Breaking a Closed Mortgage Can be Costly

You can get a low mortgage rate by signing up for a five-year term. But you could be penalized for an early exit if your plans change.

Most of the Big Five banks start with a high posted rate and offer discounts to customers who ask for one. It’s a game that has gone on for many years. However, the high posted rate can come back to haunt customers who decide to break a closed mortgage at a time when rates are falling.

Mortgage brokers help clients get the best rates from a variety of lenders. Many prefer to use smaller banks that post their best rates and don’t offer discounted rates.

How can you avoid getting hit with a mortgage prepayment charge that eats up your home equity when you sell?

Click here for the full article.

Housing Demand Forecast to Rise Through 2015

The British Columbia Real Estate Association (BCREA) released its 2014 Second Quarter Housing Forecast today.

BC Multiple Listing Service® (MLS®) residential sales are forecast to increase 5.2 per cent to 76,700 units this year, before increasing a further 6.7 per cent to 81,800 units in 2015. The five-year average is 75,400 unit sales, while the ten-year average is 84,800 unit sales. A record 106,300 MLS® residential sales were recorded in 2005.

"BC Home sales are expected to trend higher this year and in 2015, as stronger economic conditions both at home and abroad bolster consumer demand,” said Cameron Muir, BCREA Chief Economist. “While historically low mortgage interest rates are a key market driver, population growth led by a strong upturn in net migration and more robust employment growth are expected to generate additional housing demand." 

The average MLS® residential price for the province is forecast to increase 4.3 per cent to $560,500 this year and a further 2 per cent to $571,500 in 2015. Increasing consumer demand combined with fewer homes for sale has created balanced market conditions in most BC regional markets, resulting in home price appreciation more in line with overall consumer price inflation.

To view the full BCREA Housing Forecast, click here.

Fixed mortgages now trump variable, report says. Not everyone agrees.

Fixed-rate mortgages have gained an edge over variable-rate mortgages given the improving economy and attractive offers on longer-term deals, says a new report from economists at one of Canada’s big banks.

While many mortgage brokers agree with that assessment, others caution that locking into a fixed rate is not the best way to go.

“While we have in the past supported going variable, and even though short-term rates are likely to remain low this year, current offers on long-term mortgage rates and the improving economic outlook tilt the balance in favour of locking in at this stage.”

So which is better, fixed or variable? Well that really depends on your personal financial situation as well as your emotional capacity. If you can afford a possible higher mortgage in the future and won't stay up at nights wondering if rates are going to move then taking a variable may be a good option.

Otherwise a fixed rate for 5 years or longer might make you sleep better at night knowing your mortgage rate will not change for the entire term.

Always consult a mortgage professional for up to date mortgage information and trends.

Buyers were on the hunt for houses in March

Buyers favoured houses in the suburbs and condos in pricier urban communities in March, according to sales results released Wednesday for the Lower Mainland’s main property markets.

March sales showed an improvement from a year ago, but transactions continued to trend below their 10-year average, according to the reports.

“There has been a consistent balance between homeseller supply and homebuyer demand in our marketplace over the last year,” said Ray Harris, the newly installed president of the Real Estate Board of Greater Vancouver, in a news release.

Click here to read the complete article from the Vancouver Sun.

Tax Time - Do you Buy an RRSP or Pay Down Your Mortgage?

At this time every year the perennial question arises, pay down the mortgage or top up the RRSP? Traditionally the answer has been, top up the retirement savings and use the tax refund to make an extra mortgage payment. It is not bad advise but there are those who say, "mortgage first".

They argue that paying off your mortgage will give you much more financial freedom. No mortgage payments means more money in the bank and if you need to borrow you can use a home equity line of credit with a preferred interest rate. They also point out that price appreciation on your home is a permanent, tax free capital gain. RRSP contributions are just a tax deferral. Further, they say, any unused RSP contribution room is always available, it never expires. You can use it whenever you have the money.

Either way though - mortgage or RRSP - they say doing one or the other is better than doing nothing.

Housing Outlook Is Positive for 2014

"Housing demand in the province has nearly fully recovered from the 2012 downturn" said Cameron Muir, BCREA chief economist. "Over the next year, BC will be the beneficiary of a more robust global economic growth, led by a resurgent US economy and a favourable exchange rate. The resulting boost in employment will help underpin the housing market."



Home prices are expected to increase 1.8% this year and a further 1.7% in 2015.

Talk of rising interest rates no reason for home owners to panic

Talk of rising interest rates tend to make homeowners jittery and, if you have a big mortgage, you may be feeling extra nervous, but experts say not to panic.

Peter Veselinovich, vice-president of banking and mortgage operations with Investors’ Group in Winnipeg, stated that while rate increases are expected, any change will not be as dramatic as the Bank of Canada announced earlier this month.

A change in interest rates would translate to higher mortgage payments, although that would only apply to people with variable rate mortgages, since fixed-rate mortgages don’t change for the duration of their term.

Most home owners currently have fixed-rate, five-year mortgages. The mortgages come with the peace of mind of knowing what your payment will be for the duration of the term.

Click here to read the complete article from the Globe and Mail