Mortgage rates present opportunity

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Historically low mortgage rates are continuing to make homeownership affordable for Canadians, according to the Royal Bank of Canada.

Data from the RBC's Housing Trends and Affordability report shows that low mortgage rates are keeping Canadian homeowners from entering dangerously unaffordable territory. Additionally, the report stated that rate increases are likely not on the horizon.

"Exceptionally low mortgage rates have been the main factor preventing affordability from reaching dangerous levels in recent years; yet, we believe that the likelihood of a surge in rates is slim at this stage," the report stated.

Continued low mortgage rates are good news for Canadians, especially as a report from the Certified General Accountants Association of Canada shows that while many Canadians are satisfied with their finances, they're not necessarily keeping on top of them. Continue reading

Low mortgage rates remain despite government interference

It seems that not every member of the Conservative cabinet is a huge fan of Finance Minister Jim Flaherty's penchant for getting involved in the mortgage market.

According to a report from The Globe and Mail, Small Business Minister Maxime Bernier recently expressed his opinion regarding Flaherty's meddling in the world of mortgage rates. The verdict? Leave the market alone.

"Me, personally, I would not dictate to businesses what prices to decide," Bernier said. "It's the market. It's supply and demand that decides the prices. It is the case for interest rates, it is the case for other products too."

Of course, Flaherty has critics outside his party as well.

"We either have a competitive mortgage market or we do not," said Bob Rae, interim Liberal leader. "And it's clear to me that Mr. Flaherty would prefer to have a cartel where… he and his officials are setting the interest rates for every mortgage in this country."

The criticism being leveled at Flaherty is in regards to his asking both Manulife Financial to withdraw their discount on five-year mortgages, as well as complaining about the Bank of Montreal lowering it's five-year mortgage rates. Continue reading

OSFI considers shortening amortization rates

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Reports out of Ottawa could spell big changes for mortgage borrowers concerning amortization rates, according to The Globe and Mail.

Apparently The Office of the Superintendent of Financial Institutions Canada (OSFI) is weighing the pros and cons of uninsured mortgages of more than 25 years. Brock Kruger, OSFI spokesman, has attributed this attention to the high levels of debt carried by many Canadian households, among other matters.

"We are working to determine the desirability of some changes given current conditions in housing markets and recent trends in household indebtedness," Kruger told The Globe and Mail.

Considering the fact that Finance Minister Jim Flaherty tightened mortgage rules four times in as many years, the most recent being in July 2012, it's not far-fetched to think this attention from OSFI could result in further restrictions on home loans Continue reading

Trends and predictions for Canada’s mortgage market

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The Canadian Association of Accredited Mortgage Professionals has released its Annual State of the Residential Mortgage Market in Canada report for 2012.

The report, authored by CAAMP Chief Economist Will Dunning, offers a number of insights into Canada’s mortgage market, including trends from 2012 that can help shed light on things to expect in 2013.

Mortgage types
According to the CAAMP report, most Canadians chose fixed-rate mortgages for homes purchased throughout 2012. Data shows that fixed-rate mortgages comprised 79 percent of the market. Meanwhile, adjustable-rate mortgages made up 10 percent of the market. Combinations of both took up 11 percent.

These figures mark a considerable change from years past. The CAAMP report shows that in prior years, fixed-rate mortgages comprised approximately two-thirds of the market and adjustable-rate mortgages were closer to one-quarter. Combination mortgages, meanwhile, were well below their current standing of 11 percent. Continue reading

A penny saved is a mortgage payment earned

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Are you the type of person who sees a penny on the sidewalk and steps right over it? You might be missing a golden (or copper) opportunity to pay off your home loans!

Recently, a man in the U.S. state of Massachusetts made news when he paid his last mortgage installment with tens of thousands of pennies. Thomas Daigle collected the coins for more than 35 years, starting shortly after he and his wife moved into their home, according to the Milford Daily News. All told, his final mortgage payment weighed more than 360 kilos!

“It was something I wanted to do,” Daigle told his hometown newspaper. “I always follow through. I was just praying I didn’t die first.”

Have you ever wondered how much your mortgage payments would weigh? Let's check out a few factors to find out: Continue reading

Flaherty Tightens Canadian Mortgage Rules.

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In a statement Thursday, Finance Minister Jim Flaherty announced a number of new mortgage lending rules. Come July 9th, the CMHC will no longer insure mortgages with amortizations longer than 25 years, and will further limit the amount a homeowner can refinance their mortgage to 80%, down from 85%.

The Harper government has now reduced the maximum amortization three times. In 2008, they reduced the maximum amortization from 40 to 35 years, and in 2011 they reduced it again to 30 years. In July, it will be decreased once more to 25 years, eliminating the last vestiges of the extended amortizations introduced by the CMHC in 2006.
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Is the Canadian housing market poised for a fall?

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Canada's housing market held up well through the recent global financial crisis, especially compared with its neighbor to the south. But could an American-style housing collapse be on the horizon?

Home prices in Canada largely survived the economic turmoil unscathed, losing just 9 percent of their overall value during the initial collapse in late 2008 before rallying early in 2009, according to a recent Wall Street Journal Marketwatch report. Since then, home prices have continued to climb.

Unfortunately for most Canadians, income levels have not risen at commensurate levels, and personal debt is now at record highs. Credit card, mortgage and other debt has jumped to more than 150 percent of household income, Reuters reports, and sustained low interest rates have driven an increase in consumer borrowing over the last few years.
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New mortgage type includes shorter amortization period

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Canadians looking to pay off their home loans faster may soon be able to qualify for a new type of mortgage from BMO Bank of Montreal.

The new 10-year fixed mortgage comes with an introductory rate of 3.99 percent and a maximum amortization period of 25 years, allowing Canadians to pay off their home loans faster, pay less interest and protect against rising interest rates, BMO announced March 7. BMO also announced it would be lowering interest rates on its five-year products as well, dropping those to a fixed 2.99 percent.

Shorter amortization rates can help consumers save money by knocking down the time it takes to pay off a loan, but there are several options for reducing the long-term cost of a mortgage. Homeowners can pay a large lump sum early in the life of the loan, reducing the principal and therefore the interest that would otherwise add up. They could also increase their monthly payments, which would have a similar effect.
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New mortgage rules take effect today

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Tighter mortgage regulations designed to pare back the current levels of household debt across Canada take effect today, meaning those looking for Canadian mortgages likely won’t have the option of a 35-year amortization.

The Canada Mortgage and Housing Corporation will no longer provide mortgage insurance for loans with a 35-year term, which could affect many first-time buyers. It also comes just a few years after the government cut off 40-year amortizations.

The changes also affect refinancing. Borrowers can now only borrow 85 percent of their home’s value through refinancing, instead of the previous limit of 90 percent.

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New mortgage rules hold back some first-time buyers

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New government mortgage rules which go into effect on Friday will eliminate government-backed mortgage insurance for 35-year mortgages, and has had the effect of making many potential homebuyers think twice about their purchase.

One potential buyer told the Canadian Press that elimination of the 35-year loan would make her rethink her homebuying plans. The family will now wait to save up a larger down payment and look outside the GTA area to save money.

“When you reduce amortization, it increases your mortgage payment for the same purchase price, so if you have people near the edge of affordability, forcing them into a shorter amortization means they won’t qualify for as much house,” Robert McLister, editor of the Canadian Mortgage Trends website, told the source.

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