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First Rate
E-Newsletter for October 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.
In this
issue:
- Market commentary & interest
rate trends
- Rates are Up for Variable Rate
Mortgages
- Monthly Review of Interest Rate
Forecasts from the Major Banks
Market commentary & Interest
rate trends
With all the uncertainty in the
financial markets right now, it's a tough time deciding which
mortgage option is the right one for you. Here are my
thoughts. If you already have a variable rate mortgage, I
suggest you keep it variable. With the Bank of Canada (BoC) rate
drop today, it is expected that the prime rate will drop, thereby
lowering you mortgage cost.
This rate drop, however, is a bit
different from the previous rate drops. Normally, when the BoC drops
their overnight rate, the Chartered Bank prime rate drops by the
same percentage. This time around TD Canada Trust has
announced that they will be dropping their prime rate by 0.25% since
their cost of funds in the money market remain
unchanged. We have to wait and see whether other lenders
follow suit.
On the other hand, if you are
looking to get into the market, a new variable rate mortgage is now
priced at Prime + 1%. In this scenario, a fixed rate will be a
better alternative.
Another major development are the
new Department of Finance rules that kick in on Oct 15. These rules
will eliminate zero down payment, 40 year amortization and raises
the minimum credit score requirement to 600. These new rules
will definitely have a dampening effect on the real estate
market.
Rates and Charts
Prime @
4.75% for some lenders (next announcement on Oct 23, 2008)
|
Term |
Aug
22
|
Aug
29
|
Sep
5
|
Sep
12
|
Sep
19
|
Sep
26
|
Today |
|
3 year
|
5.35% |
5.35%
|
5.35%
|
5.35% |
5.35% |
5.35% |
5.50% |
|
5
year |
5.54%
|
5.54% |
5.45% |
5.45% |
5.45% |
5.45% |
5.45% |
|
10
year |
6.25% |
6.25%
|
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
Rates are Up for Variable Rate
Mortgages
Variable rate mortgages are
starting to cost more as investors are wanting a higher yield for
non-government securities. Last week, most lenders brought up
their variable rate mortgage rate to Prime (from Prime less
0.40%). Yesterday, TD Canada Trust led the industry by
increasing their rate to Prime + 1%. Click here to
read more.
Monthly Review of Interest Rate
Forecasts from the Major Banks
Economists from the Big 5 Banks
are still sticking to the same story, i.e., the Bank of Canada (BoC)
will be holding rates until 2009. 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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