Thursday

Monetary Policy Report - Bank Of canada

The Bank of Canada released its April Monetary Policy Report today. Growth of the Canadian economy has been in line with the Bank's expectations as set out in the January Monetary Policy Report, but inflation has been higher than expected. The Bank now says that the Canadian economy was operating just above its production capacity in the first quarter of this year. Domestic demand continues to be the main driver of growth in Canada. Core inflation is likely to remain slightly above 2 per cent in the coming months, because of pressures on capacity and the impact of higher core food prices. Inflation is expected to moderate by the end of 2007. The Bank continues to believe that the risks to its inflation projection are roughly balanced, although there is now a slight tilt to the upside. On Tuesday, the Bank OF Canada left its key policy rate unchanged at 4 1/4 per cent (Prime rate 6%). Mortgage interest rates are expected to remain stable for a while. The next meeting is in May. Talk to your mortgage broker about how interest rates change in the Canadian mortgage market. A little mortgage education can save you some money.

Wednesday

UK Mortgage rates could hit 8% this year

The unexpectedly large rise in inflation means the Bank of England is sure to push through more increase in interest rates in coming months - so variable mortgage rates could top 8%. For anyone that hadn't realised, inflation (the Consumer Price Index) rose to 3.1% this month. Bank of England is under pressure to bring inflation down quickly. As a result, the bank looks increasingly likely to raise interest rates in May. What's more, this may not be the last rise we see, with some economists predicting that the base rate could hit 6% (or higher) come the end of the year. Three Bank of England rate rises have been pushed through since August 2006 taking the base rate from 4.5 per cent to 5.25 per cent and adding around £750 to the annual cost of an average £100,000 variable rate mortgage. The last time mortgage rates nearing these levels was 15 years ago. Talk to your mortgage broker in UK about the options available to you so that you can save some money in the future. Or move to Canada where mortgage rates are still low and not expected to rise soon. Ha ha ha.

Tuesday

High-ratio mortgage threshold changed

Canada is reducing the cost of home buying by raising the threshold for compulsory mortgage insurance. An amendment to the Bank Act allows borrowers to access conventional mortgage financing with a 20% down payment. Previously, home buyers were required to make a down payment of at least 25% or they had to pay mortgage default insurance premiums. Bill C-37 raises the loan-to-value ratio requiring mortgage insurance from the current 75 per cent to 80 per cent. High-ratio mortgage insurance will still be required for mortgages greater than 80 per cent of the home’s value. Homebuyers could save an estimated average of $2,500 in insurance premiums, based on an average home price of $300,000. The new limit also affects individuals who intend to refinance their mortgages. In addition to insurance savings, the change will also make it easier to obtain a larger mortgage than previously possible under similar circumstances for a borrower. For refinancing at 80 per cent, there is an extra five per cent equity available to the borrowers for their financing needs.

Monday

FIRST NATIONAL FINANCIAL OFFERS AIG UNITED GUARANTY PRODUCTS

Reflecting a dynamic, changing mortgage landscape and trying to meet the demands of the growing mortgage industry First National Financial LP announced that it will offer clients mortgage insurance through AIG United Guaranty. First National Financial is the country’s largest non-bank originator and underwriter of residential mortgages. The combination of Canada’s largest non-bank mortgage originator with a member company of one of the world’s largest insurers will certainly mean more mortgage choices for Canadians. AIG United Guaranty is expected to sign up with other major lenders as well. More choices in the mortgage insurance field will certainly be good for consumers in the coming years as AIG United Guaranty tries expand its market share in the industry. Mortgage default insurance industry in Canada is currently dominated by 2 major players, CMHC (Canada Mortgage And Housing Corporation) and Genworth. Ask your mortgage broker about the mortgage default insurance options available to you when buying a new home or refinancing your existing mortgage.

ING - UNMORTGAGE

Unmortgage is just another mortgage product offered by ING Direct. They have confused many people with this new "brand name". It's not not a reverse mortgage, its not a mortgage out of this world, it is just another mortgage product. It does have some good features attached to it. ING DIRECT UNMORTGAGE offers many payment frequencies, which include monthly, bi-weekly and accelerated bi-weekly. Many other banks offer the same type of options. In fact, many lenders also offer the option of weekly payments. Unmortgage also offers flexible terms (1-10yrs), amortization periods and prepayment options just like any other lender. ING also advertises best rates and terms, but I don't think they can beat all lenders out there all the time. If you are looking for a mortgage that offers the best interest rate at good terms, I recommend that you talk to your mortgage broker. The Mortgage Group in Vancouver has access to many lenders and mortgage products including ING's UNMORTGAGE.

Saturday

Canadians making bad mortgage choices?

RBC (Royal Bank) released it annual homebuyers survey few days ago. According to the survey many Canadians seem confused about the mortgage choices available to them, especially when they have to choose between a fixed rate mortgage and a variable rate mortgage. RBC's survey shows that most people will stick to the fixed rate mortgage products even when a "safe" variable rate mortgage is available that will save money. Majority of people find it difficult to choose between a fixed rate and a variable rate mortgage. The top reason for opting for a fixed rate mortgage is the preference for payments that don't change every month. Some 76% respondents believe that their mortgage payments will change each time the prime rate changes, even though its not true. Variable rate does not necessarily mean a variable payment each month. A mortgage broker can be a great help when it comes to understanding you mortgage needs. Ask your mortgage broker about the benefits of variable rate mortgage products.

Why use a Mortgage Broker?

Most of think that mortgage brokers are only for people who have bad credit or were turned down by a bank. Unfortunately, anyone with this kind of outdated thinking could be losing thousands of dollars! New home buyers and all homeowners can save time and money by using the services of a mortgage broker. A mortgage broker has access to many competing lenders, including banks, pension funds, trust companies and even private individuals. While you may arrange a mortgage every five years, mortgage brokers are completing thousands of mortgages each year. This enables them to negotiate better interest rates, which can be passed on to their clients. There are other potential cost savings. On any given day, a particular lender may have a special rate offer for a specific mortgage term.

Many home buyers take the quote from their bank and choose a term and rate offered by the lender without realizing that a mortgage broker may be able to save them up to one percentage point off the posted rate. To ensure you get the best rate, it’s best to contact a mortgage broker at least three or four months before you renew your mortgage or consider a new home purchase. Mortgage brokers can usually guarantee an interest rate for 90-120 days. If rates go up you'll get the guarenteed rate, should rates drop in the meantime, you would get the lower rate. You also need to consider that when you shop from lender to lender, there is an accumulation of inquires on your credit bureau report, affecting your credit rating. This isn’t the case with a mortgage broker who only does one inquiry yet can still get many competing lenders to quote on your business.

What About Fees?

Some people think that using a broker will cost them lots of money. Mortgage brokers usually don't charge any fee because the lender that provides the mortgage pays the mortgage broker a fee for seding a client to the mortgage lender. A fee may still be charged to clients with impaired credit, or when private money is used. Mortgage brokers usually charge a fee to arrange a commercial mortgage. A mortgage broker can potentially save you lots of money. I suggest that you talk to a professional mortgage broker before getting any kind of mortgage. Most of them don't charge any consultation fee, so you got nothing to loose.

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