Mortgage Brokers are your personal shopper when it comes to mortgages. Brokers will have access to many lenders, each of them servicing a certain type of borrower. Brokers can present your application to the right lender, knowing which one will be a great fit. Using established relationships with lenders and presenting the file to them can save time. Timing is everything in a purchase situation; brokers will present the deal to the right lender to get an approval. Many of the lenders brokers use are only accessible through the broker channel.
It seems like not a week goes by that a major news story doesn't rock the Canadian real estate market regarding mortgage rates. While it's true that mortgage rates are an important factor when it comes to homebuying, it's even more essential for Canadians to understand exactly how mortgage rates work, and how they can affect home loans.
What are mortgage rates?
A mortgage rate is a term used to describe the interest on a home loan. For most individuals, obtaining a mortgage is a necessary part of buying a home. Mortgage rates are figured on the principal balance of a home loan, meaning how much money is still owed before the loan has been fully repaid. Since a higher balance means more interest, mortgage rates are typically more expensive at the beginning of a loan. As the balance is paid off, less interest is able to build up. This is also why homebuyers spend so much time searching for low rates, as lower interest means less money owed. Continue reading
When considering financing options for home buying, borrowers have two options: a bank or a mortgage broker.
According to the Eastern Morning Herald, Canadians are looking for the best possible mortgage rates. The statistics show that as Canada's housing market continues to recover from the global recession in 2008, mortgage brokers are favored for helping people with financing needs for their homes.
In one year, the National Bank Composite House Price Index was up 2 percent in April 2013. That's the smallest increase in 15 years. With the slow growth, tighter requirements and low interest rates, the mortgage market in Canada is becoming competitive. Continue reading
Affordability is a hot topic in Canada's residential real estate market. While rising home prices mean greater value for homeowners, they can also translate to difficulties for prospective homebuyers. After all, a more expensive home will require more financing, something that can lead to more debt and ultimately foreclosure if a borrower is unable to stay current on their loan.
Data from the Teranet-National Bank's house price index shows that despite a decline in sales, home prices have continued to rise throughout the country. Overall, on a year-over-year basis, home prices increased 2 percent during May. This follows a 2 percent gain during April. Continue reading
Moving to a new country can be a challenge. There can be language barriers, new ways of life and important necessities to figure out. One of those is securing housing.
Statistics Canada said that immigrants account for more than one in five Canadians and that by 2055, immigrants will make up 90 percent of Canada's population growth.
According to a recent poll, 87 percent of new Canadian immigrants didn't know how to apply for a mortgage in their first three months in Canada. In addition, 58 percent don't know how to apply for a credit card and 47 percent don't know how to open a bank account.
The poll also noted that 24 percent of immigrants were surprised by the credit rating system and 23 percent were shocked to not have access to credit immediately.
This lack of knowledge when it comes to getting a home creates an opportunity for mortgage brokers, said Mortgage Broker News. These immigrants are resources for brokers to work with and develop a level of trust with as they help the newcomers navigate the Canadian home market. Continue reading
News of Canadian banks increasing their mortgage rates has some mortgage brokers on edge, according to an article from Mortgage Broker News. The main area of concern? That monolines will follow suit.
Monolines are mortgage lenders that focus solely on mortgages. Whereas banks and credit unions have other loan types and products to sell, monolines are focused on home loans. Mortgage brokers are often able to obtain mortgages with ultra-low rates from these lenders, helping them get business from homebuyers looking for rates lower than the big banks can offer. However, if monolines begin raising their mortgage rates along with banks and credit unions, that competitive edge may disappear for brokers.
It's been widely reported that the Royal Bank of Canada increased its rates. The rate on four-year closed mortgages is set to increased 10 basis points, reaching 3.09 percent, while the rate on five-years will rise 20 basis points, reaching 3.29 percent. Meanwhile, the posted rate on a one-year mortgage is set to increase 14 basis points, reaching 3.14 percent, while two- and three-year mortgage rates are rising 10 basis points, reaching 3.14 and 3.65 percent, respectively. Continue reading
It's time yet again for the Canadian Association of Accredited Mortgage Professionals' semi-annual mortgage market survey, a tradition dating back to fall 2005. The May 2013 release from the CAAMP, Change in the Canadian Mortgage Market, focuses yet again on trends among homebuyers, as well as the effects mortgage tightening rules have had on the market overall.
"At this point, it's important to support the economic contribution that housing makes, instead of further restricting it," Jim Murphy, president of the CAAMP, told Canadian Mortgage Trends. "The market was already slowing when the last set of rule changes were implemented. Now the market has slowed further and we feel the changes put in place have gone far enough."
Data from the CAAMP report, which was prepared by the organization's chief economist, Will Dunning, is based partly on an online survey of 2,000 Canadians during April 2013. Continue reading
According to the Bank of Canada, buyers who stick with their current mortgage lender when it comes time for renewal may be cheating themselves out of a discount.
Data from Discounting in Mortgage Markets, a study conducted by three economists for the Bank of Canada regarding insured mortgages, found that homeowners who switch banks when it comes time to renew their mortgage get better deals than existing customers.
As the Toronto Star puts it, when it comes to mortgage lenders, loyalty doesn't pay off.
"The economists found that people who switch banks get a better deal than existing customers, because new customers offer the banks an opportunity to sell more products," Adam Mayers writes for the news source. "Existing customers assume they will automatically get a better deal because they're loyal, but don't. They don't bother to shop around because they assume they'll get the best rate so, lacking ammunition, the discount may not be much." Continue reading
Data from a Canadian Mortgage Professional poll provides a special insight into what issues facing the current real estate market most concern mortgage brokers.
"No, the sky isn't falling, say the majority of brokers responding to CMP's fifth-annual Sentiment Poll, but their answers – recorded over a six-month period ending early March – suggest headroom is getting tight," reads the report. "Even with interest rates falling instead of rising, broker worries have grown right along with economic uncertainty and the creeping slowdown in home sales more stringent mortgage rules have ushered in."
Figures from the poll show that 66 percent of brokers are concerned with the stricter underwriting guidelines put in place by Finance Minister Jim Flaherty, an increase from 56 percent during 2012. Meanwhile, 42.33 percent of respondents said home sales were their chief worry, with another 32 percent pointing to falling home prices. Continue reading
According to a survey of 300 Canadian mortgage holders by The Globe and Mail, 82 percent of respondents said they were able to obtain better mortgage rates by negotiating.
"Of the survey respondents with five-year fixed-rate mortgages, interest rates varied widely, and those who haggled for a rate lower than what their lenders advertised paid less overall," the news source reports. "Among the group that bargained with their lenders, 45 percent said their interest rates were 3 percent or less, compared to 32 percent of those who did not try to get a deal. Similarly, only 5 percent of the hagglers were paying more than 4 percent interest, compared to 16 percent of the group that didn't dicker."
While this survey features an admittedly small sample size, the picture it paints is clear: Mortgage borrowers can save money by taking the time to negotiate their home loans. The following are strategies borrowers can use to make sure they're getting an affordable deal when taking out a mortgage.
When you're picking up groceries at the market, you may not take the time to compare prices, but when it comes to something as important as a home loan, shopping around is key. There are many different types of mortgage lenders, and each may quote a different price. Continue reading