Late last week while I was away in Punta Cana for the Mortgage Centre Annual conference lenders announced their newest fixed rate mortgages. Lenders are now offering 3.15% for a fixed 5 year rate mortgage which has again set a new low for fixed rate mortgages. Some borrowers might be surprised that the new rates announced by lenders aren’t quite as close to BMO’s 2.99% as they might have hoped. The truth is that at 2.99% the bank is not making any profit from the mortgage after considering their borrowing costs and administration costs. So the question begs to be asked, why would the bank be giving money away for free? The answer is two fold.

1) BMO has been losing mortgage market share over the past couple of years. Mortgage market share is important to the bank because inevitably their mortgage borrowers will open investment, savings & chequing accounts which drive profits.

2) The move to give money away is very intentional this time of the year because it is the beginning of RRSP season. The more people to visit a BMO branch the more opportunity they will have to cross sell RRSPs and other products.

Son of a broker’s pick: You can’t go wrong with the fixed 5 year at 3.15% and if you are feeling particularily rate sensitive the fixed 4 year at 2.99% is the answer. You get all the bells and whistles with out the restrictions of BMO’s offer.

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CURRENT RATES

1 Year Fixed – 2.99%

3 Year Fixed – 3.09%

4 Year Fixed – 2.99%

5 Year Fixed – 3.15%

5 Year Variable P-.10 (2.90%)

10 Year Fixed – 3.99%

Prime Rate is currently 3.00%

Rates are subject to change and subject to the lender’s approval.

If you’d like more information connect with me below or call me directly at: 416.461.0204.

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Yesterday Bank of Montreal announced a new fixed 5 year rate mortgage that has set a new all time low for mortgage rates in Canada. Is it the lowest rate? Yes. Is it the best mortgage? Maybe not. Watch the video below to learn why.

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The Bank of Canada met this morning for the last time in 2011 to make their interest rate announcement. As was widely expected the bank left the prime rate unchanged at 3.00%. If you have a variable rate mortgage or a line of credit your monthly payment won’t change. The bank reported that conditions in global financial markets have deteriorated as the sovereign debt crisis in Europe has deepened. The recession in Europe is now expected to be more pronounced than the Bank had anticipated.

Closer to home, recent economic indicators in Canada suggest that growth in the second half of this year is slightly stronger than the Bank projected.

Although the crisis in Europe has effected bond prices, which are driving the yield down (typically a trigger for lower fixed rate mortgages), I am not certain that banks will be willing to pass on those prices to borrowers and I feel that fixed rate mortgages will remain unchanged and stable into the new year.

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Son Of A Broker’s Pick Of The Week: The fixed 4 year at 2.99% offers you the lowest rate for the longest term and is the best bang for your buck today. Fill out a quick online application and I’ll be in touch shortly to set you up with a 120 day ratehold for 2.99%.

1 Year Fixed – 3.08%

3 Year Fixed – 3.29%

4 Year Fixed – 2.99%

5 Year Fixed – 3.39%

5 Year Fixed (must close by Jan 31st) – 3.29%

5 Year Variable P-.10 (2.90%)

50/50 Hybrid 3.25% (effective rate)

Prime Rate is currently 3.00%

Bank of Canada Qualifying Rate for High Ratio Mortgages 5.29%

The following is a graph I sourced from my good friends at Ratehub.ca which shows the recent convergence of fixed and variable rate mortgages. Starting late August 2011 it’s clear to see the upwards trend of variable rate mortgages converging with a relatively flat fixed rate market.

Source: Ratehub.ca

The number of Canadians carrying mortgage debt into their 70s was the hottest mortgage topic this week. A recent RBC poll showed that one-third (33 per cent) of older Canadians over the age of 55, have 16 or more years left on their mortgage term. This statistic makes me wonder if these older Canadians aren’t better off concentrating their limited cashflow towards a retirement nest egg rather than paying off their mortgage? At the age of 70 what good is it to have a free and clear home with no other assets to live off of?  I’d love to know the statistics on how many of these older Canadians who finally pay off their mortgages will have to go straight back to the bank to request a reverse mortgage in order cover the cost of living in retirement? It’s extremely ironic when you think of the life time spent paying for a mortgage just to have a free and clear home for the bank to register another mortgage on at the end of your life. Good for banks, bad for hard working Canadians.

Mortgage interest rates have stayed relatively stable as there has been some stability in the Government of Canada bond market over the past 2 weeks.

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Son Of A Broker’s Pick Of The Week: If you require your mortgage in 2011 the 3.29% is a no brainer. I expect to see that rate continued into the new year.

1 Year Fixed – 3.08%

3 Year Fixed – 3.35%

5 Year Fixed – 3.49%

5 Year Fixed (must close by Dec 31st) – 3.29%

5 Year Variable P (3.00%)

50/50 Hybrid 3.25% (effective rate)

Prime Rate is currently 3.00%

The following graph compares the discounted weekly fixed 5 year rate vs. the discounted variable 5 year rate since January 2011.

Sourced from Ratehub.ca

This graph is sourced from my friends at Ratehub.ca and is sample of what type of mortgages visitors to their site were requesting last week.

Sourced from Ratehub.ca

Click Here to apply for your mortgage today.

The mortgage interest rate roller coaster continues to enthrall its riders yet again. The latest twist came as Sheryl King, an economist at Bank of America, predicts that Europe’s worsening sovereign-debt crisis is going to push the central bank to cut its key rate down to .025% or 2.25% in consumer terms.  Her report predicted that the Bank of Canada would be forced to lower the prime rate by -0.75% in early 2012 to prevent Canada from slipping deeply in to recession. While there is nothing to indicate at this point that she is correct it will certainly be something to look out for as the year comes to an end.

In the mean time the Eruozone crisis has been putting a squeeze on bond yields and I would expect to see fixed rate mortgages ease down slightly over the coming week.

THE SON’S PICK OF THE WEEK:  If Sheryl King’s musings are correct then you may want a piece of the variable pie. A way to stay in the game but hedge your exposure is to consider a 5 year 50/50 mortgage where have your principal is charged 3.59% and the remaining half is charge Prime (3.00%).

1 Year Fixed – 3.08%

3 Year Fixed – 3.28%

5 Year Fixed – 3.59%

5 Year Fixed (must close by Dec 31st) – 3.39%

5 Year Variable P (3.00%)

50/50 Hybrid 3.30% (effective rate)

Prime Rate is currently 3.00%

Rates subject to change at lender’s discretion.

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Last Friday, September 23rd, we saw a huge drop in the Government of Canada 5 year bond yield. This drop creates downwards pressure on fixed rate mortgages which are priced according to bond yields.  Although fixed rate mortgages are priced at an all time low it appears that there is the capacity for rates to drop further according to this post from Canadian Mortgage Trends.

There has also been some continuing action in the variable rate market as the spread on Prime minus mortgages are shrinking. Given the current global economic climate it seems unlikely that the Bank of Canada will need to move the prime rate over the short to medium term. This makes variable rate mortgages an attractive option if the risk that the prime rate can be mitigated. As such Canadians have been switching into variable rate mortgages in a big way which has meant that the profit margins for mortgage lenders has begun to shrink forcing them to decrease the spread on their variable rate mortgages.

The following are my current rates; I invite you to get in touch with me to learn more about our rates and how you can get me to work on your behalf for free.

1 Year Fixed – 2.60%

3 Year Fixed – 2.89%

4 Year Fixed – 2.99%

5 Year Fixed – 3.49%

5 Year Fixed (45 day) – 3.39%

5 Year Variable P-.35 (2.65%)

50/50 Hybrid 3.12% (effective rate)

Prime Rate is currently 3.00%

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Late last week, RBC suddenly triggered a move to reduce the spread on their variable rate mortgages and it didn’t take long for the rest of the market to follow. Previous to the change the average spread for a 5 year variable was P-.75%. Today the spread has narrowed to P-.50%. There was tremendous competition between lenders for variable rate business which really squeezed their profit margins. It has also been interesting to observe how many clients are flocking to variable rate mortgages.  Not too long ago it was difficult to educate borrowers of the benefits of variable, today there is a very obvious shift in the way borrowers are understanding their mortgage financing options.

These are a selection of my current rates. If you are shopping around feel free to give me a call to give me an opportunity to earn your business.

1 Year Fixed – 3.15%

3 Year Fixed – 3.45%

5 Year Fixed – 3.49%

5 Year Fixed (45 day) – 3.39%

5 Year Variable P-.50 (2.50%)

5 Year Variable P-.75 (2.25%) Credit Union Rate

50/50 Hybrid 3.02% (effective rate)

Prime Rate is currently 3.00%.

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The recent global economic downturn has benefits if you are currently in the mortgage market. The market mayhem has two effects: on the one side it alleviates any pressure the Bank of Canada may have felt to increase the prime rate and secondly, as investors pour their money into safe investments like Government of Canada bonds the yield drops. A falling bond yield triggers lower fixed rate mortgages.

The following are current rates:

1 Year Fixed – 3.19%

3 Year Fixed – 3.55%

5 Year Fixed – 3.49%

3 Year Variable P-.65 (2.35%)

3 Year Variable P-.80 (2.20%) High ratio only.

5 Year Variable P-.90 (2.10%)

50/50 Hybrid 3.02% (effective rate)

Prime Rate is currently 3.00%.

If you are shopping around for a rate don’t hesitate to give me a call I may be able to not only offer you my excellent service and advice but also a market leading rate. 416.461.0204

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A few weeks ago I was contacted by mortgagebrokernews.ca , Canada’s leading mortgage industry news site, to come in and do a video interview about the challenges and benefits of blogging for mortgage brokers. While I still consider myself a novice in the field, I was happy to share some insights with my colleagues that learned I through blogging on sonofabroker.com.

Although the video is directed towards the mortgage broker community, I wanted to share the video with as I am proud and grateful for the recognition.

Thank you!

As seen on mortgagebrokernews.ca

Greetings from poolside! I couldn’t stand the thought of being cooped up in the office with this historic summer day in Toronto. Conveniently all of my gadgets are working and I like the idea of doing this mobile office more often. Rates seem to be settling down and the expected July Bank of Canada prime rate hike never precipitated as the BOC remain cautious about making any changes to a fragile economy. If you’d like to talk rates with me or get a quote fill in the contact form below, email me privately or give me a call 416.461.0204. Remember my service doesn’t cost you!

1 Year Fixed – 3.19%

Bank of Canada Qualifying rate 5.52%

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