Vancouver home mortgage
By ebizniz on April 4, 2008 - 4:54pm
Since June 2007 when Canadian Prime rate was raised from 6.0% to 6.25%, the credit seized-up in August forced the central banks of Canada to ease-up and cut interest rates from 6.25% in November 2007 to 6.0% in December followed by a further cut in January to 5.75%.
Canada followed the US aggressive cut in interest rates last month and made another rate cut from 5.75% to 5.25%. The next rate setting meeting by the Bank of Canada on April 22 this month is expected to result in another 0.25% to 0.50% reduction.
So far, Canadian Prime Rate had fallen 1.0 full percentage point, but Canadian Banks are slow to reduce their posted mortgage rates. Prior to the rate reductions, Canadian posted mortgage rates by Canadian Banks and credit unions were from 7.35% for 1-year term to 7.49% for 5-year term. Currently, the posted rates for 1-year and 5-year are at 7.15% and 7.19%.
The reason for the small reduction in the posted rates may be attributed to Canadian Banks taking advantage of the higher interest rate spread to beef-up their balance sheets. Some Canadian banks were reported to be badly affected by their subprime losses.
By ebizniz on July 26, 2007 - 9:28pm
A blog posting by Vancouver Home Mortgage :
With the Bank of Canada raising interest rates and Canadian Banks offering more attractive saving rates to consumers, investors will be tempted to move their real estate investments to safer savings account and GIC investments.
The Bank of Nova Scotia is advertising a 4.85%* on a 24-month GIC. The offer is only available until August 04. There are minimum deposit of $1,000 required and the GIC is non-redeemable.
ICICI Bank offers a more flexible deal, offering 4.5% on C$ deposits and 5.0% on US$ deposits on the bank’s HiSAVE Savings Account. There is no minimum deposit required and interest is calculated the daily balance and paid monthly!
The Canadian housing market is faced with:
* Rising Interest Rates
* Severe affordability problem
* Rising dollar impacting the manufacturing and resource sectors
* Softening in oil and gas prices
* Increasing new and resale home inventory
* Distinct possibility of US recession
These are negative forces that could topple the unrealistic real estate markets in Greater Vancouver, Fraser Valley of BC, Calgary and Edmonton.
What are your thoughts?
By ebizniz on July 3, 2007 - 11:50am
An article by Vancouver Home Mortgage:
In addition to CMHC 40-year mortgage, Genworth Financial has a similar program for home buyers in Canada. Sky-high house prices are making home ownership less affordable to cash-strapped home buyers. Some economists and housing analysts are arguing that longer amortization is bad for home owners.
The danger in stretching a 25-year mortgage to the CMHC 40-year mortgage is that it will hurt home buyers who in the first place cannot afford to buy their own homes. The program is a two-edged sword. Yes, the lower monthly mortgage payment enable home owners in buying their homes, but it will also likely become a huge financial burden to the home owners. Generally, home ownership under this program will hurt rather than help these home owners.
Here are the reasons and adverse consequences of a CMHC 40-year mortgage:
1) By stretching a 25-year loan to 35 or 40 years, financially weak and cash-strapped home buyers are added to the pool of existing home buyers, causing further house price escalation.
2) A home owner buying a home for example at $342,500 with 10% down payment, has to pay $6,345 (2% mortgage insurance) on a traditional 25 year loan. But, he or she has to pay $8,248.50(2.6% as an extra 0.2% is to be paid for every 5 years over 25 years), $1.903.50 more on the insurance premium required for a 40-year loan.
By ebizniz on July 2, 2007 - 9:52am
An article by Vancouver home mortgage:
Vancouver home mortgage is reporting a slower Canadian economic growth for the second half of 2007.
TAVIA GRANT from The Globe and Mail reported on June 29, 2007 a slow down in wholesale trade for March, 2007. The lower growth number at 0.3% is the first time in 10 months, and economists are projecting a lower growth number for April to be at 0.2%.
Inspite of the slower growth in Canada's economy, no one is expecting the long expect interest rate hike by the Bank of Canada to be post-phoned. "Rates may rise by a quarter percentage point on July 10, but the outlook for borrowing costs is fuzzy after that, an economist said".
JULIAN BELTRAME of Canada East Online reported on Thursday June 28th, 2007 "High-flying Canadian dollar helping bring down inflation". With the Canadian dollar at 30 year high at around Cdn $94.00 against the US dollar, economists are projecting a slowing down in Canada's economic growth. Eastern Canada's manufacturing companies are already reporting higher costs and projecting lower revenues from exports to the U.S.A. and overseas due to the high Canadian dollar.
