Someone hit the snooze button on our Monthly Mortgage Update, so I’m here to wake it up! Mortgages, you see, do not have to be boring or even be of interest to only mortgage brokers and real estate agents. At least, this is the challenge I am facing, and I accept.
First off, check out the new look. How could you not take advice from a person with those smart spectacles?
Now that I’ve established my credibility (okay, check out my LinkedIn profile), let’s get down to business. Here are the highlights broken down into easily digestible sub-sections for your ease and pleasure.
Fixed Mortgage Rates are on the Rise
The big story this month is that fixed mortgage rates are on the rise. In fact, 5-year fixed discounted mortgage rates on our site have gone from around 2.70 per cent at the beginning of June to almost 3.20 per cent – that’s a jump of 0.50 per cent in just one month! We haven’t seen rates that high on our site since the end of 2011.
If you want to know how this happened, I’ll try to break it down for you. Essentially, our neighbours down south decided to scale back on pumping new money into their own economy, which signalled a rebounding market and a rise in interest rates. With the economy in recovery mode, big returns can be had by investing in alternatives, and bond prices tend to fall so bond yields rise. Given that we follow the lead of the U.S. on just about everything, Canadian bond prices dropped and yields went up. Banks issue bonds to fund mortgages, so as their costs of funding them went up, so did mortgage rates.
Still following? If you want more detailed information on events leading up to the latest mortgage rate increases, check out this Toronto Star article. And if you want more information on how mortgage rate movements take place in general, check out our REM Online article.
Finally, with fixed mortgage rates on the rise, a case can be made again for variable rates, as made in this article by The Globe and Mail.
Mortgage Volumes are Slowing but Housing is Looking Up
We’ve been seeing the tighter mortgage rules introduced last year affect the market with a slowdown in new mortgage originations. Combined with the government and media warnings on household debt overload, it seems that Canadians are finally borrowing less.
Rob Carrick over at The Globe and Mail says “Canadians get the message on saving more” and Rob McLister at Canadian Mortgage Trends gives a rundown on the latest bank earnings, which follow the storyline.
Meanwhile, after months of bad news in the real estate market, new figures showed some improvement in both sales and prices. Many market spectators are still painting a cautionary tale but I found this statement from Urbanation raised some interesting points and a fresh perspective.
It’s important to look at different sources when evaluating the market, and I hope you will find this multi-perspective summary useful.
Dominion Lending Centres Buys The Mortgage Centre
Dominion Lending Centres (DLC) purchased The Mortgage Centre last month, marking CIBC’s full exit from the broker channel and DLC’s bid for market share leadership. You will notice The Mortgage Centre offices continue to operate as an independent brand on our site and elsewhere.
I’ll wrap up our new Monthly Mortgage Updates with some company updates and news.
Check out our just-launched sister site ClosingCosts.ca to calculate your home closing costs, compare quotes on home inspectors and real estate lawyers and get the rundown on everything you can expect after signing that Purchase Agreement. Right now we are just in Ontario, but we will soon be expanding to other provinces.
2013 Mortgage Infographic
Did you see our latest infographic? We mined the data from CMHC’s 2013 Mortgage Consumer Survey and CAAMP’s Change in the Canadian Mortgage Market to share the good, the bad and the ugly things happening in Canada’s mortgage market.
CMP Top Mortgage Brokers
Last week we ran a series on Canadian Mortgage Professional (CMP) Magazine’s Top Mortgage Brokers in Alberta with five questions for the top five brokers in the province. Check it out on our blog!
Finally, after years of failed attempts, we finally claimed ownership of the @ratehub Twitter handle (we dropped the “_Canada”). If you’re not already, follow us!
Kerri-Lynn (KL) is the Chief Marketing Officer at RateHub.ca. Her mortgage recaps can be found monthly on our blog.