Canada’s Resales Through The Roof!

July 22nd, 2009 No comments

Reuters  Published: Friday, July 17, 2009

Sales of existing homes in Canada jumped 31.5% in the second quarter from the previous one – their first year-over-year quarterly increase since before the peak of the financial crisis, the Canadian Real Estate Association said this week.

The industry group said actual home sales totaled 147,351 units in the second quarter of 2009, up 1.4% from the same quarter of 2008.

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Could bonds pull mortgage rates down even more?

July 13th, 2009 No comments

RITA TRICHUR Toronto Star:    Falling bond yields could spur a slight drop in medium-term residential mortgage rates this summer, but bargain-hungry consumers would be foolish to count on considerably cheaper borrowing costs, experts say.

About a month ago, banks blamed soaring bond yields for two sizeable hikes to key residential mortgage rates.

Those moves drove up posted rates on five-year fixed-rate loans by 60 basis points to 5.85 per cent. 

While yields have reversed course in recent weeks, banks have yet to pass on those savings to consumers. Meanwhile, there are fresh signs of life in the housing market, fuelling increased demand for mortgages.

Some economists and rate strategists believe that yields could fall a bit further and speculate that mortgage rates might follow suit. But there are no guarantees and experts surmise those potential declines would be minimal at best.

Doug Porter, deputy chief economist at BMO Capital Markets, says banks will be more inclined to tweak their rates if yields continue heading south

Typically, they want to be convinced that it is not a flash in the pan and that any retreat in yields is sustained,” he said.

“I believe that we are probably not too far away from that point. It might take a little more of a deeper rally (in bond prices) to make it completely convincing.”

Bond yields move inversely to prices. While variable-rate mortgages are largely influenced by the banks’ prime rates, conventional fixed-rate mortgages are linked to the bond market.

Banks generally try to match maturities when they finance mortgages with bonds. That means five-year mortgages are paired with five-year bonds.”

 

Charmaine’s comment:  I have highlighted certain phrases, as can be seen by the above article, banks are fast to increase their fixed rates when the bond rate increases however are very slow to reduce them as cited by Doug Porter of BMO Capital Markets, “they want to be convinced that it is not a flash in the pan and that any retreat in yields is sustained”.  

Also note the decrease in the premium on the variable rate from a couple of months ago:

Today I can offer you Prime plus 0.20 – most of the bank’s are at prime plus 0.40 – 0.60!

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Hamilton & Toronto Housing Trends

July 9th, 2009 No comments

Some really great trending in the Hamilton CMA as provided by CMHC.  Sales to New Listing Ratio’s have trended exceptionally well over the last several months and while sales are below last years levels by 8% – the previous 2 years were historically record levels and this is a huge improvement over the Oct-Feb results.  70.4% Sales to New Listing Ratio indicates an extremely robust resale home market.

 

 

Number of Sales

Yr/Yr² (%)

Number of New Listings

Average Price

Yr/Yr² (%)

Q1 2008

2,838

-8.2

4,739

$281,634

6.8

Q2 2009

2,166

-23.7

4,557

$264,187

-6.2

 

 

 

 

 

 

YTD 2008

5,654

-5.3

9,190

$285,294

6.4

YTD 2009

4,670

-17.4

8,162

$279,068

-2.2

 

 

Additionally, I thought I would share some of the numbers coming out of the Toronto CMA as provided by CMHC.  Really exceptional results with Sales to New Listing Ratio showing 65%…indicative of a very healthy resale housing market and positive trending in all categories. 

 

 

Number of Sales

Yr/Yr² (%)

Number of New Listings

Average Price

Yr/Yr² (%)

Q1 2008

17,721

-13.4

36,885

$379,232

4.3

Q2 2009

12,957

-26.9

34,077

$358,036

-5.6

 

 

 

 

 

 

YTD 2008

35,894

-12.5

74,291

$388,941

4.5

YTD 2009

30,653

-14.6

60,758

$377,091

-3.0

 

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New 18 Month Mortgage Released!

June 30th, 2009 No comments

This new exciting mortgage product is currently at a rate of 2.75%!

  • Purchase must close by August 28th, 2009
  • The 18-month term is convertible at any time with no penalty to a 5 year fixed rate mortgage, at published rates available at time of conversion
  • 20% prepayment allowed each year!!
  • You may also increase payment by 20% each year
  • On this product a minimum amortization of 15 years is allowed

Email Charmaine@designermortgages.ca for more information on getting this exciting new product!

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Thinking about converting your variable mortgage? Read this first!

June 22nd, 2009 No comments

Would you like to pay an extra $300 per month on your mortgage? Not likely.

That hasn’t stopped a number of Canadians, with the deal of a lifetime on a variable-rate mortgage, from switching over to a more expensive fixed-rate product and paying the extra freight.

A fear of rising rates is driving the rash decision. But if you’ve finally managed to pin your banker to the ground, why on Earth would you let him off the mat?

More than 28% of Canadians have a variable-rate product tied to prime, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP). If you negotiated a deal before October of last year, chances are you are now borrowing money for as little as 1.35%. That’s based on deals that at one point saw the banks giving 90 basis points off prime. Prime is now 2.25%.

However, Joan Dal Bianco, vice-president of real estate-secured lending, TD Canada Trust has said “It’s not a mass rush yet, but we are starting to see … people locking in. But variable rates are still so good.” She stops short of questioning why a consumer would pull out of these “deals” that are no longer available on the market. Try to get a variable-rate mortgage today and the best you can probably hope to get is 60 basis points above prime, or 2.85%.

“Bonds yields are going up rapidly and people are starting to realize the rates are going to go up,” Ms. Dal Bianco says. Throw in the fact the Bank of Canada used the weasel word “conditional”(on inflation rates)when it promised not to raise rates until June, and you can understand why some people think today’s record-low prime rate might not hold. But if you’re someplace between 60 to 90 basis points below prime, the rate is going to have to go up pretty fast to justify locking in today at 4%, even though that is just slightly above the all-time low hit last month for a five-year term.

“I don’t understand why you would lock in,” says Jim Murphy, chief executive of CAAMP. “Sure, if they start to rise, but [Bank of Canada governor Mark] Carney says they won’t rise, so you’ve got another year at that prime-minus rate.”

Don Lawby, chief executive of Century 21 Canada, says even when rates do start to increase, they are not going to jump significantly right away. You are not going to get 4% on a fixed rate again, but double-digit rates seem unlikely.

The bottom line is if you’ve got a deal on your mortgage, why would you give it back?

 

Source: Gary Marr, Financial Post Published: Saturday, June 13, 2009

 

Don’t choose between Fixed and Variable. Choose Both! New 50/50 Wise Mortgage Program!


Features:
– 50% of mortgage amount is at current 5 year fixed rate pricing (now at 4.49%)
– 50% of mortgage is at current 5 year ARM pricing (now at Prime +.40%)

 

See previous blog -The Best of Both Worlds- for more information!

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