A growing number of Canadians are opting to use mortgage brokers instead of going to the bank branch, a recent study said.
According to Maritz Research, which conducted the study on behalf of CAAMP, the mortgage broker channel handled 23 per cent of all mortgage activity in 2008. This number was higher in Western Canada, (34 per cent in Alberta and 27 per cent in British Columbia), as well as amongst females (26 per cent), who were more likely than men (20 per cent) to deal with brokers.
“In the past, the first or only place a person would go when looking for a mortgage was to their local bank, however more and more Canadians are now seeking out the services of Mortgage Brokers to help them navigate the biggest purchase of their lives,” said study author Rob Daniel, managing director, Maritz Research Canada, to the Financial Post.
Another strong demographic for mortgage brokers was with young Canadians. In the 18 to 34 demographic brokers represented a 28 per cent share. With 53 to 54 year olds this decreased to 24 per cent, and with the 55 and older crowd it was even lower, at just 17 per cent.
It’s nice to see Canadians understand the value in the service we provide. In the US, people use brokers for everything – health, auto, home & life insurance etc. So rather than heading straight to the bank (with their 5-10 products) and accepting their ‘lowest’ rate… why not submit your application once and have all the mortgage products from over 50 lenders in Canada at your disposal? Keep this in mind: Banks always look out for themselves. As your mortgage broker, I am always fighting for your best interests. Unbiased advice at no cost to you, along with greater savings and selection make this the growing trend. Who wouldn’t want a tailor-made mortgage along with huge savings?
AS OF TODAY: VARIABLE RATE @ 1.95% (Prime -.30%)
Call John @ (604) 710-1500!
SMART PLANNING NOW WILL SAVE YOU $$$
If you’re currently in a Variable Rate mortgage and are considering converting to a Fixed product… STOP! I may be able to:
- Pay out your penalty.
- Get you a brand new 5 yr+ Product. (If you have 2-3 years left on your mortgage, do you really want to renew your mortgage when rates could potentially be a lot higher in a few years?)
- Get an interest rate that is much lower than the conversion rate within your current mortgage; saving you thousands.
The time to ask these pertinent questions is right now. We are seeing some of the lowest rates in Canadian mortgage history. Why not take advantage of what many are calling the “bottom” of interest rates? I can help you plan your long-term goals while taking advantage of these savings. It’s smart-planning and free to boot! Call now!
Posted fixed-rate mortgages at TD Bank, CIBC, Scotiabank, Bank of Montreal and Royal Bank were cut last week, reflecting lower rates in the bond market.
Bank of Montreal was the first to announce its cuts last Wednesday while Scotiabank waited until Thursday afternoon, the last among the big banks. Laurentian Bank also lowered posted rates.
The largest percentage cuts were at Scotiabank and CIBC; however, these cuts kept all the lenders at close to the same rates. Across the board, five-year fixed rates were at 5.59 per cent and two-year fixed rates dropped to between 3.75 per cent and 3.95 per cent . Scotiabank and BMO also offered a five-year fixed closed special of 4.29 per cent.
Overall, when comparing the lowest ten-year fixed closed rate, BMO and TD have rates of 6.7 per cent, whereas CIBC is slightly higher at 6.80 per cent. Variable closed mortgage rates did not change.
When speaking about the ‘Big 5′ lowering their rates… there are some things to keep in mind. Above and beyond the banks lowest rates, there are promotional rates that are available to consumers. These lower rates might be available on a 30-day ‘Quick-close’ product OR available only to select brokers who have exceeded a certain quota in mortgage volume. Fortunately, I’m in a position to discount past a lot of advertised rates. Call me to discuss your deals today!
It’s been a crazy couple days in the bond market. Here’s some additional info to chew on: The bond yields have taken another huge hike today. At last check, the bond yield is up to 2.86%. That is a jump of 22 basis points today and 44 basis points in the last two days. The Spread is down to 1.13% based on that update. The banks fixed-rate products are largely dependent on what is happening in the bond market. In light of this, some of them have already raised their 5-year rate by 35 BPS.
Are we in for rate increases? What’s the best decision to make in light of this recent buzz? Let’s talk about it! Each person’s situation is different so please feel free to give me a shout.
It was a little less than a year ago that the global financial crisis began to hit home, which is to say that mortgage rates spiked higher.
Now, the cost of mortgages is coming down. If you’re buying a home or renewing a mortgage, it’s time to review your options.
Fixed-rate mortgages declined a little last week, but the most dramatic changes can be seen in variable-rate mortgages. Pre-crisis, variable-rate mortgages came with discounts that ranged from 0.75 percentage points to as much as 0.90 points off prime. By late last fall, crisis conditions prompted lenders to start charging prime plus a full percentage point or more. Now, some lenders are starting to unwind their crisis-rate premiums. Can variable-rate mortgages fall back to their pre-crisis lows any time soon?
I don’t think so. But could the spread get to a little below prime? That could very well happen. One thing is certain: you need someone on your side to help decide which product is best for you.
So, it’s strategy time. With prime at 2.25 per cent and fully discounted five-year fixed-rate mortgages going for something in the area of 3.9 to 4.1 per cent, you’re got some thinking to do if you’re buying a home or renewing a mortgage.
The variable rate looks tempting. Sure, the prime is going to rise in the medium term, but it’s expected to stay put until next spring at least. Some economists say that it will stay put into 2011. Even when prime does move higher, it will have to increase by roughly 1.75 percentage points to get to where today’s five-year mortgages are.
The risk is there; rates could go up a lot more. Rates went down four percentage points from December, 2007, through April, 2009. There is the possibility that they could go back up four. It could happen.
Variable-rate mortgages allow you to lock into a fixed-rate mortgage, so there’s no reason why you have to ride interest rates all the way up. Still, you have to recognize that fixed-rate mortgages could be significantly more expensive by the time you decide to lock in. However, an academic study of rates between 1950 and 2007 found variable-rate mortgages were the money-saving choice over five-year fixed-rate mortgages 89 per cent of the time.
All of this is food for thought. Needless to say, you need a qualified person on your side to help you make the best decision. I’m happy to assist and apply this information to your individual case. Call me!
John’s Wednesday Words of Wisdom
A fixed rate is an interest rate that does not change throughout the course of your mortgage term. With the same interest rate, you have a regular interest payment and you know the exact amount your payments will be each month. This can make personal budgeting easier. Having a fixed rate makes it possible for you to figure out how much of your mortgage you will have paid off by the end of the year.
“Some people like fixed rate because if they fix the rate for three years, they know exactly what their mortgage payment will be for three years, and in three years’ time their interest rate will not have changed. It gives them peace of mind”
A variable rate is an interest rate that fluctuates with the market during your mortgage period. They provide a lot of flexibility and are especially appealing when interest rates are on their way down. Although your mortgage payment typically remains constant, the ratio between your principal and interest rate fluctuates. If interest rates go down, more money goes toward repaying your principal, helping you pay off your mortgage faster. If interest rates go up, you pay more interest and less principal. If they rise substantially, the original payment may not cover both the interest and the principal. The portion that is not paid is owed, and you could be asked by your lender to increase your monthly payment. Historically however, it is the variable product that has saved people the most amount of money. Please click on the following graph:
“Remember… not all mortgages are created equally. Variable rate products vary from lender to lender. Making sure that your variable rate mortgage has the ability to convert to floor rates of the day is only one of the benefits of having a mortgage professional in your corner.”
Some customers follow interest rates closely and will call their lender to switch from variable to fixed, but many customers do not. And if you’re not following interest rates regularly, you may miss out on opportunities to save money. This is where a competent mortgage broker comes in handy. They can alert you when rates are on the move, and their reasons for doing so.
As of July 2009, a five-year variable mortgage can be had for about 2.5% to 2.85% and a five-year fixed mortgage for about 4.09%, so there is a definite difference between the two at this point in time. But given the current challenging economic climate, some people still prefer the stability of fixed mortgages. The premium of over a percent is justified with the peace of mind borrowers get from having a fixed rate. Historically, a fixed-rate mortgage of less than 5% doesn’t happen very often, so perhaps this is as good as it gets or as close as it gets in terms of fixed-rate mortgages?
Either way, I am here to answer any and all of your questions. I can direct you in making the correct decision between fixed or variable. Each of them has their pros and cons. Once we have spoken, it will become evident what type of client you are. You will leave with the satisfaction of having a complete understanding of both fixed and variable rate mortgages.
