How do we (mortgage brokers) know rates are going up?

Hi All – many people ask how we know that rates are going to change ahead of time. Below is a sample of the data that we read on a daily basis. If you were motivated enough to read things like this every day – or figure them out for yourself – then you would know too. Or, just let a mortgage broker do it.


Bond yields today are roughly where they were a week ago but there has been plenty of volatility over the intervening period.

Last week yields were pushed higher by in-line or better than expected economic data in Canada (Manufacturing Sales Growth, Trade Balance) and the US (Retail Sales Growth, Initial and Continuing Jobless Claims, Trade Balance), together with a sense of optimism that the European debt crisis will be resolved and/or that concerted steps there would be taken to protect the banking system.

Generally speaking, “good” economic news tends to push bond yields higher as market participants are less interested in the safety bonds provide.

Notwithstanding last week’s developments, yields have come back down today as worse than expected economic data in the US and a clarification from Germany that a once-and-for-all solution to Europe’s debt crisis will not be forthcoming and that markets should expect such crisis to extend into next year.

In all, these developments present the global economy in better shape than what we thought at the start of the week, and the rise in rates reflects that change.

Calgary house prices and sales rise in September

Calgary is showing solid numbers are the in-migration continues. Almost 40% of people moving to Alberta move to Calgary.

CALGARY — Calgary house prices and sales rose in September compared with a year ago, according to the Canadian Real Estate Association.

In releasing its monthly data on Monday, CREA said MLS residential sales in Calgary reached 1,789 units in September, up 11.4 per cent from September 2010 while the average sale price rose by 1.3 per cent on an annual basis to $406,252.

Year-over-year in Alberta, sales rose by 9.7 per cent to 4,316 units while the average price increased by 3.0 per cent to $359,637.

Nationally, MLS sales of 37,760 were up 11.0 per cent from September 2010 and the average price rose by 6.5 per cent to $352,581.

“Canada’s housing market remains stable amid continuing financial market volatility, contributing to Canadians’ confidence in the economy and providing support for Canadian economic growth,” said Gregory Klump, CREA’s chief economist, in a statement. “Interest rates are expected to remain low for longer, and evidence suggests that recent changes to mortgage regulations are preventing the kind of excesses they were designed to avert. Both of these developments are good news for the housing market.”

© Copyright (c) The Calgary Herald

Why you do not want a CIBC mortgage – they are beig sued for unfair payouts.

Lawyer files prepayment class action against CIBC
By Vernon Clement Jones

Twin class action lawsuits were filed in B.C. and Ontario late last week alleging some CIBC mortgage borrowers have been unfairly penalized by “vague” prepayment terms, the lawyer behind the action told

“There are two substantive complaints here,” Kieran Bridge, a Vancouver lawyer with the Construction Law Group, told “We believe that through this lawsuit CIBC’s practices with respect to how they calculate mortgage prepayment penalties will be found to be unenforceable. In this case, as with all of these types of cases, we are concerned about whether Canadians are being treated fairly and lawfully.”

Aside from what Bridge terms “uncertain and unenforceable language” in contracts dating as far back as 2005, he also points to the mathematical formula CIBC used to determine those prepayment charges, calling them “invalid,” or in legal speak a “miscalculation.”

The suits rely on individual representative plaintiffs in B.C. and Ontario. Each of those two notices of claim alleges CIBC applied terms and conditions to certain mortgage contracts that allowed it “unfettered discretion” in calculating mortgage prepayment penalties.

The suits also allege that the actual amounts of those penalties were themselves in breach of the mortgage contracts.

CIBC will have a chance to respond to the claims, with a judge’s decision on whether to certify the civil lawsuit, and move it to trial, possibly taking a year or more. The bank did not provide comment to MortgageBrokerNews Tuesday, and none of the allegations have, in fact, been proven.

The collective legal action effectively echoes some of the more perennial and broader concerns of brokers, who grapple with the widely varying interest rate differential and prepayment penalties many lenders demand of borrowers. The former, sometimes stretching into the tens of thousands of dollars, has presented a major impediment to helping clients take advantage of historically low rates by switching or refinancing clients before maturity, argue many mortgage professionals.

Those challenges have led to broker calls for industry-wide standardization of penalties.

Undoubtedly, broker-arranged mortgages through Firstline are among the thousands of transactions the dual suit is meant to address, said Bridge, at the same time expressing his support for mortgage professionals.

The B.C. lawyer led a similar case against RBC about ten years ago. It ultimately ended in a settlement, said Bridge.