Mortgage Bytes

• All but one of Canada's primary security dealers expect another 0.25% rate cut from the Bank of Canada on March 4. Reuters
• BMO senior economist, Sal Guatier, says the Bank of Canada "is certainly on track to cut rates again in March."
• All the big banks have followed RBC's lead and cut their prime rates to 5.75%.
• FSCO wants your comments on its new Ontario mortgage broker legislation. You have until Feb. 15.
• The average homeowner obtains 12 mortgages in their lifetime.  Source: Mortgage Architects.
• Sources tell us the elimination of withholding tax on cross-border interest should increase U.S. investment in Canadian subprime mortgages.  That could mean better terms and more choices for mortgage shoppers.
• Seniors Money now offers reverse mortgages in Western and Atlantic Canada.  Facts of note:
  • Their average reverse mortgage is $75,000
  • According to what we hear, the company pays about 75 basis points on broker referrals
  • 93% of seniors 65 and over live in private households
  • Those aged 60+ own over 2.35 million homes in Canada.  60% of those are mortgage free.
• We had a feeling it might happen... Toronto home sales spiked 21% in the 4th quarter as buyer raced to beat the new land transfer tax deadline.
• Straight from the grape vine (don't quote us)...
  • We're hearing unconfirmed chatter that HSBC may be paring back it's broker business--and focusing primarily on their top producing brokers.  They're supposedly also building up their own national sales force.  Could it be a pre-cursor to them exiting the broker channel?  We hope not!
  • Within six months Maple Trust, Dundee, and Scotia Express could all be merged together.
• National Bank is reportedly revamping its All-in-One mortgage in April.  It will become fully readvancing with the ability to lock in different portions at low fixed and/or variable rates.
• The average property tax in Ontario is $1,270 per $100,000 of assessed value according to a recent BMA Management Consulting study.
• Scam artist gets one year for mortgage scheme.

Comments

[Traciatim]

The average homeowner gets 12 mortgages? So if they start when they are 30 and go until their are 84 they are getting one every 4 years?

I don't get it, don't you not really make a profit if you sell in the first 5-6 years?

Lets say you start with a 100K house, it appreciates at 2% per year, and you have a 5 year mortgage at 5.89% for the full balance. So your payment is 633.28 and your ending balance after 5 years would be around 90K. You would sell your house for 110K and lose 6.5K to a real estate agent. So you would get to keep 13.5K. However, you've paid out $37996.80 in payments on your mortgage alone, not including CMHC fees, taxes, maintenance, that little garden that looks so nice by your walkway . . .

If the average person is pulling that, then I don't get how the average person ever gets ahead. Maybe that's why we have really low savings rates, and tons of people saying their financial situation is terrible.

[Vasile]

Do I miss anything? Who said anything about selling? You can easily get a new mortgage on your existing house when refinancing. You can even pay the penalties and change the existing mortgage at almost any time.

[paulb]

Excellent site Melanie! I love getting the detailed mortgage info before the rest of my colleagues!

I have detailed daily Vancouver area stats as well as inventory charts at my website here:

http://www.nvcondos.ca if you are interested.

Paul

[Steve Heath]

I'm guessing they are counting renewals as well... so if you have a 25 year amortization and do it in five five-year chunks, they count that as five mortgages.

[Mortgage Broker]

Hi Traciatim,

Here's a few misc. points of note:

* According to HGTV the average Canadian moves once every 3-5 years so 4 is about right.

* Vasile and Steve are right in suggesting that a portion of those 12 mortgages are refi's and renewals where the homeowner doesn't move.

* Also, some people that move either rent or have their mortgage already paid off.

Have a great day!
- Melanie

[Phil]

Hey just wondering why posted fixed mortgage rates don't go down even though the prime rate has dropped half a percent in the last little while.

What are they waiting for?

[AVL]

I agree. I do realize that the fixed rate is marked by the bond market, but I am dumbfounded as to why nothing has changed. In fact, it went up in Mid Dec.....

Anyone her have any ideas/insight to if this may change?

[Traciatim]

I suppose, I didn't really think that a renewal would be considered a new mortgage. I guess it depends on their definition of 'obtain'. I would only include if they went out of their way to get a new mortgage, usually in a move, but since stats can be made to say pretty much anything you want I'll have to drop it.

Phil and AVL. The reason fixed rates aren't dropping is because banks are greedy and have to recoup their losses from someone, may as well be the unsuspecting public . . . or in bankers terms; There is increased uncertainty in the lending market causing the spread needed for sustained profits to be widened as risks have increased.

[Canadian Mortgage]

Bond yields (which drive fixed rates) have hit long-term lows in recent weeks. Unfortunately, mortgage investors are highly risk sensitive these days and many lenders can't access funds near those low rates, like they once could.

While the Bank of Canada has lowered it's target rate twice lately, that hasn't directly reduced the rates that mortgage investors are demanding.

A good number of lender execs and economists think it will be at least 60-90 days until fixed mortgage spreads approach normalcy. No one really knows though.