News News News

I haven't put much on the blog lately about the changes within the industry as I know everyone has been bombarded with information. So I decided to give some quick insights on this entry...
- rates have gone up twice in less than 30 days and we are expecting another rate hike of 15 bps any day now
- the qualifying rate is at 6.10% (for all deals except 5 year fixed rates) and that will likely be 6.25% by May 3rd
- keep an eye on the BA (Banker's Acceptance) Rate as it is what Variable Rate Mortgages are priced on. If and when Prime goes up from 2.25%, the BA Rate will be on the rise too and this could lead to larger increments below Prime for VRMs (think Prime minus 0.60% in the summer and Prime minus 0.80% by next spring)
- I attended the CMP Awards on April 23rd as a Finalists in the BDM of the Year category. Alas, I did not win, but it was truly an honour just to be nominated. Thanks to Home Trust, the Atlantic Brokers, and CMP Magazine
- AIG is now Canada Guaranty. Other than the name change, nothing has changed there. Home Trust uses Canada Guaranty and they have some great products to offer.
- we are seeing a number a trends come out by both the government and the insurers aimed squarely at slowing down the economy. This is not a bad thing (think what goes up must come down). If we recover out of this recession slowly, we will also recover strongly. And no recovery is without it's pain. Time to get used to the new way of doing business.
- last thought...think back to the summer of 2008. Fixed rates were 5.25% to 5.99% and VRMs were Prime minus 0.50% to 0.90%. Look forward to the summer of 2010 and you might see the same type of thing - low risk options cost more! If your client wants to take some risk on a VRM, they will get the better rate; if they want the security of a guaranteed rate for 5 years, they will have to pay a bit more for it.

Spring Market - boom or bust?

How will the spring market flesh out for you? Will it be a Boom or a Bust? Let's look at the stats. The new regulations come in during April (9th for the CMHC changes and 19th for Federal regulations) and this will affect a small amount volume overall. Rates have moved up, with the promise of them moving higher (don't be fooled when the rates move down by 10-20 bps, that is just the natural "settling" of the rates) and this will move clients out of the market. The new qualifying rate won't affect the market over and above the rate increase as those who can't qualify when rates go up still can't qualify.

So where does this leave our question...Boom or Bust. That is going to fall on potential buyer's preception of the market and the economy. If they feel that they have to buy now, no matter what, that is when they will buy. This is the time where you, as mortgage professionals, can help to guide that preception. A smile and an "everything's great" attitude will carry over to the client. Being Debbie Downer will rub off on the client in a negative way and they will walk. Staying positive now will pay dividends down the road.

So, what's the lesson...don't get caught in the "negative trap". Your words and actions will drive a Booming Spring Market!