|
First Rate
E-Newsletter for
October 2007
Dear Homebuyer,
Happy Thanksgiving!
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 at Ladner, Port Moody, Delta and Coquitlam.
Click here
to view our list of upcoming seminars.
In this issue:
- Market commentary &
interest rate trend
- The Best Time to Buy a Real
Estate
- Variable rate mortgages are
now priced at Prime less 0.50%
- Improving Your Credit Score
Market commentary & Interest
rate trends
As you can see from the table
below, fixed term interest rates on all terms have remained static
during the past month. What has changed is the pricing
of Variable Rate Mortgages (VRM). While in the past, it
was possible to obtain VRMs at Prime less 0.90%. Most
lenders have increased their VRM to Prime less 0.50% (see
article below on VRMs)
The Bank of Canada (BoC) is widely
expected to hold off raising rates for some time now despite
the strong Canadian economy. The BOC has to balance the
problems brought about by the rapidly rising
Canadian dollar which is causing significant pain to the
manufacturing sector in Ontario. With the prospect of the
US Fed dropping their interest rates, an increase in Canadian
interest rates would send the Loonie soaring.
Rates and Charts
Prime @ 6.25%
(next announcement on Oct 16, 2007)
|
Term
|
Aug
24 |
Aug
31
|
Sep
7
|
Sep
14
|
Sep
21
|
Sep
28
|
Today
|
|
3
year
|
5.70%
|
5.70%
|
5.70%
|
5.70%
|
5.70%
|
5.70%
|
5.70%
|
|
5
year
|
5.79%
|
5.79%
|
5.79%
|
5.79%
|
5.79%
|
5.79%
|
5.79%
|
|
10
year
|
6.15%
|
6.15%
|
6.15%
|
6.15%
|
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
The Best Time to Buy a Real
Estate
If youre looking to buy a home,
youre probably wondering what is the best time to purchase.
Studies have shown that the best time to buy is during the
Winter months. This makes a lot of sense. How many people want
to move in December or January? Not many. You wont find much
competition for properties during this time of the year.
Listings tend to stay unsold longer, prompting sellers to be
more willing to compromise.
The worst time to buy is in the
Spring. Most people want to house hunt in the Spring. The
weather is better and it is just in time for school opening.
With more competition for properties, prices tend to rise
during this time of the year.
If youre in the Metro Vancouver
area, theres one more advantage to purchasing the Winter. Its
probably raining. This may help you determine whether the
property you are buying has problems with water ingress.
Variable rate mortgages are now
priced at Prime less 0.50%
Its getting harder to sell a
variable rate mortgage (VRM) these days. A few months ago, you
could get a variable rate mortgage at Prime less 0.90% (or
even 0.95%). Now, all but a few lenders have bumped up their
rate to Prime less 0.50%.
We have the US Subprime crisis to
thank for this. Investors (who purchase these asset backed
securities) are now thinking that theres more risk to these
securities than original thought. Consequently, they want to
get a higher yield for this.
With the prime rate at 6.25% and
the discount at 1/2 percent, a (new) VRM holder will be paying
5.75%. Thats not much of a discount to the current 5 year rate
of 5.79%. Thats a far cry from when VRMs were at 3.0% compared
with the 5 year mortgage rate of 5.4% in July of 2004. With no
strong pressure for interest rates to drop, a VRM is, in my
opinion, not an attractive proposition anymore.
Of course, there are other options
besides at 5 year term mortgage (which most people seem to
automatically take). If you really want peace of mind, you may
opt for a 7 year mortgage at 6.0% or a 10 yr mortgage at 6.2%.
The premium is quite small for a much longer term.
Improving Your Credit Score
For most lenders, the credit score
on your credit bureau is the single most important determinant
of your ability to access credit. It can also affect the
rate of interest you are charged when you borrow. It is
well worth your time to ensure that you maintain a good credit
score.
It is easy to check your credit
score. There are two major credit bureaus in Canada -
Equifax (www.equifax.ca)
and Transunion (www.tuc.ca). You
should be able to access your credit score online for a small
fee.
If your credit is not good and you
plan to obtain a mortgage in the next few months, it is very
important that you get a copy of your credit bureau.
I can coach you on how you can improve your credit score so
that you can obtain the best rates possible. Be sure to
ask me to send you a copy of the FICO booklet, the indispensable
guide to understanding how your credit score is arrived at and
how your score can be improved.
Relevant Links
|
