Author Archive

First of all, my warmest wishes for a very Happy New Year, wishing you a year full of happiness, good health and prosperity.

I hope 2008 was a good year for you, in the mortgage industry we saw major changes in 2008…

1. The U.S. sub-prime fiasco made lenders and mortgage investors run for cover. Canada lost some good lenders
2. Rate Premiums. Bond yields and the Bank of Canada’s key interest rates fell substantially in 2008.  Yet, heightened credit risk forced lenders to pay more for the money they lent out.  That led to record-high mortgage spreads, high fixed rates, and for the first time in a very long time we saw prime plus for variable rate mortgages and secured lines of credit.
3. Amortizations. 2008 saw the government eliminate the popular 40-year amortizations.
4. Minimum down payment The government brought back the 5% minimum down payment
5. Government Support of the Market. Canada Mortgage Bonds program is the main source and for non-bank lenders, sometimes the only source of capital.  In October, the Finance Department again came to the rescue with its mortgage buyback initiative.

2009

The Big 5 banks have forecasted that they expect further rate cuts by the Bank of Canada in 2009.  They are expecting between 1/2 % to 1%.

Here is what the big banks are forecasting for interest rates:

• TD Economics – TD expects a rate cut of 50 basis points in January 2009
• BMO expects 1/2 percent rate cut in January 2009 –
• RBC forecasts 1/2 percent drop in January 2009 –
• CIBC Wood Gundy expects a 3/4% rate reduction by February/March 2009
• Scotia is forecasting a 1% drop for 2009

The big question is, will the banks pass on the rate cuts made by the Bank of Canada!

Do you think the banks will pass on the full reductions!  What rate are you currently paying!

Next Bank of Canada announcement is January 20th

I have created a Video introducing Verico Designer Mortgages Inc. Take a look – and comment, please.

Profile

Charmaine Idzerda is the owner and broker of record of Verico Designer Mortgages Inc. Charmaine is an Accredited Mortgage Professional and been in the banking industry for more than 25 years. Prior to specializing in mortgages, she was a Relationship Manager for the private division of a large commercial bank.

Charmaine is an active member of the community, since 2003 she holds the position of Vice-President of the St Vincent de Paul Society in North Burlington. St Vincent de Paul Society helps those less fortunate in the community.

VERICO Designer Mortgages specializes in residential and commercial mortgages.

Charmaine’s focus has always been client service, “I believe in treating others as I would like to be treated” says Charmaine. “This has allowed me to create long term relationships with my clients and strong referrals of their friends and family.”

Charmaine joined the VERICO network three years ago. Charmaine and her team have laid the foundation for an incredibly successful business. All agents of VERICO Designer Mortgages go through a specified training program in order for them to represent VERICO Designer Mortgages in a professional manner.

Each Verico office is independently owned and operated.

Website: www.DesignerMortgages.ca

VERICO Designer Mortgages Inc.
#5 – 1253 Silvan Forest Drive, Burlington Ontario L7M0B7
Phone: (905) 336 5997
Fax: 1.866.824.8057
Toll free: 1.866.824.8057

Yes, I am afraid so. Daily I am receiving emails about products that are been discontinued and tightening of credit guidelines. Mortgages that I could get approved 6 months ago are now been declined. Fixed interest rates are increasing; the discount from prime on the variable has disappeared. Today, four banks have informed me that their variable rate is now prime plus 1% . CIBC broker division has totally discontinued their variable rate products.

The reason for this is that the banks own costs of funding is increasing, the banks are beginning to pass this cost on to their clients through higher lending rates in an effort to preserve profitability. This trend, in addition to a broader slowdown in the pace of lending due to higher risks has all contributed to higher interest rates.

FYI – The Big Five’s Canadian bank’s retail businesses, earned $2.73-billion in the last quarter.
“There’s no doubt the credit crunch has already squeezed profits, says Chris Hodgson, head of Canadian banking at Bank of Nova Scotia. The delicate balance, he explains, is how to pass on some of the banks’ pain via higher rates on mortgages and loans without squeezing the consumer too much and slowing things down further.”

The credit crunch means that banks are paying significantly more to obtain money to lend to customers.
The premium that banks now pay because of the liquidity crunch is now more than 100 basis points (1%) on five-year variable-rate mortgages, compared with about 5 basis (0.05%) points a year ago, Mr. Hodgson said. So far, “we’ve held the line, we haven’t really passed that on to consumers.”

Many of you have variable rate mortgages, you maybe wondering if this is the time to lock in. The information I am getting from economist is that we could see prime rate decreasing by 1% in the coming year, this could be the reason why lenders are now offering prime plus 1% on variable rate mortgages. Your bank would probably love you to lock into a fixed rate, do you think this is a good idea, when you are currently receiving prime (4.75%) less ……….?

The Bank of Canada’s next scheduled date for announcing the overnight rate target is 21 October 2008.

We should certainly count our blessings, but we should also make our blessings count.”
– Neil A. Maxwell

Wishing you all the best this Thanksgiving!

Have you ever thought of buying a property from which you can run your business? Have you signed a lease where you are paying the hydro, maintenance and property taxes? Have you ever asked yourself if there is a better way?

Like most business owners you may assume that a bank is the only place to go when you want to get a commercial mortgage. By using the services of a mortgage professional you have access not only to the traditional lenders but also lenders that specialize in commercial mortgages.

The main differences between the traditional lenders and the non-conforming lenders are that the non-conforming lenders:

• do not require income verification,
• require a lower down-payment, and
• are more flexible on the type of property.

Their rates are slightly higher than traditional sources; however compared to paying a lease it may be worth your while to investigate this option.

Charmaine Idzerda is a Mortgage Broker with Verico Designer Mortgages Inc. To discuss your mortgage options please call her now at 905.336.5997 (Burlington), toll-free in North America 1.866.824.8057 or visit www.DesignerMortgages.ca