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Changes from Lenders in Discounting
Prime remains at 4.75%
Surrey, BC - July 24, 2008 - There has been no change in rates, however, lenders have had a great year and have met many of their targets. In fact, many lenders are overloaded in the varaiable mortgage area as people try to maximize their interest savings. Due to this, many some of the lenders have decided to reduce the discounting offered. Many have reduced their maximum discounts from Prime - .60% or more to Prime - .40% and less. Just like Oil companies, once one tries it, the others will likely follow. So far Firstline, most Credit Unions & TD Canada Trust, have reduced their discounts, with First National likely to follow.
If you currently have a variable rate mortgage and have not locked into a fixed rate, your rate will not be affected by this. However, if you are in a fixed rate mortgage and were thinking of moving to a variable rate, you must act now. We feel this discounting will come back, but when is a good question and it may take 6 months or more for competition to drive the discounting down again. With the US in a recession and it is likely to continue for more than a year or so, taking a variable now might save you a great deal of money, even if you are in the middle of your fixed term, if you are paying more than 5.25% roughly. With Oil dropping the inflation fears should ease and with it, any likelyhood of an increase in Prime. Call us for a review if you are in doubt! |
Lenders making other changes without advising us
We recently learned that MCAP has made changes to their fixed term mortgages in that they are completely closed in the first 3 years unless you sell. This means that if you want to refinance your home or just move lenders, you can't for the first 3 years (unless you stay with MCAP). We are not happy about these changes and have told MCAP, but don't expect any changes soon. For those clients who are with MCAP, please contact us before you lock in to a fixed rate, we would like to review this with you.
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Changes to High Ratio Insurance Policies made by Gov't of Canada.
The Government of Canada made dramatic changes to High Ratio Insuranced mortgages which will take effect in October this year. With no advance warning the changes were made in a political attempt to look like they were protecting Canadians from US style exotic mortgages, when in reality they are just stopping a small percentage from attaining home ownership, while causing others reduced cashflow. The changes include a maximum amortization of 35 years down from 40, the elimination of the 0% down programs, and reductions in debt service ratio limits. What does this mean for you? In most peoples situations little will change, and if you have more than 20% equity, nothing will change. In general it will be First Time buyers who will be affected and who may have to rent longer.
Though these changes are not mandatory till the fall, many lenders have already adopted them, so if you wanted to buy a home with 0% down or have a 40 year amortization to keep your cash flow at the lowest possible, this window is closing soon, so you need to act now.
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| About Invis on the Peninsula
Invis on the Peninsula is a group of Mortgage Experts led by Michael Anthony Lloyd who believe in looking after their client's best interests over the long term. With a combined lending experience of over 40 years they have the experience to find the best strategy for any situation. Their business is built on a referral basis, the referral of a friend or family member is the greatest compliment they can receive.
Michael Anthony Lloyd is an Accredited Mortgage Professional & member of the Canadian Association of Accredited Mortgage Professionals. www.caamp.org
The comments & opinions contained within are strictly those of the author, no guarantees are made. All Rights Reserved Michael Lloyd 2008. |
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