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Issue No. 5 June 17 2009
Pre-Approvals Hard to Find!!

Pre-Approvals: A Dying Breed?

Pre-approvals are something many lenders could do without.  The problem (from a lender's perspective) is that people get pre-approved and then frequently don't close.
One bank that recently did away with pre-approvals in the broker channel was rumoured to be losing  $20 million a year on them. Pre-approvals are pretty expensive, and the return for lenders is debateable.  In most cases, less than one-third of pre-approvals actually close! 

Meanwhile, the lender is tying up human resources to process the applications, as well as capital to hedge the rates (if rates move adversely, the lender is on the hook, so lenders pay to lock-in the interest rates using derivatives).
In recent weeks, some very big-name lenders have halted pre-approvals--either altogether, or in the broker channel.  Two of the most prominent have been FirstLine (a division of CIBC) and TD.
There are still some good lenders doing pre-approvals but their numbers are dwindling.

 It'll be interesting to see what the future holds for pre-approvals.  If we had to guess, more lenders may eventually either:
A)  Eliminate them; or,
B)  Start charging rate premiums (some lenders, for example, already charge 0.10% more for pre-approvals).

Rates as of June 24, 2009
Fixed Rate Mortgages    
6 month convertible            4.60%
1 year open                           6.55%
1 year closed                        2.75%
2 year closed                        3.05%
3 year closed                        3.65%
4 year closed                        4.09%
5 year closed                        4.39% 
7 year closed                        5.80%        

Variable Rate Mortgages    
5 year closed - Prime* +.40%
5 year open   - Prime* +1.00%

Home Equity Line Of Credit

Please call for product availability and rates.

Information from sources deemed to be reliable. Product availability and borrower qualification apply.
*Prime = 2.25%

Rod Minnes
Global West Mortgages

Canadians still want rec homes despite economic
gloom, report says
Albertans most likely to give in to recreational property purchase
CALGARY - Despite the economic downturn, many Canadians are still dreaming of owning a recreational property, both as a longterm
investment and to enjoy with family and friends, says a national real estate report released today.
And Albertans are among the most willing in the country to make changes to their finances or lifestyle to own a cottage.
The 2009  Recreational Property Report said Canadian are willing to make sacrifices to own a cottage and more of
them want to use their cottage, cabin or chalet year-round as a recreational property although some still want it as their primary
The nationwide survey showed the dream of owning a getaway property on the water, to escape the pressures of
city life and to relax with family and friends is still alive and well across the country! "Beyond the obvious lifestyle benefits, however, our research demonstrates Canadians
see recreational property as a smart and safe long term investment."
The survey found that 64 per cent of Canadians view cottage ownership as a sound investment. To pursue their dream of buying a
recreational property, 55 per cent of Canadians would be willing to make compromises with regards to their financial or lifestyle
choices, such as purchasing a property with family and friends, renting out their cottage, making a cottage their primary residence,
buying a fixer-upper, or moving into a smaller principal home in the city.
"In Alberta, 69 per cent of residents agree that a cottage is a good long-term investment. At 62 per cent, Albertans are among the
most willing in the country to make changes to their finances or lifestyle to own a cottage. One in five Albertans would purchase a
fixer upper, the highest score in the country, and 15 per cent would purchase a property with friends or family members," said the
For Albertans, the three most important features of a cottage or recreational property are access to utilities (60 per cent), peace
and quiet (51 per cent) and four-season use (33 per cent). Access to boating and fishing (28 per cent) and proximity to amenities
(22 per cent) also ranked high for Albertans. Sixty per cent said a cottage on a lake would be their first choice!