Vancouver Mortgage News – Variable Mortgage Rates Coming Down

May 26, 2009

bankrates.gifMore Canadian lenders are expected to reduce their variable mortgage rates

On April 21, 2009, the Bank of Canada (BoC) announced their last rate drop (BoC rate announcement).  This brought down the overnight rate to  its lowest rate at 1/4%. The Bank  of Canada announced to hold the rate until “the end of the second quarter of 2010?.

Major lenders reacted quickly to the base rate cut and announced a reduction in their standard variable mortgage rates. The latest rates reductions from lenders like HSBC and Merix brought their variable rate mortgages down to 2.75% (prime + 0.5%) and 2.65% (prime + 0.4%).

Fixed rate mortgages can be had for as low as 3.05% for 3-years and 3.54% for 5-year term respectively. Home owners who are locked in at 5.0% are seriously considering the cost savings to refinance their mortgages. If you are considering refinancing your mortgage, you need to find out how much it will cost you to break your mortgage contract.

If your cost saving works out to be much more than your penalty cost, you may want to consider refinancing your home. For more information on whether you should refinance your mortgage, kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Steepest Fall In Canadian’s economy

April 24, 2009

The Canadian economy took a shocking fall during the first quarter, dropping at the steepest pace in at least 50 years. The central bank dropped the overnight target interest rate to 0.25 per cent, and committing to keep it there for a year.

Gross domestic product fell an estimated 7.3 per cent – the biggest contraction since 1961. The contraction in the Canadian’s economy is worse than the United States which showed a contraction of  3 per cent. The main reason is that U.S. weakness in the housing and auto sectors is hammering critical Canadian export industries – vehicles, parts and forest products.

If the low policy fails to stimulate growth, the central bank had in mind to injecting new money into credit markets through what it calls quantitative and credit easing.

1) Quantitative Easing

The more dramatic approach would be quantitative easing – essentially increasing the money supply to improve the availability and cost of obtaining credit.

This would flood credit markets with money, making loans more easily available to businesses and households and, given the law of supply and demand, less costly.

One of the Bank of Canada’s roles is to print money – there are about $50 billion worth of banknotes currently in circulation – but Carney said quantitative easing would be “an electronic fashion of creating new central bank money.”

2) Credit Easing

The second measure would be credit easing, a more targeted approach for the bank to enter specific stressed credit markets, such as commercial paper or car leasing.

“Credit easing does not need to be financed through an expansion of settlement balances (printing money),” the bank said. “It could, instead, be financed either by reducing holdings of other assets or by increasing government deposit liabilities, so that the monetary base remains unchanged.”

Will  this be a protracted recession? 

Until there are signs of recovery in the global economy, Canada will experience a protracted slow down. The depth of Canada’s economic despair is reflected in the Bank of Canada’s revision to its estimate for the Canadian economy in the first quarter to contract at an annual rate of 7.3 per cent.

An article by foreignpolicy.com – “The Worst Is Yet to Come” previews the next stage of the global financial crisis.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Choosing Your Mortgage: Fixed Or Variable Rate?

March 10, 2009

Fixed Or Variable Rate Mortgage?

Bargain basement borrowing costs are prompting many Canadians to opt for fixed mortgages even though variable products continue to be a money-winning option for the foreseeable future, industry observers say.

Currently, the Bank of Canada’s trend-setting overnight rate is at 0.5 per cent, and Canadian Banks’ prime rate is at 2.5%.

Canadian Imperial Bank of Commerce’s chief economist says variable rate mortgages should produce the greater benefit for the next two to 2.5 years, but be a wash over five years.

“If you’re really risk-averse, jump on those fixed-term rates because they’re extremely cheap,” Benjamin Tal said. “Going variable probably will give you good performance for the next two years or so and beyond that, we might see interest rates rising.” Inflation could ultimately lead to higher interest rates, but likely not before 2011, he said.

Variable rates remain attractive even though banks last fall eliminated discounts and began charging premiums for their variable mortgages.

Homeowners whose mortgages were booked at prime rate with discounts as low as 90 basis points below prime should just stay with their variable mortgages until the end of their terms. They should take this opportunity to pay down their mortgages.

Studies conducted by Mortgage expert Moshe Milevsky of York University have shown that variable rates have historically produced greater savings 88 per cent of the time. “In today’s environment, you’d be hard-pressed to make a case to continue floating,” he said, advocating a blend between fixed and floating rates.

For home owners who prefer the security of fixed mortgages, and owners of rental properties, fixed-rate mortgages may work better as they can better budget their rental income with stable mortgage payment.

Other factors to consider

A home owner should consider other factors in deciding whether to get a fixed or variable mortgage. What kind of mortgage to take should never be made in isolation of individual circumstances such as the amount of equity, value of the house, debts and risk aversion.

In today’s real estate market where home prices are falling, seeking a long-term rate may be more important than the type of rate. There is a real danger that when you want to renew your 1 or 2 years mortgage, you may find that the mortgage on you owe is more than the value of your home.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Mortgage refinancing

March 9, 2009

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Mortgage refinancing

With interest rates at an all time low, homeowners are calling their mortgage brokers to inquire on refinance their mortgages at lower rates.

Homeowners who presently have fixed rate mortgages at 5.5% or higher are finding that they are better off refinancing their mortgages at today’s low 4.29% 5-year rate and pay the penalties, appraisal and legal costs. The cost benefit of switching to a lower interest rate in some cases are compelling.

Cost benefit analysis

A home owner with $342,200 mortgage (25 years amortization) at 5.65%, paying $2,167.92 a month will save $269.24 a month refinancing at 4.29%. With 3.5 years remaining on the mortgage, the saving works out to just over $11,300. Depending on the costs of refinancing, a home owner can decide if he or she should refinance.

If you are interested in refinancing, you should contact your curent lender to find out the penalty cost of breaking your mortgage contract. Your mortgage broker can work out the cost benefit and advise you whether you are better off refinancing or to stay put with your mortgage. Reinancing has to make sense, save you money or helps free up extra cash you need.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Should you refinance to make your home more energy efficient?

February 3, 2009

Refinance to make your home more energy efficient makes sense

The 2009 budget offers home owners up to $1,350 tax credit for energy efficient home improvements.

Here are the reasons:

* As part of the 2009 budget your client may qualify for the Home Renovation Tax Credit (HRTC) of up to $1,350 for renovations completed within the next 12 months.
* You can get a 10% rebate on the mortgage insurance premium if you refinance you home to make it more energy efficient?  Plus, the extended amortization without surcharge may be available to your client.  Note: this rebate also applies to customers who purchase an energy efficient home

* In addition to the 10% rebate, you may be eligible for additional federal and provincial grants of up to $10,000 under the Canada ecoEnergy Retrofit grant

Additional benefits of the above programs:

* Energy efficient improvements are attractive because they offer lower monthly utility bills
* This translates into income for you, allowing you to free up income to qualify or buy a more expensive home (increasing their borrowing power)
* You’ll increase the resale value of you home — an official EnerGuide label proves you’ve done the work

Details on the renovation tax credit.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Cut In Bank Rate

January 20, 2009

 Mortgage news report by Vancouver Home Mortgage:

The Bank of Canada has trimmed it’s overnight target rate by 1/2%.  That puts it at 1.00%, an all-time low.

OTTAWA – The Bank of Canada today announced that it is lowering its target for the overnight rate by one-half of a percentage point to 1 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 1 1/4 per cent.

The outlook for the global economy has deteriorated since the Bank’s December interest rate announcement, with the intensifying financial crisis spilling over into real economic activity. Heightened uncertainty is undermining business and household confidence worldwide and further eroding domestic demand. Major advanced economies, including Canada’s, are now in recession and emerging-market economies are increasingly affected. Energy prices have fallen as a result of substantially weaker global demand.

Read the full report here…

BMO, RBC, TD, CIBC, and Scotia Bank followed the rate cut in reducing their prime rates to 3.00% as well. This rate reduction will be be applauded by borrowers.

The Bank of Canada has now cut rates by a total of 3.50% in the last 13 months. The Bank’s next scheduled interest rate announcement is March 3.

Click here for current discounted rates available from The Mortgage Group.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Saving On Mortgage Interest Payment

November 9, 2008

How much can you save on mortgage interest payment?

Your savings can be as much as tens of thousands of dollars in interest payment. It is also possible to pay off your mortgage in about one-third the time on your 30 years mortgage. The great news is that you achieve this result by making the same regular monthly mortgage payment on your 30 years mortgage.

How come you have not heard of this?

Most home owners are already using accelerated mortgage repayment plan to pay off their mortgage. But, until now, no one has provided them with a “mortgage repayment accelerator” program that they can effectively take control of their mortgage repayment.

Smart Mortgage Management

Most home owners are concerned about the mortgage interest rates they are paying. Good mortgage management goes far beyond getting a good rate. While most home owners are aware and express the desire to pay off their mortgages early, a more disciplined approach and active management of their mortgages can help them save thousands of dollars in mortgage interest payments.

You can email me for more details on how you too can pay off your mortgage in one-third the time,and save thousands of dollars in mortgage interest payment.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Home Financing For First Time Home Buyer

August 15, 2008

katsure.jpgThings you should know about home financing for first time home buyer

Buying a home is exciting, but can also be a time of anxiety and apprehension. As a first time home buyer, there are many issues you need to address. It is advisable for you to work with a local real estate agent, and a mortgage broker to help you with your real estate needs.

You can discuss with your bank to find out how much you can be approved, or your mortgage broker can help you in selecting a mortgage that is right for you. You should have your mortgage pre-approved, before taking the next step in looking for a home to buy. Once you are pre-approved, you know for certain what you can afford.

Why Deal With a Mortgage Advisor?

There are many advantages working with a Mortgage Broker who are trained to provide you valuable advice. You have more choices and you can choose a mortgage plan most suitable to you. You will also get the most competitive mortgage rates and you save time shopping the mortgage yourself with different banks.

Choosing the wrong mortgage plan could be very costly to you. Should you choose a variable mortgage or fixed closed mortgage?

Currently variable rate mortgage is very attractive, but is this mortgage plan right for you? Click on this link to find out whether you should consider a variable mortgage.

Smart Mortgage Planning Helps You Save $$$

Most important of all, find out how your can pay off your 30 years mortgage in one-half the time by making the same amount of monthly mortgage payment. This is a big deal for any home owner… the mortgage interest you can save can be hundreds of thousand dollars!

If you like to find out more information on getting a mortgage, kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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What is a Canadian Mortgage Bond (CMB)?

August 6, 2008

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Canadian Mortgage Bonds (CMBs) are issued by the Canada Housing Trust (CHT), a part of Canada Mortgage and Housing Corporation’s (CMHC). Canada Mortgage Bonds Program was introduced in June of 2001.

CMBs are fully guaranteed by CMHC (a crown corporation of the Government of Canada).Hence, the guarantee  has the backing by the government of Canada. The benefit of CMBs to investors is in receiving higher interest rates than government bonds.

Canada Mortgage Bonds provide investors with an attractive fixed income investment opportunity featuring: semi-annual interest payments; repayment of principal at maturity and; a full timely payment guarantee by CMHC on behalf of the Government of Canada.

Canada Mortgage Bond – an internationally recognized program provides Canadians with both an attractive and secure investment opportunity. CMB is an important source of funds, and enhances the efficiency of the secondary mortgage market. This helps in lowering the cost of mortgage financing in Canada.

How CMB’s Work?

Canada Housing Trust sells CMBs to investors. CHT then uses these proceeds to purchase prime mortgages from “approved” lenders. These lenders then take these proceeds and lend them out as new mortgages all over again.

CMHC pioneered the development of the Canadian secondary mortgage market with National Housing Act (NHA) Mortgage Backed Securities in 1987. Since the introduction of the Canada Mortgage Bonds Program in June of 2001, CMHC has provided its timely payment guarantee for over $24 billion of bonds issued by the Canada Housing Trust.

Reference: CMHC’s CMB Program.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Real Estate News – Mid-Summer Update

July 26, 2008

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The real estate market in Western Canada is expected to face some major challenges. Large inventory build-up of resale and new homes and unusual contraction in sales over the past few weeks are causing concerns as how Canada’s housing market will hold up.The drop in housing demand was reported in The National Post “West leads drop as Canadian housing slumps“. The July sales housing sales slump in BC will likely make worst headline early next month.

The economic news are gloomy and Canadian consumers and home owners will need to deal with the new reality of slower growth, higher unemployment, declining home prices, higher interest rates, tighter credit and lower immigration to the major city centers.

“Lost amid concern over United States government agencies moving in to support mortgage lenders Freddie Mac and Fannie Mae plus IndyMac Bankcorp, was a warning that Canada could soon face its own mortgage crisis.”

The National Post reported “Mortgage crisis may be looming for Canada“The tighter under-writing, termination of the 40 years amortization and 0$ down payment financing by CMHC, uncertainty in the stock markets around the world are making Canadian consumers less confident. An earlier news report was saying Canada might in fact be in a recession. If Canada’s economy follows the US, UK, Spain, Australia and now New Zealand, we may not be far from facing a similar fate with our housing and financial market.

Moving forward, the state of Canada’s economy and the challenges faced by consumers were summed up by National Post Columnist, Diane Francis’s ” Debt meltdown summer notes

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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