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Toronto Mortgage Broker Brad Compton talks about the future of Canadian Mortgage Rates as well as the details of the recent Mortgage Regulation Changes in Canada. You might be surprised who is actually behind te recent changes.
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Interest RatesWhat does the future hold?
Presented by: Brad Compton
Tonight’s Discussion
Fixed vs. VariableWhat drives rates?Where have we been?Where are we going?New Mortgage rules
Fixed VS. Variable
Fixed VS. Variable
VARIABLE FIXED
Payments Fluctuate Payments Remain Constant
You can set payment amount Payments can’t be set
Penalty is 3 month’s interest Penalty is 3 month’s interest or IRD
Open product available No open product
Re-advanceable Product None available
What Drives Rates
Variable – Bank of CanadaFixed – Canadian Bond market
Bond Yield
Risk
Expenses
Profit
Mortgage Rate
10 Year Stats
Average Prime Rate: 4.46%Highest Prime: 7.25%Lowest Prime: 2.25%
3.00%
Average Fixed: 6.49%Highest Fixed: 7.75%Lowest Fixed: 5.19% 5.24%
Where Are We Going?
UP
WHEN???
Where Are We Going?
Variable – Overnight Index Swaps (OIS)
Where Are We Going
Canadian 5 yr Bond Yields
New Mortgage Rules
Reduced amortization to 30 yearsRefinances up to 85%CMHC no longer backing HELOCsMarch 17th deadline
New Mortgage Rules
Financial Ruin!
New Mortgage Rules
Roughly 30% of mortgages last year had 35 yr amortization. Most were FTHB
TD estimates the amortization decrease will impact 20,000 sales
Amortization reduction will drop average affordability by 6-7%
Roughly 10% of mortgages currently refi above 85%
Current default rate of .42%
New Mortgage Rules
New Mortgage Rules
Default rate below .5%CMHC Net Income $931M71% of book is on loans with an LTV of
less than 80%9% return on securitization activity
Who is Responsible?
Thank You
Brad ComptonInvis Mortgage Agent
Twitter: bcomp123www.YourLowMortgage.ca
