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I save you money by sourcing the best products at the best rates – not only on your first mortgage but through every subsequent renewal. So whether you're buying a home, renewing your mortgage, refinancing, renovating, investing, or consolidating your debts — I’m your personal mortgage consultant who will help you get the right financing, from the right lender, at the right rate.
Please call me today for your best mortgage solution and advice. Phone: 604.802.8193
Rates, Refinancing and Relief - The Effects of COVID19 - UPDATED March 24th
More Rate Increases
HSBC often leads the market on mortgage pricing and today it upped multiple rates:
3yr fixed (high ratio): 1.88% to 1.99% Still the lowest rate in Canada
5yr fixed (switch/purchase): 2.49% to 2.69%
5yr fixed (refis): 2.59% to 2.79%
5yr variable (switch/purchase): 2.49% to 2.74%
5yr variable (refis): 2.59% to 2.84% (P 0.11%)
Evaporating variable-rate discounts are sadly a sign of the times, even at rate leader HSBC.
Extreme application volumes are leaving some applicants waiting over two weeks for mortgage approvals. Generally speaking, the better the mortgage deal, the more applications the lender gets and the longer borrowers must wait.
Rates and Refinacing
This week has been yet another roller coaster of news, that none of us have fully been able to digest let alone fully understand. The COVID19 crisis has rocked the markets and that flight of capital has caused rates to fall. This caused a flurry of inquiries for most brokers regarding refinances to catch those suddenly lower rates. Unfortunately for the borrower who did not react quickly, just as quickly as rates fell, they popped back up again, in some cases above the levels they were at prior to their drop. This has caused much confusion in conversations with our clients. Didnt the Bank of Canada lower the rate twice? well, yes, they did. However, as the banks have watched the COVID19 situation unfold, they have become nervous of liquidity and risk issues. This has driven them to inflate their margins to potentially allow for losses such as defaults.
The net effect is that if you are looking at a purchase or refinance today, you will likely find both fixed and net variable rates at roughly the same levels as they were back in January or February. The big question is, when will these rate increases end. If the 2008 market drop was any indication, we will likely see either rates staying the course or potentially bumping upwards slightly, again depending on the investors perception of risk in government bonds.
Bottom line is the rates are, and have been at historically low levels for a long time now. With the historical rate for a 5 year, fixed rate mortgage around 6%, the current available rates around 3% are a bargain. My advice in such uncertain times would be to take a fixed rate and know what your costs will be for the next 5 years. The discount on variables has evaporated so at this point, the variable option unlikely would give the savings you may have seen in the past and should the BOC raise rates over the course of the typical 5 year term, you may actually be paying a premium. Food for thought.
Id like to leave you with some information many of us have been wondering about, Payment Relief.
Most banks and mortgage companies have now announced, that during what looks like an uncertain period ahead, should you need a break from your monthly mortgage payments, they are willing to assist. The gist of the offer is that with many lenders, you may miss up to six months of payments to offset a loss of income should you be laid off. The mechanics of this is that the lender will allow you to miss those payments and instead, add the interest portion that you would have otherwise paid into the principle amount of your mortgage. This is not free money. The interest portion will be capitalized into the amount you owe so after the six months of missed payments, you will begin to pay it back with a portion of your normal payment, basically extending the amortization of your mortgage by a little over six months from where it sits today. Dont get me wrong, this is a great deal for a borrower if you really need it. If not, it adds to your interest costs and should be avoided. In other words, dont do it just because you can.
If you need to discuss possible payment relief with your mortgage lender, below is a partial list of major Canadian lenders for your convenience. If youd like to discuss potential refinances, equity take-out or other mortgage related issues, I am always available to assist you as well.
Feel free to reach out directly by phone or text to: 604.802.8193 or email me at email@example.com
Stay safe and stay well.
Robert Mogensen Mortgage Consultant
B2B 1 800 263 8349
Connect First 403-736-4000
Chinook Financial 403-934-3358
First Calgary Financial 403-736-4000
First National 1-888-488-0794
Home Trust 1-855-270-3630
Street Capital 1-866-683-8090
Bank of Canada maintains policy rate, continues forward guidance and current pace of quantitative easing
The Bank of Canada on September 8th held its target for the overnight rate at the effective lower bound of percent, with the Bank Rate at percent and the deposit rate at percent. The Bank is maintaining its extraordinary forward guidance on the path for the overnight rate. This is reinforced and supplemented by the Banks quantitative easing (QE) program, which is being maintained at a target pace of $2 billion per week.
The global economic recovery continued through the second quarter, led by strong US growth, and had solid momentum heading into the third quarter. However, supply chain disruptions are restraining activity in some sectors and rising cases of COVID-19 in many regions pose a risk to the strength of the global recovery. Financial conditions remain highly accommodative.
In Canada, GDP contracted by about 1 percent in the second quarter, weaker than anticipated in the Banks July Monetary Policy Report (MPR). This largely reflects a contraction in exports, due in part to supply chain disruptions, especially in the auto sector. Housing market activity pulled back from recent high levels, largely as expected. Consumption, business investment and government spending all contributed positively to growth, with domestic demand growing at more than 3 percent. Employment rebounded through June and July, with hard-to-distance sectors hiring as public health restrictions eased. This is reducing unevenness in the labour market, although considerable slack remains and some groups particularly low-wage workers are still disproportionately affected. The Bank continues to expect the economy to strengthen in the second half of 2021, although the fourth wave of COVID-19 infections and ongoing supply bottlenecks could weigh on the recovery.
CPI inflation remains above 3 percent as expected, boosted by base-year effects, gasoline prices, and pandemic-related supply bottlenecks. These factors pushing up inflation are expected to be transitory, but their persistence and magnitude are uncertain and will be monitored closely. Wage increases have been moderate to date, and medium-term inflation expectations remain well-anchored. Core measures of inflation have risen, but by less than the CPI.
The Governing Council judges that the Canadian economy still has considerable excess capacity, and that the recovery continues to require extraordinary monetary policy support. [The Bank of Canada] remains committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Banks July projection, this happens in the second half of 2022. The Banks QE program continues to reinforce this commitment and keep interest rates low across the yield curve. Decisions regarding future adjustments to the pace of net bond purchases will be guided by Governing Councils ongoing assessment of the strength and durability of the recovery. [The Bank of Canada] will continue to provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation objective.
The next scheduled date for announcing the overnight rate target is October 27, 2021. The next full update of the Banks outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time.
Source: Bank of Canada
Ontario weighs down residential permits nationally
The total value of building permits in Canada decreased 3.9% to $9.9 billion in July. All provinces except British Columbia and Newfoundland and Labrador posted lower values, with the majority of the national decline reported in Alberta (-23.4%). Building permits fell 3.1% in the residential sector and 5.6% in the non-residential sector.
On a constant dollar basis (2012=100), building permits fell 3.8% to $7.0 billion.
Seven provinces reported declines in the residential sector, led by Ontario (-10.5%).
Single-family permits fell 9.6% in July, with two provinces showing growth. Ontario (-9.1%) contributed the most to the decrease.
Construction intentions for multi-family units rose 2.7% in July. British Columbia posted an increase of 55.1%, which was driven by high-valued condo projects in the city of Surrey. In contrast, Ontario reversed strong growth in June (+67.6%) and fell 11.7% in July due to fewer high-valued condo permits reported for the census metropolitan areas (CMA) of Hamilton and Guelph.