Christine Buemann Mortgage Broker

OTTAWA — The TD Bank says Canadians can expect borrowing costs to remain near record lows for the rest of the year. That’s because the pace of the economic recovery is expected to slow sharply in Canada, the United States and much of the world. As such, the Bank of Canada will likely refrain from raising its key interest rates until 2012, TD says. The central bank has had its policy rate set at one per cent since September. The rate was set at all-time low of 0.25 per cent through much of the recession, to stimulate borrowing and spending, until a series of rate hikes began last summer. The still-low rates have been a double-edged sword for Canadians who are already piling up debt at record levels, according to the Certified General Accountants Association of Canada. The association says Canadian household debt has reached a record $1.5 trillion, and calculates that more than half of indebted Canadians are borrowing just to afford day-to-day living expenses such as food, housing and tr...

Over the past few months, major economists have back peddled on their rate hike predictions. Not long ago, the consensus of economists was projecting a July 19 increase. Now, those same analysts aren't looking for a rate bump until this fall...or later. A slew of factors justify a deferral of rate increases, including: • A parade of weak economic data from the U.S.—our key trading partner • Core inflation that remains manageable • Global economic risks • Debt-laden consumers that are only cautiously spending • A U.S. housing market that's double-dipping • U.S. unemployment that may be structurally and permanently elevated • A Canadian dollar that is still acting as a brake on our economy. For reasons like these, TD Bank became the first major bank last week to predict the Bank of Canada would stand pat on rates through 2011. Depending on how the next rounds of economic data look, other banks may follow suit. Then again, the rate picture can and does change. BMO says: "...i...

Bank of Canada Governor Mark Carney sounded more alarm bells last week. It was a warning about the perfect storm of rapidly rising home prices and the future vulnerabilities of homeowners when interest rates start rising. Fittingly, Carney was speaking in Vancouver, where home prices are up a whopping 25.7% year-over-year—if you include the sales of high-end homes. Carney noted that the average house price nationally is at four-and-a-half times the average household disposable income. This compares to an average ratio of three-and-a-half times during the past quarter century, he said. Here's a Chart. (Mortgage affordability, however, is still just slightly above normal, based on long-term averages, but that is based on current interest rates.) While he didn’t come out and call Canada’s housing market a “bubble,” he certainly warned about the current level of “financial vulnerabilities.” “...the ratio between the all-in monthly costs of owning a home and renting a home, as measured ...

CANADA’S JOBLESS RATE FALLS TO LOWEST LEVEL IN TWO YEARS By Julian Beltrame, The Canadian Press OTTAWA - Canada's unemployment rate fell to its lowest in more than two years as a combination of more self-employed workers and fewer job seekers in May pushed the key economic marker down to 7.4 per cent. Statistics Canada said 22,300 new jobs were created last month, slightly above consensus estimates following April's strong 58,000 jobs gain. The last time Canada's unemployment rate was as low as 7.4 per cent was in January 2009, a few months after the economy had plunged into recession. The finer details of the May report were less impressive, however. "Small business is of vital importance to the Canadian economy, but job creation within this category in a soft spot for the economy (and) is always a knock against the quality of the headline gain," Derek Holt, vice-president of economics for Scotiabank, said in a note to clients. The number of employees in Canada a...

The Bank of Canada lowered their Qualifying Rate by another .10% to 5.49%, effective today. The qualifying rate is generally used by lenders on most high ratio* deals to qualify: • A mortgage with any term length of under 5 years • Variable rate mortgages • Home Equity Lines of Credit • 50/50 mortgages The reason why the Qualifying Rate was implemented is because interest rates have been hovering around at a historic low. Using the increased rate ensures that purchasers have room within their monthly budget to withstand an increase in mortgage payments. Essentially, the Bank of Canada wants Canadians to only be entering into mortgages that are sustainable over the long run for their income. Every lender has their own set of guidelines for conventional deals (more than 20% down payment). *a high ratio deal is one that has less than 20% for down payment

http://www.youtube.com/watch?v=YbCOUw4_50Q

The Bank of Canada announced today that it is maintaining its target for the overnight rate at 1%. In turn, prime rate will remain at 3.00%

Canada Mortgage and House Corporation released its housing Market Outlook for the second quarter in 2011. Here are a few highlights. • Housing starts: Housing starts are moving back in line with demographic fundamentals, after peaking in the second quarter of 2010. Since then, they have progressively moderated, including in the first quarter of 2011. Housing starts are forecast to be 179,500 units for 2011 and 185,300 units for 2012. • Resales: Sales of existing homes through the Multiple Listing Service® (MLS®) have made further gains in the first quarter of 2011. MLS® sales are expected to increase modestly both in 2011 and in 2012. Overall, 452,100 sales are expected in 2011, followed by 461,300 in 2012. • Resale prices: The increase in the average MLS® price in the first quarter of 2011 was stronger than expected, but the average MLS® price is expected to moderate throughout the remainder of the year. For 2011, the average MLS® price is forecast to be $361,100 while 2012 will see a...

Feature: Stated Income Product I currently have access to a stated income product that is extremely beneficial for clients who do not make as much “on paper”. Most lenders offer Stated Income products, but the difference with this particular lender is that they accept clients who earn a base salary plus commission (or tips) instead of only self-employed clients. It is usually in the client’s best interest to try an “A” lender first, but if you are looking for alternative lending options, it is nice to know that they are available. The interest rates for this particular product are slightly higher due to the higher level of risk the lender is assuming therefore it should be considered a back up option. 5.5% cash-back for down payment Please note that the lender who is currently offering 5.5% cash-back that can be used towards the down payment will only be offering this until June 30th, 2011. After that time, I will still have access to cash-back for down payment products, but only up to...

A meagre 1 in 4 borrowers made extra principal payments on their mortgage last year. There are easy ways to make extra payments and erase your mortgage many years quicker. What follows is a basic strategy to shorten your effective amortization dramatically, and barely make a dent in your bank account. The idea isn’t fancy. All you need to do is increase your mortgage payments each year to match the rate of inflation. Over the long-haul, inflation has come in at about 2% on average. Two percent also happens to be a reasonable expectation of annual wage growth—at least according to long-term averages and income growth forecasts. If you’re a typical Canadian family earning $68,860* a year, 2% wage growth suggests you’ll make about $1,377 more next year. So, given this information, let’s consider the median Canadian family with a “typical” mortgage (e.g., a $250,000 loan fixed at 3.99% interest, with a 30-year amortization and $1,187 monthly payments). If a borrower proceeded down this pat...

Time is running out to take advantage of the 5.5% cash-back for down payment. Contact me today for details http://www.youtube.com/watch?v=grGobhmlBOA

One common misconception that I hear frequently is that mobile homes are cheaper and easier to purchase. Although they can be, if purchased on their own land, mobiles in parks tend to cost more over the long term than some buyers anticipate. There are several factors that contribute to this: • You generally cannot extend the amortization beyond 25 years (sometimes not past 10 or 15 years depending on the age of the home). This makes monthly payments higher, hence the buyers qualifying maximum mortgage amount will be lowered • Banks will usually charge their “posted rate” as opposed to the discounted rates that you may receive for a small house or duplex • Although you commonly pay less in property taxes for a mobile in a park, you will have to factor in the pad rent that is in addition to the taxes Here is a comparison of $120,000 purchase with 5% down. I have factored in $100 a month for heating as per the industry standard. I have also factored in CMHC fees. Mobile in park (at curren...

As the saying goes, "The lowest rate will save you hundreds, but the wrong term can cost you thousands." Put another way, the mortgage term you choose can have a far greater impact on borrowing cost than your up-front interest rate. That’s because your term determines the length of time you're locked into a rate. That, in turn, affects how long you'll overpay or underpay, relative to the other available options. The wrong term can get mighty expensive if interest rates deviate from your assumptions, or if you need to break your mortgage early. It therefore pays to make the right choice from the get-go. Almost anyone can find a low rate by doing a little Googling. Picking the right term is not as easy. Take some time, get good advice, and nail the right term the first time. The venerable 5-year fixed still wins popularity contests, especially since high-ratio qualifying rates leave many with no other choice. However if you can afford to take some risk, it will be worth...

http://www.youtube.com/watch?v=_VjTG6jumKs

IS THE BEST MORTGAGE RATE IMPORTANT? Mortgage clients constantly tell me "I need the best mortgage rate. What rate do you offer?" While the client is always right, and we always provide the best rate and terms, we do convey the need to look at the "extras" when selecting the best mortgage. Extras include: •Low prepayment penalties •Generous pre-payment privileges •Cash back •Cash back clawbacks •Assume-ability •Portability •Refinance options •Low lender fees (if applicable) •Missed payment flexibility •Payment frequency flexibility •Lock in terms (for variable rate) Clients are attracted by even a 0.1% savings in mortgage rates. But when you do the math, the relative importance of the "extras" become clear. 0.1% savings on the typical 5-year $250,000 mortgage equates to: •A difference in monthly payment of only $14 •A savings of just $346 over five years on your mortgage balance Just one of the extras above could offset this 10 times over.

The Bank of Canada surprised few yesterday by keeping its key lending rate at 1.00% for the fifth consecutive meeting. In turn, prime rate will remain at 3.00%. Financial markets and major economists are largely forecasting 2011's first rate hike to fall on July 19. The next BoC rate meeting is on May 31.

Here are a few simple ways to literally cut years off of your mortgage. The first and most obvious one is to choose a smaller amortization period. Taking a $100,000 mortgage at 5% from a 25 year amortization period to a 15 year amortization period will save you $32,619.21 in interest cost over the life of the mortgage. You may also consider increasing your monthly payments. Every little bit helps. On a $100,000 mortgage with an interest rate of 5%, increasing your monthly mortgage payment by just $50.00 per month will pay that mortgage off in just over 21 years as opposed to 25 years. Another idea is to make lump sum payments. On a $100,000 mortgage at 5% interest, making one extra payment of $500 a year will reduce your amortization to 22 years from 25 years. The most common change is to the frequency of your payments to bi-weekly instead of monthly. On a $100,000 mortgage at 5% interest you will cut back your amortization to 21.5 years instead of 25.

http://www.youtube.com/watch?v=v_S96j8cmSQ

The 5-year government yield (which leads 5-year fixed mortgage rates) pierced 2.80% on Friday. It’s risen almost .35% in two weeks. That’s squeezed gross lender margins on deeply-discounted five-year rates to near 1.00% (1.20% can be considered “normal”). As a result, ultra-low fixed rates are in danger of rising .10% or more higher, especially if this yield trend continues. The 5-year rates are still at all time lows, but they may not last if this trend continues. Keep in mind; this perspective refers to fixed rates in the short term. Although rates continue to trend upward, they can drop down unexpectedly due to unforeseen circumstances as we saw recently. Should interest rates continue to rise as predicted; now is an optimal time to get a pre-approval done and secure a low rate for the next 120 days.

Speculation is that the Bank of Canada is planning at least two rate hikes this year of .25% each. Here's an example that shows approximately how much monthly payments would increase on a typical variable rate mortgage with a .50 % point rate hike. It's based on the current average variable rate of 2.3%, amortized over 30 years. On a $100,000 mortgage, payment will increase approx $26 On a $200,000 mortgage, payment will increase approx $52 On a $300,000 mortgage, payment will increase approx $77 On a $400,000 mortgage, payment will increase approx $103 Some lenders offer a "hold your payment" feature to keep your variable rate mortgage payment from increasing if rates rise. However, the portion of your payments going to interest will increase, therefore decreasing the amount you pay towards principle.