You can meet Greg Barrow of Dominion Lending Centres Perfect Mortgages at the Richmond Hill Canada Day Home Show on Wednesday July 1st, 2009. Come out and explore a variety of commercial and community booths at the Canada Day Home Show located at the Richmond Green Sports Complex in Richmond Hill from 11 a.m. - 5 p.m.
FREE ADMISSION - Compliments of Tim Hortons - Free all day event admission with donation of a non-perishable food item to benefit the Richmond Hill Food Bank. Food donation bins supplied by Cubeit Portable Storage will be available at the three main event entrances to the park: the main park entrance located off of Elgin Mills (directly south of the Sports Complex); the park entrance located at the northwest corner of the Ring Road, opposite of the entrance to RSk8 Park: and the entrance to the park located closest to Richmond Green Secondary School.
This exciting day hosts the largest municipal fireworks display in Canada. A variety of activities for the entire family are offered, including children's village games, musical entertainment, midway, food pavilion, and so much more.
Download a Canada Day Brochure for all the events and times.
Look for the Dominion Lending Centres booth in the Sports Complex. Greg will be there all afternoon to meet with you and provide you with expert advice on anything related to mortgages. Greg will be joined by Margaret Gourlay of Develco Realty Services Limited. Mrs. Gourlay has been a realtor in Richmond Hill for over 25 years and can answer any of your questions regarding the real estate market in Richmond Hill and surrounding areas.
So come by and say hello! Happy Canada Day, eh!
Monday, June 29, 2009
Real-estate virgins need guidance
[SOURCE -By Colleen Biondi, Canwest News Service
There are lots of firsts in a person's life: first time riding a bike, first date, first kiss, first job and first car. Then, there is the purchase of your first home.
Like any leap of faith, diving into the unfamiliar terrain of real estate can be scary and intimidating. There are the teasing ads in the paper, the flirtatious links on the Internet and the come-hither For Sale signs on manicured lawns.
It is at this point that many realize deciding on your first condo is even more daunting than selecting the perfect ensemble for a blind date or how to delicately make the first move in the movie theatre. In fact, once you take that first-base step to condo ownership, all you really need is some good advice to talk you through it.
FROM A MARKET ANALYST
As of Jan. 27, you are able to claim up to $750 on next year's tax return, says Lai Sing Louie with Canada Mortgage and Housing Corp. Due to these recent federal tax breaks, you can now also draw up to $25,000 from your RRSP plan to use as a down payment for your condo without penalty.
"You're basically borrowing from yourself," he explains.
Louie says you should shop around for good interest rates.
Rates are at historical lows; these days you have access to rates as low as four per cent for five-year mortgages.
FROM A MORTGAGE SPECIALIST
Know how much your condo fees are going to be, recommends RBC's Alex Wolder. First-time condo buyers tend to focus what their monthly payments are versus what their equity position is, such as whether they'll be able eat something other than Kraft Dinner, he adds. But condo fees range from $125 to $500 per month; your pre-approval amount will be based on an average condo fee rate.
If you discover your rate is higher, your pre-approval amount may be compromised.
"It could completely kibosh the deal, especially for first-time buyers putting down a minimal amount," says Wolder. "There is very little wiggle room."
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If you are a first time home buyer and would like to meet with Greg Barrow from Dominion Lending Centres to discuss your financing options, please email me or call 416 807 7123 to set up a meeting. Please feel free to call or email if you just have a few questions you would like answered. Have a great day!
Friday, June 26, 2009
Ontario Mortgage Rates
| This edition of Weekly Rate Minder has the latest, best rates for Canadian mortgages. At Dominion Lending Centres, we work on your behalf to find the mortgage that suits your needs. Best of all - our service is "free".* It's the selected lender that pays us and YOU get the best rate. *(O.A.C., E.&O.E.) | ||||||||||||||||||||||||||||||||
• Explore Mortgage Scenarios with Helpful Calculators on gregbarrow.ca | ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
Variable rate mortgages from as low as Prime + .35% Rates are subject to change without notice. Fixed mortgage rates shown in table above and quoted variable mortgage rates are available nationally to qualified individuals. Some conditions may apply. Lower rates may be available in certain regions, or to those with higher credit scores or higher net worth – check with your Dominion Lending Centres Mortgage Expert for full details. *O.A.C., E.& O.E. | ||||||||||||||||||||||||||||||||
Canadian consumer confidence
Canadian consumers are feeling more optimistic about their finances and job prospects, but they are still shying away from making major purchases, the Conference Board of Canada said Monday.
The board’s consumer confidence index rose 0.7 points to 82.1 in June – the fourth straight monthly increase. The index – based on monthly surveys – is now up 10.6 points since March.
“Responses indicate that consumers feel increasingly confident about their current and future financial situation,” the board said. “As well, the balance of opinion on future employment prospects improved for a third consecutive month.”
The survey – conducted between June 4th and 14th – found, however, that many consumers are holding off on buying big-ticket items. “The recession has clearly hit the financial well-being of many Canadians, as negative responses still outnumber positive responses by a more than two-to-one margin,” the board said. – Financial Post
The board’s consumer confidence index rose 0.7 points to 82.1 in June – the fourth straight monthly increase. The index – based on monthly surveys – is now up 10.6 points since March.
“Responses indicate that consumers feel increasingly confident about their current and future financial situation,” the board said. “As well, the balance of opinion on future employment prospects improved for a third consecutive month.”
The survey – conducted between June 4th and 14th – found, however, that many consumers are holding off on buying big-ticket items. “The recession has clearly hit the financial well-being of many Canadians, as negative responses still outnumber positive responses by a more than two-to-one margin,” the board said. – Financial Post
Harmonized Sales Tax - Ontario - Real Estate
Premier Dalton McGuinty’s Liberals are sweetening the pot in a bid to make the controversial harmonized sales tax (HST) more palatable to Ontarians.
In a surprise move last Friday morning, the government announced it was capitulating to homebuilders’ demands by effectively reducing taxes proposed on new homes. Under the change, buyers of new homes in all price ranges would receive a 75% rebate of the 8% provincial portion of the HST on the first $400,000 of the cost.
In the March 26th budget, Finance Minister Dwight Duncan had said that while people purchasing new homes costing less than $400,000 would be eligible for the tax break, those buying more expensive homes would get little relief.
It would have been a recipe for disaster for consumers and developers because there would be a gradual increase in taxes on homes costing between $400,000 and $500,000, and a massive one on those priced above $500,000. For residents of Greater Toronto, where homes are more expensive than in the rest of Ontario, it would have been especially onerous. – Toronto Star
In a surprise move last Friday morning, the government announced it was capitulating to homebuilders’ demands by effectively reducing taxes proposed on new homes. Under the change, buyers of new homes in all price ranges would receive a 75% rebate of the 8% provincial portion of the HST on the first $400,000 of the cost.
In the March 26th budget, Finance Minister Dwight Duncan had said that while people purchasing new homes costing less than $400,000 would be eligible for the tax break, those buying more expensive homes would get little relief.
It would have been a recipe for disaster for consumers and developers because there would be a gradual increase in taxes on homes costing between $400,000 and $500,000, and a massive one on those priced above $500,000. For residents of Greater Toronto, where homes are more expensive than in the rest of Ontario, it would have been especially onerous. – Toronto Star
First-Time Homebuyer’s Monitor
The housing market may have experienced some ups and downs this year, but the spirits of potential first-time homebuyers across Canada remain strong, according to Genworth Financial Canada’s First-Time Homebuyer’s Monitor released yesterday.
“The survey results show Canadians have a deep emotional attachment to homeownership,” said Peter Vukanovich, President of Genworth Financial Canada. “Most people closely associate financial security and emotional well-being with homeownership. That’s particularly true among first-time homebuyers.”
The study measured both the financial and psychological factors of homeownership – providing the following insights into the link between homeownership and personal fulfillment:
84% agree with the statement, ‘Owning a home provides a greater sense of emotional well-being and security’
85% believe that even though homeownership may mean more work and effort, they’d rather own than rent
88% say they would feel more financially secure owning their own home
The national survey of more than 2,500 Canadians was conducted between April 24th and May 4th, 2009. The complete First-Time Homebuyer’s Monitor with a regional breakdown is available at: http://click.icptrack.com/icp/relay.php?r=10344338&msgid=239886&act=FV56&c=191858&admin=0&destination=http%3A%2F%2Fwww.genworth.ca%2Fcontent%2Fetc%2Fmedialib%2Fgenworth_ca%2Fpdfs.Par.2386.File.dat%2FFTB_Monitor_June_2009_EN.pdf
“The survey results show Canadians have a deep emotional attachment to homeownership,” said Peter Vukanovich, President of Genworth Financial Canada. “Most people closely associate financial security and emotional well-being with homeownership. That’s particularly true among first-time homebuyers.”
The study measured both the financial and psychological factors of homeownership – providing the following insights into the link between homeownership and personal fulfillment:
84% agree with the statement, ‘Owning a home provides a greater sense of emotional well-being and security’
85% believe that even though homeownership may mean more work and effort, they’d rather own than rent
88% say they would feel more financially secure owning their own home
The national survey of more than 2,500 Canadians was conducted between April 24th and May 4th, 2009. The complete First-Time Homebuyer’s Monitor with a regional breakdown is available at: http://click.icptrack.com/icp/relay.php?r=10344338&msgid=239886&act=FV56&c=191858&admin=0&destination=http%3A%2F%2Fwww.genworth.ca%2Fcontent%2Fetc%2Fmedialib%2Fgenworth_ca%2Fpdfs.Par.2386.File.dat%2FFTB_Monitor_June_2009_EN.pdf
Monday, June 22, 2009
Here is a collection of recent Real Estate & Mortgage headlines.
Real estate may be turning us on once again [National Post]
Home buyers in Toronto are showing signs of returning confidence this summer.
According to the Toronto Real Estate Board, sales of existing homes were at 5,185 in the first half of June - a 19% rise over the same period last year.
"Households in the greater Toronto area have become more confident in purchasing a home over the past three months," said TREB president Maureen O'Neill in a release. "Affordability, due in part to very low borrowing costs, has played a key role." Full Story
Owning a second home more common thanks to Baby Boomers [Financial Post - June 20, 2009]
The rate of vacation home ownership in Canada is increasing, according to an analyst report out this week by Scotia Economics. Based on data from Statistics Canada and CMHC, 9% of Canadian households owned a second home -- cottage, resort condo or other vacation home -- in 2005, up from 7% in 1999. The Real Estate Trend report attributes this trend to the ageing population and Baby Boomers currently in their peak home-owning years. The median age of a second homeowner in Canada is 50. But the report also cautions that demand for vacation homes could slow over the coming decade as the "Baby Bust" generation -- those born between 1967 and 1979-- take over as vacation home buyers. This cohort is far smaller than the Boomers. As a result, potential cottage buyers might find some easing off in the prices seen over the past decade.
‘Irresistible' rates drive Canada's recovery [Globe & Mail]
It looks like a miraculous resurrection.
In the midst of recession, the average national price of Canadian resale homes hit a record level in May, and sales activity increased for the fourth consecutive month. While U.S. residential real estate prices have been falling for almost three years, Canada seems to have stumbled and picked itself up again in a span of 12 months.
To some real estate agents, the market looks as good as it did before the global financial crisis began to bite last summer.
“Without getting nitpicky, yes it does,” said Toronto real estate agent Laurin Jeffrey. “I just lost out on a multiple offer last night on a house, and my client asked me to have a look at what's going on with that sort of a house. In that price range and style of home, 14 out of 19 sales in the past 30 days have been at or above the asking price.” Full Story
If you have been considering purchasing your first home or refinancing you existing home, call a Mortgage Professional to find out if now is the right time for you. I can be reached at gbarrow@dominionlending.ca or by phone at 416 807 7123.
Have a great day!
Real estate may be turning us on once again [National Post]
Home buyers in Toronto are showing signs of returning confidence this summer.
According to the Toronto Real Estate Board, sales of existing homes were at 5,185 in the first half of June - a 19% rise over the same period last year.
"Households in the greater Toronto area have become more confident in purchasing a home over the past three months," said TREB president Maureen O'Neill in a release. "Affordability, due in part to very low borrowing costs, has played a key role." Full Story
Owning a second home more common thanks to Baby Boomers [Financial Post - June 20, 2009]
The rate of vacation home ownership in Canada is increasing, according to an analyst report out this week by Scotia Economics. Based on data from Statistics Canada and CMHC, 9% of Canadian households owned a second home -- cottage, resort condo or other vacation home -- in 2005, up from 7% in 1999. The Real Estate Trend report attributes this trend to the ageing population and Baby Boomers currently in their peak home-owning years. The median age of a second homeowner in Canada is 50. But the report also cautions that demand for vacation homes could slow over the coming decade as the "Baby Bust" generation -- those born between 1967 and 1979-- take over as vacation home buyers. This cohort is far smaller than the Boomers. As a result, potential cottage buyers might find some easing off in the prices seen over the past decade.
‘Irresistible' rates drive Canada's recovery [Globe & Mail]
It looks like a miraculous resurrection.
In the midst of recession, the average national price of Canadian resale homes hit a record level in May, and sales activity increased for the fourth consecutive month. While U.S. residential real estate prices have been falling for almost three years, Canada seems to have stumbled and picked itself up again in a span of 12 months.
To some real estate agents, the market looks as good as it did before the global financial crisis began to bite last summer.
“Without getting nitpicky, yes it does,” said Toronto real estate agent Laurin Jeffrey. “I just lost out on a multiple offer last night on a house, and my client asked me to have a look at what's going on with that sort of a house. In that price range and style of home, 14 out of 19 sales in the past 30 days have been at or above the asking price.” Full Story
If you have been considering purchasing your first home or refinancing you existing home, call a Mortgage Professional to find out if now is the right time for you. I can be reached at gbarrow@dominionlending.ca or by phone at 416 807 7123.
Have a great day!
Wednesday, June 17, 2009
Ontario Mortgage Rates - Weekly Update
| This edition of Weekly Rate Minder has the latest, best rates for Canadian mortgages. At Dominion Lending Centres, we work on your behalf to find the mortgage that suits your needs. Best of all - our service is "free".* It's the selected lender that pays us and YOU get the best rate. *(O.A.C., E.&O.E.) | ||||||||||||||||||||||||||||||||
| • Our Best Rates • Explore Mortgage Scenarios with Helpful Calculators on gregbarrow.ca | ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
Variable rate mortgages from as low as Prime + .75% Rates are subject to change without notice. Fixed mortgage rates shown in table above and quoted variable mortgage rates are available nationally to qualified individuals. Some conditions may apply. Lower rates may be available in certain regions, or to those with higher credit scores or higher net worth – check with your Dominion Lending Centres Mortgage Expert for full details. *O.A.C., E.& O.E. About Dominion Lending Centres
| ||||||||||||||||||||||||||||||||
Tuesday, June 16, 2009
Home Maintenance Tips for Spring
[Source - CMHC]
Protect Your Home — and Your Investment!
One of CMHC’s Home Maintenance Tips for Spring is to make sure your sump pump is operating properly before the spring thaw sets in, and ensure the discharge pipe allows water to drain away from the foundation.If you're like most Canadians, your home is probably your most important investment. It's also the place where you and your family tend to spend a great deal of time. A regular schedule of seasonal maintenance can help you protect that investment for years to come, and help keep your home — and your family — healthy, safe and sound all year round.
This spring, Canada Mortgage and Housing Corporation (CMHC) has a short checklist of simple inspections and repairs that can help you put a stop to the most common and costly problems before they occur, in as little as a few minutes a week, including:
Check your furnace, air exchanger and air conditioner filters, and clean or replace them if needed.
Check and clean your range hood filters on a monthly basis.
Make sure all indoor and outdoor air vents (intake, exhaust and forced air) are clear of snow and debris.
From the ground or any overlooking windows, check your roof for missing or damaged shingles. Have any damaged ones repaired.
Check the condition of caulking around windows and doors. Replace as necessary.
Test ground fault circuit interrupter(s) on electrical outlets each month by pushing the test button, which should cause the reset button to pop up.
Consult your hot water tank owner’s manual and follow its recommendations for testing the temperature and pressure relief valve to ensure it isn’t stuck. If you are unsure, consult a plumber.
Shut down and clean the furnace humidifier, and close the furnace humidifier damper on units with central air conditioning.
Have your fireplace or woodstove and chimney cleaned and serviced as needed.
Clear all drainage ditches and culverts of debris.
Check smoke, carbon monoxide and security alarms, and replace their batteries.
Clean all windows, screens and window hardware. Repair any holes in screens or replace them if necessary.
Open the valve to the outside hose connection once any danger of frost has passed.
Examine the foundation walls for cracks, leaks or signs of moisture, and repair them if required.
Repair and paint fences as needed.
Make sure your sump pump is operating properly before the spring thaw sets in, and ensure the discharge pipe allows water to drain away from the foundation.
Re-level any exterior steps or decks which may have moved due to frost or settling.
Clean any debris from eavestroughs and downspouts, reattach any sections that are loose, and make sure they are securely attached to your home and that the flow of water discharges away from your foundation.
Have well water tested for quality, and test for bacteria every six months.
Carry out any spring landscaping and, if necessary, fertilize young trees.
For more information or a free copy of the "About Your House" fact sheet Home Maintenance Schedule and other fact sheets on owning, maintaining or renovating your home, ask CMHC at 1-800-668-2642 or visit our Web site at www.cmhc.ca. For over 60 years, Canada Mortgage and Housing Corporation (CMHC) has been Canada’s national housing agency, and a source of objective, reliable housing expertise.
For story ideas or to access CMHC experts or expertise, contact CMHC Media Relations — National Office at: 613-748-2799 or by e-mail: media@cmhc-schl.gc.ca
Monday, June 15, 2009
GTA May Resale Housing Sales Higher Than Last Year
[Source - TREB]
In May 2009, Greater Toronto REALTORS® reported 9,589 sales, up almost two per cent from May 2008 – the first annual increase since December 2007. The seasonally adjusted annual rate of sales in May was 81,300. See details.
Click here for complete Market Watch. pdf
In May 2009, Greater Toronto REALTORS® reported 9,589 sales, up almost two per cent from May 2008 – the first annual increase since December 2007. The seasonally adjusted annual rate of sales in May was 81,300. See details.
Click here for complete Market Watch. pdf
Thursday, June 11, 2009
Dominion Lending Centres Industry News
In its monthly Global Forecast Update entitled Rebooting Growth released last Thursday, Scotia Economics raised its projections – indicating that the global economy is on the verge of crossing over from recession to recovery. The report also forecasts that the Bank of Canada and the US Federal Reserve will begin raising interest rates as early as the first quarter of next year.
“Although the restructuring and retrenchment underway in a number of key sectors and regions will remain a significant drag on the pace of activity, strong cyclical forces are providing much-needed impetus to growth,” said Warren Jestin, Scotiabank Chief Economist. “Canada and many other countries around the world are expected to piggyback on the renewed momentum being generated by the globe’s primary economic engines, the United States and China. The recovery should become increasingly more broadly based, with the likelihood of accelerating economic gains through the balance of this year extending into 2010.”
Canada’s economy should be buoyed by strengthening demand in the United States and internationally for manufactured and commodity-related products, although the nation’s performance will likely lag the upturn because of competitive issues, including a stronger currency.
According to the report, even with the globe’s output growth turning positive in the second half of the year, the contraction in worldwide real GDP in 2009 is still likely to average 2.7%, a post-war record. But building upon the strengthening economic momentum, global output growth is now expected to average 2.6% in 2010, a roughly half-percentage point higher than Scotia Economics’ previous forecast.
Residential construction in Canada increased in May – yet another positive development for the housing market. Housing starts across the country rose more than 9% in May to 128,400, seasonally adjusted and at an annual rate, from 117,600 in April, CMHC said Monday.
“Housing starts data for May from CMHC provided us with the first sign that a bottom might be forming in Canadian home building activity,” said Toronto-Dominion Bank economist Pascal Gauthier.
The increase was broad-based, including both single homes and multiple units such as condominiums, and was better than economists had projected.
Housing starts surged in Ontario and the Prairies, and rose more modestly elsewhere, although construction declined in British Columbia, New Brunswick, and Newfoundland and Labrador. – Globe and Mail
Consumer confidence has climbed to its highest level in 15 months as Canadians become increasingly assured that better economic times are ahead, a Harris/Decima poll showed last week.
The cloud of pessimism that followed the economic collapse of 2008 began to evaporate from February through June, with the percentage of people anticipating hard times to come falling by half from 59% in February to 29% in June, the poll showed.
The resurgence in public sentiment – a reading of 78.5, the highest since February 2008 – also showed a doubling, from 10% to 20%, in the number of people optimistic about the outlook for 2010.
Canadians’ longer-term outlook also rose, with 51% expecting positive results over the next five years, compared with 39% in February. Also, the number of Canadians who feel it is a good time to make a major purchase rose from 41% to 49%. – Financial Post
“Although the restructuring and retrenchment underway in a number of key sectors and regions will remain a significant drag on the pace of activity, strong cyclical forces are providing much-needed impetus to growth,” said Warren Jestin, Scotiabank Chief Economist. “Canada and many other countries around the world are expected to piggyback on the renewed momentum being generated by the globe’s primary economic engines, the United States and China. The recovery should become increasingly more broadly based, with the likelihood of accelerating economic gains through the balance of this year extending into 2010.”
Canada’s economy should be buoyed by strengthening demand in the United States and internationally for manufactured and commodity-related products, although the nation’s performance will likely lag the upturn because of competitive issues, including a stronger currency.
According to the report, even with the globe’s output growth turning positive in the second half of the year, the contraction in worldwide real GDP in 2009 is still likely to average 2.7%, a post-war record. But building upon the strengthening economic momentum, global output growth is now expected to average 2.6% in 2010, a roughly half-percentage point higher than Scotia Economics’ previous forecast.
Residential construction in Canada increased in May – yet another positive development for the housing market. Housing starts across the country rose more than 9% in May to 128,400, seasonally adjusted and at an annual rate, from 117,600 in April, CMHC said Monday.
“Housing starts data for May from CMHC provided us with the first sign that a bottom might be forming in Canadian home building activity,” said Toronto-Dominion Bank economist Pascal Gauthier.
The increase was broad-based, including both single homes and multiple units such as condominiums, and was better than economists had projected.
Housing starts surged in Ontario and the Prairies, and rose more modestly elsewhere, although construction declined in British Columbia, New Brunswick, and Newfoundland and Labrador. – Globe and Mail
Consumer confidence has climbed to its highest level in 15 months as Canadians become increasingly assured that better economic times are ahead, a Harris/Decima poll showed last week.
The cloud of pessimism that followed the economic collapse of 2008 began to evaporate from February through June, with the percentage of people anticipating hard times to come falling by half from 59% in February to 29% in June, the poll showed.
The resurgence in public sentiment – a reading of 78.5, the highest since February 2008 – also showed a doubling, from 10% to 20%, in the number of people optimistic about the outlook for 2010.
Canadians’ longer-term outlook also rose, with 51% expecting positive results over the next five years, compared with 39% in February. Also, the number of Canadians who feel it is a good time to make a major purchase rose from 41% to 49%. – Financial Post
Wednesday, June 10, 2009
Fixed Mortgage Rates on the Rise
Fixed mortgage rates have been increasing over the past 2 weeks. This is a result of a leap in bond yields. If you have been considering a refinance, or if your a first time home buyer, you may want to take action now.
Canadian Mortgage Trends posted this yesterday to explain the recent increases.
--------------------------
With the leap in bond yields yesterday, a bunch of lenders are once again raising fixed mortgage rates.
TD was the first of the Big 5 today to announce a rate increase. Canada’s second largest bank is hiking rates as follows:
5-year posted fixed rate: 5.85%, up 0.40%
4-year posted fixed rate: 5.14%, up 0.30%
3-year posted fixed rate: 4.65%, up 0.50%
That 5-year move is the biggest increase in almost a year. TD also announced it is lowering its 1-year rate by 0.15%.
If history is a guide, the other large banks will likely announce their own increases in the next 24 hours.
Assuming the banks all move their 5-year posted rates to 5.85%, that will amount to a 0.60% increase in the last nine days. On a $200,000 5-year mortgage with 25-year amortization, that equates to over $5,700 more interest over five years.
If there’s one bright side, it’s that IRD penalties will potentially fall for certain people who are breaking their fixed-rate mortgages early.
[Source: Canadian Mortgage Trends]
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Canadian Mortgage Trends posted this yesterday to explain the recent increases.
--------------------------
With the leap in bond yields yesterday, a bunch of lenders are once again raising fixed mortgage rates.
TD was the first of the Big 5 today to announce a rate increase. Canada’s second largest bank is hiking rates as follows:
5-year posted fixed rate: 5.85%, up 0.40%
4-year posted fixed rate: 5.14%, up 0.30%
3-year posted fixed rate: 4.65%, up 0.50%
That 5-year move is the biggest increase in almost a year. TD also announced it is lowering its 1-year rate by 0.15%.
If history is a guide, the other large banks will likely announce their own increases in the next 24 hours.
Assuming the banks all move their 5-year posted rates to 5.85%, that will amount to a 0.60% increase in the last nine days. On a $200,000 5-year mortgage with 25-year amortization, that equates to over $5,700 more interest over five years.
If there’s one bright side, it’s that IRD penalties will potentially fall for certain people who are breaking their fixed-rate mortgages early.
[Source: Canadian Mortgage Trends]
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Wednesday, June 3, 2009
When Does it Pay to Break Your Mortgage
With mortgage rates at “emergency” levels – low rates not seen by your parents and possibly even your grandparents – chances are you’ve considered breaking your current mortgage and renewing now before rates start to rise.
Perhaps you want to free up cash for such things as renovations, travel or putting towards your children’s education? Or maybe you want to pay down debt or pay your mortgage off faster?
If you’ve thought about breaking your mortgage and taking advantage of these historically low rates, feel free to give me a call to discuss your options.
In some cases, the penalty can be quite substantial if you aren’t very far into your mortgage term, but we can determine if breaking your mortgage now will benefit you long term.
People often assume the penalty for breaking a mortgage amounts to three months’ interest payments so, when they crunch the numbers, it doesn’t seem so bad. In most cases, however, the penalty is the greater of three months’ interest or the interest rate differential (IRD).
The IRD is the difference between the interest rate on your mortgage contract and today’s rate, which is the rate at which the lender can relend the money. And with rates so low these days, the IRD tends to be greater than three months’ interest. Because this is a way for banks to recuperate any losses, for some people, breaking and renegotiating at a lower rate without careful planning can mean they come out no further ahead.
Keep in mind, however, that penalties vary from lender to lender and there are different penalties for different types of mortgages. In addition, the size of your down payment and whether you opted for a “cash back” mortgage can influence penalties.
While breaking a mortgage and paying penalties based on the IRD can result in a break-even proposition in the short term, if you look at the big picture, you’ll see that the true savings are long term – as we know that rates will be higher in the years to come. Your current goal is to secure a long-term rate commitment before it is too late, and here lies the significant future savings.
Following is an example of a home that cost $250,000 in November 2008 (just months ago) and what it’s worth now, as well as the average change in interest rates, and total savings based on a 25-year amortization:
November 2008
Purchase Price: $250,000
Average Interest Rate: 5.84%
Monthly Mortgage Payment: $1,575
Amortization: 25 years
Total Interest Paid Over 25 Years: $225,000
vs.
May 2009
Purchase Price: $212,500
Average Interest Rate: 3.64%
Monthly Mortgage Payment: $1,076
Amortization: 25 years
Total Interest Paid Over 25 Years: $112,000
Using the above example, you would have saved $113,000 in interest payments alone over 25 years. Imagine the comparison using a higher-end home as an example.
Perhaps you want to free up cash for such things as renovations, travel or putting towards your children’s education? Or maybe you want to pay down debt or pay your mortgage off faster?
If you’ve thought about breaking your mortgage and taking advantage of these historically low rates, feel free to give me a call to discuss your options.
In some cases, the penalty can be quite substantial if you aren’t very far into your mortgage term, but we can determine if breaking your mortgage now will benefit you long term.
People often assume the penalty for breaking a mortgage amounts to three months’ interest payments so, when they crunch the numbers, it doesn’t seem so bad. In most cases, however, the penalty is the greater of three months’ interest or the interest rate differential (IRD).
The IRD is the difference between the interest rate on your mortgage contract and today’s rate, which is the rate at which the lender can relend the money. And with rates so low these days, the IRD tends to be greater than three months’ interest. Because this is a way for banks to recuperate any losses, for some people, breaking and renegotiating at a lower rate without careful planning can mean they come out no further ahead.
Keep in mind, however, that penalties vary from lender to lender and there are different penalties for different types of mortgages. In addition, the size of your down payment and whether you opted for a “cash back” mortgage can influence penalties.
While breaking a mortgage and paying penalties based on the IRD can result in a break-even proposition in the short term, if you look at the big picture, you’ll see that the true savings are long term – as we know that rates will be higher in the years to come. Your current goal is to secure a long-term rate commitment before it is too late, and here lies the significant future savings.
Following is an example of a home that cost $250,000 in November 2008 (just months ago) and what it’s worth now, as well as the average change in interest rates, and total savings based on a 25-year amortization:
November 2008
Purchase Price: $250,000
Average Interest Rate: 5.84%
Monthly Mortgage Payment: $1,575
Amortization: 25 years
Total Interest Paid Over 25 Years: $225,000
vs.
May 2009
Purchase Price: $212,500
Average Interest Rate: 3.64%
Monthly Mortgage Payment: $1,076
Amortization: 25 years
Total Interest Paid Over 25 Years: $112,000
Using the above example, you would have saved $113,000 in interest payments alone over 25 years. Imagine the comparison using a higher-end home as an example.
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