5-year fixed rates up by 10 bps

Some news for the New Year! Over the last few days most mortgage lenders have raised their five-year fixed rates up by 10 bps points and are priced on average at 3.69%. If you're buying a house or renewing a mortgage in the next 4 months ensure you re-lock your mortgage rate hold.

The pricing on variable-rate-mortgages remains the same at prime -.4% to prime -.5%.

Government of Canada benchmark bond yields - 5 year

GRAPH PERIOD: 28 December 2012 - 30 December 2013

Date	Yield
2013-12-30	1.92
2013-12-27	1.96
2013-12-26	NA
2013-12-25	NA
2013-12-24	1.90

What's up for 2014?

I’ve recently heard one of my favourite economists, Benjamin Tal of CIBC World Markets speak about the outlook for the global economy in 2014. How do world affairs affect the housing market? Global events impact people’s inflation expectations. Inflation has a direct impact on the bond market, which is correlated to fixed-rate mortgages. If rates go up, there is less demand for housing as the monthly carrying costs are higher. 

The overall mortgage rates message is relatively boring for 2014: low stable rates. However Benjamin Tal highlighted some interesting bits that are worth sharing:

•  2013 was a year in transition. There is real and sustainable recovery in the U.S. and the Canadian and the U.S. economy are still tied closely together. So as rates remain stable south of the border, they will also remain stable in Canada.

• There will be fewer first-time home buyers in 2014. Young people in Canada are more educated than ever before, but also less financially sound. Those graduating from college or university have higher student debt and lower income as compared to previous generations. The lift in the housing market for those homes appealing to “first-time buyers” will not be the same in the near future.

• Opportunities for real estate investing rest with properties that appeal to a younger demographic who can’t purchase a home, but want to rent a reasonably nice home or condo.

• The demographic trend for those who are 55 or up is easy to follow; investing in this market is a sound decision.

• Facebook and twitter are not driving forces in the economy and should be considered cautiously when long-term investing. However, technological innovations are a key factor in increasing productivity around the world. The U.S. continues to make great strides in this area, while Canada lags behind.

•  The consumer debt Canadians are acquiring through mortgage debt will continue to be a drag in the Canadian economy.

•  The increase in a bank’s prime rate isn’t forecast to move until the first quarter of 2015. This is significant for those who have variable rate mortgages.

It’s critical for those who work in the real estate industry to understand how the global economy affects the housing market. 

Whether you’re a client of a bank or mortgage brokerage, if you’re interested in reviewing your own home purchase or sale and how it will impact you financially please contact me by phone at 519-763-3900 ext. 1001 or via e-mail at lastovic.s@mortgagecentre.com.

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It seems there's just no shaking Canadians' faith in real estate.

It seems there's just no shaking Canadians' faith in real estate. There was more proof of that over the past week.

The latest report from Statistics Canada shows that the rate of household debt to income has topped-out again. It hit nearly 164% for the third quarter of 2013. Most of that is mortgage debt, which rose 1.8% and now stands at $1.13 Trillion.

The Bank of Canada and the Finance Minister continue to call the high level of indebtedness the single biggest domestic threat to the economy, but Canadian consumers don't seem worried. The latest read on consumer confidence by Bloomberg-Nanos shows an increase to 59.3, up from 58.9 a week earlier. Pollster Nik Nanos says most of that is based on a positive view of real estate.

Consumer confidence is getting some support from a forecast by one of Canada's biggest credit union cooperatives. Citing an expanding population and a contracting supply of development land, it expects the price of housing in the country's biggest market, Toronto, to double over the next 25 years. 

 Thanks to our mortgage-lender partners at First National Financial for this analysis today.

It’s No “Charlie Brown” Christmas Tree for The Mortgage Centre

Landon Mitchell, age 6 of Guelph, Ontario has just gotten $250 richer, thanks to the money he’s won through The Mortgage Centre’s Holiday Card Contest. 

“We wanted to do something fun that would engage our clients and their families,” says Christopher Bisson, president of The Mortgage Centre in Guelph. “We held a contest and asked for entries from children to help design our company’s holiday card this year. We’ve mailed nearly 1500 Christmas cards this year with the design by Landon Mitchell.

The design of the Christmas card is one of the purest and simplest images of the holiday, the Christmas tree. The brightly coloured tree was made of colourful dots, which were stamped with Q-tips and paint. The Mitchell family has an artistic flair, with Landon, the artist, commenting, “My older brother won a contest two years ago for his drawing, now I’ve won a drawing contest too!”.

The Mortgage Centre (Guelph) is the region’s top mortgage brokerage house and has been in business since 1999. It’s helped hundreds of families each year with their mortgage-financing needs. Their reputation is built on giving their clients better advice and better mortgage rates to help them save money and achieve their home-ownership goals.

Sometimes I just need to "take a pill"....

This week my Blackberry died and I've had a flutter of anxiety since then. They're sending me a new device, but it's going to take seven to ten business days to get. I don't think that's acceptable, but in the meantime I'm looking at the bright side.

I'm actually now able to live better in the moment, without the worry of missing a phone call or text. Hey, I even have time to write a blog post! So here it goes. I know that mortgages aren't always top of mind (isn't Christmas coming?), but there's some great opportunities to save money on interest.

A few years ago, those clients who chose variable rate mortgages (VRMs) priced at over the prime rate, should consider refinancing their mortgage to get a better rate. While we're offering a five year fixed rate mortgage between 3.39% to 3.69% (depending on the features you want), the variable rates are attractive at prime -.4% to prime -.6%. The prime rate's at 3%, which means you could get a VRM at 2.6%. Variable rate mortgage also can have significantly lower penalties, with most lenders only charging three months interest, which can easily be wrapped into the mortgage.

For example if you have a $250,000 mortgage the interest savings per year by making this change is $1625 per year, not to mention your mortgage payments will be lower!

If you have a VRM that's at three percent or higher, please give me a call or message me and I can run the figures to help you make an informed choice.