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your mid-week mortgage market minute
with Jim Cook, Broker
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in the mortgage marketplace ...
The funny thing about inflation is that it can be significantly impacted by business/consumer expectations.  If we anticipate costs going up, there is typically a surge in purchasing which, in itself, creates demand driven inflation.  The same exists in reverse, where folks hold off for prices to fall - and/or - budgets are so impacted by higher costs, that new purchases are postponed.

This is exactly why policy makers track consumer and business sentiment.  And what we see is that, for the first time since 2021, more businesses are expecting sub 3% inflation than others.  Unfortunately, we don't yet see that trend in consumer surveys looking at 1 year ahead expectations.  This reflects folks reactions to current food, housing and energy pricing - consumers tend to be more focused in the present even when asked about the future. 

The next Bank of Canada survey results are set for July 15 - just before the July 24th policy rate announcement, which is the widely anticipated first reduction in Prime Rate - unless we are lucky on Jun 5th.

This past week has seen bond rates starting to increase - which will start to put pressure on some of those interest rate specials out there.  For those looking to play in the spring market, putting a pre-approval (rate hold) in place might not be a bad idea to protect against the rate fluctuations in the near term.

** check out the Rate Snapshot section below - a lender offering an intriguing strategy for buyers with less than 20% down and opting for the 4.99% 5 yr special rate that exists currently. **
rate snapshot ...
No overall change in rates - yet. Unfortunately, the sweet spot 3 yr term rate hasn't budged.  Interesting, for those purchasing with less than 20% down, one lender at 4.99% for 5 years has highlighted that as rates drop, you can come back and do an 'early renewal' - the lender will restart the 5 yr term clock, and new years at the lower rate and provide a blended new rate to the borrower - WITHOUT re-qualifying - no bureaus, employment letters, etc.  That is very attractive.

If we compare a 5 yr at 4.99 and a 3 yr at 5.14 and assume that rates are 0.75% lower in 3 years, the weighted average is 4.75% over 5 years.  If we only get a 0.5% drop over the next 3 years, that is now 4.85%.  In both cases, we are very close to a 5 yr special currently offered - and if you have the option to renew early on a blend with little more than a phone call, the 5 yr starts to look very attractive!

For properties priced below $1 million, with less than 20% down payment, example rates would be:
  • 1 yr fixed  6.64% or $6.78 per $1k in mortgage
  • 3 yr fixed  5.14% or $5.90 per $1k in mortgage
  • 5 yr fixed  4.99% or $5.81 per $1k in mortgage
For clarity, a $500,000 at 5.09% on a 25 yr amortization would have payments of 500 x 5.87 = $2,935 monthly.

Note also that rates can change daily, certainly differ between lenders and definitely differ based on down payment, mortgage features and hidden costs.
in Jim's practice ...
As evidenced by the late issuance of this weeks 3M - I am being cursed a wee bit by my popularity this week ;-)    There seems to have been a number of homes come onto the market that have captured the interest of many of my buyers.  Still too little but moving in the right direction.

In the last couple weeks, I made mention of reporting requirements for mortgage cosignors.  Last week, CRA came forward and advised that it was suspending that requirement for Bare Trusts in 2023 - with more guidance to follow later in the year.

In future weeks, we are going to start to highlight some of our client processes so you are aware of how things have evolved.

Have a successful week!  
Jim was very informative and was very clear through every step, answered any questions we had, and is so patient and kind. I highly recommend Jim for any mortgage needs.

(A, Mar 2024)
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Jim Cook is a nationally-recognized broker with some quarter billion in mortgages funded. 
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