Fixed Mortgage Rates Up
Attributed to a rise in bond yields, big Canadian banks TD Canada Trust and RBC have decided to increase mortgage rates on their five-year fixed rate mortgages by as much as 25 basis points, or one quarter of a per cent.
The decision is marked by higher bond yields, meaning it is more expensive for banks to borrow in the bond market, a cost that is offset by raising mortgage rates available to consumers.
Fliogix Expert is the software platform the majority of mortgage brokers in Canada use to send their applications to lenders in Canada for processing. In the last three months, more than 14,000 different mortgage brokers and 77 lenders used Filogix Expert to submit their mortgage applications in Canada.
Though Filogix Expert dominates the mortgage application platform industry, there are two competitors at this company’s heal: MorWeb and Axcess Canada. It is difficult for smaller companies to break into the platform technology industry. Amassing a wider margin of market share among Canadian mortgage brokers involves convincing both lenders and mortgage brokers that their platform is worth the training time, the implementing efforts and the introduction to clientele. Breaking into the mortgage application platform industry involves a large amount of financial and technological resources.
Perhaps influenced by whispers of housing bubbles and rates doomed to rise, fewer Canadians are saying that now is a good time to buy a new home in their community than they did earlier this year, yet numbers are still higher than those attained from surveys conducted by the same institution from 2006 to 2008. Canadians are also saying that, in their opinion, low mortgage rates have accounted for more people buying homes than should have. Yet, when asked their thoughts on their own mortgage, very few said that they regret committing to the mortgage they currently hold.
Housing values in Canada are merely “overvalued”, not facing a housing bubble on the verge of bursting, according to economists at BMO Nesbitt Burns.
The BMO economists are saying that in comparison to the personal incomes of Canadians, Canada property prices are only moderately higher than real value. Mortgage servicing costs for the average Canadian homeowner are still leveling at a normal 34 per cent.
A growing number of Canadians are negotiating lower than advertised rates, according to a survey conducted last month by CAAMP and Maritz. While advertised rates have averaged 5.65 per cent over the past year, Canadians who have opted for a five year, fixed-rate mortgage within that timeframe have managed to secure an average rate of 4.23 per cent, saving 1.42 per cent in interest payments over their term.
Imagine a mortgage calculator so comprehensive that the least expensive route to home ownership becomes tangible before a commitment is made; a mortgage calculator that can calculate beyond down payment, monthly payments, rates and amortization length.
Thanks to the Canadian Mortgage Calculator created by Jon Wittwer, this ability has become accessible to all prospective Canadian homebuyers with an Internet connection and Excel. Wittwer’s mortgage calculators actually take into consideration potential tax deductions mortgage interest can generate, and the lump sum payments you might make along the way.