29 Aug

The rise of the variable rate?


Posted by: Kimberly Walker

The rise of the variable rate?

Fixed or variable? It’s a debate brokers thought they left behind but is now coming up more and more as fixed rates climb and concerns about a Central Bank move fade into the distance.

“You’re seeing a one per cent spread between variable and fixed so it almost doesn’t make sense to go with a fixed rate right now,” James Harrison of Mortgages.ca told MortgageBrokerNews.ca. “It didn’t make sense while the fixed rates were historically low; now the discounts on variable rates are getting better and the fixed rates are increasing.”

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Ratehub.com took to its Twitter account to shed some light on the topic Monday.

“Earlier this year, 80% of our site users showed interest in fixed rates, but what will happen now with the spread b/w variable rates?” the company mused.

Not every broker is willing to turn his back on fixed rates just yet, however.

“I still think fixed rates are at all-time lows, even though we’ve seen them rise recently,” Mauro Di Cosola of Dominion Lending Centres told MortgageBrokerNews.ca. “In the overall scheme of things I still think fixed rates are the way to go. 3.59, 3.69 per cent isn’t too high. If somebody were to get a five year fixed rate at 3.59 per cent I think they’re still sitting pretty.”

Di Cosola does admit that clients are more willing to consider a variable rate, though; a trend that may be signally a change in attitude.

“I have seen clients tend to look at the variables a little bit more than they otherwise would.”

Of course, every situation is different and the type of mortgage a client depends largely on the client’s priorities.

“It depends on the client wants to have no trouble sleeping at night, I would suggest a fixed rate,” Di Cosola said. “If they want the lowest rate I would be more inclined to suggest a variable rate, in a rising (fixed) interest rate environment.

“No one has a crystal ball so the variable products could go up as well. At least you know what you’re getting when you have a fixed rate: If a client doesn’t like the gyrations of the market, fixed rates give them piece of mind.”


27 Aug

Banks Can’t Keep Up With Demand


Posted by: Kimberly Walker

Brokers say they are experiencing longer than average turnaround times with the banks, suggesting it could be a result of a flooded market due to collective client fears that rates will continue to increase.

“I would divide the segment into two parts; the adjudication part with the banks in general is probably twice or three times as long because of the rush of people trying to rush deals,” Andrew Galea of The Mortgage Management Group told MortgageBrokerNews.ca. “The monolines are still adhering to much faster turnaround times.”

Galea believes a flood of buyers are looking to take advantage of the market before rates increase.

“People who would usually sit on pre-approvals are now trying to close as soon as possible,” Galea said. “Those who wouldn’t be totally committed are now having a fire lit under them to act sooner rather than later.”

The wait times are making things dicey for brokers when client close dates fast approach while deals are still on the lender’s table.

“I have a few closings coming up on the 30th (of August) and the lender response times have been lacking,” Deepak Bansal of Dominion Lending Centres Mortgage Village told MortgageBrokerNews.ca. “I have a feeling that they are inundated with deals because of rate increases… clients are getting in before further increases.”

Bansal currently has deals on the table with a specific lender that usually has a one day turnaround. He has been waiting on the lender for over 48 hours, though.

Buyers are getting antsy and trying to close deals quicker to accommodate current rates.

“One client of mine changed his closing date to utilize a rate hold,” Bansal said.


2 Aug

July Home Sales Take Off In GTA


Posted by: Kimberly Walker

Toronto real estate numbers for July were the best since 2009, with total sales up 16 per cent compared to last year, according to statistics released today by the Toronto Real Estate Board.

“Last month’s sales represented the best July since 2009 and was the third-best July result on record,” said Dianne Usher, president of the TREB. “Despite recent increases in average borrowing costs, home buyers are still finding affordable home ownership options in the GTA.”
TREB reported 8,544 residential sales for July, with new listings added to the Toronto market and active listings up as well, but at a smaller rate.
“We are a year removed from the onset of stricter mortgage lending guidelines and many households who put their decision to purchase a home on hold have reactivated their search,” said Usher. “An increasing number of these households are getting deals done.”
Reflecting tighter market conditions, the average selling price for July sales was up on a year-over-year basis by eight per cent to $513,246, while the low-rise market segment continued to be the driver of overall price growth.
The average condominium apartment price was also up by more than the rate of inflation on an annual basis, along with an increase in the Home Price Index on a year-over-year basis for all major home types.
This sellers’ market represents what should be a continuing trend, suggests one senior TREB analyst.
“We are forecasting continued average price growth for the remainder of 2013 and through 2014 as well,” said Jason Mercer, TREB’s senior manager of market analysis. “Months of inventory for low-rise homes remain near record lows, suggesting that sellers’ market conditions will remain in place in the second half of 2013. An increase in listings in 2014 would lead to more balanced market conditions and a slower pace of price growth next year, albeit still above the rate of inflation.”