A Balanced Real Estate Market

Anyone who has recently braved the real estate market particularily in Toronto or Vancouver is likely aware that the market has been favoring sellers a trend that will likely change in 2012. Over the last two months the sales to new listings ratio, an important metric used by economist to determine whether we are in a buyer’s market or seller’s market, has started to ease off and the expectation is that the market will continue to balance itself in 2012.  There are several reasons including the possibility of additional mortgage rule tightening, concerns about purchasers affordability being maxed out and over supply in the market.The graph below illustrates that the sales to new listings ratio is hovering around the 50% mark, a good indicator of a healthy real estate market.

Housing Inflation

Avery also explained to me that housing inflation, another indicator used to check the health of a real estate market, was trending back towards zero. House inflation is a measure used to determine year over year (y/y) how rapidly housing prices are increasing. The current y/y % change is around 4.8% as of the 3rd quarter of 2011. Globally, Canada has some of the hottest real estate however, economists are expecting prices to level off spring 2012. Ultra-low interest rates are still attracting buyers, but increased economic uncertainty combined with job loss and unemployment could effect the numbers in 2012.

By the time Avery and I made it back to our resort his message was clear regarding Canadian real estate in 2012. Things could be better and they could be worse. 2012 appears as if it’s going to be a flat year.

Personally I think this is great news because the numbers are showing that Canada is not experiencing a real estate bubble and that things look like they are easing softly in what has been a somewhat over heated market over the past 24 months.  A sentiment that is starting to be shared in the media most recently Canada Housing Is Pricey But Far From A Bubble: BMO

Our clients at Tridac – The Mortgage Centre know exactly what the connection to piggy banks is. If we're arranged your mortgage then no doubt you've received one of our cute little piggy banks as a ‘thank you’ gift after closing your mortgage.  The significance of the piggy bank runs deep in our family business as a metaphor for savings and the building of equity in your home.

If you're looking to have a professional arrange your mortgage we invite you to contact us. Whether you're a first time homebuyer, looking to refinance, or need private mortgage money, we're here to help you. Plus you'll get a piggy bank and the story to go with it!

Toronto mortgage broker Christopher Molder welcomes the year with his first blog post reflecting on the past and looking forward to 2012.

There’s seldom an occasion during which we can sit back and contemplate time gone by and time to come. Thank goodness we mark each calendar year with a definite beginning and end. This gives us a formal opportunity to reflect, reset and plan ahead.

2011 was another fantastic year at our brokerage Tridac Corporation Ltd – The Mortgage Centre. It was also another year of learning and evolving. After 34 years in business, there’s still so much to work on and improve. When my dad started our brokerage there wasn’t a computer in sight, whiteout was always in stock and the typewriter was a modern piece of equipment. This past year, technology was again at the forefront of our growth as we evolved our brokerage into a fully social business.  With the help of my brother Mark we took another serious look at social media. Actions included revamping our website, again, adding a Son Of A Broker – Facebook page (please become a fan we only have 28 likes – Mark thinks that’s pretty weak), joining the conversation on Twitter, and learned that Linkdin really isn’t that social. I’m not too sure why we are on Google+ but I figure it’s good karma or something like that (I know you’re reading this Google). We have a Google Places page and even have legit reviews about our business! I also redesigned this very blog in mid 2011 as the previous version was so 2010.

Our clients will be happy to know that in late 2011 we integrated new customer relations software which will improve your experience with us. Features include an annual phone call from yours truly and enhanced communication to notify you of any changes that would affect your mortgage.  We’re also in the process of setting up an online debt management system designed as an easy to use budget tracker. This system will not only help you determine where your money is being spent but more importantly assist you to get out of debt and pay down your mortgage as quickly as possible.

To our new and old clients who have made 2011 a great year thank you for your business and support. My dad and I truly appreciate the opportunity to help you with your mortgage financing. At risk of making this sound like a post scribbled in a year book I’d also like to use this opportunity to shout out to a few colleagues, partners, and friends who have made this year fun and taught me a lot: Mark Savel, savelblogs.com; Kerri-Lynn, Brennan & Alyssa  Ratehub.ca; Kevin Tuttle, ChrisClarketeam.com; Joy Paterson, condochicks.com; The Bhandari brothers, talkcondo.com; Matt & Cliff, BuzzBuzzHome.com; Geoff Charkow, MerixFinancial; Tony Olivera, Remax; and Brian Persaud, urbantoronto.com.

Best wishes for continued success in 2012.

Christopher Molder – Son Of A Broker

If you'd like to apply for the 3.25% fixed 5 year rate call me at 416.461.0204 x 2. or emal me at chris@tridacmortgages.com. Keep in mind that my services are free of charge to you as I get compensated by the mortgage lender through a standard finders fee.

Christopher Molder

When it comes to shopping online, I’m not alone. Statistics Canada reports that in 2010, 51% of Canadian internet users ordered goods or services online. Not surprising considering the number of people buying concert tickets, airline tickets, booking hotels, or buying electronics like iphones and cameras. But how good is the internet when it comes to shopping for more personalized and "technical" goods and services like skis or mortgages? Well, shopping for skis online obviously works, so what about shopping online for a mortgage?

The experience of a mortgage borrower shopping online can't be much different than my experience shopping for skis. Just like skis, mortgages are technical and come in different shapes, sizes and brands each designed for a specific purpose. Narrowing down your search can be a challenge with every broker, bank and specialty website vying to grab your attention. The noise can be overwhelming. So should you feel confident shopping for a mortgage online?

Lets face it, mortgages remain the single largest expense a typical household will incur. I think few people feel confident making a decision based solely on information gathered from a website without consulting a professional. But, with better and better mortgage sites appearing, the ability to shop completely online for a mortgage may one day become a reality. Mortgage websites have evolved into reliable resources helping you, the borrower, find relevant information to help choose the right mortgage.

Take the popular mortgage site ratehub.ca a one of kind website that not only serves as a search engine to find Canada's best rates but serves as a platform to educate and empower borrowers to make informed mortgage decisions. A great feature of the site is that neither a financial institution nor a mortgage broker runs it so the information and advice are neutral.

If you’re shopping online for a mortgage it’s tough to know what sites are current and offer reliable information. A few things to look out for when browsing a mortgage site include:

1. Sites that engage visitors through social media like Twitter and Facebook. A site that engages their audience is likely to be careful about the quality of content they’re sharing online.
2. If the broker is blogging, check to see how recent their posts are.  It's a great way of determining whether someone is “home” and actively working the site. It also helps you to determine if the content is relevant and current.
3. Check for testimonials on a brokers website. As brokers we crave affirmation that we’re doing a good job and we love to share our success with the world. It's also surprisingly obvious when someone is faking testimonials on their own site.

I've written enough mortgages in my career to know that there isn't a one size fits all mortgage solution. We live in a dynamic and ever changing world and the needs of each borrower are unique. Having said that you shouldn't shy away from educating yourself online and engaging mortgage websites. They provide a wealth of relevant information that can help you level the playing field so that when you do engage a mortgage professional you are doing so well informed.

Now, if only it would snow I could use those skis that I bought online!

I'm a private mortgage lender in Ontario lending private money for any good purpose. Poor credit, mortgage arrears, self-employed, and no employment situations are considered.

Deal directly with the lender. Pay no lender fees. Mortgage terms are open and repayable at any point.

I help homeowners in unique situations who are marginalized by the banks and lending institutions. In over 35 years as a mortgage lender I've encountered almost every conceivable financing situation.

Lending to:

• consolidate debt
• stop power of sale
• pay mortgage and tax arrears
• restructure financing
• pursue tax sale opportunities
• complete major home renovations

For the last time in 2011 the Bank of Canada made their interest rate announcement. As expected, the Bank left the prime rate unchanged at 3.00%. If you have a variable rate mortgage or a line of credit your monthly payment won't change. The bank reported that conditions in global financial markets have deteriorated as the sovereign debt crisis in Europe has deepened. The recession in Europe is now expected to be more pronounced than the Bank had anticipated.

Closer to home, recent economic indicators in Canada suggest that growth in the second half of this year is slightly stronger than the Bank projected.

Although the crisis in Europe has effected bond prices, which are driving the yield down (typically a trigger for lower fixed rate mortgages), I am not certain that banks will be willing to pass on those prices to borrowers and I feel that fixed rate mortgages will remain unchanged and stable into the new year.

Son Of A Broker’s Pick Of The Week: The fixed 4 year at 2.99% offers you the lowest rate for the longest term and is the best bang for your buck today. Fill out a quick online application and I'll be in touch shortly to set you up with a 120 day ratehold for 2.99%.

1 Year Fixed – 3.08%

3 Year Fixed – 3.29%

4 Year Fixed - 2.99%

5 Year Fixed – 3.39%

5 Year Fixed (must close by Jan 31st) – 3.29%

5 Year Variable P-.10 (2.90%)

50/50 Hybrid 3.25% (effective rate)

Prime Rate is currently 3.00%

Bank of Canada Qualifying Rate for High Ratio Mortgages 5.29%

The following is a graph I sourced from my good friends at Ratehub.ca which shows the recent convergence of fixed and variable rate mortgages. Starting late August 2011 it's clear to see the upwards trend of variable rate mortgages converging with a relatively flat fixed rate market.

Events in Europe are unfolding like any great drama with twists and turns in the plot. The story began in Greece and the first twist came when Greek prime minister Papandreou put forward a referendum on proposed austerity measures. Without skipping a beat the plot thickened in Italy with the resignation of Berlusconi and the ensuing darama. Just this morning I heard of Portugal’s largest union going on strike over austerity measures in that country.

As a mortgage broker I often see things as a question of borrowers and lenders. Countries much like individuals can borrow money and incur debt. Typically we express the total debt of a country as a percentage of national GDP as one way of looking at borrowing levels within the context of a country’s ability to repay their debt. Canada’s Debt to GDP ratio is currently 83%. The United States of America’s ratio is 98% and according the ECB Greece’s debt represents  156% of their GDP. (Wikipedia) To put this into context when applying for a mortgage a bank will approve a maximum loan amount using 44% of a borrower’s gross annual income to cover payments associated with housing(taxes, mortgage, condo fees etc) and all other debts and obligations, such as car loans and credit cards.

Obviously it is ridiculous to compare a country’s sovereign debt with personal debt but it’s interesting to observe that the fall out of spending more than one earns whether its on a national or personal level leads to a crash.  On a personal level living beyond your means for an extended period of time will eventually lead to some form of crisis whether it’s bankruptcy, marital breakup or any other forms of self destruction. In the case of national debt we observe massive demonstrations, riots, strikes and political fallouts which are unproductive and can cause long periods of recession.

So if Greece walked in to my office located on the Danforth (seems like the most logical place for Greece to go shopping for a mortgage) what would I tell her? Obviously she wouldn’t get far with a mortgage application but what advice could be given? In our consumption driven society where credit is so readily available how does one avoid living beyond their means? Perhaps the best remedy is to learn to live in a place of sufficiency. We are so often driven by the need to fill the void of something that is lacking in our lives, more money,  more cars, more clothes, more electronics, more toys, more vacations, more stuff we don’t really need. But if we were to stop to appreciate what we already have, we may discover life provides us with an abundance of what we really need to live within our means.

Here's the scoop....last Friday, September 23rd, we saw a huge drop in the Government of Canada 5 year bond yield. This drop creates downwards pressure on fixed rate mortgages which are priced according to bond yields.  Although fixed rate mortgages are priced at an all time low it appears that there is the capacity for rates to drop further according to this post from Canadian Mortgage Trends.

There has also been some continuing action in the variable rate market as the spread on Prime minus mortgages are shrinking. Given the current global economic climate it seems unlikely that the Bank of Canada will need to move the prime rate over the short to medium term. This makes variable rate mortgages an attractive option if the risk that the prime rate can be mitigated. As such, Canadians have been switching into variable rate mortgages in a big way which has meant that the profit margins for mortgage lenders has begun to shrink forcing them to decrease the spread on their variable rate mortgages.

The following are my current rates; I invite you to get in touch with me to learn more about our rates and how you can get me to work on your behalf for free. Christopher Molder. 416.461.0204

1 Year Fixed – 2.60%

3 Year Fixed – 2.89%

4 Year Fixed – 2.99%

5 Year Fixed – 3.49%

5 Year Fixed (45 day) – 3.39%

5 Year Variable P-.35 (2.65%)

50/50 Hybrid 3.12% (effective rate)

Prime Rate is currently 3.00%

Although your periodic mortgage payments appear to be the same amount, the proportion allocated towards paying interest and paying down your balance (or principal) is constantly changing. For each mortgage payment you make, your money is first used to pay the interest on your outstanding balance and the remaining portion is used to reduce your balance.

Consider the above example of a $300,000 mortgage at 5% amortized over 30 years. The monthly payments are $1,600. In the early years of the mortgage the majority of your monthly payments go towards paying the interest portion of your mortgage. The money used to pay down the outstanding principal is only a trickle at first. As your balance declines so does the proportion that you pay towards interest and by the end of your mortgage the majority of your money is used to pay principal with little interest expense.

There are ways of saving yourself interest expense over the life of your mortgage. The key to saving money on your mortgage is to pay off the principal as fast as possible if your household budget allows it. Most mortgage lenders have prepayment privileges built into their mortgages which give you the opportunity to save your self money.

Take the best of both worlds! Go for a 50/50 mortgage where you get a variable rate and fixed rate combined into one.

At the time of writing the effective rate for a 5 year variable rate mortgage is 2.55% with very little probability that the Bank of Canada prime rate will change in the near to mid-term. A fixed 5 year is at 3.49%.  The spread between the two options is only 0.74%.  If you are a consumer trying to decide fixed versus variable, it would be difficult to determine which option will out perform the other. We are really in uncharted territory… both have pros and inherent drawbacks.

Here’s how you can protect yourself: take a 50/50 mortgage. The 50/50 mortgage allows you to lock half of your balance as a fixed rate and the remaining half as a variable rate mortgage.  In doing so you are benefiting from the positives of each and spreading the risk over your entire mortgage.

Most people would agree that investment diversification is the key to a solid investment portfolio. The same holds true for your mortgage: Rate diversification.

There are only a handful of lenders who offer these great 50/50 mortgage products. One of my favorites is Merix Financial who are currently offering their 50/50 Wise Mortgage at 3.02%

In his latest video blog installement, Toronto mortgage broker, Christopher Molder, summarizes mortgage interest rates.

We can now offer 3.49% for a fixed 5 year! Amazing considering the lowest fixed 5 year I have ever arranged was 3.49% last summer.

If you are in the market and currently looking for a mortgage, competitive rates, and a professional to help with the decission, call us with confidence. We're here to help you. 416.461.0204.