Interest rates are low, and from the looks of things, should remain stable well into 2012. If you’re currently paying out the nose because you’re locked into a fixed-rate mortgage, now could be a good time to break your mortgage and refinance your rate. Unfortunately, trying to break a mortgage before your term is up can be a nightmare experience. The penalties for bailing early can be high, so don’t be rash with your decision. Consult with a mortgage broker before you dive in head first. Continue reading
Tag Archives: Fixed Mortgage
CAAMP Releases Highlights From Fall 2011 Consumer and Industry Surveys
The focus of these surveys was to gather Canadians’ opinions of the mortgage industry. The report includes specific questions on experiences with their mortgage professional as well as information and feedback from industry members.
The survey results were presented by Maritz Research at Mortgage Forum 2011 in Toronto.
Click here to review the entire report.
CAAMP Report Finds Canadian Consumers Believe They Have Too Much Debt
The seventh annual State of the Residential Mortgage MarketĀ report, conducted by CAAMP (the Canadian Association of Accredited Mortgage Professionals) has found that consumers are worried about debt. The report, which included survey data from 2,000 Canadians (half of which were homeowners), asked participants to what extent they agree with various statements based on a 10-point scale: a response of 10 indicated complete agreement. The statement, “as a whole, Canadians have too much debt,” received the the highest degree of agreement, scoring an average rating of 7.98 out of 10.
While debt remains a major cause of concern, there is a widespread opinion that Canadian real estate is a good long term investment. Consumers still feel that a mortgage is a “good debt” and very few regret taking on the size of mortgage that they did. However, there is still a very big perception that Canadian homeowners are largely unprepared for the financial obligations of purchasing a home. Continue reading
Rolling the Dice, Fixed vs. ARM ( Adjustable Rate Mortgage)
Rolling the dice is perfectly acceptable when you’re in a casino in Las Vegas. I know from first-hand experience that playing “craps” in Vegas can be a rush. For those of you who may not be familiar with the rules or finer points of “craps”, and would like to give it a try next time you’re in Vegas, DO NOT ATTEMPT TO PLAY UNLESS YOU UNDERSTAND ALL RULES!Ā Now that you’ve rolled your eyes and are thinking thanks for enlightening me Bozic, the fact is many do play without understanding all the rules. Why? Because that’s where the action is and where all the noise is coming from. The noise draws you to the table, and when you get there you think I want some of this. You find yourself placing bets, not even understanding what your odd’s are. You might even start mimicking the bets being placed by other gamblers at the “craps” table. You look down at the table and you’ve got all your bets covered. Come on shooter, make this a magical role. Then you hear the most dreaded words at a “craps” table, seven out…seven out. For those uninitiated that means all your chips are gone! That’s when you start thinking if you only had played blackjack instead you could have played for much longer. But that’s gambling and it’s a part of the experience. That’s okay for Vegas but maybe not so much so when choosing between a fixed rate mortgage and an ARM.
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The reality is that many borrowers are rolling the dice today. I’m setting aside those borrowers that can withstand the rate variances, and have the stomach to ride out an ARM for 60 months. I just wonder about borrowers who truly don’t understand the rules of the game. I wonder if some borrowers are placing mortgage bets based on what their neighbor or co-worker did with respect to their mortgages. Maybe borrowers are being influenced today by advertising. The 50/50 mortgage is getting a lot of airplay today, and that product was designed for those that wanted to play it safe or safer. Maybe it’s all about today and they’ll worry about tomorrow, whenever tomorrow comes. Maybe all of the above plays a part in the decision-making process but the biggest influence is the brokers personal bias.
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All I know is that at some point in the not too distant future rates are going up. The warnings and predictions have been there for all to see for some time now. For example, Bank of Canada Governor Mark Carney recently said the following, “Low interest rates today do not necessarily mean low rates tomorrow,” warned Carney. “Risk reversals, when they happen, can be fierce; the greater the complacency, the more brutal the reckoning.” There’s no ambiguity there, and I’m thinking he might be one of those people “in the know”. The way I look at it any five year mortgage, under 4%, is free money. It’s also 60 months of peace of mind for the borrower. I can’t help but think if borrower’s get squeezed by a rate hike, and then they ask you how did this happen, irrespective of the facts all they will hear is, seven out…seven out.
Until next time
Cheers
Boris Bozic.
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