This morning I spent some time not only having a good breakfast, learning a few interesting points from CMHC and their research. More geared towards the Fraser Valley.
Here's some interesting points that I was able to quickly write down. They are in point form and some may just seem random. I tried to write down what I beleived were the most important!
-Fraser Valley market is in a balanced market, while Chilliwack is in a buyers market
-Vancouver average house price is $1.182m while the Fraser Valley is at $623k.
-With the twinning of the Port Mann more people are to settle in the Fraser Valley. Easier access to Vancouver and surrounding areas which will keep the Fraser Valley, more so Surrey and Langley as a hot spot
-House prices are predicted to go up 5% in 2011 and 3% in 2012 in the Fraser Valley
-Rates are to remain favourable
-CMHC predicts the variable to have a very modest increase of maybe up to .50% in 2011 and 2012
-$123B in housing starts are registered
-Inter provincial population growth is expected to be about 8-9000 people. Which international is expected to be around 50-55,000 for 2011-2012. In the Fraser Valley approximately 11,000 of those will come while the others spread around the GVRD. Surrey is still expecting about 1,000 people a month, as it is right now, to come.
-Business bankruptcies do not have huge numbers like they did in the 90's which is a great sign
-The population age between 65-74 years old is growing fast and more demand for smaller homes will be needed
-Full time employment is down. Abbotsford's unemployment was one of the highest recently at just over 10%, while in the last month it has come down
And here's something that I really didn't know about in regards to your CMHC insured mortgage if you are making lump sum payments. You can actually ask for that money back from the lender in one lump sum or over a period of time. The returned amount has to be the lesser of the original amount or 90% of the homes value.
Thursday, June 23, 2011
Tuesday, June 7, 2011
Why the banks are ran solely as a business
People say to me a lot 'oh I'm ok, I don't need your services, I've been dealing with my bank for 30+ years. They'll do what I need'
I hear this often and I have one good story that hits a little too close to me and some past clients.
I know of an older dear couple that the wife had just passed away and the husband needed to get out a $30k unsecured line of credit. Not that he needed the money. It was that all his investments were tied into GIC's (which is not good)
His bank, with which he's had a relationship for 30+ years, turned to him and said "sorry the max we can do without securing against your home is $20k" This wasn't enough for him. A funeral now a days is pretty darn expensive.
So he complained a little, told them he had more than enough in his GIC's to cover it etc.
They let him leave saying we'll look into doing something and will call you back in a couple days.
Finally they did and this is what they did for him. 2 line of credits of $15k each. One at Prime +.50% and one at Prime +3.5%. Secured against his GIC's.
They would NOT give him a full $30k, with a good rate, unsecured. I think this is wrong as he's been such a huge supporter of this bank for so many years.
The moral of this story is, no matter how long you've been with your financial institution, it does not necessarily matter. Not to say this is the case all the time, I just hear about it a lot. Using an independent whomever mortgage, insurance, investment, adviser is always the way to go as we are unbiased and do not use just one lenders products.
Remember the banks are in it to make a profit. This is their sole drive.
I hear this often and I have one good story that hits a little too close to me and some past clients.
I know of an older dear couple that the wife had just passed away and the husband needed to get out a $30k unsecured line of credit. Not that he needed the money. It was that all his investments were tied into GIC's (which is not good)
His bank, with which he's had a relationship for 30+ years, turned to him and said "sorry the max we can do without securing against your home is $20k" This wasn't enough for him. A funeral now a days is pretty darn expensive.
So he complained a little, told them he had more than enough in his GIC's to cover it etc.
They let him leave saying we'll look into doing something and will call you back in a couple days.
Finally they did and this is what they did for him. 2 line of credits of $15k each. One at Prime +.50% and one at Prime +3.5%. Secured against his GIC's.
They would NOT give him a full $30k, with a good rate, unsecured. I think this is wrong as he's been such a huge supporter of this bank for so many years.
The moral of this story is, no matter how long you've been with your financial institution, it does not necessarily matter. Not to say this is the case all the time, I just hear about it a lot. Using an independent whomever mortgage, insurance, investment, adviser is always the way to go as we are unbiased and do not use just one lenders products.
Remember the banks are in it to make a profit. This is their sole drive.
Wednesday, June 1, 2011
Great quote - Follow up to, 'not about lowest rate'
I was sent this quote today and it ties in so perfectly to previous posts about how it's not about the lowest rate out there, it's about the best product that suites your needs and not the lenders needs.
Here's the most recent post http://gitersos.blogspot.com/2011/05/its-not-always-about-lowest-rate-follow.html
"It is unwise to pay too much, but it is worse to pay too little.
When you pay too much, you lose a little money...that is all.
When you pay too little you sometimes lose everything, because the thing you bought was incapable of doing the things it was bought to do.
The common law of business balance prohibits paying a little and getting a lot...it cannot be done.
If you deal with the lowest bidder it is well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
There is hardly anything in the world that some man cannot make a little worse and sell for a little cheaper, and the people who consider price only, are this man's lawful prey"
JOHN RUSKIN (1819-1900)
Here's the most recent post http://gitersos.blogspot.com/2011/05/its-not-always-about-lowest-rate-follow.html
"It is unwise to pay too much, but it is worse to pay too little.
When you pay too much, you lose a little money...that is all.
When you pay too little you sometimes lose everything, because the thing you bought was incapable of doing the things it was bought to do.
The common law of business balance prohibits paying a little and getting a lot...it cannot be done.
If you deal with the lowest bidder it is well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
There is hardly anything in the world that some man cannot make a little worse and sell for a little cheaper, and the people who consider price only, are this man's lawful prey"
JOHN RUSKIN (1819-1900)
Wednesday, May 25, 2011
Variable rate discounts may not be decreasing
About a week ago I had talked about lenders trying to decrease the discount off of prime.
One major lender, one of the largest mortgage lenders in Canada, had tried hoping that others would follow suite.
Well it didn't happen, or hasn't happened as of yet. Some of the lenders that moved slightly are back to where they were just prior.
I believe it was this one lenders kick at the can to try and slow down the variable business as for the lenders they're not huge money makers as a fixed rate is. Currently they are way offside with their variable discount and I can only imagine that they will soon be back to normal.
One major lender, one of the largest mortgage lenders in Canada, had tried hoping that others would follow suite.
Well it didn't happen, or hasn't happened as of yet. Some of the lenders that moved slightly are back to where they were just prior.
I believe it was this one lenders kick at the can to try and slow down the variable business as for the lenders they're not huge money makers as a fixed rate is. Currently they are way offside with their variable discount and I can only imagine that they will soon be back to normal.
Tuesday, May 17, 2011
Deposits on a home purchase
When you purchase a property you will need to have a certain amount set aside for subject removal that will go towards your down payment on completion.
This money, whether it be $10k or up to $100k+, depending on the value of the home being purchased, has to be provided at the time of subject removal. This can be within a week or two of writing an offer and the offer being accepted.
What you need to know is that you have to come up with this money. Lenders do not generally lend you this money.
You should have the discussion about the deposit with your Realtor as early as writing the offer so you can determine what an amount is appropriate and attainable.
This money, whether it be $10k or up to $100k+, depending on the value of the home being purchased, has to be provided at the time of subject removal. This can be within a week or two of writing an offer and the offer being accepted.
What you need to know is that you have to come up with this money. Lenders do not generally lend you this money.
You should have the discussion about the deposit with your Realtor as early as writing the offer so you can determine what an amount is appropriate and attainable.
Wednesday, May 11, 2011
CAAMP Spring Survey - Interesting Facts
This is the fact sheet for the CAAMP Spring survey that was just released. There's some good information.
There is currently $855 billion in mortgages on principal residences and $215 billion in Home Equity Lines of Credit (HELOC)
• Individuals with HELOCs only have an average 65 per cent equity in their homes
• HELOC prevalence is highest among middle age homeowners
• Equity takeouts amount to $26 billion annually, with most funds used for renovations ($9.4 billion), followed by investments ($5.0 billion)
• The average down payment for a home purchased in the last 12 months was 30%, up from 26% for homes purchased two years ago
• Among all borrowers, 63 per cent have fixed rate mortgages, 30 per cent have variable rate mortgages and 6 per cent have a combination of both
• Less than a quarter (22 per cent) of all borrowers have amortization periods longer than 25 years
• 34 per cent of those who most recently renewed or renegotiated their mortgages did so before their term expired. The average time to pay off a mortgage is 7.4 years less than the original amortization
• 200,000 homeowners paid off their mortgages in the last 12 months
• The average mortgage interest rate discount is 1.44 per cent for those who chose a five year fixed rate mortgage in the last twelve months with the average mortgage rate being 4.04%
• Of those who renewed their mortgages in the last twelve months, 65 per cent are paying lower rates than previously
• 66 per cent of all mortgage borrowers can tolerate a monthly mortgage increase of $300 or more
• Among borrowers who took out a new mortgage in the last 12 months, 27% obtained it from a mortgage broker. Overall mortgage broker share stands at 23%
• Canadian appetite for home buying has returned to pre-recession levels, following a slide over the past three surveys. Almost 60 per cent respondents thought that now was a good time to buy
• Optimism is returning to the market with almost half (46 per cent) of those questioned saying that they expect prices to rise
Here's the final report
There is currently $855 billion in mortgages on principal residences and $215 billion in Home Equity Lines of Credit (HELOC)
• Individuals with HELOCs only have an average 65 per cent equity in their homes
• HELOC prevalence is highest among middle age homeowners
• Equity takeouts amount to $26 billion annually, with most funds used for renovations ($9.4 billion), followed by investments ($5.0 billion)
• The average down payment for a home purchased in the last 12 months was 30%, up from 26% for homes purchased two years ago
• Among all borrowers, 63 per cent have fixed rate mortgages, 30 per cent have variable rate mortgages and 6 per cent have a combination of both
• Less than a quarter (22 per cent) of all borrowers have amortization periods longer than 25 years
• 34 per cent of those who most recently renewed or renegotiated their mortgages did so before their term expired. The average time to pay off a mortgage is 7.4 years less than the original amortization
• 200,000 homeowners paid off their mortgages in the last 12 months
• The average mortgage interest rate discount is 1.44 per cent for those who chose a five year fixed rate mortgage in the last twelve months with the average mortgage rate being 4.04%
• Of those who renewed their mortgages in the last twelve months, 65 per cent are paying lower rates than previously
• 66 per cent of all mortgage borrowers can tolerate a monthly mortgage increase of $300 or more
• Among borrowers who took out a new mortgage in the last 12 months, 27% obtained it from a mortgage broker. Overall mortgage broker share stands at 23%
• Canadian appetite for home buying has returned to pre-recession levels, following a slide over the past three surveys. Almost 60 per cent respondents thought that now was a good time to buy
• Optimism is returning to the market with almost half (46 per cent) of those questioned saying that they expect prices to rise
Here's the final report
Wednesday, May 4, 2011
It's NOT always about the lowest rate - Follow up
To start off. I am in no way putting down any one lender or financial institution. All I'm doing is simply giving you the facts so you, the public, are more cognisant of what truly lies behind a mortgage.
This is some of the not so good that lie behind one lending institutes great low rate mortgage. That is, if you can even obtain that great low rate.
• Interest rate premiums will apply when certain debt servicing requirements are not met and if your credit score isn't as high as they want. (with other institutes I have access to, the rate you see is the rate you get)
• No transfers of your mortgage to a new home without a penalty. The lender will only do a refinance meaning the client must pay their own legal fees. (this is not good. You should be able to take your mortgage with you and do a blend of rates with no penalty. They show you a great rate, however, you may end up paying much more in the end. If you took the rate slightly higher with this option then you would end up way ahead)
• Registers all mortgages as Collateral Mortgages. (See here why these are not good http://gitersos.blogspot.com/2011/04/collateral-mortgages.html)
• Lender does not collect property taxes on the client’s behalf.(Not necessarily a bad thing, however, I would highly recommend this option as making small payments to build up a property tax payment is much easier than waiting until the end of the year to pay one large lump sum)
• Pre-payment privileges are 20% on the anniversary date ONLY. (Most other lenders allow you to prepay up to 15-25% with as many payments a year as needed with a minimum payment of $100 a time. This option is much better as you are continuously paying your mortgage down which means that you are pay less interest overall)
• If the mortgage amount is less than 65% of the homes value then they may be able to waive an appraisal. An appraisal comes with a cost of $250(most lenders I deal with will not need an appraisal. The only time an appraisal is a must is when you put 20% or more down, and it's a rental property or your going under a self employed, stated income program.
• Pre approvals/rate holds are only 90 days not the typical 120
• The branch will do a call and try and sell extra products i.e. life insurance prior to funding
• Clients have to go to the branch and set up an account prior to closing adding extra steps to the process and taking up your time
• The lender may request you to pay out and close revolving credit product(s) i.e credit cards. I've seen an instance where a young client had to CLOSE her only two revolving credit cards with a mere $2,500 limit/balance on each. The credit bureau will be impacted negatively when you close accounts. And then she'll need to re-apply for a new credit card to keep her credit in check, which will then take more points off her score and take up time to do so.
I've also had another client with a line of credit and NO balance and the lender wanted it closed.
This is some of the not so good that lie behind one lending institutes great low rate mortgage. That is, if you can even obtain that great low rate.
• Interest rate premiums will apply when certain debt servicing requirements are not met and if your credit score isn't as high as they want. (with other institutes I have access to, the rate you see is the rate you get)
• No transfers of your mortgage to a new home without a penalty. The lender will only do a refinance meaning the client must pay their own legal fees. (this is not good. You should be able to take your mortgage with you and do a blend of rates with no penalty. They show you a great rate, however, you may end up paying much more in the end. If you took the rate slightly higher with this option then you would end up way ahead)
• Registers all mortgages as Collateral Mortgages. (See here why these are not good http://gitersos.blogspot.com/2011/04/collateral-mortgages.html)
• Lender does not collect property taxes on the client’s behalf.(Not necessarily a bad thing, however, I would highly recommend this option as making small payments to build up a property tax payment is much easier than waiting until the end of the year to pay one large lump sum)
• Pre-payment privileges are 20% on the anniversary date ONLY. (Most other lenders allow you to prepay up to 15-25% with as many payments a year as needed with a minimum payment of $100 a time. This option is much better as you are continuously paying your mortgage down which means that you are pay less interest overall)
• If the mortgage amount is less than 65% of the homes value then they may be able to waive an appraisal. An appraisal comes with a cost of $250(most lenders I deal with will not need an appraisal. The only time an appraisal is a must is when you put 20% or more down, and it's a rental property or your going under a self employed, stated income program.
• Pre approvals/rate holds are only 90 days not the typical 120
• The branch will do a call and try and sell extra products i.e. life insurance prior to funding
• Clients have to go to the branch and set up an account prior to closing adding extra steps to the process and taking up your time
• The lender may request you to pay out and close revolving credit product(s) i.e credit cards. I've seen an instance where a young client had to CLOSE her only two revolving credit cards with a mere $2,500 limit/balance on each. The credit bureau will be impacted negatively when you close accounts. And then she'll need to re-apply for a new credit card to keep her credit in check, which will then take more points off her score and take up time to do so.
I've also had another client with a line of credit and NO balance and the lender wanted it closed.
Subscribe to:
Posts (Atom)