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TD, RBC End 2.99% Mortgage Deals Early

After a crazy month fielding calls about rates and competitive rates from the major banks, they have put a hault on them.  Although the product that were attached with them were limited and badly disclosed to consumers, there are still amazing rates to be had in the mortgage market.  The problem with banks is that they can choose to give one rate today and a different rate tomorrow.  All I can suggest be informed and do your homework and ask questions when shopping for a mortgage.  Its not always about rate its about having a mortgage plan that suits your needs and someone that can show you ways to save money on your mortgage long term!  If your interested in learning more about how to save money on your mortgage , no tricks no catch good ole information for you from me  http://bit.ly/AfD2RR    Here’s the article below;

After briefly offering record-low rates of less than 3% on some of its mortgages in response to its rivals, Canada’s two biggest banks have pulled back their offers prematurely.

Toronto-Dominion Bank, Canada’s second-largest bank, raised its special four-year closed fixed rate mortgage 40 basis points to 3.39%, effective Wednesday, while also introducing a special five-year closed fixed rate mortgage at 4.04%.

The bank also hiked its five-year closed mortgage 10 basis points to 5.24%.

TD had said it would offer the special rates until Feb. 29.

The moves put TD back in line with Royal Bank of Canada, which made the same rate decisions on Monday, coming into effect Wednesday.

RBC had also initially planned to keep its special rates available until Feb. 29

 

The only difference is RBC already had the special five-year closed fixed rate mortgage product, which it increased 10 basis points to 4.04%.

RBC had first cut its rate to 2.99% in January in response to a similar cut from BMO.

Matt Gierasimczuk, a spokesman with RBC, said the bank had to end its special prematurely because of rising funding costs.

“Our long-term funding costs have gone up considerably due to global economic concerns and, while we have held off in passing on these rate changes to our clients, it is now necessary for us to increase this mortgage rate,” he said in an interview with Bloomberg News on Monday.

With household debt-to-income ratios at at historic highs and still on the rise, the Bank of Canada has repeatedly voiced its concerns over the past year that Canadians are living beyond their means.

“We have expressed on numerous occasions our concerns about rising household indebtedness,” senior deputy governor Tiff Macklem said in a question-and-answer session following a speech in Toronto Tuesday. “The simple fact is that consumers are consuming more than they’re earning.”

With files from Reuters and Bloomberg News

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Bank of Canada hold key rate steady

Bank of Canada Keeps Key Rate Steady

As expected by most economists, the Bank of Canada announced earlier today that it is keeping its key policy rate steady.

In its statement the Bank noted that it expects “growth in Canada will be slow through mid-2012 before picking up as the global economic environment improves, uncertainty dissipates and confidence increases.”  The Bank also projected today that the Canadian economy “will expand by 2.1 per cent in 2011, 1.9 per cent in 2012, and 2.9 per cent in 2013.”

The prime rate at most lenders will stay at 3.00%, which means those with variable-rate mortgages will still enjoy relatively low rates.  A new variable-rate mortgage can in many cases be obtained by qualified borrowers at Prime minus 0.20% – 0.40%  Home equity lines of credit and variable-rate credit cards are also typically linked to the prime rate.  The pricing for new fixed-rate mortgages is influenced by trends in the bond markets, rather than the central bank’s key policy rate.

The Bank’s next rate decision is scheduled for December 6.

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Mortgage Rates – How to protect yourself when they increase – Video message!

Heres a video I personally did on how to take a proative approach to protect and prepare yourself with rising interest rates in the future and save thousands of dollars! Click below to view video

Inflation Hedge Strategy - Learn to protect yourself from rising rates

Lisa Alentejano

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Increase to Variable Rate Mortgages

Why could I get Prime minus .90 last week and today it is Prime minus .25?– A great question, says the Mortgage Brokers Association of BC (MBABC), especially when fixed interest mortgage rates are remaining the same.  The quick answer?  As with many things, it all boils down to money.

Over the last couple of months, banks and other lenders have been offering historically low variable interest rates to qualified homebuyers in an effort to attract new clients and mortgage business.  In the short term, lenders have been prepared to accept these low profit margins with the knowledge that, as the prime rate inevitably rises, so too will their profit on variable mortgages – a similar ‘loss leader’ tactic used by retailers to get consumers into their door.

“However”, says Geoff Parkin, MBABC’s president, “the recent announcement by Bank of Canada governor, Mark Carney has changed the mortgage lending landscape.”   Carney stated that, because of poor performing global markets and continuing economic uncertainty, the benchmark interest rate would remain unchanged.  The long-term outlook indicates continuing low fixed interest rates with no significant increases to the Prime rate.  “In a nutshell”, says Parkin, “the bank’s theory of anticipating rising profits on variable rates was proven wrong.  They’ve had to quickly respond to this situation by reducing the variable rate discount in order to gain back profit.”

What does this mean for consumers who have variable rate mortgages?  Much of the same, says Parkin.  “We continue to see low fixed rates and the variable rate is under 3.0%.  There may still be value in going variable over fixed, but because consumers all have different financial situations and mortgage needs, we recommend they obtain expert financial advice from their MBABC mortgage broker.”

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Condo for the studious kid?

Summer is drawing to a close and if the student in your household is studying in Toronto, they may be moving back into residences or private rental accommodation.

However, some parents are choosing to buy a place for their offspring, and perhaps some friends, to live in for the duration of their studies. While it may sound like a great investment, your financial planner will be getting you to ask some tough questions.

Ask yourself: “Can we afford it?” says Carol Bezaire, vice-president, tax and estate planning at MacKenzie Financial in Toronto, who reccomends planning ahead by asking: “‘What are we going to do with this property if our child doesn’t go to school or drops out?’ Down the road if the child decides they want to stay in the place, ‘What kind of arrangement with the child are we going to have?’ ”

Ms. Bezaire recommends getting legal and tax advice when drawing up an agreement between you and your child. If you charge your child rent, they can write it off as a tax credit. However, you will need to record the rent as income on your return and you will be liable for tax on any capital gain when you sell the property. If space will be rented to non-family members, Ms. Bezaire says, you must get tax advice on operating a business rather than a personal arrangement.

The type of housing stock available may also affect the rent-versusbuy decision.

“As a market investment, condos have definitely grown exponentially. In Q2, we had 9,445 condos sold,” says Pauline Lierman, senior research analyst, Urbanation in Toronto. A lot of that is due to the fact that students have a desire to be in the city, but there is a shift away from the houses that are broken down into units. “Families are moving back in and buying them and converting them back into singlefamily units, so you’re getting areas where there isn’t as much supply of the traditional type of student-ghetto housing.”

Some parents – particularly from overseas – have been planning ahead.

“Some projects have been very successful in their marketing to forward-thinking families,” says George Carras, president, RealNet Canada. “They may consider that, ‘My child is much younger, we like Canada and we’d like them to come to school in Canada. So let’s just invest in the condo as possible accommodation.'”

Mr. Carras says such purchases tend to be focused around University of Toronto’s and George Brown’s main downtown campuses.

“You can start to see some of the development acquisitions and interests taking place further north,” Mr. Carras says. “For Seneca, [there’s interest in] some of the growth that’s taken place in and around the Sheppard corridor. You’re within a reasonable distance to the school but you’re also accessible to public transit.”

While your child studies, many new and resale condos will come up for sale in the GTA. Mr. Carras and Ms. Lierman both say continued population growth, coupled with a decline in single-family home construction, means there will likely be decent demand should you decide to sell the condo when your child graduates.

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The Mortgage GameWith rates predicted to rise, should you lock in, or take a risk and how much should first timers spend?

With anticipated interest rate increases on the horizon, many homeowners are wondering whether to lock debt such as mortgages and secured lines of credit into a fixed-rate mortgage or stay variable. Even some who are mortgage free are concerned with how rate increases will impact secured lines of credit, the financing of vacation homes and recreational property.

First-time buyers may be particularly concerned with entering the national capital’s expensive real estate market.

What can you afford?

As a first time home buyer, it’s essential to figure out what you can afford. A quick rule of thumb is that your household expenses should not add up to more than 40 per cent of your pre-tax household income. Household expenses include mortgage payments, property taxes, condo fees, utility and heating costs, and any payments on other loans such as car loans, credit card debt and lines of credit.

Probably the first step should be to get a copy of your credit history from Equifax Canada and/or the credit bureau. As this is what lenders will look at, it’s important to review its accuracy.

Then do a household budget, list your assets and liabilities and meet with a bank or mortgage broker to get pre-approved for a mortgage. Try the monthly payments on for size. Let’s assume that your current rent is $1,000 and your anticipated payment as a homeowner is $2,350 for principal, interest, taxes, hydro, etc. Try putting aside the extra $1,350 immediately. Not only will this help you save some extra money, but it will get you in the habit of allocating this level of payment every month. Consider the maintenance costs as well, from normal upkeep to potentially larger expenses like a new roof or furnace.

It’s important to find out how much you can afford before falling in love with a house.

Start saving before you start shopping — the larger the down payment, the lower the financing costs. Although it’s not always possible for first-time home buyers, try to come up with at least a 20-per-cent down payment. Any down payments below this level must be insured with Canada Mortgage and Housing Corporation (CMHC) or Genworth Financial — another expense to factor in.

To assist with your down payment, consider using the Home Buyer’s Plan, which allows you to withdraw up to $25,000 from your RRSP for the purchase of a qualifying home.

Work with a real estate agent familiar with the area you would like to live in, an experienced home inspector and a real estate lawyer to help draft an offer and ensure that title is transferred properly.

Mortgage options

A recent survey indicated that more than 60 per cent of Canadians expect rates to rise over the next 12 months. With this in mind, here are some mortgage strategies to consider.

Fixed rate: If the prospect of rate increases is causing you significant concern, then perhaps you should consider locking in all or some of your debt. With the inflated home equity line of credit rates that consumers have been charged (prime plus 0.5 to one per cent instead of the traditional prime), it’s not that big a jump to a five-year fixed rate, perhaps as little as one per cent more.

If your fixed-rate mortgage is renewing in 2011 and you are interested in another fixed-rate mortgage, it may be worthwhile negotiating with your lender to close out your current mortgage and move into the new lower rate mortgage without penalty. As a strategy to pay off the mortgage sooner, consider increasing the payment and utilize weekly or accelerated bi-weekly payment schedules.

If you would like some level of security but don’t want a fixed rate on all your debt, consider a blend where a portion is at a fixed rate and the balance at a variable rate.

Variable rate: There are many studies that show that despite its volatility, a variable-rate mortgage tends to save more interest in the long term.

Variable-rate mortgages are best for consumers who are financially stable and can financially and emotionally handle the day-to-day fluctuations. One strategy is to benchmark your variable rate payment to that of a five-year, fixed-rate mortgage. Not only will you apply thousands of dollars against the principal and shorten the mortgage term, you will also build a higher potential payment into your budget.

Here are other tips for a variable-rate mortgage:

• Ask for a variable-rate mortgage at below prime. You might even be able to get prime minus 0.75 per cent.

• Negotiate a better rate on your home equity line of credit. Try to get the prime rate or prime plus 0.5 per cent, as opposed to the current prime plus one per cent that you are probably paying.

• Consider moving all of your debt to a combination of these two options.

For consumers who like the variable-rate mortgage option but are concerned about rate increases, ask your financial institution to give you a 120-day rate guarantee at their best discounted five-year rate. Keep the five-year, fixed-rate guarantee as insurance if rates increase significantly and renew it every 120 days until you feel rates have stabilized.

The windsor star

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Bank of canada – holds key rate – steady eddie…..

As expected today Bank of Canada is holding the key rate steady..so for all you variable rate mortgage holders, your probably giving a sigh of relief as you can still take advantage for a couple more months with a low interest rate and no change to your payment, or you could contact me, to introduce you to the Inflation Hedge Strategy which when implemented, will protect yourself against the increase of interest rates and allows me to monitor your rates for you.  Hope for the best, plan for the worst.

Here are some of the comments from the Bank of Canada announcement today;

Parsing through the comments of Mark Carney, Bank of Canada governor, there are definite signs that the central bank is taking a firmer stance on plans to remove monetary stimulus sooner rather than later.

Here’s some highlights from the bank’s July statement:

  • The bank is now saying “some of the considerable monetary policy stimulus currently in place will be withdrawn” (emphasis ours) compared with “eventually withdrawn” in the last statement
  • Economy now forecast to grow 2.8% in 2011, 2.6% in 2012, 2.1% in 2013
  • Down slightly from April forecast of 2.9% growth in 2011
  • Forecasts for 2012 and 2013 remain unchanged
  • Headline inflation is expected to stay north of 3% due mostly to “temporary factors” including significantly higher energy and food prices
  • Core inflation is “slightly” higher than anticipated, owing in part to “persistent strength in the prices of some services”
  • Core CPI to remain around 2%
  • Total inflation expected to return to 2% target in middle of 2012
  • Economic expansion proceeding “largely” as projected
  • Canadian growth still expected to re-accelerate in the second half of 2011
  • “Growth in household spending is now projected to be slightly firmer, reflecting higher household income” relative to April projections
  • Bank forecasts “assumes authorities are able to contain the ongoing European sovereign debt crisis, although there are clear risks around this outcome”

Here’s what analysts are saying about the bank’s comments:

Avery Shenfeld, chief economist, CIBC World Markets

  • “The troubles abroad and challenges to net exports kept the bank from hiking as early as today”
  • “Signs of better growth in the U.S. and Canada in the second half would clearly be enough to tip the bank into hiking, and we should have enough of that evidence on hand by October”

Michael Gregory, senior economist, BMO Capital Markets

  • “Rate hikes don’t appear imminent (read: not likely in September), reflecting a downgraded and riskier near-term outlook”
  • “We are sticking to our call for October and December rate hikes this year”
  • “The bank is betting that the inflation profile won’t make tightening more of a lay up move; we’re somewhat more skeptical”

Bank of Canada next meet September 12, 2011.