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Mark Herman – Calgary Mortgage Broker

$37,000 Payout Penalty at CIBC

January 12, 2021 Calgary mortgage

The latest in giant payout penalties, this one was $47,291.

Here is a person – one of my ACTUAL ALMOST-Customers who had to swallow a surprise at TD for $35,000. (We tried 3 times to get him to not take that mortgage.)

To make this even more mind blowing, at a 39% tax rate that is $65,700 the person has to pay … about the same as 1-year of income at a full time job, without tax taken off.

  • Would you work for 1 year to give it all to your bank if you had to sell or move or close down the mortgage for any reason?
  • Would you sign an agreement like that?
  • Have you already signed an agreement like this without knowing you have?

EASY to AVOID …

You don’t need to add in this risk to your home purchase. It is easy to get around by taking a mortgage from a major Broker Bank.

Broker banks calculate the payouts the “old way” which was way more fair to you, the buyer. Click here for the posts about payout penalties.

Broker banks also have better Terms & Conditions than the Big-6.

Link to the article: https://toronto.ctvnews.ca/american-who-sold-home-in-toronto-shocked-by-47-000-mortgage-penalty-1.5212884

“Broker Banks have better T&C than all of the Big-6. Call a mortgage broker first.”

Mortgage Mark Herman, Top Rated Calgary Mortgage Broker

 

Why CoronaVirus = Lower Mortgage Rates

January 30, 2020 Bank rates

This link does a great job explaining why rates are coming down right now for mortgages.

https://www.cbc.ca/news/business/coronavirus-mortgage-rates-canada-1.5443071

Summary:

  • Events that could cause a stock market crash tend to also cause a “flee to safety” and the 5-year Canadian Mortgage Bond is that safety net.
  • When investors buy these bonds the demand goes up so the bonds pay less as everyone wants them.
  • The lower cost of the bond means a lower interest rate on your mortgage

This should be a short term blip, so if you are buying a home take advantage of it quickly

Mark Herman, top Calgary mortgage broker

Why you don’t want your mortgage at your main bank

June 20, 2019 Bank rates, Mortgage Rules

The Big-5 banks do not love you, they love your money, and now they can “trap” you in their mortgages if you fail the Stress Test.

Highlights of the last post are below. The post from January is here: http://markherman.ca/how-the-big-5-banks-trap-you-in-their-mortgages/

The new mortgage rules – called the B20 – allow the banks to renew you at almost any rate they want – or at least not a competitive one – if your credit, income, or debts should mean you can’t change banks.

 If your mortgage is at your main bank they can see:

  • your pay and income going into your accounts
  • debt balances on your credit report
  • what your credit score is
  • your debt payments
  • your home/ rental addresses so they can accurately guess at your home value.

ALL THIS MEANS they can calculate if you can pass the new “Stress Test.”

If you can’t pass it then they know you can’t change banks, are you are now totally locked into them for your renewal. They can renew you at POSTED RATES … 5.34%, not actual discounted rates they offer everyone, today (June 2019) about 2.99%.

The GOOD NEWS is broker banks do not do any of this … so having your mortgage at your main bank only helps them “grind you” later on. …. so how convenient is having your mortgage at your bank now?

Highlights of the article link below are:

Canada’s biggest banks are tightening their grip … as new rules designed to cut out risky lending make it harder for borrowers to switch lenders …  the country’s biggest five banks … are reporting higher rates of renewals by existing customers concerned they will not qualify for a mortgage with another bank.

“B-20 has created higher renewal rates for the big banks, driving volumes and goosing their growth rates,” said an analyst. “It’s had the unintended consequence of reducing competition.”

Royal Bank of Canada (RBC), said last month that mortgage renewal rates [are up …] due in part to the B-20 regulations.

Ron Butler said, “Even if they are up-to-date with their repayments, borrowers may find they don’t qualify with other lenders so they’re stuck with their bank at whatever rate it offers,” he said.

Senior Canadian bankers such as RBC … and TD … voiced their support for the new rules prior to their introduction, saying rising prices were a threat to Canada’s economy.

While analysts say RBC and TD are expected to benefit from higher-than-normal retention rates in 2019, not everyone is sure borrowers will benefit.

“The banks are becoming more sophisticated in targeting borrowers who would fail the stress test and they can charge them higher rates at renewal knowing they can’t move elsewhere,” Butler said.

A lesson from RBC’s mortgage rate increase

January 6, 2016 Bank rates, Featured, Uncategorized

I love this article from the Globe as it explains why rates are going up a bit and what expectaions are for the near term.

Call for a rate hold if you are thinking of buying in the next 4 months!

“Borrowers who use a mortgage broker pay less …,” Bank of Canada.

See our reviews here: http://markherman.ca/CustomerREVIEWS.ubr

Mark Herman, Top best Calgary mortgage broker

The lesson home buyers should take from RBC’s mortgage rate hike

ROB CARRICK

The Globe and Mail

Published Wednesday, Jan. 06, 2016 10:07AM EST

… Rates are still low, but the stable part is in question after Royal Bank of Canada announced a small but still significant round of mortgage rate hikes that will take effect Friday. Expect other banks to follow along.

RBC will increase borrowing costs on special offers for fixed-rate mortgages with terms of two to five years by 0.1 of a percentage point. For example, the five-year fixed rate will rise to 3.04 per cent from 2.94 per cent, … [ we still have 2.79% for the 5 year, with full features]

Higher payments aren’t much of an issue – for now. Despite economic weakness that argues for stable or possibly even lower borrowing costs, mortgage rates appear to be facing upward pressure. Nothing startling, mind you. But the days of stable five-year fixed rates tucked nicely under the 3 per cent threshold may be coming to an end at your neighbourhood bank branch…

… Fortunately, there’s an intense level of competition in the mortgage business. If there’s one lesson home buyers and owners should take from RBC’s rate increase, it’s to never get a mortgage without cross-checking rates with at least one other source, preferably a mortgage broker with access to multiple lenders.

There are lots of alternative mortgage lenders that undercut the banks on rates and, almost as importantly, offer much less onerous penalties if you have to break a mortgage before it matures. [ here is a link to that http://blog.markherman.ca/2015/08/26/payout-penalties-how-the-big-5-banks-get-you/ ]. Also, you don’t have to negotiate with these lenders … [especially on your renewal!] . There’s no need to get a line of credit or bring your investments over to get the best rate on a mortgage.

Another message to take from RBC’s rate increase is that variable-rate mortgages are losing some of their appeal. In addition to raising costs on fixed-rate mortgages, RBC announced that the special offer on its five-year variable-rate mortgage will move to prime minus 0.1 from prime minus 0.25.

Fixed-rate mortgages have been the most popular lately, but there has until now been a case for going with the variable-rate option. Variable-rate mortgages are priced off the prime rate, which is influenced by the Bank of Canada’s benchmark overnight rate. The central bank is nowhere close to raising rates, which means variable rate mortgages, appeared to be safe from increases in the short term. Now, we see that this isn’t the case. Rates are still low in today’s mortgage market, but maybe not stable.

For all if the article … http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/the-lesson-home-buyers-should-take-from-rbcs-mortgage-rate-hike/article28031075/

Alberta sky is not falling

May 5, 2015 economy

The graph below shows the expected Alberta GDP growth rate for the end of 2015 and 2016. The numbers are still positive – just not as high as they were before.

If the Calgary to Edmonton corridor was a country it would have the 2nd highest growth rate in the world after China.

Now these numbers are back to earth, things will continue as normal as oil slowly works it’s way back to about $70 a barrel.

Mark Herman, Top Calgary, Alberta mortgage broker

Click on the chart to see it larger.

image

Slight mortgage rate increase on the way?

February 23, 2015 mortgage rates

We watch lots of technial things to see where rates are going. One of those is the CMB – Canadain Mortgage Bond.

Today, the benchmark government of Canada five year bond yield ended the week at 0.79%, up from 0.73% the previous week.

that means that fixed rates may move up from their 2.74 – 2.79% soon.

Get your rate hold / applicastion in!

Mark Herman, AMP, B. Comm., CAM, MBA-Finance

WINNER: #1 Franchise for Funded $ Mortgage Volume at Mortgage Alliance Canada, 2013 and 2014!

Direct: 403-681-4376

Accredited Mortgage Professional | Mortgage Alliance | Mortgages are Marvelous

Toll Free Secure E-Fax: 1-866-823-1279 | E-mail: mark.herman@shaw.ca |Web: http://markherman.ca/

1 Graph Shows Why Mortgage Rates Are Lower in Jan 2015

February 2, 2015 Bank rates, economy

The graph below shows why rates have found what we think is a short term low. This will not last forever so be sdure to get a rate hold now!

30 day Canadian Mortgage Bond (CMB) trend – below

trend

Graph Summary

The banks get their money for mortgages from the CMB … this is a short term oddity right now. This trend will change soon and is from:

  1. the quick drop in oil prices
  2. the surprise rate cut from the Bank of Canada on Prime
  3. and other world economic activity.

Market Summary

The Bank of Canada has certainly shaken things up with its surprise 0.25 bps rate cut. Even more so because Governor Stephen Poloz has left the door open for a further cut.

Poloz explained that the BoC trimmed its rate as “insurance” for the broader economy in light of the fallout from falling oil prices. He went on to say the Bank was prepared to take out more insurance.

Concerns about unemployment, slowing economic growth and deflation have obviously trumped past worries about record high household debt-to-income ratios.

However, it is not a sure bet that the lower central bank rate will inflate the Canadian real estate bubble. Canadians have established a history of using lower rates to pay down debt, rather than adding to it.

All this from Calgary’s top mortgage broker, Mark Herman

Oil Price & Mortgage Interest Rates

January 7, 2015 economy

This is an easy way to see the relationship between oil prices and mortgage interest rates.

Mark Herman, Top Calgary Alberta mortgage broker.

The path between the price of oil and the cost of your mortgage may seem long and winding and hard to follow, but it does exist.

Oil is a major component of Canada’s economy. Energy accounts for about 25% of Canadian exports and oil is a significant part of that. Oil is now selling for about half what it was just a few months ago.

Lower oil prices mean less royalty money for governments. Low oil also means the main driver of employment in Canada – the Alberta oil patch – is likely to slow as well as energy firms cut back operations. Employment is one of the key indicators the Bank of Canada watches when determining interest rate policy.

Falling oil prices are likely to have an, overall, negative effect on Canada?s economy, exerting downward pressure on the Bank of Canada rate, and therefore variable mortgage rates. The impact on GDP and employment will likely hold down government bond yields and, in turn, fixed mortgage costs.

Retail Sales: Alberta spends the most

November 25, 2014 economy

“More support of Calgary and Alberta home prices; the high-value jobs in Calgary pay more and the 40,000 people a year that move to Alberta are spending that money. The numbers are mind blowing.”

Mark Herman; Calgary, Alberta mortgage broker

 Jonathan Muma Nov 25, 2014 10:25:24 AM

Albertans love to shop.

That’s according to the latest report from Statistics Canada which shows retail sales are up $6.7-billion, or 7.4 % from a year ago through the first nine months of this year.

That’s the highest annual growth rate in the country.

The next closest province is British Columbia at 5.3 %, and Canada overall, retail sales grew to $42.8-billion, up 4.5% from a year ago.

http://www.660news.com/2014/11/25/alberta-leads-the-way-as-canadian-retail-sales-soar/