All eyes are on Apple today as they are expected to announce two new iPhone 6 models as well as an iWatch. This coming at a time when they are under a lot of scrutiny over the iCloud hack.
Mortgage Market Upate:
- Both fixed and variable interest rates have remained steady since our last office meeting before the summer break. We’ve even seen a drop in certain terms and different product specials here and there.
- Job report shows Canada shed 11,000 jobs (mostly part-time) in August when economists were expecting a gain of about 10,000 jobs. August’s job report showed weaker data than expected for both Canada and the US.
- The 5 year fixed term remains the most popular largely due to qualifying. Borrowers looking for fixed terms shorter than 5 years or a variable mortgage must qualify at the Benchmark rate in Canada which is currently 4.79%.
- Example: Someone earning $75k per year will qualify for a mortgage of approx. $400k under a 5 year fixed term vs. $330k using the Benchmark rate. A 17.5% difference!
- Bank of Canada left rates the same in their last meeting also hinting that their stance on future rates is neutral. The next Bank of Canada announcement is October 22nd which will be an interesting one as they are expected to comment on the new “normal” for rates moving forward.
Mortgage Strategy of the Week:
Given the recent Bank of Canada’s neutral stance on rates and the hint at a new “normal” for interest rates for the foreseeable future, here is a strategy we’ve used with some clients.
Well qualified clients have sold their townhouse they bought as their first home. They have now bought a single family home for significantly more than their townhouse. After meeting with them to talk about their goals and their family needs we drew up a strategy that included them going into a 2 year fixed term at 2.34%. This allowed them to keep their initial payment and interest way down while still knowing what their payments and interest costs would be for a fixed period of time. Having a level of comfort that rates were not going to skyrocket they were comfortable with the calculated risk of the short term product and in 1 year and 8 months when we can secure their new rate (120 days before renewal) we will again sit down and see where the market is, how their family situation has changed and get them into the best product for them at that time.
This shorter term strategy allows families to be in control of their finances while taking calculated risk and having a team (us) committed to making sure they remain in the best mortgage for their ever changing needs.
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What is the tagline Apple is using for their highly anticipated launch tomorrow?
My Thought for the Week:
Focus on 3 big goals and track my t0-do’s and daily activities to ensure they are in alignment with my 3 big goals.