Ottawa ponders further tightening of mortgage rules

Garry Marr and Paul Vieira, Financial Post · Sunday, Oct. 3, 2010

TORONTO/OTTAWA • The federal government is once again looking at tightening rules in the Canadian mortgage market, according to a source close to the situation.

Finance officials are set to meet in Ottawa on Monday with some of the country’s leading economists for pre-budget discussions and the subject of whether to tighten housing regulations may come up.

Much of the discussion about changing the mortgage rules seems to stem from comments made by the Bank of Canada governor who last week warned that consumer borrowing could not continue at its present clip.

“Canadian household balance sheets are becoming increasingly stretched,” said Mark Carney, who issued a warning to legislators about taking steps to contain the growth of personal debt. “Historically low policy rates, even if appropriate to achieve the inflation target, create their own risks.”

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15 Key Points Every Customer Should Know on Why They Should Use a Mortgage Broker

1) Mortgage Brokers in Ontario shop the best rates and products from 90 different Banks, Credit Unions and Trust Companies including: CIBC (First line), Toronto Dominion, Scotia, Bank of Montreal, Royal (Merix), and most of the Canadian Credit Unions, ING, etc.

2) Our services are free as the bank pays us a finder’s fee. The Industry is changing and banks now have to compete for business, so they value our referrals. Keep in mind, they spend millions of dollars operating their many branches, plus internal staffing and layers of management, so they can afford to offer deep discounts for the business we bring to them.

3) Isn’t it time the Banks compete for your mortgage business? You wouldn’t get just one opinion from one doctor if your physical condition were in question…why get just one opinion when your financial condition is going through the most significant transaction of its life?

4) Your bank very rarely gives you the best rates and products. Most homeowners renew their mortgage every four or five years automatically, so they rarely receive the best rates and programs. Since our Brokerage sends lenders millions of dollars of new business each month, they always offer us the deepest discounts which the mortgage agent will pass on to you - whether you are purchasing, refinancing or renewing.

5) Our application process is simple and quick. We just take a little info and send it electronically to the lenders that we feel are the best fit for your situation; A mortgage broker should have some feedback later that day or the next!

6) One of our best benefits is that we are available on your terms! Isn’t it frustrating when a bank takes several days to get back to you, and then you have to make your way through their endless voice mail boxes?

7) We take one credit bureau only and forward it to all the lenders! Many people inadvertently disqualify themselves from getting the best rate when they are shopping for a mortgage. When multiple banks pull a credit bureau, your Beacon score drops every time, sometimes eliminating the chance for the best mortgage or a mortgage at all!

8) There’s a mortgage product available for almost everyone now. When a person’s situation isn’t ideal, there’s usually a story about why; maybe they changed jobs, maybe they went through a divorce or another life-altering event and their credit was affected. It is our job to tell your story to the lender that will qualify you.

9) I appreciate your business. I sincerely appreciate your business and want to do a good job for you because I want all your family and friends business in the future! (Has any bank employee ever told you that?)

10) We are a certified Experts. Most bank employees are not certified and only know about their own bank’s products and do not know and cannot advise you to go to another lender where you can get qualified. You wouldn’t go to your G.P. if you needed a specialist. Deal with a mortgage expert specializing in mortgages from all lenders.

11) We work for you, not the banks. We don’t get paid unless we fund your mortgage with a lender that is giving you the product you need and we have no interest in getting the lender more interest on your mortgage, as the higher the interest, the lower the amount we can qualify you for; clearly we work in your best interests, not the lender’s.

12) Rate Protection. If the rates drop before you close you automatically get the lower rate and if rates go up you have the lower rate locked in. The last time you got pre-approved for a mortgage at a bank, did you get a commitment letter? Did they offer you a rate protection like the one we can secure for you?

13) Commitment Letter Every-time. We provide a commitment letter every time so you can relax and be confident your mortgage financing is in place!

14) 85% of all people in the USA use a mortgage broker and we are catching up quickly here in Canada.

15) A mortgage broker is no longer the “lender of last resort”! Actually we are becoming the first choice of the educated borrower.

Home prices are still 6.4% above their pre-recession peak, the Teranet-National Bank House Price Index shows.

Prices climbed 0.5% in July from a month earlier, marking the 15th consecutive increase, National Bank said, though for the first time in four months not all regions shared in the gain. Prices in Vancouver dipped, the bank noted. 

 

Over last year, the index was up 12.4%, compared to 13.6% a month earlier. “July’s rise is the weakest in four months, but it nevertheless continues the best string of consecutive monthly price increases since October 2006,” Senior Economist Marc Pinsonneault said in a research note. 

 

Click here to see the full story in The Globe and Mail.

 

Bank of Canada increases overnight rate target to 1 per cent

From Bank of Canada website:

OTTAWA –The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economic recovery is proceeding but remains uneven, balancing strong activity in emerging market economies with weak growth in some advanced economies. In the United States, the recovery in private demand is being held back by high unemployment and recent indicators suggest a more muted recovery in the near term.

Economic activity in Canada was slightly softer in the second quarter than the Bank had expected, although consumption and investment have evolved largely as anticipated. Going forward, consumption growth is expected to remain solid and business investment to rise strongly. Both are being supported by accommodative credit conditions, which have eased in recent weeks mainly owing to sharp declines in global bond yields.

The Bank now expects the economic recovery in Canada to be slightly more gradual than it had projected in its July Monetary Policy Report (MPR), largely reflecting a weaker profile for U.S. activity. Inflation in Canada has been broadly in line with the Bank's expectations and its dynamics are essentially unchanged.

Against this backdrop, the Bank decided to increase its target for the overnight rate to 1 per cent. As a result of monetary policy measures taken since April, financial conditions in Canada have tightened modestly but remain exceptionally stimulative. This is consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada.

Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook.

Information note:

The next scheduled date for announcing the overnight rate target is 19 October 2010. A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 20 October 2010.

Selecting the right mortgage term

Selecting the mortgage term that is right for you can be a challenging proposition for even the savviest of homebuyers, as terms typically range from six months up to 10 years.

By understanding mortgage terms and what they mean in dollars and sense, you can save the most money and choose the term that is best suited to your specific needs.

The first consideration when comparing various mortgage terms is to understand that a longer term generally means a higher corresponding interest rate. And, a shorter term generally means a lower corresponding interest rate. While this generalization may lead you to believe that a shorter term is always the preferred option, this is not always the case. Sometimes there are other factors – either in the financial markets or in your own life – that you will also have to take into consideration when selecting the length of your mortgage term.

If paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer mortgage term, such as five or 10 years, so that you can ensure that you will be able to afford your mortgage payments should interest rates increase.

By the end of a five- or 10-year mortgage term, most buyers are in a better financial situation, have a lower outstanding principal balance and, should interest rates have risen throughout the course of their term, will be able to afford higher mortgage payments.

If you are shopping for a mortgage for an investment property, you will likely want to consider choosing a longer mortgage term – depending, of course, on your overall plan. This will allow you to know that the mortgage payments on the property will be steady for a long time and enable you to more accurately project your future income from the property.

As well, if you know you will not be staying in the same home for the next five or 10 years, opting for a shorter term can save you significant fees when it comes to early payout penalties.

Choosing the right mortgage term is a unique decision for each individual. By understanding your personal financial situation and your tolerance for risk, I can assist you in choosing the mortgage term that will work best for your situation.

As always, if you have any questions about mortgage terms or your mortgage in general, I’m here to help!

Canada Mortgage Interest Rates

Recently, the real estate industry has dominated the headlines. 

 

Mark Carney, Governor of the Bank of Canada, raised warning flags about the impact of higher interest rates on those Canadians who are already stretching to carry their mortgages. 

 

There’s been coverage of the dispute between the Competition Bureau and the real estate industry over proposals that would allow greater price competition among real estate agents.

 

And there have been suggestions from within the industry that there needs to be increased professionalism among real estate agents. 

 

For many Canadians, none of these is the central issue when it comes to real estate. Rather, the key question comes down to the appreciation they can expect on the investment in their home. After all, the past decade has been a great period for homeowners. Expecting this to continue, some Canadians have stretched to buy larger houses now, before prices get away from them. Research firm Investor Economics points out that residential mortgages are at a record level, approaching $1 trillion. 

 

Click here for the full Globe and Mail article.

Dominion Lending Centres Wins Big at CMP Canadian Mortgage Awards

Dominion Lending Centres dominated the CMP Canadian Mortgage Awards on Friday, April 23rd at Toronto's Liberty Grand – walking away with five prestigious national awards!

Dominion Lending Centres took home top prizes for Mortgage Brokerage of the Year, Best Branding and Best Advertising. Meanwhile, one of our veteran broker/owners, Gary Meger, Neighbourhood Dominion Lending Centres in Barrie, ON, won Mortgage Broker of the Year. Finally, the Business Development Manager for our extensive white label Dominion Mortgage line of products, Cynthia Kramer, won Lender BDM of the Year!

“We are absolutely honoured that our industry peers and partners, as well as an esteemed panel of judges recognized Dominion Lending Centres with these incredible awards,” says Gary Mauris, President of Dominion Lending Centres.

“We will continue to provide our more than 1,700 brokers and agents across the country with value-added tools and services to ensure we remain on top, and are the company of choice for Canadian mortgage consumers,” Mauris adds.

This is the second consecutive year Dominion Lending Centres has captured the Best Branding award. Dominion Lending Centres is the only mortgage brokerage in Canada that has an advertising fund to ensure we gain access to households across the country via advertising – our main advertising vehicle being Television.

If you haven't yet noticed an upsurge in Dominion Lending Centres TV commercials, you soon will! This month and next, we have an increased presence across the country on News and Sports programming, culminating in an astounding 12.2 Million additional viewer impressions in the key demographic of consumers between the ages of 25 and 54! This is on top of the more than 240 Million viewer impressions we will make this year.

Earlier this month, six new Dominion Lending Centres commercials began airing across Canada. The key message follows a theme that interest rates are still near historic lows, and encourages viewers to contact a Dominion Lending Centres mortgage professional through our main website – www.DominionLending.ca – when purchasing a new home, or renewing or refinancing an existing mortgage.