Rates are starting to respond to the downward pressure...
One Big 5 Bank did in fact drop their 5 year fixed rates late last week 0.15%. PM me to find out which one.
Will other banksfollow suit? Yes. If you have an approval in place today...will your bank aoutomatically drop the rate on your approval? No!
Does my firm have access to lenders that ALREADY were BEATING the big banks (some by 0.50%) - 100% yes. In most cases we can at least match if not significantly beat bank rates. The last calculation I ran for a client last week on his $465,000 RBC Renewal, we would save him $8600 in interest versus the RBC offer. It pays (BIG) to talk to a mortgage broker outside your bank at renewal time! 60-90 days before renewal is the time to reach out to us.
A Little on Regulations (Behind the Curtain)...
As of Jan 1, 2019 Capital Requirements for the Banks, imposed by Government Regulators, has increased. This cuts into their profits (which they dont like) and so they have been slow to drop rates following the bond market, which they always do.
Prepayment Penalties on Variable Rate Mortgages are precisely regulated to a maximum of 3 months interest. Fixed Fate Mortgages are regulated too, however are based on Interest Rate Differential (IRD), which can cost borrowers the equivalent of 10 months - 20 months - or even 30 months interest!
Its not all about Rate. Equally as important is early term break penalties (AKA Prepayment Penalties). The Big 6 have the HIGHEST breakage penalties of any other Canadian lenders. IRD Penalties (Interest Rate Differential) should be a clear and concise, easy to understand calculation, just like Rates are easy to understand. They are not as the government allows the banks to keep them hidden and difficult to calculate for the lay person, and even for many bankers.
MOST IMPORTANT: In Decreasing Interest Rate Environments - These penalties can be TENS of THOUSANDS of dollars on mortgages $300k-$600k (Fairly common mortgage amounts for most Canadians). Protect yourself and ask the question What if I need to break this 5 year mortgage early - How is my penalty calculated?. Most lenders will shy away from answering this as it can be so convoluted and they really dont know as its based on posted rates at time of payout.
Did you know approx 60% of Canadians break their 5 year term mortgages (sell/move to another property, refinance, marital breakdown, traumatic life event, etc). Truly, when you are trying to negotiate with your bank over 0.05 or 0.10 less on a rate - they often will come down, knowing 6 of 10 will break and the thousand or two they concess on up front interest they will make up by the FIFTEEN to THIRTY THOUSAND prepayment penalty they charge many of their clients (in decreasing rate environments due to their IRD clause).
Working with an independent Licensed Mortgage Broker ensures you get a great Rate and also your other interests are protected. My business is built on Client Relationships NOT Client transactions.
Call, Text orEmail at any time - I am happy to discuss your individual needs andprovide custom mortgage advise.
Canadian home sales activity eases in October
Ottawa, ON, November 15, 2018 Statistics released today by the Canadian Real Estate Association (CREA) show national home sales declined between September and October 2018. Highlights:
National home sales fell 1.6% from September to October.
Actual (not seasonally adjusted) activity was down by 3.7% from one year ago.
The number of newly listed homes eased 1.1% from September to October.
The MLS Home Price Index (HPI) was up 2.3% year-over-year (y-o-y) in October.
The national average sale price slipped by 1.5% y-o-y in October.
Home sales via Canadian MLS Systems edged back by 1.6% in October 2018. While activity is still stronger compared to the first half of 2018, it remains below monthly levels recorded from early 2014 through 2017. (Chart A) Transactions declined in more than half of all local markets, led by Hamilton-Burlington, Montreal and Edmonton. Although activity did improve modestly in many markets, it was offset by a decline in sales elsewhere by a factor of two.
Actual (not seasonally adjusted) activity was down 3.7% compared to October 2017 and in line with the 10-year average for the month. While sales were down y-o-y in slightly more than half of all local markets in October, lower sales in Greater Vancouver and the Fraser Valley more than offset the rise in sales in the Greater Toronto Area (GTA) and Montreal by a wide margin.
This years new mortgage stress-test has lowered how much mortgage home buyers can qualify for across Canada, but its effect on sales has varied somewhat depending on location, housing type and price range, said CREA President Barb Sukkau. All real estate is local. A professional REALTOR is your best source for information and guidance in negotiating a purchase or sale of a home during these changing times, added Sukkau.
National sales activity lost momentum in October, said Gregory Klump, CREAs Chief Economist. In part, this reflects waning activity among some urban centers in Ontarios Greater Golden Horseshoe region and the absence of an offsetting rise in sales in the Lower Mainland of British Columbia. Even so, the balance between sales and listings in these regions points to stable prices or modest gains. By contrast, the balance between sales and listings for housing markets in Alberta, Saskatchewan and Newfoundland indicates a weak pricing environment for homeowners who are looking to sell.
The number of newly listed homes edged down 1.1% between September and October, led by the GTA, Calgary and Victoria. The decline in new supply among these markets more than offset an increase in new supply in Edmonton and Greater Vancouver.
As for the balance between sales and listings, the national sales-to-new listings ratio in October came in at 54.2% close to Septembers reading of 54.4% and its long-term average of 53.4%.
Considering the degree and duration to which market balance readings are above or below their long-term average is the best way of gauging whether local housing market conditions favour buyers or sellers. As a rule of thumb, measures of market balance that are within one standard deviation of their long-term average are generally consistent with balanced market conditions.
Based on a comparison of the sales-to-new listings ratio with the long-term average, about two-thirds of all local markets were in balanced market territory in October 2018.
CHIP Reverse Mortgages Explained...
Here is a great video from Home Equity Bank...
As a certified CHIP mortgage broker I am here to answer your questions and guide your application.