21 Sep

General

Posted by: Anne Martin

EQUIFAX UPDATE:

“We have found no evidence of unauthorized activity on our Canadian core consumer or commercial credit reporting databases.

We will be sending notices via mail directly to all impacted consumers outlining the steps they should take.

As part of the notification process, we will provide free credit monitoring and identity theft protection to impacted Canadians (including any Equifax Canada employees).

Canadians who are concerned they may have been impacted can contact our consumer representatives at 1-866-828-5961 or EquifaxCanadaInquiry@Equifax.com”


Best fixed rates are as low as *2.89 – 3.49 % for a 5 year fixed, variable rate mortgages from as low as p-.85%      
Prime Rate is 3.20%

*High Ratio/Quick Close Specials Available

This is a critical time to sit down and review your household financing needs. Please do not hesitate to contact me should you have any questions.

If you are in the market for a home, or need to refinance in the next year, it is really important to make an appointment today to find out how these changes may affect you.

**rates subject to change with market conditions – *OAC  **conditions apply E. & O. E.

Terms Bank Rates Our Rates
6 Month 3.14% 3.10%
1 YEAR 3.04% 2.89%
2 YEARS 2.84% 2.89%
3 YEARS 3.44% 2.84%
4 YEARS 3.89% 2.99%
5 YEARS 4.94% *2.89 – 3.49 %
7 YEARS 5.30% 3.39%
10 YEARS 6.10% 3.84%
Rates are subject to change without notice. *OAC E&OE

 **Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.”

Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you.

18 Sep

Residential Real Estate Statistics for Barrie, Ont. August 2017

General

Posted by: Anne Martin

“The housing market is becoming more balanced in comparision with earlier this year.  In this changing market, it’s important you use your local, professional REALTOR® for your real estate needs.”  -says Rob Alexander, 2017 President, Barrie & District Association of REALTORS® Inc. (BDAR)

*The Barrie and District Association of Realtors changed to a new data systems, therefore, statistics may be approximate.

City of Barrie

In the City of Barrie detached homes in August 2017 sold for an average selling price of $515,922 which is an increase of 14% over August 2016.  With townhouses, link and semi-detached homes selling for an average of $380,862, meaning an average increase of 11% over August 2016.

Surprisingly, condo sales averaged a 5% increase over August 2016 with an average price of $330,942.  This is a contrast to Toronto who reported a a 21% decrease in sales in the second quarter of 2017 of condo townhouses from 2016, and a 8.3% decrease in sales of condo apartments for the same time period.  Please see http://creastats.crea.ca/treb/mls02_category.html

Essa Township

Detached residential properties sold for an average of $457,470 in August 2017, a decrease of 10% over August 2016.

Innisfil

The Innisfil real estate market showed detached residential properties in decreased by 3% to $529,229.

Oro-Medonte Township

The average selling price for detached homes in Oro-Medonte was $717,906, an increase of 14% over August 2016.

Springwater 

This township showed a whopping increase of 30% to $774,716.

It appears that multiple offer situations and crazy bidding wars have come to a close, for the most part!  This may be due to the new mortgage rules implemented by the federal and provincial governments in the Spring of this year.  Most notably is the decrease in pricing and sales in Toronto most likely due to the new foreign buyer tax implemented by the provincial government.  Oro and Springwater showed a nice increase over last year but will they slow down and become more balanced like the Barrie real estate market shortly?

The Federal government is currently in consultations with mortgage industry professionals to discuss how to best implement new proposed changes to mortgage rules.  How will the effect Barrie and area real estate is important to see in the future.

These proposed changes could slow the market even more and make it difficult for not only home purchasers but also home owners who want to refinance their existing mortgages.  It will be important to see how this plays out!

Information available at https://www.bdar.ca/public/Stats/August2017StatsMediaRelease.pdf

 

 

6 Sep

Bank of Canada increases prime lending rate, again!

General

Posted by: Anne Martin

Today, September 6, 2017, The Bank of Canada raised its target overnight rate by another .25% to 1.0% making this the second rate hike in a row.  The cause of this action is most likely the 4.5% growth in Gross Domestic Product in the second quarter of the year, despite the recent increase in value of the Canadian dollar, and a below target rate of inflation.

Compared to the economy of the US, we have outperformed them considering the battering they are taking as a result of two hurricanes, Harvey and Irma.  According to the Bank of Canada’s press release Canada is becoming “more broadly based and self-sustaining”.  Last weeks second quarter GDP release showed “solid employment and income growth”.  Business and investment growth has also picked up but we should show a more moderate pace of economic growth in the second half of the year.

The bank does say that it will keep an eye on household indebtedness and the markets reaction to changes in the interest rate, however, it is welcoming a slowdown in housing and borrowing activity.

Inflation is not a primary concern at the moment in as it remains below the target rate of 2%, along with subdued wage pressure.

The Bank of Canada has proven that further policy decisions are not predetermined but will depend on incoming economic and financial data.

Please see:  Dr. Sherry Cooper “Bank of Canada takes Action” 

Bank of Canada increases overnight rate target to 1 per cent

 

25 Aug

Back to School! Mortgage Market Update August 25, 2017.

General

Posted by: Anne Martin

MARKET UPDATE

Yes!  It’s almost that time, the time where parents rejoice…and kids lament…  BACK TO SCHOOL!

  Click here for some tips on getting your home back in order and ready for school.


Best fixed rates are as low as *2.78 – 3.34 % for a 5 year fixed,
variable rate mortgages from as low as 2.70%
Prime Rate is 2.95%

*High Ratio/Quick Close Specials
This is a critical time to sit down and review your household financing needs. Please do not hesitate to contact me should you have any questions.

If you are in the market for a home, or need to refinance in the next year, it is really important to make an appointment today to find out how these changes may affect you.

**rates subject to change with market conditions – *OAC  **conditions apply E. & O. E.

Terms Bank Rates Our Rates
6 Month 3.14% 3.10%
1 YEAR 3.04% 2.44%
2 YEARS 2.84% 2.54%
3 YEARS 3.44% 2.59%
4 YEARS 3.89% 2.79%
5 YEARS 4.89% *2.78 – 3.34 %
7 YEARS 5.30% 3.39%
10 YEARS 6.10% 3.79%
Rates are subject to change without notice. *OAC E&OE

 **Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.”

Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you.

16 Aug

Canadian Housing Market Weakens in July 2017

General

Posted by: Anne Martin

The release by the Canadian Real Estate Association for the month of July confirms that important housing markets in Canada continued to slow down especially the Golden Horseshoe area that surronds Toronto.  The slowdown started in April in this area starting mostly with the announcement of the 15 % foreign buyers tax credit and the 16 point program announced provincially to enhance home affordability.

Then the Bank of Canada announced a rate hike in July, the first in seven years which had further effects on the economy, causing mortgage rates to increase along with the value of the Canadian dollar.  The posted mortgage rate which is often used as the mortgage qualifying rate for insured mortgage loans increased by 20 basis points which affected mortgage applicants ability to income qualify for their mortgages, taking some out of the mortgage and home buying market.  There is a proposal to extend this qualification to uninsured mortgage borrowers as well, meaning those who have more than 20% down payment or equity in their homes.

CREA saw the number of home sold in July decrease by 2.1% for the fourth consecutive month.  Sales activity is down by 15.3% from the activity of March this year.  Year over year, sales is down 11.9% for July.

The number of new listings went downward by 1.8% in July, led by the GTA.  In July is was seen that the national sales to new listings ratio balanced out to 53.5%.  Above 60% is considered a sellers market and below 40% is considered a buyers market.  More than 60% of all local markets are now in a more manageable buyers market.

Prices continue to decline.

Home prices continued to fall in July, extending the decline that began in April.  The Aggregate Composite MLS House Price Index rose by 12.9% year-over-year in July, a further deceleration from the pace earlier this year. The decline in price growth from June to July was the result of softening prices in the GGH.  Price gains reduced in all categories of homes including townhouses, detached family home and bungalows.

With exerts from Dr. Sherry Cooper, economist for Dominion Lending Centres.    http://ow.ly/FQa830esxA9

In the city of Barrie, smaller price increases are being seen with the housing market leveling out.

“We are now seeing the housing market level out with smaller price increases in some areas and decreases in some of our smaller areas compared  with.  With things evening out, your local Realtor will help you get the most value for your real estate transaction.”                                                                                                                                                    ‐ Rob Alexander, 2017 President, Barrie & District  Association of REALTORS® Inc. (BDAR)

The city of Barrie saw an increase in detached residential prices of 18% in the month of July 2017 over the average price in the same month 2016.

Townhouses increased by 14% in the same period and Condos had a whopping 37% increase in July 2017 over July 2016.

For more info on the residential statistics for Barrie and District please follow this link.  http://ow.ly/wiTt30esxpG

16 Aug

Ten things to know about the prime lending rate. Consumer’s Home Digest August 2017

General

Posted by: Anne Martin

Welcome to the August issue of my monthly newsletter !

This month’s edition offers ten things to know about the Prime lending rate and your mortgage, as well providing insight on exactly how to determine if your mortgage is truly portable.

Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!


Ten Things to Know About Prime & Your Mortgage

  1. Fixed-rate mortgage holders are not affected by Bank of Canada rate changes during their current term. Only those in either adjustable-rate or variable-rate mortgages need read on.
  2. On July 12 lenders increased variable-rate borrowing costs by 0.25% to match the Bank of Canada increase of the same amount on the same day.
  3. There are three more scheduled Bank of Canada meetings this year, and there remains doubt about any further increases this year. Few expect anything more than a 0.25% further increase.
  4. This was the first increase to Prime in nearly seven years, and it follows two 0.25% reductions in 2015.
  5. A 0.25% rate increase equals a payment increase of $13 per month per $100,000 of outstanding mortgage balance for those in an adjustable-rate mortgage. That means a $300,000 mortgage balance will see payments rise by $39 per month.
  6. Not all payments increase. Several lenders differentiate from an adjustable-rate product by offering what is called a ‘variable-rate’ mortgage and their clients will not have any payment change at all. Instead, the life of the mortgage is extended slightly. A letter in the mail from your lender should be arriving to confirm which camp you are in.
  7. There is no penalty or fee to convert to a fixed rate. Whether in an adjustable-rate mortgage or a variable-rate mortgage, you have the option of locking into a fixed-rate at any time without cost. The length of the term offered varies according to policy and remaining time to maturity, with some lenders allowing conversion to a three-year fixed from day one, but most ensuring they have you under contract for the full original term.
  8. Locking in can be very costly. The prepayment penalties differ significantly between variable- and fixed-rate products. Be careful about locking in. Aside from immediately increasing your payment even further, you stand to increase your potential prepayment penalty by up to 900%. Few think they will trigger a penalty, yet more than half of borrowers actually do.
  9. No surprises. Mortgage lenders failed to give us the full 0.25% decreases in 2015, instead only reducing rates by 0.15% both times. Counting on our short memories and lack of uproar, lenders chose to increase by the full 0.25% on July 12, rather than doing what would have been fair and only increasing 0.15%
  10. Future increases will depend largely on consistent economic good news. This is what drives interest-rate increases.

Stay tuned for next month’s newsletter as we weigh the likelihood of another 0.25% increase at the September Bank of Canada meeting.

Is My Mortgage Portable?

The question: ‘Is my mortgage portable?’

The answer most often given: ‘Yes.’

This answer is increasingly wrong.

In reality, you may qualify to move 80% or less of the current balance.

The proper question: ‘Do I need to re-qualify for my current mortgage to move to a new home?’

The proper answer: ‘Yes, your mortgage is portable, but only if you re-qualify under today’s new and more stringent guidelines.’

Who is the very best person to answer the portability question? Your mortgage broker.

They will answer this question accurately. And it can only be answered accurately with a complete and updated application, along with all supporting documents to confirm the maximum mortgage amount under current guidelines.

Calling the 1-800 number on your mortgage statement, or asking the teller while depositing cheques is far less likely to get you an accurate answer. Instead that tends to be the origin of the one word answer.

Call your mortgage broker as soon as you start thinking about moving.

Too many clients learn this lesson the hard way. They sell their existing property before speaking with their Mortgage Broker, and in some cases they also enter binding purchase agreements under the mistaken assumption they can just ‘port their mortgage.’

What is the problem?

Key Point – The Federal Government has created a dynamic in which there are two different qualifying rates used for approvals. One is for the initial purchase or refinance, and the other is for when it comes time to move to a new home.

So the qualifying rate used yesterday to get you into a five-year fixed rate mortgage on your current home is not the one being used to qualify you to move that same mortgage to a new home down the street, even just one day later.

Key Point – One day into your new five-year fixed mortgage you are now subject to a ‘stress test’. In a nutshell, the stress test effectively reduces your maximum mortgage amount by 20%. Meaning that you can only port 80% of the current balance to another property… just one day later.

So, what’s the fix?

The best fix – The government could add a simple sentence to their lending guidelines along the lines of ‘If a borrower qualified for their mortgage at the five-year contract rate at inception, then the borrower shall be allowed to re-qualify at the original contract rate when moving their mortgage to a new home.’

Currently this fix does not exist.

The current fix – You pay a penalty to break the current five-year fixed mortgage you have and then apply for a new five-year fixed mortgage. Which is as ridiculous as it sounds.

The penalty amount? Approximately 4.5% of balance, i.e., $14,000 on a $300,000 mortgage balance. Yes, you read that correctly.

This is entirely unreasonable. It is not a fix at all. If you bought with 5% down, and then a few months later were transferred to another province and had no choice but to move, this represents your entire down payment vanishing due to a simple oversight by the federal regulators

Did you know… Homeowner Tips
Paint Brush Tips:
The majority of wealthier Canadians mortgage their homes by choice. 67% of high net worth Canadians (those with $500,000 or more in investable assets) with a mortgage have the cash to pay off their home – in full – but don’t, according to a survey for Investors Group. Their reasons for holding on to their mortgage vary, including tax planning and income-generating rental properties. In Canada, mortgage interest on rental properties is tax deductible. When it comes to painting, many people will buy the big package of brushes for $7. But the bristles on these brushes may be coarse or could fall out. In addition, they can end up looking ratty after a while and the paint won’t spread evenly. The key is to buy a good quality brush and clean it properly as specified on the label. And if you have a big job and find yourself having to paint in intervals, you can wrap your wet brushes in kitchen wrap. Place the oil-based brushes in the freezer and the latex-based in the fridge. When the job has been completed, you can then clean them and put them away. In many cases a good brush will last for dozens of paint jobs.

 

 

4 Aug

Canada’s Unemployment rate falls in July to 6.3%

General

Posted by: Anne Martin

Canada’s job market posted gains of 10,900 more jobs reducing the jobless rate to 6.3%, the best rate in almost nine years. Canada’s strong economy caused the Bank of Canada to raise interest rates last month for the first time in seven years and it is expected that they will raise them again by the end of 2017, possibly October.

Canada’s economy is now the strongest of the G7 with growth of 3.7% in the first quarter of the year and a 4% gain is expected in the second quarter.
However, growth in the second half of this year is expected to be only 2.25% because of the higher value of the Canadian dollar and a slowdown in real estate sales in the GTA. Exports fell 4.3% in June due to lower exports of gold and energy products.
July’s job strength was in retail and wholesale trade and as well as information, culture and recreation which makes sense for the summer. Manufacturing gained as well which is good news.

Read Dr. Sherry Coopers full report here.

28 Jul

How will slow inflation affect our interest rates? Mortgage Market Update July 28, 2017

General

Posted by: Anne Martin

 

MARKET UPDATE

How will slow inflation affect our interest rates?

  Click here to find out


Best rates are as low as 2.94 – 3.34
*high ratio purchase for a 5 year fixed, variable rate prime minus .70%
*OAC  **conditions apply

This is a critical time to sit down and review your household financing needs. Please do not hesitate to contact me should you have any questions.

If you are in the market for a home, or need to refinance in the next year, it is really important to make an appointment today to find out how these changes may affect you.

Current Interest Rates

Terms Bank Rates Our Rates
6 Month 3.14% 3.10%
1 YEAR 3.04% 2.44%
2 YEARS 2.84% 2.24%
3 YEARS 3.44% 2.34%
4 YEARS 3.89% 2.69%
5 YEARS 4.84% 2.94 – 3.34
*high ratio purchase%
7 YEARS 5.30% 3.34%
10 YEARS 6.10% 3.64%
Rates are subject to change without notice. *OAC E&OE
 Prime Rate is 2.95%

Variable rate mortgages from as low as Prime minus .70%

 **Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.”

Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you.

*O.A.C., E.& O.E.

12 Jul

Bank of Canada raises its key overnight rate affecting prime rates. July 12, 2017

General

Posted by: Anne Martin

For the first time in seven years, the Bank of Canada announced today that it was hiking its key overnight rate by a quarter percentage point (25 basis points) bringing it to 0.75 percent as the economy has staged a broadly based economic expansion this year. In a break from tradition, the Bank has taken this action even though inflation remains well below its target rate of 2 percent. Indeed, inflation has hit its lowest level since 1999. The consumer price index (CPI), released in late June, rose only 1.3 percent in May from a year ago, down from an annual pace of 1.6 percent in April. Both Governor Poloz and Senior Deputy Governor Wilkins have emphasized that the Bank must begin to hike rates pre-emptively due to the lagged effect of monetary tightening.

Measures of annual core inflation, a key indicator tracked by the Bank of Canada, which excludes volatile components such as food and energy, fell to its lowest in almost two decades. The average of the central bank’s three core measures declined to 1.3 percent, its lowest level since March 1999. The Bank has recently played down sluggish inflation numbers, suggesting they reflect the lagged effects of past excess capacity. Incoming inflation figures have been well below the Bank’s forecasts and will likely remain low for some time as oil prices are wobbling downward and wage inflation is a mere 1.3 percent–just keeping up with core inflation.

Last Friday’s continued strong employment report for June cinched the rate-hike. Employment rose a hefty 45,300, lifting the 12-month gain to a whopping 350,000 and trimming the jobless rate to match the cycle low of 6.5%. What’s more, total hours worked surged in the second quarter at the fastest rate since 2003. GDP climbed an impressive 3.3% year-over-year in April, while record levels of exports and imports suggest activity stayed on track in May, and further record highs for auto sales suggest consumers kept right on spending in June. Spending strength is yet another sign that after two years of lagging behind, Canada’s overall growth rate has come bouncing back in the past year to surpass the U.S. pace. The Bank now expects the output gap to close around year end.

Markets have been expecting this move for some time, as monetary policymakers have publicly stated that the 2015 interest-rate cuts appear to have done their job. Governor Stephen Poloz has said that the Canadian economy enjoyed “surprisingly” strong growth in the first three months of this year and that he expects the growth pace to remain above potential (estimated at 1-3/4 percent), setting the stage for this rate hike. In response, Canadian bond yields have moved higher, the Canadian dollar has surged anew, and the big Canadian banks raised mortgage rates by roughly 20 basis points last week in anticipation of this move. The 5-year Government of Canada bond yield has surged nearly 50 basis points in the past month. Indeed, 10-year government yields are up to roughly 1.9 percent, their highest yield in more than two years. The Canadian dollar surged to above 77.5 cents, the strongest level in 10 months, up more than 6 percent from the lows in early May. Stalling oil prices may reverse some of the loonie’s recent gain.

The big banks will also raise their prime rates, driving up the cost of variable rate mortgages, other loans and lines of credit tied to the benchmark rate. While the banks shaved their response to the interest rate cuts to less than the 25 basis points decline when monetary policy was easing, it is likely now that banks will adjust lending rates to close to the full 25 basis point increase. This asymmetric response is consistent with the desire of regulators to slow the growth in household debt.

Housing is one crucial component of the Canadian economy, and it has slowed meaningfully at the national level, in line with the central bank’s expectations. Prices and sales have declined in the Greater Toronto Area and surrounding municipalities since the Ontario Fair Housing Plan announcement in late April. However, housing activity has gained momentum in Montreal and Ottawa, while Alberta stabilizes and Vancouver posted a modest bounceback from the swoon following its August 2016 imposition of a foreign buyers’ tax. The underlying strength in many housing markets is the reason why policymakers are proposing new rules to tighten mortgage lending. This time OSFI–the regulator of financial institutions–is proposing that banks stress test non-insured borrowers at two percentage points above the contract rate. This despite the fact that non-insured borrowers are putting at least 20 percent down on their home purchase. A small BoC rate hike would reinforce the multi-faceted steps to calm the broader housing market.

The Bank has repeatedly stated that “macroprudential and other policy measures have contributed to more sustainable debt profiles,” even though household debt-to-income levels have hit a record high (see chart).

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Uncertainties, of course, persist–particularly on the trade side as NAFTA is renegotiated in fewer than 90 days. The U.S. has already imposed duties on softwood lumber, and President Trump’s rhetoric remains hostile, threatening U.S. import duties on steel and other products. These uncertainties notwithstanding, I expect another Bank of Canada rate hike in the fourth quarter. The Federal Reserve will also likely increase rates in Q4. Look for a slow crawl upward in interest rates from both central banks in 2018.

11 Jul

NDLC Newsletter for July 2017. Are rate hikes looming?

General

Posted by: Anne Martin

Welcome to the July issue of my monthly newsletter !

Summer vacation at last! Two months of fun in the sun lie ahead! This month’s edition takes a look at the recent interest rate-hike warnings in the media, and a closer look at the housing market.

Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!

 

Rate Hikes: Still As Much A Matter Of ‘If’ As ‘When’

One month of headlines suggest interest rates are dropping to new lows, another says no changes anytime soon, and recently many headlines seem to be suggesting an increase soon. This stream of mixed messages contradicting one another has been steady since rates dropped to 50-year record lows in 2009.

Many were adamant in 2009, and each year since, that rates could go no lower, and yet they have. Sure there have been a few shortlived blips upward along the way, in defiance of all who are calling for a return to normal… whatever normal may now be.

The key driver of interest rate movement is the economy in general. Not a thin slice of it such as real estate. What drives interest rates down? Economic bad news. What will drive rates up? Economic good news.

Economic good news seems in short supply since 2008.

Interest rates are a very large economic lever, far too large to be used simply to cool the arguably overheated real estate markets of two particular cities. Cooling of real estate is not addressed via interest rate hikes, markets are cooled and have been cooled as of late through lending policy changes.

Many commentators forget that only a few short years ago there existed 40-year amortizations with 100% financing not just for owner-occupied but for investment properties, and variable-rate mortgage qualifications that were much easier than today.

The reality is that borrowers in 2007 – at nearly double the current interest rates – qualified for larger, and arguably riskier, mortgages than borrowers today do.

And always do the math, yes math is no fun, but here is a shortcut:

A 0.25% rate increase equals a $13 per month increase in payments per $100,000 of mortgage balance.

And keep in mind that the majority of Canadians are in fixed rate mortgages, and the majority of them have renewal dates a year or two away. And for those mortgage holders an increase from todays rates of 0.25% – 0.50% would in fact only be equal to their current rate.

A 0.25% increase in the Bank of Canada rate would impact less than 10% of households across Canada, perhaps less than 5% of households. And that impact would be on average ~$39 per month.

Could you handle a $39 increase in your mortgage payment? Odds are you have actually already increased the minimum payment on your own as so many Canadians do. In that case you are already ahead of any increase.

Is the economy truly strong enough for an increase? We shall see come July 12 what the Bank of Canada thinks.

Are the small percentage of variable rate mortgage holders in Canada not already making higher payments ready for a 0.25% increase – overwhelmingly yes, they absolutely are.

The big beneficiaries of these uncertain times or trepidation around even a slight interest rate increase will be those in fixed rates approaching renewal dates over the next 12 months, and those enjoying the ride in their variable rate mortgages.

Be sure to start the renewal conversation with your broker six months out from the mortgage renewal date. Your current lender may suggest that rates are about to move and suggest locking into something early as the right move, but always consult with your independent mortgage broker first to determine if the move being suggested is right for you – or simply just right for the lender.

What is right for you matters to us.


 

Canadians have options when it comes to housing

By Dr. Sherry Cooper

Despite the variation in real estate markets across Canada, homebuyers face the same fundamental question whether they are first time buyers in Toronto, families purchasing a fixer-upper in Atlantic Canada, or down-sizing boomers in the West, says Dominion Lending Centres chief economist Sherry Cooper: What are you willing to do to achieve your goal.

“For the first-time homebuyer, it’s a trade-off between living close to your workplace and having to pay more for your home versus living farther away and facing a meaningful commute to get more for your money,” she says.

Baby boomers with their retirement nest egg tied up in their single-family homes, face very similar circumstances. For boomers, staying in the city usually means downsizing to a condo, which is more expensive per square foot and can take a serious bite out of that nest egg.

Moving out of the city often means giving up family, friendship, and services.

In between, there’s the move-up market – people with growing families who are looking for their second home. They have equity, so they can afford a larger down payment and typically, they are close to their peak earning years. The challenge they face, particularly in regions where the market is strong, is a shortage of suitable homes. Investors and developers are frequently bidding for the same properties. People thinking of moving up may want to consider another option: Buying a larger condo in the suburbs or in smaller communities. There is a demand for more choice in this market segment, she says, that has led to developers start building two and three-bedroom units in the suburbs thatinclude amenities like indoor and outdoor play areas.

The lifestyle issues, Cooper says, are best solved by family discussion. First, sit down and talk. Then, talk to a mortgage broker, a real estate agent and possibly an accountant.

“For a first-time home-buyer in particular, you really do need to know how much you can afford. It may be less than what you can borrow. You don’t want to go right to the edge because there’s just too much risk,” she says. “You want to have enough of a cushion that you could take care of an emergency, or in the event of one of you losing a job. You have to have some precautionary savings.”

For all demographic groups Cooper advises locking into a fixed-rate mortgage. “I would go for a five-year fixed if I were buying right now. Because rates are low and the chances are that in the future, they will be higher.”

Mortgages are complex, and she cautions against simply taking the best deal a bank has to offer. For example, the first-time buyer may want the option of paying down the principal more quickly.

“That’s the whole story of why mortgage brokers make so much sense, because they can shop the loan for you and can find something that is much more customized to what your personal needs are.”

For first-time buyers and boomers, renting is also an option that shouldn’t be ignored, she says. Boomers can then get the full amount of equity from their home while first-time buyers can continue to save for their down payment. Similarly, those in the move-up market may want to consider using the equity in their home to finance a home renovation rather than buying a new residence.