Category Archives: Mortgage Types

How Much Would an Interest Rate Increase Hurt Your Budget?

According to a recent study by the Bank of Montreal, four in ten Canadians would feel the pinch if best rate mortgages saw a two percent interest rate increase. The study, which was compiled by Leger Marketing, found that 43 percent of Canadian homeowners believe an interest rate increase would either hamper their ability to pay their mortgage or leave them on rocky financial footing.

The study also found that one out of every five Canadians surveyed felt that a two percent increase would hurt their ability to make their mortgage, while 23 percent were unsure how a hike would affect them. Just over half, 57 percent of respondents felt that they could still afford their home if interest rates were to increase (the survey was completed online with a national sample of 150 Canadians over the age of 18). Continue reading →

What Will the Budget Bring?

According to a report in the Globe and Mail, next week’s highly anticipated federal budget should only contain “modest” spending reductions and little to no intervention in the housing market. Finance Minister Jim Flaherty delivered these and other comments outside of a volunteer firefighter station in Ottawa last Thursday. During the announcement, Mr. Flaherty stated that he would like to see if the market could “correct itself,” rather than force new regulations into place.

Flaherty’s response comes after Canadian banks requested Ottawa to institue mortgage insurance regulations in order to avoid what many are foreseeing as a major housing crash. The nation’s largest banks have been calling for the government to either lower the maximum amortization period for insured mortgages or raise the required minimum down payment amount for best rate mortgages.

Continue reading →

Draft Guidelines: Residential Mortgage Underwriting Practices and Procedures

More stringent mortgage qualifications are on the way. On Tuesday, the Office of the Superintendent of Financial Institutions in Canada released draft recommendations that would impact Canada’s banks and other federally regulated lenders.

The 18 page document contained a slew of information, the majority of which make complete sense. However, there’s still great cause for concern in the financial sphere. According to this document, the OSFI is proposing a swift implementation that could shake the system off its foundations. One reputable mortgage source described the OSFI’s recommendations as a “policy-initiated free-fall”.

While we encourage home hunters to review the entire document (available via this link), here’s what best rate mortgage hunters need to know. Continue reading →

Changes Coming for Mortgage Penalties

One of the easiest ways to ensure you’re getting the best mortgage rate around is to renegotiate your financing terms when interest rates are low. Which is great… except for one small problem: penalties. Banks are notorious for slapping borrowers with hefty penalties, especially those who are looking to wiggle their way out of a long-term fixed rate deal.

It used to be that borrowers could anticipate a penalty charge that amounted to approximately three months’ worth of interest at their current rate. Today, most lenders charge a penalty that is based on three factors:

  1. The current and past interest rates
  2. The outstanding balance
  3. The number of months left in the mortgage term

This is knowns as the Mortgage Rate Differential (IRD). Unfortunately for homeowners in search of a best rate mortgage, the IRD is now significantly higher than in the past thanks to rock-bottom interest rates. Continue reading →

Harper Government Makes Moves to Protect Consumers

The Harper government announced Sunday that it would be moving forward with several measures to help Canadian consumers achieve greater control over their own finances.

In a release posted to the Department of Finance Canada website, the Honourable Ted Menzies, Minster of State (Finances) and Shelly Glover, Parliamentary Secretary to the Minister of Finance, announced that measures would be taken to ban unsolicited credit card cheques, and that a shorter cheque hold period would be instituted later this year. It is believed that these changes will provide Canadian’s with more timely access to their own money. A new Mortgage Code was also announced. Continue reading →