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Dec 2006

Market commentary & Interest rate trends

I've stated this before and am stating it again.  Go Variable!  If you want to lock-in, do so in one year's time.  Right now all signs point to declining interest rates.  If you don't want to watch interest rate movements, just read our newsletter.  I will advise you as to the best time to lock in.

If you still want a fixed rate, you'll find that many lenders are all over the map.  As of now, the lowest 5 yr fixed rate is at 4.92% (with a 30 day rate hold).  Most banks are at 5.15% to 5.25%.  Be sure to phone me for the latest rates.   

Rates and Charts

Prime @ 6.0% (next review on Dec 5, 2006)

Term	Oct 13	Oct 20	Oct 27	Nov 3	Nov 10	Nov 17	Nov 24
3 year	5.30%	5.30%	5.30%	5.25%	5.25%	5.25%	5.25%
5 year	5.29%	5.29%	5.29%	5.14%	5.14%	5.14%	5.09%
10 year	5.69%	5.74%	5.69%	5.60%	5.60%	5.60%	5.60%

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)

Click to view other relevant graphs

 

1) Graph of 5 year residential mortgage rate and prime rate since 1951

2) Graph of 5 year posted rate since January 2000

3) Graph comparing the 5 year mortgage rate versus variable at prime - 0.80%

Looking for a zero down mortgage? Look again because the rules have changed

With new competitors poised to enter the Canadian mortgage insurance industry, CMHC and Genworth have revamped their zero down mortgage offering.

CMHC - In the past, CMHC allowed home purchasers to borrow the down payment.  The amount borrowed would then be used as a down payment for the mortgage.  Now, home buyers can obtain the full / 100% amount from the mortgage lender.  CMHC also allows a 40 year amortization.  CMHC's mortgage insurance fee for 35 yr amortization is 3.5% of mortgage amount.

Genworth - Genworth previously required borrowers to take a 5% cashback which would be used as the down payment.  As with CMHC, borrowers can obtain 100% financing from lenders.  This opton offers significant savings over the cashback approach.  Genworth's mortgage insurance fee for 35 yr amortization is 4.1% of mortgage amount.

AIG - AIG is the latest entry into the mortgage insurance market.  Currently, only one lender is offering AIG's product line but this will change in 2007.  AIG's mortgage insurance fee for 35 yr amortization is 4.1% of mortgage amount.  AIG allows a 40 yr amortization.  AIG also has a 3% down payment option.

There can be significant savings to these new rules.  Unfortunately, many lenders have been slow to implement the new rules.  Be sure to talk to us before you apply for a no down mortgage.  Our advice will save you money.