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First Rate

A newsletter specifically designed to keep you updated on interest rate trends
john santos ocampo, mortgage broker 
John Santos-Ocampo AMP
Mortgage Broker
 
Direct Line: (604) 506-0397
Fax: (604) 648-9541
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July 2005

Dear home owner,

As a homeowner (or prospective 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:

  • Market commentary and Interest rate trends
  • Do you really want to pay off your mortgage?
  • In the news

Please check out my NEW affiliate website: BCHomeBuyer.ca .

Market commentary & Interest rate trends

Fixed term interest rates continued to drop in June 2005.  The 10-year fixed rate is looking very attractive at 5%.  This is the lowest it has been over the past 50 years.  Anyone looking for long term interest rate security should consider locking-in a 10 year fixed mortgage.

While rates may seem the lowest it's ever been, some economist speculate this may not be the bottom.  The predicted rise in oil prices to $100/barrel could be a drag on the economy.  With a slowing economy, the Bank of Canada (BOC) will not be under any pressure to raise rates.  For more information, read CIBC's article: How low can rates go?

The BOC is set to review the overnight rate is on July 12, 2005 (the basis for the chartered bank prime rate).   An increase in the overnight rate is not expect at this time.

Rates and Charts
Prime @ 4.25%

Term

May 13

May 20

May 27

Jun 3

Jun 10

Jun 17

Jun 24

3 year

4.50%

4.50%

4.45%

4.45%

4.30%

4.25%

4.25%

5 year

4.75%

4.70%

4.70%

4.60%

4.50%

4.50%

4.50%

10 year

5.32%

5.19%

5.19%

5.14%

5.00%

5.00%

5.00%

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
 

 

Tips on minimizing taxes on your investment property purchase?

 

1) Consider getting a cashback on your mortgage - We generally don't encourage our customers to use cashback programs since they can be expensive.  However, there is one situation where you may want to consider obtaining a cashback.  This is when you are purchasing an rental property.  When you get a cashback mortgage, the interest rate on the mortgage is increased to compensate for the cashback.  A tax advantage is generated because the increased interest on the mortgage is tax deductible while the cashback is tax free.

 

2) Make your current mortgage tax deductible - Many individuals have some cash available for a down payment on an investment property.  While you may think it wise to use the funds as a down payment on an investment property, you would be better off to pay down your home mortgage.  You then re-borrow the funds (on your home mortgage) for the down payment on your rental property.  By doing this simple maneuver, you are able to make a portion of your home mortgage tax deductible. 

 

We do not profess to be financial planners, lawyers or accountants. Before you do anything consult the appropriate professional.

 

In the News (excerpts from recent press releases)

1) Vancouver new-house prices up another 1.7 percent in April (Van Sun, Jun 10/05).  Vancouver's new housing prices spiked 1.7% in April -- the biggest increase in the country.  Statistics Canada released its new housing price index Thursday, which showed the price of new homes in Canada went up by 0.6 per cent in April compared with March, the biggest monthly gain since June 2004.. Click here to read more.

2) Is the real estate bubble about to burst?  (Canadian Press, June 24/05) - Canada's housing boom has turned real estate into juicy bits of conversation around the summer barbecue --  but many homeowners are asking whether a price bubble is about to burst. Click here to read more.

3) $1,000,000 just to get in the door (Vancouver Sun, Jun 25/05) - Home buyers who think $1 million can buy a great house almost anywhere in Greater Vancouver should think again becausea the price of entry into many exclusive neighborhoods has passsed the $1-million mark, according to Multiple Listing Service data. Click here to read more.

4) CIBC World Market's Monthly Indicators (CIBC World Markets, Apr 5, 2005) - CIBC's monthly economic newsletter.   CIBC is still predicting the prime rate to stay at 4.25% until Dec 2006 ( see Interest and Foreign exchange rates table).  Click here to read more.

Links and Resources:
1) Royal Bank - Financial Market Weekly
2) Bank of Canada - Bond Yields
3) Bank of Canada - Consumer price index, 1995 - present

 

Please consider the information provided in this newsletter as general information.  Before you do anything consult a professional.

 

To unsubscribe, please click reply with the subject "unsubscribe" and you will be removed from this email list.
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