Mortgage Matters

This morning I met with Carole, a single mother, this wonderful lady has been fending for herself from the age of 14.  She can be so proud of herself.  She came to me, to help her and her 15 year old daughter obtain their dream of home ownership.  They are not ready now and won’t be ready for at least 6 months, today they have walked away with a concrete plan so that their dream will become a reality.

 

If you are thinking of buying a home in the next 6 to 12 months or even longer, now is the time to contact your trusted mortgage agent/broker.   Two tips I gave Carole this morning, firstly for her to look at reducing the interest she is paying on her auto loan and credit card.  We worked out the reduction in her credit card interest alone would equate to $112 a month – this can be used to pay off her visa card.  Secondly to draw up a budget, in order for the budget to be effective, I have suggested that she track her spending for the next month.  Once she sees where her money is going she can create a budget that is realistic and at the same time she can eliminate unnecessary spending.

 

Another point I want to make is regarding credit card payments.  Please pay your credit card before the due date.  I have seen where clients’ credit scores have been drastically affected, not for a missed payment but a late payment.  One client actually paid on the due date however he paid online, which takes 2 to 3 days to get credited to your account.  On his credit bureau it showed up as a R2 (which previously used to mean 60 days in arrears).  Due to the falling property prices, banks are also moving quicker to foreclosure when a mortgage payment is missed.  If you find you are unable to meet your mortgage payments, please contact me so that we can discuss different strategies.   Charmaine Idzerda Tel: 905.336.5997 or 1.866.824.8057

Mortgages Home Ownership

A look at 2008 from a mortgage perspective!

First of all, my warmest wishes for a very Happy New Year, wishing you a year full of happiness, good health and prosperity.

I hope 2008 was a good year for you, in the mortgage industry we saw major changes in 2008…

The U.S. sub-prime fiasco made lenders and mortgage investors run for cover. Canada lost some good lenders

Rate Premiums.  Bond yields and the Bank of Canada’s key interest rates fell substantially in 2008.  Yet, heightened credit risk forced lenders to pay more for the money they lent out.  That led to record-high mortgage spreads, high fixed rates, and for the first time in a very long time we saw prime plus for variable rate mortgages and secured lines of credit.

Amortizations.  2008 saw the government eliminate the popular 40-year amortizations.  

Minimum down payment  The government brought back the 5% minimum down payment

Government Support of the Market.   Canada Mortgage Bonds program is the main source and for non-bank lenders, sometimes the only source of capital.  In October, the Finance Department again came to the rescue with its mortgage buyback initiative.

2009

The Big 5 banks have forecasted that they expect further rate cuts by the Bank of Canada in 2009.  They are expecting between 1/2 % to 1%.

Here is what the big banks are forecasting for interest rates:

• TD Economics - TD expects a rate cut of 50 basis points in January 2009
• BMO expects 1/2 percent rate cut in January 2009 –
• RBC forecasts 1/2 percent drop in January 2009 –
• CIBC Wood Gundy expects a 3/4% rate reduction by February/March 2009
• Scotia is forecasting a 1% drop for 2009

The big question is, will the banks pass on the rate cuts made by the Bank of Canada!

Do you think the banks will pass on the full reductions!  What rate are you currently paying!

 

Next Bank of Canada announcement is January 20th

Mortgages 2008 Mortgage Prospective, 2009 Mortgage Outlook