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First Rate
E-Newsletter for July 2008
Dear
[fname],
If you are a homeowner, potential
homeowner or a real estate investor, you know that your mortgage is
the single largest expense you'll ever have. Keeping abreast
of interest trends, mortgage innovations and credit strategies will
help lower your mortgage costs and possibly build wealth for you and
your family.
I have a unique approach to the mortgage
business and that is, to provide my customers with the most
comprehensive information and options available so they can make the
best mortgage and home buying decision. I don't use any slick
sales techniques or negotiation strategies. It's all about
providing the right information and letting you make the decision-
My job is done when you know your
options.
Events - Home Buyer
Seminars
We are not holding first time
home buyer seminars in the Summer. We will resume our normal
schedule in September. Be sure to check out website for
upcoming sessions.
In this
issue:
- Market commentary & interest
rate trends
- Monthly Review of Interest Rate
Forecasts from the Major Banks
Market commentary & Interest
rate trends
The 5 year fixed rate moved up by approx. 1/4% since my
last newsletter. Many lenders had anticipated the Bank of
Canada (BoC) to drop their rate on Jun 10, 2008. When the rate
drop did not materialize, the bond markets reacted by pushing rates
up by a quarter percent.
There's also been some adjustment in
the variable rates. Some lenders have reduced their discount
on their variable rate mortgages. TD Canada trust now offers
their 5 year variable at prime less 0.45% (previously at prime less
0.60%).
If you're shopping for a mortgage now, there are many
lenders offering a "quick close" specials. This allows
borrowers who are closing in a fairly short time frame (usually in
30 days) to get a break on the 5 year interest rate. The
lowest quick close rate is at 5.19% for mortgages between $500k - $1
Million. You can also obtain lower rates for "jumbo" loans
(i.e., larger mortgage amounts starting from $500,000). These
special programmes are not offered on a pre-approval basis.
You will need an accepted offer to take advantage of these
products.
For borrowers holding a variable rate product, we
still suggest you stay the course. We expect the variable rate
mortgage will still offer significant savings compared to locking-in
to a 5 year mortgage.
Rates and Charts
Prime @
4.75% for some lenders (next announcement on Sep 3,
2008)
-
|
Term |
May
30
|
May
23
|
Jun
6
|
Jun
13
|
Jun
20
|
Jun
27
|
Today |
|
3 year
|
5.25% |
5.25%
|
5.25%
|
5.50% |
5.50% |
5.50% |
5.50% |
|
5
year |
5.49%
|
5.49% |
5.49% |
5.65% |
5.65% |
5.65% |
5.65% |
|
10
year |
6.20% |
6.20%
|
6.25% |
6.25%
|
6.25% |
6.25% |
6.25% |
-
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
Monthly Review of Interest Rate
Forecasts from the Major Banks
The Bank of Canada (BoC)
surprised financial markets by holding rates on June 10 siting
higher inflation risks. With the expectation of a BoC rate drop, the
financial markets had already priced-in lower fixed interest rates.
When the drop did not materialize, fixed rates increased by 1/4%
across the board.
With the BoC’s overnight rate remaining
static, variable rate mortgages remain unchanged.
For now,
economists at the Big 5 Banks agree that rates (i.e, for variable
rate mortgages) will hold. Here is what they are
saying:
- TD Canada Trust - “…we think
that the Bank will do what it can to avoid making any interest
rate moves in the near term, raising rates only when the economy
is back on track. To us, that means the overnight rate will remain
at 3.00% until the second half of 2009.” — TD Quarterly Economics Forecast dated June 18,
2008.
- Scotia Capital - “…The BoC left
its overnight rate unchanged at 3.00%. Policymakers appear likely
to remain on hold for the time being, with the accompanying
statement shifting focus to the upside risks to inflation, noting
that global growth and commodity prices have been higher than
expected. Still, future rate reductions are not off the table yet.
The BoC retained its view that core inflation only gets back up to
2% by 2010 and still points to downside risks to growth. –Scotia Capital Weekly Trends dated June 13, 2008
- CIBC World Markets - “…We’re
inclined to take Carney at his (new) word, and expect that the
next move will be a rate hike in 2009. “– CIBC World Markets Economic Flash dated June 10,
2008 .
- RBC Economics - “…The Bank of
Canada is unlikely to switch to a tightening policy stance in the
near-term, especially with the economy growing at a
slower-than-potential rate this year.” — RBC Economics Report dated June 10,
2008
- BMO Capital Markets Economics
Research - Please refer to BMO’s economic forecast on Page 7
showing the overnight rate at 3% (unchanged) until the end of
2008. BMO report dated June 13, 2008
.
Are you working with a
professional?
What exactly is a professional?
Here's my definition:
1) An expert in his field
2) Responds quickly to all emails and
phone calls
3) A person with the highest level
of integrity - Will only recommend products and services that
are in your best interest. If I do not have the right product
for you, I will point you in the right direction.
4) No pressure, hype or mind games -
only honest advice.
Relevant
Links
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