blog
Dear Clients,
Now I know why the stores start so early, it would feel like they just did the decorations and now there is just a week to go!
I thought it would be good to do a recap on this year's mortgage bonus packages that most of you are on.
There are three Variable Rate categories in our firm now.
- The Old Timers: those of you who have below prime mortgages from before the "Collapse". Congratulations to those who took our advice and stayed put even during the 6.25% prime rate. It certainly has paid off. Now almost 2\3rds of your payment is directly against principal. You can send a couple of thanks to your favorite deity this holiday season.
- The Collapse Clients: who financed during and shortly after the "Collapse" who are above prime. Prime has been moving down from 3.5% since the first of January 2009. You have dropped about 1.25%.
- Newbies : those who have come in recently and we are now edging to just below prime.
Congratulations to the Old Timers as it looks like you are going to reap the benefits for the next year or two. Also if your renewal is coming up in the next couple of years you will still be below prime!
Watching closely for Collapse Clients. Yes those of you well above prime like +.80% to +1.25% over prime it is definitely time to pay the penalty and drop into the low prime rate. For those at +.60% over I would like to see another .10% drop in the variable rate to make the penalty pay. Those under +.60% over just sit for now.
Newbies- hopefully you are going to make it to the Old Timers Category!
You are hearing a lot of hullabaloo in the news about the danger of low interest rates and you may have seen a couple of interviews on CHCH that I did last week concerning this.
Unfortunately people are not getting more than a 30 second clip and the point is either lost or misinterpreted.
Here at The Personal Mortgage Group we do look into the future of our clients and prepare you for the unexpected by building in the flexibility you need to stay safe in the event of change in circumstance or interest rates. We are also contacting you regularly to make sure you understand the risks of developing or maintaining debt outside your mortgage. This is what the Bank of Canada was warning about and will continue to do so. For those who still do not want to listen they could pay dearly.
In the above article they are noting that because of the high dollar along with a high unemployment rate recovery will be well into 2011. When unemployment stays below 8% we may see things start to change.
Again, one of the best Christmas gifts you can give someone in your circle of Family and Friends is share with them your good fortune of resetting your financing to save you thousands or making the right financial decisions when buying your home.
Lock in Rates (not suggesting locking in at this time)
Prime still at 2.25%
3 yr. 3.55%
4 yr. 3.89%
5 yr 3.99%
All the best!
Suzanne Boyce
blog
Dear Clients,
Sorry, I guess our interview on CHCH was aired one hour earlier than expected for those of you watching for it.
Below is an article about prime staying at .25% (Bank of Canada overnight rate) until June 2010 so no change there.
Inflation is really the only thing that can budge the rate up and the experts are predicting possibly the second half of 2011.
Above attachment is on GDP in major Canadian cities. You will find the charts most interesting but note: the index is momentum based so if there has been a major swing in the factor you will be seeing this in the chart not changes in the oval economic activity so READ CAREFULLY.
I guess Christmas is now looming! I think it is going to be one of the best yet. People are gradually going back to what is most important.
LOVE not CREDIT!
Cheers
Suzanne
LOCK In Rates
3 yr 3.55%
4 yr 4.00%
5 yr 4.09%
Prime 2.25%
We are not recommending locking in at this time
Economic recovery is 'solidly entrenched': BoC
Paul Vieira, Financial Post
OTTAWA -- After months of uncertainty, the economic recovery now appears to be "solidly entrenched," the Bank of Canada said Tuesday, indicating its forecast for growth should unfold as envisaged.
Still, in its latest interest rate announcement, the central bank reiterated, as expected, its conditional commitment to keep its key policy rate at a record low 0.25% until June 2010 as inflation is still not expected to hit its preferred 2% target until the second half of 2011.
Recent data - from retail sales to a stunningly strong jobs report for November -- have painted a mostly cheer picture of the Canadian economy, analysts say, even though third-quarter GDP growth of 0.4% annualized came in well below the central bank's 2% expectation.
Since the central bank's latest economic forecast in October, "global economic developments have been slightly more positive and the global outlook has improved modestly," the bank's governing council said in its statement, adding though that "significant fragilities" remain.
The central bank said the composition of economic growth is unfolding as expected, highlighted by a shift toward stronger domestic demand and less reliance on exports.
"The main drivers and the profile of the projected recovery in Canada remain consistent with the bank's [outlook]," it added. "The bank continues to expect economic growth to become more solidly entrenched over the projection period and inflation to return to the 2% target in the second half of 2011."
According to the central bank's outlook, Canada is expected to grow 3.3% this quarter, followed by expansion of 3% next year and 3.3% in 2011. Predictions for strong growth gained steam late last week when data indicated the Canadian economy added 79,000 jobs in November.
Further, the central bank on Tuesday played down the impact of the stronger dollar, even though it acknowledged it remained a key risk to its forecast, and "could act as a significant further drag" on growth and inflation. The stronger loonie, which has advanced as much as 25% this year against its U.S. counterpart, led to a surge in imports in the third quarter - resulting in net exports acting as a drag on the economy of roughly 5.3 percentage points.
Since the last rate announcement, however, the dollar has on average traded a couple of cents below the central bank's working assumption of a US96¢ loonie.
Most analysts were looking for any change in nuance in the bank's statement - in particular a hint or two that it might move before its conditional pledge to keep rates at a record low until June 2010 given the surge in domestic consumption as households take advantage of record low borrowing costs.
Instead, the central bank reiterated that its target rate of 0.25% "can be expected" to remain intact until the end of the second quarter of next year. The pledge is conditional on inflation hitting the 2% target in the third quarter of 2011, as the bank expects.
The last time the bank raised its key policy rate, to 4.5%, was in July of 2007 - and shortly afterward the first signs of the credit crisis emerged.
Some economists, such as Ryan Brecht of Action Economics, expect the central bank to begin hiking its policy rate, and aggressively, starting in the second half of next year.
In a note released Tuesday morning, Mr. Brecht, the firm's senior North American economist, said he envisaged the Bank of Canada raising its target rate by 175 basis points before December of 2010, for a policy rate of 2%, or "more normal levels." Still, that would be below the 3% level in September of 2008, when Lehman Bros. collapsed, or the 4.5% peak hit more than two years ago.
Financial Post
Suzanne Boyce
