By and large, the 5-year fixed mortgage rate follows the pattern of 5-year Canada Bond Yields, plus a spread. Bond yields are driven by economic factors such as unemployment, export and inflation.

When Canada Bond Yields rise, sourcing capital to fund mortgages becomes more costly for mortgage lenders and their profit is reduced unless they raise mortgage rates. The reverse is true when market conditions are good.

In terms of the spread between the mortgage rates and the bond yields, mortgage lenders set this based on their desired market share, competition, marketing strategy and general credit market conditions.

Source: All data percentages were taken from CAAMP “Annual State of the Residential Mortgage Market in Canada” 2010

The Canadian Real Estate Association published resale data for May last week with most markets seeing a healthy rise in sales volumes. Average prices across the country were up in May by more than 7% year-over-year to $416,584.

CMHC released results of its Mortgage Consumer Survey last week. Brokers are seeing growing market share and more than three quarters of consumers are now researching mortgages online before contacting a broker or a lender.

Canada’s inflation rate moved above 2% for the first time in more than two years, as reported by Statistics Canada on Friday. The Canadian dollar moved up to 93 cents US on the news.  According to one of CIBC’s analysts last week, they believe we may see an increase to our Overnight Target rate at the next announcment from Bank of Canada.  Although it’s just an opinion, always interesting to see the thoughts from these analysts. 

The benchmark government of Canada five year bond yield ended the week at 1.60%, up slightly from 1.58% the previous week.

We often encounter a lack of awareness with clients when it comes to mortgage completion and vacationing, that I’m hoping to shed some light as to why it’s a good idea to vacation after the mortgage is complete.  There seems to be a mis-conception that people are free to go on vacation once the mortgage is approved and you’ve signed the documents. 

As a reminder, it’s best to remain in town until your mortgage and real estate transaction are complete.  Often there may be last minute requests from the lawyer or bank and if you’re not in town to deal with them, it may cause additional time and stress for you at closing. 

Here’s a rule of thumb to help avoid additional stress;  If you are in the process of taking a new mortgage on your new or existing home, please ensure you are in town during the closing process.  You need to sign at a lawyers office a couple days prior to closing and your file will not complete on time if you are not available for the required signatures.  Stay home until the mortgage closes and take as many or as long of a vacation you choose once it completes.  Otherwise you will cause unnessesary stress on yourself and your family if there is an unforseen request made by your lawyer that you no longer are able to deal with due to being out of town. 

That being said, when you do take your well deserved vacation….Enjoy!!

The Week in Economic and Real Estate News

CMHC reported last week that housing starts in Canada were trending higher in May compared to April. Builders continue to manage their activities according to demand and analysts suggest that current levels of starts are within the range supported by market fundamentals.

According to the Teranet House Price Index, May saw modest Canadian home price increases with the index reaching a new high. Only 3 of the 11 major markets tracked saw new highs.

RBC Economics published its latest Economic and Financial Market Outlook last week. It predicts solid growth in Canada over the next two years but the housing market is expected to slow and provide limited support to the economy.

The benchmark government of Canada five year bond yield ended the week at 1.58%, unchanged from the previous week.

This time of year always brings questions about property taxes.  Most people have received notices at this point and here are a couple reminders:

If you live in your property, you need to claim the Home Owners Grant.  Usually column B on your notice.  You can often claim the grant online on your cities website or you can do it at city hall. 

If you do not claim the grant, you will receive a bill in August for the $570 due for not claiming it. 

If your lender collects taxes for you, they will pay your taxes automatically for you and you don’t need to do anything to prompt them.  You will receive a notice from your bank in August confirming what they paid on your behalf and let you know if that is any sort of adjustment made to your regular tax payment. 

If you don’t have your lender or the city collect your taxes monthly, then you will need to pay your property taxes by July 2 of this year and that can be done via online banking, in branch with your bank or paid directly to city hall. 

If you have questions or would like more clarification around this, feel free to contact me anytime at 604-729-7940.

Canada’s major real estate boards reported May results last week. The news was generally good with sales and prices up but low inventories are still creating difficult conditions for buyers in Calgary and Toronto.

The Bank of Canada left its key overnight rate at 1% last week and its commentary contained no indication of rate increase in the short or medium term.

CMHC announced on Friday that it will no longer offer mortgage insurance to condominium developers and that it will align its low ratio insurance criteria with its transactional homeowner insurance.

Statistics Canada reported May employment data on Friday. Almost 29,000 jobs were added in Canada while in the US, more than 200,000 jobs were added for the fourth consecutive month.

The benchmark government of Canada five year bond yield ended the week at 1.58%, up from 1.53% the previous week.  

News provided by MCAP Mortgage News for the week of June 9/14.

Canada’s major real estate boards reported May results last week. The news was generally good with sales and prices up but low inventories are still creating difficult conditions for buyers in Calgary and Toronto.

The Bank of Canada left its key overnight rate at 1% last week and its commentary contained no indication of rate increase in the short or medium term.

CMHC announced on Friday that it will no longer offer mortgage insurance to condominium developers and that it will align its low ratio insurance criteria with its transactional homeowner insurance.

Statistics Canada reported May employment data on Friday. Almost 29,000 jobs were added in Canada while in the US, more than 200,000 jobs were added for the fourth consecutive month.

The benchmark government of Canada five year bond yield ended the week at 1.58%, up from 1.53% the previous week.  

News provided by MCAP Mortgage News for the week of June 9/14.