The major mortgage news from last week was the Bank of Canada’s interest rate announcement that saw the overnight rate remain at 1.0%. There wasn’t much movement from 5-year fixed mortgage rates last week as 5-year Government of Canada bond yields finished only a few basis points higher than the previous week. There was a huge rise in variable rates that occurred in the middle of the month, but it looks like they’ve dropped and levelled off over the past two weeks. Even though the spread between variable and fixed mortgages have been shrinking lately, it still might be an opportune time to choose a variable mortgage.
So far, the only thing frightening on Halloween is the lingering global economic landscape, particularly in the USA. Mortgage rates remain at relative historical lows.
Halloween is approaching (boo!) and we got things started with a bee-themed fete over at BuzzBuzzHome this week. Everyone dressed as themselves, but acted a little out of character as the refreshments were passed around. Fun times had by all.
Here it is, folks, the week in Tweets!
Haha! RT @HarrietPierce: RT @HannahLisaGreen: Research has shown 1 in 5 of us will be HIDING from trick or treaters next week to SAVE MONEY.
[This is not a charity: save at the expense of the children]
syladurantaye Steve Ladurantaye
Just realized my house closes in less than 90 days, and best rate my bank will offer is 4.04 on a five year fixed… hmm. @RateHub_Canada
[RateHub here to save the day!]
SavelSells Mark Savel
How to win friends and tweet others #booksiwanttowrite
toronto_life Toronto Life Daily
Justin Bieber cops a feel of Selena Gomez at a Winnipeg Jets game – bit.ly/vtvBUq
[And a million girls’ hearts are broken]
TalkCondo Amit & Roy Bhandari
Do you want first access and best prices to Toronto’s top condo’s? Join our Insider’s Club: goo.gl/vy4YK
[Better than VVIP]
Epic! RT @marcyberg: How was the @BuzzBuzzHome meet up?
[We tend to agree!]
Check it… @BrianPersaud and @RateHub_Canada bartending – ow.ly/i/jUlX #ThirstyTuesday
But what do you need to know?
It’s time to put away the shorts and sandals and pull out the coats and scarves. Warm weather is fleeting as the temperature drops each day. This time of year is when cottage country starts emptying faster than ice cream cups at fat camp. While the busy period for cottage sales tend to fall in the spring, smart buyers will wait until the autumn season. Why? Because cottage sellers are willing to sell for less, rather than endure the maintenance and carrying costs of holding the property throughout the winter.
It’s obvious from the “we are the 99% protesters” that we are in difficult economic times. So the thought of purchasing a cottage by yourself, combined with the necessary upkeep can be a tall financial order, especially for individuals already paying one mortgage.
The solution: Split the cost with a friend.
The advantages of purchasing a cottage with a partner are obvious, particularly where affordability is concerned. Having a second set of funding reduces your financial burden significantly, plus there’s the added benefit of a second person to aid in property maintenance and keeping the beer fridge well stocked.
The number one concern that should be on your mind is liability and ownership. Undertaking a joint agreement should be taken very seriously. Remember, you’re splitting the mortgage costs with another person and that person has the ability to impact your credit rating. Once all the names are signed on the mortgage, all parties are held accountable for satisfying the mortgage payments. Such arrangements are best handled by a lawyer. Let’s take a look at the two types of legal co-ownership.
Who will emerge as the Ratehub Best Mortgage Campaign Tournament winner? Our last Bank Battle Series which focused on mortgage calculators saw ING Direct take the crown, but this time around they were eliminated in the semi-finals by a very game TD Bank. TD also defeated BMO Bank of Montreal in the first round to help get themselves to our Finals. As for our other finalist Scotiabank, they defeated PC Financial and RBC to get to the ultimate showdown for mortgage campaign supremacy. A lot is at stake (in our little webspace) and we think this will be fiercest battle yet. What’s on the line? Only the one trillion dollar industry that represents outstanding residential mortgage credit in Canada. With 5.7 million home owners in Canada and many more on the way, it’s important for financial lending institutions to make their mark and be heard. This competition has been measuring which bank mortgage marketing campaign has been the most effective. It’s the final showdown; let’s take a look at the final competitors.
In the red corner: Wearing red, by way of Halifax, Nova Scotia, is Scotiabank
In the blue corner: Wearing green with white trim, fighting out of Toronto, Ontario, is TD Bank.
TD’s Marketing Campaign:
The Right Mortgage
New addition: TD Bank South Asian TV Spot
Scotianbank’s Marketing Campaign:
“Flip the coin mortgage plan”
“Diversify your mortgage”
“How Will Changes to Canada’s Mortgage Rules Impact You”
New Addition: “Borrow to get Ahead”
Today, the Bank of Canada announced that the key interest rate shall remain at 1.0%.
The core inflation rate is at 2.2%, which is above the Bank of Canada’s target of 2.0%. Typically when inflation hits above target, most investors expect the Bank of Canada to eventually start hiking the overnight rate. However, we are in a different economic climate, where most of the world’s financial super-powers are struggling. The resolve to stall rates as mentioned by economists such as Emanuella Enanajor of CIBC World Markets a few days ago said, “With the external risks still elevated, the BoC won’t be moved to hike rates.” C.D. Howe Institute’s Monetary Policy Council (MPC), a financial advisory to policy makers, recommended that the Bank of Canada maintain it’s 1.0% overnight rate until April 2012, followed by an increase of 1.5% by October 2012.
According to a survey by Reuters, most economists expect a rate hike to be delayed until the third quarter of 2012 due to wavering global economic landscapes, particularly in the U.S. and the European Union.
With the overnight rate remaining the same for the ninth consecutive time, we normally would expect variable rates to maintain their current course. However, anticipating the long-term stagnation in rates in an uneasy economic climate, lenders are reducing the discounts on variable rates in relation to the prime rate. This means that variable rates are moving in an upward direction even though market interest rates remain unchanged. This is uncommon but a reflection of the unpredictable market.
If you are considering a variable mortgage rate, now is the time to lock in before attractive discounts are no longer available. Use Ratehub to compare mortgage rates in Canada to find the best discounted variable interest rate today.
Ratehub is a free service for consumers to compare Canadian mortgage rates. Our rates are sourced from all the major banks and mortgage brokerages in the nation. Ratehub also lets you connect with mortgage brokers and specialists to discuss the mortgage rates that are posted on our comparison page.
We select only the best mortgage professionals to handle your mortgage queries. One such broker is Drew Donaldson of Safebridge Financial Group based out of Toronto. Drew supplies some of the best mortgage rates in Ontario in addition to his wide knowledge base.
Name: Drew Donaldson
Brokerage: Safebridge Financial Group
MEET OUR MORTGAGE SPECIALIST
Q. What did you do before you were in the mortgage business?
I bartended while playing Division I football at the University of Central Michigan. Working late hours and constantly networking was what I did best.
Q. Fill in the blank. ‘If I weren’t in the mortgage business, I’d be____________.’
Building various businesses and creating new markets as a serial entrepreneur.
Q. What first got you interested in the mortgage business and how long have you been in it?
I have been in the mortgage business for 5 years now. I entered the industry because many of my close friends in the US were in the business and doing very well. Many of whom still run mortgage companies in Scottsdale Arizona, Royal Oak Michigan, and Virginia Beach. We flew down to visit my best man in Scottsdale last April to see how their mortgage company operated and take new ideas and concepts back to the Canadian marketplace.
It is the semi-finals of the Ratehub Bank Battle Series where we search for the best mortgage campaign. We’re almost in the finals, where Scotiabank patiently waits for its challenger to emerge from either Canadian powerhouse bank, TD Bank or from the new kid on the block, ING Direct. What the judges are looking for is how well these two banks target the mortgage market with TV commercials.
According to Canadian mortgage statistics, the current mortgage market contains 1 trillion CAD in residential debt, where the average mortgage size is close to $150,000. That means the mortgage industry is big business, especially in Canada which has maintained a healthy real estate environment for growth. According to CAAMP, mortgage credit should increase another 8% this year. Let’s take a look at what ING Direct and TD are doing to attract those mortgage customers.
In the red corner: Wearing orange, ING Direct
In the blue corner: Wearing green, TD Bank.
TD Marketing Videos:
ING Direct’s Marketing Videos:
Here we are in the second round of our Bank Battle Series searching for the best mortgage campaign. So far, round 1 saw razor thin victories and we expect the competition to get tougher this time around. The competitors still left in our tournament are Scotiabank, RBC, ING Direct, and TD. What we are looking for is the ability to effectively target prospective mortgage consumers to gain market share. We’re using available TV commercials and videos from the internet to judge each participant.
Banks are the number one source for new mortgages and according to CAAMP that number is almost at 50% since 2010. With the mortgage industry expecting to grow further this year, it’s a necessary move for lenders to get as much of the market pie as they can, using the best marketing strategy possible. Let’s take a look at today’s contenders who share a similar background.
In the red corner: Scotiabank, out of Toronto, Ontario by way of Halifax, Nova Scotia.
In the blue corner: The Royal Bank of Canada (RBC), also out of Toronto, Ontario and founded in Halifax, Nova Scotia.
Scotianbank’s Marketing Theme(s):
“Flip the coin mortgage plan”
“Diversify your mortgage”
“How Will Changes to Canada’s Mortgage Rules Impact You”
RBC’s Marketing Theme:
“New to Canada”
In honour of Small Business Week, we’ve decided to help nurture the minds of our community and give away one book every day for the duration of the week. That’s right, five days, five books – FREE!
All you have to do is Tweet, Facebook, or Comment (on this blog) your all-time favourite business book (a reason would be great too!), and we will pick a winner at random each day!
Good luck, and may the (literary) force be with you!
VARIABLE MORTGAGE RATES
Oh my, how variable mortgage rates have changed. Take a look at our Mortgage Rate History graph below and you will see that the best discounted 5-year variable rate has risen 65 basis points inside of a month. Considering the key interest rate hasn’t budged for eight consecutive announcements, the rise in variable rates is a little surprising. We can credit this to poor global economic growth, especially in the United States and Europe. Most variable rates are hovering around prime. It’s not likely that the Bank of Canada will lower the key interest rate anytime soon. Most industry insiders are predicting flat movement to moderate increases over the next year. The spread between variable and fixed rates is closing fast!
FIXED MORTGAGE RATES
Last week 5-year Government of Canada bond yields grew and we saw major banks hike their discounted 5-year fixed rates such as CIBC, RBC, and BMO Bank of Montreal.