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November 2004

• Interest rate trends
• No Income Qualifier programs for Business Owner
• In the news

Interest Rate Trends

Fixed interest rates down slightly in October. 

The Bank of Canada increased their overnight rate by 1/4% percent to 2.50% on October 19, 2004.  This was the second change in the overnight rate since April 2004.  Most analyst had predicted this move due to higher inflation numbers. 

Inflation data released on Oct 26 showed that the inflation rate dropped in September 2004 to 1.8% from 1.9% in August and 2.3% in July.  The rate of inflation is an important determinant of interest rates. 

Prime @ 4.25%

Term	Sep 17	Sep 24	Oct 1	Oct 8	Oct 15	Oct 22	Oct 29
3 year	4.70%	4.70%	4.70%	4.70%	4.70%	4.70%	4.62%
5 year	5.10%	5.10%	5.10%	5.10%	5.10%	5.05%	5.05%
10 year	5.85%	5.85%	5.83%	5.83%	5.83%	5.79%	5.69%

Table shows the discounted residential mortgage rates for 3, 5 and 10 yr closed fixed rate mortgages

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 - 0.75%

No Income Qualifier (NIQ) Mortgages for Business Owners

Are you a business owner who can't get a reasonable size mortgage because you don't show enough income on your tax returns or financial statements?  If so, there are NIQ programs available for business owners.  Under these programs you merely state your income.  This is similar to when you purchase an automobile on credit.  The sales manager will just ask you how much you make.  That amount is used in your application.

Most NIQ programs require 10% down payment on a home purchase transaction or 15% on a refinance transaction.  Most programs require you to be in business for at least 3 years (in special cases, 2 years in business).  To get the best interest rates, you need a good credit score.  If your credit score isn't that good, there are alternative lenders that can help.  To read more, please click on Mortgages for self-employed.

In the News (excerpts from recent press releases)

1) Bank of Canada hikes interest rates (Canwest News Service, Oct 20, 2004)  - Interest rates are up, and are likely going higher, but don't lock in that variable-rate mortgage, expects advised Tuesday after the Bank of Canada did the expected and raised interest rates a further quarter point.  Click here to read more.

2) BC's housing boom likely to continue into 2005 (Vancouver Sun, Oct 29, 2004) - BC's residential housing boom has not stalled in the latter half of 2004 and promises to march on into 2005, although not as torrid a pace, Canada Mortgage and Housing said in its National Housing OUtlook.  Click here to read more.

3) Housing starts trend downward (TD Economics, Oct 8, 2004) - Canada's housing starts fell to 231,000 in September.  Nonetheless, on the whole, the housing market continues to defy gravity and remains well above anything supported by population growth or demographic change.  Click here to read more.

4) CIBC World Markets August Report (CIBC World Markets, Oct 7, 2004) - Once again, central banks seem to be taking a wrong turn. Both the Federal Reserve Board and the Bank of Canada have launched tightening campaigns right smack in the middle of an oil shock. . .Soaring oil prices are replacing interest rates as the key brake on future North American growth, lifting the outlook for oil and gas sector earnings and reducing the need for rapid-fire interest rate hikes. Click here to read more.

5) House prices hottest in Victoria (Canwest News Service, Oct 13, 2004) - The price of a new home in Victoria posted the largest 12-month increase of any city in Canada as the national housing market continues to experience robust demand from home buyers, Statistics Canada.  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.

 

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