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First Rate
E-Newsletter for May 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
- Forecasts from the Big 5 Banks
Continue to Point to Easing of Interest Rates
- CMHC’s Vancouver Housing Market
Update
- How to Qualify for the Largest
Mortgage Amount
- Variable Rate Mortgage Holders
Usually Come Out Ahead of Fixed Rate Mortgage
Holders
Market commentary & Interest
rate trends
With the Bank of Canada (BOC)
cutting their overnight rate by 1/2% on April 22, we are all left
wondering whether more cuts are expected. Since Dec 2007, the Bank
had already cut interest rates by 1.5%. The economists at the
5 major banks seem to think more cuts are coming (see my blog dated
April 29). The BOC's next rate review is scheduled for
June 22. At that time, the expectation is that there could be
another 1/4 % rate reduction.
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 June 10,
2008)
-
|
Term |
Mar
21
|
Mar
28
|
Apr
4
|
Apr
11
|
Apr
18
|
Apr
25
|
Today |
|
3 year
|
5.50% |
5.50%
|
5.50%
|
5.50% |
5.25% |
5.25% |
5.25% |
|
5
year |
5.79%
|
5.79% |
5.59% |
5.59% |
5.59% |
5.59% |
5.59% |
|
10
year |
6.25% |
6.25%
|
6.10% |
6.10%
|
6.15% |
6.15% |
6.15% |
-
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
Forecasts from the Big 5 Banks
Continue to Point to Easing of Interest
Rates
The Bank of Canada cut its
overnight rates on April 22 to 3.0%. As a consequence, lenders/banks
brought down their prime rate to 4.75%. The question in everyone’s
mind is - Have we hit the bottom?
Here’s what economists at
the Big 5 Banks are forecasting:
- TD Canada Trust - “more easing
to come”
- RBC - Overnight rate to drop to
2.75%
- CIBC Wood Gundy - 0.25% rate cut
to 2.75%
- BMO - Rates to 2.75% by
September 2008
- Scotia Capital - Rates to 2.75%
by 2nd Quarter 2008
Click here to
read the complete article.
CMHC’s Vancouver Housing Market
Update
On April 10, 2008, Robyn
Adamache, CMHC’s Senior Market Analyst, presented to a group of
bankers and mortgage brokers in the Richmond and Vancouver area
CMHC’s Housing Market Update. She discussed recent housing trends
and provided an update on the local resale market. Click here to
learn what she says about our local market.
How to Qualify for the Largest
Mortgage Amount
With the high cost of property in
the Metro Vancouver area, how does one qualify for the largest
possible mortgage amount? Here are a few tips:
- Have a good credit score
- Take an extended amortization
- Minimize your other debt payment
- Consider purchasing a property
with a rental suite
- Use a mortgage broker
Click here to
learn more.
Variable Rate Mortgage Holders
Usually Come Out Ahead of Fixed Rate Mortgage
Holders Based on research done by Moshe Milevsky, associated
professor of finance at the Schulich School of Business at York
University, holders of variable rate mortgages came out ahead of
fixed rate holders 90.1% of the time. The study was based on
mortgages granted between 1965 and 2007. The resulting savings from
the variable rate mortgages allowed borrowers to pay off their
mortgage between 8 and 19 months sooner.
Click here to
learn 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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