update - beam me up scotty

as the year draws to a close - we have seen the prime rate drop over the past few months as central bankers try to keep the entire financial system of the world -liquid.
We have seen the market slow down and i have seen many people in financial trouble before Christmas - this is very unusual - we dont normally see the 'cracks form until after january or february visa and mastercard bills hit the mail'
it will be a difficult winter - hunker down and stay tuned
until then
Have a Happy New Year and remember the sun will come up tomorrow - no matter what happens...
i am here if you need help or to chat

greygoose out...where are the olives ?

mayhem in october

as we near the end of october - we have seen market panic. Interest rates in Canada for the variable (floating) rates have moved from prime -1% to prime plus 1% and then the bank prime has dropped 3/4 of a percent....but really they have increased by 1.25% thus increasing the bank spreads.
fixed rates have increased by approximately 50 bp....the canadian banking system is in much better shape than many other countries, but we will not escape this mayhem.
the question remains..in the long term will consumer demand drop and cause deflation or will the massive amounts of money from the US treasurey cause inflation....that is the trillion dollar question as there are no more million or billion dollar questions - they are too small.

mortgage mayhem

the US mortgage market has come apart - and congress is now trying to negotiate a 700 billion dollar bailout - this may stabilize the market for a short time but will it work for the long run ?
the entire world will be affected - rates will rise but they cannot skyrocket - or the economies will stall and a major recession will occur.
try to payoff debts - refinance to reduce monthly outlay - will keep in touch
greygoose out.

govt steps in to chage canadian mortgage market

very interesting
the government has changed the lending regulations for insured loans as of October 15th
they are eliminating 100% financing and requiring a minimum 5% downpayment (no clarification yet on whether clients can still borrow the 5%)
reducing the amortization from 40 years to 35 maximum
adjusting the maximum ratio for qualifying to 45% of gross income (still too high in my opinion)
this is all a function of the US spillover - we certainly live in interesting times

greygoose out.....

steady as she goes

interest rates are holding relatively steady - but the major lenders are playing games. they will give you a pre-approval which is generally a higher interest rate than if you were actually purchasing or refinancing.
then they will give you a better rate 30-45 days prior to closing for 'real' transactions.
what is the downside ? - if you are renewing or looking to lock into a fixed rate from a variable or floating rate - you will likely get a higher interest rate than the lenders very best rate because they are keeping their' 'posted discount rates' higher.....instead of 5.15-5.29 you would likely get 5.39-5.49% - oh the games they play to try and take advantage of the consumer....

down down down..but for how long ?

the bank of canada dropped their target rate by .50% this week - but the major chartered banks took approx 8 hours to follow suit. It would appear the major banks are trying to signal to the bank of canada - they do not want to drop rates any further - which tends to go along with my conspiracy theory - which says banks hate lending money below 6%.
the spreads on the bankers acceptance puts the current variable rate mortgages into a negative position - and the lenders are saying they must cut the spreads on the variable product.
they have already dropped from prime less .90 to prime less .60 as an average and it will likely drop further to prime less .25 - 40....which is likely a more reasonable spread. The banks got themselves into this mess by constantly trying to out do each other and increasing the discounts until they werent making any money...at least thats what they say.
now is likely still the time to take a variable product with a front end load over 6-12 months - but keep your eyes on the 5 year mortgage rates - currently around 5.50%..if they start moving up lock in and as they say in the movies.....forget about it......

rates come down - update since March

Well we returned from the Masters - won by Trevor Immelman - as usual it was a great week.
we returned to see that most of the mounds of snow had disappeared - it looks like we will fall approximately 8cm short of the record.
interest rates are still softening on the short end - bank prime is 5.25 and likely to fall another quarter to one half of one percent this week.
the 5 year money is 5,29-5,49
lenders are playing interesting games by giving a bigger discount within the last 30 days - thus mortgage approvals are being switched between lenders 120 -90 - 45 - 30 days prior to closing.
never a dull moment.
it still appears we are heading for a recession - i still think the average consumer has far to much debt and will be forced to consolidate to survive within the next year.
time will tell
greygoose out.