Mortgage rates set to stay low for the next six months

Renewing a home loan shouldn’t be too painful for the next six months according to a new report from The Canadian Association of Accredited Mortgage Professionals. It’s predicting that the low rates should continue well into 2015 and that means those that have been used to paying at a higher rate can look forward to savings and that will be good news for the economy as a whole. CAAMP says that of the 1.35 million homeowners that have renewed or refinanced their loans during this year 1.05 million are now paying at a lower rate. Their figures also show that 16 per cent of those with a mortgage have increased the level of their monthly payments or paid a lump sum to pay down their loan faster. Another 7 per cent have increased the frequency of their loan repayments to fortnightly. Around 11 per cent have taken equity out of their home for other purposes including debt consolidation, home renovation or investments. Among first-time buyers the average down payment is 21 per cent with 11 per cent of respondents being gifted the money from a relative and 6 per cent receiving a loan from a family member.

Housing Demand Ratchets Higher in British Columbia

Vancouver, BC – November 18, 2014. The British Columbia Real Estate Association (BCREA) released its 2014 Fourth Quarter Housing Forecast today.

"Consumer demand has ratcheted up this year and is expected to remain at a more elevated level through 2015,” said Cameron Muir, BCREA Chief Economist. “While historically low mortgage rates support demand, the housing market is also being underpinned by a more robust economy and associated job growth, strong net migration and consumer confidence."

BC Multiple Listing Service® (MLS®) residential sales are forecast to increase 15.1 per cent to 83,900 units this year. Stronger economic conditions are expected to be somewhat offset by higher interest rates later next year, and keep home sales from advancing much further. As a result, MLS® residential sales are forecast to edge up a further 1.2 per cent to 84,900 units in 2015. The 15-year average is 80,400 unit sales and a record 106,300 MLS® residential sales were recorded in 2005. 

The average MLS® residential price for the province is forecast to increase 6 per cent to a record $569,800 this year and a further 1.2 per cent to $574,300 in 2015. “New construction activity is generally keeping pace with population and household growth, keeping supply in line with consumer demand,” added Muir. BC housing starts are forecast to increase 4.6 per cent to 28,300 units this year and a further 1.4 per cent to 28,700 units in 2015.

Interest Rate Hike. The Question is When?

Canada's latest inflation numbers have once again turned attention toward the Bank of Canada's plans for interest rate increases.

Core inflation – which the central bank uses for its policies – jumped by an unexpected 4-tenths to 2.1% in August. However that is still well within the Bank's target range and it remains to be seen if this is a sustained acceleration that could require interest rate intervention.

Of course the American influence remains strong and the U.S. Fed has quieted the debate about its next move. It's latest policy statement continues to use the phrase "considerable time" when referring to its pledge to keep borrowing costs down. The Fed also indicated it would like to see stronger employment numbers before raising rates.

The Bank of Canada is definitely going to raise rates. The question they still don't know is when. All data indicates it will take some time before we see a rise.

No Housing Bubble

The three Canadians who could be said to have the biggest influence over the country's housing market have all expressed their confidence in it.

Finance Minister Joe Oliver, Bank of Canada Governor Stephen Poloz and CMHC CEO Evan Siddall were at a meeting of G20 financial heads in Australia and all said they see no bubble in the Canadian market. But they are watching it closely.

In a speech, Siddall said CMHC research shows "there are no immediate problematic housing market conditions at the national level."

Siddall did caution, though, that action could be required if the market doesn't cool as predicted.

The Bank of Canada's Poloz repeated his concern that housing is a "vulnerability" for Canada but, he said, "we don't see the housing market as particularly hazardous and we certainly don't consider it to be a bubble."

How Record Low Interest Rates Help You Pay Off Your Mortgage Faster

Record low interests rates are helping Canadians pay off their debt faster, but cheap borrowing costs are not enough to overcome the red hot housing sector, according to a new survey.
The Canadian Association of Accredited Mortgage Professionals says 35% of Canadians were able to bump up their payments in the last year, some of them taking advantage of a renewed loan at a lower interest rate. That lower rate allows them to apply more of their monthly payment to principal as opposed to just interest.
“There are people comfortable with what their payments are when they are renewing and [the lower rate] becomes an additional payment,” said Jim Murphy, chief executive of CAAMP.
A $250,000 mortgage at 4%, amortized over 25 years, has a monthly mortgage payment $1,315.06 but if you lower the rate to 3% — the going rate on a five-year rate mortgage — your monthly payment drops to $1,183.12. Keep the payment the same and that extra $131.94 can be applied to principal which will ultimately mean your loan is paid off more quickly.
CAAMP found in its May survey that the average mortgage rate of a Canadian homeowner is 3.24%, that’s down from 3.5% a year ago. It said the renewal rate for what it called “recent” mortgages was down to 3.02% on average.

10 Reasons to Make Repairs Before You Sell Your Home

If you’re planning to list your home this summer, you don’t have a lot of time to tackle all the necessary repairs. Why is it important to check these off your to-do list ahead of time? Money spent on improvements now will be far less than the cost of that first price reduction if your house sits on the market.

Even if your home doesn’t linger for long, you run the risk of a buyer asking for concessions and credits for items you didn’t fix, and the quotes from experts doing the work will almost certainly be higher than your own out-of-pocket cost.

Click here for 10 reasons you’ll want to make repairs before you put your house on the market, courtesy of Forbes.

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

7 Reasons Why Your New Years Resolutions Fail and How to Fix Them

Did you know that at least 5 studies show that about 90% of your New Year's resolutions will fail within the first 30 days?

You could argue that point but I bet if you took a moment to reflect on your past resolutions, you  would be forced to agree. Does that mean you are weak and incapable of bettering yourself? Of course not! It does mean that we need a little help setting goals that actually work.

Here are 7 mistakes that most people make when setting their new year's resolutions and how to fix them. Here are the 7 reasons.

1: They don't write them down.
2: They don't ever review their goals after New Year's Day.
3: They focus on setting many goals instead of focusing on one.
4: They make broad, ambiguous goals.
5: They don't make themselves accountable.
6: They don't change their normal patterns.
7: They forget to focus on the present.

Click here to read the entire article from Successify