Monthly Archives: October 2011

Bank of Canada Rates Remains Unchanged

As you know, your variable rate mortgage, lines of credit and/or student loans are all based on the Prime Rate and as promised, 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 9:00 am EST, October 25th, 2011, the Bank of Canada did what we expected them to do… they maintained their overnight rate.  What this means to you is that the prime rate on your mortgage or line of credit will not change and remains at 3.00%.  This is great news as you still have a great low rate and so continue to make the most of the low payments you will still have and maybe chat with a financial advisor about a Tax Free Savings Account or some RRSP contributions to trigger a potential income tax refund next year!  If you don’t have a financial advisor, let me know and I’d be happy to recommend one to you.

Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision:
“The global economy has slowed markedly as several downside risks to the projection outlined in the Bank’s July Monetary Policy Report have been realized. Financial market volatility has increased and there has been a generalized retrenchment from risk-taking across global markets. The outlook for the Canadian economy has weakened since July, with the significantly less favourable external environment affecting Canada through financial, confidence and trade channels.  Although Canadian growth rebounded in the third quarter with the unwinding of temporary factors, underlying economic momentum has slowed and is expected to remain modest through the middle of next year.”

The outlook has not changed since the last announcement…. the Canadian economic growth stalled in the second quarter but the Bank continues to expect that growth will resume in the later part of this year.   Based on this repeated message and economic conditions it is anticipated that prime rate might not actually increase until well into 2012 maybe even 2013.  When it does start to increase, it is expected to be gradual and controlled in line with economic recovery, both in Canada and globally.  Remember any change to the prime rate since 1992 has only been by 0.25% at any ONE time.
We have seen the fixed term rates fluctuate slightly since the last announcement and are still very low at around 3.49% to 3.79% for a five year fixed term.
Based on this recent announcement, and the anticipation that the prime rate will still remain low for the coming months, unless you feel otherwise, I’d recommend that you remain with your current variable rate product as the interest is very much 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. The next announcement on any change to the prime rate is December 6th, 2011 at which time I’ll be in touch again.
I wonder if I can ask a favour – rates are so low right now and so it is a great time to buy a property or consider refinancing especially as I can hold rates for up to six months, if you know of someone that is looking for advice on their mortgage options, with no obligation, would you mind passing my contact information on to them – this is very much appreciated.
Yours truly,


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Posted by on October 26, 2011 in Uncategorized


Think Twice Before Signing on the Dotted Line

Think twice before signing on the dotted line.

When it comes time to choosing a mortgage, many homeowners opt for the lowest rate they can find, at the traditional five-year term, without paying attention to the fine print. In many cases, these no-frills mortgages – and even some that have frills – can make a huge dent in your wallet if you ever try to break them.. Always ensure you have the correct information about what your signing, what impact it will have for you and your family should the need arise to sell your property or refinance again.

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Posted by on October 24, 2011 in Uncategorized


The BFS client

We all know that looking to purchase a home is a whole lot more complicated when you are Business For Self.  Many lenders today require so much paperwork and information that it is very complicated to move forward.  All the required documentation is a long list.  It sometimes feels as though you are signing over your first born.  Anyone who is self employed, whether business owner or sole proprietor has gone through this one point in their life and if you have a great accountant who plays the tax game, it is even more of a challenge.

As many lenders and CMHC and Genworth have changed their business for self programs, your window of opportunity is a little smaller.  Each insurer has specific guidelines to follow, if your self employed less than 2 years your better with X insurer and if your business for self longer than 2 years, again you fit into X insurer’s products.  There currently are some lenders who look differently a clients who are business for self.  Whether they offer a higher GDS and TDS to help qualify or are more of a stated income product, these options may get you into your new home a lot quicker and with less headache.  With more loose guidelines of course there has to be some kind of catch and of course it usually falls to rate. You may not get a discounted rate but have a posted rate which is generally maybe 1% higher can make a difference and if you can eliminate a CMHC premium, it might even make sense.

If your looking to see where you may fit with some of these options, please consider speaking with a qualified mortgage planner to weigh which option is better for you.

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Posted by on October 20, 2011 in Uncategorized


Where did our variable rate market go?

A few weeks ago we could find variable-rate mortgages at prime minus .80 or better but today that is a different story.  With all the economic trouble in the world and lender profit motives have shrunken variable discounts beyond anyone’s expectations.

Banks are currently offering prime rate with little to no discounts. With a few lenders lagging behind still offering prime minus .15 or .20 I am sure it will be days before they are gone.  Some lenders even suggest they shall have to move to just offering prime or prime plus.

With 5 year fixed rates so appealing, it makes you recalculate whether variable is the way to go.  The spreads are so small right now and as long as the client doesn’t have to move or sell in the next 5 years, you may have to wonder if this is a  good option.

Interest rates for the past 2 decades have been trending downward but looking ahead, rates are no longer able to drop over one percent.  The most we could hope for is an extended period of horizontal rate movement.  The BoC still can cut rates slightly however the Europeans and American crisis and sub 2% core inflation won’t delay rate hikes forever.

When looking at mortgage options, as always take a close look at your life today, tomorrow and most importantly 5-10 years down the road.  Make a plan that  suits your lifestyle, income and goals.  Take advantage of increasing your payments even if it means just by $20.00 a payment, something extra is always better than nothing.  Try and see whether your able to take advantage of the Smith manuervre by taking your tax deduction and applying it toward your mortgage debt.  Even reducing your amortization makes a huge difference.

As always home ownership has constantly been one of the best investments in the world and being in a position of owning your home free and clear is one of the greatest accomplishments one can make.  No matter what happens, no one can take your home away from you and you always have a roof over your head.

If looking for options on the best mortgage strategy that suits you and your family, consult a qualified mortgage advisor to show you all your options and what they mean for you at the end of the day.

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Posted by on October 18, 2011 in Uncategorized


Is Your Mortgage Tax Deductible?

Americans have been able to write the interest on their mortgage payments off for years, something most Canadians don’t realize they can do.  Following Fraser Smith’s strategy allows you to slowly turn your bad mortgage debt into good mortgage debt. By properly restructuring one’s affairs, it’s possible to use certain types of flexible mortgages – the Matrix Mortgage from Firstline Mortgages in particular – that gradually convert non-deductible mortgage dent into deductible investment loans.

You start out with say a $200,000 mortgage that is not deductible, every single dollar that is pumped into paying down your principal is pumped back into a loan to buy investments, the interest on which is tax deductible.  Gradually, the mortgage falls to zero and the investment portfolio soars to $500,000 – assuming a 10% return over 22 years (a net $300,000 if you subtract the debt which remains in place)

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Posted by on October 13, 2011 in Uncategorized


FYI, Published Rates Going up TONIGHT

FYI, our PUBLISHED Rates are going up TONIGHT at 10pm MST (12am EST)!

1 through 5 year fixed rates are all up 10 bps

3 and 5 year ARM are both priced at Prime + 0.00%

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Posted by on October 12, 2011 in Uncategorized


Bond Market ended considerably higher

Rates in the bond market ended last week considerably higher than where they opened, as optimism in the second half of the week outweighed some of the pessimism that presented itself on Monday and Tuesday. All told, the five year market moved about 15bps higher over the past week.

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Posted by on October 12, 2011 in Uncategorized