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.
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 Toronto mortgage 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.