I have been bad...not posting on my blog since September is just not acceptable. So I have posted a bunch of new posts tonight. We have had a very busy October with the re-launch of our B products, new lending areas, our new One-Charge, and great rates on our Insured/Accelerator products.
So I will try to do new posts every week going forward, time permitting.
Thanks.
Thursday, October 28, 2010
Focus on Refinance
A recent article suggested that more Canadians are choosing to stay in their current home and renovate rather than move to upgrade. In fact, the split between purchase and refinance business this year has shown up to a 50/50 split rather than the typical 25% refinance and 75% purchase split.
What does this mean for you? Tayloring your business to go with trends is a good way to keep deals flowing in the door. Advertise that you are the "refinance expert" and show clients ways that they can tap into their equity to refinance, pay for renovations, and ultimately increase the value of their home.
With great rates, like our 3.49% Rate Promo for 5 year Fixed, your clients can even save money while borrowing more.
What does this mean for you? Tayloring your business to go with trends is a good way to keep deals flowing in the door. Advertise that you are the "refinance expert" and show clients ways that they can tap into their equity to refinance, pay for renovations, and ultimately increase the value of their home.
With great rates, like our 3.49% Rate Promo for 5 year Fixed, your clients can even save money while borrowing more.
Social Networking
Social networking is catching on in a big way. Home Trust now has a Twitter account too. For you as a broker, social networking should be looked at as planning for the future. Currently (according to CMHC) only about 3% of new mortgages are sourced from social networking (Twitter, Facebook, Linkedin, etc.), but you have to look at the current demographic using social networking (approximate ages 18 to 35) as the future mortgage borrowers. These people continue to move into the "home buyer" category and it is important to get them thinking early of you as their first choice when it comes to mortgage financing. So set up a Twitter, Facebook, and/or Linkedin today and get your message out there (www.twitter.com; www.facebook.com; www.linkedin.com).
Bank Rate Forecast
Rate Forecast
Here is a good article from Canadian Mortgage Trends (www.canadianmortgagetrends.com) last week that talks about where Fixed and Variable rates are headed in the near future. This information will help you in your discussions with clients as to what to do today when choosing their mortgage options.
October 12, 2010
Canadian Interest Rate Forecast
After bursting out of the gates earlier this year, the economy is hobbling to the 2010 finish line. With inflation well-contained, interest rate expectations are down across the board since the last rate forecast in August.
Rate Forecasting In Perspective
Major economists are paid well to tell us where interest rates are headed. They have access to every data source, academic study, historical backtest, and analysis tool imaginable. While far from infallible, these forecasts serve as a point of reference when creating amortization models based on future rate assumptions.
Below you'll find a summary of the latest year-end interest rate projections from each of Canada's Big 5 banks. Use them only as a rough guide because rate outlooks have considerable margins of error.
Latest Overnight Rate Forecast
The Bank of Canada's overnight target has a direct impact on variable mortgage rates.
Bank 2010 2011
BMO 1.00 2.25
CIBC 1.00 1.75
RBC 1.00 2.25
Scotia 1.00 1.75
TD 1.00 2.00
Year-end Avg 1.00 2.00
Chg vs Today 0.00 +1.00
(All figures rounded to the nearest 1/4 point increment.)
Latest 5-Year Government Bond Yield Forecast
Government bond yields drive 5-year fixed mortgage rates.
Bank 2010 2011
BMO 2.03 3.05
RBC 2.45 3.50
Scotia 1.85 2.50
TD 2.30 3.10
Year-end Avg 2.16 3.04
Chg vs Today +0.29 +1.17
(CIBC's 5-year bond forecast was not available.)
Variable-Rate Mortgage Forecast
Most analysts now expect the Bank of Canada to remain on the sidelines until 2nd quarter 2011. On average, major economists now predict a 100 basis point increase in the overnight rate over the next 15 months. Their outlooks, if accurate, imply a 4.00% prime rate by December 31, 2011. Prime rate is currently 3.00% and the 10-year average of prime is 4.50%.
Based on a 75-basis-point discount from prime, these forecasts suggests 5-year variable rates in the 3.25% range by year-end 2011.
Fixed-Rate Mortgage Forecast
Banks foresee 5-year bond yields climbing 117 basis points in the same 15-month timeframe. That would put the 5-year yield at 3.41% by the end of next year. The 10-year average of the five-year yield is 3.93%.
Assuming a typical 120 basis point spread above yields, these forecasts suggest deep-discounted 5-year fixed rates could rise to roughly 4.24% by year-end 2011.
______________________________________________
Things to Note: These forecasts are made by the banks and are subject to frequent change. This data is provided only for general interest. Always discuss your needs and risk tolerance with a mortgage professional before acting on any information you read online.
History has shown that it's near impossible to accurately predict interest rates long-term so use these figures at your own risk. That said, while economist projections are often wrong, they are still one of the better sources of educated opinion on interest rates.
"Chg" = the expected change in rates from today. In other words, Chg is the average forecast minus today's rates. All forecasts are based on the respective year-end.
Not all contributors have published updates since CMT's last rate forecast review. For banks providing mean quarterly overnight rate forecasts, we have averaged their Q4 and Q1 forecasts to estimate year-end figures for 2010 and 2011. Results are rounded to the nearest 1/4 point, in keeping with the Bank of Canada's standard rate setting increments.
Data Sources: BMO, CIBC, RBC, Scotiabank, TD
Here is a good article from Canadian Mortgage Trends (www.canadianmortgagetrends.com) last week that talks about where Fixed and Variable rates are headed in the near future. This information will help you in your discussions with clients as to what to do today when choosing their mortgage options.
October 12, 2010
Canadian Interest Rate Forecast
After bursting out of the gates earlier this year, the economy is hobbling to the 2010 finish line. With inflation well-contained, interest rate expectations are down across the board since the last rate forecast in August.
Rate Forecasting In Perspective
Major economists are paid well to tell us where interest rates are headed. They have access to every data source, academic study, historical backtest, and analysis tool imaginable. While far from infallible, these forecasts serve as a point of reference when creating amortization models based on future rate assumptions.
Below you'll find a summary of the latest year-end interest rate projections from each of Canada's Big 5 banks. Use them only as a rough guide because rate outlooks have considerable margins of error.
Latest Overnight Rate Forecast
The Bank of Canada's overnight target has a direct impact on variable mortgage rates.
Bank 2010 2011
BMO 1.00 2.25
CIBC 1.00 1.75
RBC 1.00 2.25
Scotia 1.00 1.75
TD 1.00 2.00
Year-end Avg 1.00 2.00
Chg vs Today 0.00 +1.00
(All figures rounded to the nearest 1/4 point increment.)
Latest 5-Year Government Bond Yield Forecast
Government bond yields drive 5-year fixed mortgage rates.
Bank 2010 2011
BMO 2.03 3.05
RBC 2.45 3.50
Scotia 1.85 2.50
TD 2.30 3.10
Year-end Avg 2.16 3.04
Chg vs Today +0.29 +1.17
(CIBC's 5-year bond forecast was not available.)
Variable-Rate Mortgage Forecast
Most analysts now expect the Bank of Canada to remain on the sidelines until 2nd quarter 2011. On average, major economists now predict a 100 basis point increase in the overnight rate over the next 15 months. Their outlooks, if accurate, imply a 4.00% prime rate by December 31, 2011. Prime rate is currently 3.00% and the 10-year average of prime is 4.50%.
Based on a 75-basis-point discount from prime, these forecasts suggests 5-year variable rates in the 3.25% range by year-end 2011.
Fixed-Rate Mortgage Forecast
Banks foresee 5-year bond yields climbing 117 basis points in the same 15-month timeframe. That would put the 5-year yield at 3.41% by the end of next year. The 10-year average of the five-year yield is 3.93%.
Assuming a typical 120 basis point spread above yields, these forecasts suggest deep-discounted 5-year fixed rates could rise to roughly 4.24% by year-end 2011.
______________________________________________
Things to Note: These forecasts are made by the banks and are subject to frequent change. This data is provided only for general interest. Always discuss your needs and risk tolerance with a mortgage professional before acting on any information you read online.
History has shown that it's near impossible to accurately predict interest rates long-term so use these figures at your own risk. That said, while economist projections are often wrong, they are still one of the better sources of educated opinion on interest rates.
"Chg" = the expected change in rates from today. In other words, Chg is the average forecast minus today's rates. All forecasts are based on the respective year-end.
Not all contributors have published updates since CMT's last rate forecast review. For banks providing mean quarterly overnight rate forecasts, we have averaged their Q4 and Q1 forecasts to estimate year-end figures for 2010 and 2011. Results are rounded to the nearest 1/4 point, in keeping with the Bank of Canada's standard rate setting increments.
Data Sources: BMO, CIBC, RBC, Scotiabank, TD
Rate Projections from Ben Tal
Rate Uncertainty & Ben Tal's Call
Choosing between a fixed or variable mortgage can seem like throwing darts with your eyes closed.
Borrowers today are seeing headlines like this:
Economists want BoC to keep raising interest rates
Then they turn the page and see this:
Could the Bank of Canada be forced to cut rates again?
Even the Bank of Canada's Mark Carney isn't too sure of the future.
On CBC yesterday Carney said, "Upside risks are balanced by downside risks...The upside is as likely as the downside."
At a FirstLine Mortgages event yesterday, CIBC economist Benjamin Tal translated that. "What Carney is telling us," Tal said, "is (the Bank of Canada) has no clue what is going to happen."
Tal added:
"The bond market is pricing in inflation below 1.50% for the next ten years." (But he believes "the bond market is mispricing inflation.")
The Bank of Canada now predicts the economy won't reach its full potential until year-end 2012, one year later than previously expected.
The BoC doesn't need to raise rates to slow consumer credit because "it's already happening."
Consumers' spending capability is at a "30-year low." It won't take many rate hikes to slow the economy from here.
As a result, Tal asserted: "I don't expect (variable or fixed) mortgage rates to rise in any significant way in the next 12 months." There is "no rush to make a mortgage decision."
When someone in the audience asked him which mortgage he'd take today (fixed or variable), Tal replied:
"I'm almost convinced that over the next 2-3 years variable will be better. In the last two years fixed will be better. But, the gap (between fixed and variable) will not be significant over five years."
That said, if he had to choose today, he feels that "mathematically speaking," variable-rate mortgages will "probably" outperform fixed rates.
Choosing between a fixed or variable mortgage can seem like throwing darts with your eyes closed.
Borrowers today are seeing headlines like this:
Economists want BoC to keep raising interest rates
Then they turn the page and see this:
Could the Bank of Canada be forced to cut rates again?
Even the Bank of Canada's Mark Carney isn't too sure of the future.
On CBC yesterday Carney said, "Upside risks are balanced by downside risks...The upside is as likely as the downside."
At a FirstLine Mortgages event yesterday, CIBC economist Benjamin Tal translated that. "What Carney is telling us," Tal said, "is (the Bank of Canada) has no clue what is going to happen."
Tal added:
"The bond market is pricing in inflation below 1.50% for the next ten years." (But he believes "the bond market is mispricing inflation.")
The Bank of Canada now predicts the economy won't reach its full potential until year-end 2012, one year later than previously expected.
The BoC doesn't need to raise rates to slow consumer credit because "it's already happening."
Consumers' spending capability is at a "30-year low." It won't take many rate hikes to slow the economy from here.
As a result, Tal asserted: "I don't expect (variable or fixed) mortgage rates to rise in any significant way in the next 12 months." There is "no rush to make a mortgage decision."
When someone in the audience asked him which mortgage he'd take today (fixed or variable), Tal replied:
"I'm almost convinced that over the next 2-3 years variable will be better. In the last two years fixed will be better. But, the gap (between fixed and variable) will not be significant over five years."
That said, if he had to choose today, he feels that "mathematically speaking," variable-rate mortgages will "probably" outperform fixed rates.
Tuesday, September 28, 2010
New Brunswick Broker Licensing
If you are a broker in New Brunswick, or are doing business in NB, this will be of interest to you. The NB government is now licensing all brokers. Here is an article prepared by a law firm outlining the details:
New Brunswick's New Cost of Credit Disclosure Act
New Brunswick has a new Cost of Credit Disclosure Act, c.28.3 (the "Act") and New Brunswick Regulation 2010-104 under the Cost of Credit Disclosure Act (the "Regulation"), both of which became effective on September 15, 2010. The Act substantially addresses New Brunswick's commitment to harmonize its cost of credit disclosure requirements with the laws of other Canadian jurisdictions in accordance with the principles and the harmonization template agreed to in 1998 by the federal, provincial and territorial governments. The provisions of the Act and the Regulation change significantly the disclosure requirements applicable in New Brunswick. The Act was passed in 2002 but was not brought into force until new regulations were passed.
Registration Requirement for Lenders, Lessors and Credit Brokers
Of particular note is that lessors who provide financing for personal, family or household purposes now must register under the Act in order to carry on that business in New Brunswick. Similarly, credit brokers who arrange, facilitate or attempt to arrange consumer credit must be registered to carry on this activity in New Brunswick. Lenders were required to be registered in New Brunswick under the former legislation, and the requirement continues under the Act, now referring to lenders as "credit grantors."
Overview
The Act requires credit grantors, lessors and credit brokers acting in the ordinary course of business to register under the Act unless they come within one of several exemptions specified in the Regulation. The Act only applies to lessors, credit brokers, or credit grantors insofar as their respective credit agreements or lease agreements are entered into primarily for personal, family, or household purposes. Lenders should note that registrations made under the previous version of the Act will remain in effect until such registrations expire.
The Act defines a "credit grantor" as a person who (i) has entered into, or who is negotiating to enter into, a credit agreement under which the person extends or is to extend credit to a borrower if the credit is not in respect of the sale of goods intended for resale, and the credit is for $100 or more or (ii) is an assignee of the original credit grantor's rights under a credit agreement. The Act defines a "lessor" as a person who (i) negotiates to enter into or who enters into a lease under which the person leases goods to a lessee or (ii) is an assignee of the original lessor's rights under the lease. The Act defines a "credit broker" as anyone who, for compensation, arranges, negotiates or facilities (or attempts to do any of the foregoing) an extension of credit from a credit grantor to a borrower.
A "credit agreement" is an agreement under which credit is extended and includes (a) an agreement in relation to (i) a loan of money, (ii) a credit sale, (iii) a line of credit, or (iv) a credit card, (b) a renewal of or an amendment to an agreement referred to in (b), and (c) a lease.
Mortgage Brokers and Mortgage Lenders
Parties who arrange the financings of mortgages must ensure they review the requirements of the Act and understand their responsibilities because the scope of the definition of "credit agreement" is broad enough to include mortgage loans (which the Regulation defines as a loan of money secured by a charge against real property). Accordingly, mortgage brokers and mortgage lenders will typically be caught within the definition of credit broker or credit grantor, as the case may be, and must, therefore, register under the Act. This is a significant change in the legislative framework since, previously, mortgage lenders typically were not required to issue disclosure documents to borrowers in connection with New Brunswick mortgage loans.
Given that it is now an offence under the Act to fail to provide the required disclosure information, lessors, credit brokers, and credit grantors will want to ensure that they understand and comply with the provisions of the Act and should review the Act and the Regulation in detail.
New Brunswick's New Cost of Credit Disclosure Act
New Brunswick has a new Cost of Credit Disclosure Act, c.28.3 (the "Act") and New Brunswick Regulation 2010-104 under the Cost of Credit Disclosure Act (the "Regulation"), both of which became effective on September 15, 2010. The Act substantially addresses New Brunswick's commitment to harmonize its cost of credit disclosure requirements with the laws of other Canadian jurisdictions in accordance with the principles and the harmonization template agreed to in 1998 by the federal, provincial and territorial governments. The provisions of the Act and the Regulation change significantly the disclosure requirements applicable in New Brunswick. The Act was passed in 2002 but was not brought into force until new regulations were passed.
Registration Requirement for Lenders, Lessors and Credit Brokers
Of particular note is that lessors who provide financing for personal, family or household purposes now must register under the Act in order to carry on that business in New Brunswick. Similarly, credit brokers who arrange, facilitate or attempt to arrange consumer credit must be registered to carry on this activity in New Brunswick. Lenders were required to be registered in New Brunswick under the former legislation, and the requirement continues under the Act, now referring to lenders as "credit grantors."
Overview
The Act requires credit grantors, lessors and credit brokers acting in the ordinary course of business to register under the Act unless they come within one of several exemptions specified in the Regulation. The Act only applies to lessors, credit brokers, or credit grantors insofar as their respective credit agreements or lease agreements are entered into primarily for personal, family, or household purposes. Lenders should note that registrations made under the previous version of the Act will remain in effect until such registrations expire.
The Act defines a "credit grantor" as a person who (i) has entered into, or who is negotiating to enter into, a credit agreement under which the person extends or is to extend credit to a borrower if the credit is not in respect of the sale of goods intended for resale, and the credit is for $100 or more or (ii) is an assignee of the original credit grantor's rights under a credit agreement. The Act defines a "lessor" as a person who (i) negotiates to enter into or who enters into a lease under which the person leases goods to a lessee or (ii) is an assignee of the original lessor's rights under the lease. The Act defines a "credit broker" as anyone who, for compensation, arranges, negotiates or facilities (or attempts to do any of the foregoing) an extension of credit from a credit grantor to a borrower.
A "credit agreement" is an agreement under which credit is extended and includes (a) an agreement in relation to (i) a loan of money, (ii) a credit sale, (iii) a line of credit, or (iv) a credit card, (b) a renewal of or an amendment to an agreement referred to in (b), and (c) a lease.
Mortgage Brokers and Mortgage Lenders
Parties who arrange the financings of mortgages must ensure they review the requirements of the Act and understand their responsibilities because the scope of the definition of "credit agreement" is broad enough to include mortgage loans (which the Regulation defines as a loan of money secured by a charge against real property). Accordingly, mortgage brokers and mortgage lenders will typically be caught within the definition of credit broker or credit grantor, as the case may be, and must, therefore, register under the Act. This is a significant change in the legislative framework since, previously, mortgage lenders typically were not required to issue disclosure documents to borrowers in connection with New Brunswick mortgage loans.
Given that it is now an offence under the Act to fail to provide the required disclosure information, lessors, credit brokers, and credit grantors will want to ensure that they understand and comply with the provisions of the Act and should review the Act and the Regulation in detail.
Saturday, July 3, 2010
Summer Hours
I heard an great concept a few years ago...outwork your competition. We have all heard "work smarter, not harder". This goes along with it. Outworking your competition is easy during the summer. Lots of people are taking vacations but some are taking Friday afternoon off. What if you were to work those Friday afternoons when other were at the cottage or on the golf course. Just like that, you would be outworking your competition. Vacations are an important way to recharge the batteries. But you are usually not that busy during the summer months that you "need" to only work four day weeks. Top producers are often workaholics, but you don't need to work 20 hour days. Just be available and you will become a top producer.
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