of core inflation are moving up in most countries. In response, central banks around the world continue to tighten monetary policy. Economic activity in the United States has moderated, although the US labour market remains tight. China is facing ongoing challenges from COVID shutdowns. Commodity prices have been volatile: oil, wheat and lumber prices have moderated while natural gas prices have risen.
Prices have come down from their peak in July
From the National Bank of Canada
Declining transactions in the resale market and rising interest rates continue to weigh on property prices, with the Teranet-National Bank Composite House Price Index falling 0.2% from June to July after seasonal adjustments. This is the first monthly decline since the one seen at the beginning of the pandemic in June 2020. Using the unsmoothed seasonally adjusted index, which is more sensitive to market fluctuations, the decline is even more pronounced, with property prices falling 1.4% from June to July. Moreover, price decreases continue to be widespread across the country. In fact, for all 32 markets where the seasonally adjusted unsmoothed index was available in July, 58% experienced a decline during the month, the same proportion as observed in June, but much higher than those recorded since the beginning of the year. You have to go back to May 2020, at the very beginning of the pandemic when uncertainty was at its peak, to find such a large proportion of markets down. While the Bank of Canada has indicated that it will continue to raise its policy rate and that transactions in the real estate market should continue to decline, we anticipate that the composite index should decrease by 10% by the end of 2023.
https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf
