Wednesday, March 11, 2020, Tom Gasparec
 
Hi Valued Client,

What a roller coaster ride it has been in the last few days.  We spent our whole day and night yesterday calling clients to advise them that rates have decreased again from last week with some great savings opportunities.  
Now just a few hours ago we received a notification from a lender that possibly rates could be increasing again within the next few days.
Wow, get your applications in asap, it could save you thousands! 

Record low Rates in the 2% range.  *some conditions apply for high ratio purchases, insurable switches, renewals and refinances. Rates Subject to change, On Approved credit. 

What is a mortgage optimization??

With a half (0.50) percent decrease in your current rate a mortgage optimization will likely make sense, even with a mortgage penalty charged by your existing lender. All or a portion of this penalty can be built into the optimization with no out of pocket expenses required. 

The mortgage optimization can potentially save you several thousands of dollars to tens of thousands of  $$$ dollars depending on your mortgage balance.  


To debt consolidate or not??
 
Swap out your bad debt for good debt.  Any personal debt obligations you might have are costing you several thousands extra per year in interest. 

See the example below of a client carrying $63,000 in personal credit card and loan debt. 
The illustration is very powerful showing the monthly cash flow savings of $1,527.66, that's $18,331.92 per year and $91,659.60 over 5 years which is more then the personal debt owed.   
The power of a debt swap!   

Your mortgage advisor for life,

Tom Gasparec, AMP 
Mortgage Agent
Toll Free: 1 866 492 4024


Monday, March 05, 2020, Tom Gasparec
Hi Valued Client,

                                                             
Here is some great insight from one of our top lenders why the surprise move and change in tone from the Bank of Canada today.  

Also below, see Common Questions from our clients answered regarding the rate decrease.

"At 10am eastern, the Bank of Canada made its second interest rate decision of the year and provided new thoughts on the state of the Canadian economy and the short-term outlook.

Given the emergency actions by the U.S. Federal Reserve yesterday, and the impact of recent stresses on the Canadian economy from the COVID-19 virus and rail blockades, the Bank of Canada’s downward move was not surprising.

To provide context for the Bank’s statement, First National compared today’s pronouncement with the Bank’s previous remarks in January and summarizes the differences
here.


Scott McKenzie
Senior Vice President, Residential Mortgages
"                                                             


Common questions we fielded today from clients
- When will I see my interest decrease? 
 
Answer;  If you are in a variable rate usually lenders will change their rates within the week or early next week.  Each lender has slightly different policies on how they make this change. 
 
-I have a Fixed rate, will my rate decrease by 0.50% with this announcement? 
 
Answer; No, the Bank of Canada Prime rate directly only affects the adjustable and variable rates.
 
HOWEVER; fixed rates are tied directly to bond yields and investor sentiment. Fixed rates & the associated bond yield movements are a forward looking indicators, meaning they predict central bank rate decision expectations & economic forecasts for the future.
In the recent past weeks fixed rates have decreased based on expectations from the US Fed and Bank of Canada announcements that occurred yesterday and today along with a negative outlook for the economy. 
 
Based on the current revised expectations for the economy going forward it is very likely that we will see future rate decreases for Fixed rates in the coming weeks.


Your mortgage advisor for life,

Tom Gasparec, AMP 
Mortgage Agent
Toll Free: 1 866 492 4024
Saturday, February 28, 2020, Tom Gasparec
Hi Valued Client,

                                                             
Finance Minister Bill Morneau announced changes to the method of calculation for the benchmark rate used to determine the minimum qualifying rate (stress test) for insured mortgages.

Instead of the Bank of Canada 5-Year Benchmark Posted Rate, the new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications contract rate, plus 2%. These rates will be published on the Bank of Canada website weekly. These changes will come into effect on April 6, 2020

The current method uses Posted Rates at Canada's big banks which are often much higher than rates being offered in the mortgage market and that gap has widened recently.  You can easily find a fixed-rate insured mortgage for far less than three per cent, for example, even though four of Canada's five biggest banks have a posted rate of 5.19 per cent.
Currently the average insured 5yr Fixed term mortgage is 2.89%.   

Today a borrower would need to qualify at 5.19%. Under the new rules they would be stress tested at 4.89%.
This is a difference of 30 basis points.  It will lower the borrower’s overall debt ratio by about 1% leaving room to qualify for a higher purchase price.

Using an example of a borrower with a yearly income of $100,000 with 10 per cent down payment, today they would qualify for a home value at approximately $511,000. 
Effective April 6, 2020 the same borrower will be able to afford approximately $526,000. This is a $15,000 increase in purchasing power.

This will certainly boost buying power, it's psychologically very positive. 

We would recommend to clients that are currently shopping for a home attempt to purchase their dream home before April 6th date. We expect to see a potential 3 to 6% jump in property prices from the increased demand this will generate.  
Supply is very low, and we are already seeing most of our clients in multiple offer situations in desirable areas.

On a related note, the regulator OFSI is also considering similar changes to the conventional mortgage rate stress test requirements. 

Your mortgage advisor for life,

Tom Gasparec, AMP 
Mortgage Agent
Toll Free: 1 866 492 4024