Happy New Year!

I just wanted to take the opportunity to wish you and your families a very safe and happy holiday season. All the best for 2010!!

I saw an interesting segment on the CBC News a few nights ago and have now seen the story from a few other news outlets regarding minimum mortgage down payments. Jim Flaherty has announced that the CMHC is reviewing the 35-year amortization along with the minimum down payment of 5%, hoping to avoid the real estate bubble where buyers get in over their heads like what we've seen happen south of the border.

I was struck by the story because Canadian Lenders' risk tolerances are far more conservative than those of our neighbours in the US. We don't have 50-year amortizations or 125% mortgages and never will because Canadians are far more averse to debt (believe it or not) than Americans. Paying off our mortgages and doing it quickly is something that actually means something to us.

Of the 45 million homes that have a mortgage in Canada, which is only 60% of the population, only 12% have a longer than 25-year amortization. Of those mortgage holders, only 5% of them have what CMHC would define as high ratio mortgages (where the mortgage is more than 80% of the value of the home), which may be at risk if interest rates changed too much in the next 3-5 years when these borrowers have to re-negotiate their mortgage terms. It was stated by the economist quoted in the story that this is not a huge concern, so I wonder why the "shock and awe" news outlets feel it necessary to highlight these types of stories as doom and gloom.

Reality is our economy is strong and the real estate market has almost single-handedly driven our economy for the last 12 months. Consumer confidence is returning and we are likely looking at a stronger and more prosperous year in 2010.

If the goverment is concerned about consumer debt, they should be taking a longer look at the predatory practices of credit card companies. We wouldn't be seeing the numbers of borrowers we are, who are having to refinance their mortgages and end up in high ratio situations to consolidate credit card debt if credit card company's practices were more consumer friendly. It's not mortgage lenders who send you a letter every 6 months telling you "congratulations, we've increased your limit", it's the credit card companies. That was happening to me and before I knew it, I had a credit card with a $35,000 limit. Who needs a credit card with a $35,000 limit?! If I need a revolving credit facility with that kind of limit, I'm going to get a Line of Credit at a rate of 3-6% instead of a credit card at 19-29%. If the government would look deeper at this problem, they would actually see that it's the flexibilty of the mortgage industry that is saving some consumers by allowing them to consolidate their debts into a low rate mortgage and slash their monthly payments rather than get gouged by double-digit credit card rates. Unfortunately, I don't think Mr. Flaherty is going to ask my wha I think anytime soon.

Once again, all the best for the season to you and your families!

Here is a snapshot of my best rates as of today

Quick Close Specials (Possession/Funding within 30 days, no pre-approvals)

2.00% = 3-yr Variable closed (Prime MINUS 0.25%)
3.64% = 5-yr Fixed No Frills/Value Mortgage (up to 5% pre-payment privileges)
3.69% = 5-yr Fixed (up to 15% pre-payment privileges)

Standard Fixed Rate Mortgages (Four Month rate holds)

1 Year = 2.35%
2 Year = 2.90%
3 Year = 3.25%
4 Year = 3.79%
5 Year = 3.89%

Variable Rate Mortgages and Lines of Credit

Closed (3 months interest to pay out early in full)

3 Year = 2.10% (Prime MINUS 0.15%)
5 Year = 2.05% (Prime MINUS 0.20%)

Open (no penalty to pay out in full)

Secured Line of Credit = 2.85% (Prime PLUS 0.60%)
5 Year = 3.10% (Prime PLUS 0.85%)


"Special" Mortgages

2.15%/4.09% = 5 Year Balanced Mortgage where half as Variable at Prime MINUS 0.10% and half as Fixed at 4.09%
5.49% = 5 Year with 5% Cash-back

Please do share this with your friends and family as they too should be aware of the rates that are available to them.

If you would like to stop receiving my rate updates, please let me know.

All the best,

Peter