Changing Rates

The global instability due to the war in Ukraine has finely started to effect mortgage rates. There have been a lot of changes in the past month and they are now starting to hit the financial markets. Bond yields which effect fixed mortgage rates have steadily started to rise since the start of the month and as a result have increased the fixed 5 year mortgage rate by 55 basis points since the 1st of the month. The bank of Canada has also changed prime rate for the 1st time in 2 years this month as well increasing the overnight lending rate by 25 basis points.

So the reason that I am bringing up rates today is that the spring is typically the busiest time of the year to purchase real estate, if you are planning to purchase a home in the near future then I highly suggest that you look at getting pre approved so your rate can be held while you go out and find your dream home or your next home. In case you are wondering we can also hold the spread on the variable rate which currently sits at prime -.90% to prime -1.1% depending on the lender and the down payment percentage.

So protect yourself against any further rate increased by locking in your rate now. Just reach out and I can help you do it.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Qualifying rate change

As some of you may know that we have a mortgage stress test or qualifying rate of 5.25%. This is to help insure that when you are qualifying for a mortgage you will still be able to make the payments if and or when the rate changed to 5.25%. What many of you may not have heard is that this qualifying rate or stress test rate has now increased.

Actually it has not changed but it has increased so let me explain. The way the stress test works is that it is based on the contract rate ( your mortgage rate) plus 2% or 5.25% which ever is greater. The stress test rate of 5.25% has not changed but the mortgage rates have thus moving the qualifying rate now above 5.25%.

Rates have been increasing as bond yields have changed as they have over the past several months. Yesterday they increased again. Notification received last night that 5 year fixed rates were changing to between 3.54 to 3.84% depending on loan to value ( percentage of down payment compared to the value of the property) and the type of program. So based on these things it would change your qualifying rate to 5.54 to 5.84% thus further reducing your buying power and affordability.

One option would be to go with a variable rate as that still uses the 5.25% qualifying rate until those rates change or select a 1 or 2 year term instead. If you are in the market to purchase a home this year, then please reach out to me so we can lock in your rate now before the next rate increase.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Overheated

In the past few days there have been several articles all taking about the potential upcoming downfall to the Canadian real estate market. If this is true should you be worried.

Let’s examine a few things first, the pandemic changed a lot of things about our lives and with it came the ability to work remotely and yet still be productive. As a result there have been plenty of people leaving the major centre’s and moving to the suburbs and also to other provinces to get that better quality of life and the slower pace.

The interprovincial migration coupled with the recent higher level of International migration has led to record levels of demand for housing. When you put the migration in with lower multi unit and single family housing starts this creates higher demand for the units currently available on the market. Now this year it has heated up even further with a sharp drop in the available listings on the market. So what does hit the market tends to sell for well over the listing price.

Now we circle back to the original point, should you be worried that you just paid 150K over asking to secure your home? I don’t think so and this is why, if you plan to stay in your new home for at least 10 years then any market correction combined with the paying down of your mortgage will balance out in the end. However if you are speculating and hoping to flip it for a quick profit, that may be easier said than done as homes that require a lot of work are still selling for top dollar.

Here are the stats that one of my local realtors just posted. Prior to the pandemic HRM was averaging around 3000 active listings so that means that buyers had lots of choice and homes tending to sell within 60 days which was always the normal rule of thumb. Today we have just over 200, and they are only staying on the market for up to 17 days or long enough to have the financing secured. These homes are also selling for 110% of the listing price on average. All this helps create the 15-20% gains in value that we have seen in the past two years.

When listings and or available units ( multi residential) start to increase to catch up with demand then we will start to see the market to calm down and actually get back to normal. The recent increase in mortgage rates has had no effect on cooling the market. People still need a place to live and until there are enough of them out there this will continue at least for the short term.

“A housing bubble is a run up in housing prices filed by demand, speculation and exuberance” Investopedia

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

KYC

In the financial services industry which I work as a mortgage broker, it is expected that we all practice KYC also known as know your client. Without doing so how can I possibly recommend a mortgage product for their current needed or requirement. When I started doing this 20 years ago there was always a lot of face to face time. The initial meeting to find out their requirements, follow up to gather documents and finely another meeting to sign everything. So there was lots of face to face time.

Now most of my meetings are conducted over Zoho meeting ( virtual meeting software), with follow ups on the phone, text or email. My role as I see it as their mortgage consultant is to present the best possible options and then help my clients decide. There are no cookie cutter solutions in this industry, one size defiantly does not fit all when it comes to your financing. So without getting to know you and your unique situation it is very difficult to find a solution that is ideal. I am only a phone call away if you ever have any questions.

Today I am thankful for the snow flurries during my morning run, a great book about a visionary and getting to know lots of great people.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Tell your story

Not every mortgage application is the same, and thankfully no two lenders are the same either. This is why it is vitally important to tell a very compelling story with every mortgage request submission. You see this is because lender’s policy’s often are not black and white and clients don’t always fit in the same box.

In our notes with every mortgage request I tell a story around the 5 C’s of credit ( Character, Credit, Capacity, Collateral and Capital). Doing this will allow me to address any weaknesses of the client, why it happened and why it won’t happen again and build on the strengths to show why this mortgage request should be approved.

Due to the fact that some clients background in the 5 C’s is not ideally suited with the major A lender, that is why it is great to deal with a broker who has much more options. When all fails with A lenders we have alternative and then private sources. While nobody has the perfect past, as long as clients are open and honest about what happened then things can be dealt with so options can be found.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Prime Rate Change

Yesterday at 11am Atlantic Standard Time, the Bank of Canada increased it’s overnight interest rate from .25bps to .50bp. Thus all the banks followed by increasing their prime rate from 2.45% to 2.70%. Except for one key lender who was at 2.60% and has now increased to 2.85%.

As a quick comparison for those who are on variable rates and are thinking of switching to a fixed, the 5 year fixed rate is now between 3.04 -3.24 depending the lender. However remember that your discount to the prime rate will not change over the length of your term. So the people who took a variable at Prime -1% are still sitting quite pretty. Make sure that you do the math before you make any harsh decisions.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Virtually yours

Since the start of the pandemic, I have pretty much eliminated face to face meetings. I may have done 3 in the past 3 years and hundreds of virtual meetings. Of those three meetings in person one did not show up, so I am not only losing the actual time that I have blocked off for the meeting, I lose the time to get there and the time to get back. Which is a killer for productivity.

Virtual meetings are a whole different story. Yes I still block off the same amount of time to meet with the person, but if they are a no show it’s not a great loss of time. Typically I will wait in the online meeting room for up to 15 minutes after the start time, cause sometimes life happens. Then if they are a no show it’s no big deal, I can not miss a beat in my day and continue to stay productive.

When I started doing this 20 years ago, we didn’t have these options. When documents needed to be signed it was always in person, and driving all over town to meet with people was not very productive. Now in the digital age of online meeting software and digital signing programs it can all be done remotely. Saving everyone time and yet remaining productive.

Today I am thankful for the fact that our Canadian Girls did it again and won the Olympic Hockey Gold medal, that I don’t lose any productivity when clients don’t show up for virtual meetings and kids walking to school cause the weather is nice.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Seller’s Market

As many of you know we are definitely in the midst of an intense seller’s market. New properties hit the market only long enough in some cases for your first and only viewing before it is sold shortly there after. It’s also the low number of new listings that are pushing the pricing higher on the remaining few on the market.

So while I am waiting to get the data that I requested from NSAR, here is some proof that we are in a very hot housing market. In Dec of 2020 the average cost of a home in Halifax/Dartmouth was $400,965 and just 12 months later that had jumped by 22.2% to $490,127. All the while the whole country averaged a 17.7% increase and the the markets everyone mentions in the news Toronto was up 31.1% and Vancouver was up 17.3%

While all this talk and news reports about pending rate increases may temporally calm the market, it will not correct the greater underlying issue which is that we have a fundamental supply problem. We do not have enough homes for people who want to buy them nor do we have enough rental unit for those looking to down size. This is preventing the empty nesters from selling as they have no place to go. Until these factors are correct we will be seeing price wars and multiple offers on properties for a while yet.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

More Options

One of the benefits of dealing with a mortgage broker is that we have more financing options for our clients from more diverse lenders. Yes I know the other side of the debate and the multitude of products available at the big banks. However more products from the big bank may not help you when all you need is financing for your new home. Who cares if they have a great rate on savings accounts if they are unable to help you finance your property.

This brings me to the new lender to my portfolio. They have just started lending her in the maritimes and are registered with all three high ratio mortgage insurers. They have a rather unique product that you need to hear about. There are many lenders who have purchase plus improvement mortgage and these are proving a required element in today’s tight housing market due to the fact that the perfect home is now longer available so you must now make it perfect.

So back to the new guy, the typical purchase plus program allows you to increase your purchase price by 10% or 40K which ever is less. The new lender allows you to go to 20% or up to 100,000. This is incredible as with the recent spike in property prices and the cost of renovations, there is not much you can accomplish with 10% or 40K.

If the house that you plan on buying requires some work, and most do in today’s market then this is definitely a program to check out.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Do the Math

There is a lot of talk about the Bank of Canada changing overnight lending rate at it’s next meeting. So some ill informed homeowners are rushing to lock in their mortgage rates to avoid any rate hikes. That is entirely understandable if you are risk adverse, however if you haven’t already I think there is a few things you should know.

Ok so to make sure that you are informed, we need to do some math. I just looked at the our current rates, and for AAA credit clients who required an insured mortgage the variable rates are averaging at prime ( 2.45) less 1.10%, so that means they start at 1.35% and the fixed rates for insured mortgages average 2.89%. If you haven’t done the math that is 1.54% in the difference. For uninsured clients the rates are slightly different, variable is prime -.90 (1.55%) and fixed is 3.04%, which is a difference of 1.49%.

Historically the Bank of Canada has moved rates at .25% at a time. There have been instances where that has been .50% and also .15% but the average in the past 12 years has been .25%. Given the current disparity between the current fixed rate and the available variable rate, I still believe that the variable rate is the way to go. The BOC would have to move the over night lending rate 8 times at .25% to equate to the current fixed rate. Even at that the variable rate is still superior as the potential penalty to discharge or break it is a fraction of what it would be for a fixed rate.

So do the math and see if this makes sense to you. However if you are risk adverse you may sleep better knowing that you have a fixed rate but you should at least make an educated decision.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here