If you can’t decide whether a fixed or variable rate mortgage is better, you are not alone.

According to a recent poll undertaken by CIBC /Harris Decima

“Canadians are split in their views on whether a fixed rate or variable rate mortgage is the right way to go in the current rate environment, even as they anticipate higher interest rates over the next year.”

The poll shows:

• 39 per cent of respondents said they would choose a fixed mortgage if they had to choose between a fixed or variable mortgage today.
• 32 per cent said they would choose a variable rate mortgage.
• One-quarter (25 per cent) were undecided as to which would be the better choice.
• 61 per cent of respondents believe interest rates will be higher a year from now, while 24 per cent believe that rates will remain the same over the next 12 months.
• Only 3 per cent of respondents believe rates will be lower a year from now than they are today.

The poll results also highlight that views on choosing a fixed or variable mortgage can change depending on your stage of life. For example:

• Among 25-34 year olds, who are more likely to be first time buyers or new homeowners, only 27 per cent would choose a variable mortgage
• That climbs to 42 per cent among respondents 45-54 years of age, who are more likely to be near the end of their mortgage and have greater tolerance for rate changes within their mortgage payment

Choosing a fixed or variable rate mortgage is what we help our clients with every day. The “best choice” depends on YOUR financial circumstances and goals. Every time you purchase a property, your circumstances are different. Whether you are purchasing your first home, purchasing your first rental home, or want to move into your “retirement” home, the best mortgage for you depends on the current market, the current mortgage rates and your financial situation.  We work with you to get the best mortgage, each and every time!

Give us a call and let us help you determine the best mortgage for today’s market.  604-736-1855

As predicted, Mark Carney, Governor of the Bank of Canada announced that Interest Rates would remain unchanged.

Carney once again cited concerns over the strong Canadian dollar and its potential impact on the Canadian economy.

Carney said, “The persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy, putting additional downward pressure on inflation through weaker-than-expected net exports and larger declines in import prices.”

The good news:

In Canada, the economic expansion is proceeding largely as expected in the April MPR. The economy grew at an annual rate of 3.9 per cent in the first quarter, reflecting continued strong business investment, smaller contributions from household and government spending, and a modest drag from net exports. Although temporary supply chain disruptions are expected to restrain growth sharply in the current quarter, this is expected to be unwound in subsequent quarters.

The potential risks:

The possibility of greater momentum in household borrowing and spending in Canada represents an upside risk to inflation. On the other hand, the persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy, putting additional downward pressure on inflation through weaker-than-expected net exports and larger declines in import prices.

The conclusion:

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be eventually withdrawn, consistent with achieving the 2 per cent inflation target. Such reduction would need to be carefully considered.

If you are on a variable rate mortgage, renewing your mortgage or making a first home purchase  … it’s all GOOD news!

Check out the current mortgage rates here … then give us a call to discuss your mortgage needs.   604-736-1855

.

Here’s a market update from our friends at Macdonald Realty; Simon Clayton, Jason Low, Sandra Ens, Jason Feinstadt, and Jenny Stephanson.

May 2011 Market Update

The Spring Market is underway. For those of you thinking about selling, it is important to realize how vital the Art of Pricing is to the sale of your home.

All sellers want the highest price possible for their homes, but the strategies to get there are not always intuitive. In certain circumstances, pricing low can be more effective than pricing high, while in others, pricing above market value can be a winning strategy. In most cases, however, the optimum pricing strategy is to price within 10% of market value and let the market decide. After all, the ‘list price’ comes with a caveat: Or Best Offer.

Top 5 Reasons for NOT Pricing High:

• 1. You lose out on potential buyers who put a price cap on their property searches.
• 2. Serious buyers question the motivation of a seller with an overpriced listing.
• 3. You provide a strong comparable for your neighbours who are properly priced. You are effectively selling other people’s well-priced homes.
• 4. Buyers assume that properties which remain on the market for long periods of time have something inherently wrong with them.
• 5. Other agents will be more hesitant to show your home.

May 2011 Market Update

If you would like to learn more, please feel free to contact us by phone or by clicking on one of the links below:

Simon Clayton 604-764-0711

Jason Low 604-790-5276

Sandra Ens 604-263-1911

Jenny Stephanson 604-675-6214

Jason Feinstadt 604-263-1911

MacDonald Realty 604-263-1911

We are simply thrilled to let you know that we won the  Best Customer Service in Canada from an Individual Office for the SECOND year in a row!

Rumor has it  that all seven judges voted for us unanimously.  Whether that is true or not … all of our customers DID vote with their wonderful testimonials and stories.

THANK YOU!!  Every day we have the opportunity to be grateful for your phone calls, your support and your repeat business.

The CMP  awards  took place on April 29th  in Toronto.  It was one big party, with over 500 people attending the gala celebration.  Hosted by radio personality Maureen Holloway, the fun-filled Las Vegas-themed evening featured acrobatic performances, and live music at a party sponsored by Merix Financial (who also sponsored our award category).

.

.

Merix Financial Best Customer Service,
Individual Office:

Averbach Mortgages,
The Mortgage Group,
Vancouver, B.C.

Check out some of the testimonials we have received.
And be sure to add your own!

.

.

On March 11th an earthquake measuring 8.8 magnitude hit northern Japan and triggered a devastating tsunami. Within a day the markets tumbled around the world.

In Canada, the major banks reacted to the market woes by dropping their rates. As Japan fades from the daily newscasts, Canada’s banks have again reacted by raising their fixed rates.

Depending on the bank … 5-year posted rates are going up to 5.69%.

We are still able to get you better rates from many of our lenders, but if you plan on making a purchase or re-mortgaging within the next few months, give us a call for pre-approval or to lock in a good rate.

Contact us or give us a call at 604-736-1855

On March 18th the new Mortgage financing rules went into effect. We have been inundated with calls asking about the new rules and how they will affect different scenarios.

Here is a synopsis of the new mortgage rules.  We have highlighted the three most important areas and have provided our opinions on how the rules will impact  renewals, refinances and new purchases.

Maximum Amortization Period

In high ratio mortgages, where the down payment is less than 20%, the maximum amortization has been reduced from 35 years to 30 years.

In conventional mortgages, where the down payment is 20% or more,  the maximum amortization has been reduced to 30 years by the big banks. Thirty-five and forty year terms are still available from some lenders.

How does this affect the average consumer?

On a typical $400,000 – 5-year fixed rate mortgage at 3.94% the drop in amortization from 35 to 30 years increases the payment by $139.42 (1749.10 vs 1888.52) per month or put another way it will increase the monthly payment by $34.85 per $100,000 borrowed. (Check out our rates which are currently lower than the 3.94% in the example.)

Another way of looking at the affect on an average borrower making $60,000 per year is to measure the overall drop in their buying power.

Borrowing limit at 35 year amortization => $367000
Borrowing limit at 30 year amortization => $339000

The reduced amortization causes the borrowing power to decrease by $28,000 in this example.

Once you see the numbers it becomes obvious that the amortization rule change will not make or break most deals. It is unfortunate that most lenders are adapting the new 30-year amortization limit on all loans regardless of the Loan-to-Value ratio.  This industry is constantly evolving. I can remember the excitement during the introduction of the extended amortization rules … first 35 then 40 years. It will be interesting to see if the government eventually scales it all the way back to 25 years.

The good news is that we still have access to the longer term amortizations if our clients need or want them. In fact, a 40 year amortized loan is still available on conventional loans (LTV <80%)…and at some very good rates.

Refinance Maximum Loan to Value

The maximum loan to value for residential properties will be reduced to 85% from 90%.

How Does This Affect YOU?

We see this rule change as an interesting social experiment. The Finance Minister Jim Flaherty is doing his best to stop consumers from bleeding all of the equity out of their homes. By reducing the LTV limit on refinances he is making it harder for borrowers to subsidize their lifestyles via the ETO (Equity Take Out) refinance loan.

While Flahety’s intentions are good, the question is will this rule change have the effect on consumer spending habits that he is hoping for? If it does, then this policy change will reduce additional spending (on average) and thus help to reduce Canadian debt levels in general.

Our fear is that people spend money without regard to higher level lending guidelines. We see it in applications that come across our desks every week. People buy cars, take vacations, and rack up credit card debt without thinking about the position they are putting themselves in.

The ETO refinance is the solution to the problem…it is not the cause! If a client can roll $30,000 worth of accumulated debt into their mortgage and drop the carrying cost from an interest rate of 18% to under 4% they are in a far better position. Our argument is that if we don’t let them do this refinance, they may be held prisoner to their debt load for many years.

We are not sure who is correct in this argument but it will be interesting to see if this rule change helps to reduce overall debt loads in Canada. It is possible that this rule change will reduce the net debt levels, but at the cost of also reducing the affordability of the debt already incurred.

Refinance of Current Mortgages

The good news is that renewals will not be affected by this rule change. If you keep the terms of the mortgage exactly the same,  the mortgage will continue at the original amortization. The only change you will notice is the change in your payments caused by the resetting of the interest rate … not by a change to the amortization.

Remember, if you change anything in the original mortgage you are subject to the new rules at the time of the refinance and thus will lose the longer amortization!

As always, should you have any questions or concerns, please do not hesitate to contact us.

CALL US NOW:  604-736-1855