Canadian Mortgage News & Canada's Mortgage Trends

The Smith Maneuver

There's been a lot of buzz about the Smith Maneuver lately.  Is it a good mortgage strategy?  Or isn't it?  Here are two recent opinions from the Toronto Star and Canadian Capitalist .

Calgary Mortgages - Today vs Yesterday

Calgary is more affordable today than 25 years ago?

This Business Edge article would suggest it is.

1981

Typical Calgary home price:  $106,000
Typical Calgary mortgage:  $90,000
Interest rate at the time:  18.125%
Mortgage payment:  $1,319
Average Income:  $19,932
Proportion of Income:  79%

2007

Typical Calgary home price:  $357,000
Typical Calgary mortgage:  $332,000
Interest rate at the time:  6.0%
Mortgage payment:  $2,125
Average Income:  $60,000
Proportion of Income:  42.5%

Mortgages Around the World

The LA Times takes us on a trip around the mortgage globe.

It seems Canada's lending terms and downpayment requirements are pretty reasonable compared to abroad.

5.3% Gains for Homeowners?

Re/Max says the average Canadian gained 5.3% on the price of their home(s) over the past 25 years.

Don MacDonald says that's not the whole story.

Mortgage Complacency

In this post, the Canadian Capitalist cites a stat that suggests 30% of people simply sign the mortgage renewal form their bank sends them.

This echoes our November piece on how people generally stay with their existing lender without shopping around.

What a mistake.  It's scary to think of the money being lost because people assume they can't do much better elsewhere.  Do yourself a big favor.  Always get multiple quotes from a licensed mortgage broker.

Home Sellers: Pick the Right Words

Ads on dating sites highlight the good and hide the bad.  Real estate ads are no different.  University of Guelph professor Paul Anglin did a fascinating study about what sells homes.  Statesman.com summarizes it well in this article.

Anglin studied Realtor listings in Windsor, Ontario from 1997 to 2000 and came up with these interesting tidbits:

• 40% of home listings expire without selling, after having been listed an average of 19 weeks.
• Listings with the words "Beautiful" or "gorgeous" sold in 15% less time and at a 5% higher price on average.
• Listings with the word "handyman's special" sold in 50% less time.
• Listings with the words "moving" or "motivated" took 30% longer to sell and sold or 1-8% less respectively.
• Listings with the word "rental" took 60% longer to sell.

Anglin now plans to study the Toronto market where homes sell significantly faster--in just five weeks on average.

Mortgages in a RRSP?

I get questions from time to time about the desirability of putting mortgages in an RRSP.  Ontario Business Edge has a great article that spells it all out on one page.  Check it out here.

Canada's New Insurer

AIG United Guaranty officially received approval to become Canada's third major mortgage insurer.  This paves the way for more competition and new incentives for Canadian mortgage seekers.  Here is a list of AIG's new mortgage products:  Click

Big Banks Hike Mortgage Rates

Bond rates have bounced 1/4% in the last month thanks to a sinking dollar and perky economy.  That's prompted Canada's biggest banks to hike rates.  Royal Bank, CIBC, Bank of Montreal, and Scotiabank all boosted their one to five-year mortgages 0.20% on Tuesday.  Their 5-year posted rate is now 6.65%.  Their "discounted" 5-year rate is about 5.59%.

(But we can do much better!)

Scotia Predicts 1/2% Rate Decline

The latest vote in the rate guessing game is "Lower."  Scotia Bank say mortgage rates will fall 0.5% in 2007.  Report Link via the Canadian Capitalist .