As of today, the Bank of Canada rate remains at one percent.  However there are signs that the economy is improving, which is the good news … the bad news is that when it improves, the Bank of Canada rate WILL go up, and mortgage rates will also increase.

“As expected, governor Mark Carney and the Bank of Canada again maintained interest rates at a stimulus-level one per cent Tuesday. But his upbeat assessment of the economy sent the clearest and most hawkish signal yet that rates will be moving higher – probably sooner, rather than later.”

~  Regina Leader Post

Jim Flaherty gave Canadians this stern warning:

“Interest rates are going to go up. There’s only one way they’re going to go. Get realistic about it and say, ‘will I be able to afford my mortgage at a higher interest rate or not?’ Do the arithmetic and figure it out”

There IS cause for concern:

In 2001 less than 1% of consumer spending was financed through home equity  … today 3% of everything Canadians spend is money that is borrowed against our homes.

Equity lines of credit have increased 800%,  from $8 billion in 2001 to a staggering $64 Billion in 2012.

What can YOU do about it? 

Use our online calculators to figure out what your mortgage payments will be when rates increase.  Can you afford the increase in monthly fees?

Better yet … do the calculations above and increase your payment to the increased amount today. You will not only rest assured that you can make the extra payment, but you will be paying off your mortgage faster. When the time comes to renew (presumably at higher rates) you will already have paid down a chunk on the principal portion of your mortgage.  ** Call your mortgage lender to see if you are able to make increased monthly payments against your mortgage. Many mortgage loans allow extra monthly or yearly payments.

Part of these programs involve ethics.  You would rightly assume that much of the behavior covered involves high ethical standards in dealing with our customers.  These standards are in place to protect consumers from misinformation and from unethical practices.

The ethical standards also involves truth in advertising and … competition.

This past week we became aware of the fact that two of our competitors were utilizing what are know as Black Hat (unethical) Search Engine Marketing (SEO/SEM)techniques.

They were in effect trying to steal Google traffic from us by using our personal names, and our company name in Google searches.

One of our competitors went so far as to code our names in his blog posts on pages that were totally unrelated to us.

Not only is this “hijacking” of our names and internet traffic illegal, it breaks the ethical standards and guidelines established by our professional association.

The matter is now being investigated by a CAAMP ethics investigator.

Many of our clients own their own businesses.  If you have a business website, we encourage you to check and make sure your competitors are not trying to undermine you by hijacking YOUR name or your company name for their personal benefit.

“Most analysts and, increasingly, bank economists, predict the government will officially move to that 25-year cap if, in fact, consumer debt levels fail to ease.”

Justin wants the government to re-consider the 25-year cap because there the plenty of borrowers who are not in financial jeopardy but who prefer to manage their cash flow by utilizing the 30-year plan.

Read more about what Justin has to say to the government in the  article “Broker to Govt: make an exception”

Here are some of the facts:

• This credit only applies to first time home buyers.
• This is an income tax credit, not a cash rebate.
• The tax credit is equal to 5% of the home price, with  a maximum of $10,000.
• The tax credit is pro-rated based on your income, which means  higher income families won’t benefit ($200,000+ annual income).
• Eligible NEW homes include: newly constructed and substantially renovated homes purchased from a builder and homes that are owner-built.
• The tax credit is available from Feb 21, 2010 to March 31, 2013.

Take a look at the  2012 First Time Home Buyers Fact Sheet  PDF

Check out our current rates here.

The rates that YOU will be offered are based on the amount of your down payment and your credit rating.

In this market place we look for the BEST combination of rates and features. Depending on your needs and circumstances we look for a package that has great flexibility and good terms.

Here are some of the features that are available:

Prepayment – With a pre-payment privilege, you can make payments toward the principal portion of your mortgage over and above your monthly payments.

Closed mortgages have different types of pre-payment options. The amount you can pre-pay becomes important if you get bonus payments, a windfall or an inheritance.

An open mortgage means you can pay the entire principal sum without notice. This is a good option if you are self-employed or if you get regular bonus payments.

Do  YOU Prefer Security or Flexibility?

Mortgages are available with closed, open and convertible options, with fixed or variable rates. The options you choose should be based on the market (going up or down), on your financial goals and on your risk tolerance (desire for long-term security).

There are Two Rate Structures to Choose From:

A fixed-rate mortgage will remain the same for the length of the negotiated term. Your payment schedule is established in advance. You can choose either an open or closed mortgage, depending on the term.

A variable-rate mortgage fluctuates with the current market rates. Your monthly payment will remain constant (usually for a year or two), but the amount allocated to your principal will vary. If rates are going down, this may be a good option. If rates are start rising, you may want to convert to a fixed-rate mortgage.
If you are on a tight budget, you may be willing to pay more for peace of mind.

Closed Mortgage – Interest rates are fixed for the full term of the mortgage, and you will have to pay a penalty to change the agreement conditions. This type of mortgage is ideal for buyers who think that interest rates will rise and who are not planning to make any moves over the term of the mortgage.

Convertible Mortgage – With this mortgage you have the flexibility to convert to a longer closed mortgage at any time without penalty. If  rates rise, you can lock in.

Need a Mortgage?

If you are planning on buying for the first time, moving to a new home or renewing your mortgage, you should know where you stand. Please give us a call at 604-736-1855

In a recent online study conducted by TNS Canada for TMG The Mortgage Group Canada, results showed just under one third of Canadian renters are planning to buy real estate within the next 2 years; equivalent to a potential increase of 12% in demand for home ownership. Further findings from the representative sample of Canadians revealed that interest rates have a significant impact on the timing of purchasing.

“The study found that 28% of current renters are planning to buy in the next two years,” stated Mark Kerzner, President of TMG The Mortgage Group Canada. “That’s a large pool of potential buyers poised to have a significant impact on real estate sales and the mortgage industry. Since over half of those buyers indicated they would buy faster if they believed interest rates were to rise, now is when they should be seeking professional mortgage advice, getting pre-approved and locking in an interest rate.”

The study also showed Canadian renters are equally as concerned with mortgage features as they are with mortgage rates. Lawrence Smith, Professor Emeritus in Economics at the University of Toronto noted: “The same percentage of renters indicated the ability to repay with as much flexibility as possible was as important as obtaining the lowest possible mortgage rate. This demonstrates the strength and quality of Canadian borrowers. It means Canadians are really thinking about paying off mortgages as opposed to what we’ve seen with sub-prime mortgages in the US which was all about rate, cash-flow and just getting approved.”

In response to the study’s finding that nine out of ten renters planning to buy real estate would use the services of a mortgage broker, Kerzner added: “Buyers recognize mortgage brokers provide a fast, efficient way to access a wide variety of mortgage options and solutions, in most cases at no additional cost. Saving time and money is important, especially to first-time purchasers.”

Summary of key findings:

· 28% of current renters are planning on buying in the next 2 years; one third of those plan to buy in the next 12 months. This is equivalent to a potential increase of 12% in homeownership demand.

· 54% indicated their timeframe would change and they would buy sooner if they believed interest rates were to rise 2% or more in the next 12 months.

· 91% of renters planning to buy real estate would likely use the services of a mortgage broker.

· When asked where they intend to seek information about mortgages, just as many renters indicated they will contact a mortgage broker (68%) as their bank (66%).

· 34% indicated the most important factor in choosing a mortgage would be the ability to repay with as much flexibility as possible; 33% indicated it was the lowest possible rate.

· 79% of renters planning on purchasing indicated they are educated in the buying process and aware of being able to use RRSP’s towards a down payment.

About TNS Canada:

TNS Canada is one of the country’s largest and most experienced independent research organizations, having served marketing and opinion research needs since 1932.

About TMG The Mortgage Group Canada:

Awarded 2011 National Mortgage Broker Network of the Year, TMG The Mortgage Group Canada is in its 22nd year in the industry making it one of the longest operating national mortgage brokerages in Canada with over 700 mortgage professionals.

Averbach Mortgages is affiliated with The Mortgage Group Canada.  If you are thinking about making a purchase in the next few months, give us a call.  We will help you get a pre-approved mortgage and lock in the best rate possible. Our mission it to MAKE IT EASY for you to get a great mortgage.