Big Mortgage BLOW OUT SALE!

If you’re sharp-eyed you may have noticed some ‘special offers’ on 5 year fixed rates.  BMO kicked off another low-rate war by once again offering a rock-bottom 5 year fixed rate of 2.99% and a new 10 year fixed at 3.99%.

Nobody wants to be left out of fun like that, so TD, CIBC and Scotiabank quickly followed suit and started offering a 2.99% rate as well.

How are customers responding?

Techar said reaction to BMO’s previous offer was fantastic. “We saw an increase in volume almost immediately and it continued for the whole two-week period.”

These deals are temporary and expire in a few weeks.  You’d almost think something was about to happen March 29th, but who knows?  Rumour has it more changes are coming to insured mortgage rules in Canada whether it’s higher down payment requirements or shorter amortization terms.

So is this a deal too good to refuse, or a trap for the gullible?

If rates start to rise, could it be a benefit to buy a home now?  Would these ridiculously low rates offset a drop in prices at a higher interest rate?

What about in markets whose prices have fallen for the last few years?  There are many of these across BC – The Okanagan has seen prices collapse by more than 30% so already.

And what does Mark Carney have to say about all of this?

“Canadian household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk,” Carney said Thursday as he held the bank’s trend-setting rate to 1 per cent.

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VMD
Member

This, if true, won’t help Van RE (or Canadian Economy)
[Chinese Economy Already in ‘Hard Landing,’ JPMorgan’s Mowat Says]
Mar 14, 2012
“If you look at the Chinese data, you should stop debating about a hard landing,” Mowat, who is based in Hong Kong, said at a conference in Singapore yesterday. “China is in a hard landing. Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact.” His team was a runner-up for best Asian equity strategists in a 2011 Institutional Investor magazine poll.

http://www.bloomberg.com/news/2012-03-14/chinese-economy-already-in-hard-landing-jpmorgan-says.html

Bullocks
Guest
Bullocks
I saw Royal Bank’s full page 2.99% mortgage ad in today’s paper. I’ve got to think that this is a sprint to the finish by the big banks to capture market share before the upcoming budget imposes additional rules on mortgage lending. Even though the rate is low, I’m sure there are some pretty steep penalties if you try to retire your mortgage early. Fools will rush in without reading the fine print. What really caught my eye about Royal’s ad was that there is a “skip a payment” option available with these mortgages. I don’t know how many payments you can skip or how frequently but this sounds like a variation on subprime mortgages. I guess any interest accrued on a missed payment gets rolled into the principal. Anybody that would use this option is looking towards a lifetime… Read more »
patriotz
Member

“Would these ridiculously low rates offset a drop in prices at a higher interest rate?”

Of course not, because you only get them for 5 years. Which the public seems unable to figure out.

If the rates are fixed over the entire amortization – which you can get in the US – yes maybe you can come out ahead. But the prices in the US have already dropped anyway.

Girlbear
Guest
Girlbear

@patriotz: These are going to turn out like the teaser rates in the US…

Anonymous
Guest
Anonymous

@Bullocks: “Even though the rate is low, I’m sure there are some pretty steep penalties if you try to retire your mortgage early.”

Retire the mortgage early? That is so unVancouver.

Don Lapre
Member
Don Lapre
Drachen
Member

@Anonymous:

“Retire the mortgage early? That is so unVancouver.”

The trick is, even selling is considered early payout. So, after losing a few hundred grand on that house you couldn’t afford and had to sell for less than you purchased, now you have to pay the bank ANOTHER 50k or so to buy out of your mortgage.

It’s enough to make you want to break into song.

Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died

Makaya
Member
Makaya
I just saw this funny comment to a “The Economist” article posted on their facebook page. Here is what the Economist wrote: “Canadians are thrilled whenever foreigners single out their country for positive attention. The idea that Iceland might want to ditch its battered krona in favour of the Canadian dollar, not the American version, scores high in this regard. Economists say there are few technical problems in Iceland abandoning the krona and adopting the loonie, as the Canadian currency is known. But is it a serious proposition?” And the funny comment from one of our own…: “Yeah, we are just ecstatic when our country is singled out ‘for positive attention.’ Particularly because generally, the attention we get is so negative. You know, with Vancouver always rated as the worst place in the world to live; our dire economic situation… Read more »
jesse
Member

@patriotz: “Which the public seems unable to figure out.”

Better titled: When inflation targeting fails

jesse
Member

@Bullocks: ” I’ve got to think that this is a sprint to the finish by the big banks to capture market share before…”

… the peak selling season from April to June heats up. Would-be buyers are shopping around for the best rates right now as they prepare to start viewing houses for sale. Why would RBC advertise earlier when people have other priorities?

b5baxter
Member

An updated inventory graph is available at:
http://vancouverpeak.com/groups/inventory-graph/forum/topic/inventory-graph/?#post-2310

Inventory is at record levels for this point in the year. The graph shows that it is at the highest point in 7 years. If other sources of data are included I believe it is actually at the highest point in 11 years.

Over the last month the average daily increase was:
59
At this rate we will reach 16,000 in 5 days (Mar-20-12)
At this rate we will reach 20,000 in 73 days (May-27-12)
and 25,000 by August-21-12

VHB
Member
VHB

Mar-2012
Total days 22
Days elapsed so far 10
Weekends / holidays 4
Days missing 0
Days remaining 12
7 Day Moving Average: Sales 124
7 Day Moving Average: Listings 260
SALES
Sales so far 1208
Projection for rest of month (using 7day MA) 1488
Projected month end total 2696 +/- 372
NEW LISTINGS
Listings so far 2760
Projection for rest of month (using 7day MA) 3120
Projected month end total 5880 +/- 397
Sell-list so far 43.8%
Projected month-end sell-list 45.9%
MONTHS OF INVENTORY
Inventory as of March 14, 2012 15701
MoI at this sales pace 5.82

jesse
Member

@Don Lapre: Did you catch one of their interviewees? A foreign-trained neurosurgeon turned Realtor. Living the Canadian dream.

space889
Member
space889

@jesse: Highest and best use of immigrants knowledge and skills. Plus, it’s not like we can actually trust him doing brain surgery given just pathetic the education level of non-Canadian medical schools and universities are. I’m sure he’s welcome to practice neurosurgery again once he has undergone appropriate re-education starting from at least first year medical school (assuming he’s good enough to get in, and not deemed to be too old). 🙂

jesse
Member

@space889: “Highest and best use of immigrants knowledge and skills”

I hope you’re joking! 🙂

Best place on meth
Member
Best place on meth

@jesse:

“… the peak selling season from April to June heats up”

What if we’ve already passed the peak selling season for the year?

Anonymouse
Guest
Anonymouse

@Drachen:

“The trick is, even selling is considered early payout.”

How’s that a trick? If you buy a new property and stay with the same lender, most will waive the penalty. But if you sell and discharge the mortgage then it *is* an early payout.

Best place on meth
Member
Best place on meth

@jesse:

“A foreign-trained neurosurgeon turned Realtor”.

You know, if he were able to combine the 2 and start practicing neurosurgery on prospective buyers we could really be on to something here.

WFT?
Guest
WFT?

@jesse:

As a realtor, he probably makes more than we would as a neurosurgeon.

patriotz
Member

@Don Lapre:

“It’s an illusion for people to think they can live in downtown Toronto in a detached home and not be wealthy,” Lamb said.

Of course in realtorspeak “live” only means “buy”:

http://toronto.en.craigslist.ca/tor/apa/2855572277.html

Well it’s downtown North York actually, but only a 15 minute ride from Bloor and Yonge. Same hood as that house that went for $1.2 mil. Bubble anyone?

Don Lapre
Member
Don Lapre

“the person buying rental properties has two advantages — the value of their property is appreciating while their tenant is paying their mortgage, and their mortgage is depreciating”

I’ll take 10!!

http://business.financialpost.com/2012/03/15/is-being-a-landlord-the-road-to-riches/

patriotz
Member

@Don Lapre:
“Investors are prepared to buy houses they will rent out at a loss, just because they think prices will keep rising—the very definition of a financial bubble. “

http://www.economist.com/node/4079027

Scott
Guest
Scott

@WFT?: until he doesn’t. I suspect neurosurgeons have a more consistent income.

jesse
Member

@patriotz: “they will rent out at a loss, just because they think prices will keep rising”

What gets me about this is how it’s twisted around, that large downpayments or cash-only purchases inherently never rent out at a loss on the income statement, the “cash flow positive” mantra that I overhear in noisy restaurants.

It misses the point, that capital is inherently finite and scarce. Oh well!

jesse
Member

@Best place on meth: “What if we’ve already passed the peak selling season for the year?”

That would be a dilly of a pickle… not likely IMO but neither would I rule it out. I’m still calling for prices cresting in June but hey I’ve been wrong before. I thought 2008 was “it”. Boy is my face red 😳

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