With new regulations, insured mortgages have a maximum 25 year amortization. Banks often choose to insure low ratio mortgages, and cover the cost themselves. Having insured mortgages allows banks to off load the risk and securitize these mortgages.
Among all the ups and downs in Canada's housing market over the last few months, one thing has remained certain: Mortgage rates are low. This has spurred homebuyers and homeowners alike to obtain new mortgages or refinance their current ones, offsetting the cooldown in sales due to Finance Minister Jim Flaherty's restrictions on government-backed mortgages.
However, some industry observers are exploring the possibility that rates may be rising sooner rather than later.
"If you're house hunting or thinking of refinancing, and you don't have a mortgage rate hold, consider getting one," writes Rob McLister for Canadian Mortgage Trends. "Canada's 5-year bond yield just pierced a three-month high. That means – barring a big reversal – there's a good likelihood that fixed rates will ratchet higher. (Bond yields steer fixed mortgage pricing, most of the time.)"
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
New data from Scotiabank reveals that homeowners are feeling more confident in their ability to pay off their mortgages faster.
Figures from Scotiabank's Mortgage Landscape Study, which surveyed 1,000 Canadian homeowners between February 14 and February 25, 2013, show that nearly two-thirds of mortgage holders (67 percent) say it's possible to pay off their home loans faster. What's more, they say it's possible to do so without impacting their lifestyle.
Meanwhile, a majority of mortgage holders (59 percent) said that adding $20 per month to their home loan payments would have no impact on their finances. Continue reading
Data from the Canadian Imperial Bank of Commerce shows that Canadian borrowers believe it will take them longer than previously thought to pay off their mortgages.
A poll from the CIBC shows that the average Canadian homeowner believes they will reach the age of 57 before they pay off their mortgage. This is up from age 55 during the previous year. The province with the longest expected repayment period was British Colombia, where the average Canadian expected to reach age 59 before paying off their mortgage.
"Being mortgage free sooner can help accelerate retirement savings, but carrying a mortgage into your late 50s can have the opposite effect and make it more challenging to reach your long term savings goals," said Colette Delaney, executive vice president of mortgage, lending, insurance and deposit products at the CIBC. "If your other debts are heading up, your chances to pay off your mortgage sooner are going down, and that's why you need a clear plan that takes into account debt management, mortgage repayment and long term savings." Continue reading