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Notable News of the Week: February 8, 2013

Banks try more up-front pricing – Canadian Mortgage Trend

You’ve probably seen them before: “special” rate offers from banks listed online, in newspapers, on billboards, etc. And while the word “special” sitting next to a number may look good at first, rates of 3.99%+ are anything but. Fortunately, more and more banks are now listing their best mortgage rates up-front. TD, Scotiabank and BMO are just a few of the big banks who are now posting more reasonable rates, with CIBC and National Bank expected to follow.

In a time when mortgage consumers have more self-education options online than ever before, including mortgage rate comparison sites, the banks have no choice but to stop posting artificially high advertised rates and start posting their more competitive options. If mortgage brokers are able to offer buyers rates closer to 2.99% up-front, why would anyone choose to lock-in at 3.99% with their bank? Yes, buyers are often able to rate-match with their lenders, but not offering these rates up-front first can hurt a buyer who doesn’t know this is an option.

First-time buyers are back after 2012 slump in sales – Financial Post

A strong start to 2013 is providing hope that the overheated housing market in Toronto is, in fact, not heading for a crash. “January can be a very volatile month. I’m usually struggling for buyers. But I cannot remember having this much business coming into the new year,” says listing agent Carolyn Griffis of ReMax. Mortgage brokers are also reporting steady numbers of first-time homebuyers looking for pre-approvals, proving that many are tired of waiting for the housing market to cool or crash.

The Toronto Real Estate Board (TREB) reported January’s home sales to be down only 1.3 per cent from last year, while prices jumped by 4.3 per cent. The average selling price of a home in Toronto was $482,648 in January 2013, an increase of almost $20,000 from the $462,655 seen in January 2012. The strong month“suggests that some buyers, who put their decision to purchase on hold last year due to stricter mortgage lending guidelines, are once again becoming active in the market,” said Toronto Real Estate Board president Ann Hannah in a statement.

Disappointing stats on the First-Time Home Buyers’ Plan – Canadian Mortgage Trends

Last week, Canada Revenue Agency (CRA) released new data that included some disappointing statistics about the First-Time Home Buyers’ Plan (HBP). The HBP, which lets qualified first-time homebuyers borrow up to $25,000 tax-free from their RRSP for a down payment, has a repayment structure of 1/15 over 15 years – that means the total amount borrowed is divided by 15 and that amount must be repaid annually for 15 years. While it has long been assumed that as many as 25-35% of participants were not making their annual payments, new data reports that number is actually 47%. That means 47% of participants (almost 1 in 2) of the HBP end up paying income tax on the amount they borrowed.


Where are they this week?

Current Mortgage Rates February 7 2013Mortgage Rate History February 7 2013

A history of weekly 5-year fixed mortgage rates and 5-year variable mortgage rates.

History of Mortgage Rates February 7 2013

Canadian Mortgage Rates Since 2012

Mortgage Rates Since 2012 February 7 2013

The average discounted mortgage rates in Canada in 2013:

Discounted Mortgage Rates February 7 2013