13 Oct

Why Canadians Do Need Mortgage Guidance

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Posted by: Jordan Thomson

Turns out Canadians do need mortgage guidance!!

Stats from a recent national survey show most of you are uninformed about your mortgage options and 43% are comfortable doing their mortgage online. Seriously?
When you’re dealing with hundreds of thousands of dollars, a mortgage broker IS your best option!

Watch Video Here

I help my clients buy their first homes, refinance and take out equity, debt consolidations to save money and increase cash flow, retire with no mortgage payments, build wealth through investment properties….there is so much you can do and need to know about your mortgage so it truly pays to seek professional advice like mine!

Need to chat, call me on 604.725.1607 or email jordan@citywidemortgage.ca

27 Sep

How the Canadian Political Leaders Plan to Address Housing Affordability this Election

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Posted by: Jordan Thomson

#Mortgage Minute this week.

The Federal election is upon us, and there’s no doubt that affordable housing issues are at the top of many voters’ minds.

This week, I talk about the Liberals and Conservatives election campaigns to help open the door to homeownership and increase affordability for more Canadians.

Watch my #MortgageMinute VIDEO here.

Prefer to talk? Call me on 604.725.1607 or email jordan@citywidemortgage.ca

2 Sep

Competitors Attack Banks on Mortgage Penalties

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Posted by: Jordan Thomson

Competitors Attack Banks on Mortgage Penalties

Mortgage penalties are getting bigger! If there’s one thing the major banks wish would go away, it’s talk about their fixed-rate mortgage penalties. Competitors constantly use accounts of huge bank penalties to sell against the banks, and the media picks up on it.

Expect more of this as mortgage penalties approach record highs.

Read About It Here

22 Aug

Stress Test Rate and Recent Decrease

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Posted by: Jordan Thomson

Currently, all borrowers in Canada need to qualify for a new mortgage at the current Bank of Canada Benchmark Qualifying Rate or at their approved mortgage interest rate plus 2.0%, whichever is higher.

For more than a year, this Bank of Canada Benchmark Qualifying Rate has been 5.34%. Now, for the first time in 3-years, the Bank of Canada has decreased that Qualifying Rate to 5.19%, a 0.15% decrease.

What does this mean?

Well, this Bank of Canada Qualifying Rate is essentially a bank’s Stress Test Rate. If a borrower has an annual gross income of $60,000, they can qualify for a $265,000 purchase price with a 10% down payment at a 5.34% qualifying rate.

Change that qualifying rate to 5.19%, that same borrower qualifies for a $269,000 purchase price at 10% down payment. This is a $3,700 increase in borrowing ability.

A borrower with $80,000 of gross annual income and a 20% down payment qualifies for a $455,000 purchase price at a 5.34% Bank of Canada Qualifying Rate. Change it to 5.19%, it increases to $462,000. A $5,600 increase in borrowing ability.

1.5%. That is the increase borrowers now have in their borrowing ability.

Ironic part of all these calculations, the stress test was implemented to protect consumers against rising interest rates. Their concern was that borrowers would not be able to cover their monthly payments when they came up for renewal.

Highest 5-year interest rate since January 2010? 3.79%.

Highest 5-year fixed interest rate in the past 5-years? 3.24%.

Last time someone had to pay an interest rate above 5%? For one month in 2009 and before that, summer of 2008.

Food for thought! If you have any other questions regarding the Bank of Canada and mortgage Stress Test rules, please reach out to me!

26 Jul

“State of the Rate”- Benchmark Rate DROPS

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Posted by: Jordan Thomson

Great News! The recent DROP in the Benchmark Rate, means you may qualify for up to an average of $10,000 more mortgage!
Take a look at how this rate drop impacts you if you are looking to qualify for a new mortgage.

As always, it’s important to speak with me to determine your actual qualification amount which you can do by emailing jordan@ciytwidemortgage.ca or calling 604.725.1607.

20 Jul

Benchmark Rate DROPS for the first time in 3 years!

Latest News

Posted by: Jordan Thomson

For the first time in just under 3 years, we see a DROP in the Benchmark rate to 5.19% from 5.34%!
What does this mean for homebuyers? How much extra mortgage could you qualify for?

Check out my #MortgageMinute where I give you all the details!

Click here to Watch my Video!

Feel free to call or email me if you have any questions at 604.725.1607 or jordan@citywidemortgage.ca!

21 Jan

BC’s Speculation Tax: What you need to know.

Latest News

Posted by: Jordan Thomson

#MortgageMinute this week. BC’s Speculation Tax: what you need to know!

It will be up to homeowners to apply for exemptions, with a deadline of March 31.

The government announced this past Tuesday that all homeowners in B.C.’s largest urban centres will need to apply for exemptions from the province’s new speculation tax or receive a bill, whether they are speculators or not.
Watch my #MortgageMinuteLIVE video here for all the details you need to know.

22 Nov

Mortgage Interest Rate Tiers

Latest News

Posted by: Jordan Thomson

Since we know that lenders can back-end insure our mortgages and that this specifically makes these mortgage investments more attractive to investors, what does this mean for borrowers like you and me?

To summarize, any mortgage that is inexpensive for a wholesale lender to get financing for, allows the lender to pass on savings to their clients, meaning mortgages that are insured get the best rates! An insured mortgage is where a borrower pays the mortgage default insurance because they have less than 20% down payment and is required on all mortgages where the down payment is less than 20%.

But, lenders can also pay for insurance for their client! An “insurable” mortgage is one where the clients puts 20% down (or more), and their mortgage is approved as though a client is paying for insurance, but the actual insurance is paid for by the lender.

Rates for insurable mortgages are generally very similar to insured mortgages.

An “uninsurable” mortgage on the other hand is one where mortgage insurance is not available.

The graph below outlines what type of mortgages are insured, insurable or uninsurable.

So what does this all mean for you, the borrower?

If your mortgage is insurable, you may be able to get the best rates. What is interesting to note is that if you have a mortgage that was previously uninsured, your current lender cannot insure your mortgage but your mortgage may be insurable if you transfer to a new lender – this is where your opportunity lies!

Also, if your mortgage was previously “insured,” and you paid for mortgage insurance, you will also be offered the best rates upon transfer or renewal.

So whatever your mortgage or financing needs, give me a call at 604.725.1607. I’m always here to help!

22 Nov

Waiting for a Rate Drop?

Latest News

Posted by: Jordan Thomson

So are a lot of other people.

So far, all we’ve gotten is a dozen large or mid-sized lenders hiking 5-year fixed rates over the past week or so.

Meanwhile, the 5-year swap yield (one of the best leading indicators for fixed mortgage rates) is back down to levels it saw six months ago.

5-year-Swap

Back then (in May), the best 5-year fixed rates at big banks were roughly 3.44%-3.49%.

Today we’re at 3.69%, give or take, despite yields having dropped almost 20 basis points in the last 10 days.

No Rush to Discount

Big banks, which directly or indirectly control over $4 out of $5 mortgage dollars in this country, are in no hurry to chop rates and match falling yields. (Falling yields generally lower their funding costs.)

They’ve watched their mortgage growth get pummelled to levels we haven’t seen since last century. They’ve also witnessed a whole new level of competition this year for deposits and mortgages. That’s pressured net interest margins in the worst way.

The biggest problem is that the pool of prime borrowers has shrunk like wool socks in a clothes dryer. That’s mainly courtesy of stricter mortgage rules and higher rates.

These changes have driven competitors to cut insured/insurable mortgage margins to the bone to keep their pipelines full. Banks, which fund many of these competitors, seem to be onto them. What we’re hearing is that banks are being somewhat less generous on fixed rate pricing for the non-bank companies they buy mortgages from.

On top of this, banks are also keeping their own discretionary bank rates elevated. Aren’t oligopolies grand?

None of this is astonishing. After all, we are in the first quarter. Q1 is a notoriously weak time for mortgage discounts as the banks keep their powder dry for the active spring mortgage market.

There’s also the never-ending headline-driven worry about the credit cycle deteriorating. If/when that happens, bank losses will tick higher. And banks being the shrewd operators they are often price for such possibilities ahead of time.

Summing it all up, mortgage rates will follow if yields drop further. But don’t expect the juicy fixed-rate discounts we saw earlier in the year—not until the banks recoup some of their spread.

via Rate Spy

6 Nov

Bank of Canada Raises Rates to 10 year high

Latest News

Posted by: Jordan Thomson

The Bank of Canada today delivered a widely expected quarter-point increase to the overnight target rate, raising borrowing costs for millions of Canadians.

Citing an economy that is operating “at capacity” and modest wage growth, the BoC noted in its statement that the “policy interest rate will need to rise to a neutral stance to achieve the inflation target.” That neutral range, it says, is between 2.50% and 3.50%, suggesting additional rate increases of 75-100 bps.

Removed from previous statements was the word “gradual” concerning future rate increases. The BoC said the pace of those hikes will depend on “how the economy is adjusting to higher interest rates, given the elevated level of household debt,” as well as global trade policy developments.

James Laird, co-founder of RateHub and President of CanWise Financial, said the BoC’s statement is a clear signal that additional rate hikes may come faster than expected.

“They haven’t been this explicit in the past one-and-a-half years, even though they moved the rate up five times,” he told CMT. “They are sending a strong signal that rates will continue to move up at a quick pace.”

Benjamin Reitzes of BMO Capital Markets wrote in a research note that “there’s clearly an appetite for a few more hikes from the Bank. BMO’s forecast for hikes in January, April and July is looking pretty good right now.”

What it means for mortgage holders

Hours after the BoC’s announcement, most of the country’s big banks raised their respective prime rates, which brings the country’s prime rate to 3.95%—a 125-bps increase since last summer.

Most adjustable-rate mortgage (ARM) holders and those with lines of credit will see their payments increase as of their next payment date. ARM mortgage holders can expect monthly payments to rise about $12 per $100,000 worth of mortgage.

Variable-rate holders won’t see their payments increase, but they will see the interest portion of their payments jump while their principal portion declines.

The average 5-year variable insured rate available from brokers, as tracked by Mortgage Dashboard, is now 2.88%, up from 2.31% a year ago.

That’s still a sizable discount off 5-year fixed rates, which have risen to an average of 3.43%, up from 2.95% a year ago thanks to the 5-year bond yield (which leads fixed mortgage rates) reaching a seven-year high.

With the current spread between fixed and variable rates, many mortgage shoppers are likely to find themselves asking the perennial question: do I go fixed or variable?

Laird says that in a rising rate environment consumers tend to gravitate towards the security of fixed rates.

“But anyone who plans to pay down their mortgage rapidly can still consider a variable rate mortgage,” he notes. “Even in a rising rate environment the variable is the better choice for those who will aggressively pay down their mortgage. For those who want certainty in their mortgage rate, a longer-term fixed (7- or 10-year) should be considered.”

Rob McLister, founder of RateSpy.com, says historical data doesn’t support ultra-long terms, like 10-year mortgages. But he agrees that variable rates can still be a good bet for new mortgages, if the borrower is financially stable and the rate discount is big enough. “A rate of prime – 1.00%, for example, changes your probability of success dramatically versus prime – 0.60%,” he said.

Over the long term, research shows “variable-rate mortgages win, and the higher rates go, the more they win,” he told BNN today. Still, he cautioned this isn’t always the case.

“Interestingly, in summer 2017 if you would have gotten a bargain 5-year fixed rate mortgage, you’d be way ahead of the game compared to a typical variable-rate mortgage holder today,” based on interest cost alone and assuming no changes to the mortgage since origination.

As for fixed rates, McLister says the hottest deals are in the insured market. That’s a boon for clients with less than a 20 percent down payment, or an already-insured switch. Insured rates remain as much as 35 basis points below the best uninsured rates, depending on the term.

Canadians Becoming Anxious

The five rate increases over the last 15 months, and the prospect of more to come, have more than half of Canadians concerned about managing their debt costs, according to a recent poll from debt consultancy firm MNP. More troubling was a 6% increase since June in the number of Canadians worried that higher interest rates may push them towards bankruptcy (33%).

This coincides with a CBC poll of 1,000 Canadian homeowners this month that found almost three quarters of those with debt on their home—primarily mortgages—say they’re worried about rate hikes.

“It’s now been a year since the first interest rate increase in nearly a decade,” said Grant Bazian, president of MNP’s personal insolvency practice. “As the effects have had time to soak in, more people are feeling the pinch. Of particular concern is there’s an entire generation of Canadians who never experienced a higher rate environment.”