Mortgage Tips

  • mortgage-pre-approvals If you’re looking for a pre-approval, be prepared to wait a few days longer than normal.  Refinances and spring home buying are boosting mortgage application volumes at various lenders. That’s forcing pre-approvals to the back burner since lenders deem them non-time-sensitive.
  • There are ways to avoid foreclosure if you’re on the brink. This Bankrate story has some good advice. TD’s Kelly Hechler says”: “Lenders will work with every customer to try and find a solution for their individual situation.”
  • First-time homebuyers have two major ways to offset closing costs:

Real Estate Market

  • dropping-home-prices The average Canadian home was worth $281,972 in February, down 9.2% YOY.  (CREA)
  • Should you buy now or wait?  Canadian Real Estate Association economist, Gregory Klump, says:  “Timing the market” can be a bit of a throw of the dice.”  Watching home price charts may therefore be misleading because “sales activity picks up before prices do,” he says. (CBC)
  • So, when will we know whether Canada’s housing market has put in a bottom?  “Four months after the fact,” says RE/MAX Condos Plus.
  • If you want to watch price trends regardless, here’s an interesting site.
  • “The most important factor for housing markets is job creation.” – CAAMP economist Will Dunning (Story…)
  • Will the Olympics boost home prices in Vancouver? They didn’t in Calgary (in 1988) or in Montreal (in 1976) says CREA economist Gregory Klump. (CBC)

Mortgage Commentary

  • The always vocal Garth Turner calls fixed-rate mortgages “dumb, extreme and costly.” He says “Why the hell” would you lock in now when you can do so later “with a phone call when it becomes apparent” rates are going up.  It sounds like Garth has a “greaterfool-proof” way to predict interest rates. We’ll keep watching his blog in the hope he shares it with the public.

Mortgage Rate Trends

  • mortgage-interest-rates BMO economist, Doug Porter, expects the Bank of Canada will cut rates again on April 21. (Hamilton Spectator)
  • Credit market traders are betting on a 59% chance of a 1/4% rate cut by April 21.  They expect a 0% chance of rate increases by next January.  (CEPTraders trade on current economic information, which can change at any time. So use this at your own risk.
  • “Over the past 6 months, a bubble of government bonds developed as investors sought refuge in the face of massive deleveraging…Low yields are not expected to be around for long, and will probably end badly, as have all other bubbles.” –- Assante Financial Planner, John Lunam  (Bond yields are closely linked to fixed mortgage rates.)

Mortgage Industry and Products

  • Scotiabank We’ve heard unconfirmed word that Scotia will be making their STEP mortgage automatically readvanceable in the near future. (Although we’ve heard that before)  At the moment, borrowers must manually request increases to their STEP line of credit after paying down $5000 or more in mortgage principal. This contrasts with popular products like FirstLine’s Matrix, where credit is readvanced automatically without borrower intervention or quirky minimums.
  • “At this point, the margins of selling into the Canada (Mortgage) bond program are very good,” says Home Capital CEO, Gerald Soloway (FP)  That’s good news for non-bank lenders who rely on the CMB for mortgage funds.
  • “There has not been a year in which residential mortgage credit has declined since 1969 (the earliest period in which data is available), including three recessionary periods.” — Jennings Capital analyst, Marc Charbin (Globe)


  • More-debt The top 5 reasons for mortgage defaults, according to AIG United Guaranty:
      1. Over-extension
      2. Reduced income
      3. Job loss
      4. Martial Breakdown
      5. Fraud

Single-person applicants have the highest probability of default, and 95% of defaults occur in the first five years of a mortgage. (AIG)

  1. Why edit the post, it’s no secret that AIG has not done well, all I stated was will AIG be putting together a top 5 list of ways to make a $50 dollar stock into a government owned penny stock.

  2. Garth is an idiot. How about: “Because once you take a VRM they don’t give you the discounted fixed rate when you decide to lock-in, they give you the posted fixed rate.”

  3. Hi Bob,
    We really try to avoid editing things but, at the same time, it’s important for criticism to be well-supported and on point. Pot shots don’t add value.
    The AIG post you’re referencing pertained to AIG United Guaranty, the independently run Canadian subsidiary, not the US behemoth that dug it’s own grave.
    AIGUG Canada is doing anything but running itself into the ground. It’s maintaining operations during a tough time and it’s run by good people who haven’t made the type of decisions you’re referring to.
    Hope that clarifies…

  4. Hey maybe you shouldn’t throw stones, I know for a fact that clients at the bank I deal with get fully discounted rates when switching from a closed VRM to a fixed.

  5. Advice for First Time Buyers
    A number of factors have led to the number of first time buyers purchasing property falling over the past year, and these factors include lack of mortgages, the effects of the global credit crunch, and falling property prices.
    You need to bear in mind that there are many different upfront fees that you may have to pay out when taking out a mortgage, such as solicitor fees, mortgage arrangement fees, and a hefty deposit, and in order to work out whether you can even afford to take out the mortgage you need to determine whether you have the necessary funds available for the upfront payments. It is important to go through your income and outgoings thoroughly to ensure that you can comfortably afford the monthly repayments on the mortgages, as you could otherwise lose the property if you fall into arrears.
    Also, as first time buyers you need to bear in mind that it is not just the mortgage repayment that you have to factor into your budget. You will also need to ensure that you can afford to pay bills, pay for groceries, and cover other costs.

  6. ” Scotia’s STEP does now have it confirmed to readvance the LOC, I did mine the other day. ”
    Correct, but it is just through the branches. Scotia hasn’t initiated auto-readvancing in the broker channel yet.

  7. Rob’s comment:
    AIGUG Canada is doing anything but running itself into the ground. It’s maintaining operations during a tough time and it’s run by good people who haven’t made the type of decisions you’re referring to.
    Rob, as long as the letters AIG are in front of the division, it must be painted with the same brush, AIG Canada has been around for about 5 years and still has yet to land a big bank, the industry used to go to AIG when Cmhc, and Genworth declined the deal. I am not saying that they might not have good people there, but let’s call it like it is, in this environment the pickins’ for them has diminished even further as lenders are choosing only to send deals to CMHC.

  8. Bob#1:
    The pickins have decreased for now. That is right. But I have to disagree with the rest. AIGUG Canada is a separate entity run independently and its parent. The mothership’s misguidedness is in no way reflective of how AIGUG Canada (which is run by Canadians) operates its business.
    The reason AIGUG Canada (and Genworth for that matter) haven’t put more of a dent in CMHC’s business is because of the critical difference in how the government chooses to guarantee each insurer’s mortgages. We’ve discussed this aspect on CMT many times so I won’t go into it here.
    Take care,

  9. What is the story with this Dude who keeps posting falsely under “Bob” and “Bob#1”?
    Does it amuse you? What’s your gig, man? Why don’t you just pick your own fake name and stick with it instead of sock-puppeting?

  10. No wait, I said it only bothered me when it was in an individual post, you are okay then, no wait, no don’t do it, i don’t like it, i talk about these things because this name bob is important to me.

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