Fixed rates up unfortunately.  Standard 5 year fixed now at 4.24%.  Variable still low at 1.75% or prime minus .50%.

Call or email Buyingblock.com for more details.  Ask how you can get an additional .05% off your interest rate.

RBC and TD have announced that they are lifting rates on fixed term products.  See below for full details keeping in mind those are the posted rates. Others are likely to follow and discounts below posted rates are anywhere from 1.4-1.6%.   

No change to prime rate and variable or adjustable rate mortgages.  Though that is coming at some point too.   Inflation #s last month a little higher than Bank of Canada likes so chance they may lift prime sooner than the expected July uptick.   Still much debate how much prime will or can go up.  Economy still on shaky ground though some more positive #s and reports have been coming in. 

Current rates are below 4% anywhere between 3.69 and 3.89% depending on lender.  To lock in or not still a difficult question.  If deep discounted variable in 1% range still a lot of room to make up.  But if wish so peace of mind and additional 5 years of historic low fixed rates may be something to consider. 

RBC 5 year fixed rate :  5.85%

RBC 3 year fixed rate :  4.35%

Even with news speculating of impending rate hikes, lenders keep lowering mortgage rates as competitive spring real estate market begins to heat up.  Fixed rates have dropped with specials as low as 3.64% on 5 year terms ( 30 day rate hold ), 3.79% for 5 years can be held for 120 days and now variable rate is as low as 1.75%! 

That being said, investors with millions of dollars at stake think the Bank of Canada is four months away from its first prime rate hike in over 2 1/2 years.

The Bankers’ Acceptance rate (BA) yields are at an 11-month high.

BAs influence variable-rate mortgage pricing and they’ve been dormant for almost a year.

Now, the interest-rate market is waking up.  Traders are pricing in a 1/4 percentage point rate increase on July 20. 

July 20 is the Bank of Canada’s first interest rate meeting after its conditional moratorium on rate hikes ends.

Traders aren’t always right, but opinions backed with money usually mean more than opinions without.

Economists surveyed by Bloomberg are calling for a 1.25 percentage point jump in Canada’s key lending rate by year-end (from 0.25% today to 1.50%) which typically shifts prime rate in equal segments.

Time will tell.

Some specials this week with one lender dropping the variable rate mortgage to 1.75!  That is prime minus .50%.  Three year term.  Fixed rates as low as 3.29% for three years and 3.64% for five years.  Bank of Canada met two weeks back suggesting prime rate staying low til at least mid year.   Great time to get into real estate market.  Contact Byingblock for more details.  Rate holds for up to 4 months.

This just in:

We have all heard about the Bank of Canada’s position on raising the overnight rate - no change until mid 2010.

Well, I was reading an economist’s take on this last week and he actually feels that the central bank will postpone rate hikes until mid 2011. He supports this position by citing a strong Canadian dollar, core inflation remaining within the target rate or below and an economy that is gradually pulling out of a recessionary period.

Yesterday I read an article in the Financial Post that quoted the venerable C.D. Howe Institute. The Howe Institute, a conservative-leaning think tank, believes that significant increases to the key overnight lending rate are required - ‘the central bank should act with zeal to get ahead of the inflation curve’. The Howe suggests that The Bank of Canada needs to aggressively raise the benchmark lending rate by 50 basis points beginning in the summer. The increases to the overnight rate should continue to increase with every scheduled announcement until mid 2011. Wow, that is aggressive! That would take the Prime lending rate from 2.25% today to somewhere in the 5.25-5.75% range in mid 2011.

There you have it, two dramatically different takes on how the Bank of Canada should contend with its monetary policy for the next twelve to sixteen months. I will reserve judgement until I read Mr. Carney’s thoughts next week.

Key Date: March 2nd, 2010 Interest Rate Announcement.

Scott H

Great rates abound in the Mortgage Marketplace and Buyingblock.com is prepared to get you the best rate:

Take advantage with a mortgage pre-approval and hold a great rate for 120 days or if you have a firm offer, speak to our mortgage experts about getting you a super low ‘Quick Close Special’ interest rate!!

Rates:

QUICK CLOSE SPECIAL

5 year fixed = 3.69%  bundle our services and get 3.64%

3 year variable = 1.85% (Prime minus 0.40% today) bundle our services and get 1.80%

PRE-APPROVAL RATES

5 year fixed rate pre-approval = 3.84%

5 year variable rate pre-approval = 1.95%

Specials abound.  Fixed rates as low as 3.69% on five year terms and variable rates as low as 1.95% or prime minus .30%.

As well, some new mortgage rules are slated to take effect April 19th as this morning Finance Minister Jim Flaherty made the following three announcements to mortgage insurance rules:

1.      Variable mortgages qualified at five year fixed rate ( previously used 3 year term );

2.      Refinancing limited to 90% instead of 95%;

3.      Non owner occupied residences require 20% down payment;

This announcement is the result of a review process on debt levels undertaken by the federal government who was fearing possible asset bubble and over heated housing market. 

Again, Mark Carney and the Bank of Canada has announced they would keep the key interest rate at a record-low 0.25 per cent to achieve its inflation target of two per cent and keep economy going.  This means prime rate is staying at 2.25%.

While the Bank said economic growth in Canada resumed in the third quarter of 2009 it has proved a little less than expected and though there has been a slightly higher than expected rate of inflation in recent months, it reiterated that the economy is still lagging, particularly due to factors like a strong Canadian dollar and low levels of U.S. demand for our manufactored goods.  

As such, prime staying at 2.25% and one of our lenders has increased the discount below prime to .30% below so that is netting out today at 1.95%.  Small drop in fixed rates as well with a 5 year term special closing within 30 days at 3.75%.

Low rates still around but for how long?  Five year fixed at 3.79% still lingering for quick close deals in next 30 days though 1/2 dozen lenders have raised rates above 4% on the popular five year fixed product.  3.89% can be held for 120 days.  Variable/adjustable rate mortgage still availalbe at 2% or prime minus .25%.  Three year term.  Prime minus .20% option for five years.

And does it make sense to consolidate that extra debt you may be carrying and add to mortgage?  See…

How your mortgage can set you free of other debt

by Michelle Warren, Bankrate.com
Wednesday, January 6, 2010provided by

 Credit crunch, debt crisis — call it what you will, but the current economic climate is spurring people to get their own finances in order. For Jack and Sarah Stewart, of Toronto, this means tackling the $40,000 in debt they’ve allowed to balloon during the past eight years. With their mortgage coming up for renewal, they’re thinking of clearing the slate and rolling the burden into their mortgage.

“We want to consolidate our debt, but we’re not sure if increasing our mortgage is the best way to do it,” says Jack, who asked that his and his wife’s names be changed to protect their privacy.

He’s not alone. Laurie Campbell, executive director of Credit Canada, says it’s a question people grapple with all the time. “Homes in the past have been your sacred cow,” she says, referring to the drive to pay down one’s mortgage as quickly as possible.

These days, however, with people juggling debts and paying varying rates of interest, increasing one’s mortgage can be a smart move, even if it takes longer to pay off.

Lowering interest rates

Peter Majthenyi, a mortgage planner with Mortgage Architects, in Toronto, says it’s a common theme as homeowners strive to bring down the overall interest they pay, as well as reduce their monthly obligations. He prefers to think of it as repositioning one’s debt, and in his experience, “in almost all cases, it’s justified.”

“If you have debt that is sitting at 18 percent interest, then it certainly makes sense,” says Campbell, adding that it’s something to consider only if you have enough equity in your home and if your mortgage is coming up for renewal (read the fine print to find out if the penalties for breaking a mortgage outweigh the possible benefits).

Majthenyi notes that if you’re working with the same lender, there’s often no penalty involved with increasing your mortgage before the term expires.

The Stewarts seem like prime candidates. They have a $200,000 mortgage on a house worth about $425,000. They have plenty of equity, they’re up for renewal at the end of the year and they say they’re serious about getting their finances in order. Ideally, they’d roll the debt into their mortgage, continue an accelerated payment program whereby they pay every two weeks and they would not increase their amortization period, but instead increase their payments.

Dealing with debt

It’s a good plan, says Campbell, who thinks all mortgage holders should accelerate their payments. She also likes the idea that they plan to stick to a 17-year amortization instead of renegotiating another 25-year mortgage. However, she stresses that none of this amounts to much if the Stewarts are going to continue the same spending habits and find themselves in a similar position five years from now. “They have to understand what got them into this $40,000 debt in the first place. They have to make sure they don’t fall victim to that again.”

She recommends cutting up credit cards, especially store cards, which have higher rates of interest, and not using one’s line of credit like a bank account.

The Stewarts say the bulk of their debt was incurred for renovation costs, including a new kitchen and installing hardwood flooring, but admit their spending habits need a makeover. “We’re always dipping in to our line of credit because we’re strapped for cash,” says Sarah Stewart. “I think if we consolidate the debt, it’ll increase our cash flow and we’ll be able to live within our means.”

Jeanette Brox, a Certified Financial Planner with Investors Group in North York, Ont., always encourages her clients to look at the big picture when it comes to financial health: “My job is to make them think outside the box.” She says helping people manage debt, while securing their future, is essential. “People need to think beyond what our parents did, which was paying down the mortgage,” she says. “I used to think that way too, but I don’t anymore.”

In her view, the Stewarts and others like them need to take an aggressive approach if they ever want to get ahead. Not only do they need to improve cash flow, but they also need an emergency fund for unforeseen expenses, not to mention a retirement plan.

Planning for the future

Brox admits a lot of people would balk at the idea, but she thinks the Stewarts, both in their early 30s, should not only roll their debt into the mortgage, but increase their mortgage an additional $35,000 for a total of $275,000. To make payments more manageable, she’d also recommend increasing the amortization period to 25 years. She would invest $25,000 in mutual funds and further $10,000 in a money market account (earning about two percent interest).

“This is what I call a lifestyle fund,” says Brox, adding that part of the interest cost on the mortgage would be tax deductible. “It’s a win-win situation, but you’ve got to be really disciplined.”

That means using their increased tax return to pay down the principal on the mortgage, thereby helping compensate for the interest cost of carrying the additional $35,000. The other bonus is that within five years (or so), the $25,000 registered retirement savings plan, or RRSP, will have grown to about $40,000. She stresses this is a long-term plan and people have to realize that the market is going to rise and fall.

“It’s all based on comfort level,” says Brox, adding that the biggest mistake she sees with people who reposition debt is that they don’t have a long-term plan and, as Campbell, pointed out, go back to old spending habits. “People need to have their whole financial picture analyzed. It’s something to consider, but you need to work with a planner or bank manager.”

Lines of credit

There’s a whole school of thinkers that shudder at the thought of increasing one’s mortgage. At the core of this is that you’re trading unsecured debt for secured debt and paying interest on that debt for the entire life of your mortgage, which can dramatically increase the cost of borrowing. In addition, refinancing also involves added legal costs (in most cases a minimum of $500). An alternative is consolidating debt onto a line of credit or home equity loan, which have higher interest rates than a mortgage, but can be paid off more quickly.

This works in theory, say our experts, but rarely in real life. “A lot of people just make the minimum payment and never get it cleaned up,” says Brox.

“I’m wary of open lines of credit because they can easily stay at $50,000 forever,” says Campbell, adding that an increased mortgage payment forces people to be more disciplined in paying down debt.

As for paying the debt for the entire length of your mortgage, all the experts stress that the way to combat this is by channelling extra funds back into the mortgage and paying off the mortgage early. This could mean accelerated payments, using tax returns or bumping up the payments. “We’re putting all the money back into the principal of the mortgage,” says Majthenyi, who points out that an extra $10,000 on a mortgage costs about $50 a month, while a $10,000 loan requires minimum payments of $300.

In the Stewart’s case, it’s costing them about $1,000 a month to cover $40,000 debt. If it’s part of their mortgage, it translates into about $200. Ideally they’d direct the bulk of that money back into their mortgage through an annual lump payment or by increasing individual payments by a few hundred dollars.

Repositioning debt into one’s mortgage is a sound option for people who are committed to changing bad habits and/or taking a long-term approach to getting their finances in order.

When it comes to money, Brox says that people need a big-picture plan, not a band-aid solution: “A lot of times it’s not what you make but how you manage it.”

Good chance fixed rates could be climbing.  Current low is 3.79% with 30 day rate hold or 3.99% for 120 days.  Note some lenders already up in mid 4% range.  Variable still in 2% or 2+% range depending on lender.  Job numbers being released today will influence the bond yields and in turn likley affect fixed rates.  Get preapproved asap if interested in a fixed rate mortgage this winter! 

David Paddon, THE CANADIAN PRESS
TORONTO - Canada’s residential real estate market is expected to remain unusually strong through the first half of this year after a strong finish to 2009, according to a survey published Thursday by Royal LePage.

The Royal LePage analysis is consistent with other recent reports on the state of the Canadian real estate market, which has rebounded over the past 12 months after sales dried up in late 2008 and hit a multi-year low in January 2009.

The Canadian market’s sudden plunge was sparked by a credit crunch that originated in the U.S. housing and lending industries - eventually spreading globally, causing a worldwide recession in the late summer and early fall of 2009.

However, the Canadian real estate market has been much quicker to recover than its American counterpart, in part because of a more stable banking industry, historically low interest rates and improving consumer confidence.

Royal LePage executive Phil Soper says Canada’s real estate market enters 2010 with “considerable momentum from an unusually strong finish to the previous year.”

The stimulus effect of low borrowing costs has contributed to a sharp rise in demand that has driven activity to new highs, he said in a statement.

Royal LePage says house prices appreciated in late 2009, with fourth-quarter price averages higher than in the fourth quarter of 2008.

The average price of detached bungalows rose to $315,055 (up six per cent), the price of a standard two-storey home rose to $353,026 (up 5.2 per cent), and the price of a standard condominium rose to $205,756 (up 6.4 per cent).

Regions that saw the strongest declines during the recession are now showing marked gains. Those regions include Toronto and the Lower Mainland, B.C.

Vancouver, which is frequently Canada’s most expensive real estate market, experienced a particularly robust quarter, with home prices rising across all housing types surveyed.

“No other sector of the economy has been as highly affected by economic stimulus as housing,” said Soper.

“As consumer confidence has improved, Canadians have shown a lingering reluctance to acquire depreciating assets such as consumer durables, but have embraced the opportunity to invest in real property.”

Royal LePage estimates that Vancouver’s real estate prices will rise a further 7.2 per cent this year, although February may be soft because of the Olympic Winter Games that will be held in the city and nearby Whistler, B.C.

Detached bungalows in Vancouver sold for an average of $828,750 in the fourth quarter, up 11.4 per cent from the same period last year. Standard condominiums in Vancouver went up 11.8 per cent year-over-year to an average of $452,750. Prices of standard two-storey homes in Vancouver rose 9.6 per cent year-over-year, selling at $917,500.

In Toronto, the average price of a standard condo rose 2.9 per cent to $309,316, detached bungalows rose 9.9 per cent to $446,214 and standard detached homes increased 3.5 per cent to $564,175.

In Montreal, the average price of a detached bungalow rose to $245,125 (up 3.1 per cent; a condo increased to $216,667 (up 16 per cent) and a two-storey house increased 12.3 per cent from a year earlier to $345,789, Royal LePage said.

The Greater Montreal Real Estate Board reported Thursday that the number of sales last year increased 41,802, up three per cent from 2008. The median price of a single-family home was $235,000 last year, up four per cent from 2008.

“Although sales decreased the first four months of 2009, Montreal’s real estate market rebounded and finished the year on a positive note,” said Michel Beausejour, the Montreal board’s chief executive.

The group that represents Toronto-area realtors reported Wednesday that there were 87,308 transactions last year through the Multiple Listing Service, a 17 per cent increase over 2008.

In December, there were 5,541 sales in the Greater Toronto Area (average price $411,931), up from 2,577 sales in December 2008 (average price $361,415), according to the Toronto Real Estate Board.

The Toronto board also said the number of sales of existing homes rebounded in the latter half of 2009 after a slow start at the beginning of last year.

Royal LePage’s average price estimates for other Canadian cities include:

-St. John’s, N.L.: Detached bungalow, $217,167 (up 14.3 per cent); standard two-storey house $298,833 (up 14.1 per cent).

-Halifax: Detached bungalow, $238,000 (up 10.7 per cent); standard two-storey homes, $265,333 (up 1.8 per cent).

-Charlottetown: Detached bungalow, $160,000 (up 1.9 per cent); standard two-storey $195,000 (up 3.7 per cent).

-Saint John, N.B.: Detached bungalow, $228,000 (up 1.3 per cent); standard two-storey $299,000 (up 1.5 per cent).

-Moncton, N.B.: Detached bungalow, $152,300 in the fourth quarter (up 1.5 per cent); standard two-storey home, $131,000 (up 4.0 per cent)

-Fredericton: Detached bungalow, $182,000 (up 12.3 per cent); standard two-storey, $210,000 (unchanged).

-Ottawa: Detached bungalow, $332,417 (up 3.4 per cent); standard two-story home $331,917 (up 3.7 per cent).

-Winnipeg: Detached bungalow, $241,650 (up 9.9 per cent); standard two-storey home $275,500 (up 10 per cent).

-Edmonton: Detached bungalow, $299,286 (down 0.7 per cent); standard two-storey home, $340,557 (down 1.2 per cent)

-Calgary: Detached bungalow, $412,478 (up 0.5 per cent); standard two-storey home, $427,067 (up 2.3 per cent).