Greg Colby

Refi Ahead of Condo Trouble? Toronto condo listings have exploded 215% to a record high, reports Bloomberg. And they’re projected to be even higher in October, according to HouseSigma. Driving that surprising number: skittish investors (many with negative cash flow given surging rental listings and a 14% y/y drop in rents),... elevator phobia, people coming off mortgage deferrals, relatively higher unemployment among condo dwellers office-liberated workers ditching the city for bigger, greener spaces, and the damaging self-reinforcing psychology of surging listings. It’s like that tropical storm in the Atlantic. You see it building and wonder if it can become a Cat-5. Well, the winds are picking up and lenders are risk averse. If urban condos depreciate more from here, more appraisals will undershoot expectations and lenders will underwrite mortgages secured against such properties noticeably more conservatively. We do see things softening enough to drive condo prices down, RBC economist Robert Hogue told the Globe recently. In other words, if you own a big-city condo downtown, plan to keep it for a while, are contemplating refinancing and need to borrow the full 80% of your property value, contemplate quicker. From Ratespy

One-Year Mortgages Edge Closer to 1% If you’re going to gamble on a short-term rate, you could do a lot worse than 1.29%. On a contract rate basis, that’s the lowest fixed mortgage rate Canada has ever seen. And it’s probably not done dropping yet. This latest one-year offer is available in select provinces and applies to high-ratio and insurable mortgages up to 65% loan-to-value only.

Deals on non-prime mortgages are the best they’ve ever been, according to RateSpy’s records. If your debt ratios are a bit stretched, your credit is below average or you’re having trouble proving income in the normal way, you can now find non-promotional 1- and 2-year fixed rates under 3% for the first time, thanks to Equitable Bank’s new 2.99% offer.

Effective this week it gets a little easier to buy a house or refinance. On Saturday, BMO and CIBC shaved 15 basis points off their posted 5-year fixed rates. That’s enough to drop the benchmark 5-year posted rate to 4.79%. Given regulators use this benchmark rate to calculate Canada’s minimum mortgage stress test, today’s cuts mean you’ll now need less income to qualify for a given mortgage amount. Put another way, it means someone making $70,000 a year can now afford a 1.2% ($4,000) more expensive home with 5% down. That’s not much to get excited about but on a market-wide basis, small buying power improvements are inflationary for home prices, other things equal.

Prospective homebuyers were reassured today that interest rates will remain near historic lows for a long time, according to Bank of Canada Governor Tiff Macklem. The BoC chief made the comments during a conference call following the Bank’s interest rate meeting, where it left the overnight lending rate unchanged at 0.25%, at its effective lower bound. Interest rates are very low and they are going to be there for a long time, Macklem said. Canadians and Canadian busin...esses are facing an unusual amount of uncertainty, so we have been unusually clear about the future path for interest rates. In the Governing Council’s official statement, it said it would hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. Observers say that implies the Bank has no plans to start raising rates until at least 2023.

WHAT YOU CAN DO WITH A REVERSE MORTGAGE: The tax-free cash you can get from a reverse mortgage can be used for whatever you need it for. Whether it’s for eliminating debt, buying a vacation or rental property, increasing your cash flow, or providing your family with an early inheritance it’s up to you! You can access up to 55% of the equity in your home and receive the money in a lump-sum payment, periodic instalments, or a combination of the two. If you would like to learn more about how a reverse mortgage can be a tool in your financial plan, please contact me at [email protected]