Interest rates april 2010

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Toronto Mortgage Broker Brad Compton gives his thought on where variable and fixed mortgage rates are heading in the coming months. See how banks determine what they are going to charge for their fixed and variable mortgage rates. Also get up to date on the most recent changes to mortgages in Canada

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  • Give predictions - Economy recovering faster, inflation higher than predicted. Carney reminds us that the conditional promise of leaving rates alone until mid 2010 is based on keeping inflation in check. The longer we go the more severe the rate correction will have to be
    Give Cautions - US economy is still sluggish.
  • Give predictions - Economy recovering faster, inflation higher than predicted. Carney reminds us that the conditional promise of leaving rates alone until mid 2010 is based on keeping inflation in check. The longer we go the more severe the rate correction will have to be
    Give Cautions - US economy is still sluggish.















  • Interest rates april 2010

    1. 1. INTEREST RATES Brad Compton Invis Mortgage Agent
    2. 2. Todayʼs Discussion
    3. 3. Todayʼs Discussion •Fixed & Variable rates
    4. 4. Todayʼs Discussion •Fixed & Variable rates •What drives them?
    5. 5. Todayʼs Discussion •Fixed & Variable rates •What drives them? •Where are they going?
    6. 6. Todayʼs Discussion •Fixed & Variable rates •What drives them? •Where are they going? •How can consumers protect themselves?
    7. 7. Todayʼs Discussion •Fixed & Variable rates •What drives them? •Where are they going? •How can consumers protect themselves? •Recent changes to mortgage regulations
    8. 8. How To Build a Fixed Rate
    9. 9. How To Build a Fixed Rate in 4 easy steps
    10. 10. How To Build a Fixed Rate in 4 easy steps 5 Year Bond
    11. 11. How To Build a Fixed Rate in 4 easy steps 5 Year Bond 2.92%
    12. 12. How To Build a Fixed Rate in 4 easy steps Default Risk 5 Year Bond 2.92%
    13. 13. How To Build a Fixed Rate in 4 easy steps Default Risk 0.35% 5 Year Bond 2.92%
    14. 14. How To Build a Fixed Rate in 4 easy steps Admin Costs Default Risk 0.35% 5 Year Bond 2.92%
    15. 15. How To Build a Fixed Rate in 4 easy steps Admin Costs 1.00% Default Risk 0.35% 5 Year Bond 2.92%
    16. 16. How To Build a Fixed Rate in 4 easy steps Hedging Costs Admin Costs 1.00% Default Risk 0.35% 5 Year Bond 2.92%
    17. 17. How To Build a Fixed Rate in 4 easy steps Hedging Costs 0.15% Admin Costs 1.00% Default Risk 0.35% 5 Year Bond 2.92%
    18. 18. How To Build a Fixed Rate in 4 easy steps Hedging Costs 0.15% Admin Costs 1.00% Default Risk 0.35% 5 Year Bond 2.92% 4.42%
    19. 19. Fixed Rates - Where are rates going
    20. 20. Fixed Rates - Where are rates going UP!
    21. 21. Variable Rates - BOC Affect
    22. 22. Variable Rates - BOC Affect •The Bank of Canada Prime lending rate - .25%
    23. 23. Variable Rates - BOC Affect •The Bank of Canada Prime lending rate - .25% •Banks add allowances for risk and admin costs - 2.25%
    24. 24. Variable Rates - BOC Affect •The Bank of Canada Prime lending rate - .25% •Banks add allowances for risk and admin costs - 2.25% •Variable mortgages usually have a discount to prime
    25. 25. Variable Rates - BOC Affect •The Bank of Canada Prime lending rate - .25% •Banks add allowances for risk and admin costs - 2.25% •Variable mortgages usually have a discount to prime •Lines of credit and open mortgages usually have a premium added
    26. 26. Variable Rates - BOC Affect •The Bank of Canada Prime lending rate - .25% •Banks add allowances for risk and admin costs - 2.25% •Variable mortgages usually have a discount to prime •Lines of credit and open mortgages usually have a premium added •Some variable mortgages keep payments the same with rate fluctuations - ARM & VRM
    27. 27. Variable Rates - BOC Affect •The Bank of Canada Prime lending rate - .25% •Banks add allowances for risk and admin costs - 2.25% •Variable mortgages usually have a discount to prime •Lines of credit and open mortgages usually have a premium added •Some variable mortgages keep payments the same with rate fluctuations - ARM & VRM •Some lenders will adjust payments monthly and some are quarterly
    28. 28. Variable Rates - Where are they going
    29. 29. Variable Rates - Where are they going UP!
    30. 30. Variable Rate Outlook
    31. 31. Variable Rate Outlook •Bank of Canada will be raising the prime rate in June/ July
    32. 32. Variable Rate Outlook •Bank of Canada will be raising the prime rate in June/ July •Increase should be gradual 1-1.5% by end of 2011
    33. 33. Variable Rate Outlook •Bank of Canada will be raising the prime rate in June/ July •Increase should be gradual 1-1.5% by end of 2011 •US economy still weak resulting in little rate movement south of the border
    34. 34. Variable Rate Outlook •Bank of Canada will be raising the prime rate in June/ July •Increase should be gradual 1-1.5% by end of 2011 •US economy still weak resulting in little rate movement south of the border •Don’t want to repeat history - 1992 and 2002 Canada raised rates too quick only to reverse within months
    35. 35. How To Protect
    36. 36. How To Protect •Get pre-approved - Lock in rate for 120 days
    37. 37. How To Protect •Get pre-approved - Lock in rate for 120 days •Look at refinanicng - break mortgage - ask lender to blend and extend
    38. 38. How To Protect •Get pre-approved - Lock in rate for 120 days •Look at refinanicng - break mortgage - ask lender to blend and extend •Longer term mortgage
    39. 39. How To Protect •Get pre-approved - Lock in rate for 120 days •Look at refinanicng - break mortgage - ask lender to blend and extend •Longer term mortgage •Mixed mortgage - part variable and part fixed
    40. 40. How To Protect •Get pre-approved - Lock in rate for 120 days •Look at refinanicng - break mortgage - ask lender to blend and extend •Longer term mortgage •Mixed mortgage - part variable and part fixed •Look at locking in variable
    41. 41. New Mortgage Regulations
    42. 42. New Mortgage Regulations •Minimum 20% down for rentals under 5 units
    43. 43. New Mortgage Regulations •Minimum 20% down for rentals under 5 units •Only 50% of rental income can be used to qualify
    44. 44. New Mortgage Regulations •Minimum 20% down for rentals under 5 units •Only 50% of rental income can be used to qualify •Qualifying interest rate on variable & terms under 5 years now posted rate - 6.10%
    45. 45. New Mortgage Regulations •Minimum 20% down for rentals under 5 units •Only 50% of rental income can be used to qualify •Qualifying interest rate on variable & terms under 5 years now posted rate - 6.10% •Refinances up to 90% LTV only
    46. 46. New Mortgage Regulations •Minimum 20% down for rentals under 5 units •Only 50% of rental income can be used to qualify •Qualifying interest rate on variable & terms under 5 years now posted rate - 6.10% •Refinances up to 90% LTV only •Stated income program only applies to individuals who have been self employed for less than 3 years on purchases up to 90% and refi’s up to 85%
    47. 47. Brad Compton Invis Mortgage Agent 416-671-2183 bradcompton@invis.ca @bcomp123

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