News from your BC Mortgage Broker

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2009-12-30T14:18:00.001-08:00

Our blog has moved!

See us in our new location at http://www.bcdirectmortgages.com/blog/

Article: Ottawa Mulls Tighter Mortgage Rules

2009-12-22T13:40:00.000-08:00

From CBC News Online:

Ottawa is considering new measures to tighten mortgage standards and prevent would-be homebuyers from taking on more debt than they can afford.

Finance Minister Jim Flaherty said in an interview with CTV he's worried about people piling up debt while interest rates are low and then getting into trouble when interest rates rise, as they inevitably must.

As a result, the Conservative government is considering increasing the minimum down payment from five per cent "to a higher figure," he said, and Ottawa may also reduce the amortization period from a maximum of 35 years "to something less."

Twenty-five-year mortgages used to be the norm, until lenders started making 30-, 35- and 40-year mortgages available to stimulate demand. In mid-2008, the Department of Finance moved to trim the maximum paydown period to 35 years and to require a minimum five per cent down payment for new federally insured mortgages.

Even so, 18 per cent of Canadian mortgages are for terms longer than 25 years, and 10 per cent are amortized over 35 or 40 years, a recent Scotiabank report estimated.

The average price of a resale home in Canada hit $337,231 in November, the Canadian Real Estate Association said last week. That's 19 per cent higher than the depressed levels of a year earlier.

Flaherty's comments echo Bank of Canada governor Mark Carney, who last week urged consumers to get their financial houses in order to prepare for when the central bank inevitably raises its key policy rate from its current emergency record low of 0.25 per cent.

Proceed with caution: CIBC

Word that Ottawa might step further into the red-hot real estate market had housing watchers buzzing Monday.

"You could basically shut down 25 per cent of the market," CIBC economist Benjamin Tal told CBC's The Lang and O'Leary Exchange. "It's going to be significant because we're talking about a lot of money that took advantage of those rates."

"What the Bank of Canada and Finance Department are saying is that people are abusing these rates, but they need to be careful not to risk this fragile recovery."

Though he admits more lending caution would be prudent, he advocates Ottawa be wary of anything as drastic as a hard cap of 30-year amortizations, or minimum 10 per cent down payments, for example.

"If you want to do it, do it in a gradual way that you do not kill housing [because] housing is the only thing ticking in this market," he said. "The timing is tricky."

Housing Market to Continue Upswing

2009-11-30T10:05:00.000-08:00

Found this great article from Castanet in Kelowna: http://www.castanet.net/edition/news-story-50512-1-.htm#50512 on November 2, 2009.

The housing market's gradual upswing will continue throughout the fall and into the new year, says Kelowna's Paul Fabri of the Canada Mortgage and Housing Corporation.

“Strong price competition, a good selection of listings and favourable interest rates will help sustain growth in demand for existing homes next year,” says Fabri. “Expect existing home prices to edge back up as demand improves and the supply of listings is drawn down."

Fabri said the biggest improvement will come in the detached home sector, as the existing supply of new homes is sold and new homes will be built. Condo housing starts will be slower, as there is still a large number of new units on the market.

"At the end of September, there were approximately 250 new, built condo units on the market and that doesn't include the units that have yet to be built," says Fabri. "So for the first half of 2010 we won't see a lot of condo construction."

Fabri says new construction will also start in the rental apartment market, as rental prices have come up and land that was originally intended for condominiums may end up for multi-family rental housing instead.

Article "Canada's Remarkable Housing Recovery"

2009-09-29T11:18:00.000-07:00

Here is an article I found on http://www.cbc.ca/ by Tom McFeat (http://www.cbc.ca/money/story/2009/09/17/f-housing-bubble.html):

The signs of economic recovery seem to be everywhere these days. Consumer confidence is up.

The governor of the Bank of Canada has all but declared the recession over, with the latest GDP figures suggest that the economy is growing again. The stock market has surged 50 per cent from its March low. Plenty of "green shoots" and all that.

A stunning recovery in the Canadian housing market also appears to be taking hold if anecdotal evidence and the statistics are to be believed. Sales are up by double digits in most major markets across the country (they've more than doubled in Vancouver). Average selling prices have rebounded from just the start of the year and are now at record levels in most provinces. Bidding wars have returned in Vancouver and Toronto.

That's a remarkable turnaround from the situation just eight months ago, when prices were down year-over-year in the more expensive markets and sales slumped more than a third from the previous year's levels. Many homeowners took their properties off the market to wait out the slump, which led to a dearth of listings and helped to stop the slide in prices.

Most economists see this quick bounce-back as surprising but healthy — further proof that Canada and the Canadian consumer weathered the global recession better than our American cousins. But a few observers remain wary of jumping on the housing bandwagon. They point to other statistics — like the country's rising deficit, rising unemployment, rising personal bankruptcy numbers, rising household debt levels, a hobbled manufacturing sector and mortgage rates that have nowhere to go but up.

They see all this as raw material for a looming drop in housing prices that could leave many recent homebuyers who've put five per cent down "under water" — in other words, owing more on their homes than the homes are worth. In some U.S. markets, more than half the homeowners who have mortgages have negative equity.

Former maverick MP, federal cabinet minister and personal finance author Garth Turner is one observer who's firmly in the "bubble" camp. His real estate blog — entitled "Greater Fool" — has been forecasting something approaching a housing meltdown for a while now.

Last winter, Turner predicted the real estate market would wither in the face of the recession. But it didn't — a fact he attributes to low interest rates that encouraged "massive borrowing by people I thought were already hideously indebted." He also blames the real estate industry for "irresponsibly telling people prices would rise forever and [that] they must buy now while rates were low."

To be sure, most analysts don't see the housing market as being in bubble territory. They argue that homes are much more affordable now than they were during the last major bubble in the late 1980s, when mortgage rates were above 10 per cent. But there's no denying that there's something of a frenzy in some markets these days.

Low rates + confidence = sales

There's widespread agreement that low mortgage rates are spurring the recent buying spree in housing. At the time of writing, a five-year fixed mortgage was available at most major financial institutions at a generational low of 4.19 per cent — even less at a few smaller lenders. That has prompted buyers who had headed to the sidelines late last year to flood back into the market.
Some times, that flood of buyers is directed at some of the same properties. "The max we've seen so far this year is 20 offers one evening on a semi-detached home," Toronto realtor Thomas Cook wrote in his blog in July.

Some observers also credit a couple of measures introduced in February's federal budget aimed at first-time buyers — a $750 tax credit and an extra $5,000 that buyers can take from their RRSPs for a down payment.

But low interest rates are still the biggest factor. Still, Gregory Klump, chief economist at the Canadian Real Estate Association, says mortgage rates alone weren't enough to push people from browsing to buying. People are now more confident their jobs are safe, he told CBC News. "Improved affordability combined with improved economic security — that's resulting in the drastic rebound in sales activity," he says.

The Bank of Canada has pledged to keep its key overnight lending rate at a rock-bottom 0.25 per cent until at least the middle of 2010, as long as inflation doesn't pick up. In the short term, there seems little likelihood of that.

Rate hikes to come eventually

But some economists are warning that the central bank may eventually be hiking rates big time. "The tightening will not likely begin before the third quarter of 2010," according to Sébastien Lavoie, an economist at Laurentian Bank Securities.

"That said, when the time does finally come, timid [quarter percentage point] increases will not be enough to 'normalize' rates," he wrote in early September. "The Bank [of Canada's] exceptionally low current policy rate implies that the tightening cycle will have to be quite aggressive." How aggressive? Lavoie forecasts "a succession of hike announcements" of a half, three-quarters and perhaps even a full percentage point at a time.

Increases that large could, of course, play havoc with the real estate market. Those who stretched to buy through a 35-year amortization could find themselves in big trouble when it comes time to renew if rates spike. Given that a recent survey from the Canadian Payroll Association found that 59 per cent of Canadians are living paycheque to paycheque, the prospect of a sharp jump in mortgage costs would hit some owners very hard.

"People need to be circumspect," CREA's Klump agrees. "They need to run through the scenarios. What if rates jump two per cent?"

Do the math

A quick look at the math shows what could happen if rates do jump substantially. Let's assume someone has bought a house for $320,000 — the average national MLS selling price in August. If they put five cent down, they'd face a mortgage of $304,000 plus mortgage loan insurance of $8,360 for a total financing requirement of $312,360.

With a five-year mortgage rate of 4.19 per cent amortized over 35 years, that yields monthly payments of $1,412 month. Jack the rate up to 8.0 per cent, and the monthly payment jumps more than $700 to $2,189.

Rising prices and rising mortgage rates will make it more difficult to carry that home purchase. "If prices continue to eclipse incomes [as they have for seven years], affordability could become an issue again for first-time buyers, especially when interest rates return to more normal levels beyond 2010," warns BMO economist Sal Guatieri.

A variable rate mortgage is now available for as little as prime plus 10 basis points (2.35 per cent) — a big improvement from the prime plus one per cent that was offered earlier this year. At MonsterMortgage.ca, vice-president Vince Gaetano tells CBC News the majority of clients at his firm are going variable, with about 35 per cent choosing a five-year fixed mortgage.
He notes that most bankers last year were predicting rates would jump — warnings that led many who had been enjoying variable rates as low as 1.45 per cent to lock in for five years at rates above five per cent. Needless to say, he doesn't think much of bank prognostications.
Will recovery stall?

While bidding wars have returned in a few markets, a better balance between supply and demand could be in store as more listings appear. Nationally, average selling prices in August were up 11.3 per cent from the previous year to $324,000. But realtors say that average is skewed upwards by more sales of expensive homes in the more expensive markets (for instance, Calgary saw one home sell for $10.3 million in August).

CREA says factoring out changes in sales activity results in a year-over-year weighted price increase of 7.1 per cent. The weighted August figure was actually down 0.8 per cent from July.
In the short term, most observers think the recovery in Canadian housing sales will continue as mortgage rates stay historically low and more listings appear. Longer term, there's more uncertainty. The real estate industry sees national sales rising 5.3 per cent in 2010 and average home prices rising modestly — up 2.1 per cent over 2009. CMHC predicts an average price increase of 1.6 per cent.

Others are more cautious. A recent survey by Royal LePage of more than 1,100 of its agents found only 61 per cent thought the housing market's current strength was sustainable. The biggest reason cited by the doubters was the expectation that mortgage rates will rise.
Real estate watchers are advising borrowers to be careful in the current low mortgage rate environment and add some wiggle room to their affordability calculations. Rates are bound to go up at some point — the only question is when and how fast.

Article Says "Worst of Housing Price Decline Behind Us"

2009-09-08T11:02:00.000-07:00

Here is an interesting article I found online at The Financial Post website at http://www.financialpost.com/story.html?id=1931818 (article by John Morrissy):

The worst is over for North America's beleaguered housing markets, with a steady stream of data out of Canada and the U.S. indicating the recovery is at hand, economists say.

"A similar pattern in both countries is unmistakenly suggesting we've not only bottomed in housing, but we're on the way back up," said TD Bank chief economist Don Drummond.

Canada's already brightening picture was helped along Wednesday by a report showing housing prices in major markets across the country jumped 1.5 per cent in June, building on May's two per cent advance.

The rebound in prices was evident even in most of Canada's hardest hit urban markets, like Toronto and Vancouver, the Teranet-National Bank report showed.

For National Bank senior economist Marc Pinsonneault, that means "the worst of home-price deflation in Canada is behind us," he said Wednesday.

"The improvement is consistent with the huge improvement in market conditions in most of the major cities in Canada," which show sales resales rising sharply - up 18 per cent in July alone - and listings on the decline, Pinsonneault said.

The numbers out of the U.S. are also good, at least relative to bone-jarring declines that marked the subprime meltdown and drove housing prices 31 per cent below their peak in 2006, Drummond said.

On Tuesday, the S&P/Case-Shiller composite index showed home prices in the U.S. also bouncing higher, for the second straight month.

And on Wednesday, the U.S. Commerce Department announced new-homes sales surpassed expectations by increasing 9.6 per cent to 433,000 units in July, the biggest increase in more than four years and the highest level of activity in 10 months.

"The housing market has clearly turned the corner," BMO Capital Markets economist Jennifer Lee said in an interview.

"The items supporting a housing recovery have been working in tandem over the past while, and they are still going strong, like the Energizer bunny."

She credited rapidly declining inventories of unsold homes and the $8,000 U.S. first-time homebuyer tax credit, along with the same things that have helped the Canadian market, like low housing prices, improving consumer confidence and inexpensive mortgages, for the recovery.

Though residential real estate accounts for only five per cent of each country's economies, Drummond said rising home prices boost household wealth and spending power, and carry a psychological boost to a recession-weary consumers beyond their numbers.

Renewed strength in the Canadian market was evident in four of six major markets tracked by the Teranet-National Bank survey. Vancouver posted its first price gain after 11 months of declines, up 1.6 per cent; Montreal posted its fourth straight monthly increase, up 1.2 per cent; Ottawa gained 2.1 per cent; and Toronto recorded its second straight month of gains, up 2.3 per cent.

Halifax and Calgary were the only laggards, each slipping 0.2 per cent. For Calgary, it was the 12th consecutive losing month.

Economists were quick to point out that while the trend has shifted, markets on both sides of the border are way off previous peaks. In the U.S., for instance, about 600,000 new homes are being built annually, compared with the 2.3 million homes at the peak of the cycle.

Current conditions in Canada have created a seller's market, said Pinsonneault, although he expects greater balance to return as higher prices draw more properties onto the market.
Mortgage rates, meanwhile, won't rise over the next 12 month by more than 50 to 75 basis points from today's 5.85 per cent posted rate on fixed five-year mortgages, he said.

One uncertainty is whether the Bank of Canada can hold lending rates steady, as promised, until the middle of next year, economists say.

Variable rate mortgage drops again!!!

2009-09-01T16:32:00.000-07:00

One of our major lenders has just announced a rate reduction to their variable rate mortgage. The rate is now at Prime plus 0.20% which is 2.45% (current Prime lending rate is 2.25%). For those of you who are not wishing to lock in your mortgage just yet, take advantage of our best variable rate product in the financial marketplace.

Some Interesting Statistics from CAAMP

2009-08-06T11:33:00.000-07:00

In April 2009, CAAMP (Canadian Assoc.of Accredited Mortgage Professionals) reported from a recent survey the following:

"- First-time mortgages are most likely to be sourced through a mortgage broker (48%) (compared to Banks at 44%).
- The mortgage broker industry represented 46% of all new mortgages written in Canada last year (compared to 43% through Banks).
- The average mortgage holder has $145,000 in equity in their home.
- Last year, about 15% of mortgages involved an equity take-out (average amount of $42,500).
- Mortgage Brokers are most frequently used in Alberta (36% of mortgage activity), British Columbia (35%), Ontario (32%), and Manitoba (31%)."

If you would like to read the contents of this survey, please visit CAAMP's website at www.caamp.org. Click on "mortgage industry" and under Survey Reports click on "The Canadian Residential Mortgage Market During Challenging Times".

Welcome to Summer in the Okanagan!!!

2009-06-30T10:35:00.000-07:00

What a great day! The sun is shining, birds are singing, and mortgage rates are still a bargain! Yes, we've seen the rates slowly go up these past few weeks but no one would imagine that the lowest rates in history would last forever. The best 5 year fixed rate is now 4.29% which, in my opinion, is not bad at all considering past historic rates. Most lenders are offering a variable rate at Prime plus 0.60% but we have a few lenders offering even lower. One has a variable rate at Prime plus 0.35% for their 4 year term and Prime plus 0.40 for their 5 year term. Most economists are predicting that the Prime rate will go up next year so if those of you who like "peace of mind" then the 5 year fixed rate is a good bet.

Here in the Okanagan we are seeing healthy signs of people wanting to buy and anxious to get pre-approved. A pre-approval is a good idea to not only have a rate hold at these low rates for 120 days, at no cost to you, but also gives you an idea what you can afford before you go out to buy. Please feel free to give me a call anytime at 250-762-2070(local) or 1-888-877-3535(for you out-of-towners)for a quick review of your own situation. There is no cost nor obligation to you for this service. Let my 30+ years of mortgage lending experience go to work for you and find you the best deal!

WOW!! 5 YEAR FIXED RATE AT 3.54%!!!

2009-05-14T13:26:00.000-07:00

That's right! One of our major lenders is offering a fantastic low rate of 3.54% on a 5 year fixed term mortgage. Eligible for both purchases and refinances on owner occupied and income qualified deals only. NO rentals, stated income, pre-approvals, secondary homes and transfers. Call us for more details today!

Mortgage Rates at an All-Time Low!

2009-04-07T14:23:00.001-07:00

The 5 year closed rate for a few lenders is now below 4.00%!!! For those thinking of purchasing, now is a great time, as home prices have also decreased and I’m sure there are some bargains to be found out there!

While no one can predict the very bottom of the market (both for interest rates and for home prices) we do know that mortgage rates today are at an all-time low, so those thinking of purchasing or refinancing are encouraged to do so soon!

Is This the Right Time to Re-Negotiate Your Mortgage?

2009-03-11T16:04:00.000-07:00

Are you currently locked-in with your mortgage?

With today's low interest rates, more and more consumers are questioning whether or not they should consider paying the penalty on their remaining mortgage term and locking-in at a lower rate. Depending on the penalty your bank will charge you on your current mortgage, it may very well be a sound decision to pay the penalty and obtain a better rate.

Most lenders charge the greater of a 3 months interest penalty, or Interest Rate Differential (IRD). The only way to know for sure what the penalty will be, is to contact your current lender directly and request this information. This is the first step in determining if it is a good idea to re-negotiate. The second step is simply to give us a call. We will calculate new mortgage scenarios for you (ie - fixed rate versus variable rate) in order to assist you with which option works best for you.

Whichever term or option you choose, we will discuss with you what your savings will be, and help you make the right decision. This is a free service we offer - there is no obligation to you!

What's in Store for 2009?

2009-01-14T13:54:00.000-08:00

This is a recent article found in the Jan./Feb. 2009 Mortgage Journal magazine where the Senior Economist-CIBC World Markets Inc., Benjamin Tal, had this to say about the current housing market in Canada:

"House prices in Canada will continue to ease in the coming months. But the triggers that led to a freefall in Canadian real estate markets in the early 1990's and today in U.S. markets don't exist. Recently, the Canadian real estate market moved from a confident seller's market to a more muted balanced market, and by early '09, will turn, for the first time since 1995, to a buyer's market. When measured against income, the Canadian real estate market has overshot, but just a five to seven percent drop in prices from peak levels should bring equilibrium back, which is a fraction of the twenty-five percent overshooting seen in the U.S. by mid 2006.
At it's core, the U.S. meltdown is a subprime story. Eliminate subprime from the U.S. housing market, and instead of the most severe house price meltdown since the Great Depression, you get a trivial moderate cyclical slowing--something along the lines of what we are currently experiencing in Canada."

A Good Start to a New Year with Lower 5 Year Fixed Rate!!!

2009-01-14T11:05:00.000-08:00

We just received confirmation from one of our many lenders for a special reduced 5 year mortgage rate. Here are the details:

" Effective Wednesday, January 14, 2009 Special 5 year fixed mortgage rate special of 4.49% This offer is not open to pre-approvals. **Only available for NEW business involving a purchase or refinance (no transfer/switch deals). Available on single and multi-tiered mortgages. The maximum rate hold for a new purchase is 90 days. The maximum rate hold for refinance is 60 days. Income must be confirmed (no waiving of income). Minimum Beacon score 680. Maximum GDS/TDS is 32/42. "

Give us a call today toll free at 1-888-877-3535 and get yourself approved at a great rate!

CAAMP: Canadians Confront Housing Market with Caution and Confidence

2008-11-20T09:38:00.000-08:00

The following is the press release from the Canadian Association of Accredited Mortgage Professionals annual Fall report on consumer perceptions and choices.

November 18, 2008 (Toronto, ON) - Residential mortgage consumers remain remarkably positive as they weather the financial storm, according to a report released today by the Canadian Association of Accredited Mortgage Professionals (CAAMP). Attitudes towards local conditions have shifted only slightly with 38 per cent of Canadians believing now is a good time to purchase and 32 per cent believing it is a bad time. Mortgage arrears remain low and steady at .28 per cent and an overwhelming 84 per cent of home owners are satisfied with their mortgages. The information was gathered by Maritz from an online survey of over 2,000 Canadians in mid-October and analyzed in conjunction with CAAMP Chief Economist Will Dunning.

Canadians do expect housing prices to fall: 35 per cent, more than twice as many as last fall, now believe prices will drop; half of those surveyed gave a neutral answer while the number who thought prices would go up fell from 40 per cent to 20 per cent. Westerners, who have endured particularly hot housing markets, are most negative, and in British Columbia, 48 per cent of those surveyed said they expect prices to fall, far above the national average. “As we confront these challenging times, borrowers foresee changes in their local housing markets, yet remain confident in a stable Canadian mortgage system,” said Jim Murphy, AMP, President and CEO of CAAMP. “CAAMP anticipates mortgage credit growth to slow, but remain relatively strong, surpassing the $1 trillion mark by 2010.”

Despite the traumatic American mortgage fall out, Canada has managed to steer clear of deflated markets. The Canadian system is supported by low and steady interest rates, better underwriting processes, different products and normal re-sale activity levels. “Canada is a financially conservative country where consumers are able to meet the terms of their mortgages and buying decisions are based on affordability,” said Dunning. “This contributes to a solid real estate market that will not experience the same drop off we see south of the border.”

Housing equity positions are strong in Canada with a growing trend of re-financing mortgages. About one in five borrowers took out an increasing amount of cash from their mortgages, with the average draw rising 20 per cent to $41,000 compared to last year. Fifty-six per cent of respondents said they used this money, which totals $18.5 billion nationwide, for debt consolidation and repayment; 30 per cent of these funds went towards home repair and renovation.

New home buyers took advantage of alternative mortgage products - half of new mortgages taken out in the last year were for amortizations longer than the traditional 25 years, an increase of 13 per cent. Longer term amortizations now account for 16 per cent of all outstanding mortgages and six per cent are 40-year terms. The federal government has now introduced stricter regulations on insured mortgages. CAAMP’s survey found Canadians had low awareness of the new regulations; however once explained, 60 per cent supported the changes.

The “Annual State of the Residential Mortgage Market in Canada” report contains a wealth of additional industry data, including regional breakdowns of survey responses, where Canadians obtain their mortgages, the role of job creation in fuelling Canada’s housing market, and additional insight into housing forecasts in Canada and the United States. For a full copy of the report, please visit: www.caamp.org.

Optimum Mortgage: What's Happened to Alternative Lending?

2008-11-17T09:35:00.001-08:00

Here is an interesting article we received on November 13, 2008 from Optimum Mortgage (a division of Canadian Western Bank). It is an interview with manager Les Shore, and explains the current market conditions for alternative lending.

What's Happening with Alternative Lending?
As world capital markets struggle to absorb the impact of the sub-prime fiasco from the United States, borrowing costs remain high, which in turn negatively impacts rates for fixed term mortgages for all borrowers. How has this affected the world of Alternative Lending? How has this affected those borrowers who still need the assistance of an Alternative Lender? (e.g., small business owners with good credit history but who do not necessarily meet "A" lender income criteria, and/or borrowers with less-than-ideal credit ratings). Lester Shore has been at the hub of Alternative Lending since Optimum Mortgage first entered the Alternative Lending marketplace in 2004.

Q: What is the current state of 'Alternative Lending'?
A: "In today's markets, the business funding model where Alternative Lenders could advance these mortgages and easily bundle-and-sell them to other investors has ultimately proven unsustainable. As such, many Alternative Lenders have quietly exited the marketplace. However, the demand for this type of lending has not disappeared. In contrast to media headlines of late, many individuals and small businesses in Canada have continued to prosper through this market turmoil."

Q: Is Alternative Lending still available?
A: "Yes, however, borrowers and brokers will see higher mortgage pricing through the foreseeable future, which reflects the significant increase in deposit costs currently faced by all financial institutions. Alternative Lenders that remain in the marketplace have also become more cautious with regard to their underwriting criteria. Real estate values have moved steadily higher across the country over the past several years, and we are now seeing the impact of moderated residential sales activity. Lenders are reducing their maximum loan-to-value on new advances to reflect more "normalized" home values, particularly in Western Canada which experienced the largest run-up in prices. Credit definitely remains available - as our economy has continued to perform relatively well and delinquency rates are not excessive - but it is being provided on a more cautious and select basis."

Q: So, who continues to lend into the Alternative Lending market?
A: "Primarily deposit-taking institutions that have not been reliant on selling mortgages into pools as their main source of funding. The more disciplined lenders who have been in this business for a while have confidence that is based on experience, and have reacted proactively to changes in the marketplace. I expect these institutions, like Optimum Mortgage, will continue to meet the needs of borrowers."

Q: Do you see any "positives" in recent events?
A: "Real estate values have remained on a relatively steady long-term growth trend in most parts of Eastern Canada, and we anticipated the price corrections observed on property values in areas of Western Canada - simply because the rate at which values were increasing was unsustainable; affordability was becoming an issue. Overall, moderated sales activity will not only be healthy for both the real estate and the mortgage/lending markets, but ultimately, for the consumer."

Q: What does the future hold for Alternative Lending in Canada?
A: "Some borrowers may have a tougher time finding credit - reflecting more stringent underwriting standards and the fact that there now are fewer lenders in the marketplace - but credit remains available for the majority of this segment. We remain very optimistic about future opportunities in this business, and overall values remain solid providing adequate protection for our loans. We also have confidence that our clients will continue to repay their loans in a satisfactory manner."

What's Up With Lenders!

2008-11-14T15:36:00.000-08:00

Here is some enlightened information we received this week from only a few of our lenders . . .

Lender 1
- 100% Financing still available!
- No Notice of Assessments (NOA's) for self-employed

Lender 2
- 1 year term rate special at 4.49%
- 4 year term rate special at 5.34%

Lender 3
- Will lend on foreclosures, bruised credit, no income
- Lending up to 75% loan to value (LTV)

Lender 4
- Stated Income Program at the best fixed rates. Up to 95% LTV for self-employed and 100% commissioned, and up to 65% LTV for salaried employees.
- Rental Program at the best fixed rates. Up to 90% LTV insured, up to 80% LTV conventional, and an 80% rental offset is available on the subject property.

Because we deal with so many lenders, we can offer you the best available mortgage for your own particular situation.

Stressed about mounting debts and high monthly payments?
OR
Curious whether or not you are receiving the very best deal from your bank?

Whatever your concerns or circumstances are, feel free to call us anytime (evenings and weekends included)!

Purchasing a Home With Rental Income

2008-10-21T13:27:00.000-07:00

Whether you are buying a home to owner-occupy with a rental suite (a great mortgage helper!) or a rental property on its own, take advantage of one of the very few lenders offering deep discounted low interest rates and providing up to 80% loan to value on a 40 year amortization (yes, a 40 year amortization is still available!).

More importantly, the lender will use an 80% rental offset on the subject property. What that means is if the rental income is $1,200 per month, then the lender will deduct 80% of this rental income (or $960) off of the mortgage payment for qualifying purposes. We have helped many clients that now enjoy home ownership today by using the above scenario.

You Can Still Buy With Zero Down!

2008-10-07T11:21:00.000-07:00

With the recent announcement that the Federal Dept. of Finance has eliminated 100% financing, a few lenders are still offering a 5% cashback incentive (which provides for the 5% downpayment) provided that you accept their posted 5 year closed term (or longer). So, if you purchase a residential property for $200,000, the lender will provide the necessary 5% downpayment in order to qualify for CMHC/Genworth insurance.

Using today's 5 year posted rate of 7.20% and a 35 year amortization, the monthly payment is $1,265.05 per month (o.a.c.) for a mortgage amount of $195,985 (the CMHC/Genworth premium is $5,985 and is added to the mortgage.

For those of you renting and perhaps considering home ownership in the near future, but are finding it difficult to save for the downpayment, this could be a great alternative. Once your 5 year term is over, you can then qualify for the bank's best discounted rates for the balance of the amortization.

Interest-Only Line of Credit or Variable Rate Mortgage - Which to Choose?

2008-09-23T14:39:00.001-07:00

First of all, both products have one similarity. They both are set to the Prime lending rate. However, an interest-only line of credit (LOC) requires no principal payments, and you only pay the interest owing on the outstanding balance each month. The amortization is "infinity", and you will end up with the exact mortgage you started with at any future date, unless you pay extra in addition to the interest owing. For a line of credit, all banks normally charge their best clients the Prime rate, which today is 4.75%. For example, a $300,000 mortgage will cost you $14,250 of interest annually, or approx. $1,187.50 per month. An advantage of a line of credit is that you can always re-borrow whatever you have already paid down on your mortgage. The lenders refer to this type of mortgage as being re-advanceable. This is a great feature for those who have irregular income or are often purchasing and liquidating investments and require the ability to have access to funds when needed.

With a variable rate mortgage, the interest rate is also set to Prime, but at a lower rate, as the rate is usually set at Prime minus (for example, the rate could be set at Prime minus 0.50%). However, the major difference between a variable rate and a line of credit is that principal payments are required on a variable rate mortgage. For example, a $300,000 mortgage, amortized over 35 years at Prime minus 0.50%, will cost you $1,366.90 per month. Because a small portion of the monthly payment is put towards the mortgage itself, the mortgage balance after 5 years is $279,090.34,. This means your mortgage will have reduced $20,909.66 or an average of $348.49 per month (this is assuming that the Prime rate stays the same over the 5 year period; however, in reality, we will see changes over time, up and down).

The key difference is that you will be paying more for your interest-only line of credit (a half of one percent more!) which on a $300,000 is approx. $1,500 annually!

So which to choose? A re-advanceable interest-only line of credit at Prime, or a variable rate mortgage (with principal and interest payments) at Prime minus 0.50%?

My answer is both! But that's a discussion for another day, so stay tuned for more!

Now is a Great Time to Refinance!

2008-09-09T14:59:00.000-07:00

There is no question that during the past several years, home values have increased. Depending on when you purchased your residence, the value of your home most likely appreciated substantially. Perhaps when you bought, you did not have an opportunity to add more to your mortgage because of your loan to value or debt servicing concerns, but these extra funds may have been useful for home improvements at that time. In today's market, it may be an excellent time to take advantage of your home equity to do those long awaited home improvements, or maybe consolidate all your other higher interest debt to just one convenient lower interest rate payment by considering a refinance of your existing mortgage.

Why is this a good time to consider refinancing? Lenders can now approve a mortgage up to 80% loan to value without requiring CMHC insurance (previously, the limit was 75%). If (and this is only an "if") home prices trend downwards in the future, the amount you will be able to borrow without needing CMHC insurance may be decreased. The longer you delay your refinance, there is a chance that you may have less equity in your home in the future, which may not make it possible to do a refinance on a non-insured basis.

Of course, we would first complete an analysis of your particular situation to determine if this is a good time for you to refinance. We would need to consider your individual circumstances such as, is your current mortgage locked-in? What is the penalty to get out of your existing mortgage? Is it better for you to wait until the end of your current mortgage term, or perhaps refinance with your existing lender? Whatever course of action you may take with your refinance, we are here to assist you!

Why a Blog?

2008-08-28T14:42:00.000-07:00

Every day, we receive valuable information on the mortgage industry, and thought we'd share it with you!

We'll keep you abreast of the best mortgage rates available, along with current rate specials (the "hot" deals!). We'll also keep you informed of any mortgage trends, stats, and any new general information. We trust you will find your visit here informative!

So here goes . . .

Today, most lenders have since reduced their amortizations to 35 years and no longer provide 100% financing. Well, it just so happens that we do have a few lenders still accepting applications for the Zero Down Mortgage and willing to approve a 40 year amortization up until October 13, 2008.

This product is great for those now ready to buy, but just haven't saved for the downpayment yet. The longer amortization is also helpful if debt servicing is a bit tight for what you wish to buy. You can always increase your mortgage payment later, as most lenders allow a payment increase of up to 15% to 20% without penalty each year, which will ultimately reduce your amortization.

Stay tuned for more to come! Have a great day!