Angela Kroemer Mortgage Professional
1.250.650.4182
Showing posts with label varible. Show all posts
Showing posts with label varible. Show all posts
Friday, December 16, 2011
Interest Rates Dropping?
2011 has certainly been a silly year for Interest Rates.
Before it was the normal to get a varible rate now it is the normal to get a fixed rate.
Just when you think Bank of Canada will raise their rate , it stays the same.
And now, when everyone says the rates will be rising, I get a email to say, stay tuned because the rates will be dropping.
Will everyone drop their rates? I am not sure but I do have a Lender that says they will be dropping their rates.
So for now , it would be very beneficial for you to get on my contact list, so I can send you the Interest Rate updates.
Why pay more for your mortgage when you do not have to.
Email me or phone me to get on my interest rate contact list.
You can always go to my website and sign up there.
http://www.ComoxValleyMortgagesToday.com
Thank you
Angela Kroemer, AMP
Mortgage Professional
1.888.679.0190
akroemer@mortgagegroup.com
www.ComoxValleyMortgagesToday.com
TMG The Mortgage Group Canada Inc.
Monday, October 3, 2011
Fixed Rate or Variable Rate......has the choice become easier?
September 29th 2011
The age old question facing consumers, do I take a fixed rate or variable rate......and a similar dilemma facing mortgage brokers as their clients ask them for advice on which option to take. We all know it depends on the client’s appetite for risk, affordability, cash flow stability, etc. however statistics have shown that taking a short term or variable rate has predominantly, but not always, been cheaper than take a longer fixed rate mortgage.
We maybe in or coming to an interest rate environment when taking a fixed rate or a hybrid mortgage (50/50) may actually be cheaper than staying in a variable rate. Why you ask.....let’s look at the facts as to why this maybe a good time to take a fixed rate or hybrid mortgage.
1. 5 year fixed rates are at the lowest levels in history, we have never been this low.....3.39% are available through many lenders and 2.99% for a 4 year is very attractive.
2. The gap between a prime - 0.40% (2.60%) and 5 year fixed rate (3.39%) is 0.79% and (in some cases even lower), this is down significantly from 3 to 4 months ago when the gap between a 5 year ARM and 5 year fixed rate was as high as 2.00%. If we consider a 4 year fixed rate at 2.99% versus ARM of 2.60% the gap is only 0.49% or two quarter point increases in prime.
3. You can’t predict when to time a conversion from ARM to Fixed rate, especially in a volatile market. Fixed rates have a tendency to move ahead of variable rates....when variable rates begin to rise the fixed rate has already gone up and if you convert you maybe converting at a much higher fixed rate than today’s rates.
No position is complete without looking at the counter arguments’, in other words why a client should consider a variable rate versus fixed rate mortgage. Once again let’s look at the facts.
1. Bank of Canada has indicated it is not looking at raising the overnight anytime soon or at least will hold off until such time as it sees the economy improving
2. There is no indication that inflation is increasing, therefore supports point 1 above.
3. U.S. has no plans to increase rates for the next two years making it more difficult for Canada to raise rates unless the Canadian economy is growing in spite of the U.S. being sluggish
4. Canada is becoming a safe haven for investors’ thus larger demand for Canadian bonds. This demand is keeping bond yields down thus lower fixed rates on mortgages.
Both positions have merit and no one has a crystal ball, however, if we continue to see the gap between fixed rate and ARM rates shrink then the risks of taking a variable rate versus fixed rate increases substantially. The risk being that ARM rates could increase higher than .79% % over the next 18 months to 24 months, therefore over the course of a 5 year term the fixed rate may actually be less costly than the ARM rate. If the gap between ARM and fixed gets is 1% or less, I believe the smart money would go to fixed rate versus ARM. If the gap between ARM rate and fixed rate is between 1% and 1.50% then a 50/50 mortgage maybe the best bet. If the gap between ARM and fixed rate is in the 1.50% to 2.00% range then ARM rate maybe the way to go. Based on the present volatile market conditions it is hard to predict or say what will happen, this volatility, is the biggest wild card and probably the main reason I personally would be taking a fixed rate or 50/50 versus an ARM, a bird in the hand (fixed rate) is better than two in the bush (ARM rate).
John Bordignon
EVP, Strategic Development, Paradigm Quest Inc.
Office: (416) 366-8606 ext 2294
Thank you
Angela Kroemer Mortgage Professional
1.888.679.0190
akroemer@mortgagegroup.com
www.ComoxValleyMortgagesToday.com
TMG The Mortgage Group Canada Inc.
The age old question facing consumers, do I take a fixed rate or variable rate......and a similar dilemma facing mortgage brokers as their clients ask them for advice on which option to take. We all know it depends on the client’s appetite for risk, affordability, cash flow stability, etc. however statistics have shown that taking a short term or variable rate has predominantly, but not always, been cheaper than take a longer fixed rate mortgage.
We maybe in or coming to an interest rate environment when taking a fixed rate or a hybrid mortgage (50/50) may actually be cheaper than staying in a variable rate. Why you ask.....let’s look at the facts as to why this maybe a good time to take a fixed rate or hybrid mortgage.
1. 5 year fixed rates are at the lowest levels in history, we have never been this low.....3.39% are available through many lenders and 2.99% for a 4 year is very attractive.
2. The gap between a prime - 0.40% (2.60%) and 5 year fixed rate (3.39%) is 0.79% and (in some cases even lower), this is down significantly from 3 to 4 months ago when the gap between a 5 year ARM and 5 year fixed rate was as high as 2.00%. If we consider a 4 year fixed rate at 2.99% versus ARM of 2.60% the gap is only 0.49% or two quarter point increases in prime.
3. You can’t predict when to time a conversion from ARM to Fixed rate, especially in a volatile market. Fixed rates have a tendency to move ahead of variable rates....when variable rates begin to rise the fixed rate has already gone up and if you convert you maybe converting at a much higher fixed rate than today’s rates.
No position is complete without looking at the counter arguments’, in other words why a client should consider a variable rate versus fixed rate mortgage. Once again let’s look at the facts.
1. Bank of Canada has indicated it is not looking at raising the overnight anytime soon or at least will hold off until such time as it sees the economy improving
2. There is no indication that inflation is increasing, therefore supports point 1 above.
3. U.S. has no plans to increase rates for the next two years making it more difficult for Canada to raise rates unless the Canadian economy is growing in spite of the U.S. being sluggish
4. Canada is becoming a safe haven for investors’ thus larger demand for Canadian bonds. This demand is keeping bond yields down thus lower fixed rates on mortgages.
Both positions have merit and no one has a crystal ball, however, if we continue to see the gap between fixed rate and ARM rates shrink then the risks of taking a variable rate versus fixed rate increases substantially. The risk being that ARM rates could increase higher than .79% % over the next 18 months to 24 months, therefore over the course of a 5 year term the fixed rate may actually be less costly than the ARM rate. If the gap between ARM and fixed gets is 1% or less, I believe the smart money would go to fixed rate versus ARM. If the gap between ARM rate and fixed rate is between 1% and 1.50% then a 50/50 mortgage maybe the best bet. If the gap between ARM and fixed rate is in the 1.50% to 2.00% range then ARM rate maybe the way to go. Based on the present volatile market conditions it is hard to predict or say what will happen, this volatility, is the biggest wild card and probably the main reason I personally would be taking a fixed rate or 50/50 versus an ARM, a bird in the hand (fixed rate) is better than two in the bush (ARM rate).
| Fixed Rate to ARM Gap * | Primary Product Selection |
| less than 1.00% | 5 year fixed rate |
| 1.00% to 1.50% | 50/50 |
| 1.51% or higher | 5 Year ARM |
| * difference in rate between a 5 year fixed rate and 5 year ARM rate |
EVP, Strategic Development, Paradigm Quest Inc.
Office: (416) 366-8606 ext 2294
Thank you
Angela Kroemer Mortgage Professional
1.888.679.0190
akroemer@mortgagegroup.com
www.ComoxValleyMortgagesToday.com
TMG The Mortgage Group Canada Inc.
Saturday, October 1, 2011
Mortgage Brokers and The Lenders
As mortgage brokers we usually belong to a big firm. Mine is The Mortgage Group Canada Inc. This big firm secures Lenders. We as brokers have a list of lenders we can choose from.
What are Lenders ?
With TMG we have over 50 Lenders to choose from. These Lenders quite simply lend money for mortgages. The Lenders are well established, money lending businesses, with some being banks.
Since these Lenders do not have to hire salespeople to create business, they can offer lower interest rates because of their lower overhead expenses. As brokers we are their sales force and in return we are paid a commission from the Lender. This service is free to clients. (Charges may apply for very bad credit).
How do we choose Lenders for our Clients ?
When a client fills out an application with all information of of what they have (assets), what they owe (liabilities) and what they have coming in (income) we then can get a credit rating with the clients approval. With this credit rating we see the history of the clients credit. The mortgage broker also needs to know their client and what the client wants out of their mortgage. Some like to pay the mortgage off fast, some believe it will go on for 30 years and are happy with lower payments. If you are retiring in 3 years but have a 5 year mortgage term can you afford the last 2 years of payments with only your retiring income? With the most popular mortgage term being 5 years the client and broker have to look beyond the day you get your mortgage but look into the future and see if any life changes will affect the mortgage.
Each Lender has their own programs and policies they operate under. When they post their interest rate they also post a paragraph of what type of clients they are looking for. For example you may not be considered for the Lender of the lowest interest rate if you only have income from self employment, they may see that as an extra risk or if you want to buy a rental property that may be an extra risk and so they would charge a little higher interest rate. If you want a 5 year fixed rate and the Lender only wants to do a 5 year variable then again you would not fit into their program. The reasons are varied from Lender to Lender.
When we have a clients history we go to the Lender that will be the greatest fit for the client. This is where a brokers knowledge of the different Lenders and their client is the key to making the clients experience fast, less stressful and efficient.
As a client it is best to let your broker know of any changes that you can foresee coming up in the next 5 year span of the term of your mortgage. A perfect example of this is :
You want a mortgage but you know that in 3 years your trust account will be released to you and you will pay off the mortgage then. If you and the broker have not discussed this then the broker may put you in a mortgage with no prepayments ---at the end of 3 years you will have penalties to pay out your mortgage. If your broker does know, then they would put you into a 3 year mortgage or a 5 year mortgage that would allow you to pay off your mortgage without penalties.
Any questions, contact me.
Thank you
Angela Kroemer Mortgage Professional
1.888.679.0190
akroemer@mortgagegroup.com
www.comoxvalleymortgagestoday.com
What are Lenders ?
With TMG we have over 50 Lenders to choose from. These Lenders quite simply lend money for mortgages. The Lenders are well established, money lending businesses, with some being banks.
Since these Lenders do not have to hire salespeople to create business, they can offer lower interest rates because of their lower overhead expenses. As brokers we are their sales force and in return we are paid a commission from the Lender. This service is free to clients. (Charges may apply for very bad credit).
How do we choose Lenders for our Clients ?
When a client fills out an application with all information of of what they have (assets), what they owe (liabilities) and what they have coming in (income) we then can get a credit rating with the clients approval. With this credit rating we see the history of the clients credit. The mortgage broker also needs to know their client and what the client wants out of their mortgage. Some like to pay the mortgage off fast, some believe it will go on for 30 years and are happy with lower payments. If you are retiring in 3 years but have a 5 year mortgage term can you afford the last 2 years of payments with only your retiring income? With the most popular mortgage term being 5 years the client and broker have to look beyond the day you get your mortgage but look into the future and see if any life changes will affect the mortgage.
Each Lender has their own programs and policies they operate under. When they post their interest rate they also post a paragraph of what type of clients they are looking for. For example you may not be considered for the Lender of the lowest interest rate if you only have income from self employment, they may see that as an extra risk or if you want to buy a rental property that may be an extra risk and so they would charge a little higher interest rate. If you want a 5 year fixed rate and the Lender only wants to do a 5 year variable then again you would not fit into their program. The reasons are varied from Lender to Lender.
When we have a clients history we go to the Lender that will be the greatest fit for the client. This is where a brokers knowledge of the different Lenders and their client is the key to making the clients experience fast, less stressful and efficient.
As a client it is best to let your broker know of any changes that you can foresee coming up in the next 5 year span of the term of your mortgage. A perfect example of this is :
You want a mortgage but you know that in 3 years your trust account will be released to you and you will pay off the mortgage then. If you and the broker have not discussed this then the broker may put you in a mortgage with no prepayments ---at the end of 3 years you will have penalties to pay out your mortgage. If your broker does know, then they would put you into a 3 year mortgage or a 5 year mortgage that would allow you to pay off your mortgage without penalties.
Any questions, contact me.
Thank you
Angela Kroemer Mortgage Professional
1.888.679.0190
akroemer@mortgagegroup.com
www.comoxvalleymortgagestoday.com
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