The Mortgage Centre – BC Direct Mortgages

Some lenders are cautiously reducing their rates for 3, 4, and 5 year fixed terms albeit with some conditions. One of our lenders is offering a 3 year fixed rate at 3.50% for new business and insured deals only. This same lender offers a 4 year rate with similar guidelines at 3.89%. Another lender has just reduced their 5 year fixed rate for their “value” mortgage product to 3.89%. This is a great deal providing you do not anticipate pre-paying your mortgage more than 10% annually and no lump sum payments are allowed. This lender will not accept stated income, rentals, secondary homes, transfers, or provide pre-approvals for this particular product. If you can close your deal within 30 days (great for refinances!) then the lender can approve your deal at 3.99% for a 5 year fixed rate. This mortgage will have competitive pre-payment privileges and allow for bi-weekly or weekly payments if you so desire.

Please note that no two lenders are exactly the same with their rates and their terms and conditions. Our job is to provide you with all the available options out there for you and to reduce the stress of finding you the best mortgage for your needs. We will provide you with more than one option so that you can feel very comfortable with your decision on how you wish to proceed. You can reach me, Ed Kolisnyk, an Accredited Mortgage Professional, at 250-808-9000.

Perhaps one of the most major decisions each of us makes with regards to our mortgage is which term to choose from: variable or fixed. Definitely not an easy task as we’re all wanting to pay the least amount of interest over time, yet have some comfort that the type of mortgage we do choose is the best choice overall.

None of us have a crystal ball to predict future rates but we can look at the past. Let’s look at where rates were a year ago today. Some of our mainstream lenders were offering a Quick Close (30 day) 5 year fixed rate of 4.39% and normal 5 year fixed rate (allowing for 120 rate holds for pre-approvals) was at 4.49%. The best 5 year closed variable rate mortgage was at Prime plus 0.40%. The Prime lending rate was at 2.25% so the variable rate would have been 2.65% at that time.

It’s interesting to note that today, one year later, the best 5 year fixed rate for a Quick Close is 4.29% (10 basis points less) and best 5 year fixed rate (again allowing for a 120 rate hold) is 4.39% (also 10 bps less).

The greater difference is in the variable rate product where the rate differential is a full 1.0% in the fixed portion of the variable rate (difference between +0.40 and -0.60%) while the Prime lending rate has only gone up 0.25%. This is a net difference of 0.75% in your favour over last year’s rate if you were to choose a 5 year closed variable rate mortgage today.

Also to keep in mind is there is a substantial difference in rates between the variable and fixed (currently 2.39%). This means that the Prime lending rate will have to go up by this amount just to be equal to the 5 year fixed rate being offered by lenders today. Definitely something to consider when making your decision.

If you would like more information on this and how it may apply to your own personal situation, please give me a call to discuss further. I can be reached at 250-762-2070 or by cell at 250-808-9000.

Enjoy your summer!

Ed

Today, Mark Carney, the governor of Bank of Canada, announced that they have raised the overnight rate by 0.25%. This was definitely anticipated by most economists as the feds did indicate they would do so once the economy rebounded from the recession. I guess the bigger question is what they will do on July 20th, which is the next meeting date to discuss whether or not another rate hike is necessary.

Although the Prime lending rate is now slightly higher at 2.50%, we can still get you a great variable rate mortgage at a rate of Prime minus 0.50%. For those who like the benefit of a fixed rate option and yet considering the lower variable rate, then why not consider both. That’s right, you can have, for example, 50% at the best 5 year fixed rate and 50% variable or whatever percentage you want (60/40 or 70/30, etc.). You are in full control of what you would like with your mortgage terms. This is available up to 95% for purchases and 90% for refinances. Once you are under 80% loan to value, this mortgage can be re-advanceable meaning for every dollar you pay down your mortgage below 80% of the value of your mortgage security, you have a dollar that you can re-borrow without requalifying and redoing your mortgage at the lawyer’s office again. This is a great product and highly recommended by us for your consideration. If you want to know more about this product then please give me a call locally (Kelowna area) at 250-762-2070 or for outside the area you can reach me toll free at 1-888-877-3535.

Have a great day!

 Ed

showing luxury homes sales rebounding in Kelowna by 700%! (highest in Canada). We definitely all know that Kelowna and surrounding areas continues to attract buyers from across Canada and world-wide for that matter. In my initial meeting with new clients who are new to our area, I enjoy listening to each of their stories as to why they have chosen to relocate here. For most of them, their move here is work related, whether they are starting  a new career or perhaps being transferred here with the same employer. For others, they chose Kelowna to start a new business venture leaving the comforts of a salaried income behind. Yet others have moved here now that they have finally reached retirement age. In all cases, each and every one of them say they love the area and especially our great weather! They enjoy golfing, skiing, boating, and the abundance of nature trails for leisurely walks. Wow, I can hardly believe it myself, but my family and I have just celebrated our 26th year anniversary of living here in beautiful Kelowna having relocated from Dauphin, Manitoba. I definitely do not miss the mosquitoes nor the 40 below weather in winter!  We never get tired of the scenery here, be it Lake Okanagan, surrounding hillsides, orchards, vineyards, and numerous scenic golf courses.  Also, you don’t need to spend a million dollars to buy a home with a “million dollar” view!

Anyways, if I can be of service to you with any of your mortgage concerns or if you have any questions at all, please feel free to give me (Ed) a call today at 250-808-9000. For out of towners, my toll free line is 1-888-877-3535.

You may be surprised by this, but back in April 1990, Canada’s prime lending rate charged by financial institutions was a whopping 14.75%! The average prime lending rate for the past 25 years is approx. 7.0% and has been under 5.0% for the past two years. We are all hearing that the Federal Government will be increasing rates by July of this year which is one reason why the chartered banks have already raised their fixed rates this past week. Choosing between a variable rate mortgage and a fixed rate mortgage is a big decision for each of us but, ultimately, whichever way you decide, base your decision on your comfort level (ie – locking in now to avoid higher rates in the near future providing you with peace of mind, or enjoying the benefits of a lower interest rate with a variable rate product (currently as low as 1.85%) knowing that these low rates won’t be here for long). If you are still undecided which way to go, please give me a call to discuss your own situation with me further. I do not mind taking time to help you with your decision, and by the way, there is no charge  for my advice! You can reach me, Ed Kolisnyk, at 250-762-2070. Let my 30 plus years of mortgage lending go to work for you!

It’s great to see these low rates still with us. For how long is anyone’s guess, but the Fed’s are suggesting rate hikes later this year. Let’s hope later than sooner. For those of you considering a variable rate mortgage, we have lenders offering a five year variable rate at Prime minus .40% (1.85%) or a three year variable rate at Prime minus .50% (1.75%). One must keep in mind that when the Prime lending rate goes up in the future, so will these rates go up as well.

Are you still locked in your mortgage for a year or two at higher interest rates? Do you have some other additional high interest debts (ie - credit card, auto loan, etc.)? Are you struggling to make all your payments from month to month? Call me (Ed Kolisnyk) today and let’s discuss the many ways to save you money and increase your monthly cash flow. You can count on my thirty plus years of mortgage lending to go to work for you!

In today’s news release by CBC, CMHC’s chief economist, Bob Dugan, has said that the increased demand for new homes across Canada is as a result of the strong pace of sales of existing homes as seen for the most part of 2009, along with continued low mortgage rates.

This is great news for all those in the construction trades, I’m sure! Let’s all hope this trend continues, especially the low mortgage rates!

By the way, the Bank of Canada also announced today that there will not be any change to their lending rate at this time.

three changes to a high-ratio, insured mortgage effective April 19th, 2010.

Here is the impact for each of the three changes to be implemented:

1. The first change is that qualifying for a new mortgage will be calculated using the higher five year fixed rate term instead of the three year fixed rate term. You can still choose a lower interest rate or a shorter term but qualifying will be on the higher five year fixed rate term.

2. The second change is that the maximum one can withdraw in refinancing their mortgage will be reduced to 90% from the current 95% of the value of one’s home.

3. The third change is that for non-owner occupied properties, a minimum down payment of 20% will be required instead of only 5%. Borrowers purchasing an owner-occupied property with a rental unit attached (ie duplex) will still be able to qualify with a 5% down payment.

warns Finance Minister, Jim Flaherty. In a recent Globe and Mail article (Report on Business), the federal government has suggested that mortgage amortizations may be reduced and/or the minimum downpayment requirement may be increased. Either way, this is definitely not good news for those still saving for a downpayment or have a particular home price range in mind.

Let’s for example say that you are presently pre-approved to purchase a home for $400,000 with a 5% downpayment. Considering the maximum amortization of 35 years, and a current 5 year fixed rate of 3.89%, your monthly payment (excluding property taxes) will be $1,702.51. This is based on a mortgage of $391,970 with CMHC fees added on. If the amortization was reduced only 5 years, the impact on your mortgage is a reduction of $29,203 that would not be available to you (if the lender and CMHC had previously pre-approved you for the maximum based on a 35 year amortization and monthly payments needed to be the same). A reduction of amortization to 25 years has the impact of $64,610 in our example! That’s $64,610 less of a home to qualify for! Never mind if they also change the downpayment requirement from 5% to 10%. You’ll now need an additional $20,000 to save up for your purchase!

Unfortunately, being pre-approved doesn’t really help either as this is mainly a “rate hold” guarantee and not an approval for a  future mortgage. Once you have an accepted offer, the lender will only at that time be able to obtain CMHC insurance, and be within guidelines imposed at that time. So, if the amortization needs to be reduced or CMHC now requires a larger downpayment, your approval will be based on the new guidelines.

In any event, let’s all hope that Mr. Flaherty is not forced to take any drastic measures, as he has suggested, as no doubt these changes would have a major impact for many future home buyers.

Need someone with mortgage lending experience to help you in your refinance or purchase?  Let my 30 plus years in this industry work for you! You can reach me, Ed Kolisnyk, an Accredited Mortgage Professional, locally in Kelowna and area at 250-808-9000 or for out-of-towners you can reach me toll free at 1-888-877-3535.

Want to learn more about mortgages and would like to have a better understanding of your credit bureau report? The Financial Consumer Agency of Canada has a great website  to answer these questions and much more. If you have any questions about your own situation and mortgage eligibility, please give me, Ed Kolisnyk (Accredited Mortgage Professional),  a call toll free at 1-888-877-3535 or, for Kelowna/West Kelowna residents, you can call me direct at 250-808-9000.