The Mortgage Teacher

Bank of Canada raises overnight Prime .25% – September 8,2010

TheMortgageTeacher — Wed, 08 Sep 2010 13:22:40 +0000

Like expected, BofC raised prime .25%… So if you have a variable, it rose in June, July and now September…

Bank of Canada increases overnight rate target to 1 per cent

OTTAWA –The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economic recovery is proceeding but remains uneven, balancing strong activity in emerging market economies with weak growth in some advanced economies. In the United States, the recovery in private demand is being held back by high unemployment and recent indicators suggest a more muted recovery in the near term.

Economic activity in Canada was slightly softer in the second quarter than the Bank had expected, although consumption and investment have evolved largely as anticipated. Going forward, consumption growth is expected to remain solid and business investment to rise strongly. Both are being supported by accommodative credit conditions, which have eased in recent weeks mainly owing to sharp declines in global bond yields.

The Bank now expects the economic recovery in Canada to be slightly more gradual than it had projected in its July Monetary Policy Report (MPR), largely reflecting a weaker profile for U.S. activity. Inflation in Canada has been broadly in line with the Bank’s expectations and its dynamics are essentially unchanged.

Against this backdrop, the Bank decided to increase its target for the overnight rate to 1 per cent. As a result of monetary policy measures taken since April, financial conditions in Canada have tightened modestly but remain exceptionally stimulative. This is consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada.

Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook.

Information note:
The next scheduled date for announcing the overnight rate target is 19 October 2010. A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 20 October 2010.

http://www.bankofcanada.ca/

Fixed Mortgage Penalty, it will be great to have some clarity.

TheMortgageTeacher — Tue, 07 Sep 2010 12:44:39 +0000

When it comes to calculating an IRD penalty there is so much uncertainty from one bank to another, sometimes it even seems different from one person to another with in a same banking institution. That just goes to show that something needs to be done about how a Fixed-Rate Mortgage penalty is calculated. Michael Mullis AMP

Great update from canadianmortgagetrends… Thanks for the post, I’ll spread the news.

Update on Mortgage Penalty Standardization

In March, the government promised to “bring forward regulations” to standardize the calculation and disclosure of mortgage pre-payment penalties. This was a welcome gift for consumers who are fed up with large and confusing IRD penalties.

As we speak, the Department of Finance (DoF) says it is “working on new regulations.” Those regulations are “aimed at bringing greater clarity to the calculation of mortgage pre-payment penalties.”

Details are sketchy at this point, and the DoF says it cannot “speculate on specific measures at this time.”

It says, “The next step in the regulatory process will be the publication of the draft regulations for public consultation.”

Those draft regulations are expected to be published “before the end of the year.”

The changes would only apply to federally-regulated lenders. However, it’s possible that other lenders will conform to federal guidelines to remain competitive.

How is my Mortgage Penalty structured….IRD ?

TheMortgageTeacher — Fri, 03 Sep 2010 12:30:13 +0000

This is one of the surprises us Canadians have been receiving the last few years when asking for our Penalty and the COST to get out of our current mortgage.

Well many of us know the traditional 3 months interest penalty, but if the rates today are less then the rate you committed on, then you could be in for a very Unpleasant surprise, be sure to contact me if you need some strategies to help avoid these extra fees and costs.

I’ll take 2 minutes to explain what IRD is in this video….

Another thing you can do is search Google for that lender’s “standard charge terms.” The penalties are usually explained there.

Thanks to canadianmortgagetrends Here’s a sample IRD explanation from BMO’s standard charge terms:

Should Canadians use a Mortgage Broker or a Bank when getting advice ?

TheMortgageTeacher — Wed, 01 Sep 2010 03:07:24 +0000

Very Strong words from Top Home Mortgage News… But that’s why I like it !, they bring up great points. It makes you ask…. Should Canadians still be referring mortgage advice through Bank Branches?

Have an interesting read below….

Mortgage Professionals want to be Regulated; Banks don’t want this. So why do the banks want unskilled workers?

The bank has many reasons for not wanting to have skilled employees. The main reason is because of salaries. The bank would prefer to have 100s of unskilled employees that they can easily replace, and they want to be able to pay these employees a fraction that they would pay to a regulated professional. Banks want to teach their employees the bare minimum to get by, then have them sell as many mortgages as possible.

In this process, many borrowers will lose. They will lose by not being educated, not understanding the risks, and buying properties that are too expensive. The default rate of borrowers will be much higher than a mortgage professionals book of business. This is because the mortgage professionals clients are less likely to over spend, live beyond their means, and manage money improperly.

The mortgage industry doesn’t pay for customer service; however, with a commission income, it depends on bulk transactions which also puts the end client at a loss.

Please feel free to Comment below.

And the 1st $200 Moxies Winner is…..

TheMortgageTeacher — Mon, 23 Aug 2010 01:10:03 +0000

That’s right friends, it’s our first Winner of The Mortgage Teachers $200 Moxies Gift Certificate Giveaway. I want to say Thanks to Moxies London, Fresh FM and of course all the people that have been particapating.

Now for the fun, and the Winner is…….

Click the Image to see the Video....

The Mortgage Teacher and Family donate to the (Dorchester) Thames Centre Arena Expansion

TheMortgageTeacher — Wed, 18 Aug 2010 19:46:29 +0000

as per the Dorchester Signpost Newspaper.

Michael Mullis The Mortgage Teacher and Family have Donated $9000 for naming rights with in the New Dorchester (Thames Centre) Arena Expansion.

“My wife (Tracey) and I have grown up in the Dorchester area our entire lives, and Dorchester athletics have been a big part of who we are today. So it only seems right to pay it forward and help support the Dorchester youth of today.”

I have always loved how Dorchester is known for its Teamwork and “small-town” atmosphere, and that is probably why our Sports Teams have always done so well. So now with a 1 year old (Harlow) and a 3 year old (Cooper) I’m excited to experience it all over again !”

Canadian Banks raise Prime .25%, Are all rates about to raise ?

TheMortgageTeacher — Thu, 03 Jun 2010 12:04:25 +0000

That’s right Canada, the Bank of Canada decided that June 1st 2010 was a good time to increase the Prime rate from 2.25% to 2.5%.

To quickly define, here are the main points:

- only effect those with Variable Rate Mortgages

- average payment will increase $22 / Monthly

- Prime went from 2.25% to 2.5%

- IF…. you were to “lock in”, your rate could be around 4.49%

ADVICE: If the thought of increase worries you?… then here’s my advice, SET your payment at a rate of 4.5% or higher, if you Lock In, that would be your payment anyway. if your bank allows this “set-payment” then it will allow you to pay extra principle while the Prime rate rises another 2%.

Want to Read more into this further ?……. Read below

On the same day the Bank of Canada bumped its key lending rate up, a major chartered bank edged a key mortgage rate down, moves that reflected the continuing uncertainty in world financial markets.

The Bank of Canada on Tuesday became the first G7 central bank to raise interest rates since July 2008, hiking its key overnight lending rate one-quarter of a percentage point to 0.5 per cent in a long-anticipated move aimed at keeping Canada’s recovering economy from overheating.

However, with uncertainty over the global economy mounting due to turmoil in the European Union, the pressure for future short-term rate increases might be easing.

The turmoil has caused interest rates for longer-term bonds to fall, allowing the Bank of Montreal to trim its five-year discount mortgage rate one-tenth of a percentage point to 4.25 per cent.

Having short-term rates rising while long-term rates are falling, “is a very unique situation we haven’t seen in a very long time,” said Benjamin Tal, a senior economist with CIBC World Markets.

He said it was “a bold move by the Bank of Canada realizing there is a real risk it will have to [pull back interest rates] after this move.”

Commenting on his decision, Bank of Canada governor Mark Carney said “any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments,” given the uncertainty around the global recovery.

Carney said the decision “still leaves considerable monetary stimulus in place, consistent with achieving the two-per-cent inflation target in light of the significant excess supply in Canada.”

The decision came a day after Statistics Canada reported the domestic economy had its strongest quarterly performance in over a decade, as GDP expanded by 6.1 per cent in the three-month period ended March 31.

Tal said one of the reasons Canadian bond interest rates have fallen after increasing in April is because the market had priced in a more aggressive move by the Bank of Canada.

Tal added that it is becoming uncertain whether the central bank will need to continue raising rates at its next meeting in July.

“Even the Bank of Canada isn’t convinced they will move again,” Tal said.

Doug Porter, deputy chief economist for BMO Capital Markets, said Carney’s statement “was unambiguously on the dovish side of expectations with the bank almost bending over backwards to indicate this is not necessarily the start of a relentless campaign to crank rates higher.”

In the meantime, Tal said home buyers in the mortgage market also face a unique situation with first-time buyers getting a second opportunity to take advantage of relatively low fixed-term interest rates on longer-term loans, which are tied to the bond market.

Those who already have variable mortgages, which are tied to the bank’s prime borrowing rate and influenced by the Bank of Canada’s key rate, can expect higher loan payments.

“Ultimately, the [variable-rate] increases will not be significant,” Tal predicted.

With variable mortgage rates one-quarter to half a percentage point below the major banks’ prime rate of 2.25 per cent, Tuesday’s rate change won’t add a lot to most monthly mortgage payments.

“A quarter-point increase [does not have] a huge impact,” Joanne Vickery, president of the Mortgage Brokers of B.C., said in an interview.

On a $250,000 mortgage amortized over 25 years, for instance, the bump would increase a borrower’s mortgage payment by almost $30 to $1,058.

But in future, Vickery said, borrowers should pay more attention to rates and how increases could pinch their budgets.

The Canadian Association of Mortgage Professionals estimates three out of every 10 Canadian mortgage holders have opted for variable-rate loans, which are still a good deal given five-year fixed rates range from BMO’s 4.25 per cent to 4.59 per cent.

However, Carolyn Heaney, BMO’s area manager of business development in Metro Vancouver, said the bump in rates should be an incentive for borrowers to “stress test” their budgets to determine where their “sleep-at-night factor is, and how comfortable they are with changing interest rates.” depenner@vancouversun.com

I’m Pre Approved, what now ?….. Should I use a Realtor ?

TheMortgageTeacher — Tue, 11 May 2010 23:28:15 +0000

Once you are Pre-Approved and you know what your Purchase limit is… at that point people ask “what next, what is step 2 ?”

Do I start looking online or do I call a Realtor?…. Honestly, both. Ask around, let work associates know you are looking, announce on your social media status…. the more houses you can find, the better.

As far as calling a Realtor right away…… Click the video below and I’ll explain in 2 minutes.

If you feel someone you know could use this info…Please, forward this Video Blog.

What is the difference between Fixed vs Variable rate Mortgages ?

TheMortgageTeacher — Tue, 04 May 2010 20:09:28 +0000

The most famous question over the last 5 years, “Should I take a fixed or a variable rate mortgage ?”…… Take a few minutes and see if this helps you decide which is most comfortable for you.

After asking many of my current clients what they learned from me teaching them the difference between Fixed and Variable rate mortgages… Well I tried to sum it up in 5 minutes….. so PLEASE, pay attention to this quick video, its a very ” Down to Earth” explanation.

Hope this helps, and as always please comment if you like….

if you know someone else that is confused between “Fixed vs Variable” please forward this Blog

How do I get out of my current mortgage and subsequent penalty?

TheMortgageTeacher — Mon, 26 Apr 2010 00:37:13 +0000

with rates as low as they are, many of us have been thinking…” would I save if i got a new mortgage ?”… Well, one of the BIG deal breakers is : .. what will my current bank charge me to get out?.

This question could be better answered by using the tips I speak of in the below video.

Please click below to watch me answer ” How do I get my Current Payout ? “…. ( video below )

Know someone else battling a large penalty, forward this blog