Are Mortgage Interest Rates going up to down and should you buy hold and sell investment real estate?

I received an email from a reader and thought I would share the question and my answer with you.

The question from Aijaz was:

I love your site.

Thanks for keeping the data up to date.

Lots of good data on it.

Question. Do u think with interest rates going up possibly mid 2015.

This will cause a correction in pricing.

What is your opinion on the over value of canadas house pricing.

Some forecasters saying 20% drop in pricing.

Are you currently on the Buy, hold, or sell model for investment property?

My answer was:

Hello Aijaz

Thank you for your email and kind comments.

You are asking very good questions.  Unfortunately, nobody can predict the future but these are my thoughts and opinion.

I can see the prime rate rising to 3.25 and maybe 3.5% by the end of next year, at the earliest.  Even if/when this happens, the banks will raise their rates only slightly, I don't see them keeping in step with the Bank of Canada Rate. 

Rates will only rise to keep inflation in check.  I don't think that rates will cause a correction in pricing.  Yes, slightly fewer people will be able to enter the real estate market due to a price increase, but I don't feel this will have a large impact on our resale market.

I believe that it will be some other event or combination of events that will cause our real estate market to have a correction.  Our rise in prices has been unprecedented and nearly constantly upward since 1995.  Logic says this cannot continue forever.  Eventually the market increase in prices will slow and possibly retreat.  When this will happen is anyone's guess.  My opinion is that we will have a gradual slowdown of the market prices in late 2015 and into 2016, maybe only a 2 or 3% increase over that period rather compared to previous year over year increases of 4 to 10%  You have to compare figures from the same period previous year as prices fluctuate during the year and you need to watch the month over month trend to get a handle on real estate prices.  Year over year increases are what I am referring to.

Even if rates increase 0.5 or 1% we are still in extremely low interest rate period compared to last 50 years.  I think that these low rates will be with us until at least 2020 and possibly longer.  There is no reason for the rates to rise to 8% or higher and if they did, the economy would have great difficulty absorbing this shock and may crumble and correct as you and many are suggesting.  I feel this is a generational phenomenon, low rates may be with us for 20 years. Rates have been exceptionally low since 2009 and I see rates staying in this very low range well into the 2020's

Our real estate market, similar to the stock market, can have a major correction in a very short period of time.  Our TSX stock market has dropped (corrected - good grief I don't like that word, as it's a drop/loss/fall, not really a correction) nearly 10% since the high in mid September.  In a similar way, if buyers stop paying the prices that sellers are asking and the real estate market softens then we can easily have a correction in the average price of 10% or $60,000 on the current average price of nearly $600,000  It would take about 2 to 4 months for this correction to happen.

I am always of the mindset to buy and hold for the longer term, at least 5 years and more like 10 to 20 or longer.  Buy real estate, hold, reduce original amortization to 20 years, use bi-weekly accelerated payments, pay yourself by making up the $100 to $300 per month shortfall with your savings and let the tenants pay off your investment properties in 15 to 20 years.  Then you can enjoy the income in your later years.

I hope this helps.

If you have more questions, please let me know.

Happy Thanksgiving to you and your family!

Mark

Bank of Canada leaves overnight interest rate at 1% - thus prime rate at your bank will stay at 3%

The Bank of Canada announced today that they are leaving the overnight interest rate (the rate that banks charge other banks to hold their money overnight) at 1% - thus prime rate at your bank will stay at 3%

This is good news if you are thinking of borrowing money

The press release began:

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

Inflation is close to the 2 per cent target and is evolving as the Bank anticipated in its July Monetary Policy Report (MPR). Recent data reinforce the Bank’s view that the earlier pickup in inflation was attributable to the temporary effects of higher energy prices, exchange rate pass-through, and other sector-specific factors rather than to any change in domestic economic fundamentals.

Read more at http://www.bankofcanada.ca/2014/09/fad-press-release-2014-09-03/

I hope this finds you Happy and Healthy!

All the Best!

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
BUS 905-828-3434
FAX 905-828-2829  CELL 416-520-1577
mark@mississauga4sale.comMississauga4Sale.com

• Thinking of selling your home in the next 3 to 6 months?  Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
  www.mississauga4sale.com/internet-evaluation.htm
• Power of Sales and Foreclosureswww.mississauga4sale.com/Power-Sales-Bank-Sales-Alert-Request.htm
• If you have not already signed up to receive my monthly real estate newsletter, you may do so here: On-Line Real Estate Newsletter sign up
  www.mississauga4sale.com/popupquestion.htm
• See seasonal housing patternswww.mississauga4sale.com/TREBprice.htm
• Would you like me to send you a desk or wall Calendar?
  www.mississauga4sale.com/Calendar-Order-Form.htm

 

Bank of Canada leaves key rate in August 2014 at 3% again!

The Bank of Canada has announced again that they are keeping the prime lending rate at 3%

As expected, the Bank of Canada announced today that it is keeping the benchmark rate unchanged. Great news if you’ve got a variable-rate mortgage; the prime rate stays at 3%.

This is good news for borrows or people with variable rate mortgages

I hope you are enjoying your summer!

Mark

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1
BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Bank of Canada announced today that they are leaving the key bank prime overnight interest rate at 1%

The Bank of Canada announced today that they are leaving the key bank prime overnight interest rate at 1%

This rate has remained fixed at this 1% since 2010 and there are no signs of increasing the rate in the future.

The major banks will most likely continue to keep their bank prime rate at 3% and this will be the key amount that all other mortgage rates, loan and deposit rates will remain relative to.

Banks can offer lower or higher rates to customers regardless of the Bank of Canada rate, but they often will move in concert with the Bank Rate.

See the entire press release below.

All the best!
Mark

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

Total CPI inflation has moved up to around the 2 per cent target, sooner than anticipated in the Bank’s April Monetary Policy Report (MPR), largely due to the temporary effects of higher energy prices and exchange rate pass-through. Core inflation remains significantly below 2 per cent although it has drifted up slightly, partly owing to past exchange rate movements.

Global economic growth in the first quarter of 2014 was weaker than anticipated in the MPR and recent developments give slightly greater weight to downside risks. The U.S. economy is rebounding after a pause in the first quarter, but there could be slightly less underlying momentum than previously expected. Globally, long-term bond yields have continued their decline, reflecting in part growing market anticipation that interest rates will remain low over the long term. This, along with buoyant stock markets and tight credit spreads, indicates that financial conditions remain very stimulative.

The Canadian economy grew at a modest rate in the first quarter, held back by severe weather and supply constraints. The ingredients for a pickup in exports remain in place, including the lower Canadian dollar and an anticipated strengthening of foreign demand. Improved corporate profits, especially in exchange rate-sensitive sectors, should also support higher business investment in the coming quarters. There are continued signs of a soft landing in the housing market and a constructive evolution of household imbalances. We still expect excess supply to be absorbed gradually as the fundamental drivers of growth and inflation in Canada strengthen.

Weighing recent higher inflation readings against slightly increased risks to economic growth leaves the downside risks to the inflation outlook as important as before. At the same time, the risks associated with household imbalances remain elevated. The Bank judges that the balance of risks remains within the zone for which the current stance of monetary policy is appropriate and therefore has decided to maintain the target for the overnight rate at 1 per cent. The timing and direction of the next change to the policy rate will depend on how new information influences the balance of risks.

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1
BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Bank of Canada Key Interest Rate, Bank of Canada Prime Rate and Bank Prime Rate what's the difference?

The Bank of Canada Sets the Key Interest Rate and this is the target overnight interest rate at which major financial institutions borrow and lend one-day (or "overnight") funds among themselves - it is this rate that the banks determine all of their lending rates to the public.  This rate is also known as the Bank of Canada Prime Rate


Typically, banks charge 2% above the Bank of Canada Prime Rate for their lines of credit and for their best customers. 


The current Bank of Canada Prime Rate is 1%  Thus, the Bank Prime Rate today is 3%


The Bank of Canada has kept the current Bank of Canada Prime Rate at 1% since July of 2010


See the current rate at this page:


http://www.mississauga4sale.com/rates.htm


more on the definitions of Prime Rate, Bank Rate, Target Rate and more


http://www.mississauga4sale.com/How-does-Bank-of-Canada-Bank-Set-Prime-Rate.htm


All the best!
Mark


For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1
BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Opportunities Exist with short term mortgages

See the graph below.  The wider the gap between the 1 year mortgage interest rate and the 5 year
rate the more opportunity there is to save money!

You may wish to consider choosing a short term variable rate for your mortgage for at
least the next while since the current gap is quite large.

All the best!
Mark

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,

Specializing in Residential & Investment Real Estate

RE/MAX Realty Specialists Inc., Brokerage

2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1
BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

5 year closed mortgage or 5 year open, what's best?

Question and answer from an avid blog reader of mine.

 

Hi Mark,

 

I have been researching real estate and mortgages. Found your site and its is very informative.

In your professional opinion is 5 yr. closed mortgage better over 5 yr closed variable ?

 

It seems that banks are pushing for closed variable, why is that. I was offered a 2.7% 5 yr closed variables, after I requested a closed at 3.49%.

After some persuading I took closed variables, did I make mistake? My renewal is in June.

Your input an help will be appreciated

Best regards,

S.

 

Hi S.,

 

Thanks for your kind comments, glad you have found it helpful.

 

There is no simple or quick answer to your question.  It's completely up to your personal risk tolerance.  If you took closed variable at 2.7 this rate will likely stay about where it is for many months and possibly a year or more.  What bank are you with?

 

If you chose the 5 year variable rate, doesn't that mean you are locked in with lender and your rate will fluctuate based upon the prime rate?  If this is the case and prime stays at 3% for at least another year or possibly longer, your rate will remain fixed at 2.7%  You are .3% less than prime, so this is a reasonable discount.  When you say renewal in June, do you mean that's when you can lock in at a fixed mortgage rate?  2.7% is a reasonable rate for a 5 year variable.

 

Mortgage rates are very competitive these days and the banks are slashing rates to get your business. 

 

BMO announced today that the 5yr fixed rates just dropped to 2.99%

 

I too agonized over a renewal for our mortgage last month and was pushing for an additional .1% off the rate.  After TD agreed to the final discount, I did the calculation and it made a difference of less than $2 per month on our payments, so it was minimal.  Depending upon the size of your mortgage, small discounts in the rate have little effect on your payment.

 

The most important aspect of mortgage payments, in my opinion, is to make sure your payments are accelerated bi-weekly.  This is most critical and will allow you to pay off a 25year mortgage in less than 18 years, you save huge on interest and can start saving for retirement 7+ years sooner than you otherwise would have been able to.

 

I hope this helps.

 

Please let me know if you have more questions.

 

Thank you,

Mark

 

Bank of Canada Keeps Prime rate at 1% again!

The Bank of Canada announced today that they are keeping the prime lending
rate at 1%

The Bank said that the reasons for this are:



* inflation is below 2%

* global growth is expected to rise in the next 2 years

* growth in Canada has been improved, but slower than anticipated

* economy is expected to gradually grow towards capacity over next two years

* inflation is expected to remain below target for some time, thus downside risks to inflation have grown in importance and keeping the rate as is will help keep inflation low

The Bank of Canada Prime rate has been at 1% since late 2010, over 3 years

I hope this finds you well,

Mark





This is the full release:



Highlights from the bank of Canada Rate announcement:



Ottawa -

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

Inflation in Canada has moved further below the 2 per cent target, owing largely to significant excess supply in the economy and heightened competition in the retail sector. The path for inflation is now expected to be lower than previously anticipated for most of the projection period. The Bank expects inflation to return to the 2 per cent target in about two years, as the effects of retail competition issipate and excess capacity is absorbed.

Global growth is expected to strengthen over the next two years, rising from 2.9 per cent in 2013 to 3.4 per cent in 2014 and 3.7 per cent in 2015. The United States will lead this acceleration, aided by diminishing fiscal drag, accommodative monetary policy and stronger household balance sheets. The improving U.S. outlook is affecting global bond, equity, and currency markets. Growth in other regions is evolving largely as projected in the Bank's October Monetary Policy Report (MPR). Global trade growth plunged after 2011, but is poised to recover as global demand strengthens.

In Canada, growth improved in the second half of 2013. However, there have been few signs of the anticipated rebalancing towards exports and business investment. Stronger U.S. demand, as well as the recent depreciation of the Canadian dollar, should help to boost exports and, in turn, business
confidence and investment. Meanwhile, recent data have been consistent with the Bank's expectation of a soft landing in the housing market and a stabilization of household indebtedness relative to income.

Real GDP growth is projected to pick up from 1.8 per cent in 2013 to 2.5 per cent in both 2014 and 2015. This implies that the economy will return gradually to capacity over the next two years.

Although the fundamental drivers of growth and future inflation appear to be strengthening, inflation is expected to remain well below target for some time, and therefore the downside risks to inflation have grown in importance. At the same time, risks associated with elevated household imbalances have not materially changed. Weighing these considerations, the Bank judges that the balance of risks remains within the zone articulated in October, and therefore has decided to maintain the target for the overnight rate at 1 per cent. The timing and direction of the next change to the policy rate will depend on how new information influences this balance of risks.



This is from the papers.....

The Bank of Canada kept its benchmark interest rate steady at one per cent today, continuing its longest stretch of inaction on record.

Canada's central bank last changed its target for the overnight rate in late 2010, when it was raised to its current level. The bank announces its latest policy decision on interest rates every six weeks, and the bank has now stood pat for 26 consecutive policy meetings.

In a statement accompanying Wednesday's decision, the bank said it expects inflation to remain lower than previously anticipated for the next little while. It also said it expects a soft landing in the housing market.

The bank wasn't expected to raise or lower rates on Wednesday, but watchers are closely parsing the statement to gauge which direction the bank is heading in - a rate hike to cool inflation, or a rate cut to stimulate the economy.

Wednesday's statement suggests the bank is leaning toward the former.

The loonie plunged in the immediate aftermath of the news, shedding about a third of a cent to trade at 90.70 cents US.





I hope this finds you Happy and Healthy!

All the Best!

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
BUS 905-828-3434
FAX 905-828-2829 CELL 416-520-1577
mark@mississauga4sale.com
Mississauga4Sale.com

* Thinking of selling your home in the next 3 to 6 months? Would you
like a Complimentary & Quick Over-The-Net Home Evaluation ?
www.mississauga4sale.com/internet-evaluation.htm
* Power of Sales and Foreclosures
www.mississauga4sale.com/Power-Sales-Bank-Sales-Alert-Request.htm
* If you have not already signed up to receive my monthly real estate
newsletter, you may do so here: On-Line Real Estate Newsletter sign up
www.mississauga4sale.com/popupquestion.htm
* See seasonal housing patterns
www.mississauga4sale.com/TREBprice.htm
* Would you like me to send you a desk or wall Calendar?
www.mississauga4sale.com/Calendar-Order-Form.htm

Bank of Canada Rate Announcement Decmeber 4 2013 no change in rate

Bank of Canada has decided to not change the bank rate

Once again, the Bank of Canada is leaving it's key lending rate at 1% which means that we consumers have a base of 3% for our Bank Prime lending rate.  This has remained unchanged for over 3 years now, unprecendented in the history of the Bank of Canada to leave the rate unchanged for such a long period of time.

See historic interest rate graph at this link

The Bank of Canada said, "
The global economy is expanding at a modest rate, as the Bank expected. Although growth in several emerging markets has continued to ease, growth in the United States during the third quarter of 2013 was stronger than forecast. Even if some of this pickup was due to temporary factors, the data are consistent with the Bank’s view of gathering momentum in the U.S. economy.
In Canada, underlying growth is broadly in line with the Bank’s projections in its October and July Monetary Policy Reports. Real GDP growth in the third quarter, at 2.7 per cent, was stronger than the Bank was projecting, but its composition does not yet indicate a rebalancing towards exports and investment. The housing sector has been stronger than expected but is consistent with updated demographic data and a pulling forward of home purchases in light of favourable financing conditions. The Bank continues to expect a soft landing in the housing market. Non-commodity exports continue to disappoint and the price of oil produced in Canada has eased further. Business investment spending is up from previous low levels, but is still recovering more slowly than anticipated. On balance, the Bank sees no reason to adjust its expectation of a gradual return to full production capacity around the end of 2015"

Read more from the Bank of Canada




For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1
BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Bank of Canada Interest Rate - latest announcement

As of November 30, 2013 the Bank Prime remains at 1%

Typical lending rates for the public is Bank Prime Rate which is 3%

see current best interest rates

This is an excerpt from the latest announcement from the Bank of Canada

Ottawa -
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
The global economy is expected to expand modestly in 2013, although its near-term dynamic has changed and the composition of growth is now slightly less favourable for Canada. The U.S. economy is softer than expected but as fiscal headwinds dissipate and household deleveraging ends, growth should accelerate through 2014 and 2015. The nascent recovery in Europe, while modest, has surprised on the upside. China’s economy is showing renewed momentum, while growth in a number of other emerging market economies has slowed as their financial conditions have tightened. Overall, the global economy is projected to grow by 2.8 per cent in 2013 and accelerate to 3.4 per cent in 2014 and 3.6 per cent in 2015.
In Canada, uncertain global and domestic economic conditions are delaying the pick-up in exports and business investment, leaving the level of economic activity lower than the Bank had been expecting. While household spending remains solid, slower growth of household credit and higher mortgage interest rates point to a gradual unwinding of household imbalances. The Bank expects that a better balance between domestic and foreign demand will be achieved over time and that growth will become more self-sustaining. Real GDP growth is projected to increase from 1.6 per cent in 2013 to 2.3 per cent in 2014 and 2.6 per cent in 2015. The Bank expects that the economy will return gradually to full production capacity, around the end of 2015.

read more: http://www.bankofcanada.ca/monetary-policy-introduction/key-interest-rate/schedule/



For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1
BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Bank of Canada Interest Rate announcement March 6, 2013

The Bank of Canada just announced they are keeping the prime rate at 1% meaning that the prime lending rate stays at 3%

This is historic news, this is the longest stretch that the Bank of Canada has kept it's rate this low.  It's been at 1% since the fall of 2010!

Read more at this link

See current rates at this link

Full aannouncement is below




Ottawa - The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.




The global economic outlook is broadly consistent with the Bank’s projection in its January Monetary Policy Report (MPR). Global financial conditions remain stimulative, despite recent volatility. In the United States, the economic expansion is continuing at a gradual pace and private sector demand is gaining momentum. Fiscal drag in the United States over the next two years remains consistent with the Bank’s January projection, although it is likely to be more front-loaded as a result of sequestration cuts. The recession in Europe continues. Growth in China has improved, while economic activity in some other major emerging economies is expected to benefit from policy stimulus. Commodity prices have remained at historically elevated levels, although persistent transportation bottlenecks are leading to continued discounts for Canadian heavy crude oil.



Canada’s economy grew by 0.6 per cent at annual rates in the fourth quarter of 2012, with solid growth across most domestic components of GDP offset by a sharp reduction in the pace of inventory investment. The Bank expects growth in Canada to pick up through 2013, supported by modest growth in household spending combined with a recovery in exports and solid business investment. With a more constructive evolution of imbalances in the household sector, residential investment is expected to decline further from historically high levels. The Bank expects trend growth in household credit to moderate further, with the debt-to-income ratio stabilizing near current levels. Despite the expected recovery in exports, they are likely to remain below their pre-recession peak until the second half of 2014 owing to restrained foreign demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.



Total CPI inflation has been somewhat more subdued than projected in the January MPR as a result of weaker core inflation and lower mortgage interest costs, which were only partially offset by higher gasoline prices. Low core inflation reflects muted price pressures across a wide range of goods and services, consistent with material excess capacity in the economy. Core and total CPI inflation are expected to remain low in the near term before rising gradually to reach 2 per cent over the projection horizon as the economy returns to full capacity and inflation expectations remain well-anchored.



Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. With continued slack in the Canadian economy, the muted outlook for inflation, and the more constructive evolution of imbalances in the household sector, the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required, consistent with achieving the 2 per cent inflation target.


For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1
BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Reasons to be very happy we live under the current financial climate in Canada

The Bank of Canada also comments on future circumstances and predictions of what it sees for interest rates in the future.  At each announcment, as they did this morning, they update their forcast.  This is the latest forcast:

"Following an estimated 1.9 per cent in 2012, the Canadian economy is expected to grow by 2.0 per cent in 2013 and 2.7 per cent in 2014, and to reach full  capacity in the second half of 2014, later than anticipated in the October Report."

This indicates that as long at the economy in Canada and globally continues as it is, we can probably expect that interest rates will remain at about 1% well into 2014.  This is good news for people who need to borrow.

The governor of the Bank of Canada is Mark Carney and he made a remark in Decmeber of 2012 and it was:

“Achieving our objective will mean delivering a path of policy that adjusts as economic circumstances evolve…. Our goal, as always, is to ensure that households, firms and investors can make their decisions in a stable macro environment.”

With this type of thinking we have to be very happy to live under this financial climate in Canada

All the Best!
Mark

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,

Specializing in Residential & Investment Real Estate

RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1
BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com

Prime Rate stays at 1% Bank of Canada

The Bank of Canada announcement today stated they overestimated growth in the economy and are keeping the rate at 1% meaning the prime lending rate for public stays at 3%

The next Bank of Canada interest rate announcement is 6 March 2013 and their comments on the economy will be interesting indeed!

All the best
Mark

This is the annoucement from the Bank of Canada

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.




The global economic outlook is slightly weaker than the Bank had projected in its October Monetary Policy Report (MPR). At the same time, global tail risks have diminished. The economic expansion in the United States is continuing at a gradual pace, restrained by ongoing public and private deleveraging, global weakness and uncertainty related to fiscal negotiations. Despite a marked improvement in peripheral sovereign debt markets, Europe remains in recession, with a somewhat more protracted downturn now expected than in October. Growth in China is improving, though economic activity has slowed further in some other major emerging economies. Supported by central bank actions and by positive policy developments in Europe, global financial conditions are more stimulative. Commodity prices have remained at historically elevated levels, though temporary disruptions and persistent transportation bottlenecks have led to a record discount on Canadian heavy crude.



In Canada, the slowdown in the second half of 2012 was more pronounced than the Bank had anticipated, owing to weaker business investment and exports. Caution about high debt levels has begun to restrain household spending. The Bank expects economic growth to pick up through 2013. Business investment and exports are projected to rebound as foreign demand strengthens, uncertainty diminishes and the temporary factors that have weighed on resource sector activity are unwound. Nonetheless, exports should remain below their pre-recession peak until the second half of 2014 owing to a lower track for foreign demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar. Consumption is expected to grow moderately and residential investment to decline further from historically high levels. The Bank expects trend growth in household credit to moderate further, with the debt-to-income ratio stabilizing near current levels.



Relative to the October MPR, Canadian economic activity is expected to be more restrained. Following an estimated 1.9 per cent in 2012, the economy is expected to grow by 2.0 per cent in 2013 and 2.7 per cent in 2014. The Bank now expects the economy to reach full capacity in the second half of 2014, later than anticipated in the October MPR.



Core inflation has softened by more than the Bank had expected, with more muted price pressures across a wide range of goods and services, consistent with the unexpected increase in excess capacity. Total CPI inflation has also been lower than anticipated, reflecting developments in core inflation and weaker-than-projected gasoline prices. Total CPI inflation is expected to remain around 1 per cent in the near term before rising gradually, along with core inflation, to the 2 per cent target in the second half of 2014 as the economy returns to full capacity and inflation expectations remain well-anchored.



Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. While some modest withdrawal of monetary policy stimulus will likely be required over time, consistent with achieving the 2 per cent inflation target, the more muted inflation outlook and the beginnings of a more constructive evolution of imbalances in the household sector suggest that the timing of any such withdrawal is less imminent than previously anticipated.



Information note:

The next scheduled date for announcing the overnight rate target is 6 March 2013. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 17 April 2013.

read more at this page

New Mortgage Guidelines in Canada as per Finance Minister Jim Flaherty June 21 2012

Hello, This is a Summary of changes to mortgage guidelines as per Finance
Minister Jim Flaherty...(effective July 9th, 2012)



1) The maximum amortization period for purchases with less than a 20% down
payment will be 25 years (down from 30 years)

2) Home owners will only be able to refinance their homes up to 80% of the
home's value (down from 85%)

3) The government is also resetting the maximum Gross Debt Servicing ratio
(GDS) to 39% and the Total Debt Servicing ratio (TDS) to 44% (Currently, GDS
does not apply to qualified borrowers with credit scores of 680+) ***see
below for info GDS and TDS

4) Mortgage Insurance will no longer be available of homes over $1 million
(you will need to have at least 20% down payment)



OSFI (The Office of the Superintendent of Financial Institutions Canada is
the primary regulator and supervisor of federally regulated deposit-taking
institutions



Also announced the following changes...

1) The maximum loan to value on home equity lines of credit (HELOCs) is
cut to 65% from 80%

2) The loan to value will be re-calculated upon any refinancing and
whenever the lender deems prudent

3) HELOCs will continue to serve as revolving lines of credit with no
specific amortization period. However, OSFI says lenders must now expect
borrowers to have the ability to fully repay HELOCs over time.



Debt Ratios (GDS / TDS Ratios)

Lenders have long relied on two standard measures of one's "ability to pay"
their mortgage:



Gross Debt Service (GDS): The percentage of the borrower's income that is
needed to pay all required monthly housing costs (mortgage payments,
property taxes, heat and 50% of condo fees).



Total Debt Service (TDS): The percentage of the borrower's income that is
needed to cover housing costs (GDS) plus any other monthly obligations that
an individual has, such as credit card payments and car payments.

The acceptable ratios for both have generally been 32% and 40% respectively.

For people with very high credit scores, GDS requirements are often waived
and the TDS maximum is slightly higher (44% as of January 2011).

I hope this finds you Happy and Healthy!

All the Best!

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
BUS 905-828-3434
FAX 905-828-2829 CELL 416-520-1577
mark@mississauga4sale.com
Mississauga4Sale.com

* Thinking of selling your home in the next 3 to 6 months? Would you
like a Complimentary & Quick Over-The-Net Home Evaluation ?
www.mississauga4sale.com/internet-evaluation.htm


* Power of Sales and Foreclosures
www.mississauga4sale.com/Power-Sales-Bank-Sales-Alert-Request.htm


* If you have not already signed up to receive my monthly real estate
newsletter, you may do so here: On-Line Real Estate Newsletter sign up
www.mississauga4sale.com/popupquestion.htm


* See seasonal housing patterns
www.mississauga4sale.com/TREBprice.htm


* Would you like me to send you a desk or wall Calendar?
www.mississauga4sale.com/Calendar-Order-Form.htm

2.99% for 4 Year Mortgage! Mortgage interest rate promotion

I recently was emailed a fabulous mortgage rate promotion. See the rates
below.

Thanks to recent renewed trouble in Europe, we see some new mortgage rate
promotion.




4 year fixed at 2.99%, fully qualified deals only. This promotion is ending
at May 22.

3 year fixed at 2.99%.

Please let me know if you have any other questions or require further
information about this promotion.

Thank you,

Mark

Mortgage Rates On The Rise

Just as soon as I posted that fixed rates are currently excellent and it's a great time to lock in, then I received the email below that fixed mortgage rates are on the rise!

Could be time to lock in..... read below

Mark

_____

From: Mortgage consultant
Sent: Tuesday, March 27, 2012 8:51 PM
Subject: Mortgage Rates On The Rise

Mortgage Rate Bulletin

RBC and TD have announced mortgage rate hikes effective this Thursday March
29th... Other lenders are sure to follow!

Get your applications in now to get your 120 rate holds before rates go up.

10 year fixed rates still available at 3.99% and are looking better and
better right now!

5 year fixed rates still available at 2.99%

If you need mortgage help, please contact me!

Mark

Are rates about to increase? Mortgage Interest Rate outlook

We have seen a price war for 4 year mortgage interest rates for the past couple of weeks. BMO was one of the first out of the gate to offer 2.99% for a 4 year mortgage, the other banks and lenders followed shortly thereafter.
Now you can see 5 and 10 year mortgage interest rates at absurdly low levels.
I've seen 5 year fixed rate mortgages at 3.5% which is unbelievably low.
Fixed rate mortgages are very attractive right now.
I've written many articles about staying with short term mortgage rates at this page:
<http://www.mississauga4sale.com/Lock-In-Short-Term-Long-Term-Mortgage.htm>
http://www.mississauga4sale.com/Lock-In-Short-Term-Long-Term-Mortgage.htm
My preference for many years has been to go variable, but if you are not a gambler, then it could be getting close to the time where you lock in your mortgage.
Read the article below that just appeared in the POST, it's very interesting what the experts are saying.
Stay Tuned.......
All the best!
Mark


The logic is pretty simple. You hit rock bottom and there is no where else to go but up.




Mortgage rates on terms of five years and 10 years have never been this low. You can go back 50 years and not find a rate of 2.99% from one of the major banks for a fixed-rate product for five years. The 10-year, an almost unheard of length for most Canadians to commit to, has touched down at below 4%. Even sticking it out with a variable-rate product linked to the prime lending rate still looks pretty good with most major financial institutions offering some type of discount off their 3% floating rate. Already there are signs rates could be on the increase. The bond market - which mortgage rates are based on - has been rising fast and the big banks say their most recent specials will come to an end this week. But even with a 50 basis point increase, a five-year fixed closed mortgage of 3.5% is almost unheard of historically. "Everybody is looking at the bottom here and thinking, 'When are rates going to go up?'"  .Even among the experts, few foresaw this price war in the mortgage sector. "With the big banks getting very aggressive again, it took a lot of people by surprise," said Mr. Mangaroo. "I think people were thinking the status quo would hold for a while." .He says the last Bank of Canada announcement about the economy had people thinking at some point the overnight lending rate, which impacts the prime lending rate, would go up, but not this year. "Now that people are thinking of early 2013, that has people talking but really that is just so far out says Mr. Mangaroo. "It's really just an abstract concept at this point." Craig Alexander, chief economist with Toronto-Dominion Bank, says he can understand how there might be some fatigue from consumers hearing about rising rates. "Unfortunately, we have been saying for years 'that's it, rates can't go any lower than they are today' and then they are [lower] 12 months later," Mr. Alexander says. .But this time out, he says, it almost seems impossible that rates on a five-year closed mortgage could go lower than the current 3%. "Short of the Canadian economy going into a recession and causing the Bank of Canada to cut rates back to their all-time low, there really isn't an environment that would lead to significantly lower mortgage rates," Mr. Alexander says. "The downside here is extraordinarily limited." The real risk for the consumer might be not locking in right now. While no one is expecting the overnight rate to go up anytime soon - discounts off the prime lending rate might even improve if the economic uncertainty calms in some parts of the world - the 50-year-low rates today could become hard to find. "If the economic forecasters are wrong about the outlook for growth and things turn out better than anticipated, then bond yield will rise, we'll have a steeper yield curve and higher fixed mortgage rates," Mr. Alexander says. "You won't be able to get what is offered today in 12 months time. They could go up half a percentage point or higher." In the interim, Gregory Klump, chief economist with Canadian Real Estate Association, says in terms of profitability, there is room for the banks to go lower on rates, but margins for the banks are so thin he doesn't expect it happen. "We are not out of the woods yet in terms of a clear picture that growth is going to strengthen," says Mr. Klump about the catalyst that could drive up bond rates, which would impact mortgage rates. "My own view is growth may well weaken." He predicts that any rise in rates will happen slowly, which the housing market would more easily absorb. "I do not expect it," Mr. Klump says about the type of interest rate shock that could send housing sales tumbling. Author Garth Turner, a noted pessimist on the fortunes of housing these days, thinks those who want to be in the market for a house should probably be grabbing on to long-term products. He says the banks know the housing market is already shrinking and are scrambling for a larger share of the mortgage market, something that also allows them to cross-sell other products like RRSPs to consumers. "The writing is already on the wall, prices will be declining," Mr. Turner says. "The Bank of Canada will be raising rates." A Bank of Canada hike will make variable rates rise fast, and he agrees the present day rates could look very good in a few years. "If you want to be a homeowner, it is an appealing product. Three or fours years from now, these rates could look absurd. I have no problem with being in real estate as long as it's not the bulk of your net worth. If you are getting into real estate now though and leveraging up, you are going to be unhappy about it," says Mr. Turner, adding the raising rate environment will hurt sales and prices will follow quickly. Don Lawby, chief executive of Century 21, says the rate wars going on right now combined with the unusually warm winter have already boosted housing sales, which could leave little demand left for the spring market. "Interest rates are low and they probably can't go any lower than they are," says Mr. Lawby, who thinks there is not much room for housing prices to go higher. "I looked around and say if the local economy stays good, the market can stay good. But these low rates are very key."

I hope this finds you Happy and Healthy!
All the Best!
Mark
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
BUS 905-828-3434
FAX 905-828-2829 CELL 416-520-1577
mark@mississauga4sale.com
Mississauga4Sale.com
* Thinking of selling your home in the next 3 to 6 months? Would you
like a Complimentary & Quick Over-The-Net Home Evaluation ?
www.mississauga4sale.com/internet-evaluation.htm

* Power of Sales and Foreclosures
www.mississauga4sale.com/Power-Sales-Bank-Sales-Alert-Request.htm

* If you have not already signed up to receive my monthly real estate
newsletter, you may do so here: On-Line Real Estate Newsletter sign up
www.mississauga4sale.com/popupquestion.htm

* See seasonal housing patterns
www.mississauga4sale.com/TREBprice.htm

* Would you like me to send you a desk or wall Calendar?
www.mississauga4sale.com/Calendar-Order-Form.htm

Is it time to lock in your mortgage rate?

I was asked by Harry

"Hi Mark,

Hope all is well.

I have been on variable rate since I spoke with you last. I have an opportunity to lock in my mortgages at 2.99% for 4 years. Is it a wise move under today's conditions?

Thanks in advance.
Harry"

Hello Harry,

Yes, I saw this rate and blogged about it last week! Not sure if you saw it or not:

Long term mortgage rates

It's a judgment call on your part, there are some severe restrictions that you must be aware of. There are discounts on these 'posted' rates, so ask for a discount.

We may find that the variable rates drop again to prime minus, maybe they will go to prime minus .9% again and that's 2.1% and you may regret the 2.99%

Funny thing is, when rates were 10 to 14% for about 15 years in the late 80's to early 2000's you would have jumped at 2.99% and thought you won the lottery.

Our mortgages are all variable, prime minus, so I'm still staying where we are for at least the next 6 to 12 months or most likely longer.

Again, it's how much risk you are willing to take.

I wish you the best and let me know what you decide!
Mark

Mortgage Interest Rates 2.99% for 5 year at or near all time low!

You have likely read or heard about BMO announcing their 5 year fixed rate at 2.99% It will not be long before the other major banks follow

Please read the fine print of any offering and mortgage, there are often stipuations and restrictions.

See the short article below to learn more about what to look for with mortgage rates and locking in long term.

As you may have already heard, BMO announced yesterday that they are bringing back their 5 year fixed rate special of 2.99%. This will once again, spark rate wars! When they first announced this special in January, other banks and mortgage lenders were quick to respond with their own rates of 2.99%, however just on 4 year terms.

While the BMO rate sounds attractive, it comes with some serious restrictions:

- Fully closed for the full 5 year term. This means that you cannot pay the mortgage off in full unless the house is sold through to a non-family member for fair market value. This also means it can't be refinanced during the term, unless done through BMO (guess who has the negotiating power in that situation?)

- maximum 25 year amortization (their website says 'for people who want to become mortgage free in 25 years'. Clever marketing, but a little misleading as there are many borrowers who go with 30 year amortization and are committed to getting it paid off faster. Any lump sum payment will significantly accelerate the pay off of the mortgage. I digress)

- Prepayment privileges are limited to 10% / year.

There ARE better 5 year fixed products available out there for 2.99% with much better terms then BMO, such as full prepayment privileges of 15%, 30 year amortization, and a closed period of only the first 3 of the 5 years.

The 4 year fixed at 2.89% (something that has been available since August) is also becoming a popular option.

It is important to read the fine print on any mortgage, as many mortgage professionals may not take the time to explain them to you. While a rate may look the same on paper, certain restrictions can end up costing you more money down the road. Provided by Paul Meredith, Citycan financial

I hope this finds you Happy and Healthy!

All the Best!

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
BUS 905-828-3434
FAX 905-828-2829 CELL 416-520-1577
mark@mississauga4sale.com
Mississauga4Sale.com

* Thinking of selling your home in the next 3 to 6 months? Would you
like a Complimentary & Quick Over-The-Net Home Evaluation ?
www.mississauga4sale.com/internet-evaluation.htm

* Power of Sales and Foreclosures
www.mississauga4sale.com/Power-Sales-Bank-Sales-Alert-Request.htm

* If you have not already signed up to receive my monthly real estate
newsletter, you may do so here: On-Line Real Estate Newsletter sign up
www.mississauga4sale.com/popupquestion.htm

* See seasonal housing patterns
www.mississauga4sale.com/TREBprice.htm

* Would you like me to send you a desk or wall Calendar?
www.mississauga4sale.com/Calendar-Order-Form.htm

Economy is humming in Canada, will it last?

This article below summarizes what has been happening in Canada recently and the outlook for the economy from the view point of TD Canada Trust They are optimistic on some points and pessimistic on others, enjoy the read! Mark

HOPE BOLSTERS MARKETS, BUT CAN IT LAST?

Highlights

• Financial market sentiment has proven far more upbeat than expected in early 2012, supported by reduced risks of a systemic banking crisis in Europe and better-than-anticipated U.S. economic data.

• This improved sentiment and market trends have led to an upward revision to our long-term govern­ment bond yield forecasts, with Canadian 10-year bond yield to reach 2.85% by year-end. We have also increased our near-term commodity price forecasts.

• Given all of the positive news factored into the current strength of the Canadian dollar, there is risk of a near-term pullback. Nevertheless, the loonie should trade broadly in a 5 cent range above and below parity over the medium term.

• The positive financial sentiment belies the continued risk-filled environment. We continue to see risks from the European fiscal crisis, the slowdown in emerging market economies, and now from high oil prices. Volatility is likely to increase in the coming months.

With two months of 2012 now under our belts, the mood on global financial markets is decidedly calmer than we had anticipated. The S&P/TSX has rallied so far this year, and measures of market volatility have returned to more normal levels (see chart). Markets seem far more confident that Eu­ropean leaders will be able to manage their sovereign debt crisis without triggering global contagion. Particularly, the European Central Bank's (ECB) first injection of liquidity to the banking sector back in December helped to dramatically ease liquidity pressures in the financial system. Expectations are high for the take-up on the next opportunity for financial institutions to tap cheap three-year loans from the ECB, on February 28th. Consensus expectations are for around €470 billion Euros of loans to be extended, which is just shy of the amount loaned in December. While the increased liquidity to the banking system is unquestion­ably positive, it does not address the fiscal challenges facing European governments.

Last week, leaders also managed to agree on a sec­ond bailout package for Greece, hopefully averting a disorderly default in March. Now Greece must solicit participation from private sector bond holders for a debt swap at less than half of the par value of current Greek bonds. Unfortunately, we suspect that the current bail out package will ultimately prove insufficient to put Greek debt on a sustainable path. The Greek economy is in a rapid downward spiral that will deeply impair fiscal improvement. So, while markets are calm for now, the Greece crisis is bound to cause renewed financial market volatility in the future.

U.S. economy: hope, with a side of caution

Apart from markets stepping back from the precipice of impeding euro-driven doom, the rally seen in equities also has its roots in the more upbeat U.S. economic data so far in 2012. Both businesses and consumer confidence has improved from the lows seen last fall. And greater optimism in manufacturing is being born out in the hard production data, which continues to grow at a steady pace. Durable goods orders also point to continued strength ahead and corporate balance sheets also remain very healthy.

Perhaps the best news is that U.S. job growth has been accelerating out of its mid-2011 soft patch. Maintaining the current pace of 200,000 new jobs per month is just what is needed to sustain spending growth and help repair household balance sheets. The other good news is that the housing market is showing some signs of improvement; existing home sales and housing starts are rising, and residential investment is starting to contribute to economic growth. Auto sales also got off to a very strong start to the year.

However, just as the European risks decline, a new threat in the form of rising oil prices is rearing its head once again. Resurgent gasoline prices are making it feel like 2011 all over again. Just when just as the U.S. seems to be picking up steam, rising gasoline prices – already above $4 per gallon in California – start to bite at consumers' purchasing power. Moreover, recent increases in crude prices suggest gasoline is headed higher in the coming weeks (see chart). Tensions surrounding Iran have built a large risk premium into the price of oil, and if crude prices come down somewhat (see forecast pages 3), consumers should get some relief. But considering rising gas prices have preceded every major U.S. economic slowdown in the past 40 years, it is a risk that bears close watching.

Bottom Line

So what does all this mean for our outlook for markets? With the ECB backstopping the European banking system with cheap liquidity, a lower chance now that Greece will imminently default on its debt, and a stronger economic picture emerging from the U.S., we no longer expect a third round of quantitative easing (QE3) by the Federal Reserve. That scenario is now a risk to our outlook in the event of a worse-case outcome in Europe, or more signs the U.S. growth is faltering.

That has led us to raise our forecasts for longer-dated bond yield forecasts both in the U.S. and Canada (see table page 3). However, unlike the U.S., there has been little to cheer about in the Canadian economic data of late. That has led us to raise our year-end Canadian bond yield targets relatively less than Treasuries. Rosier market sentiment has meant commodity prices have remained firmer, and oil prices continue to rise, so we have raised our near-term crude price target accordingly, but our longer-term targets unchanged.

Our forecast for the Canadian dollar, however, has remained unchanged. With the price of oil vulnerable to a giveback if geopolitical tensions don't play out as feared, and the potential for a deterioration in market sentiment if all does not go smoothly in Europe, we still see near-term weakness in the Canadian dollar (Strong Canadian Dollar Ahead, But Mind The Potholes). Moreover, removing QE3 from our base-case outlook is a plus for the U.S. dollar, and another headwind for the loonie. But beyond that we continue to expect relatively strong macroeconomic funda­mentals to support a Canadian dollar in a 5-cent range above or below parity with the U.S. dollar over the medium term.

While our pessimism of late 2011 has not been borne out, the changes to the forecast are generally positive, so they are ones we are happy to make. Now we all have to keep our fingers crossed that these new hopes aren't dashed by a continued spike in oil prices, renewed problems in Europe or a hard-landing by emerging market economies.