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Mortgage Bytes

  • posted-rates Despite Tuesday’s Bank of Canada rate cuts, the Globe says “banks are trying to hold lending rates as high as possible to preserve profit margins.”  CBC says 1% discounts off posted bank rates are now “more difficult to get.”  Well, if your bank doesn’t comply, go to the competition.  Certain non-bank lenders have cut rates nicely in the last few days.
  • 1/3 of the money BMO lends out comes from the credit markets, and costs of funds there have soared since the summer. The rest of BMO’s loot comes from deposits.
  • 2007 was a nice year for First National.  They originated 49% more mortgages than 2006.  They also got approved as an issuer of NHA-mortgage backed securities and as a seller in the Canada Mortgage Bond programs.  This should reduce their funding costs in 2008.  First National is the top single-family lender for mortgage brokers.
  • The Canadian Federation of Independent Business’ December survey shows access to business credit worsened for 13% of respondents and improved for 7%.
  • Only 7% of Canadians claim they’re “very likely” to buy a home in the next two years.  That’s the lowest proportion since RBC’s poll started 15 years ago. 
  • 52% say their next home will be bigger.  19% say it’ll be smaller.  So ask we must.  How come no one’s rolled out 50-year amortizations so people can afford all these big homes?  40-year ams. are so 2007!  RBC poll


Regarding 50-year amortizations, we jest of course. Long-ams have already propped up our real estate market, some would say, a bit too much. There’s even speculation that lenders will cut back on long-term amortizations over time for risk reasons.  However, with 40-year ams. being so popular, and considering their practical uses, we’re skeptical of that happening.