Branch Banking Now Trails Online Banking
Internet-banking-in-CanadaCanadians are slowly becoming less attached to branches.
In the last year, 80% of bank customers visited a branch while 86% used online banking. Two years ago, the numbers were reversed at 84% and 80% respectively.
This data comes from a new J.D. Power and Associates report released Thursday. The study finds that one in five bank customers have not made a branch visit in the past year, with many preferring to do business with e-banks like ING Direct, PC Financial and Manulife Bank.
J.D. Power also reports that customer satisfaction has dropped by a significant five percentage points at the major banks. That, and the online banking shift, should have major banks slightly concerned.
For financial institutions trying to woo tech-savvy customers, their website is becoming as important as their branches.
JD-powerLubo Li, a Senior Director at J.D. Power and Associates, covers Canada’s financial services sector. His research finds three key factors that clients look for in an online banking site (in this order):
1) Appearance of the website
e.g., aesthetics, a professional look, etc.
2) Ease of navigation
e.g., the intuitiveness of the user interface and number of clicks required to access key functions
3) Range of services
e.g., the breadth of products and services available on the same website
ING-DirectThe top-ranked online banking site in Canada is currently INGDirect.ca, according to J.D. Power. “Nobody is even close to ING,” says Li. ING’s website scored 879 out of 1,000 with respondents. The top-ranking Big 5 bank website was TD Canada Trust, with a score of 820.
"ING is doing a phenomenal job delivering a superior customer experience," Li says, adding that major banks could learn something from Canada’s #1 online bank brand. ING’s site is upbeat, clutter-free and highly intuitive in terms of navigation.
Interestingly, overall customer satisfaction with online banking sites fell this year by eight percentage points. Li partly attributes that to people having “higher expectations” for websites nowadays. So if your homepage looks like a build-it-yourself website template from 1998, it could be hurting you more than you realize
For a glimpse of ING's website click here.
Source:http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/07/branch-banking-now-trails-online-banking.html
Tuesday, July 31, 2012
Tuesday, July 24, 2012
Where are rates going?
Interest Rates Remain Steady
Last week, the Bank of Canada (BoC) made its fifth scheduled key interest rate announcement of 2012, and as expected, this rate remained at 1.00%, where it has been for almost two years.
At the same time, the BoC released its latest Monetary Policy Report (MPR), which is designed to give Canadians a look at where both the global and Canadian economy may be headed down the line.
This report is far more cautious in nature than the last MPR, which was released in April, and the BoC is forecasting weaker prospects for global economic growth, and is expecting the Canadian economy to pick up the pace in terms of growth in 2013. Currently, the BoC is projecting a 2.1 per cent growth in 2012 (down from April’s forecast of 2.4 percent in 2012 and 2013), 2.3 per cent in 2013, and 2.5 per cent in 2014 (up from 2.2 per cent).
“The economy is expected to reach full capacity in the second half of 2013, thus operating with a small amount of slack for somewhat longer than previously anticipated.” – BoC Monetary Policy Report, July 2012
Unlike April’s report, this one does not come with a warning from the BoC in regards to mortgage rates rising faster than expected.
Bond Yields Down
Five-year Government of Canada (GoC) bonds decreased three points last week, closing at 1.15 per cent on Friday. As five-year GoC bond yields drive fixed mortgage rates, we could be seeing a slight decrease in fixed rates over the next few weeks.
Mortgage Rate Recap
Earlier this month, a number of banks – including both TD and RBC, dropped their 1-year and 2-year fixed rates. Last week, Bank of Montreal and National Bank followed suit, reducing their 1-year and 2-year fixed rates to remain competitive. Desjardins also decreased their 2-year fixed rate, while TD Canada Trust reduced their 3-year fixed rate by 10bps from 3.95% to 3.85%. Note that these rates are at the branch level, not necessarily through a broker.
Source: http://www.ratehub.ca/mortgage-blog/2012/07/monday-mortgage-update-july-23-2012/#more-4172
Last week, the Bank of Canada (BoC) made its fifth scheduled key interest rate announcement of 2012, and as expected, this rate remained at 1.00%, where it has been for almost two years.
At the same time, the BoC released its latest Monetary Policy Report (MPR), which is designed to give Canadians a look at where both the global and Canadian economy may be headed down the line.
This report is far more cautious in nature than the last MPR, which was released in April, and the BoC is forecasting weaker prospects for global economic growth, and is expecting the Canadian economy to pick up the pace in terms of growth in 2013. Currently, the BoC is projecting a 2.1 per cent growth in 2012 (down from April’s forecast of 2.4 percent in 2012 and 2013), 2.3 per cent in 2013, and 2.5 per cent in 2014 (up from 2.2 per cent).
“The economy is expected to reach full capacity in the second half of 2013, thus operating with a small amount of slack for somewhat longer than previously anticipated.” – BoC Monetary Policy Report, July 2012
Unlike April’s report, this one does not come with a warning from the BoC in regards to mortgage rates rising faster than expected.
Bond Yields Down
Five-year Government of Canada (GoC) bonds decreased three points last week, closing at 1.15 per cent on Friday. As five-year GoC bond yields drive fixed mortgage rates, we could be seeing a slight decrease in fixed rates over the next few weeks.
Mortgage Rate Recap
Earlier this month, a number of banks – including both TD and RBC, dropped their 1-year and 2-year fixed rates. Last week, Bank of Montreal and National Bank followed suit, reducing their 1-year and 2-year fixed rates to remain competitive. Desjardins also decreased their 2-year fixed rate, while TD Canada Trust reduced their 3-year fixed rate by 10bps from 3.95% to 3.85%. Note that these rates are at the branch level, not necessarily through a broker.
Source: http://www.ratehub.ca/mortgage-blog/2012/07/monday-mortgage-update-july-23-2012/#more-4172
Thursday, June 7, 2012
Will Rate Rise?
Overnight Rate Held Steady
Bank-of-Canada-Benchmark-RateThe Bank of Canada has left its policy rate as is, at 1%.
In today’s rate announcement, the Bank also toned down hints that it may resume rate hikes sooner than expected.
What it didn't do, however, is remove a key statement from April about future rate increases being necessary.
Here’s more on that, and highlights from the BoC’s public release:
Bank-of-Canada“…Some modest withdrawal of the present considerable monetary policy stimulus may become appropriate…” (This phrase debuted in the BoC’s April report. The market was eager to see if it would remain, and it did. Carney wants debt-laden consumers to know he’s ready to lift rates as soon as conditions warrant.)
“The outlook for global economic growth has weakened in recent weeks.”
“Some of the risks around the European crisis are materializing and risks remain skewed to the downside. This is leading to a sharp deterioration in global financial conditions.” (Canadian interest rate policy is largely held captive by this factor. The BoC must watch—like the rest of us—to see how EU events unfold.)
“…(Canadian) housing activity has been stronger than expected, and households continue to add to their debt burden in an environment of modest income growth.” (Near-record-low rates continue to drive this activity.)
“…Domestic financial conditions remain very stimulative.” (In other words, things would have to get a lot worse to justify a rate cut.)
For mortgagors, the above suggests that prime rate will stay put at 3.00% for the foreseeable future. That should keep us in the longest period of flat rates since the 1950s.
Source:http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/06/overnight-rate-held-steady.html,June5,2012, Rob McLister, CMT
Bank-of-Canada-Benchmark-RateThe Bank of Canada has left its policy rate as is, at 1%.
In today’s rate announcement, the Bank also toned down hints that it may resume rate hikes sooner than expected.
What it didn't do, however, is remove a key statement from April about future rate increases being necessary.
Here’s more on that, and highlights from the BoC’s public release:
Bank-of-Canada“…Some modest withdrawal of the present considerable monetary policy stimulus may become appropriate…” (This phrase debuted in the BoC’s April report. The market was eager to see if it would remain, and it did. Carney wants debt-laden consumers to know he’s ready to lift rates as soon as conditions warrant.)
“The outlook for global economic growth has weakened in recent weeks.”
“Some of the risks around the European crisis are materializing and risks remain skewed to the downside. This is leading to a sharp deterioration in global financial conditions.” (Canadian interest rate policy is largely held captive by this factor. The BoC must watch—like the rest of us—to see how EU events unfold.)
“…(Canadian) housing activity has been stronger than expected, and households continue to add to their debt burden in an environment of modest income growth.” (Near-record-low rates continue to drive this activity.)
“…Domestic financial conditions remain very stimulative.” (In other words, things would have to get a lot worse to justify a rate cut.)
For mortgagors, the above suggests that prime rate will stay put at 3.00% for the foreseeable future. That should keep us in the longest period of flat rates since the 1950s.
Source:http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/06/overnight-rate-held-steady.html,June5,2012, Rob McLister, CMT
Thursday, May 31, 2012
CHMC Mortgage Survey
Are you curious to know what is going on in the mortgage industry? Check out these interesting statistics from the annual survey produced from CMHC.
71%: of consumers researched mortgages online, up from 65% in 2011. (Somewhere down the line we'll see this number in the 90% range.)
86%: of those researching mortgages online search for interest rates. (Rates are the #1 mortgage research topic. No surprise.)
61%: of buyers reported receiving explanations about the impact of mortgage prepayments and the effect of rising interest rates during their information and mortgage selection process.
71%: of consumers who went online used a mortgage calculator.
20%: of first-time buyers used social media (up from just 3% in 2010).
43%: of social media users used the interactive nature of social media either to solicit opinions or to provide answers to other mortgage consumers.
27%: of mortgage consumers used a mortgage broker to arrange their mortgage in 2012, vs. 23% in 2011.
46%: of consumers were contacted by their mortgage professional after their mortgage closed.
77%: of those using the services of a broker said they were satisfied with their experience.
1.9: the average number of brokers that recent buyers contacted in order to learn about mortgage options.
2.7: the average number of lenders that recent buyers contacted in order to learn about mortgage options.
34: the average age of a first-time homebuyer. The survey also found that first-time buyers have a:
higher incidence of using a mortgage broker
lower level of lender loyalty
higher incidence of using online resources for mortgage research
higher use of social media, and
greater time spent doing mortgage research.
5 weeks: the average time mortgage consumers spend doing research before making a mortgage product decision. First-time buyers spend an average of eight weeks.
We find these facts very interesting and can shed some light on the growth of the mortgage industry. For more detail and further information check out the full survey at
http://www.canadianmortgagetrends.com/files/cmhc-mortgage-consumer-survey-2012-1.pdf
Thursday, May 17, 2012
How To Get The Best Mortgage Rate
This Week's HOT TOPIC ... Getting the best rate
Ever wonder how your neighbour, colleague, or close friend got such a good deal on their new mortgage rate? Why they seem to get this fantastic rate that seems so much lower than any quote you got from your own bank?
In today's newsletter we are going to discuss five key ideas that you can implement in your mortgage shopping strategy so that you come out a winner. Yes, you too can have access to the lowest rates around.
Step 1 - Use a mortgage broker
No shock here. As most of our readers know we strongly believe in using your mortgage broker as a trusted resource. A broker can help reduce your time and energy spent on shopping for the best rate. Brokers have a good understanding of who is offering what rate. They can point out the lowest possible rate in the industry, but more importantly can also point out the pros and cons to that product.
Step 2 - Have good credit
It is important to have good credit when applying for a mortgage. Most of the posted rates you find on the internet are contingent on the applicant having a reasonable credit score. When applicants have less than average credit you may be looking at a higher rate than necessary.
Step 3 - Have a larger mortgage
When you approach a bank for a mortgage who do you think has a better chance at getting a better rate on the loan? Obviously a borrower with $300,000 in debt will fare better than some one looking to borrow $50,000. Bankers are more willing to let commissions go to lower your rate if they still stand to make money off your deal.
Step 4 - Bring additional business to the bank
Hey, if you are willing to roll your entire financial wealth over to one institution, then go for it. Just be aware that you are putting all your eggs in one basket. Some bankers, especially those on commission, will drool over the idea of gaining several accounts with one easy transaction, and may entice the representative to lower rates for you.
Step 5 - Use a smaller lender
Sometimes when approaching a big bank there is little to no wiggle room. They know that they can sit back and some one else is bound to walk through that door later today. Smaller lenders may not react the way. They deal on smaller volumes and tend to not want to let business go. Smaller lenders tend to give their best food forward upfront, no haggling necessary.
So if you are in the market for a new mortgage, and struggling to find the best rate out there, hopefully these five steps will help you. And if all else fails, come talk to us. Maybe what you are looking for isn't the cheapest product, but rather the best product for your financial needs.
Ever wonder how your neighbour, colleague, or close friend got such a good deal on their new mortgage rate? Why they seem to get this fantastic rate that seems so much lower than any quote you got from your own bank?
In today's newsletter we are going to discuss five key ideas that you can implement in your mortgage shopping strategy so that you come out a winner. Yes, you too can have access to the lowest rates around.
Step 1 - Use a mortgage broker
No shock here. As most of our readers know we strongly believe in using your mortgage broker as a trusted resource. A broker can help reduce your time and energy spent on shopping for the best rate. Brokers have a good understanding of who is offering what rate. They can point out the lowest possible rate in the industry, but more importantly can also point out the pros and cons to that product.
Step 2 - Have good credit
It is important to have good credit when applying for a mortgage. Most of the posted rates you find on the internet are contingent on the applicant having a reasonable credit score. When applicants have less than average credit you may be looking at a higher rate than necessary.
Step 3 - Have a larger mortgage
When you approach a bank for a mortgage who do you think has a better chance at getting a better rate on the loan? Obviously a borrower with $300,000 in debt will fare better than some one looking to borrow $50,000. Bankers are more willing to let commissions go to lower your rate if they still stand to make money off your deal.
Step 4 - Bring additional business to the bank
Hey, if you are willing to roll your entire financial wealth over to one institution, then go for it. Just be aware that you are putting all your eggs in one basket. Some bankers, especially those on commission, will drool over the idea of gaining several accounts with one easy transaction, and may entice the representative to lower rates for you.
Step 5 - Use a smaller lender
Sometimes when approaching a big bank there is little to no wiggle room. They know that they can sit back and some one else is bound to walk through that door later today. Smaller lenders may not react the way. They deal on smaller volumes and tend to not want to let business go. Smaller lenders tend to give their best food forward upfront, no haggling necessary.
So if you are in the market for a new mortgage, and struggling to find the best rate out there, hopefully these five steps will help you. And if all else fails, come talk to us. Maybe what you are looking for isn't the cheapest product, but rather the best product for your financial needs.
Tuesday, May 1, 2012
Interest Rate Outlook
Bank of Canada suggests rate hikes soon…
April 18, 2012 — Steve Garganis
The Bank of Canada met on Tuesday for the 3rd of eight scheduled meetings this year to set the Bank of Canada rate. As expected, no rate change… But there were some language in the meeting that suggests we could start to see rates go up as early as this year…. here’s an article from The Star and reaction from TD’s Economist.
In short, it appears and I stress the word, appears, as though Mr. Carney is warning us that interest rates will be rising sometime soon. But Economists aren’t buying into that warning just yet. There is still too much uncertainly about the global, U.S. and domestic economies. And as long as these concerns persist, then interest rates should remain low.
SOME EXPERTS DON’T BELIEVE ALL THE DOOM AND GLOOM STORIES
It’s true, we have experienced emergency interest rates for over 3 years now… It’s no secret the govt is concerned about Canadians get into too much debt. You’ve heard the figures. The average Canadians owes around 153% of their annual income…. concerns about a housing bubble. But how does that compare with the rest of the world? Here’s an interesting article from the Financial Post’s Andrew Coyne, which says there are other countries that carry 200% and 300% of their annual income in personal debt… there doesn’t seem to be the level of concern about their economies. So why are we in such a panic?
It appears we are at a point where rates could go up but a lot of things would have to fall into place before that happens… it could take 6, 9 months or even a few years before that happens… maybe longer…? Any rate increase is sure to be slow…. Don’t panic… if you see an opportunity where you can benefit from these low rates, then act on it… don’t let the media scare you into inaction or lack of action…..
And as always, speak with a professional that can discuss and explain the different mortgage products and trends… make an informed choice.
Source:http://canadamortgagenews.ca/2012/04/18/bank-of-canada-suggests-rate-hikes-soon/
April 18, 2012 — Steve Garganis
The Bank of Canada met on Tuesday for the 3rd of eight scheduled meetings this year to set the Bank of Canada rate. As expected, no rate change… But there were some language in the meeting that suggests we could start to see rates go up as early as this year…. here’s an article from The Star and reaction from TD’s Economist.
In short, it appears and I stress the word, appears, as though Mr. Carney is warning us that interest rates will be rising sometime soon. But Economists aren’t buying into that warning just yet. There is still too much uncertainly about the global, U.S. and domestic economies. And as long as these concerns persist, then interest rates should remain low.
SOME EXPERTS DON’T BELIEVE ALL THE DOOM AND GLOOM STORIES
It’s true, we have experienced emergency interest rates for over 3 years now… It’s no secret the govt is concerned about Canadians get into too much debt. You’ve heard the figures. The average Canadians owes around 153% of their annual income…. concerns about a housing bubble. But how does that compare with the rest of the world? Here’s an interesting article from the Financial Post’s Andrew Coyne, which says there are other countries that carry 200% and 300% of their annual income in personal debt… there doesn’t seem to be the level of concern about their economies. So why are we in such a panic?
It appears we are at a point where rates could go up but a lot of things would have to fall into place before that happens… it could take 6, 9 months or even a few years before that happens… maybe longer…? Any rate increase is sure to be slow…. Don’t panic… if you see an opportunity where you can benefit from these low rates, then act on it… don’t let the media scare you into inaction or lack of action…..
And as always, speak with a professional that can discuss and explain the different mortgage products and trends… make an informed choice.
Source:http://canadamortgagenews.ca/2012/04/18/bank-of-canada-suggests-rate-hikes-soon/
Thursday, April 26, 2012
To Clean Or Not To Clean
Should You Get Your Heating Ducts Cleaned?
A hot air furnace heats and distributes air through its ducting system.The ducts are usually made of sheet metal and are most obvious in your basement, where they hang from the floor joists.The return, or cold air, ducts bring air to the furnace, usually collecting it centrally in the house. The return air trunk duct is the big rectangular duct along the basement ceiling that enters the bottom of the furnace. The supply, or warm air, ducting usually exits from the top of the furnace. It starts with a trunk duct on the basement ceiling.The individual supply ducts, in round or smaller rectangular sheet metal, branch off the trunk duct and go to each room, where they terminate in a floor or wall register. Over time, dust and debris will collect in these ducts, particularly in the return air ducts.You may be wondering whether it would be worthwhile to have these ducts cleaned.
Duct cleaning is a major industry. As a homeowner, you may be regularly solicited to have your heating ducts cleaned on a regular basis. Claims are made that duct cleaning will:
provide you with better indoor air quality (or IAQ),
reduce the presence of house molds and allergens,
get rid of house dust,
result in more airflow and better delivery of warm air, and/or
reduce energy costs.
If you expect duct cleaning to make these improvements, you may be disappointed. It is difficult to find objective and independent research which substantiates these claims.
What Can Duct Cleaning Do For You?
A thorough duct cleaning done by a professional duct cleaner will remove dust and debris-pet hair, paper clips, children's toys and whatever else might collect down there. Ideally, the inside surface will be shiny and bright after cleaning. Duct cleaning may be justifiable to you personally for that very reason: you may not want to have your house air circulated through a duct passage that is not as clean as the rest of the house. However, duct cleaning will not usually change the quality of the air you breathe, nor will it significantly affect airflows or heating costs.
In the 1990s, duct cleaning research conducted by Canada Mortgage and Housing Corporation (CMHC)1,2 and the US Environmental Protection Agency (EPA)3 tested house and duct performance before and after cleaning. Researchers observed little or no discernible differences in the concentrations of house airborne particles or in duct airflows due to duct cleaning. This is because ducts are just metal passages.They cannot create dust. Most household dust comes from outdoor dust that has been tracked in or blows through windows or other openings. ''Dust'' is also created by human skin and hair shedding, pet debris, fibres from carpets, clothes, bedding, hobbies etc. In fact, as you walk around in your house you raise a small cloud of dust particles wherever you go. Dust will be present in one form or another whether you have clean ducts or not.
Householders often expect an efficient furnace filter will remove airborne dust. CMHC has tested the effectiveness of furnace filters in reducing household dust. While some very good filters effectively clean the air in the ducts, they do not create a dust-free environment in your house because of all the dust sources mentioned above. A good filter will help keep your air-conditioning coil, furnace heat exchanger, and supply ducts from accumulating circulated dust. For more information on filters consult the CMHC publication Your Furnace Filter in the About Your House series.
1 Efficiency of Residential Duct Cleaning , Auger, Donnini, and Nguyen Inc. for CMHC 1994
2 Use of Biocides by Residential Duct Cleaners , Figley Consulting Associates for CMHC, 1994
3 Should You Have the Air Ducts in Your Home Cleaned?, US EPA, 1997
When Does Duct Cleaning Make Sense?
There are several situations when duct cleaning could make sense (although there is little research data to support this).
If you have a problem with water in your ducts, this may result in mold growth in the duct. In this situation, solve the water problem first, clean and disinfect the ducts where mold growth has occurred, and have the rest of the ducting system cleaned as well. In some cases, it may be necessary or more cost effective to simply replace the affected duct areas.
If you are moving into a newly constructed house, and have doubts about the diligence of the construction crew, duct cleaning can be useful. Drywall dust, fibreglass pieces, and sawdust have no place in ducts. Duct cleaning will also catch the odd occurrence where lunch bags or soft drink cans have fallen or been swept into ducting. For similar reasons, duct cleaning may be advisable for older houses following major renovations.
If you are having trouble with furnace airflow, a duct cleaning could reveal significant blockages. Have the ducts cleaned before you embark on more expensive duct replacement or rerouting to solve an airflow problem. Cleaning of furnace and air conditioning components (e.g. furnace fan blower, air conditioning coil, humidifier, furnace heat exchanger, etc.) has been shown to make some difference in duct air flow.
If you look in the return air registers and see an accumulation of debris in the duct below, you may want to have it removed. CMHC research showed that return air ducts, which are relatively big and have slow moving air, are generally far dirtier than the supply ducts.You should be able to accomplish much of the return air duct cleaning with a household vacuum cleaner after removing the register grill. For example, households with hairy pets or young children may find it necessary to inspect their return air ducts more frequently. Do not expect any difference in airflow or house air quality after this cleaning.
How Should Your Ducts Be Cleaned?
There are various duct cleaning procedures available. Reputable duct cleaners will be familiar with different techniques and their effectiveness. Duct cleaners affiliated with heating and air conditioning firms may be able to provide a more thorough system tune-up. Check to see if the duct cleaners are affiliated with trade organizations.They should also be able to offer references from satisfied customers. Some duct cleaners visually inspect the ducts after their work, either through duct access panels that they cut into the sheet metal or by in-duct cameras. This allows some proof of the effectiveness of the cleaning.
Do not accept offers from duct cleaners to spray or fog the ducts upon completion of the work, ostensibly to get rid of residual bacteria or mold.There are no products registered under the Pest Control Products Act in Canada for residential duct cleaning. Registered products, if they existed, would have been tested for effectiveness and human safety. A proper duct cleaning job does not require the use of a biocide to clean up missed areas. Based on current research, broadcast spraying of biocides through houses is considered inappropriate if you wish to maintain good indoor air quality.
So... To Clean or Not To Clean?
This choice is up to you. Duct cleaning may possibly improve air quality of houses in cases where serious moisture or blockage problems exist in the ducting.
A comprehensive cleaning of all heating and cooling system components (furnace fan blower, furnace heat exchange, air conditioning coil, humidifier, ducts, etc.) may help air movement within the house. However, regular duct cleaning is probably unnecessary for most householders.
Some people will choose to have their ducts cleaned simply because they feel that they cannot do this task easily themselves, and they prefer to have any accumulation of dust and dirt within the house removed regularly. Ensure that any duct cleaning that takes place in your home does not include broadcast spraying of biocides within the duct system.
Source:http://www.cmhc.ca/en/co/maho/gemare/gemare_011.cfm
A hot air furnace heats and distributes air through its ducting system.The ducts are usually made of sheet metal and are most obvious in your basement, where they hang from the floor joists.The return, or cold air, ducts bring air to the furnace, usually collecting it centrally in the house. The return air trunk duct is the big rectangular duct along the basement ceiling that enters the bottom of the furnace. The supply, or warm air, ducting usually exits from the top of the furnace. It starts with a trunk duct on the basement ceiling.The individual supply ducts, in round or smaller rectangular sheet metal, branch off the trunk duct and go to each room, where they terminate in a floor or wall register. Over time, dust and debris will collect in these ducts, particularly in the return air ducts.You may be wondering whether it would be worthwhile to have these ducts cleaned.
Duct cleaning is a major industry. As a homeowner, you may be regularly solicited to have your heating ducts cleaned on a regular basis. Claims are made that duct cleaning will:
provide you with better indoor air quality (or IAQ),
reduce the presence of house molds and allergens,
get rid of house dust,
result in more airflow and better delivery of warm air, and/or
reduce energy costs.
If you expect duct cleaning to make these improvements, you may be disappointed. It is difficult to find objective and independent research which substantiates these claims.
What Can Duct Cleaning Do For You?
A thorough duct cleaning done by a professional duct cleaner will remove dust and debris-pet hair, paper clips, children's toys and whatever else might collect down there. Ideally, the inside surface will be shiny and bright after cleaning. Duct cleaning may be justifiable to you personally for that very reason: you may not want to have your house air circulated through a duct passage that is not as clean as the rest of the house. However, duct cleaning will not usually change the quality of the air you breathe, nor will it significantly affect airflows or heating costs.
In the 1990s, duct cleaning research conducted by Canada Mortgage and Housing Corporation (CMHC)1,2 and the US Environmental Protection Agency (EPA)3 tested house and duct performance before and after cleaning. Researchers observed little or no discernible differences in the concentrations of house airborne particles or in duct airflows due to duct cleaning. This is because ducts are just metal passages.They cannot create dust. Most household dust comes from outdoor dust that has been tracked in or blows through windows or other openings. ''Dust'' is also created by human skin and hair shedding, pet debris, fibres from carpets, clothes, bedding, hobbies etc. In fact, as you walk around in your house you raise a small cloud of dust particles wherever you go. Dust will be present in one form or another whether you have clean ducts or not.
Householders often expect an efficient furnace filter will remove airborne dust. CMHC has tested the effectiveness of furnace filters in reducing household dust. While some very good filters effectively clean the air in the ducts, they do not create a dust-free environment in your house because of all the dust sources mentioned above. A good filter will help keep your air-conditioning coil, furnace heat exchanger, and supply ducts from accumulating circulated dust. For more information on filters consult the CMHC publication Your Furnace Filter in the About Your House series.
1 Efficiency of Residential Duct Cleaning , Auger, Donnini, and Nguyen Inc. for CMHC 1994
2 Use of Biocides by Residential Duct Cleaners , Figley Consulting Associates for CMHC, 1994
3 Should You Have the Air Ducts in Your Home Cleaned?, US EPA, 1997
When Does Duct Cleaning Make Sense?
There are several situations when duct cleaning could make sense (although there is little research data to support this).
If you have a problem with water in your ducts, this may result in mold growth in the duct. In this situation, solve the water problem first, clean and disinfect the ducts where mold growth has occurred, and have the rest of the ducting system cleaned as well. In some cases, it may be necessary or more cost effective to simply replace the affected duct areas.
If you are moving into a newly constructed house, and have doubts about the diligence of the construction crew, duct cleaning can be useful. Drywall dust, fibreglass pieces, and sawdust have no place in ducts. Duct cleaning will also catch the odd occurrence where lunch bags or soft drink cans have fallen or been swept into ducting. For similar reasons, duct cleaning may be advisable for older houses following major renovations.
If you are having trouble with furnace airflow, a duct cleaning could reveal significant blockages. Have the ducts cleaned before you embark on more expensive duct replacement or rerouting to solve an airflow problem. Cleaning of furnace and air conditioning components (e.g. furnace fan blower, air conditioning coil, humidifier, furnace heat exchanger, etc.) has been shown to make some difference in duct air flow.
If you look in the return air registers and see an accumulation of debris in the duct below, you may want to have it removed. CMHC research showed that return air ducts, which are relatively big and have slow moving air, are generally far dirtier than the supply ducts.You should be able to accomplish much of the return air duct cleaning with a household vacuum cleaner after removing the register grill. For example, households with hairy pets or young children may find it necessary to inspect their return air ducts more frequently. Do not expect any difference in airflow or house air quality after this cleaning.
How Should Your Ducts Be Cleaned?
There are various duct cleaning procedures available. Reputable duct cleaners will be familiar with different techniques and their effectiveness. Duct cleaners affiliated with heating and air conditioning firms may be able to provide a more thorough system tune-up. Check to see if the duct cleaners are affiliated with trade organizations.They should also be able to offer references from satisfied customers. Some duct cleaners visually inspect the ducts after their work, either through duct access panels that they cut into the sheet metal or by in-duct cameras. This allows some proof of the effectiveness of the cleaning.
Do not accept offers from duct cleaners to spray or fog the ducts upon completion of the work, ostensibly to get rid of residual bacteria or mold.There are no products registered under the Pest Control Products Act in Canada for residential duct cleaning. Registered products, if they existed, would have been tested for effectiveness and human safety. A proper duct cleaning job does not require the use of a biocide to clean up missed areas. Based on current research, broadcast spraying of biocides through houses is considered inappropriate if you wish to maintain good indoor air quality.
So... To Clean or Not To Clean?
This choice is up to you. Duct cleaning may possibly improve air quality of houses in cases where serious moisture or blockage problems exist in the ducting.
A comprehensive cleaning of all heating and cooling system components (furnace fan blower, furnace heat exchange, air conditioning coil, humidifier, ducts, etc.) may help air movement within the house. However, regular duct cleaning is probably unnecessary for most householders.
Some people will choose to have their ducts cleaned simply because they feel that they cannot do this task easily themselves, and they prefer to have any accumulation of dust and dirt within the house removed regularly. Ensure that any duct cleaning that takes place in your home does not include broadcast spraying of biocides within the duct system.
Source:http://www.cmhc.ca/en/co/maho/gemare/gemare_011.cfm
Tuesday, April 24, 2012
How you can save up to $20,000 by refinancing your mortgages
How you can save up to $20,000 by refinancing your mortgages.
April 19, 2012 — Steve Garganis
We’ve seen a growing trend lately… Customers calling to find out if there was any way to take advantage of today’s record low rates….. If you are buying for the first time or are renewing a mortgage, then the answer is simple… YES.. But what if you are one of the thousands of Canadians that listened to their Bankers and the media or so-called ‘Experts’ and took at Fixed rate mortgage a few years ago.
You have a rate of 4.00% to 5.50% and you keep reading about record-low interest rates in the low 3.00% range….. what can you do? Well, here are 2 recent examples…. These are real clients…. These are real savings…
So where was the Banker in all this? Why didn’t the Banker call these clients to make them aware of the huge savings? In case you didn’t know it, the Banks are a business… and they want to maximize their profit. Don’t ever forget that.
CASE STUDY #1… 6 YEARS REMAINING AT 5.45%
We had a new client contact us with a $350k mortgage… they were with a BIG SIX bank.. their penalty to exit would be $10k… that’s a lot of money, and we don’t like anyone to pay penalties…..but we did the math and found this client a 3.29% mortgage for 5 years… the end result worked out to be a gross savings of $34,000… After paying the penalty, they realized a savings of $24,000 over the next 5 years. WOW! That’s an easy decision to make.. the clients also decided to add the penalty into the mortgage…. imagine savings almost $5,000 per year!
CASE STUDY #2… 7 REMAINING AT 5.25%
Another client had a $235k mortgage… also with a BIG SIX Bank… penalty to exit was $4k…. we also found a 5 yr mortgage at 3.29% for this client… the savings worked out to $23,000…less the penalty, that worked out to $19,000 in savings over the next 5 years!… Again, a no-brainer… Clients moved on this right away… we added the penalty into the mortgage and put almost $4,000 per year, into their pockets.
CAN YOU SAVE ON YOUR MORTGAGE?
We’re seeing more opportunity to save money by taking advantage of today’s low rates…. Don’t wait for your Bank to call. These are just a few, recent examples. If you’ve been thinking about how you can save on your mortgage, then take a few minutes and look into it. Get your mortgage reviewed by an unbiased person. Call a good Mortgage Broker. It could be worth a closer look. Give us a call at 416-410-6663 and speak to a mortgage broker now.
Source:http://canadamortgagenews.ca/2012/04/19/24000-and-19000-in-savings-by-refinancing-their-mortgages/
April 19, 2012 — Steve Garganis
We’ve seen a growing trend lately… Customers calling to find out if there was any way to take advantage of today’s record low rates….. If you are buying for the first time or are renewing a mortgage, then the answer is simple… YES.. But what if you are one of the thousands of Canadians that listened to their Bankers and the media or so-called ‘Experts’ and took at Fixed rate mortgage a few years ago.
You have a rate of 4.00% to 5.50% and you keep reading about record-low interest rates in the low 3.00% range….. what can you do? Well, here are 2 recent examples…. These are real clients…. These are real savings…
So where was the Banker in all this? Why didn’t the Banker call these clients to make them aware of the huge savings? In case you didn’t know it, the Banks are a business… and they want to maximize their profit. Don’t ever forget that.
CASE STUDY #1… 6 YEARS REMAINING AT 5.45%
We had a new client contact us with a $350k mortgage… they were with a BIG SIX bank.. their penalty to exit would be $10k… that’s a lot of money, and we don’t like anyone to pay penalties…..but we did the math and found this client a 3.29% mortgage for 5 years… the end result worked out to be a gross savings of $34,000… After paying the penalty, they realized a savings of $24,000 over the next 5 years. WOW! That’s an easy decision to make.. the clients also decided to add the penalty into the mortgage…. imagine savings almost $5,000 per year!
CASE STUDY #2… 7 REMAINING AT 5.25%
Another client had a $235k mortgage… also with a BIG SIX Bank… penalty to exit was $4k…. we also found a 5 yr mortgage at 3.29% for this client… the savings worked out to $23,000…less the penalty, that worked out to $19,000 in savings over the next 5 years!… Again, a no-brainer… Clients moved on this right away… we added the penalty into the mortgage and put almost $4,000 per year, into their pockets.
CAN YOU SAVE ON YOUR MORTGAGE?
We’re seeing more opportunity to save money by taking advantage of today’s low rates…. Don’t wait for your Bank to call. These are just a few, recent examples. If you’ve been thinking about how you can save on your mortgage, then take a few minutes and look into it. Get your mortgage reviewed by an unbiased person. Call a good Mortgage Broker. It could be worth a closer look. Give us a call at 416-410-6663 and speak to a mortgage broker now.
Source:http://canadamortgagenews.ca/2012/04/19/24000-and-19000-in-savings-by-refinancing-their-mortgages/
Monday, March 5, 2012
Banks are at it again… calling mortgage clients before maturity..
March 5, 2012 — Steve Garganis
With all the recent talk in the media about ‘rate wars’ and ‘mortgage market share’, it was only a matter of time before we saw this happening. Yes, the Banksters are at it again.
We’re getting reports that Banks are contacting borrowers 4, 5 and even 6 months prior to maturity. Supposedly, they are calling to ‘offer a great rate, if you sign now!’ Hey, that sounds great. Except the interest rates that we see being offered aren’t really that great. In fact, they are higher than what is available in the wholesale market.
This isn’t anything new. We saw this happen in late 2008 and early 2009. The Banks were telling clients to lock into Fixed rates if they were in Variable (and we told our clients to stick with Variable as interest rates were heading down… sure enough, they did go down)…. And they were offering supposed ‘special rates’ 4 to 6 months prior to maturity. The only problem is that the interest rates being offered were not as good as the Banks made it seem. And the timing of the product offerings were clearly wrong.
What makes this problem even more complex today, is that some of the Banks are offering NO FRILLS mortgages with limited prepayment privileges and NO option to pay the mortgage out in full unless you sell the house. They dangle an attractive interest rate but forget to tell you about the product limitations. STAY away from these products. They will come back to bite you in your bottom….. bottom line, that is.
Here’s some advice… Before signing any renewal offer, speak with your Mortgage Broker… find out if that offer and product are really as good as the Bank makes it seem. The stats tell us that most Canadians will not bother shopping and just sign their renewal offer… and that’s too bad. A 0.40% difference in rate on a $250,000 mortgage will cost you $4774 in the first 5 years alone. Don’t be so quick to sign what the Bank offers you… don’t be complacent….you could pay dearly for it.
Source:http://canadamortgagenews.ca/2012/03/05/banks-are-at-it-again-calling-mortgage-clients-before-maturity/
With all the recent talk in the media about ‘rate wars’ and ‘mortgage market share’, it was only a matter of time before we saw this happening. Yes, the Banksters are at it again.
We’re getting reports that Banks are contacting borrowers 4, 5 and even 6 months prior to maturity. Supposedly, they are calling to ‘offer a great rate, if you sign now!’ Hey, that sounds great. Except the interest rates that we see being offered aren’t really that great. In fact, they are higher than what is available in the wholesale market.
This isn’t anything new. We saw this happen in late 2008 and early 2009. The Banks were telling clients to lock into Fixed rates if they were in Variable (and we told our clients to stick with Variable as interest rates were heading down… sure enough, they did go down)…. And they were offering supposed ‘special rates’ 4 to 6 months prior to maturity. The only problem is that the interest rates being offered were not as good as the Banks made it seem. And the timing of the product offerings were clearly wrong.
What makes this problem even more complex today, is that some of the Banks are offering NO FRILLS mortgages with limited prepayment privileges and NO option to pay the mortgage out in full unless you sell the house. They dangle an attractive interest rate but forget to tell you about the product limitations. STAY away from these products. They will come back to bite you in your bottom….. bottom line, that is.
Here’s some advice… Before signing any renewal offer, speak with your Mortgage Broker… find out if that offer and product are really as good as the Bank makes it seem. The stats tell us that most Canadians will not bother shopping and just sign their renewal offer… and that’s too bad. A 0.40% difference in rate on a $250,000 mortgage will cost you $4774 in the first 5 years alone. Don’t be so quick to sign what the Bank offers you… don’t be complacent….you could pay dearly for it.
Source:http://canadamortgagenews.ca/2012/03/05/banks-are-at-it-again-calling-mortgage-clients-before-maturity/
Monday, February 27, 2012
HOW TO GET THE MOST OUT OF YOUR MONEY
RRSP, RESP, TSFA or Mortgage prepayment? Which has the best returns?
February 22, 2012 — Steve Garganis
Trying to decide what’s the best move can be difficult…. and I must admit, this is not an easy subject to tackle. There are so many opinions. But it’s important enough that I’m going to put my 2 cents in. My final recommendations are listed at the bottom if you want to fast forward.
First, let’s come to an understanding that we are all different and have different needs. you must ask for professional opinions and make up your own mind. Having said that, I think that for me, this is actually a very easy decision.
RESP If you have kids, put money into an Registered Education Savings Plan… the govt gives you 20% on a max contribution of $2500/yr per child.. that’s $500 of free money… Just be careful to not invest in any risky funds or stocks… you’re making 20% return already… don’t get greedy.
TFSA If you have some extra cash, then yes, put those funds into a Tax Free Savings Account. You can contribute $5,000 per year and any unused contribution limit carries forward each year… and the good news is that whatever investments are allowed for RRSPs are also allowed for TFSA. Funds can go in and come out and grow tax free. But I wouldn’t be putting too much in here while you still have a mortgage… Pay your mortgage off first.
RRSP An old favorite for many. Millions of Canadians have contributed to RRSPs in an attempt to be masters of their future and retirement. Mutual Funds have become a favorite investment within RRSPs. But now let me ask you… how has your RRSP performed for you? For most of us, that answer comes with some profanities…%@!)*&%!!! or something like that.
RRSP contributions are tax-deductible… and higher income earners will benefit greater…your funds can grow, tax-free… but you must pay taxes when you withdraw the funds. At age 71, you have 3 options…-transfer to a Registered Retirement Income Fund, -buy a life annuity (better when interest rates are high), -or take the cash (bad choice as you will have to include those funds as income in one tax year which will result in large tax bill.)
RRSPs are a way to grow your investments, tax-free, and defer paying the tax… but you will have to pay the tax… make no mistake about that…
MORTGAGE PREPAYMENT Probably the least exciting but the best choice for many.. just pay down your mortgage… your mortgage is not tax-deductible, unless you have a mortgage on an investment or rental property. Get rid of that mortgage faster..make prepayments… even little prepayments done regularly will make a difference…. On a $300,000 mortgage, a $3,000 annual prepayment will shorten your amortization from 25 years to 20 years, 10 months. Based on today’s 3.29% mortgage rate, that’s a savings of over $28,000. Hey, a $28k return on a $45k investment isn’t bad.
ONE MORE OPTION…INVEST IN REAL ESTATE Sure, we’ve all seen property values go up over the last few years… actually, they’ve gone up over the last 12 years.. this is a long bull market for real estate… and there will probably be a correction. But if you buy a rental property, you should plan to hold it for the long-term… 7 years or more… that’s usually enough time for any price correction to reverse itself. Rental properties are popular today because mortgage rates are low and vacancy rates are even lower.
Another way to invest in real estate is through private mortgages. Private mortgage rates run from 10% to 15%. It takes a little more knowledge and experience to understand this investment, but it could be worthwhile.. Just be careful to get as much information as possible before making any 2nd mortgage investment decision. These are RRSP eligible too. This subject will have to be covered in greater detail as there is a lot more to it.
FINAL DECISIONS. For me, RRSPs just haven’t performed well… And maybe I haven’t invested wisely…. One thing is certain, my Investment Advisors and Fund Managers all won… they take their cut off the top… Not all Investment Advisors are alike, but I seemed to have hooked up with those that talked a better game than they could deliver. Here’s a question… were you ever put into a Deferred Sales Charge (DSC) mutual fund? You know, the funds where you can’t exit the fund family for 5 or 6 years without paying a hefty penalty? I know several friends and clients that got pushed into those funds…. not one of them is happy… I am staying away from these funds…
In case you can’t tell, I’ve lost my faith in mutual funds and decided to manage my own money.. and guess what? I’ve done better than any advisor I know… I’m sure there are good advisors out there…but I’ve just decided that no one will care more about my money and future than me…
It’s time to take charge of our money…. so here are my suggestions…
Put money into an RESP… if you have kids, this is a no brainer… make sure to park that money in a safe, low risk investment… remember, you already made 20% with the govt’s contribution….let’s not get greedy.
Pay off your mortgage. Make lump sum prepayments… anything.. something is better than nothing… and try to increase your regular payments… this will accelerate the retirement of your mortgage.
If you have to invest in stocks or funds then put this into a TFSA…
Invest in real estate… it’s not exciting.. it’s not sexy… but history tells us it goes up over the long run…
RRSPs… putting them last on my list… I’m just not a fan of them… if you have other cash, why not invest it elsewhere… but if you have to put money in RRSPs, play it safe.. this is your future, your retirement… don’t gamble with it.
Seek professional advice…. if you’re not sure what to do, get some advice… if you don’t have anyone to turn to, feel free to contact me… if I can’t answer your questions, I’ll direct you to someone who can.
Source: February 22, 2012 — Steve Garganis, http://canadamortgagenews.ca/2012/02/22/rrsp-resp-tsfa-or-mortgage-prepayment-which-has-the-best-returns/
February 22, 2012 — Steve Garganis
Trying to decide what’s the best move can be difficult…. and I must admit, this is not an easy subject to tackle. There are so many opinions. But it’s important enough that I’m going to put my 2 cents in. My final recommendations are listed at the bottom if you want to fast forward.
First, let’s come to an understanding that we are all different and have different needs. you must ask for professional opinions and make up your own mind. Having said that, I think that for me, this is actually a very easy decision.
RESP If you have kids, put money into an Registered Education Savings Plan… the govt gives you 20% on a max contribution of $2500/yr per child.. that’s $500 of free money… Just be careful to not invest in any risky funds or stocks… you’re making 20% return already… don’t get greedy.
TFSA If you have some extra cash, then yes, put those funds into a Tax Free Savings Account. You can contribute $5,000 per year and any unused contribution limit carries forward each year… and the good news is that whatever investments are allowed for RRSPs are also allowed for TFSA. Funds can go in and come out and grow tax free. But I wouldn’t be putting too much in here while you still have a mortgage… Pay your mortgage off first.
RRSP An old favorite for many. Millions of Canadians have contributed to RRSPs in an attempt to be masters of their future and retirement. Mutual Funds have become a favorite investment within RRSPs. But now let me ask you… how has your RRSP performed for you? For most of us, that answer comes with some profanities…%@!)*&%!!! or something like that.
RRSP contributions are tax-deductible… and higher income earners will benefit greater…your funds can grow, tax-free… but you must pay taxes when you withdraw the funds. At age 71, you have 3 options…-transfer to a Registered Retirement Income Fund, -buy a life annuity (better when interest rates are high), -or take the cash (bad choice as you will have to include those funds as income in one tax year which will result in large tax bill.)
RRSPs are a way to grow your investments, tax-free, and defer paying the tax… but you will have to pay the tax… make no mistake about that…
MORTGAGE PREPAYMENT Probably the least exciting but the best choice for many.. just pay down your mortgage… your mortgage is not tax-deductible, unless you have a mortgage on an investment or rental property. Get rid of that mortgage faster..make prepayments… even little prepayments done regularly will make a difference…. On a $300,000 mortgage, a $3,000 annual prepayment will shorten your amortization from 25 years to 20 years, 10 months. Based on today’s 3.29% mortgage rate, that’s a savings of over $28,000. Hey, a $28k return on a $45k investment isn’t bad.
ONE MORE OPTION…INVEST IN REAL ESTATE Sure, we’ve all seen property values go up over the last few years… actually, they’ve gone up over the last 12 years.. this is a long bull market for real estate… and there will probably be a correction. But if you buy a rental property, you should plan to hold it for the long-term… 7 years or more… that’s usually enough time for any price correction to reverse itself. Rental properties are popular today because mortgage rates are low and vacancy rates are even lower.
Another way to invest in real estate is through private mortgages. Private mortgage rates run from 10% to 15%. It takes a little more knowledge and experience to understand this investment, but it could be worthwhile.. Just be careful to get as much information as possible before making any 2nd mortgage investment decision. These are RRSP eligible too. This subject will have to be covered in greater detail as there is a lot more to it.
FINAL DECISIONS. For me, RRSPs just haven’t performed well… And maybe I haven’t invested wisely…. One thing is certain, my Investment Advisors and Fund Managers all won… they take their cut off the top… Not all Investment Advisors are alike, but I seemed to have hooked up with those that talked a better game than they could deliver. Here’s a question… were you ever put into a Deferred Sales Charge (DSC) mutual fund? You know, the funds where you can’t exit the fund family for 5 or 6 years without paying a hefty penalty? I know several friends and clients that got pushed into those funds…. not one of them is happy… I am staying away from these funds…
In case you can’t tell, I’ve lost my faith in mutual funds and decided to manage my own money.. and guess what? I’ve done better than any advisor I know… I’m sure there are good advisors out there…but I’ve just decided that no one will care more about my money and future than me…
It’s time to take charge of our money…. so here are my suggestions…
Put money into an RESP… if you have kids, this is a no brainer… make sure to park that money in a safe, low risk investment… remember, you already made 20% with the govt’s contribution….let’s not get greedy.
Pay off your mortgage. Make lump sum prepayments… anything.. something is better than nothing… and try to increase your regular payments… this will accelerate the retirement of your mortgage.
If you have to invest in stocks or funds then put this into a TFSA…
Invest in real estate… it’s not exciting.. it’s not sexy… but history tells us it goes up over the long run…
RRSPs… putting them last on my list… I’m just not a fan of them… if you have other cash, why not invest it elsewhere… but if you have to put money in RRSPs, play it safe.. this is your future, your retirement… don’t gamble with it.
Seek professional advice…. if you’re not sure what to do, get some advice… if you don’t have anyone to turn to, feel free to contact me… if I can’t answer your questions, I’ll direct you to someone who can.
Source: February 22, 2012 — Steve Garganis, http://canadamortgagenews.ca/2012/02/22/rrsp-resp-tsfa-or-mortgage-prepayment-which-has-the-best-returns/
Thursday, February 23, 2012
CMHC forecasts a healthy housing market for 2012-13…. but fixed mortgage rates have started to climb.
CMHC issued a report that says the economy will expand at a moderate pace over the next few years, as reported in The Spectator. The Bank of Canada should also keep it’s trend setting rate low until mid 2013. This means Variable mortgage and secured lines of credit rates will remain low.
The report also says the average house price in Canada is expected to hit $368,900 this year. But, a closer look at the Greater Toronto Area market shows that house prices are climbing much faster. A lack of supply and a pent up demand, together with record low interest rates are fueling price increases. Reports of homes being sold above asking are popping up outside of Toronto.. including Milton, Georgetown, Oakville, Burlington and Hamilton.
If you’re in the market for a home, my advice would be to not wait til the Spring market. The market is now. Experienced realtors are telling me they have priced a 5% increase in the first 2 months of 2012. Waiting could cost homebuyers $18,000 or more.
FIXED MORTGAGE RATEShave started to climb. Earlier this week we saw RBC and TD pull their special mortgage rate offers… BIG SIX Banks don’t like to compete in the wholesale mortgage market with mortgage brokers… when these 2 banks realized no other BIG SIX bank was offering this rate, they quickly withdrew the offer… read this article... the BIG SIX banks are calling a truce? What does that mean…? Don’t you want your banks to compete? And that last paragraph by BMO’s Frank Techar is priceless.. “We went to 2.99 per cent to draw attention to the benefits of having a mortgage with a maximum amortization of 25 years”. This does make me a laugh a little… BMO’s NO FRILLS mortgage was a way to gain market share and entice borrowers into a restricted and closed mortgage product… Mortgage Brokers already had access to this rate and a NO FRILLS product through another lender… but it’s not a great product and the restrictions are costly…Most brokers will not recommend or even offer this product to their clients.
The ripple effects of this ‘truce’ are that wholesale mortgage rates have started to climb… ING and National Bank have also increased their rates. This could be temporary but if the Greeks get their act together and the U.S. economy starts to improve, we will see rate hikes…. My advice is get your mortgage preapproval now…. These are historical low interest rates… I’m not sure they will be here for much longer.
Source: http://canadamortgagenews.ca/category/mortgage-trends/ February 16, 2012 — Steve Garganis.
The report also says the average house price in Canada is expected to hit $368,900 this year. But, a closer look at the Greater Toronto Area market shows that house prices are climbing much faster. A lack of supply and a pent up demand, together with record low interest rates are fueling price increases. Reports of homes being sold above asking are popping up outside of Toronto.. including Milton, Georgetown, Oakville, Burlington and Hamilton.
If you’re in the market for a home, my advice would be to not wait til the Spring market. The market is now. Experienced realtors are telling me they have priced a 5% increase in the first 2 months of 2012. Waiting could cost homebuyers $18,000 or more.
FIXED MORTGAGE RATEShave started to climb. Earlier this week we saw RBC and TD pull their special mortgage rate offers… BIG SIX Banks don’t like to compete in the wholesale mortgage market with mortgage brokers… when these 2 banks realized no other BIG SIX bank was offering this rate, they quickly withdrew the offer… read this article... the BIG SIX banks are calling a truce? What does that mean…? Don’t you want your banks to compete? And that last paragraph by BMO’s Frank Techar is priceless.. “We went to 2.99 per cent to draw attention to the benefits of having a mortgage with a maximum amortization of 25 years”. This does make me a laugh a little… BMO’s NO FRILLS mortgage was a way to gain market share and entice borrowers into a restricted and closed mortgage product… Mortgage Brokers already had access to this rate and a NO FRILLS product through another lender… but it’s not a great product and the restrictions are costly…Most brokers will not recommend or even offer this product to their clients.
The ripple effects of this ‘truce’ are that wholesale mortgage rates have started to climb… ING and National Bank have also increased their rates. This could be temporary but if the Greeks get their act together and the U.S. economy starts to improve, we will see rate hikes…. My advice is get your mortgage preapproval now…. These are historical low interest rates… I’m not sure they will be here for much longer.
Source: http://canadamortgagenews.ca/category/mortgage-trends/ February 16, 2012 — Steve Garganis.
Tuesday, February 21, 2012
Mortgage Market Share — Top 10 Lenders
"Big-Banks" control three out of four mortgages in Canada’s $1.1 trillion mortgage market, and their share has been growing.
Here are the top 10 Canadian mortgage lenders by market share…
The Big Hitters:
1. RBC $186.3 billion, total market share 17.08%
2. TD Bank, $157.0 billion, total market share 14.40%
3. CIBC, $148.7 billion, total market share 13.64%
4. Scotiabank, $145.7 billion, total market share 13.36%
5. Desjardins, $81.3 billion, total market share 7.46%
6. BMO, $71.2 billion, total market share 6.53%
7. First National, $40.8 billion, total market share 3.74%
8. ING Direct, $30.2 billion, total market share 2.77%
9. National Bank, $29.3 billion, total market share 2.69%
10. HSBC, $19.7 billion, total market share 1.81%
Market share figures are estimates based on data from OSFI, the Bank of Canada, and McVay’s proprietary sources. Data is as of November 2011 (there is a lag in reporting). These statistics reflect both off-balance sheet securitized mortgages (prior to IFRS) and mortgage securitization retained on balance sheet as securities.
Some quick takes:
Canada’s Big 5 banks hold two out of three mortgages (65% market share).
The growth leader has been TD (Yes, despite criticism for its collateral charge mortgages). McVay says: “Collateral charges are a trend I expect to see right across the industry, as a way to secure customer relationships.” That’s because collateral charges generally make switching lenders more costly.
BMO has shed significant mortgage share since exiting the broker market (more on that this weekend), and also because of its strategy to build share in HELOCs.
National Bank has been doing well, says McVay, “largely from mortgage portfolios that it’s been buying, its broker association and its Power Financial linkage.”
source:http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/02/mortgage-market-share-top-10-lenders.html#more February 17, 2012 Rob McLister, CMT
Here are the top 10 Canadian mortgage lenders by market share…
The Big Hitters:
1. RBC $186.3 billion, total market share 17.08%
2. TD Bank, $157.0 billion, total market share 14.40%
3. CIBC, $148.7 billion, total market share 13.64%
4. Scotiabank, $145.7 billion, total market share 13.36%
5. Desjardins, $81.3 billion, total market share 7.46%
6. BMO, $71.2 billion, total market share 6.53%
7. First National, $40.8 billion, total market share 3.74%
8. ING Direct, $30.2 billion, total market share 2.77%
9. National Bank, $29.3 billion, total market share 2.69%
10. HSBC, $19.7 billion, total market share 1.81%
Market share figures are estimates based on data from OSFI, the Bank of Canada, and McVay’s proprietary sources. Data is as of November 2011 (there is a lag in reporting). These statistics reflect both off-balance sheet securitized mortgages (prior to IFRS) and mortgage securitization retained on balance sheet as securities.
Some quick takes:
Canada’s Big 5 banks hold two out of three mortgages (65% market share).
The growth leader has been TD (Yes, despite criticism for its collateral charge mortgages). McVay says: “Collateral charges are a trend I expect to see right across the industry, as a way to secure customer relationships.” That’s because collateral charges generally make switching lenders more costly.
BMO has shed significant mortgage share since exiting the broker market (more on that this weekend), and also because of its strategy to build share in HELOCs.
National Bank has been doing well, says McVay, “largely from mortgage portfolios that it’s been buying, its broker association and its Power Financial linkage.”
source:http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/02/mortgage-market-share-top-10-lenders.html#more February 17, 2012 Rob McLister, CMT
Thursday, January 12, 2012
The Incredibly Shrinking Variable Discount
Fixed or variable? Fixed or variable? Everyone wants to feel as though they had made the best choice when deciding between a fixed or variable rate mortgage. In this economy however, there is no right or wrong answer. All the research is based on historic data of what has happened with the rates and trends. The problem is that the “new norm” means tremendous volatility in our economy. Never before has the Canadian marketplace felt the repercussions of global issues as we do today. Economists are changing their predictions daily.
Sage advice would be to do what helps you sleep at night.If you choose a fixed rate, you will not have any fluctuations in your payment for the term of your mortgage. If you choose a variable rate,there will be increases in your payments at some point in time. So, if peace of mind is part of the equation, you will win even if you are paying a little more in the long run.
Canadian Mortgage Trends recently published the following article (October 17, 2011) related to fixed or variable-rate options.
“Just weeks ago you could find variable-rate mortgages at prime – 0.80% (P-.80%) or better. Consumers thought they were here to stay, but the tables turned…fast.
Economic troubles and lender profit motives have shrunken variable discounts beyond expectations. Banks are now commonly quoting prime rate, for example, with little discounting.
Once the last few holdout lenders with P-.50% [prime minus.50%] disappear, discounted variables could move towards P-.25% [prime minus .25%] or worse. Some lenders even suggest that prime or prime plus could be the new normal.
Meanwhile, aggressive brokers are selling five-year fixed rates at 3.25% or less. That’s an unusually low 50 basis point premium to a variable. A spread that tight doesn’t come around often, and it makes you rethink all of the research suggesting variables are the way to go.
Popular research indicates that people have saved money on variable-rate mortgages:
88.6% of the time:
Source: Floating Your Way to Prosperity, 2001, Moshe Milevsky, PhD; Study period: 1950-2000
90.1% of the time:
Source: Moving Mortgages, 2008, Moshe Milevsky, PhD; Study period: 1950-2008
83% of the time:
Source: Variable Rate Roller Coaster Still Hard to Beat, 2011, Douglas Porter and Benjamin Reitzes, BMO; Study period: 1975-2011
Odds like that make some people question the sanity of going fixed. But there’s a little more to the story.
While variables have cost less than 5-year fixed mortgages a majority of the time in the past, favourites don’t win every game. More importantly, assumptions are key when it comes to rate studies. Two important factors have impacted the research quoted above:
A multi-decade bias towards falling rates
Use of posted rates (instead of discount rates)
“Interest rates have been trending downward for two decades,” BMO Capital Markets Senior Economist Benjamin Reitzes told us [Mortgage Trends] in a recent interview. By default, he says, that’s tilted the table more in favour of variables than it otherwise would be.
Looking ahead, rates are no longer able to drop over one percent. The most we can realistically hope for is an extended period of horizontal rate movement. (The Bank of Canada can still cut rates slightly, but the European and American crises and sub-2% core inflation won’t delay hikes forever.)
As a result, Reitzes says, “Going forward, borrowers won’t see the same advantage to variable rates as they have in the past 25 years”
The second factor that’s largely ignored when citing rate research is the actual mortgage rates used for backtesting. Each of the three studies above uses posted rates in their historical analysis.
Reitzes states that this practice distorts the results somewhat. “Discounts off posted rates were not as prevalent historically.” Nowadays, however, “Most people get a (rate) discount if they are credit-worthy borrowers.”
That matters, because the rate discount you get obviously impacts the likelihood of your mortgage outperforming other options.
Here’s an example.
If you look at data from 1970 to 1995, the average difference (spread) between 5-year fixed and variable rates was 126 basis points. (That's 1.26%)
The average difference today is roughly 50 basis points. (0.50%).
That’s a remarkable 76 basis points lower than historical rate spreads. That makes a huge difference in research conclusions.
If you theoretically backtested with the same spreads as today (i.e., 25 bps off prime for variables and 204 bps off posted for 5-year fixeds), you’d find that fixed rates outperform considerably more often.
According to Milevsky, “…The historical probability of doing better with the floating rate mortgage…hovered around 70% to 80%” when the borrower used deep discount rates (based on a 1965-2000 study period).
Using today’s discounts, that 70-80% drops to just 53%, based on our findings from 1970 to 2006. (Obviously today’s spreads would not have applied historically but, as Milevsky maintained in his research above, that is beside the point.)
In other words, the fixed/variable decision would have been a coinflip, based on today’s spreads.
This isn’t meant to imply that fixed rates now have an insurmountable edge. If the Bank of Canada drops rates unexpectedly, a variable could easily beat all other terms over the next five years.
That said, if the BoC’s next rate move is up (which is the highest probability outcome, say economists), the boring old 5-year fixed could certainly outperform. That’s true even when compared to a variable with payments set at the 5-year fixed rate.
The nice part is this: If you go fixed and variables end up winning, you’ll likely be out far less money than in most prior years.”
What do you think? Please post a comment and/or question any time!
Source:http://tracyirwinmortgages.com/blog/ Nov 23, 2011 by tracyirwin
Sage advice would be to do what helps you sleep at night.If you choose a fixed rate, you will not have any fluctuations in your payment for the term of your mortgage. If you choose a variable rate,there will be increases in your payments at some point in time. So, if peace of mind is part of the equation, you will win even if you are paying a little more in the long run.
Canadian Mortgage Trends recently published the following article (October 17, 2011) related to fixed or variable-rate options.
“Just weeks ago you could find variable-rate mortgages at prime – 0.80% (P-.80%) or better. Consumers thought they were here to stay, but the tables turned…fast.
Economic troubles and lender profit motives have shrunken variable discounts beyond expectations. Banks are now commonly quoting prime rate, for example, with little discounting.
Once the last few holdout lenders with P-.50% [prime minus.50%] disappear, discounted variables could move towards P-.25% [prime minus .25%] or worse. Some lenders even suggest that prime or prime plus could be the new normal.
Meanwhile, aggressive brokers are selling five-year fixed rates at 3.25% or less. That’s an unusually low 50 basis point premium to a variable. A spread that tight doesn’t come around often, and it makes you rethink all of the research suggesting variables are the way to go.
Popular research indicates that people have saved money on variable-rate mortgages:
88.6% of the time:
Source: Floating Your Way to Prosperity, 2001, Moshe Milevsky, PhD; Study period: 1950-2000
90.1% of the time:
Source: Moving Mortgages, 2008, Moshe Milevsky, PhD; Study period: 1950-2008
83% of the time:
Source: Variable Rate Roller Coaster Still Hard to Beat, 2011, Douglas Porter and Benjamin Reitzes, BMO; Study period: 1975-2011
Odds like that make some people question the sanity of going fixed. But there’s a little more to the story.
While variables have cost less than 5-year fixed mortgages a majority of the time in the past, favourites don’t win every game. More importantly, assumptions are key when it comes to rate studies. Two important factors have impacted the research quoted above:
A multi-decade bias towards falling rates
Use of posted rates (instead of discount rates)
“Interest rates have been trending downward for two decades,” BMO Capital Markets Senior Economist Benjamin Reitzes told us [Mortgage Trends] in a recent interview. By default, he says, that’s tilted the table more in favour of variables than it otherwise would be.
Looking ahead, rates are no longer able to drop over one percent. The most we can realistically hope for is an extended period of horizontal rate movement. (The Bank of Canada can still cut rates slightly, but the European and American crises and sub-2% core inflation won’t delay hikes forever.)
As a result, Reitzes says, “Going forward, borrowers won’t see the same advantage to variable rates as they have in the past 25 years”
The second factor that’s largely ignored when citing rate research is the actual mortgage rates used for backtesting. Each of the three studies above uses posted rates in their historical analysis.
Reitzes states that this practice distorts the results somewhat. “Discounts off posted rates were not as prevalent historically.” Nowadays, however, “Most people get a (rate) discount if they are credit-worthy borrowers.”
That matters, because the rate discount you get obviously impacts the likelihood of your mortgage outperforming other options.
Here’s an example.
If you look at data from 1970 to 1995, the average difference (spread) between 5-year fixed and variable rates was 126 basis points. (That's 1.26%)
The average difference today is roughly 50 basis points. (0.50%).
That’s a remarkable 76 basis points lower than historical rate spreads. That makes a huge difference in research conclusions.
If you theoretically backtested with the same spreads as today (i.e., 25 bps off prime for variables and 204 bps off posted for 5-year fixeds), you’d find that fixed rates outperform considerably more often.
According to Milevsky, “…The historical probability of doing better with the floating rate mortgage…hovered around 70% to 80%” when the borrower used deep discount rates (based on a 1965-2000 study period).
Using today’s discounts, that 70-80% drops to just 53%, based on our findings from 1970 to 2006. (Obviously today’s spreads would not have applied historically but, as Milevsky maintained in his research above, that is beside the point.)
In other words, the fixed/variable decision would have been a coinflip, based on today’s spreads.
This isn’t meant to imply that fixed rates now have an insurmountable edge. If the Bank of Canada drops rates unexpectedly, a variable could easily beat all other terms over the next five years.
That said, if the BoC’s next rate move is up (which is the highest probability outcome, say economists), the boring old 5-year fixed could certainly outperform. That’s true even when compared to a variable with payments set at the 5-year fixed rate.
The nice part is this: If you go fixed and variables end up winning, you’ll likely be out far less money than in most prior years.”
What do you think? Please post a comment and/or question any time!
Source:http://tracyirwinmortgages.com/blog/ Nov 23, 2011 by tracyirwin
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