Mortgage Bytes

  • Rate-Predictions The average interest rate prediction from the big 5 banks is for a further reduction of 0.85% this year, possibly by mid-summer.  Partial source:  BCMortgage
  • The Canadian Real Estate Association is disappointed about Tuesday’s budget.  They expected some capital gains relief.  CREA feels Canada’s capital gains policy “locks in” investment properties from resale because people don’t want to pay the capital gains tax when they sell.
  • Ontario’s Realtor population grew an astounding 20% since 2005.  Metro Toronto now has one real estate agent for every 150 people.  Real Estate Intel.
  • Thinking of holding your mortgage in your RRSP? The Financial Posts notes that you’ll have to buy mortgage default insurance, even if you’re putting 20% down.  Plus you have to pay for a 3rd-party trustee.  More from Garth
  • 20% of Canadians were born abroad. Lenders are now catering to them more and more, with up to 100% financing in some cases.  Winnipeg Sun Story
  • Merix cut their rate discount today on their popular HELOC variable-rate mortgage.  It’s now prime – .25%  (versus prime – .50% yesterday).  That basically prices them out of the market if you want a variable readvanceable mortgage–which is sad because they have a solid product.
  1. When Merix cut their variable-rate HELOC discount last night from prime – .50% to prime – .25%, it probably disappointed a lot of mortgage planners. Merix’s HELOC is an excellent product, but paying .25% to .35% more–versus the competition–is too much for most people to stomach.
    Until we have better options we will steer folks who want variable readvanceables to RBC and BMO. BMO is currently at 5.296% (6-year “flexible” variable) and RBC is at 5.15% (5-year closed variable). We won’t get paid (BMO & RBC don’t have a broker channel) but these banks have the best options for the client.
    In case you’re wondering why MERIX raised their rates, here is our understanding. HELOC is a unique product that can’t easily be securitized. As a result, Merix keeps it on their balance sheet. Lately Merix’s cost of funds for doing that have increased.

  2. Of course they increased and it’s not the last one they/others will do. Cheap credit is drying up fast, capital is depleting and little trust is out there.

  3. Look, I’m just being honest. That IS the truth on what’s going on.
    Anything else is just putting your head in the sand.

  4. So is it fair to say if a person was to be renewing their mortgage within next motnth, that the variable rate is the way to go?

  5. Hi Cha, Generally speaking a variable is the best bet. Rates are falling and historically variables have saved borrowers the most interest long-term. Just make sure you find one with a good conversion rate and privileges. We or any good mortgage planner can help with that. Have a fun weekend! Melanie

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