Denise's Weekly Rate Sheet for the end of 2024

Help with mortgage info!

December 2024 - Update on rates:

Courtesy of Denise Pisani

Updated Rates:

5 Year Fixed, Insured:    4.29%
5 Year Fixed, Conventional:   4.59%

4 Year Fixed, Insured:    4.54%
4 Year Fixed, Conventional:   4.79%

3 Year Fixed, Insured:      4.19%

3 Year Fixed, Conventional:   4.49%

Variable Comeback.... perhaps:
5 Year Variable, Insured:              5.05%  
5 Year Variable, Conventional:     5.30%


The current prime rate is 5.45%  [📣]

Next rate announcement is January 29, 2025.

The prime rate is a base rate set by financial institutions in Canada to determine the variable interest rates they can charge on lending products, such as mortgages and loans. 
Remember, so when BoC makes their announcements every few months, that announcement will affect the PRIME LENDING RATE at the bank. It doesn’t usually affect the fixed rates!

Two important things to understand:

Conventional rate: if you put at least a 20% down payment
Insured rate: if you put less than 20% down payment and the purchase price is under $1 Million.

*Rates can change without notice 
*Rates depend on loan-to-value and amount of mortgage 
*Special conditions apply to discounted rates 

In other news, the headlines have been battling this week between the latest policy updates, the latest news from the Bank of Canada Govenor, Air-bnb changes, and where Ontario is headed for afforable housing and we will cover it all in this edition.

Bank of Canada Governor Tiff Macklem recently said the central bank will need to “discover” what the neutral interest rate is going forward.
Conservative Leader, Pierre Poilievre says he will remove the national sales tax on new construction homes under $1 million.
Ontario says “tax-driven revenue increases” will ease the province’s budget deficit for the year.
Ontario is lowering its projections on the number of new homes to be built in the province over the next few years.
A new report shows fewer young Canadians own homes right now, but many are planning to buy in the next five years.
The Tax Court of Canada has ruled homeowners who regularly rent their homes on Airbnb will be subject to sales tax when they sell the property.
Trump's win is already driving mortgage rate hikes in Canada.






older news... let's keep in mind...
CIBC is predicting that the Bank of Canada could introduce major rate cuts by December, potentially reducing interest rates by 50 basis points at a time. With inflation easing to 2.5%, the focus is shifting to a weakening economy, prompting faster action to avoid a downturn.

CIBC’s chief economist, Avery Shenfeld, suggests that with real interest rates still high, larger rate cuts are likely to prevent an economic stall. CIBC and National Bank expect the policy rate to drop to 3.50% by the end of the year.

A softening labour market and rising unemployment are also concerns, adding pressure for the Bank of Canada to act. Additionally, millions of mortgages are set for renewal over the next two years, many secured at low rates, which could lead to monthly payment increases of 30-40%.

Even with rate cuts, borrowers may feel financial strain as refinancing costs rise faster than income growth.

CIBC doesn’t anticipate real relief until mid-2025, when rates are expected to lower enough to ease pressures and boost consumer spending.

Meanwhile, Canadian banks are predicting further drops in five-year bond yields, which could lead to lower fixed mortgage rates.

While interest rate cuts may offer relief, the next few years could still be challenging for many Canadian homeowners.


Compliments of Denise Pisani of
www.MortgageintheCity.ca


 

https://mortgageinthecity.ca/

Some 2024 Forecasters are signalling:

Here's what the experts are predicting:

January - No rate change
March - No rate change
April - 25-basis-point drop
June - 50 basis-point drop
July - 50 basis-point drop
September - 25-basis-point drop
October - 25-basis-point drop
December- 25-basis-point drop

These forecasts take into account a range of factors, encompassing the economic environment, international interconnections, and the historical trajectory of the Bank of Canada. Although the journey on the rate roller-coaster has been exhilarating, you can be confident that we are not on a course back to the ultra-low rates witnessed in 2020 and 2021.

It's essential to bear in mind that overnight rates constitute just one aspect of the larger financial picture. The five-year Canadian bond yield, moving to its own tune, commenced at 3.42% and concluded at 3.27% by mid-December, anticipating reduced volatility in the year 2024.

Feel free to reach out  [🔔]  if you have any questions or if you'd like to discuss how these market dynamics may specifically impact your finances and mortgage goals.

The Mortgage Centre- Mortgage In The City | 188 Lakeshore Rd W Unit 6, Mississauga, L5H 1G6 Canada

denise@mortgageinthecity.ca 

Mortgage in the City

Mortgage basics

Amortization. Fixed rate. Variable rate. High-ratio. Principal. If you’re mystified by mortgage-speak, you’re not alone. Here’s a crash course in mortgage basics to help you make smart decisions about one of the biggest investments you’ll ever make.

Choose a term that works for you.

A term is a period of time (from 6 months to 10+ years) during which you pay your mortgage at a specified interest rate. To figure out what term is right for you, decide how comfortable you are with the volatility of the market and how important a stable mortgage payment is to your budget.

Long term:

Right now, interest rates are low. If you’re afraid they’ll go up and you want to lock in at a low rate, or you want to know exactly how much you’ll be paying every month, go for a longer term like 5, 7 or 10 years.

Short term:

If interest rates look like they’re falling, this may be a better bet. If you’re comfortable with payments that may fluctuate somewhat, your best bet is a shorter-term mortgage (i.e. a 6-month variable rate mortgage) that lets you take advantage of low rates, but also has the flexibility of allowing you to lock in and convert to a longer-term mortgage whenever you want.

Decide on an amortization period.

The amortization is the number of years (15, 20, 25) it would take to pay back the loan based on a fixed payment amount. The longer the amortization, the more interest you’ll pay. You can shorten your amortization by increasing your payments, paying lump sums towards the principal, or renewing your loan at a lower rate.

Decide on a fixed or variable rate.

A fixed-rate mortgage means you pay a set amount every month for the term of your loan. Whether posted interest rates rise or fall, your payments won’t change.

With a variable-rate mortgage, your interest rate fluctuates with your lender’s prime lending rate. It offers more flexibility, but also more risk. Typically, you pay a set amount every month, but when rates fall, more cash goes to principal, which reduces the interest you’ll have to pay in the long term. If rates go up, however, your set payment may not be enough to cover interest and principal, so you could end up having to pay more.

Choose a closed vs. open mortgage.

In an open mortgage, you can repay your loan any time without penalty. So if you sell another property or come into some extra money, you can pay down your principal whenever you want. Interest rates for open mortgages tend to be higher than for closed, and terms are typically shorter.

A closed mortgage is less flexible. If you decide to pay off a big chunk of your principal, you could incur a penalty. However, even closed mortgages have pretty generous prepayment options (usually up to 20% of the principal per year).

Decide how often you’ll make payments.

You can pay monthly, bi-weekly or weekly. Here’s the difference: with monthly payments, you make 12 a year. With bi-weekly payments, it’s 26. That’s the equivalent of 13 payments a year instead of 12. You probably won’t notice much of a difference in your cash flow, but you’ll pay off your mortgage faster, and save yourself thousands in interest.

Will you get a high-ratio or conventional mortgage?

That depends on the size of your down payment. A conventional mortgage is a loan that covers up to 75% of the purchase price, and doesn’t need to be insured against default. A high-ratio mortgage is anything over 75%, and must be insured by the Canada Mortgage and Housing Corporation (CMHC) or GE Capital. You can add your insurance premium (a percentage of your loan amount) to your mortgage or pay it on closing.

Get pre-approved.

Find out how much you’re eligible to borrow before you start looking. You’ll know exactly how much you can afford, and you’ll be guaranteed the interest rate that’s available at the time of your pre-approval for 60-120 days. If rates go up, you won’t have to worry about paying more, and if they go down, you get the lower rate. It’s win-win, free and there’s never an obligation to go with that lender.

Shop smart.

Now that you’re armed with some mortgage knowledge, you’ll be able to choose a loan that best meets your needs. If you need more info, most lenders have helpful information on their websites, or you can always ask your REALTOR® for help understanding the ins and outs of mortgages.

Trademarks owned or controlled by The Canadian Real Estate Association. Used under licence.