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First Rate
E-Newsletter for June 2008
Dear Homeowner,
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
Be sure to attend our upcoming
home buyer seminars in Vancouver and Richmond.
Click here
to view our list of upcoming seminars.
In this
issue:
- Market commentary & interest
rate trends
- Treatment of Rental Income for
Investment Properties
- Survey Shows Consumers Satisfied
with their Mortgage
- Forecasts from the Major Banks
Still Point to Lower Rates
- First National’s Excalibur
programme - The Latest Casualty in the Sub-Prime
Crisis
Market commentary & Interest
rate trends
The Bank of Canada announced this
morning that it will leave its key interest rate unchanged, marking
the end to a recent series of rate cuts that began in December
2007. In its statement today the Bank acknowledged that high
commodity prices could put upward pressure on inflation, stating
that “Although the composition of U.S. growth has not been
favourable for demand for Canadian goods and services, overall,
global growth has been stronger and commodity prices have been
sharply higher than expected.”
Because rates are expected to
remain soft, we continue to recommend a variable rate
strategy. With a $300,000 mortgage, a variable rate holder
will save $277 per month (or $3,324 per year) compared to a holder
of a 5 year fixed rate mortgage.
Rates and Charts
Prime @
4.75% for some lenders (next announcement on July 15,
2008)
-
|
Term |
Apr
25
|
May
2
|
May
9
|
May
16
|
May
23
|
May
30
|
Today |
|
3 year
|
5.25% |
5.25%
|
5.25%
|
5.25% |
5.25% |
5.25% |
5.25% |
|
5
year |
5.59%
|
5.59% |
5.59% |
5.59% |
5.49% |
5.49% |
5.49% |
|
10
year |
6.15% |
6.15%
|
6.15% |
6.15%
|
6.15% |
6.20% |
6.20% |
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
-
Treatment of Rental Income for
Investment Properties
Lenders will treat income from
rental properties in basically two ways: (1) Add-back of rental
income and (2) Rental Offset. Ideally, your lender uses the
rental offset approach since this method allows you to qualify for a
much larger amount. Click here to
learn more.
Survey Shows Consumers Satisfied with
their Mortgage
A recent survey conducted by the
BC Mortgage Broker's Association of BC showed that mortgage holders
were very happy with their mortgage. Here are some of the
findings:
- 91% of consumers were satisfied
with the services provided by mortgage brokers
- Keys reasons for using a
mortgage broker include: General satisfaction, good competitive
rates, simple/no hassle, helpful and accommodating. Mortgage customers placed
value in the research provided by the broker.
- 86% of consumers felt that
mortgage broker services were valuable in arranging a
mortgage
- 69% of BC mortgage consumers
would consider using a mortgage broker. Of those who have already
used mortgage brokers, 96% said that they intend to return using a mortgage
broker.
- Mortgage brokers customers would
typically be younger compared to customers who would go direct to
their bank.
Forecasts from the Major Banks Still
Point to Lower Rates
The Bank of Canada has already
cut their overnight rate by 1.5% over the past 6 months. Are the
interest rate cuts over? Economists at the major banks don’t seem to
think so. Many still think that the Bank may still drop interest
rates by another 1/4%. This time around, however, the expectation is
that the rate drop will not happen immediately.
- TD Canada Trust - “we expect the
Bank to follow the lead of the Fed and remain on hold for the next
two meetings before resuming their easing stance in the fourth
quarter with two more quarter point cuts and the floor on interest
rates at 2.25%” (see TD Economics Weekly
- RBC - The Bank of Canada to drop
the overnight rate by 1/4 in their July meeting (see RBC’s
Financial Markets Monthly for May 2008)
- CIBC Wood Gundy - “one further
quarter-point easing by the Bank of Canada” (see CIBC World
Markets Market Call for April 24, 2008)
- BMO - Rates to 2.75% by 3rd
Quarter of 2008 (see BMO’s Canadian Economic Outlook, May 23,
2008)
First National’s Excalibur programme
- The Latest Casualty in the Sub-Prime
Crisis On
May 15, First National announced that they will no longer be
offering their Excalibur programme. Excalibur was an excellent
programme targetted to individuals with challenges proving their
income. Applicants under this programme would include self-employed
individuals and individuals earning partial commissions or earning
tips. Many lenders offer self-employed programmes insured by CMHC,
Genworth or AIG.
Click here to
read more.
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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