Our Appreciation Goes to YOU

June has been an amazing month. Our office has been a bee hive of activity.

By the end of July, we’ll have eclipsed last year’s total mortgage volume. That’s an incredible increase in our business … all due to you, our customers.

We do our best to be of service to our customers, In April the Canadian Mortgage Awards presented us with a plaque for winning the “Best Customer Service” award. But better than that is the fact that OUR CUSTOMERS keep coming back to us, and keep referring us to their acquaintances, friends and family.

Both Justin and I want to acknowledge YOU and thank YOU for your business.

If you are planning on a home purchase, or on refinancing in the next six to twelve months, here are a few things you can do to positively affect your credit score.

Your credit score will impact how much of a mortgage you will qualify for as well as the rates you will be offered.

1. Be sure to pay off any loan or debt payments on or before their due date. Any 30, 60 or 90 day delinquencies on loans or debts will negatively impact your credit score.

2. IF you are having problems paying your debts, pay any loans or debts first. Then pay your credit card. Try to at least pay your minimum credit card payment. The lending institutions will first look at your payment history on loans similar to theirs (eg. car loans) and then will look at your credit card history.

3. Don’t max out your credit card.

4. Get rid of extra credit cards (including department store cards such as Sears, the Bay, etc).

5. Consider reducing the amount of your down payment, and paying down some of your consumer debt.

These actions will positively impact your credit score and may make the difference between being accepted for a mortgage, or not.

While the new HST may not be applied to monthly condo fees, it is almost a given that condo owners will see an increase in their fees within the next year.

Why?

Condo Associations will definitely see an increase in the services they pay for. Services such as landscaping, boiler, heating and plumbing services, elevator maintenance, janitorial fees, as well as building maintenance and repair services will all increase due to the HST. Who’s going to pay?

The money has to come from somewhere … and that will be through an increase in condo fees.

According to a CREA (Canadian Real Estate Association) “home sales activity and new listings in Canada declined in May.

Seasonally adjusted home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards declined nationally by 9.5 per cent in May from near-record level activity the previous month. While activity declined in more than 70 per cent of local markets, the lower national figure resulted largely from fewer sales in Toronto, Vancouver and Ottawa.”

For more information check out the CREA News Release

Today the Bank of Canada made a decision that SHOULD have many of you calling us  to consider locking in while rates are still somewhat at historic lows.  It’s only going up from here.

The central bank raised its key interest rate by a quarter point yesterday, and most lending institutions are expected to respond by increasing their prime lending rates by a quarter point to 0.5% (Prime = 2.5%).  This marks the first rate increase by the Bank since 2007.

This means that if you have a 400,000.00 mortgage your payment will increase by as much $60/monthly.  With every 25 basis point increase, you can expect an increase of $12-$15 dollars per 100,000.00 on your mortgage (depending on your amortization).

In its statement, the Bank noted, “the economy grew by a robust 6.1 per cent in the first quarter, led by housing and consumer spending. Employment growth has resumed. Going forward, household spending is expected to decelerate to a pace more consistent with income growth. The anticipated pickup in business investment will be important for a more balanced recovery.”

Yesterday’s announcement means an increase in the rate for a variable-rate mortgage.  However, lenders do vary as to when they adjust their rates for variable-rate mortgages.  Some lenders adjust the following day and some at the beginning of the following month. Only a few adjust quarterly (eg.  ING) based on your mortgage start date. Check your mortgage statement for details on your adjustment period or contact us.

Many of you called in March and early April to get a rate-hold for 90 to 120 days. Good for you! You have likely saved .65+ in interest costs for the next 5 years.  Back then, the going rate for 5 year fixed mortgages were 3.69 to 3.79%. Today, the best available is 4.35%.

There is a clear indicator that the big banks are pushing  consumers to consider going variable as the deeper discounts are suddenly reappearing.  In October of last year, the best variable rate was at Prime only. Now it’s as low as Prime minus .60 at a couple lenders and one even at minus .65% for a 3 year term. The reason for this is obvious; Variable Rate Mortgages are about to get much more profitable and most likely you’ll lock into a 3 to 5 year term.  It’s a win-win situation for them. That being said, now is not the time to get into a new Variable Rate Mortgage. We are at the very beginning of the increase cycle and the savings window is extremely short.

In our professional opinion, if you can get in to a great fixed rate now at less than 4.5%, you will have locked in your savings for the next 5 years. Furthermore, many of you have VRM’s that are expiring within 2 years. There is a big risk to riding it out since we don’t know where rates will be in 6 months, let alone 2 more years. One thing is for sure though; they will be higher!

If you are a true believer in the VRM, the likely scenario is that by the time your current VRM reaches maturity in 2011/12, the discount from Prime should reach its bottom again at Prime minus .90. Conversely, Prime should be back at or close to its peak of 6%+. Tit for tat.

Link to the fixed rates currently being offered: http://averbachmortgages.com/rates.php

I’ve been warning of another mortgage rate hike for months … and today it became a reality.  The Bank of Canada increased raised its key interest rate by a quarter point today.

As a result, I was interviewed on CTV News with the topic being Fixed vs Variable rate mortgages.

Check out our mortgage rates page:  http://averbachmortgages.com/rates.php