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

Toronto Real Estate Board Report for June 2014 Sale Price UP and sales volumes up!

The latest report from the Toronto Real Estate Board for June 2014 is out, Sales price up and sales volumes up!

Average price of $540,544 - up 8.3% compared to May of last year

Sales Volume of 11,079 - up 11.4% compared to May of last year

See the full report below,

Mark

Tight Market Conditions Prompt Strong Price Growth

Sales and Average Price Up last month

TORONTO, June 4, 2014 – Toronto Real Estate Board President Dianne Usher announced that both the number of home sales through the TorontoMLS system and the average selling price were up strongly in May compared to a year ago.

Total TorontoMLS sales for May 2014 amounted to 11,079 – a new high for the month of May. This result was up by 11.4 per cent compared to 9,946 sales reported in May 2013.

The average selling price for these sales was $585,204, representing an 8.3 per cent year-over-year increase compared to the average price of $540,544 in May 2013.

“We are now at the peak of the spring market when we generally see the greatest number of sales and the highest average selling prices. Based on the May statistics, buyers have been more active this spring compared to last year.

Despite strong price growth so far in 2014, many households remain comfortable with the monthly mortgage payments associated with the purchase of a home, as borrowing costs have remained at or near record lows over the past few months,” said Ms. Usher.

Average selling prices varied across the Greater Toronto Area, depending on geography and home type. A detached home in the City of Toronto sold, on average, for $943,055. In the surrounding GTA regions, the average detached price was $648,439. The average price for condominium apartments was $401,809 in the City of Toronto and $307,307 in the surrounding regions.

“The listings situation in the GTA did not improve this past May. With listings down and sales up compared to last year, competition between buyers increased. The result was price growth well above the rate of inflation, especially for singles, semis and townhomes,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

“It is also important to point out that even though the condo apartment market segment remains comparatively well-supplied, as new project completions have generally led to an uptick in listings, we have seen enough buyer interest to prompt strong condo price growth as well,”

See more statistics at this page

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

 

Investment property purchase and rental considerations

It is great to hear that you have decided to become active in the rental investment market.

First you need to decide if you want a single family residential or a multi-residential.

In a single family residential you are likely to break even on monthly cash flow (all your expenses - mortgage, property tax etc) paid but you will not make cash flow. The money here is made on resale value and equity that the tenant pays into your home.

I would consider the best investment for this type a townhouse - they are low maintenance and easy to rent. If this is your decision, let me know and I will narrow down some good options to send.

In a multi-residential, resale value increase is not as high (depending on area) unless you somehow increase the profit of the operation (renovate to create higher rents, add in coin-op washer and dryers, implement paid parking, etc). These are great to create monthly cash flow and can often be fully paid off within ten years if you put 100% of the rents into your mortgage payments; which would leave you with net incomes ranging from $30,000-$100,000, depending what and where you invest.

The value of these are based on CAP rates. Places like Toronto and Port Credit in Mississauga will have a lower cap rate, around 3-6% max; as the resale is higher. Places like Hamilton and Brampton have lower resales, but are very hot rental markets with cap rates ranging into the 8-11% range.

Hamilton is a good area right now for investment property for a multi-res. It is the number one investment spot in Ontario for multi-family and due to low income, renters are very active.

If you want 20% or less down, we would need to stick with 5 units or under ( I believe most banks are 4 and under, but either RBC or CIBC is 5 and under

Once you review the above information to help you decide which investment strategy you would like to pursue and then we can go from there into more detailed info.

All the best!
Mark

TREB reported March 2014 single family residential home sales in Toronto and the GTA Sales and Average Price Up in March

TREB reported March 2014 single family residential home sales in Toronto and the GTA

 

last months highlights were:

 

• average prices up 8.5% to $557,684
• sales volumes were up 7.2% to 8,081

 

See graphs and information at this link:

 

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

 

See the full report below,

Mark

 

 

Sales and Average Price Up in March

 

TORONTO, April 3, 2014 – Toronto Real Estate Board President Dianne Usher announced that Greater Toronto Area REALTORS® reported strong year-over-year increases in TorontoMLS home sales and the average selling price in March 2014. Home ownership affordability, backstopped by low borrowing costs, continued to be a key factor underlying this growth.

 

A total of 8,081 sales were reported in March 2014 – up by 7.2 per cent in comparison to March 2013. Sales growth was much stronger in March compared to the first two months of the first quarter. Sales for Q1 as a whole were up by three per cent compared to the first three months of 2013.

 

“Sales activity in the GTA accelerated last month. Compared to last year, a greater number of buyers found affordable home ownership options, as evidenced by sales growth for all major home types. Against this backdrop, however, overall inventory at the end of March remained lower than last year. This means competition between buyers increased, which is why the average selling price continued to climb,” said Ms. Usher.

 

The average selling price for March 2014 sales was $557,684 – an increase of almost eight per cent compared to the average reported for March 2013. The average price for the first quarter of 2014 was up by 8.5 per cent year-over-year.

 

“With borrowing costs remaining low, and in fact declining, strong home ownership demand will continue to butt up against a constrained supply of listings. Strong price growth will be the result for the remainder of 2014. If the pace of price growth experienced in the first quarter is sustained, TREB may revise its outlook for the average selling price,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

 

 

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

 

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Real Estate fluctuations Cyclical and Seasonal Price Trends and Graphs in Toronto and Mississauga

Question from a reader:
One question regarding the cyclical pricing.. it looks from your graph http://www.mississauga4sale.com/avgprice1995todate.jpg that the peak is typically in the April or May months. Can you tell me whether that represents closing date, conditional sale date, listing date or something else? Trying to strategize our sale timing since we're a bit flexible.

Answer:

The peak of the market price is typically between the months of April and May of each year. This represents the sale price reported on TREB for that particular month. It does not account for conditional sales or the closing date, only the firm sale price that occurred during that particular month.

If, for example, a conditional sale was put together on April 5 and firmed up April 12th, the sale price would go towards April average.

 If a conditional sale was put together on April 25 and firmed up May 3rd, the sale price would go towards May average.

Best time to list is typically a week or two after the March break, then it takes 1-3 weeks to sell and you would sell at or near maximum and close typically about 3 months later. Most people like to close end of June or end of July due to children finishing school, and since most closings are between 60-90 days, this is another major reason that contributes to the March, April and May peak selling period.

Beware of the current cycle and where we currently are:

http://www.mississauga4sale.com/Market-Emotions-Cycle.htm

See more at:

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

Please let me know if you have other questions.

Thank you,

Mark

Mid-month report from TREB regarding residential real estate sales in GTA and Toronto

this is the mid month report from Toronto Real Estate Board regarding sale snad prices for mid month in the GTA
Enjoy!
Mark

GREATER TORONTO REALTORS® REPORT LATEST MID-MONTH RESALE MARKET FIGURES

TORONTO, March 19, 2014 – Toronto Real Estate Board President Dianne Usher announced that Greater Toronto Area REALTORS® reported 3,459 transactions through the TorontoMLS system during the first two weeks of March 2014. This result for the TREB market area as a whole was virtually unchanged in comparison to 3,464 transactions completed during the same period in 2013.

“Despite the poor weather conditions experienced during the first half of March, an abundance of willing buyers were actively searching for a home to purchase. However, many of these people continued to be affected by the enduring shortage of single-detached, semi-detached and townhouse listings, which means that in some cases they could not find a home on which to make an offer, or they were facing stiff competition from other buyers,” said Ms. Usher.

For all home types combined in the GTA, the average selling price was $560,948 - up by almost six per cent in comparison to the average price for the same time frame in 2013. The semi-detached market segment in the City of Toronto led the way in terms of price growth during the first 14 days of March, with a year-over-year increase of more than ten per cent.

"Semi-detached houses represent a more affordable ownership option for some households. Because of this, some semi-detached listings have attracted many interested buyers. This competition has served to exert strong upward pressure on the average selling price," said Jason Mercer, TREB’s Senior Manager of Market Analysis.

“The average single-detached price was down slightly in the City of Toronto year over year because of a smaller share of luxury deals this year compared to last. Tight market conditions will continue to drive strong detached price growth in 2014,” added Mercer.

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