Mortgage Calculator 2018-04-16T15:33:06+00:00
Welcome to the mid-April edition of the monthly News and Rate Advisor.

It appears that Mother Nature is playing some jokes on us these past few weeks. Let’s hope we start seeing some more spring-like weather sometime soon.

Here are some highlights from this month in the mortgage and real estate industry. I hope you enjoy!

What Will Come From Bank of Canada Meeting Next Week?

The Bank of Canada meets this coming Wednesday to decide on interest rate policy. Just this week the BOC released the results of it’s Business Outlook Survey, which is a survey of businesses from across the country. The results of the survey showed that overall business sentiment continues to be positive. After the release of the survey data, the Governor of the Bank of Canada, Stephen Poloz, hinted in a press conference that the BOC does intend to continue to increase borrowing costs, however, the timing of that is certainly up in the air. One thing that is more certain is that the BOC intends to do this very gradually and will take a cautious approach so as to not disrupt the economy too much.

The results of the BOC’s survey, combined with March unemployment statistics indicating that Canada’s unemployment rate remained at 5.8% in March, the lowest in more than 40 years, caused some upward movement in bond yields this week. It appears the market is pricing in a potential rate increase from the Bank of Canada this, on the heels of more positive economic news. The rise in bond yields has already forced some lenders to increase their fixed rates. We have seen as much as 0.15% increase in fixed mortgage rates from some lenders already, with more lenders announcing increases to take place in the coming days. If you or someone you know is in the market for a new mortgage, I would suggest contacting someone as soon as possible to take advantage of today’s interest rates before they move upward. A 0.15% increase interest rates is significant and would result in thousands of dollars in extra interest cost on the average mortgage! Today’s best 5 year fixed rate available sits at 3.19%. However, with most lenders moving their rates up, I expect that to change to 3.29% to 3.34% over the coming days.

Variable mortgage rates saw another small increase in discounts being offered this month. The best variable rate mortgage on the market now sits at Prime – 1%, currently 2.45%. With the increase in fixed rates we’ve seen this week,  the gap between fixed and variable rate mortgages has widened. If the BOC holds off on increasing rates this week, it makes variable rate mortgages even more attractive. For now, variable rate mortgages and long-term fixed rate mortgages continue to be the most attractive options.  The gap between the best variable rate and best fixed rate is currently 0.75%, which means the BOC would have to increase rates three more times before the variable rate reached the level of today’s fixed rate. If fixed rates move to 3.34% this week and the BOC does not increase rates, that increases the gap to 0.90%. We’ll be keeping a close eye on it and will update everyone with any changes in rates this week. For now, while we have seen some upward movement in rates over the last 8-9 months, we’re still well below historic norms for interest rates!

Spring Market Kicks Off Early

While February saw the first drop in year-over-year home sales in quite some time, March certainly made up for that drop. There’s no question there has been plenty of demand for homes, but the lack of homes for sale has kept sales volumes relatively low over the past few months. It appears that some people have recognized the low inventory as an opportunity for selling their homes in March. Here are some of the highlights from the Ottawa Real Estate Board’s March statistics:

  • Members of the Ottawa Real Estate Board sold 1660 properties in March, an increase of 12.3% over March 2017′s 1478 properties sold.
  • Inventory of homes for sale remains below average. As a result of low inventory, listings are not staying on the market for long. Average days on market in March was 43, compared with 54 days in March of 2017. 
  • The average sale price of residential class properties (no condos) in March was $447,561, an increase of 8% over March 2017.
  • The average sale price of condo properties in March was $275,592, an increase of 0.7% over March 2017.
  • The $300,000 to $449,900 price point was the most active pricepoint for residential class proeprties in March, representing 46% of the market. In the condo market, $175,000 to $275,000 was the most active price point, representing 51% of the market.
  • The $500,000 to $750,000 price point has shown robust growth, representing 21% of residential homes sold in March.

The Ottawa housing market continues to suffer from a shortage of inventory, which has pushed prices higher. Furthermore, a lack of rental inventory seems to have pushed renters into the home buying market. However, a wave of new listings likely to come on the market in over the next month should help to ease the shortage in supply. It continues to be a great market to sell a property!

We’re a Loyal Bunch, But it Could be Costing Us!

A recent HSBC survey showed that 55% of mortgage holders worldwide were willing to switch mortgage lenders for a better deal, while only 36% of Canadians were willing to make a change. As a Mortgage Broker, I found this number a little concerning. After all, my role is to help people manage their mortgage and minimize the lifetime cost of the largest debt they will likely every have. I understand that minimizing borrowing costs often means switching mortgage lenders for the best deal available. It got me thinking about why it is that Canadians in general don’t seem as willing as other countries to switch mortgage lenders for a better deal. I have a couple theories on this, so here it goes:

  1. We can be too polite sometimes! We feel bad about backing out of a contract or a commitment we’ve made. We’re generally honest people, and we follow through on our commitments. That’s one of the things that makes Canadians such great people! These are great qualities to have, most of the time. But when it comes to finances, we could benefit from being a little less polite because it’s costing us thousands of dollars!
  2. The big banks have done a fantastic job creating loyalty! Our banking system is somewhat unique. Not many other countries in the world have a banking system where a select few banks dominate the market like our banks do in Canada. The big five banks have done an incredible job at creating loyalty among their customers. Unfortunately, it’s likely costing Canadians piles of money as their banks charge them thousands more in interest and fees than they could be paying with another lender.

As a Mortgage Broker, it’s concerning to see these statistics about how few Canadians are willing to switch mortgage lenders because I understand how much it may be costing them. One thing I do know is that regardless of who your mortgage lender is, if they see an opportunity to charge you more, they will, and they will not feel bad about it. After all, they are businesses and their role is to generate as much profit as possible. So, I encourage everyone to let their Mortgage Broker find the best mortgage deal available to them, and to take that deal, whether it’s with their current mortgage lender or a different one! Let’s be a little more selfish, look out for ourselves, and treat ourselves to some savings!

**Information provided by:
Jamie Small, AMP              613-591-3591 x108
The Mortgage Advisors

Quick Mortgage Calculator

Selling Price$Down Payment$
Interest Rate%Years
Monthly Payment$Change any combination of fields to calculate.