Elias Kellendonk, Author at SuperBrokers

Banks Swallowing Penalties to Keep Clients from Brokers

The strategy comes as a retaliation to brokers who are able to offer better mortgage rates than the bank-posted rates.

Old Strategy Sees New Resurgence

A tactic common during the ‘80s and ‘90s is seeing current flare-up as the Big Five Canadian banks compete with independent brokers to retain their mortgage clientele, says a recent post on Mortgage Broker News.ca. Canadian brokers told the agency of banks and even credit unions that are willing to cover penalty fees to keep clients wishing to refinance or close their terms early.

The strategy comes as a retaliation to brokers who are able to offer better mortgage rates than the bank-posted rates.

“Thankfully, we’re seeing it used in a limited number of cases and it represents an unsustainable strategy for the banks,” Jessi Johnson, president of the Verico Jessi Johnson Mortgage Team, told Mortgage Broker News.

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REITs Forecasted to Produce another Year of Good Returns

According to the National Association of Real Estate Investment Trusts (REIT), investors in REITs have enjoyed as much as 28 per cent returns in equity each of the last two years, and globally REIT values are up. The question is, can investors expect that same return this year?

A recovering market provides several assets to REIT investors: more dependable tenants, higher occupancy rates, and better resale property values. However, a recovering market also means, in general, higher borrowing rates.

While economists are changing their prediction tune over the Bank of Canada rates announcement to be made July 19 – meaning fewer are thinking the announcement will declare a rate hike – most are still holding onto the opinion that rates will rise by December.

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45 per cent of Canadians Purchasing Property Solo: TD Poll

Rising Trend – First-Time Homebuyers Purchasing Based on Price over Amenities and shirking the Fundamentals

Results of the 2011 TD Canada Trust First Time Homebuyers Report showed that nearly half of first-time homebuyers will purchase their property alone. These figures, issued Wednesday, indicated that 57 per cent of men and 33 per cent of women will enter into home ownership sans a co-purchaser.

Interestingly, approximately one third of those surveyed also said they were looking for a property with a rental unit from which to generate revenue. The majority of these, 71 per cent, said they would use this income entirely toward paying off their mortgage as soon as possible. Only 14 per cent said they would apply the rental income toward their savings.

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'Playing it Safe' in a Volatile Market

Advice on Keeping your Investment Ducks in a Row amid Turbulent Waters

While the Globe and Mail reports that stocks this week were pummeled in trading, the paper also reported how one of the country’s top investors is keeping it safe amid an apparent “buyer’s strike”.

Frank Mersch, portfolio manager and co-chief investment officer with Front Street Capita, told the Globe that he is keeping liquid 25 per cent of his funds’ assets for buying opportunities he believes are going to come.

Mersch, who manages roughly $400-million in Canadian hedge and equity mutual funds, predicts that a market bottoming out will occur at the end of this month, or early next. He stated that an S&P/TSX composite index level of 12,000 to 12,500 would mark a good time to buy, and that “battered energy and metals stocks” may be a good option to examine at that time.

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Mortgage Rates Down Across the Board

CanEquity Mortgage Sees Rates Drop on all Fixed Terms

Despite rumours and majority opinion forecasting rates destined to rise, CanEquity has seen significant mortgage rate drops, as recently as within the last week.

While the current variable rate mortgage special is up 5 basis points (or 0.05 per cent) to 2.20 per cent as of last Wednesday, all fixed terms – from 25 years to six months – are either down or have seen no increases in as much as the last two years.

The current five-year fixed rate term, the most popular among Canadians, fell 14 basis points last week to 3.60, one of the lowest posted offerings in the country. The 10-year fixed rate also fell, five basis points, to place it at a historically affordable 4.94 per cent.

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Fixed or Variable? Canadians Come Out Even on Recent Poll

A recent poll conducted by CIBC/Harris Decima has relayed an interesting message: though the majority (61 per cent) of Canadians believe rates will be higher next year, they are roughly even on whether they would choose a variable or fixed rate mortgage.

Of those surveyed, 39 per cent said they would opt for fixed while 32 per cent stated they would select variable, leaving a 25 per cent populace undecided.

“The divergent opinions on whether to go fixed or variable underscores what our advisors see every day in their meetings with clients – choosing the right mortgage depends on your personal financial situation,” Colette Delaney, senior VP of mortgages, lending and insurance for CIBC Retail Markets, commented on the poll results. “There’s no single answer for everyone.”

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Loonie Takes a Slide

The Canadian Dollar Sees Biggest Daily Drop in Eight Months

Side by side with a 7 per cent fall in the S&P/TSX index and a roughly 3.7 per cent decrease in oil prices, the Loonie has slid a full 1.5 cents to the U.S. dollar – the largest slump it’s seen in more than half a year – as reported today on the Globe Investor Market Blog. This means that, overall, the Canadian dollar has lost almost 4 per cent of the gain it saw at its peak at April’s end.

Despite this, and the fact that the U.S. coin has recently seen some recovery, the Loonie still stands ahead at a value of $1.02 US at the time of this publication. U.S. spending has reportedly gone up, yet investors are mixed on whether their dollars are safer invested in “the greenback”, in Canadian funds, or in gold.

Other investors say the spike in the U.S. dollar value is not reflective of the current tumultuous state the economy there is still in, and press again that the safest bet is still diversification.

How does Canada’s Prime Rate Compare Globally?

This recession affected countries worldwide; how did their economies adjust prime rate to compensate?

Taking a Look at World Prime Rates

Put simply, prime rate is basically a guideline rate, used by banks and lenders to determine the best rate at which they are comfortable lending to their top clients taking current conditions into consideration. In this country, that rate is determined and announced eight times per fiscal year by the Bank of Canada.

Prime rate changes according to the current tides of the economy. When the cost of living rises and market activity cools, prime rate generally falls, making financing more affordable to attain, and generally stimulating spending. When low rates encourage too much activity, prompting inflated costs and price values, prime rate is generally adjusted higher, discouraging buyers and allowing the market time to cool and readjust.

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Who are Canada's Top Mortgage Lenders?

According to recent CAAMP reports, though 55 per cent of mortgage shoppers will start with mortgage brokers, only 27 per cent will also close with them

While Big Banks Hold onto Mortgage Share, Who do Brokers Prefer Working With?

According to recent CAAMP reports, though 55 per cent of mortgage shoppers will start with mortgage brokers, only 27 per cent will also close with them. The majority of Canadians will still stick with their major banking institution instead of utilizing an online broker, in contrast to buyers in our neighbour south, and even to the U.K. where online mortgage shopping has picked up by 33 per cent over the last year (Greenlight).

Up from the quarter previous, Canadian big banks took a 56.5 per cent chunk of mortgage broker volume last quarter (Davis+Henderson). As per market share, the top mortgage lenders in Canada currently look like this:

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Is a Holiday Cottage Within Your Budget?

What you Need to Consider Before Purchasing your Vacation Home

There is little more appealing than a second property that provides a getaway from your hectic city life; a place to host family and build memories; and an investment from which rental revenue can be generated during the weeks or months you won’t be using it. But before you take on a dream that ends up a costly burden, think over the following steps when researching for the purchase of your home away from home.

How will you Pay for it? Is it better for you to refinance your current mortgage, take out a Home Equity Line of Credit on your current home or apply for a completely separate second mortgage? Discuss your options with a reputable mortgage broker or financial adviser and be sure to pick the option that will see you attain the lowest mortgage rate possible, and pay the least amount of taxes. Before you cash in an RRSP or other investment to come up with a down payment, examine your equity take out options.

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