Betty Bartusevicius

Waiting for Better Fixed Rates

This article is credited to Kristian Harris of Monster Mortgage. If you would like further information contact Betty Bartusevicius or Kristian.

One of our lenders sent this to me and it helps explain how and when FIXED Rates moved compared to how and when VARIABLE Rates move. Thought this may good information for people to have!

February 18, 2009
Waiting for Better Fixed Rates

The Bank of Canada's next interest rate announcement is just two weeks away, and many mortgage shoppers are fixated on it.

We've probably spoken to a dozen people in the last week who want a fixed-rate mortgage but don't want to apply until the Bank of Canada meets March 3. The thinking is that the Bank of Canada announcement will cause fixed rates to fall.

We're used to seeing this psychology with variable-rate shoppers but not with fixed rates. As such, it's worth examining further the linkage between the Bank of Canada and fixed mortgage rates.

As many know, the Bank of Canada sets Canada 's overnight target rate. This in turn influences prime rate, which directly affects variable rates.

Fixed rates are a different story. Fixed rates are driven by bond yields (usually, that is-the last few quarters have been atypical). The Bank of Canada has no direct control over bond yields, although it can influence them in certain ways.

The fact that bonds are independent from the Bank of Canada is something many don't grasp. For example, the entire country might expect the Bank of Canada to cut rates 1/4% on March 3, but if stronger-than-expected economic reports precede the Bank of Canada announcement, bond yields could jump. In that case, fixed mortgage rates could increase while variable rates fall. (We're not saying that will happen this time. It's just an example.)
So how much do fixed rates really follow the Bank of Canada's lead? According to TD, "for every percentage point of central bank easing (for example), the 5-year yield should decline by 70 bps."

We ran our own tests and found the correlation between prime rate and 5-year bond yields to be 69.5% over the last 10 years. So, a fair amount of time, bond yields will deviate from prime rate.

That makes sense because 5-year yields are driven by demand for long-term funds while prime rate is linked to demand for short-term funds.

In sum, bond yields and prime rate (and fixed and variable rates) do move together long-term. But short term, anything can happen.

So. Should fixed-rate mortgage shoppers wait until the Bank of Canada's rate announcement before locking in?

In our view, no. It's just a gamble.

There isn't much foreseeable to gain by doing this unless one feels strongly that the Bank of Canada will scare the market with a dire economic forecast...and drive down bond yields.

Most folks in this boat are simply trying to outguess the market, which no one can do consistently. Moreover, they're disregarding the fact that fixed rates are already at historic lows.
Why bother with greed-driven chance taking when you can lock in now, get assurance that your rate won't go up, and have the ability to request a downward rate adjustment should your lender drop rates in the next few weeks?

Contact Betty Bartusevicius for more information regarding the above article at 905 828 3434 or directly at 416 427 1875

Re/Max Realty Specialists Inc., Brokerage

Contact me by email; http://www.bettybart.com/AgentProfile/contactme.cfm

If not this article, how about just a chat regarding your real estate questions?

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There is no time like the present to begin your investigations into a property purchase or sale that will lead to sound decision making.

Experience is not expensive; it is Priceless.

Let me be your professional Real Estate Advisor!

The sun is starting to shine and the snow is starting to melt. With Spring just around the corner, we bring our thoughts to the landscaping and outside chores that we laid to rest in the past fall season. We're all in the same boat.

The renovation tax credit that was announced in Budget 2009 stimulus plan, may motivate property owners to carry out home improvements this year.

Renovating a home is a labour of love the can generate long-term benefits and financial return.

Because more and more of us are concerned with the environment, here are a few "Green" ideas for remodeling your home. Some of these ideas would be more appealing with recreational property, but could also apply to your prime residence.

Reclaimed Wood Flooring

If you are considering replacing the floor, reclaimed wood from other buildings could be used. There are companies that produce quality flooring out of used wood. It looks great, performs well and DOES NOT impact the environment through logging.

EnergyStar

Remodelling the washroom? Look for EnergyStar appliances -- low-flow toilets, water saving shower heads and faucets. These save on water useage and they save on energy required to heat your water.

Local Flora

Local plants will require less care than imported ones. They have been raised to adapt to our different seasons. They require less watering, no special soil or tending.

Energy Saving Windows

Energy-efficient windows will eventually pay for themselves with the savings in heating and cooling.

Alternative Power Sources

Solar panels and wind turbines are only 2 options of a growing movement to get more energy from renewable resources rather than our power grids or fossil fuels.

Educate yourself on the care and maintenance of 'green' products

After spending money on 'eco-friendly' products, we are disappointed when they don't perform as previous products. These products have a shorter shelf life and may require more care. Read instructions on use and choose according to cost and time to maintain these products properly.

If you are not looking to renovate, just click here regarding homes of the future. That could also give you ideas towards "green" homes.

Contact Betty Bartusevicius for your real estate needs and questions 905 828 3434 or directly at 416 427 1875

Re/Max Realty Specialists Inc., Brokerage

Contact me by email; http://www.bettybart.com/AgentProfile/contactme.cfm

Your new home is just a few clicks away;
http://www.bettybart.com/createnewclientuserid/whyregister.cfm

There is no time like the present to begin your investigations into a property purchase or sale that will lead to sound decision making.

Experience is not expensive; it is Priceless.

Why is Buying On The Slide a Buyer's Advantage In the Toronto Real Estate Market?

First lets consider a Sellers Market;

A Sellers Market occurs simply when there are more Buyers than Sellers. This trend has been in place since 1996 and has continued upwards till 2008. If there are two listings and 20 buyers, the home owner is able to dictate price, terms of the sale and deposits that accompany the Agreement of Purchase and Sale. The home owners took their appliances, chandalier, and window coverings. You agreed because you were happy to pay. If you were in a multiple offer situation, the group mentality applied and you paid because you wanted the property.

The Seller had Control of the Situation.

We started to see hesitation in the marketplace around October 2007, and the buying /selling dynamic started to "shift".

This Shift in the Marketplace has moved us into a Buyers Market.

You can take advantage of the Buyers Market by being a qualified, ready to buy customer and force the homeowners who need to sell to come to US with their Offers to Buy.

Are we taking advantage of the situation? Yes! Absolutely. Everything, that I learn about the Seller's situation is available to you, from the negotiating perspective. (If you are under a brokerage Representation Agreement with me.)

What have you gained? You now have the upper hand against the Seller.

Lets put this into a practical example. Let us assume that you want a house in Neighborhood 'A', and there are 25 listings available for sale in that neighborhood. From the Sales to Listings Ratio, we know that only one house in ten will be sold this month. How do we find the most motivated Seller? We pick the best homes you and I have seen together, start with an offer of the best one, and present it to the seller. Remember, an Offer must be agreed to by both parties. If the first one doesn't want to negotiate, then we move on to the next one. The seller who truly wants/needs to sell will make his presence known to you because he NEEDS, WANTS to sell and be gone. Interested?

You as the Buyer will dictate the terms, conditions, inspections, appliances and even the family chandalier that you never had a chance at before. Let's ask for everything.

So ..... Lets wait and see, we'll buy when the market has bottomed out.

There are a few different lines of thought; when the market has bottomed, you and I together are looking at historic values, so the exact date of the purchase can never be forecast. In a Balanced Market there will be no "motivated or deperate" Sellers that make their house extra appealing to you to buy as an Under Market Value Purchase. There is NO Leverage.

Secondly, if you are in a rental and are paying someone $1500 per month, for an average of the next three years, becomes $54,000 in actual payments that could have been used to pay down your mortgage or improve your property. If you don't believe me, talk to a Mortgage Specialist.

Lastly, Current interest rates are at 4 - 5% on a blended mortgage balance (variable plus fixed averaging). These rates are at a historically low right NOW. I believe there will be additional interest costs as people ( especially Governments) continue to borrow.

For those Selling and Buying into the same market there is no effective change. Sure you may get less than your neighbour did a few months ago, or back to last years values...but you will be buying with me and saving as you upgrade your property. The benefits for you are enormous.

Why don't you and I get together and have a coffee and talk about Buyers Agency and the whole process of making a move in this market.

Contact Betty Bartusevicius for your own private viewing of a property that would interest you at 905.828.3434 or directly at 416.427.1875.

Re/Max Realty Specialists Inc., Brokerage

Contact me by email: http://www.bettybart.com/AgentProfile/contactme.cfm

I can help you save time and money by shopping smarter:
http://www.bettybart.com/createnewclientuserid/whyregister.cfm

There is no time like the present to begin your investigations into a property purchase or sale that will lead to sound decision-making.

Experience is not expensive; it's Priceless!

Great News from the Government. I hope this will give buyers and sellers a little more confidence in the Real Estate Market.

To make this note short and sweet: I received this from one of my Mortgage Specialists:

Home, Sweet Home

The federal budget offers several measures of interest to people who plan to renovate or buy a home. Here's how they could theoretically work in unison for a first-time buyer:

Step 1: Claim the First-Time Home Buyers' Tax Credit
Details: Offers tax relief of up to $750 to first-time buyers to help defray closing costs on their purchase.

Step 2: Take advantage of changes to the federal Home Buyers' Program
Details: You can take up to $25,000 out of your RRSP to buy a first home and pay no taxes, up from $20,000

Step 3: Renovate your new home with help from the temporary new Home Renovation Tax Credit
Details: Claim up to $1,350 in tax relief for upgrades to your home done before Feb. 1, 2010; available to everyone, not just first-time buyers; applies to renos costing $1000 to $10,000

Step 4: Get energy efficient using the ecoEnergy Retrofit program, which was expanded in the budget
Details: Get a grant of up to $5,000 for changes to your home that add to energy efficiency: you can also claim the home reno tax credit for these upgrades

Regards,

Mortgage Brokerage of the Year, CMP Award Winner 2008
Kristian Harris - Senior Mortgage Consultant
Phone: 416.818.1645
Fax: 416.480.0472

For further information regarding the Real Estate Market or just to chat, Contact Betty Bartusevicius at 905.828.3434 or directly at 416.427.1875.

Re/Max Realty Specialists Inc., Brokerage

Contact me by email: http://www.bettybart.com/AgentProfile/contactme.cfm

If not this topic, perhaps something else relating to Real Estate?

I can help you save time and money by shopping smarter:
http://www.bettybart.com/createnewclientuserid/whyregister.cfm

There is no time like the present to begin your investigations into a property purchase or sale that will lead to sound decision-making.

Experience is not expensive; it is Priceless

Great News from the Government. I hope this will give buyers and sellers a little more confidence in the Real Estate Market.

To make this note short and sweet: I received this from one of my Mortgage Specialists:

Canada's Mortgage Industry Welcomes Federal Budget Announcements


Earlier today, federal Finance Minister Jim Flaherty tabled the federal budget. Several measures affect Canada's housing and mortgage industry.

· Temporary home renovations tax credit of up to $1,350 for eligible home renovations and alterations
· Increase in the home buyers RSP plan, withdrawal limit increased to $25,000 from the current $20,000
· A new first time home buyers tax credit that will provide up to $750 in tax relief for closing costs
· Broad based personal tax reductions including an increase in the personal exemption and increases to the limits for the two lowest tax brackets


Lindsay Doke
Trusted Mortgage Advisor
cell 416-464-6423
fax 905-785-2325
email: lindsay.doke@rbc.com
http://mortgages.rbcroyalbank.com/lindsay.doke

For further information regarding the Real Estate Market or just to chat, Contact Betty Bartusevicius at 905.828.3434 or directly at 416.427.1875.

Re/Max Realty Specialists Inc., Brokerage

Contact me by email: http://www.bettybart.com/AgentProfile/contactme.cfm

If not this topic, perhaps something else relating to Real Estate?

I can help you save time and money by shopping smarter:
http://www.bettybart.com/createnewclientuserid/whyregister.cfm

There is no time like the present to begin your investigations into a property purchase or sale that will lead to sound decision-making.

Experience is not expensive; it is Priceless