Mortgage Concierge - Guelph Real Estate Mortgages

What are you Looking for in a Realtor?

admin — Thu, 03 Nov 2011 13:57:08 +0000

A recent NAR in the U.S. (National Association of Realtors) survey listed the 4 most important things consumers look for in their real estate agent. In no particular order, here are the 4 most important factors that consumers use when deciding on who to use to help them find a home or sell a home:

• A Brand Name they can trust ~ gone are the days that anyone can start up a small real estate office. Consumers want a company that has brand presence through its size, time in business and reputation;
• They want the Area Expert ~ Consumers want someone who focuses on one part of the market, and who dominates it;
• They want the agent to be On-Line Savvy ~ Over 80% of home buyers start their search on-line and the next big market of buyers are people who don’t know what it is like to live life without a computer. Agents must know how to use the internet and social media to market to buyers;
• Someone who can demonstrate the Ability to Negotiate ~ The best way to do this is by obtaining 3rd party testimonials on-line.

While the above results are based on findings from a U.S. survey, I think that the information is valid for Canadians who are thinking of buying or selling. In fact, they are a good measure for anyone who is looking into buying or selling anything.

Lending Rate Unchanged

admin — Wed, 26 Oct 2011 18:15:22 +0000

The Bank of Canada has left its overnight lending rate unchanged, which means the Prime Rate will remain the same and Variable Rate mortgage holders will continue to enjoy their current (low) mortgage rate.

The global economy is not expanding very quickly, and with it inflation is generally subdued. Bond yields and fixed mortgage rates will remain low for the next 6-12 months as a result. One of the main reasons is that businesses are taking on less risk, and consumers are saving more of their pay cheques and reducing debt. Not to mention the U.S. still hasn’t made much of a dent in their unemployment rate.

Canada, however is well positioned. We have oil, and other natural resources, and the ability to move them to markets like China that have high demand. We will benefit further from the low rates and a stable employment rate. Now is one of the best times in the last decade for young Canadians to be buying a home.

Call us if you’d like more economic information to support the idea that now is a good time to be buying, or for any mortgage related information. We’re happy to help!

Written By:
Chris Bisson

Bond Yields Are On The Rise

admin — Fri, 14 Oct 2011 15:01:42 +0000

The bond yields are up a bit this week, which some people think might push fixed rates up a bit. While a rising bond yield does normally put pressure on the fixed rates to go up we also need to remember what happened with mortgage rates while the bond yields were going down. Most recently, as bond yields were dropping the similar term mortgage rates didn’t move down with them in lock-step. This makes it possible for the lenders to leave fixed mortgage rates alone for now.

Most variable rate mortgages are now being had at Prime less 0.25%. This is a big difference from just 8 weeks ago when you could get one at Prime – 0.8%. Since this translates into 2.75% for variable and the fixed is hovering around 3.4% more and more people are choosing to go with a fixed rate mortgage.

August new home prices edged up a little month over month in Canada, and are more than 2% higher than this time last year. The regional story paints a different picture, with some markets down 4% and others up 1 or 2 per cent. Toronto and the Kitchener-Waterloo areas are holding their own, up slightly month over month.

Written By
Chris Bisson

Zero Down Mortgages Still an Option

admin — Wed, 05 Oct 2011 19:28:46 +0000

With the sweeping mortgage reforms that have taken place in the past 2 years most people think that they need to have at least 10% of their purchase price saved up for the down payment. Although the actual rule is that buyers need at least 5% for the down payment, it is a little known fact that they don’t need to have saved that money.

Yes, you read that right. You don’t have to have the 5% saved up. Here are a couple of options for people who don’t have the 5% saved:

• Gifted Down Payment: There’s nothing better than free money, so if your parents or your kids want to give you a gift for part or all of your 5% down payment take it if it won’t change your relationship with them;
• Cash Back Mortgage: Some lenders offer the 5% in the form of Cash Back on closing. During your 5 year fixed rate term mortgage you will have a higher rate than the best on the market, but you get the 5% down so you can buy;
• Personal Loan: You can borrow your down payment from a bank, trust company, credit union, or any other party that is arm’s length. That means you can borrow the down payment from a private person too, as long as they aren’t related to you. All we need to do is take the payment from the loan into account when figuring out your affordability ratios to qualify for the mortgage.

Here are a few types of people who might be having a hard time saving their down payment that would really like to own a home: A single mom or dad, a recently married couple who have some of their down payment saved but not all of it, or someone who has recently graduated from post-secondary school and has just obtained a good job with a good company (maybe a year on the job).

If you know anyone who laments that they’d like to buy a home but they think they can’t because they don’t have their down payment saved please tell them to call us. They might just be in their new house by Christmas!

USA Housing Still in Turmoil

admin — Fri, 23 Sep 2011 21:08:10 +0000

For those who thought that things were getting better in the USA, have a look at these sobering numbers: The median sale price for resale homes is down more than 5% compared to last year; distressed sales accounted for more than 31% of all transactions; and depending on the source there are anywhere between 3 and 4 million homes that will hit the market as foreclosures in the next 18 months.

The U.S. economy isn’t on strong footing, and the government and Fed reserve there are doing everything they can to keep borrowing costs low and drive money into the economy to keep people employed.

Flip over to Canada and you can’t help but think that we are in a much better situation, but we would be fooling ourselves if we thought that the U.S. problems won’t spill over to us in some way. For example, as the U.S. GDP shrinks, there’s less demand for imports, including ours fro Canada. So that will make it harder on our exporters. Think big ticket items like cars, and you start to see where this can go. For every automotive job that gets lost another 4-6 jobs in the same community are lost.

There’s a distinct worry that we can fall into another recession, and it is well founded when considering the U.S. situation. The good news is that borrowing costs should remain low for some time as a result of weak economic factors here, in the USA and Europe. This means mortgage rates should stay low into 2013.

While the USA’s housing market will continue to weaken we are fortunate to have ours remain flat. That will be the theme in housing prices and number of sales in the coming year.

Written By:
Chris Bisson

Yoyos and Fear

admin — Wed, 14 Sep 2011 15:08:51 +0000

It’s incredible what fear and the unknown can do to people. You take an otherwise rational person, and tell them that their life savings is at risk of evaporating because the U.S. might default on their debt, and what do they do? They go out and buy U.S. T-bills. Talk about not making much sense: If they really believed the U.S. was going to default on its debt, this means the U.S. Government can’t make the payments on the T-Bills, so why invest in any U.S. Government debt instruments? It’s nuts…

The reality is that most economies in the world are going to be flat or will shrink over the next 2 years. It is unlikely that we will see any robust spurts of growth as the larger economies try to figure out what to do with their unemployed and ballooning debts. The result of this is likely to be lower oil costs, less pressure on wages, and less concern that inflation will be rising as a result. This mean borrowing costs should remain low for quite a while.

Enter the Bond Yield: The 5 year Bank of Canada bond yield recently hit 1.29%. In case you are wondering, that is an absurdly LOW yield, and one that leaves room for the 5 year fixed mortgage rate to actually drop under 3% sometime in the near future. To give you a little perspective on this, when I got into the business everyone told me that clients should lock-in for as long as they could if they could get a rate under 6%. Well, we blew past that, then past 5%, then past 4%, and now we are sitting with mortgage rates in the low 3% range. Just remember to lock-in your variable rate mortgage (if you have one) if you see the 5 year fixed rate mortgage get down to 2.79%.

Even Variable Rate Mortgages (VRMs) might be set to see a reduction in the Prime Rate. So lower rates might be coming even for VRM holders. Just be aware that some banks are shrinking the discount given off of Prime on VRMs, so get your application in (or tell your clients to call) soon, so that they can benefit from a bigger discount (and lower rate) if they decide to buy (and want a VRM).

During times of uncertainty one thing you can count on is for rates to go up and down like a yoyo. The market is running in the same direction as the news. Good news means higher rates, bad news means rates will likely decrease. The long term trend people seem to be betting on is for the world economy to be weak, so we should be able to count on low rates for quite a while.

Written By:
Chris Bisson

Bank of Canada rate increase unlikely until September

admin — Thu, 18 Aug 2011 18:40:25 +0000

Government spending, both federally and provincially, will revert from having driven one-third of growth in 2010 to subtracting nearly 1% off growth by 2012. That’s a huge swing, and one reason why the Bank of Canada has been so hesitant to raise interest rates. Other reasons include a tepid US economy and strong Canadian dollar. Read More (PDF Download)

Is Opportunity Knocking?

admin — Tue, 09 Aug 2011 19:44:09 +0000

Every once in a while opportunity seems to come knocking on our doors. Most of the time it goes unnoticed and other times it seems, that the opportunity is actually a threat. Every few years that opportunity is actually a big one.

Consider the recent crash in the stock market: There’s a lot of people running to the safety of the bond market, or cashing out. What a shame! If you don’t need this money for more than 10 years you really should be buying these undervalued stocks. And if you need the money in less than 10 years, you need to ask yourself why you were in the stock market in the first place. But I digress….

Back to the matter at hand: The current decline in stock prices may continue for a little while longer. If you would like to take advantage of the “sale” price that many of these stocks are trading at you should be paying careful attention to the market, and get in when you think they’re near bottom.

So what do you do if you aren’t sitting on a stack of cash? Many people are sitting on thousands of dollars worth of equity in their homes that can be put to use towards buying investments. You can use that money to buy rental properties or stocks and bonds, and the interest is tax deductible. If you think you have 25% or more equity in your home and would like to use some of that money to buy investments, please give us a call. Secured lines of credit run at an interest rate of Prime + 0.5% (on average), and cost about $350 to set up. If the markets come back just 10% you will be “in the money.”

One thing is certain, the current decline has most economists predicting Variable Rates will remain low well into 2012, and it is likely we will see low fixed rates well into 2012 too. This is a great time to be borrowing money, especially if the money is invested.

Written By:
Chris Bisson

Attractive Rates!

admin — Fri, 22 Jul 2011 16:04:45 +0000

As anticipated, the Bank of Canada left rates unchanged Tuesday. Due to an uncertain future for the economies in Europe, a USA trading partner who is struggling to keep its economy afloat, and an overall global recession that doesn’t seem to want to go away, it is no wonder that they are taking a “wait and see” approach.

You can expect the short term rates impacted by the Bank’s rates to remain at these levels for some time, likely into mid 2012, so anyone with a variable rate mortgage is going to experience stability for the near-term.

Even the bond market is priced so low that fixed mortgage rates are at very attractive levels. When you can get a 5-year fixed rate mortgage at 3.65% you can see why more and more people are opting for a fixed-rate mortgage. Whenever the spread between fixed and variable falls below 1.50% it makes the fixed rates seem more attractive due to their stability, hence the reason for more people choosing fixed than 2 months ago.

No matter how you slice it, rates are very attractive, and one of the reasons why housing has remained strong here in Canada.

Written By:
Chris Bisson

Will the USA Default?

admin — Mon, 11 Jul 2011 20:27:33 +0000

It’s quite amazing that the President of the USA makes a plea to government officials to raise the debt limit in order to meet its debt obligations due August 2nd and the media is focusing more on the sale of Nortel patents. In the simplest of terms, Obama is telling people that the U.S. will default on its debt obligations in less than a month unless the government there agrees to increase the amount it can borrow.

In a way it’s a good thing that this isn’t widely publicized. Imagine the panic in the markets that would ensue. Or perhaps the market is unfazed by this because it believes that the government wouldn’t possibly throw itself onto a sword; that it will increase its borrowing limit in order to keep order and money flowing in the markets.

The above is significant in our eyes because it underscores just how fragile the USA’s economic recovery really is. It is highly likely that the U.S. is years away from a full recovery, making the possibility of high inflation in the next few years unlikely. Variable Rate loan products, like Variable Rate Mortgages, should enjoy low rates for some time as a result. That isn’t to say that the Fixed Rate products are any less attractive: With 5-year fixed rate money trading hands below 4%, we’re currently near the 60-year low.

No matter how you slice it, this time in history will also be known as one of the cheapest times to borrow money. I just hope it is also known as a time when people and governments figured out a way to balance their bankbooks.

Written By:
Chris Bisson