Mortgage Bytes

  • Fed The U.S. Federal Reserve has cut interest rates 1.25% in the previous 8 days. That’s almost unheard of.  Moreover, they’re suggesting further rate cuts may be needed. Meanwhile, U.S. core inflation isn’t exactly tame at 2.7%. That’s got some economists uttering the fearsome S-word (stagflation).
  • As for us up in Canada, RBC expects “five-year fixed mortgages to drift about 1/2% to 3/4% lower through 2008.” 
  • TD predicts a 1/2% Bank of Canada cut March 4 followed by a 1/4% cut April 22. Bloomberg’s 17-economist survey predicts a 3/4% rate reduction by June.
  • 5.89 must be a magic number. A slew of non-bank lenders are now bunched together at 5.89% on 5-yr fixed mortgages.  Most brokers are now quoting this as their best rate but there are lower rates to be had.
  • 2007 was the worst year for affordability in BC since RBC started tracking it in 1985. Expect improvement in 2008 they say.
  • “A household moving from Vancouver to Winnipeg would save nearly $1,000,000 in purchase and mortgage costs for a median-priced house.” CTV
  • RBC says 85-90% of its first-time BC buyers are choosing 40-year amortizations.  But what about all that extra interest?  John Zieman of Mortgage Depot says, “Nobody goes into a 40-year mortgage with the intention of paying it off in 40 years.”
  • This new page from FSCO tallies mortgage broker complaints in Ontario. From July to September 2007 it shows only 13 complaints–not bad for tens of thousands of deals. 17 letters of caution were issued to brokers and only one Ontario broker was investigated for violating the Mortgage Brokers Act.
  • Over 1% of U.S. homeowners were in foreclosure in 2007, up 75% from 2006. Meanwhile, U.S. home prices dropped in 2007 for the first time in 40 years.
  • The Muslim Canadian Congress feels Sharia mortgages are a sham. They say “Islamic banking is nothing more than an attempt by Islamists…to scare Muslim Canadians into believing that they should pay more…and demand less in return, as an act of religiosity.”
  • Many Vancouverites are renting out suites illegally to help pay their mortgage.
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