Tuesday Rate Update

General Matthew Hines 31 Mar

 

Canada 5-Year Bond Yield Overview

 

The Canadian 5 year bond yields markets  0.12% to  1.71 The spread (based on our standard 5 year published rate of 3.19%) is BELOW the comfort zone at 1.48 ( http://www.investing.com/rates-bonds/canada-5-year-bond-yield )

The rate of return on your bond, can be read through a yield curve, If the increase in bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise.  The comfort zone is between 1.90 and 2.10.

Our Standard 5 Year Fixed Rate is 3.19% but rates as low as 2.99% are available to qualified clients. 

Our Standard 5 Year Variable Fixed Rate is P-.55 (2.45%), but rates as low as P-.65 are available to suitable clients.

All rates are subject to change without notice and borrowers must meet suitability and Lender qualifying criteria. 

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Matthew S Hines is a Toronto Mortgage Broker with Dominion Lending Centres Edge Financial. (#10710). Matthew is a First Time Home Buyer Specialist and has been helping aspiring home owners “Achieve The Dream” of home ownership since 2005. Matthew can be contaced at mhines@dominionlending.ca | www.matthewhines.ca 

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Canada 5-Year Bond Yield Overview

General Matthew Hines 18 Mar

Via Investing.com

Canada 5-Year Bond Yield Overview

 

The Canadian 5 year bond yields markets  -0.010 to  1.63 The spread (based on our standard 5 year published rate of 3.19%) is BELOW the comfort zone at 1.56 http://www.investing.com/rates-bonds/canada-5-year-bond-yield ) 

The rate of return on your bond, can be read through a yield curve, If the increase in bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise.  The comfort zone is between 1.90 and 2.10

 

Our Standard 5 Year Fixed Rate is 3.19% but rates as low as 3.04% are avaialble to qualified clients. 

Our Standard 5 Year Variable Fixed Rate is P-.50 (2.50%), but rates as low as P-.65 are available to suitable clients.

All rates are subject to change without notice and borrowers must meet suitability and Lender qualifying criteria. 

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Matthew S Hines is a Toronto Mortgage Broker with Dominion Lending Centres Edge Financial. (#10710). Matthew is a First Time Home Buyer Specialist and has been helping aspiring home owners “Achieve The Dream” of home ownership since 2005. Matthew can be contaced at mhines@dominionlending.ca | www.matthewhines.ca

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BoC Qualifying Rate Hits Record Low

General Matthew Hines 10 Mar

BoC Qualifying Rate Hits Record Low

Courtesy: http://www.ratespy.com/boc-qualifying-rate-hits-record-low/#.Ux3dtVyuw3Z 

This week the Bank of Canada’s “benchmark rate,” a measure of 5-year posted mortgage rates, dropped to an all-time low of 4.99% (from 5.24%).

The benchmark rate is an important number used by lenders to qualify you for a mortgage (i.e., calculate how big of a mortgage you can afford).

It’s also used as the basis for:

•   Cashback mortgage rates

•   Rate guarantees – This applies predominantly to the retail (non-broker) channel where many lenders still price off the posted rate, and offer the lower of the rates available at the time of approval or closing.

•   Calculations of mortgage prepayment charges (aka. early breakage penalties)

•   Capped variable rates (i.e., variable rates that have an upper limit)

The benchmark qualification rate applies to people getting mortgages with either a variable rate or a term less than five years, at a federally regulated lender–like a bank. (The method differs for people getting fixed mortgages with a 5-year term or longer. For those folks, lenders still qualify them using the actual rate of their mortgage.)

5yr-Benchmark-Rate

Here’s an example of how the new 4.99% qualifying rate affects things.

Prior to this week’s change, you could go into a bank and get a $300,000 variable rate mortgage with roughly $66,450 of income. (Based on a 5.24% qualifying rate, a 25-year amortization, a maximum 39% gross debt service ratio, 1% property taxes and no other debts.)

Now, with the qualifying rate falling to 4.99% you need to earn just $65,245, about 2% or $1,200 less.

Put another way, variable and 1- to 4-year fixed borrowers can now qualify for roughly a 2% bigger mortgage.

More about the Benchmark Rate

•   You can find the current Benchmark rate here (look for data series V121764)

•   It is calculated as a mode average of 5-year posted rates advertised by the six biggest banks (BMO, CIBC, National Bank, RBC, Scotiabank and TD) at noon Eastern time each Wednesday.

•   ”Mode average” refers to the number repeated most often. For example, suppose these are the 5-year posted rates for the Big 6 banks: 4.85%, 5.09%, 5.09%, 5.24%, 5.34%, 5.49%. The mode average (and hence the Benchmark qualifying rate) would be 5.09%.

•   The Benchmark rate is posted on the Bank of Canada’s website every Thursday by approximately noon Eastern time.

Factoid

•   Prior to last week, Scotiabank was the only Big 6 bank with a 4.99% posted 5-year fixed. It dropped to 4.99% in March 2012–two years ahead of competitors.

•   Why didn’t other lenders drop their 5-year posted rates sooner? One reason, according to a banker we spoke with, was that “Lenders were very resistant to dropping (the 5-year) posted rate because of what it might do to their pipeline” (e.g., it would have forced some lenders–who price rate guarantees off posted rates–to offer lower rates to people at the time of closing, in cases where rates fell after those people had applied).

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Matthew S Hines is a Toronto Mortgage Broker with Dominion Lending Centres Edge Financial. (#10710). Matthew is a First Time Home Buyer Specialist and has been helping aspiring home owners “Achieve The Dream” of home ownership since 2005. Matthew can be contaced at mhines@dominionlending.ca | www.matthewhines.ca

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Monday Morning Inspiration

General Matthew Hines 3 Mar

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Matthew S Hines is a Toronto Mortgage Broker with Dominion Lending Centres Edge Financial. (#10710). Matthew is a First Time Home Buyer Specialist and has been helping aspiring home owners “Achieve The Dream” of home ownership since 2005. Matthew can be contaced at mhines@dominionlending.ca

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