Mortgages In Canada - Canadian Mortgages Inc

Latest News

• Mortgage Renewal Tips
  showOdiogoReadNowButton ("126024", "Mortgage Renewal Tips", "82", 290, 55); InitialOdiogoReadNowFrame ("126024", "49", 290, 0); Has your mortgage term expired, or are you seeking to refinance your home for other reasons?Here are four tips to make the process easier for you:1. If your bank does not want to renew your mortgage, it must inform you of this fact at least 21 days before the term expires. You are not obliged to renew with the same bank. Your mortgage broker can help you shop for a new lender who offers better terms.2. Your last mortgage may have been a package deal, where you received a discount for adding home, life, and disability insurance or a line of credit from the same lender or one of its affiliates to your mortgage. You may even have transferred your investment portfolio to make your mortgage payments cheaper. Now that you are shopping around for a new mortgage, remember these add-ons will not necessarily be renewed or transferred. You probably need to reapply. A package deal may not benefit you the most. You may be able to lessen your costs by choosing your mortgage, insurance and investments à la carte. If your lender pressurizes you into buying a financial package as a condition of accepting your mortgage application, it violates federal law. This pressure tactic is known as coercive tied selling. Report the illegal pressure to the Federal Consumer Agency of Canada at 1-866-461-FCAC (3222).3. If your bank wants to renew your mortgage because you are a good customer, then it must send you a statement at least 21 days before the term expires. Check that all these items are on your statement:Total amountTermAmortization periodTotal paymentsPortion of payments that are interestYour annual interest rate as opposed to the real annual interest rate (APR), which includes administrative feesWhen interest charges beginPayment amount and due datesOptional services (e.g., insurance) you accepted and what the penalties will be if you cancel themPenalties if you pay off your mortgage before it maturesCharges applied if you defaultA description of collateral you are using to secure the mortgageAn explanation of how your payments apply first to the interest, and then the principal Broker feesDischarge feesThese items should be the same as they were on your original mortgage agreement, unless your banker notified you in writing at least 30 days after the changes took effect.  Usually, the bank includes a mortgage renewal application form with the statement.  4.      A good rule of thumb is to contact your mortgage broker and start shopping for the best deal 4 months before your term expires.  Planning early helps you avoid an automatic mortgage renewal that is too expensive. 
• Should You Follow Your Banker's Advice to Lock In?
  showOdiogoReadNowButton ("126024", "Should You Follow Your Banker's Advice to Lock In?", "82", 290, 55); InitialOdiogoReadNowFrame ("126024", "49", 290, 0); Bay Street economists met last Thursday to discuss these indicators of Canada's financial state:1) The Canadian Real Estate Association reports resale home prices decreased 6.2% last month, in comparison to September 2007. The average price is now $315,461, compared with $336,321 last year. 2) Statistics Canada reported factory sales dropped 3.7% in August because of a decreased demand for Canadian commodities in the U.S.A.The economists are urging the Bank of Canada to reduce the prime interest rate by 0.25% next Tuesday, October 21. The economists want the Government of Canada to use deficit spending to avert a recession. Dr. Sherry Cooper is the chief economist for BMO Capital Markets. She said, "The boom has turned to bust." Scotiabank's economists agree with her, predicting 0.5% growth for Canada's economy this year and shrinkage of 0.2% in 2009.However, this is not nearly as deep a recession as is expected in other countries hit by the American mortgage meltdown. The C.D. Howe Institute's Monetary Policy Council suggests "a government guarantee of interbank lending" would also bolster Canada's economy. (The government already started this process by buying $5 billion worth of mortgage securities from Canadian banks today.) Canadian banks are urging home buyers to lock in their variable mortgage rates, but this is probably not in your own best interest, because the 5-year closed rate at the Big 5 banks is now 7.20%.Consider that your bank may be urging you to lock in because about one-fifth of the variable mortgages the banks negotiated recently are now unprofitable. Banks offered a 0.6 percentage point discount on variable mortgages up until 2 weeks ago. Today, you'll pay 1 percentage point above the prime rate. So, if you are lucky enough to have a 3.35% variable rate mortgage, why jump to a 5.79% closed mortgage?In most cases, you will be better off keeping the variable rate until its term expires. Remember, most banks did not pass along the full 0.5 basis point interest savings to you last week, when the Bank of Canada dropped its rate. Banks are in business to make a profit, not to nurture and protect you.
• Banks Propose Two Solutions for Credit Crisis
  showOdiogoReadNowButton ("126024", "Banks Propose Two Solutions for Credit Crisis", "81", 290, 55); InitialOdiogoReadNowFrame ("126024", "49", 290, 0); At the beginning of the month, Mark Carney (Governor of the Bank of Canada) held a conference call with the leaders of The Big 5 Canadian banks (RBC, TD, Scotiabank, CIBC, and BMO). The Big 5 are headquartered in Toronto, so their concerns strongly reflect the Toronto mortgage market. They discussed what solutions Canadian Finance Minister Jim Flaherty should present this weekend in Washington, when he meets with the other G7 finance ministers to discuss how to minimize the impact of the ongoing U.S. credit crisis on world markets.There are two promising Canadian proposals on the table: 1. Increase the deposit limit guaranteed by the Canada Deposit Insurance Corporation (CDIC) from its current $100,000 to $250,000 to reassure depositors and make them more comfortable with leaving their money at the banks.2. Make the Canada Mortgage and Housing Corporation (CMHC) a term lending facility.Let's explore item 2 further. You probably already recognize CMHC as one of two Canadian agencies that offers mortgage default insurance. (The other is Genworth Financial.) CMHC guarantees mortgages where the applicant has only a 5% down payment. These 'weak' mortgage applicants account for only 24% of the current Canadian market, or $190 billion. The Big 5 want CMHC to substantially increase the amount of its guarantees by extending them to many other properties. Canadian bankers are experiencing problems borrowing international money to lend to Canadian consumers this week.Short-term international loans are extremely expensive because financiers are wary of getting involved with 'iffy' North Americans who may not pay them back. The Canadian bankers' strategy is to obtain cheaper funding by packaging together more of their mortgages for CMHC to absorb - not just those with minimal down payments. CMHC would give the banks securities in return. CMHC already sells securities as government guaranteed mortgage bonds to investors through the Canada Housing Trust.The banks want a bond sale and repurchase agreement with CMHC called a term repo. The banks hope to use the securities as collateral for short-term loans obtained through international financiers. If Canadian banks can obtain international money at a reasonable interest rate, they can lend it to you, the Canadian consumer, at lower interest than is presently available.(Today's prime rate is 4.50%.) You can use the low interest loan for crucial costs associated with buying your new home, like repairs, furniture, and moving expenses
• Canadian Bankers Grumble but Carney Stands Firm
  showOdiogoReadNowButton ("126024", "Bankers Grumble but Carney Stands Firm", "80", 290, 55); InitialOdiogoReadNowFrame ("126024", "49", 290, 0); "The sky is not falling," said Bank of Canada Governor Mark Carney yesterday, as he and Finance Minister Jim Flaherty introduced a "backstop measure" to guarantee amounts Canadian banks borrow from foreign sources through the Canadian Lenders Assurance Facility. Mr. Carney emphasized that, although the Canadian banking system is already quite sound and in no danger of collapse, the move will keep Canada competitive with other countries that already offer the same guarantee. He said the guarantee will make it easier for the average Canadian "to obtain a mortgage and car loan at a reasonable rate of interest". Some bankers are disgruntled that the Canadian federal government will be making a profit up to 1.85 percentage points from the guarantee. The better the bank's credit rating, the lower the risk of default, and hence, the lower the rate of interest -- the same formula that applies to Canadian loan applicants now applies to the lenders.Canadian bankers muttered over the high profit of the Feds. "We don't need this," a spokesman from Toronto- Dominion Bank said. Peter Aceto, CEO of ING Direct, said, "Of the various options that we have to cost-effectively fund our business, this is not something we would probably be interested in." Canadian Western Bank's CEO, Larry Pollock, said, "If this plan had allowed the banks liquidity at a lower cost, then that lower cost would have spilled through to general borrowing clients."Yesterday, Canadian banks auctioned off $7 billion in secured mortgages for a five-year term to CMHC, an arm of the Canadian government that will make $464 million in profit from the purchase. Two weeks ago, Finance Minister Flaherty raised deposit insurance at banks through the Canada Deposit Insurance Corp. to $100,000, far less than the banks wanted. Mr. Carney told reports yesterday that no further measures are necessary to help Canadian banks, because the tremendous bail-outs in other countries are efforts to bring their banking up to Canadian standards. Canadian banks do not need subsidies. It's important to place the bankers' complaints in the context of their 2007 profits: A record $19.5 billion.As Canadian consumers pay the banks mortgage interest, so now the bankers must pay Canadian taxpayers for using a government guarantee to make them more attractive to foreign lenders. Canadian banks have been making a 13% to 15% return on their lending for many years. The government's profit of 1.85 percentage points is reasonable by comparison.
• $7 Billion Mortgage Auction Starts Thursday
  showOdiogoReadNowButton ("126024", "$7 Billion Mortgage Auction Starts Thursday", "79", 290, 55); InitialOdiogoReadNowFrame ("126024", "49", 290, 0); The first $5 billion round of government mortgage purchases from Canadian banks through the Canada Mortgage and Housing Corporation (CMHC) was very successful, so tomorrow there will be another $7 billion mortgage auction. Thirty mortgage lenders are eligible to offer mortgages for sale to the government. The aim of the auction is to take old mortgages off the banks' books and give them a new infusion of cash to lend to Canadian consumers. The Canadian federal government originally planned to buy up $25 billion in mortgages altogether, but is now under pressure from the financial community to increase purchases to $200 billion.Finance Minister Flaherty told reporters the first round of purchases have freed up credit somewhat for consumers, so you may find it a little easier to get a mortgage loan or line of credit this week.Ian de Verteuil is an analyst for BMO Nesbitt Burns. He is satisfied that the mortgage auction will improve the availability of mortgages in the short term. However, Mr. Verteuil wants a review of CMHC's powers, to prevent it from becoming too Americanized. He is concerned that we could be headed towards a government bail-out of lenders on the scale of the U.S. Fannie Mae and Freddie Mac rescue plan.Mr. Verteuil writes, "Mortgages should be provided to consumers on the basis of affordability and the ability to repay, not simply because a government-engineered scheme provides cheap, excess funding." Since Canadian mortgage applicants are already scrutinized and required to produce identification, proof of assets, job verification, and a down payment, his fears seem groundless. CMHC has not announced that it will slacken the requirements for obtaining a mortgage.

Website: http://www.canadianmortgagesinc.ca
Date Submitted: 22-May-2008