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What To Do With Your Variable Mortgage?
How would you feel if you were paying more interest than you had to? I know the saying, if it sounds too good to be true, it is. Well, we are currently in a rate environment that is making this true. If you are in a variable rate mortgage with more than 1 year remaining in your term (and this has worked for some with less than 1 year remaining), there could be an opportunity to reduce your rate and shave thousands of dollars off your mortgage balance. And thanks to the consumer friendly penalty rules that apply to variable mortgages, I am seeing a lot of benefit to my clientele by taking advantage of this move. Although the Bank of Canada has been increasing their Overnight Lending rate (ultimately increasing the Banks Prime rate as well), we have seen discounts to variable offerings. Lets look at an example: Joe and Susan have an outstanding mortgage balance of $100 000. They purchased their house two years ago and signed into a variable rate at Prime 0.35% (3.60% today). Today, Joe and Susans variable rate offering is Prime 1.00% (2.95% today). By reducing their rate by 0.65%, they will save $641 per year. Had their mortgage balance been $300 000, their savings would be $1923 per year. And if their balance was $500 000, savings would total $3205 per year. Heres that pesky too good to be true part. Any time we break a mortgage, a penalty will be incurred. Good news is, if you are currently in a variable you will be subject to a 3 month interest penalty (the smaller of the penalty options). We do have the option to roll up to $3000 of a penalty into the new mortgage. Even after incorporating the penalty into the new mortgage, my clients are still saving between $3000 - $8500 in interest over the next five years. That doesnt account for long term interest saved due to a lower principle balance. Im sure youre asking; doesnt it make sense to lock into a fixed rate with the BOC hinting at further increases? In some cases, yes. But, by reducing your variable, it will likely take 5-6 more increases before locking into a fixed option wins in the savings column. Of course, I will always look at the lock-in option and provide all the information so you can make an informed and confident decision. Please note, each application differentiates depending on the current lender, mortgage balance and mortgage terms. The above example assumes no restrictive mortgage products and a high ratio, 25 year amortization. When calculating the savings potential, it has been found that the penalty cost offsets any potential savings with a current variable of Prime 0.65% or lower. Consumers with variable rates of Prime -0.65% or lower are still welcome to discuss their current situation to start planning for renewal. Contact me directly for more information or to setup a free consultation. Kindest regards, Mike Shanks Mortgage Advisor 403.613.3635 email@example.com
Who are the working women in Canada's top 1%?
Even though working women are now more educated than working men, they are still outnumbered in top income groups, accounting for one in five workers in the top 1% in 2015. Research shows that characteristics such as education, work experience and occupation continue to leave a substantial portion of the overall gender earnings gap unexplained. Some analysts point to the underrepresentation of women in top earnings groups as a further factor contributing to the overall gap. This study provides the first gender-based analysis of workers in the top 1% in Canadathose employed with a total income of $270,900 or more, based on the 2016 Census of Population, and provides new information on the socio-economic characteristics of women who have broken through the glass ceiling. The results of this study will be updated as new information becomes available. Working women in the top 1% are younger and more educated than their male counterparts Working women in the top 1% in 2015 were relatively younger than their male counterparts, and had higher levels of education. Specifically, 74.2% of women had obtained a bachelors degree or more, compared with 70.0% of their male counterparts. Further, women were more likely than their male counterparts to have studied in fields such as health or related fields, social and behavioural sciences and law. Conversely, women in the top 1% were less likely than men to have studied architecture, engineering and related technologies and business, management and public administration.
Bank of Canada maintains overnight rate target at 1 ¾ per cent
The Bank of Canada today maintained its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 2 per cent and the deposit rate is 1 per cent. The global economic expansion continues to moderate, with growth forecast to slow to 3.4 per cent in 2019 from 3.7 per cent in 2018. In particular, growth in the United States remains solid but is expected to slow to a more sustainable pace through 2019. However, there are increasing signs that the US-China trade conflict is weighing on global demand and commodity prices. Global benchmark prices for oil have been about 25 per cent lower than assumed in the October Monetary Policy Report (MPR). The lower prices primarily reflect sustained increases in US oil supply and, more recently, increased worries about global demand. These worries among market participants have also been reflected in bond and equity markets. The drop in global oil prices has a material impact on the Canadian outlook, resulting in lower terms of trade and national income. As well, transportation constraints and rising production have combined to push up oil inventories in the west and exert even more downward pressure on Canadian benchmark prices. While price differentials have narrowed in recent weeks following announced mandatory production cuts in Alberta, investment in Canadas oil sector is projected to weaken further.