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Note: if this page does not display correctly, click on First Rate - December 2004 edition(this page is optimized for MS Outlook, Yahoo mail and Hotmail)
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December 2004
Dear Homeowner,
As a homeowner, investor or real estate professional, you rely on your mortgage professional to keep you informed about interest rate movements and trends. This newsletter is designed to do just that.
In this issue:
- Interest rate trends
- Is it time to consider purchasing a vacation property?
- In the news
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- Interest Rate Trends
Fixed interest rates down slightly in November 2004.
The Bank of Canada will be reviewing the overnight rate on Dec 7, 2004. Until recently, most analyst were predicting another increase of 1/4% to 2.75%. However, with the Canadian dollar breaching the 85 cent level, most analysts are not so sure anymore. Higher interest rates could further strengthen the Canadian dollar, thereby adversely affecting Canadian exporters.
Inflation data released on Oct 26 showed that the inflation rate increase in October 2004 to 2.3% from 1.8% in September and 1.9% in July. The rate of inflation is an important determinant of interest rates.
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Prime @ 4.25%
Term
Oct 15
Oct 22
Oct 29
Nov 5
Nov 12
Nov 19
Nov 26
3 year
4.70%
4.70%
4.62%
4.70%
4.70%
4.70%
4.62%
5 year
5.10%
5.05%
5.05%
5.05%
5.05%
5.05%
5.05%
10 year
5.83%
5.79%
5.69%
5.73%
5.73%
5.73%
5.73%
Table shows the discounted residential mortgage rates for 3, 5 and 10 yr closed fixed rate mortgages
For a longer term view, click here to see the 3, 5 & 10 year best residential rate since September 2003 (updated monthly)
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Click to view other relevant graphs
Is it time to consider purchasing a vacation property?
You may not know this but vacation properties can be purchased with a min. down payment of 10%. This is available via mortgage insured from Genworth Financial Canada (formerly GE Mortgage Insurance Company). The maximum amount is $450,000 for an acceptable property. Applicants will have good credit (min. credit score of 680) and have the ability to service the debt.
In the News (excerpts from recent press releases)
1) Analysts See Rate Rise Despite C$ Surge (Reuters, Nov 25, 2004) - Most Canadian primary dealers are sticking to forecasts that the Bank of Canada will raise interest rates by 25 basis points next month, but the probability has been reduced, according to a Reuters survey. Ten of Canada's 12 dealers see the bank raising its key overnight rate by 25 basis points to 2.75 percent from 2.50 percent. Two dealers said the bank would stand pat.. Click here to read more.
2) Average house price to top $400,000 (Vancouver Sun, Nov 16, 2004) - The average house price in Vancouver will break through the $400,000 threshold next year despite slowing sales, a national real-estate firm predicted. Re/Max Canada says that the Vancouver market will end 2004 with average prices up 14% to about $376,000, the largest annual again in more than a decade. Click here to read more.
3) Housing market stays "robust" (Vancouver Sun, Nov 5, 2004) - Rising mortgage rates and declining home sales across the Lower Mainland are not signs the sky is falling on the real estate market, according to Canada Mortgage and Housing Corp. experts. The torrid market of recent years, fuelled by record-low interest rates and marked by bidding wars, will be replace by a strong market that is moved along by other economic fundamentals. The agency is expecting to see demand for new housing cruise along at 28,0000 to 30,000 units through 2011. Click here to read more.
4) CIBC World Markets November Report (CIBC World Markets, Nov 3, 2004) - CIBC's monthly outlook is a must read for mortgage professionals. On the interest rate front, CIBC is still expecting the Bank of Canada to increase the overnight rate next month. But by Q1 2005, a slower US economy and the C$ level should represent sufficient drags to have it join in a pause in rate hikes, allowing long-term rates to fall further. Click here to read more.
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Please consider the information provided in this newsletter as general information. Before you do anything consult a professional.
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