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Mark Herman – Calgary Mortgage Broker

Inverted Yield Curves, Impacts on Prime Rate Changes and Variable Rate Mortgages

December 6, 2018 Bank rates, economy

Summary:

For the 2nd time in 50 years the “Yield Curve” has inverted – meaning that long term rates are now lower than short term rates. This can signal a recession is on the way.

This Means …

  1. Alberta will look better comparatively to Canada’s hot housing markets which should finally cool down.
  2. Canada’s Prime rate increases look to be on hold until Spring. This makes the variable rates now look MUCH Better. There were 3 rate increases expected and these may not materialize – making the VARIABLE rate look better.
  3. Broker lender’s have VARIABLE rates that range between .1% and .65% BETTER than the banks do. If you are looking at variable rates we should look further into this in more detail.

DATA BELOW … Read More

Prime rates should go up in July

May 31, 2018 Bank rates

This only affects variable rate mortgages and there are 2 increases to Prime expected for 2018, this one and one in December – depending on how the economy goes.

  • The Bank of Canada is expected to raise interest rates on July 11th.
  • They normally increase Prime by 0.25% at a time, Prime is 3.45% now and should then go to 3.70%.
  • The Central bank also emphasized that the increase will be needed to contain inflation.

This makes the 5-year fixed rates look much better as rates are slowly going back to 4% – the Theoretical Minimum Read More

Should you look at 7 and 10 year terms?

May 23, 2018 mortgage rates

With rates on the rise, is it worth a 2nd look at longer term mortgages?

Data:

  • Rates have substantially increased over the last 6 of months. We have seen 3 prime rate increases with more on the horizon.
  • Fixed rate mortgages have also followed suit due to bond market instability and the increases are noticeable.
  • Consumer sentiment has rapidly moved from Variables rates to longer term Fixed rates of 5, 7, and 10 years.

The long-term trend for rates is up!

The advantage of Fixed rates is that they provide clients with added security and stability against this recent storm of volatility. This storm doesn’t seem to have an end in sight either with many questions still to be answered in the coming months. When will bond rates stabilize?  Will global pressures continue to drive increases?  Will we see a return to historical norms? What will be the impact of recent events on the Canadian economy? Read More

Collateral Charge Mortgage – a big deal

May 22, 2018 Calgary mortgage

Collateral charge mortgage registration … is a big deal in most circumstances.

Short Version

  • This is a method of registering your mortgage currently used by nearly every Chartered Bank / Big-6 Banks at this time.
  • You are unlikely to avoid it if you are at a Big-6 Bank so it is important to understand the ramifications.
  • Avoiding having your mortgage held by the same institution as the balance of your debts such as; credit cards, over drafts, unsecured credit lines, car loans, etc.  This is worth serious consideration. See the bold summary in the last paragraph below.
  • Have your mortgage as a stand alone piece of a bank-relationship if you must place it with a Bank
  • Ask about more information re ‘Monoline‘ lenders; broker lenders that do not register this way.

Long Version

The Financial Consumer Agency of Canada website provides the following definition;

Collateral Charge (a.k.a  ‘All-indebtedness’) – A type of mortgage whose features may include the ability to potentially borrow additional funds, subject to your lender’s approval, without the need to discharge your mortgage, register a new one and pay legal fees. If you want to switch your existing mortgage to a different lender at the end of your term other lenders will not accept the transfer of your mortgage. This means you may/ probably will need to pay fees to discharge your existing mortgage and register a new one in order to change lenders. The fee for this is the lawyer charge incurred.
 Read More

The Details: What you need to know about “discount mortgages.”

January 14, 2016 collateral mortgage, Featured, mortgage renewal, payout penalties

Grandma always said, “The price is the price, but the details are the details!”

There are discounted and restricted mortgage rates out there but they do not share the details of their disadvantages up front with you.

  1. Restricted or Limited Products / Bait & Switch

People will not even sign a 3 year cell- phone contact any more but they will try to save $15 a month on a restricted mortgage; which could cost them $30,000 as a payout penalty – BUYER BEWARE is what the regulators say. Read More