The Bank of Canada kept its rate unchanged yesterday morning. Their wording speaks to overall economic growth, inflation issues as well as the overall global situation. It is a cautious forecast which certainly reflects what is happening out on the street. We are all aware of the higher costs of filling up our cars and the increases to our grocery bill. These increases will gradually be reflected in a higher rate of  core inflation. This forecast is in line with what we expected. At this time, rates staying the same and a guarded view on future increases.  

The next Bank of Canada Announcement is scheduled for July 19, 2011.
Bank prime is 3.00%.

Today’s Mortgage Rates…
•1-year Fixed:  2.64%
•3-year Fixed:  2.99%
•5-year Fixed:  3.74%                                                             
•10-year Fixed:  4.99%
•50/50 Hybrids: 2.86% (i.e., Half fixed and half variable; 90 Day closings!!)

Voted “Barrie’s Best Mortgage Professional 2010”
P.S. If you have any questions as to what this means to your mortgage, we are always here to help you with unbiased advice.

“Mortgage shoppers are very happy with recent rate trends!  The 5-year government yield (which leads 5 year fixed rates) made a new five-month low today.The spread between 5-year posted rates and the 5-year bond yields is now the most its been since October, and 45 basis points above its 10-year average. As a result, fixed rates should drop a bit further from here.”
(Taken from Canadian Mortgage Trends website May 27,2011)

Here’s a look at rates currently being quoted for AAA-quality borrowers:

•1-year Fixed:  2.64% 
•3-year Fixed:  2.99% (Through select brokers)
•5-year Fixed:  3.74% (Applies to “quick closes”)
•50/50 Hybrids: 2.86% (i.e., Half fixed and half variable; 90 Day closings!!)

I can be reached on my personal cell phone (705-794-1283) if you or someone you know is thinking of buying or refinancing, in this extraordinary rate environment!!

Voted “Barrie’s Best Mortgage Professional 2010”

The bond rate has been steady the last few weeks. From a year to date high of 2.53 on April 8th, the rates have fallen 30-35 basis points. This has resulted in all lenders lowering their fixed rates. 5 year mortgages are now available in the 3.89-4.19% range. There has been no change in the variable rate mortgages.

We continue to get mixed signals as to what is happening with inflation and the Bank of Canada’s position re raising rates. This morning TD bank indicated they do not expect any increases until late summer or early fall. Bottom line is there are uncertainties in the financial markets. At this time there is no increase expected when Bank of Canada releases its report on May 31st.

If you have a variable rate of any more than prime,  prime + or a fixed rate of 5.0% or more, we should explore the merits of refinancing to a lower rate. Contact us for a free, no obligation review. Spending a few minutes could save you thousands of dollars.

These low rates are still close to historical lows, making now a great time to buy or refinance.      

In a time where identity theft and Ponzi schemes are plastered across the daily news, the last thing you want to worry about is yet another way to lose your hard-earned money.

But as a homeowner, you need to be aware of crimes on the rise known as mortgage fraud and real estate title fraud.

Mortgage fraud

The most common type of mortgage fraud involves a criminal obtaining a property, then increasing its value through a series of sales and resales involving the fraudster and someone working in cooperation with them. A mortgage is then secured for the property based on the inflated price.

Following are some red flags for mortgage fraud:

-Someone offers you money to use your name and credit information to obtain a mortgage

-You are encouraged to include false information on a mortgage application

-You are asked to leave signature lines or other important areas of your mortgage application blank

-The seller or investment advisor discourages you from seeing or inspecting the property you will be purchasing

-The seller or developer rebates you money on closing, and you don’t disclose this to your lending institution

“Straw buyer” scheme

Another term for mortgage fraud is the “straw” or “dummy” home buyer scheme. For instance, a renter does not have a good credit rating or is self-employed and cannot get a mortgage, or doesn’t have a sufficient down payment, so he or she cannot purchase a home. He/she or an associate approaches someone else with solid credit. This person is offered a sum of money (can be as much as $10,000) to go through the motions of buying a property on the other person’s behalf – acting as a straw buyer. The person with good credit lends their name and credit rating to the person who cannot be approved for a mortgage for his or her purchase of a home.

Other types of criminal activity often dovetail with mortgage fraud or title fraud. For example, people who run “grow ops” or meth labs may use these forms of fraud to “purchase” their properties.

Title fraud

Sadly, the only red flag for title fraud occurs when your mortgage mysteriously goes into default and the lender begins foreclosure proceedings. Even worse, as the homeowner, you are the one hurt by title fraud, rather than the lender, as is often the case with mortgage fraud.

Unlike with mortgage fraud, during title fraud, you haven’t been approached or offered anything – this is a form of identity theft.

Here’s what happens with title fraud: A criminal – using false identification to pose as you – registers forged documents transferring your property to his/her name, then registers a forced discharge of your existing mortgage and gets a new mortgage against your property. Then the fraudster makes off with the new home loan money without making mortgage payments. The bank thinks you are the one defaulting – and your economic downfall begins.

Following are ways you can protect yourself from title fraud:

-Always view the property you are purchasing in person

-Check listings in the community where the property is located – compare features, size and location to establish if the asking price seems reasonable

-Make sure your representative is a licensed real estate agent

-Beware of a real estate agent or mortgage broker who has a financial interest in the transaction

-Ask for a copy of the land title or go to a registry office and request a historical title search

-In the offer to purchase, include the option to have the property appraised by a designated or accredited appraiser

-Insist on a home inspection to guard against buying a home that has been cosmetically renovated or formerly used as a grow house or meth lab

-Ask to see receipts for recent renovations

-When you make a deposit, ensure your money is protected by being held “in trust”

-Consider the purchase of title insurance

It’s important to remember that if something doesn’t seem right, it usually isn’t – always follow your instincts when it comes to red flags during the home buying and mortgage processes.

The main reason many renters feel they can’t afford to purchase a home has to do with saving for a down payment. But there are many solutions available today that can help first-time buyers with their down payments.

Many lenders will allow for a gifted or borrowed down payment. And of those lenders that will not provide this alternative, many offer cash-back options that can be used as a down payment.

Better yet, there are programs available from some financial institutions where they will offer a “free down payment” or a “flex down”. Of course, you will end up paying about 1% more in your interest rate, but the program will help you get in the homeownership door and start accumulating equity earlier. The only catch, however, is that you must remain with the original lender for the full initial five-year term or else you’ll have to pay the down payment back.

Under the RRSP Home Buyers’ Plan, first-time homebuyers can withdraw up to $25,000 from their RRSPs for a down payment – tax- and interest-free.

And if there’s a couple making a home purchase together, they can each withdraw up to $25,000 from their RRSPs.

As always, if you or someone you know has any questions about down payment options or your mortgage in general, we are here to help!

The bond rate decreased slightly over the last week but newly released inflation numbers suggest rising rates are on the horizon.

Interesting article below providing an overview of the inflation we have seen…

Price Hikes Spreading as Inflation Hits 3.3%

TAVIA GRANT AND RICHARD BLACKWELL from the Globe and Mail; Tuesday, Apr. 19, 2011 7:07AM
Inflation is spreading through the economy at a faster pace than the Bank of Canada expected, marking a turning point after two years of little price pressure.

Until now, higher prices had largely been limited to energy, defying a trend that has swept through other countries as commodity prices surge. But they’re now showing up throughout the economy, from the post office to department stores, promising to influence key business decisions and threatening to drive up rents.

Bank prime is at 3.00%
The next meeting of the Bank of Canada is on May 31, 2011  

If you have a variable rate of any more than prime,  prime + or a fixed rate of 5.0% or more, we should explore the merits of refinancing to a lower rate. Contact us for a free, no obligation review. Spending a few minutes could save you thousands of dollars.

Have a Happy Easter long weekend!

-Cory Kline

United States 

•   It was a very quiet week for U.S. data releases, but there was plenty to digest on the macro economic policy front, both domestically and abroad.   

•   Unsuccessful discussions regarding the U.S. budget, a growing divide at the Fed, and the first interest rate hike since 2008 by the European Central Bank (ECB), led to higher U.S. Treasury yields across the maturity curve and to a further weakening of the U.S. dollar vis-à-vis its main crosses.  

•   The ECB move was a reminder that interest rates are headed in only one direction and it won’t be long before other central banks in advanced economies such as Canada and the U.K. follow suit.  

Canada 

•   The Bank of Canada’s Business Outlook Survey indicated that the inflation expectations of businesses have turned upwards, while more firms appear to be facing increased capacity pressures.  Our view on inflation and the direction on monetary policy remains unchanged.  The increase in inflation expectations is largely linked to rising energy prices.  

•   Firms indicated that competitive pressures will limit their ability to pass cost increases onto consumer prices.  

•   A number of domestic demand indicators suggest inflation will not be a problem in the near-term.  Nonetheless, slack in the Canadian economy is gradually being absorbed and a rebalancing of monetary policy will be needed, but the Bank of Canada can wait until July to start raising rates.

A Mortgage rate hike has happened over the last few days. Fixed rates moved up by 20-30 basis points. We still have a few lenders who have not moved yet, but fully expect to lose them any day now. 5 year fixed mortgages are now in the 4.2-4.3% range. There were no changes in the pricing on variable rate mortgages. This has increased the spread to approximately 2% (almost double) between the 2 products.

At this time there is no change expected in the Bank of Canada rate until after our Federal election.

If you have a variable rate of any more than prime,  prime + or a fixed rate of 5.0% or more, we should explore the merits of refinancing to a lower rate. Contact us for a free, no obligation review. Spending a few minutes could save you thousands of dollars.

These low rates are still close to historical lows, making now a great time to buy or refinance.
    

What Does a Lender Consider When Looking at Your Mortgage Application?

• Income and Job Stability – Your income determines how much you may borrow. In most cases, 32% of your gross income for salaried, non-self-employed or commissioned people is used to determine how much you can borrow to cover the cost of the mortgage payments, taxes and any applicable maintenance. All other debts (eg, car loans, credit cards and lines of credit, etc) must not exceed an additional 8% of your gross income. 
• Credit History – Your credit score must show that you pay your bills on time. If not, you may still be approved, but the interest rate may be higher than expected.

What you need to supply to the lender:

a)      Income Confirmation – For salaried individuals: letter of employment and your most recent pay stub.

b)      Down Payment Confirmation – The lender will require that you prove the source of your down payment. You will have to send in bank statements, statements showing RRSPs, stocks etc. You must show a three-month history of your accounts. If there are any large lump-sum deposits, you are likely to be asked to show where the deposit originated. For mortgages where your down payment is less than 20% of the purchase price, you will also be asked to demonstrate that you have access to 1.5% of the purchase price in your bank account. You must be able to show this through a credit card, line of credit, gift from family or savings in case closing costs run higher than expected.

c)       Contract of Purchase and Sale – This is a copy of the accepted offer of the home you intend to purchase and a copy of the MLS listing sheet.

Please contact Mortgage Advisor Cory Kline at 705-794-1283 or cory@ndlc.ca