Several years ago, TD broker services offered a 12 month rate hold for brokers to access for folks who were buying a new construction home.  Eventually however, they took this product away from our channel.  Why?  Personally I believe it was because of timing.  The timing of the markets proved that while TD was offering security to the borrower by blocking funds for a 12 month time, interest rates were going DOWN during that 12 month period.  So what ends up happening is this scenario:

1.)  Borrower decides to build a home

2.)  Borrower needs a mortgage

3.)  Borrower needs to waive conditions to financing in about a weeks time after the paperwork is drafted by the builder

4.)  Meanwhile, shovel to dirt doesn’t happen for weeks afterwards

5.)  Mortgage is granted to borrower based on immediate credit, employment, and down payment circumstances.  So mortgage sits in place at a slightly inflated rate compared to the “best on the market” at that time to hedge against market interest rate increases.  Still have to wait 8 - 12 months (or so) before actually taking possession of the home.

6.)  8 months or so rolls around and borrower finds out that their possession is 8 weeks away.  At this time, rates have come DOWN and their interest rate that was held for them 8 months ago seems way too high.

7.)  Borrower decides to move the mortgage financing to another institution to get a better rate because original lender has the best rate held for them, that could be held for that period of time.

END RESULT?  At the end of the day, the Lender has blocked funds for months at a time that do not make any money.  What the broker channel was doing, was in essence “using” TD bank to hold the rate during construction of the home.  (Bad practice in the eyes of TD….but serving the borrowers best interest!)
Is this blog about TD having come back with their product to the broker channel?  No.  It IS about another lender (not a ‘bank’) that has come to selected brokers that can have access to not only 12 month rate holds…but 18 month rate holds!  Are the rates inflated based on ‘todays best rates’?  Of course…but that’s the nature of such long rate holds.  Blocking funds for that long require a little security on the lenders behalf.
WHY I THINK IT WILL WORK FOR THIS LENDER…
Timing.  Look at the rates; where does everyone think they’re going??

The answer:  UP.  The question is “What will the average BEST interest rate look like in 12 or 18 months time from now”?  Chances are that you will have a decent rate by holding your rate through this lender by the time you need to take possession of your home.  The outcome?  Very nice….

Of course, this prompts a completely different conversation about ‘do’s and don’ts’ while waiting for your home to be built….but we can talk about that directly with one another.
LAST POINT TO MAKE….

Yes….we have access to this lender that will hold this rate for you while you’re waiting for your home to be built.  Talk to us, we’ll fill you in with all the details!

Nearly one-third of sales under $300,000 level

See homes in Calgary listed for $299,900.

CALGARY — First-time buyers have re-entered the Calgary resale housing market with “a renewed sense of confidence,” says a report released Tuesday by real estate firm Re/Max.

In the first two months of this year, 32 per cent of all sales occurred under $300,000 in Calgary, said the report.

Average price in the metro area was about $410,000, it said.

“The strength of the entry-level segment is good news for the spring market as sales of starter homes are expected to have a domino effect, prompting greater move-up activity in the weeks and months ahead,” said the report.

In the overall market, the number of homes sold in Greater Calgary is slightly below 2010 levels, with 3,199 properties changing hands as of February 28 versus the 3,297 sales reported during the same period last year.

“Rising consumer confidence levels, buyer’s market conditions, ample inventory and low interest rates continue to be the primary impetus among buyers, especially now that prices have resumed upward growth,” said the report. “Those who held off in late 2010 have finally jumped back into the fold.

“Overall, the majority of entry-level buyers are in their 20s and 30s. A growing number are singles, opting to get into the market earlier in life and build equity. With consumer confidence finally gaining momentum, an improving oil and gas sector and a brightening economy, demand for housing is set to rise this spring, while average price makes modest gains.”

mtoneguzzi@calgaryherald.com

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/First+time+Calgary+homebuyers+back+market+report/4560225/story.html#ixzz1Il9Ba6d3

Denise Deveau, Postmedia News · Mar. 30, 2011 |

Cheryl Hutton and Aaron Coates always thought getting a mortgage would be a challenge. But within 18 days of visiting a mortgage broker, they were able to close a deal on a new townhouse in Calgary without a hitch.

Now in their early thirties, both have careers in the theatre, something Ms. Hutton says has been a bit of a sticking point with banks. “In our industry we never fit the paperwork guidelines ‘for the banks.’ For some reason, people don’t think we pay our bills.”

Although it was their first home purchase, Ms. Hutton says it was surprising how easy the whole process was once they had someone who could walk them through it. “He sat us down, told us what our options were, showed us that it was possible and explained all the steps we needed to take. If it wasn’t for him, we may not have made the leap.”

Sorting through a mortgage process and negotiating rates can be overwhelming for first-time and seasoned home buyers alike. That’s why people such as Ms. Hutton and Mr. Coates turn to brokers to do the legwork for them.

Yet mortgage brokers will tell you that a good portion of home buyers out there don’t really understand what they do. “Part of the challenge we have in our world is that people aren’t really sure what a mortgage broker is,” says Gary Siegle, regional manager for Invis Inc., a mortgage brokerage firm in Calgary.

Brokers should not be confused with “rovers,” mortgage specialists attached to a specific financial institution who visit customers outside of banking hours, Mr. Siegle explains.

“They only deal with that bank’s product. A broker, however, is an intermediary whose job is to make a match between a lender and a borrower. We represent the individual, not the bank.”

About 30% of mortgages in Canada are done through a broker, according to Perry Quinton, vice-president, marketing, for Investor Education Fund, a Toronto-based non-profit financial information service.

“The reason more people don’t know about them is because the banks are so visible. It’s easy to gravitate to them when you have your savings accounts, credit cards and investments there already,” Ms. Quinton says.

Going for the comfort factor could cost you however, she adds. “A broker has access to different lenders including banks, and can shop rates and features. A half per-cent may not sound like much but that could make a difference of about $20,000 for a $250,000 mortgage amortized over 25 years. Any little bit helps.”

Mr. Siegle confirms that shopping around can deliver significant savings.

“Let’s take today’s average posted rate of 5.44%, and you get a point off that at your bank. So you think you just got a really great deal. But the vast majority of rates we deal with as brokers would be another 30 basis points lower -around 4.14%. And if you look at preferred deals that don’t offer features such as prepayment privileges, it can get as low as 3.89%. That’s another 25 basis points below what’s generally available.”

The reason for that is simple, he says. “We offer wholesale rates, banks offer retail.”

For anyone considering a broker, Ms. Quinton advises people to do a bit of groundwork first if they have the time.

“It helps to educate yourself about options and what you can afford. Look at all your living expenses, including student loans and credit card debt. Chances are you are understating those.”

Another thing to look into is the different types of available mortgages and features, including interest rates, payment frequency, amortization, cash-back programs and the ability to make lump sum payments.

“Knowing these things before you go in can save you a lot of money,” she adds.

Any mortgage broker you choose should always meet the right licensing and education requirements, so be sure to check their registration.

If you’re not completely prepared, however, that shouldn’t be a concern when working with a good mortgage broker, Mr. Siegle says.

“After all, mortgages are pretty much all we do. So even if you come in cold, good brokers will walk you through the process and ask all sorts of questions,” Mr. Siegle notes.

“You just need to be prepared to answer them openly and honestly so they can get you the best deal possible.”

http://www.nationalpost.com/news/Experts+best+brokering+mortgage/4525573/story.html

Lenders have tweaked, dissolved, and simply changed.  Some that have been known to be straight “sub-prime” lenders have tweaked to the point where they simply only look at “A” business.  Ask them about the days of sub-prime and they smile, maybe their hearts excite about the way things USED to be - but guaranteed they are happy with the “new” position they’ve taken.  But having said that - they’re now playing with a variety of other lenders that are vying for the same market position…and that’s a TOUGH game; each one trying for their fair share of the “A” market.

What is “A” business?

“A” business is considered; good credit / verifiable income / good financial net worth / and an all-around decent means of security for financing a mortgage.

SO - what about “B” business and is it still around?

YES, it certainly is!

What can we classify “B” as these days?  Well, let’s give you an example of a type of mortgage that was financed just this week by one of our lenders:

-  Dual application; credit scores were low 500’s, and mid 500’s - both credit bureaus struggling to show recent established credit, and both showing a bruised credit history.

-  10% down payment

-  One applicant business for self

3 yr. term over 35 year amortization period @ 6.60%…

FIRST TIME HOMEBUYERS!

Can you say “Happy Couple”?  This was their launch into their first mortgage. They also know that they have 3 yrs. to get positioned for the best rates on the market by cleaning up their past mistakes and establishing new/clean credit; but the important thing is that they are homeowners sooner, rather than later.

Although we may read ONLY of the lenders that push towards “A” business (because there’s SO many of them), we must remember of the lenders that tailor their guidelines for situations such as the above example.

OH yes…the secret ingredient?  This lender is only accessible through a mortgage broker.

Sincerely,

Dan Mass

dan@canadafirstmortgage.com

The percentage of Canadians using mortgage brokers to buy their homes has increased significantly, according to a Deloitte report. In the 1990s, mortgage brokers numbered in the hundreds and were “lenders of last resort” for borrowers unable to obtain a mortgage directly from a bank or credit union. “Over the last decade, an increasing number of viable options for borrowers have surfaced,” the report says. “In addition to branch-based lenders, borrowers can consult with the banks’ own mobile mortgage specialists as well as independent brokers–while also conducting their own research online. “In this changing and information-abundant environment, the mortgage brokerage channel has emerged as a legitimate competitor.” The report said share of origination transactions increased from 26% in 2003 to 38% in 2009 as mortgage brokers made particular inroads with first-time homebuyers and young Canadians.
Read more: http://www.nationalpost.com/Deloitte+report+Mortgage+brokers+making+inroads+with+first+time+buyers/3751444/story.html#ixzz13sJ64CC6

- TD Canada Trust releases 2010 Home Buyers Report -

TORONTO, July 5 /CNW/ - Are Albertans better negotiators than the rest of Canada? More than any other province, first time home buyers in Alberta are expecting to pay less than the asking price for their home (71% vs. 65% nationally). One-quarter (26%) expect to pay asking price and only 3% expect to pay more than asking price. This is according to the first TD Canada Trust Home Buyers Report, which surveyed Canadians who have purchased their first home in the past 2 years or who intend to purchase a home in the next 2 years.

More than in any other province, Albertans report putting down as much as they can afford for a down payment (95% vs. 88% nationally). Sixty-five per cent say they saved or plan on saving for two years or less for their home purchase. Despite the majority putting down as much as they can afford, only 25% plan to have more than a 20% down payment. The remaining 75% will require their mortgage to be insured by organizations like the Canada Mortgage and Housing Corporation (CMHC). Two-thirds (65%) are worried about being able to afford their home if interest rates rise.

“It’s only natural to want your first home to be the home of your dreams, but it is important to be realistic about what you can afford as a down payment and what that will mean for both the type of home you buy and for your mortgage payments over time,” says Farhaneh Haque, Regional Sales Manager, Mobile Mortgage Specialists, TD Canada Trust. “I advise first time home owners to consider a larger down payment because a 10% or greater down payment will make a big difference. It may mean that you need to save longer before buying your first home, but it will pay off in the end. Speak with a representative at your bank about setting up an automatic savings plan to help you save.”

Seventy-three per cent of those surveyed in Alberta have or plan to have a fixed-rate mortgage. “Historically you are more likely to save interest costs with a variable rate or short-term mortgage option, so if they can handle some volatility then I recommend buyers choose a variable rate. If people are adverse to interest rate fluctuations then a fixed-rate is best,” says Haque.

Albertans are doing their homework:

Nearly all home buyers are making informed financial decisions before buying their home. Top activities before buying a home include getting pre-approved for a mortgage (94%), learning about mortgage options (93%), calculating closing costs (89%) and speaking to a mortgage lender before shopping for a home (89%). However, land transfer tax, closing costs and property taxes were the top costs that buyers felt unprepared for (53%, 51% and 48% respectively).

What type of home do Albertans want?

Fifty-nine per cent of Albertans prefer fully detached homes, followed by condominiums (17%) and semi-detached homes (14%). If two homes were at the same price point, 68% would prefer a newer home over an older home. Albertans are split about the preferred location for their home; for the same price, 55% would prefer a smaller home closer to work and 45% would prefer a larger home that requires a longer commute to work.

Home shopping process:

People in Alberta do their due diligence when searching for a home, spending almost 9 months looking for a home and viewing on average 13 homes. They spend a lot of time shopping in Alberta because they plan to live in their first home for longer than people in other provinces. In fact, only 5% of people plan to spend less than 3 years in their first home (compared to 11% nationally). Thirty-nine per cent plan to spend more than 10 years in their home or to never sell.

Homes are a long-term investment

“Ups and downs of the housing market is near-impossible, so the best time to buy is when you can afford it.”

‘You know, you’re making the biggest mistake of your life. The housing market is going to fall.”

I got this great piece of advice from another journalist at the Financial Post, who has since left the newspaper, after buying my first home. Not exactly the type of thing you want to hear after taking on huge debt and making the biggest financial decision of your life.

Lucky for me, I didn’t heed that advice about Toronto’s red-hot real estate market — in 1998. I’m not going to say I made a shrewd business decision 12 years ago, or even six years later when I bought a larger house.

For me, it wasn’t a case of not following what turned out to be bad advice from a fellow business journalist. Nor was it about trying to time the market.

I was simply following the same pattern as most Canadians: I got married and decided to stop renting and buy something. Later came the need for a bigger home when the second kid was on the way.

Which brings us to today. The supply of housing is rising fast as people try to list their homes for sale before the market “crashes.” This is happening at the same time that demand is starting to wane. Economists and even the real estate industry, are all predicting a correction — the only argument being how severe it will be.

So, the question for anyone buying is: should you wait?

Don Lawby, chief executive of Century 21 Canada, thinks the strategy of waiting for a crash is not going to work during this economic cycle. “For a market to crash, you have to have people who are desperate to sell,” says Mr. Lawby. “People will [only sell] if they can’t afford their mortgage or they don’t have a job.” He doesn’t see a decline in prices, “unless you are predicting that mortgages will renew at a hefty premium — which is not the case — or a whole bunch of people are going to lose their jobs.” Mr. Lawby believes neither will happen.

And, he adds, you are really into a risky game if you are timing the market. “A house is a home. If all you are doing is looking at it as an investment — that’s what happened the last 15 years — it’s not just that. It’s a place to live and a place to raise a family,” says Mr. Lawby. Even Benjamin Tal, a senior economist with CIBC World Markets, who, last month, said in a report that Canadian housing is 14% overvalued, has doubts about playing the market. But he suspects that’s exactly what some Canadians will do.

“Is there a sense that prices will go down and people will wait? I think it might be an issue,” says Mr. Tal. “It won’t be the main reason [people don't buy], but it will happen at the margins. The fact that people sell at the peak and wait to buy is a normally functioning market.”

But even if you do make the right call on housing prices, it could end up backfiring on you in other ways. For example, if interest rates rise fast enough, any gains you make on price could be erased by interest charges, says Mr. Tal. Edmonton certified financial planner Al Nagy says you need to think of your house the way you think about any long-term investment. “Whether it’s an investment for use in your retirement or a house to live in, it’s a long-term thing. The timing becomes less critical than it would be if it is a speculative [investment].”

And he says making a call on the housing market is as tricky as any other investment call. “It’s very rare you catch the bottom. You can’t let the market dictate when it’s time to buy. The time to buy is when you can afford it,” says Mr. Nagy.

I’m not sure that philosophy would fly with my former colleague, but the problem with timing the market is: what if your timing is off ?

gmarr@nationalpost.com

CALGARY - In residential real estate, there’s an old saying about how location is an important factor in any purchase - besides the price of course.

A BMO Bank of Montreal survey, released today, says that among current and future first-time home owners, location is the main reason they would consider offering more than the asking price for a home.

The survey found that:

• 70 per cent of current home owners would consider offering more for a home based on its location

• 63 per cent of future first-time home owners would consider offering more for a home based on its location.

• Future first-time home owners who are men are more likely (70 per cent) than their female counterparts (57 per cent) to consider offering more for a home based on its location.

“Especially in today’s heated market, it’s easy to get caught up in the emotions of a home purchase,” said Jane Yuen, Senior Manager of Mortgages, BMO Bank of Montreal. “It’s hard to walk away from a home you believe is ‘the one’ but homebuyers need to avoid getting caught in a bidding war that pushes their mortgage payments outside their comfort zone. In short, you need to know your limit and stay within it.”

Among future first time home owners the study found some notable gender differences:

• Men are more likely than women to agree that talk of rising interest rates has influenced their decision to enter the housing market (39 per cent vs. 26 per cent).

• Twice the number of men compared to women report that they have been caught up in a bidding war (16 per cent vs. eight per cent)

• Females are more likely than their male counterparts to say they are being overwhelmed by the choices/decisions involved in the home buying process (44 per cent vs. 28 per cent)

The Harris/Decima online poll was conducted from February 16-22 2010 and is based on a sample of 1,000 Canadians between the ages of 25-45 years, who are either current home owners (who currently have a mortgage on their home and needed one when they purchased their home) or are planning on purchasing their first home in the next 12 months, and at least share in their household’s financial decisions.

mtoneguzzi@theherald.canwest.com

CALGARY - Calgary’s housing market in March was fueled by an expected rise in interest rates with MLS single-family home sales up by 29 per cent compared with a year ago and condo sales soaring by 37 per cent, according to data released today by the Calgary Real Estate Board.

There were 1,396 single-family home sales last month for an average price of $471,269, up just over 12 per cent from March 2009.

The 609 condo sales averaged $296,660, an increase of just over four per cent from a year ago.

“The spring market has come early to Calgary,” said Diane Scott, CREB president. “Improved economic

conditions, better employment prospects, and an earlier than expected rise in mortgage rates are all contributing

to this early boost in sales this year.

“Undoubtedly the recent announcements by all our major banks to raise mortgage rates are motivating

buyers to take the plunge. But Calgary’s market remains in a healthy position and our sales are not outstripping supply. The rise in demand will also motivate sellers to consider listing this spring.”

She said there has been some speculation that mortgage rate hikes will adversely affect housing demand in the longterm, but it should be noted that a rise in rates was fully expected.

The towns outside Calgary saw 423 sales during the month, up nearly 63 per cent from last year, for an average price of $360,805. That was up by nearly 10 per cent from March 2009.

The country residential (acreages) market experienced a whopping more than 78 per cent increase in sales to 66 transactions for an average price of $970,295, up more than 28 per cent from last year.

“Our average price has edged upwards as more move-up buyers enter the market and overall demand

strengthens,” says Scott. “But this is not an unusual trend during a spring market. We expect this modest price growth to continue, but a rise in listings will likely curb this trend.”

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/Interest+rates+fuel+Calgary+housing+market/2754209/story.html#ixzz0kKghoid1

I’d like to discuss an important issue that has been leering over the shoulders of banks, lenders, and brokers.  All of these parties have a responsibility to perform their due diligence with every valued client.  There is one step that is overlooked by many, but should probably be held in the highest of interests - and that would be placing our clients into a mortgage that will be serviceable in the FUTURE.  Tough?  Yes and no.  You see, really all it takes to do this is an estimation of your balance at the end of the first term, and wager against what the future rates might look like.  What do we know right now?  Rates will go up…of course.  How much - we don’t know exactly.  If we wager a bet that rates will be up 3% - 5% in the next 5 years, it stands to reason that we’re doing our best to limit your risk into entering into a “said” mortgage for today.  We can take your opinion on what your expected salary will look like in 5 years from now (or whatever initial term you’re partial to).  From that perspective, we can harness a ‘likelihood’ of what your future mortgage will look like.  At the very least you’re going in with your eyes open to what may happen to be the biggest investment of your life.  Could we be off in suggesting 3% - 5%?  YES!  Perhaps they’ll be up 6% - 8%.  When we’re providing a looking glass towards the future, nothing is set in stone.  The important factor here is that we want you to go into this investment with both eyes open and strategize in various ways towards different scenarios.

When a bank or broker tells you what you can qualify for on paper as a MAXIMUM mortgage…I highly recommend that you consider letting us play the scenarios - first!  It’s easy to get starry eyed with how much you can afford on paper…today.  If we can protect your risks today, for tomorrows uncertainties…wouldn’t that be worth the time it takes to figure out a scenario or two?  That’s our job