TD Raises Mortgage Rates

From Beyer Mortgage Services:
As of Monday, there will be 0% discount on the variable ( currently they can still get prime-.60 until midnight and prime -.50 until Monday with some lenders)

The fixed rates are starting to jump with some lenders up to 5.89% from 5.34 on the 5 year closed.

See news story below:

TD raises residential mortgage rates by more than a third of a % point on longer-term loans

1 day ago

TORONTO — Mortgage rates in Canada are heading higher as fears of inflation resonate through the bond market while U.S. legislators move towards agreement on a US$700 billion bailout plan for Wall Street banks.

TD Canada Trust (TSX:TD) said late Thursday it has raised its mortgage rates by more than a third of a percentage point on three, four and five-year loans.

The changes reflect the rising cost of borrowing in the bond market, an inflation-sensitive financial marketplace where banks finance their mortgage lending.

Effective Friday, a five-year mortgage increases by .35 of a percentage point to 7.2 per cent, while a three-year closed term rises by the same amount to 7.05 per cent.

A one-year closed mortgage loan falls by .3 of a percentage point to 6.35 per cent.

The changes suggest bond markets are worried about the future inflationary pressures from the proposed US$700 billion U.S. government bailout of Wall Street banks, said TD Bank chief economist Don Drummond.

"We always did figure that adding $700 billion to the deficit of the United States would probably cause something like a 25 basis point (quarter point) increase in the longer-term interest rates and that seems to have already happened," said Drummond.

"(The bailout) does increase the risk to bonds. In just plain good old demand and supply that means there has to be an awful lot of bond issuance and there's a limited supply of people that want to buy them so it's natural that the price goes up," he added.

The interest rates on mortgages and other short-term borrowing are set based on the price of bonds. With lower demand for bonds and fears of inflation, rates have to rise to lure investors willing to part with their money.

Other interest rates in the economy - from consumer and car loans to mortgage rates tied to the prime rate - are affected by the Bank of Canada trend-setting rate, which is expected to fall or remain stable over the next few months at least.

On Thursday, U.S. congressional Republicans and Democrats reported agreement in principle on a bailout of the financial industry. They said they would present it to the Bush administration in hopes of a vote within days.

The bailout is expected to push up inflation and force the U.S. Federal Reserve Board to raise rates in the future.

Thursday's mortgage rate increases also come a day after the Merrill Lynch brokerage warned that Canadian households are so indebted that it's only a matter of time before the housing market turns down, as has already happened in the United States.

The Merrill Lynch Canada report by economists David Wolf and Carolyn Kwan acknowledged that the analysis is more pessimistic than the prevailing view. However, there are parallels with what happened in the United States in early-to-mid 2006 when housing prices started going down.

"There are parallels here and there is risk here that's perhaps not being properly acknowledged," said Wolf. "We may have started from a better place but Canadians are over time starting to borrow as much as Americans and the British."

Laurie Anne Faulkner
Mortgage Broker

Beyer Mortgage Services Inc.
202-1075 Pendergast Street
Victoria, BC V8V 0A1

Living Building Challenge

As a member of the Victoria Real Estate Board's Green Task Force, last night I attended a lecture at Camosun College given by the Cascadia Green Building Council. It was part of their Transformational Lecture Series and the presenter was Jason McLennan. Jason is the founding President and CEO of Ecotone Publishing. He is a national leader in the green architecture movement and is considered a thought leader in sustainability. His topic was on Collaboration, mythology, people's stories and what it takes for change to occur.

One example Jason gave was about Juneau, Alaska. After being affected by an avalanche, their power supply was cut and, having to use emergency generators, which were extremely costly, the population of Juneau, managed to cut their hydro use by 40%.

Cascadia has brought forth the "Living Building Challenge". It takes LEED to the next level, and is based on the model of a flower, and its 6 petals :

• Site
• Energy
• Materials
• Water
• Indoor Quality
• Beauty + Inspiration

A Living Building Challenge Building:

• generates all of its own energy with renewable resources
• captures and treats all of its water
• operates efficiently and for maximum beauty

In it's first year, 60 projects have been introduced in North America. The first one in Canada is at Cambrian College in Sudbury, which will house a practical hands-on lab for electrical and plumbing classes. To learn more about the Living Building Challenge or The Cascadia Green Building Council, please go to www.cascadiagbc.org.

Something else interesting that Jason mentioned that you might want to check out is Dwell Magazine. If you want to read about new homes, and products that are energy efficient or energy saving, go to www.dwell.com.

Here's some recent mortgage news.

September 22, 2008

Variable Rates on the Rise

Several lenders have been cutting their variable mortgage rate discounts in the last few days. It's happening because their cost of funds is rising. In the last six days, 30-day bankers' acceptance yields (a proxy for variable-rate lending costs) are up over 1/4%.

Yields have been driven by concerns about the US government's newly hatched bank rescue plan and soaring commodities prices. Oil, for example, had its biggest 1-day gain ever today. So much for commodity-driven inflation dying down.

The rate increases may be short-term only though--that is, if economists like Merrill Lynch's David Wolf are right. Wolf expects coming economic slowness and is calling for a 1% rate cut by the Bank of Canada over the next year. (Bloomberg)

Despite the recent increases, variable mortgage rates are still at least 1% lower than fixed rates at the moment. So if you're shopping for a mortgage in the next 120 days, get your approval (or pre-approval) sooner than later. That covers your behind if discounts get squeezed further by the time you close.

Hi Everyone, I'll be at an open house this weekend at 2135 Sandowne Road. This is located on the Lansdowne Slope part of Oak Bay. It's a great family or retirement neighborhood. It just has a great feel to it. This house is a 50's original, but with an unusual floor plan, as it is the only split level on the street. In addition, a family room was added in the 80's, and the current owners just invested over $120,000 in renovations and upgrades. Everything from the electrical, to a new kitchen - you name it!
Nice, south facing back yard, deck, fully fenced, 4 beds, 2 baths, garage. It is an excellent buy at $729,000.
Sat and Sun 1-3