Madeline Power Mortgage Broker at Mortgage Centre
107 LeMarchant Road A1C 2H1 St. John's, Newfoundland and Labrador, NL, Canada

In light of the GDP’s slower-than-expected growth, the Bank of Canada didn’t raise interest rates yesterday, but that doesn’t mean Canadians can breathe a sigh of relief. While the variable rate didn’t increase, the fixed rate likely will because it’s tied to the world economy. What we’ve seen with fixed rates since last year is that they have gone up almost a percent, and they’re all over the place, said Furlong. The good thing about the fixed rate is the rate you have is... secure until renewal. However, upon renewal the mortgage stress test could make things a tad hairy for people in fixed-rate mortgages. There is potential with the new stress test, and increasing fixed rate, for current mortgage holders to be stuck in their current mortgage and not be able to switch, said Furlong. When that happensand banks and lenders know thisthey’re stuck and subject to higher interest rates and will have to renew with their current lender. On the flip side to that, if you have a good broker who knows what they’re doing, there’s potential to refinance. If you’re cash tight and you’re stuck with your current lender, you can refinance some of that and pay no penalties if it’s on your renewal date. What they can also do is extend amortization. You can go to one-year, two-year, or variable. There are all kinds of products out there a good broker will analyse. With the discount on variables that lenders are offering right now, I’m seeing more and more consumers go towards short terms and variables over five-year fixed, I follow rule of 50if the difference is 50 basis points between the fixed and variable, I’d tell the consumer to go towards the fixed rate, but if you’re over 50 basis points, I’d tell them to go towards the variable. if they can absorb any increases, the consumer should make the final decision.

Anyone looking to refinance or purchase and are looking at 20% or more of a down payment or equity, rules are changing January 1, 2018. You may want to get your approval before end of December 2017. Call me if you have any questions, 709-754-7202. Please share with friends and family.

Canada's banking regulator has published the final changes to its guidelines for residential mortgage underwriting, including a financial stress test for buyers who don't need mortgage insurance. The Office of the Superintendent of Financial Institutions said Tuesday the changes will come into force by Jan. 1, 2018. Even homebuyers who don't require mortgage insurance because they have a down payment of 20 per cent or more will have to prove they can continue to make payments... if interest rates rise. Other changes include restrictions on co-lending, or bundled mortgages, aimed at ensuring financial institutions do not circumvent rules that limit how much they can lend. The final guidelines are generally similar to what OSFI had proposed in July, when the regulator put out a draft for public consultation. The proposed changes, however, have been criticized for including potentially increasing costs and limiting access to mortgages for some home buyers.

Canadian existing home sales fell 2.1% m/m in July, a fourth consecutive monthly decline. Existing home sales are now 15.3% below the peak reached in March 2017. The decline was fairly broad based with sales down in two thirds of all markets across Canada. However, the biggest declines remained in the Greater Golden Horseshoe, led by a further 5.4% contraction in the Toronto market where sales have now fallen 44% from the March peak. The only major markets to post an ...Continue reading

The Bank of Canada has decided to continue its 3-ball juggling act, leaving its benchmark interest rate unchanged for the 15th consecutive setting. Actually, the Bank seems to be juggling 2 balls and a chainsaw: stimulating the economy, keeping the Loonie friendly for exporters and trying to discourage even more household debt. The overnight rate remains at 0.5%, where it has been since the middle of 2015. Right now many observers expect the Bank will stay on the sidelines... until next year. In the uncharacteristically brief statement that came with the latest setting the BoC cited low inflation and weak wage growth for the decision to leave the rate unchanged. But the Bank also said it expects the U.S. economy to start picking up in Q2. That should help Canadian exporters and could, in turn, lead to a change in interest rate policy. Of interest to the housing sector, the Bank’s statement which seemed designed to calm international jitters about potential American trade barriers and worries about a housing collapse mentioned government efforts to rein-in runaway home prices. While it says the measures have yet to have a substantial cooling effect on housing markets, the Bank is hinting that it expects the market will slow down.