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Bank of Canada Maintains its Rate

With the wintery wintery weather and the beautiful colors and lights of the holiday season. I have some great news to add to your festive spirit!

As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate and here is your personal update from me on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate.

At 10:00 am EST, Wednesday December 5, 2018, the Bank of Canada maintained their overnight rate which in essence means no change to your interest rate. This is great news which I’m sure puts a smile on your face during this holiday season.

I wanted to spend a few moments again to discuss your personal financial situation. 2016, 2017 and 2018 have been quite the roller coaster for the real estate market. Both from a mortgage legislation stand point as well as the actual home prices and now a rising interest rate environment. I’m sure you might be confused on what this all means to YOU and your situation. You might be asking yourself how will all this impact you and your plans for borrowing funds in the future or even an upcoming mortgage renewal– whether it is refinancing to maximize the low interest rates and equity in your home, purchasing rental properties or moving up into a bigger home?  Call me now for a pro bono consultation to review your current financial situation and let’s start planning now for 2019!

To continue with the Bank of Canada news, here is an excerpt of the announcement and what they had to say about their decision today:

“The global economic expansion is moderating largely as expected, but signs are emerging that trade conflicts are weighing more heavily on global demand. Recent encouraging developments at the G20 meetings are a reminder that there is an upside as well as downside risks around trade policy. Growth in major advanced economies has slowed, although activity in the US remains above potential.

Oil prices have fallen sharply recently, reflecting a combination of geopolitical developments, uncertainty about global growth prospects, and expansion of U.S. shale oil production. Benchmarks for western Canadian oil – both heavy and, more recently, light – have been pulled down even further by transportation constraints and a buildup of inventories. In light of these developments and associated cutbacks in production, activity in Canada’s energy sector will likely be materially weaker than expected.

The Canadian economy as a whole grew in line with the Bank’s projection in the third quarter, although data suggests less momentum going into the fourth quarter. Business investment fell in the third quarter, in large part due to heightened trade uncertainty during the summer.

Household credit and regional housing markets appear to be stabilizing following a significant slowdown in recent quarters. The Bank continues to monitor the impact on both builders and buyers of tighter mortgage rules, regional housing policy changes, and higher interest rates

The Bank continues to indicate that rates will continue to rise despite the slower momentum, but the pace of these increases will depend on a number of factors. They want to monitor the effect of higher interest rates on consumption and housing as well as global trade policy developments. The persistence of the oil price shock, the evolution of business investment, and Canada’s economic capacity will also be closely watched!

Fixed rates haven’t changed much since the last announcement and are around 3.69% to 3.79% for a five-year fixed term.

In most cases, variable rate products are lower than current fixed term rates, however if this rising interest rate climate is making you anxious, locking in now might be a good option. Call me to book a pro bono consultation and let’s discuss your current financial situation. I’ll be in touch again for the next announcement on January 9, 2019.

I also wonder if I can ask you a favor. With our current rising interest rate climate, anyone you know who might be looking to jump into the housing market might be losing precious purchasing power the longer they wait. The more interest rates go up, the less they qualify for. My expertise in helping everyone get the right financing for their personal situation! Would you mind passing my contact information on to them – I’ll provide a pro bono consultation to provide some great options on how I can help – this is very much appreciated.

Yours truly,

Eva Neufeld
Mortgage Tailors

 

Bank of Canada Announcement

 

Good morning

The leaves are falling, but the sky is not! As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate and here is your personal update from me on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate.

As predicted, the Bank of Canada has increased their Overnight Rate by 0.25% today. When this happens, it typically means that your Prime Rate is going to increase as well, but not always by the same amount. It can also mean that not every lender will adjust their prime rate the same way. Keep an eye out later today for further updates on your specific lenders’ prime rate.

The recent conclusion of trade talks with the United States has put Canada in a more solid position for the economy. This rate increase is not a surprise as at the beginning of the year the Bank of Canada indicated that there would be a number of increases this year. You have to admit that we have had it good for a long time and we can still continue to benefit from low rates but don’t panic!

Last year we saw two rate increases, each of 0.25%, and this is our third rate increase of 2018. The Bank is attempting to get interest rates back to their traditional average. You might be concerned about your cash flow and budgeting at this point and might be considering moving over to a fixed term mortgage. Fixed term interest rates have increased slightly with a range of X.XX% to X.XX% for a five-year fixed term.  Don’t forget that if you want to lock in you can take a shorter term that will typically have a lower rate attached to it.  If the net interest rate on your current variable is the same as or higher than the current fixed term rates right now, even though the prime rate will still remain low for a while now, it might be time to chat about your options including potentially converting to a fixed term.  Converting to a fixed term isn’t right for everyone as other factors are to be taken into consideration such as payment change, income and future plans such as renovating, moving etc.  Call me so I can calculate what your new payment would look like and also if it is suitable for you.

To continue with the Bank of Canada news, here is an excerpt of the announcement and what they had to say about their decision today:

“The global economic outlook remains solid. The US economy is especially robust and is expected to moderate over the projection horizon. The new US-Mexico-Canada Agreement (USMCA) will reduce trade policy uncertainty in North America, which has been an important curb on business confidence and investment. However, trade conflict, particularly between the United States and China, is weighing on global growth and commodity prices. Financial market volatility has resurfaced, and some emerging markets are under stress but, overall, global financial conditions remain accommodative. The Bank will be monitoring the extent to which the USMCA leads to more confidence and business investment in Canada.

The Canadian economy continues to operate close to its potential and the composition of growth is more balanced. Despite some quarterly fluctuations, growth is expected to average about 2% over the second half of 2018. Real GDP is projected to grow by 2.1% this year and next before slowing to 1.9% in 2020.

Household spending is expected to continue growing at a healthy pace, underpinned by solid employment income growth. Households are adjusting their spending as expected in response to higher interest rates and housing market policies. In this context, household credit growth continues to moderate and housing activity across Canada is stabilizing. As a result, household vulnerabilities are edging lower in a number of respects, although they remain elevated.”

Based on this outlook, the Bank is optimistic about the future of the Canadian economy now that the new North American Trade Deal has been finalized. Remember, taking advantage of these low rates is a great way to pay down your mortgage faster!

Currently variable rate products are still lower than current fixed term rates, however if concern regarding impending rate increases is going to affect your monthly budget, locking in now might be a good option. Call me to book a pro bono consultation and let’s discuss your current financial situation. I’ll be in touch again for the next announcement on December 5, 2018.

I wonder if I can ask a favour, going with my theme of “Let the sun set and the leaves fall along with Canadian consumer debt with our help”if you hear a friend or family member talk about going thru a financially tough time – maybe I can help with some budgeting, credit counselling and debt consolidation options for them.  In either of these cases, would you mind passing my contact information on to them – this is very much appreciated.

Yours truly,

Eva Neufeld
Accredited Mortgage Professional
Mortgage Tailors
Phone:  780-244-0505
Email:  eva@mortgagetailors.com
Web:  www. Mortgagetailors.com

 

 

Are You Self Employed? Looking to Buy a Home!

Self- employed and looking to buy a home?  Qualifying rules have changed!

 

 

With more than 410,000 Albertans who are self- employed, times have changed when it comes to qualifying for a mortgage.  With the B 20 Stress test in place having Albertans to qualifying at the Bank posted rate (currently 5.34%) many can qualify for less than they thought. With accountants doing their jobs to save business owners tax money, it doesn’t help them when it comes to qualifying for a mortgage. What you draw personally is currently what you get to use as your income to help buy that home.  But we do have options:

 

Insured Stated Income Program: Insured Purchase with 10% down payment.

This program is designed for self-employed borrowers who are unable to provide traditional income verification but have a proven 2-year history of managing their credit and finances responsibly. Eligible borrowers typically own a small size business for a minimum of two years, which can be confirmed via a third-party arm’s length document. In addition, the borrower is required to declare their annual income and annual business revenue, which should be reasonable based on the industry, length of operation and type of business.

 

Stated Income with 20% down payment

This program is designed for self- employed borrowers who cannot prove traditional income.  They can verify they own a business however may not be in business for the required 2 years. We look at a more common sense approach to this by acquiring 6 months bank statements to determine what income we can actually use. The interest rates generally float around normal conventional rates however do have a small lender fee involved.

 

The latest self- employed program released is for those who either recently purchased a business and do not have 2 years history or for those who may be in a trade with proven income and recently went self- employed.  This is a fairly new program so we will expect a few hiccups as lenders and insurers truly understand what they can do with the insurer’s guidelines.

 

OSFI has said there is new rules coming down the pipe for self- employed borrowers which many mortgage approvals rely on the equity in the property, “OSFI will be taking steps to ensure this sort of equity lending ceases.”

 

Should you have any questions, please do not hesitate to reach out to your Top 3 Edmonton Mortgage Broker by calling (780) 244-0505 or email to eva@mortgagetailors.com

 

 

 

 

Bank of Canada Announcement

Good morning

 

As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate and here is your personal update from me on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate.

At 10:00 am EST, Wednesday September 5, 2018, the Bank of Canada maintained their overnight rate which in essence means no change to your interest rate.  This is good news since we have seen a few rate increases this year. I want to stress to you again; areyou REALLY making the most of these low interest rates?How much do you have saved up or how closer are you to your mortgage burning party because you have made extra payments on your mortgage?

Don’t worry, if you aren’t as far ahead as you would like to be, we can work together to create a plan to get you back on track… so back to school isn’t just for the kids…us adults can benefit from going to back to the drawing board with our finances, savings and future financial wealth goals. I’d like to offer you a 20-minute pro bono consultation to see what we can do to help hit those wealth goals and dreams for you and your family.  Get a clear financial outlook, avoid expensive debt and it won’t be just the leaves that are falling in a month or two, but the amount ofunnecessary interest and debt you have as well… let’s get you closer to that Mortgage Burning Party!   It’s never too late to start planning.  Maybe this doesn’t apply to you, but you have a friend or family member that we could help, feel free to share this information with them.

To continue with the Bank of Canada news, here is an excerpt of the announcement and what they had to say about their decision:

 “CPI inflation moved up to 3% in July. This was higher than expected, in large part because of a jump in the airfare component of the consumer price index. Wage growth remains moderate.

The US economy is particularly robust, with strong consumer spending and business investment. Elevated trade tensions remain a key risk to the global outlook and are pulling some commodity prices lower. The Canadian economy is evolving closely in line with the Bank’s July projection for growth to average near potential. GDP growth is expected to slow temporarily in the 3rd quarter, mainly because of further fluctuations in energy production and exports.

While uncertainty about trade policies continues to weigh on businesses, the rotation of demand towards business investment and exports is proceeding. Despite choppiness in the data, both business investment and exports have been growing solidly for several quarters. Meanwhile, activity in the housing market is beginning to stabilize as households adjust to higher interest rates and changes in housing policies. Continuing gains in employment and labour income are helping to support consumption. As past interest rate increases work their way through the economy, credit growth has moderated and the household debt-to-income ratio is beginning to edge down.”

Fixed rates haven’t really changed at all since the last announcement and are around 3.19% to 3.49% for a five-year fixed term.

Recent data is reinforcing that higher interest rates will be warranted to achieve the Banks desired inflation target.  They will continue to take a very gradual approach that will be guided by incoming data specifically the economies reaction to higher rates as well as NAFTA negotiations etc.  Based on the anticipation that the prime rate will still remain low for a while unless you feel otherwise, I’d recommend that you remain with your current variable rate product as the interest is lower than a fixed term rate right now.  However, if having a fixed payment is important to you, call me so I can calculate what your new payment would look like and also if it is suitable for you. I’ll be in touch again for the next announcement on October 24, 2018.

I wonder if I can ask a favour, if you hear a friend or family member talk about going through a financially tough time – maybe I can help with some budgeting, credit counselling and debt consolidation options for them.  In any of these cases, would you mind passing my contact information on to them – this is very much appreciated.

I’ll be in touch again for the next announcement on October 24, 2018.

 

Yours truly,

 

Eva Neufeld
Mortgage Tailors
Phone:  (780) 244-0505
Web:  www.mortgagetailors.com

 
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Posted by on September 5, 2018 in Uncategorized

 

You Can’t Live in Your Car!

When qualifying for a mortgage, your income and debts that you have determine what purchase price you are able to buy at.  I hear quite often from clients that they have worked hard to build and maintain great credit, saved a down payment and are ready to make the leap into home ownership.  However, after I review their eligible income and debts they may be carrying, it is very sad to have to inform them that the price point they were hoping to buy is not achievable due to carrying either a large vehicle payment or credit card debt. I thought I would go over the basics of mortgage qualifying in today’s world.  If you have a desire to buy a home whether now or in the near future, think twice about buying a new car or adding credit card debt to your plate.

When calculating what one can qualify for we use two formulas and apply them to your specific financial profile.  You need to keep these in mind when starting to prepare for your mortgage pre-approval.

GDS Ratio – Gross Debt Service

We are allowed to use 34% of your gross income (39% if your credit score is great) to account for your housing costs such as your mortgage payments (principal and interest), property taxes, heat and condo fees if applicable.  We do however have lenders that have exceptions to this however expect the interest rate to be a little higher than a traditional bank.

The income coming into your home that is acceptable varies between lenders,  some lenders allow income such as Child Tax Credit to be used for qualifying while others do not.  This extra income can increase ones purchase price.  If you are self-employed, lenders calculate income completely differently, some allow add-backs, some allow your income to be increased by 15% which is why working with an experienced mortgage professional who has access to many lenders can make all the difference in what price point you may be able to qualify for.

TDS Ratio – Total Debt Service

 These ratio’s allowed by lenders can vary from 40 – 44% depending on credit and the product you are applying for.  This must account for your total housing costs (GDS) as noted above plus any other consumer debt you may carry such as student loans, credit card debt, personal loans and car payments.  This is where a high vehicle payment or other debt payment can affect or lower the mortgage amount you qualify for.

Simply, the higher your income, the less that car payment will affect your mortgage qualification.  Here are a few tips I’d like to share to help you qualify for a mortgage.

Timing is very important, if you plan to qualify for a mortgage now or in the distant future, think twice about taking on any new debt. This includes credit card debt, auto loan payments, lines of credit and “don’t pay for a year” borrowings. It is all about the payments so if you have to take on new debt, try and keep the monthly payments as low as possible.  You can always pay extra toward any of the above debt but having your payments set as low as possible means your purchase price potentially could be higher.

If you currently carry high consumer debt (credit card debt) sometimes acquiring a debt consolidation loan to restructure your payments into a longer amortization will lower your monthly payments as well as lower the amount of interest you have to pay to the bank to pay it off.

It’s kind of a double-edged sword because while you need debt to build credit, yet too much debt can have a negative effect on your mortgage application.  If you are thinking of buying a home, consult with a Mortgage Professional to discuss your options.

Here is a tip to keep in mind:

  1. For every $20,000 in income you earn you roughly qualify for $100,000 in mortgage money
  2. For every $14,000 you carry in credit card debt cancels out $100,000 or mortgage money.
  3. For every $450.00 in vehicle payments cancels out roughly $100,000 in mortgage money.

So pay close attention to this as you move forward and think twice about buying that new car or taking on more credit card debt.  Buy the home first, then buy the car.

Do you have mortgage questions?  Contact Eva Neufeld, Accredited Mortgage Professional at (Mortgage Tailors) at 780-244-0505 or by email to eva@mortgagetailors.com

 

Good morning

 

As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate and here is your personal update from me on the recent Bank of Canada announcement. The Bank of Canada has increased their Overnight Rate by 0.25%. When this happens, it typically means that your Prime Rate is going to increase as well but not always by the same amount. It can also mean that not every lender will adjust their prime rate the same way. Keep an eye out later today for further updates on your lender’s prime rate.

Recent economic data has been strong and there were a number of jobs added last month hence the Bank increasing their rate again so quickly! They are definitely keeping on track with their mandate to get interest rates back to normal levels. You have to admit that we have had it good for a long time and we can still continue to benefit from low rates so don’t panic!

Last year we saw two rate increases, each of 0.25%, and this is our second rate increase this year as the Bank attempts to get interest rates back to their traditional average. You might be concerned about your cash flow and budgeting at this point and might be considering moving over to a fixed term mortgage. Fixed term interest rates have decreased slightly with a range of 3.09% to 3.39% for a five-year fixed term. Don’t forget that if you want to lock in you can take a shorter term that will typically have a lower rate attached to it. If the net interest rate on your current variable is the same as or higher than the current fixed term rates right now, even though the prime rate will still remain low for a while now, it might be time to chat about your options including potentially converting to a fixed term.

Converting to a fixed term isn’t right for everyone as other factors are to be taken into consideration such as payment change, income and future plans such as renovating, moving etc. Call me so I can calculate what your new payment would look like and also if it is suitable for you.

Have you really made the most of the low payments you have had?   How much do you have saved up or how closer are you to your mortgage burning party because you have made extra payments on your mortgage?  Or maybe you just got a little carried away and have some high interest credit carddebt that you can’t seem to pay off in full each month.

 

Don’t worry, if you aren’t as far ahead as you would like to be, we can work together to create a plan to get you back on track, the new year is a great time to work on setting goals and developing a strategy!

To continue with the Bank of Canada news, here is an excerpt of the announcement and what they had to say about the current market conditions:

 “The US economy is proving stronger than expected, reinforcing market expectations of higher policy rates and pushing up the US dollar. This is contributing to financial stresses in some emerging market economies. Meanwhile, oil prices have risen. Yet, the Canadian dollar is lower, reflecting broad-based US dollar strength and concerns about trade actions. The possibility of more trade protectionism is the most important threat to global prospects.

Canada’s economy continues to operate close to its capacity and the composition of growth is shifting. Temporary factors are causing volatility in quarterly growth rates.  Household spending is being dampened by higher interest rates and tighter mortgage lending guidelines. Recent data suggest housing markets are beginning to stabilize following a weak start to 2018. Meanwhile, exports are being buoyed by strong global demand and higher commodity prices. Business investment is growing in response to solid demand growth and capacity pressures, although trade tensions are weighing on investment in some sectors. Overall, the Bank still expects average growth of close to 2% over 2018-2020.

CPI and the Bank’s core measures of inflation remain near 2%, consistent with an economy operating close to capacity. The Bank estimates that underlying wage growth is running at about 2.3%, slower than would be expected in a labour market with no slack.

As in April, the projection incorporates an estimate of the impact of trade uncertainty on Canadian investment and exports. This effect is now judged to be larger, given mounting trade tensions.  The July projection also incorporates the estimated impact of tariffs on steel and aluminum recently imposed by the United States, as well as the countermeasures enacted by Canada. Although there will be difficult adjustments for some industries and their workers, the effect of these measures on Canadian growth and inflation is expected to be modest.

Despite some volatility, it looks like they expect that higher interest rates are warranted to keep inflation near target; they will continue to take a gradual approach to future increases based on the economy’s adjustment to these higher rates, the evolution of capacity, wage pressures and trade actions to and from the US. Based on this it should be a while before they have another increase, but we will keep a close watch.

I wonder if I can ask a favour; if you hear a friend or family member talk about going through a financially tough time – maybe I can help with some budgeting, credit counselling and debt consolidation options for them. In either of these cases, would you mind passing my contact information on to them – this is very much appreciated.

 

I’ll be in touch again for the next announcement on September 5th, 2018.

 

Yours truly,

Eva Neufeld AMP – Accredited Mortgage Professional
Verico Mortgage Tailors
(780) 244-0505

 

Bank of Canada Announcement

Good Day!

 

As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate and here is your personal update from me on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate.

At 10:00 am EST, Wednesday May 30, 2018, the Bank of the Canada againmaintained their overnight rate which means no change to your interest rate.   Let’s not forget that interest rates are still low and this is a great time to take advantage.  As the spring market has been in full swing right now here are a few things that might’ve been on your mind lately.

News & media. There has been A LOT of buzz in the past few weeks about the housing market taking a major plummet. One of the key factors I have been discussing is how 2017 was an outlier year. Meaning these numbers were so far off trend they are skewing results and thereby allowing the media to develop a news frenzy on how the housing market is plummeting. Remember if you compare this year so far with any other year we are pretty on trend for standard growth and days on market. Keep this in mind when you make any real estate decisions this year.

Renewals.After all the regulation changes at the end of 2017, nobody was really sure of what the effect would be on upcoming renewals. After monitoring the trends this spring, it has become apparent that lenders are taking advantage of your qualifying position and are sometimes using this to their advantage. Moral of the story is I am still here to work with to find the best options, whether that is staying with your current lender or moving. What is essential to this strategy is having a plan! If you have a mortgage renewal coming up this year, reach out to me now and let’s start exploring

what your options are and how we can get you closer to your goals! I have some really amazing options from lenders that can making switching an option for you!

It’s time to chat about your options! It is never too late, or early, to start planning. Chat to me about your options, I’d be happy to make your plans become a reality.

To continue with the Bank of Canada news, here is an excerpt of the announcement and what they had to say about their decision:

“Global economic activity remains broadly on track with the Bank’s forecast. Recent data points to some upside to the outlook for the US economy. At the same time, ongoing uncertainty about trade policies is dampening global business investment and stresses are developing in some emerging market economies. Global oil prices have been higher than assumed in April, in part reflecting geopolitical developments.

Inflation in Canada has been close to the 2% target and will likely be a bit higher in the near term than forecast in April, largely because of recent increases in gasoline prices. Core measures of inflation remain near 2%, consistent with an economy operating close to potential. As usual, the Bank will look through the transitory impact of fluctuations in gasoline prices.

Activity in the first quarter appears to have been a little stronger than projected.  Exports of goods were more robust than forecast, and data on imports of machinery and equipment suggest continued recovery in investment. Housing resale activity has remained soft into the second quarter, as the housing market continues to adjust to new mortgage guidelines and higher borrowing rates. Going forward, solid labour income growth supports the expectation that housing activity will pick up and consumption will continue to contribute importantly to growth in 2018.”

Overall, to keep inflation near target, the bank continues its assessment that they will take a gradual approach to rates increasing guided by incoming data – something that we have all known for a long time!  Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so you won’t see a large significant increase all at once.

Fixed term interest rates have fluctuated up and down a bit over the last four weeks with a range of 3.39% to 3.59% for a five-year fixed term – but three-year terms in the 3.09% to 3.19% range.  Don’t forget that if you want to lock in you can take a shorter term that will typically have a lower rate attached to it.  If the net interest rate on your current variable is the same as or higher than the current fixed term rates right now, even though the prime rate will still remain low for a while now, it might be time to chat about your options including potentially converting to a fixed term.  Converting to a fixed term isn’t right for everyone as other factors are to be taken into consideration such as payment change, income and future plans such as renovating, moving etc.

 

Based on this recent announcement, and the anticipation that the prime rate will remain low through the spring market, I’d recommend that you remain with your current variable rate product as the interest is still lower than a fixed term rate right now.  However, if having a fixed payment is important to you, call me so I can calculate what your new payment would look like and also if it is suitable for you. I’ll be in touch again for the next announcement on July 11, 2018.

 

I wonder if I can ask a favour; It is that time of year that many think about what they want to accomplish this year – if buying their first home is on the “wish list”, would you mind passing my contact information on to them.  With all the hot markets out there now, and changes to mortgage legislation, there is a lot of confusion especially amongst our first-time home buyers and my specialty is walking them thru the steps with ease!  This is very much appreciated.

 

Yours truly,

 Eva Neufeld
Mortgage Tailors
(780) 244-0505