—The Mortgage Report: Aug. 5— Is This a Joke?: “The CMHC defines housing as affordable when ‘it costs less than 30% of a household’s before-tax income,’ which includes rent or mortgage (principal and interest) payments, property taxes and other home bills,” reports the Financial Post. The punchline is, you have to move to a remote fishing village in Newfoundland to...
—The Mortgage Report: July 31— Snapping Up Bonds: Fixed-rate mortgage shoppers dreaming of lower rates better hope for lots of bond buying in the months to come. And that’s what we’re getting from the Bank of Canada. The BoC is buying a lot of 5-year bonds, which heavily influence 5-year fixed mortgage pricing. Under theGovernment of Canada Bond Purchase Program...
—The Mortgage Report: Saturday Edition— The Readvanceable Shuffle: Got a fixed rate above 3% in a readvanceable mortgage? Does your lender let you lock in the HELOC portion to a low-cost short-term fixed rate? If so, here’s a tip that might save you some interest. Jargon Buster: A “readvanceable mortgage” is one that has a regular amortizing mortgage linked to...
—The Mortgage Report: July 23— Forget Posted-rate Cash-back Mortgages: Many borrowers with less than 20% down aren’t just short on down payment funds, they’re short on closing costs too. And that’s a problem, because lenders want to ensure buyers have at least 1.5% of the purchase price available for closing costs. If you can’t easily swing that, there are now...
—The Mortgage Report: Weekend Edition— It Might as Well Have: On Wednesday, the Bank of Canada threw caution to the wind and changed its playbook. It pledged not to hike rates until “the 2 percent inflation target is sustainably achieved.” The significance of that statement is now sinking in and here’s why. Normally, the Bank of Canada doesn’t wait for...
Quick Summary Today’s Announcement:No change to rates Overnight rate:0.25% Prime Rate:2.45% (also no change; seePrime Rate) Market Rate Forecast:No BoC hikes until at least 2023 BoC’s Headline Quote: “…The Bank is prepared to provide further monetary stimulus as needed.” BoC on the Economy: “The Bank expects economic slack to persist as the recovery in demand lags that of supply, creating...
—The Mortgage Report: July 13— False Start: Parts of the U.S are going back into lockdown, Fed officials are warning the economy is regressing and Ottawa is extending wage subsidies until December. That’s the kind of ominous news that makes people buy bonds. And if enough investors think the economy is heading back into the toilet, bonds will go up...
—The Mortgage Report: July 8— Avoiding the Cliff: If six-month payment deferrals end as planned in September, tens of thousands of homeowners will default on their mortgages—no question about it. CMHC calls this the looming “deferral cliff,” and analysts want to know what the government will do about it. If Australia is any guide, deferrals could very well be extended....
—The Mortgage Report: July 3— Long Road Back for Jobs: Avid rate watchers all want to know the same thing: how long will unemployment stay elevated? The answer to that is essential to knowing how long rates could remain in a trough. On Thursday, we got a sobering projection from a reputable source. The non-partisan Congressional Budget Office (CBO) says...
—The Mortgage Report: Weekend Edition— Renewal Tax: Borrowers get worse deals on mortgage renewals than on brand new mortgages. And it’s been that way for decades. Interest rates on renewals have historically been about nine basis-points (0.09%) higher than rates on new mortgages. That’s based on a survey of five-year uninsured mortgages from 19 of the largest federally regulated lenders...
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