Fixed versus Variable Penalties
I sat there with tears in my eyes and a lump in my stomach and felt like a complete and utter failure.
My husband and I were parents to a beautiful one year old and we had decided for me to stay home since daycare was going to cost more than 3/4 of my income. We were young and we were in debt.
The value of our house had risen significantly and we wanted to use some equity to pay off our debt and sleep better at night. Everything was fine, we were approved without problem, then the bomb was dropped on us .
.we found out that we would have to pay almost $8000 in penalties to break our mortgage! $8000!!! We didnt have that kind of money! We were doing our best but had not realized how expensive a baby on one income was (oh, how naive we were). How did this happen? Were smart people who read all of the paperwork before we signed it (so we thought).
If wed had a variable rate mortgage, our penalty and administrative fees would have been less than $1000. We chose a five year fixed rate because thats the smart thing to do, interest rates are always changing, and you dont know what the rates are going to look like next year.
Ive since found out that interest rates are not as scary as the news portrays them. The Bank of Canada meets 7 - scheduled in advance -times each year to look at the prime rate. The prime rate has increased by more than 0.25% only ONE time in the last ten years. Were Canadian! We dont like shocks! Slow and steady could be our motto! Thankfully the Bank of Canada likes to be boring, dependable, and stay the course.
I never want anyone to feel like I felt that day. Understanding your options is a top priority for me. I translate industry speak into regular English so that my clients understand ALL of their options and the possible outcomes of their choices. Ill ask you lots of questions to fully understand your needs and meet those needs with a loan from one of the many lenders I deal with.
Straight answers, no surprises, an expert on your side.
Almost no annual growth for national HPI
The national HPI has grown at a below-inflation rate of 0.5% over the last 12 months, the smallest gain since November 2009. Moreover, the fact that monthly gains are reported for May and June does not mean that the market recently turned the corner. These two months typically register the strongest growth rates in a year. Indeed, the two latest rises were among the weakest in history for months of May and June. If seasonally adjusted, the national HPI would been down in both months this year. However, the weakness is not regionally broad-based. The national HPI was dragged down by 12-month home price declines in Western Canada metropolitan areas (Vancouver, Calgary, Edmonton and Winnipeg) and a tiny increase in Victoria. In Central Canada and in the East, home price growth ranges from decent to strong (left chart). This is consistent with the state of home resale markets. For example, the Vancouver market turned favorable to buyers at the end of last year, while the Toronto market remained balanced and Montreal’s market has never been this tight since 2005. That being said, a rebound in home sales recently occurred in Canada which was also felt in the largest Western metropolitan areas. This should help limit home-price deflation in these areas.
The Teranet–National Bank Composite National House Price Index increased 0.8% in June, a second gain in a row after an eight-month string without a rise.
On a monthly basis, the index rose in 8 of the 11 markets covered: Winnipeg (0.1%), Quebec City (0.3%), Montreal (0.8%), Toronto (1.3%), Halifax (1.5%), Hamilton (+1.6%), Victoria (+2.1%) and Ottawa-Gatineau (+2.2%). The index was down in Calgary (-0.1%) and Vancouver (-0.3%), and flat in Edmonton.
From June 2018 to June 2019, the Composite index rose 0.5%, the smallest 12-month gain in ten years. The HPI declined in Vancouver (-4.9%), Calgary (-3.8%), Edmonton (-2.6%) and Winnipeg (-0.4%). It was up in Victoria (0.3%), Quebec City (1.5%), Halifax (2.7%), Toronto (2.8%), Hamilton (4.8%), Montreal (5.4%) and Ottawa-Gatineau (6.3%).
Source: National Bank Financial Markets; Marc Pinsonneault
NORTHERN STAR (FOR NOW...)
In contrast to the US, Canadian growth is accelerating sharply going into the second quarter, following a solid gain in domestic demand to start the year.
Fast, and accelerating, population growth, and remarkably strong employment growth are providing a solid underpinning to consumer spending and the housing market.
Positive export data suggest that the ongoing strength in domestic demand will be buttressed by net exports in the second quarter, and possibly beyond.
Canadian inflation is at the Bank of Canadas target, in sharp contrast to the US, where it has moved away from the Feds objective. This gives the BoC room to keep rates on hold if inflation remains on target.
Downside risks remain important and are all linked to US-centric developments, with worries about US trade policy ongoing despite the pause with China.
Recent Canadian developments stand in sharp contrast to events in much of the rest of the world. Whereas US growth is clearly decelerating, Canadian growth is on an upswing, with recent indicators pointing to a very sharp rebound from a somewhat sluggish start to the year. Canadians appear to be, for the time being, largely insulated from the broader malaise facing the global economy as consumer and business confidence has improved sharply in recent quarters, owing to strong sales and job creation. While there are a number of factors suggesting that the growth rebound observed will persist through 2020, there is a risk that a divergence between Canadian and US outcomes may not last.
Source: Scotiabank Economics