In my last post I wrote about Brexit, and over the summer I went to the UK. On my trip I met and spoke with a range of people, some horrified by the outcome and hoping the government will come back to voters with the results of what Brexit negotiations really will mean for the UK and seek another vote, others who made gobs of money after the results, and still others firmly happy with the results and looking forward to independence. I hear some farmers though are a little uncertain the UK government will keep up the same subsidies they have been enjoying under the EU. Nothing is negotiated yet, and the rest of Europe is fuming, quietly at this stage; I suspect they are still hoping for a new vote.
I also heard some speculation that one of the reasons the pro-Brexit leaders dropped off the radar so quickly after the vote was because they were, in part, funded by Russia as part of Putin's effort to weaken Europe. Whether true, or not, it certainly will help Russia if the UK does fully withdraw in a few years time, as would a Trump win in November. Like China, Russia is playing a long game.
I think the end result is that economies in many countries will be slow in general with bursts of up, flat periods, and maybe a little down, for some years to come, but I do not foresee sustained upside for some time.
The recent Bank of Canada announcement held rates steady at 0.5%, and I am sure I heard a news report that they are not expecting rate increases until well into next year. While the 20-40 year old age group is having to deal with ever increasing housing prices in major markets, they will certainly have enjoyed almost a decade of historically low borrowing costs, never knowing the 10.02 - 19.41% average mortgage rates of the period between 1973 - 1992. Yes, I did say 19.41%, it was the average 5 year fixed rate in March 1982 according the the Bank of Canada. So each generation has had its challenges.
So, while the rates on offer to consumers may go up and down a bit as lenders compete for business, and balance that against boosting profits, people can still expect to get cheap money for the foreseeable future. Enjoy, and unless you are making big bets and investing in something you feel good about, take this time to pay off debts as soon as you can, it will make your future more relaxed, and if rates do go up it will not hurt as much.
Friday, September 9, 2016
Tuesday, June 28, 2016
BREXIT - Now the wheels are in motion - What might it mean for mortgage rates?
The news before Brexit had been that rates were expected to rise, but as I, and many others have said, that always assumes nothing new happens to change the plan. Brexit changes the plan. Not only has the UK currency dropped off a cliff, global markets went on a crazy downward spiral, but what does it mean for mortgage rates?
If they were going to raise rates the economies of the world and particularly North America would have to be steady, solid and are on an upswing, and while Europe is not Canada's largest trading partner you cannot slam that many "rich" countries and not have some kind of global falling of the dominoes. As angry as the Europeans are at Britain, and as shocked as Cameron might be that his silly gamble to resolve internal party disagreements has now led to a global crisis, the world needs and wants some stability, so "the powers that be" will work at making the ride as smooth as they can while still slapping Britain on the wrist. The odds are also strong that Scotland will now separate from England and Northern Ireland may join the south, ending many, many years of another type of disagreement. (It helps that the rule of the RC church is also losing some grip on the laws of the Republic of Ireland making it easier for the Protestants to consider joining.)
So economic turmoil tends not to lead to stronger economic growth, which in turn lowers the pressure of the bond markets, and the Bank of Canada to raise rates.
The bottom line is that anything that is bad for the global economy is going to keep rates low, which is great for borrowers, but tough for the unemployed and also making it tough for governments to raise revenue without increasing tax rates to meet much needed infrastructure and other spending needs.
On the housing side the government therefore will be turning to other tools to tackle the insanity of the Toronto and Vancouver housing markets, so I will be keeping an eye out for more changes to the mortgage rules in coming months.
If they were going to raise rates the economies of the world and particularly North America would have to be steady, solid and are on an upswing, and while Europe is not Canada's largest trading partner you cannot slam that many "rich" countries and not have some kind of global falling of the dominoes. As angry as the Europeans are at Britain, and as shocked as Cameron might be that his silly gamble to resolve internal party disagreements has now led to a global crisis, the world needs and wants some stability, so "the powers that be" will work at making the ride as smooth as they can while still slapping Britain on the wrist. The odds are also strong that Scotland will now separate from England and Northern Ireland may join the south, ending many, many years of another type of disagreement. (It helps that the rule of the RC church is also losing some grip on the laws of the Republic of Ireland making it easier for the Protestants to consider joining.)
So economic turmoil tends not to lead to stronger economic growth, which in turn lowers the pressure of the bond markets, and the Bank of Canada to raise rates.
The bottom line is that anything that is bad for the global economy is going to keep rates low, which is great for borrowers, but tough for the unemployed and also making it tough for governments to raise revenue without increasing tax rates to meet much needed infrastructure and other spending needs.
On the housing side the government therefore will be turning to other tools to tackle the insanity of the Toronto and Vancouver housing markets, so I will be keeping an eye out for more changes to the mortgage rules in coming months.
Friday, January 8, 2016
Know the Key Factors to getting a Mortgage for a Cottage
Owning a cottage can be a wonderful thing if you enjoy leaving the
concrete jungle that is city life and embracing the green oasis that is
country life.
When the warm weather arrives, nothing beats loading up the family car with loved ones, luggage, and other goods, and making the trek to the family cottage. Unless you were gifted one or had a sizable enough cash pile to buy one outright, you will need to obtain a mortgage to make your dreams of owning a cottage come true.
Here are some key factors to getting a mortgage for a cottage. What you’ll find is that lenders will consider certain criteria before deciding whether or not to approve your cottage mortgage request.
Location, Location, Location
Lenders will want to assess the cottage you want to buy to determine, first, if they should lend you the money you need and to determine how much they are open to lending if your request gets the go-ahead. In addition to location, lenders will look at specific things such as the following:
You will need to get mortgage default insurance if you can’t come up with a down payment of 20% or more of the cost of the cottage. Since second-home mortgages are no longer insurable by the Canada Mortgage and Housing Corporation, you will have to find a private mortgage insurance firm in the event that you require mortgage default insurance.
How Much Can You Afford?
Lenders will, of course, want to be reasonably certain that you have the financial wherewithal to repay the loan. That means you need to have the sort of income that shows that you are capable of repaying however much you want to borrow.
Options
In the event that you can’t get the full loan amount you require, you will have other options on the table. For instance, you could potentially refinance your house or tap a line of credit to supplement what the lender is willing to lend you.
Words to The Wise
Getting the cottage of your dreams will take planning if you can’t pay it off in one shot, but obtaining a mortgage is possible. When you know the key factors to getting a mortgage for a cottage, you’ll be that much closer to enjoying your new cottage.
For help and more information Contact Andrea Meynell
(Northwood Mortgage lic 10349)
When the warm weather arrives, nothing beats loading up the family car with loved ones, luggage, and other goods, and making the trek to the family cottage. Unless you were gifted one or had a sizable enough cash pile to buy one outright, you will need to obtain a mortgage to make your dreams of owning a cottage come true.
Here are some key factors to getting a mortgage for a cottage. What you’ll find is that lenders will consider certain criteria before deciding whether or not to approve your cottage mortgage request.
Location, Location, Location
Lenders will want to assess the cottage you want to buy to determine, first, if they should lend you the money you need and to determine how much they are open to lending if your request gets the go-ahead. In addition to location, lenders will look at specific things such as the following:
- Proximity to reliable water source, which can impact the value of the property
- Access to the cottage — year-round access is preferable
- Distance between cottage and major market
- Cottage use — lenders prefer year-round, or even three-season cottages over one or two-season cottages
You will need to get mortgage default insurance if you can’t come up with a down payment of 20% or more of the cost of the cottage. Since second-home mortgages are no longer insurable by the Canada Mortgage and Housing Corporation, you will have to find a private mortgage insurance firm in the event that you require mortgage default insurance.
How Much Can You Afford?
Lenders will, of course, want to be reasonably certain that you have the financial wherewithal to repay the loan. That means you need to have the sort of income that shows that you are capable of repaying however much you want to borrow.
Options
In the event that you can’t get the full loan amount you require, you will have other options on the table. For instance, you could potentially refinance your house or tap a line of credit to supplement what the lender is willing to lend you.
Words to The Wise
Getting the cottage of your dreams will take planning if you can’t pay it off in one shot, but obtaining a mortgage is possible. When you know the key factors to getting a mortgage for a cottage, you’ll be that much closer to enjoying your new cottage.
For help and more information Contact Andrea Meynell
(Northwood Mortgage lic 10349)
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