Archives for February 2013

Kelowna Mortage Broker – Bank of Canada

kelowna-mortgage-brokerAs predicted the Bank of Canada will keep rates low for the foreseeable future. This is true as well for a

Kelowna Mortgage Broker.

This policy combined with the (apparently) slowing demand in the residential real estate market will create an excellent buying opportunity for those wanting to own their homes. According to the bank the wild card in their policy choice is the US economic recovery which is well documented by the US real market blogger, Calculated Risk.
The real problem for the BoC is they are caught between a high dollar, export demand and imports such that they are dammed if they do or dammed if they don’t.
If they raise rates, especially increasing the differential between US rates and Canadian rates then there will be a rise in the Canadian dollar vs the US dollar which will damaging Canada’s vital export industries. In addition, as the dollar rises, imports become cheaper. Much of Canada ‘s inflation basket is made up from imported goods so the inflation number goes down, which pushes the need to raise rates back down.

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Confused? Well the bank is a bit too. And we haven’t even factored in the tight mortgage lending policies that the Finance Department and OFSI have forced on lenders that are causing a major slowdown in the construction industry in Canada. Residential construction is a major economic driver for the Canadian economy and its loss will put further downward pressure on any plan to raise interest rates. To bring this into focus for the ordinary homeowner, all that this means is there is little push on the BoC to raise rates ahead of any move by the Feds in the US. They have committed to keep rates where they are until 2014. So despite the few disclaimers in the BoC’s policy statement, the truth is rates are going nowhere in the foreseeable future and if things don’t get going in the near term, we may even see a rate cut.

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Kelowna Mortgage Broker and The IKEA Monkey?

kelowna-mortgage-ikea-monkeyKelowna Mortgage Broker

I like the Ikea monkey. I like his coat. I like that he hangs at Ikea. He’s kind of a euro-hipster monkey out shopping for monkey size furniture and stuff at one of our favorite furniture stores.
So why is the Ikea monkey on my mind this morning? Well, while I was out walking Jack earlier it occurred to me that the Ikea monkey connects to our psyche in a fundamental way.
Much of this blog talks about the abstract and arcane world of economics with the context of mortgages and real estate. The topics, because they are abstract, don’t connect to our inner humanity. Abstract ideas are always a bit tough to follow but we feel we need to understand them so we can make good financial decisions.
What’s a good financial decision? One where we either make money or at least don’t lose money.
How do we make a good decision? We try to learn as much as we can about a subject by thoroughly researching it and then hopefully making an educated decision.
In the context of real estate the decision almost always revolves around the question, is this a good time to buy? When is a good time to get a Kelowna Mortgage. In my short 35-year career in this Kelowna Mortage industry I can tell you that no one can predict with100% accuracy when is a good time to buy a house. I can tell you that over the long term real estate prices follow the inflation rate. Sometimes they fall behind, like now in Kelowna, and some times they get ahead, like 2007 in Kelowna.

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Contact us for more information about a Kelowna Mortgage. I can also tell you that home ownership is in demand. Which brings me back to the Ikea Monkey. Owning your own home, like the Ikea monkey, touches something deep within our psyche. It is not an abstract idea. Therein are the difficulty and the solution.
If you want to own a home then buy a home. A home is not an investment. If you don’t want to lose money be prepared to live there for the next 10 years and inflation will save your investment.
Your home is not an abstract idea, like the Ikea Monkey, it’s close to your heart.

Hopefully we get an Ikea here in Kelowna soon.

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So should you take a variable or fixed rate mortgage?

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kelowna-mortgage-brokerSo should you take a variable or fixed rate mortgage?

The short answer in most markets, is variable rates, in the long run they have been the cheaper way to go. This in fact has been essentially true for the past 30 years.

There is however an underlying reason for this lucky event. The western economies have been in a long-term rate decline for those 30 years, albeit, with the occasional blip. Compounding the variable advantage was the intensive rate competition of 6 years ago when lenders were offering prime minus rates on their variable products.But that was then and this is now. We are today in a rate market place that is offering 5 years rates at 3 percent, which coincidentally is the long term inflation rate. (I say that in historical terms we are currently in a deflationary economic environment) what this means is that any long-term rate in this range will, over time, be a low rate.

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The current interest rate environment is not sustainable, at some point all of the monetary stimulus that every government in the world is pushing, is going to kick in and then watch out for big rate increases.

When is this going to happen? If I knew that I’d be making billions on Wall Street but I can assure that the trillions of dollars being pumped into the world economy are going to hit at some point and when they do the result will be a shockingly fast upward bump in rates.

So our advice today is contrary to the advice we’ve been giving for the last 25 years. We now recommend that if you don’t intend to repay your mortgage over the next ten years, then you should lock into a fixed rate term, maybe even a ten-year term which at sub 4% seems like a super bargain to me.

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Mortgage Kelowna | Why use a Banker?

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Why Use A Banker?


In Canada, 5 federally chartered banks dominate the financial industry. They account for 80% of the mortgage market, the balance being made up of various credit unions, and nonbank lenders like pension funds, life insurance companies, etc.
The banks themselves, by Canadian standards, are gigantic entities, the size of, and in many cases larger than, provincial governments. The banks are the second most active lobbyists in Ottawa.
I’m telling you this to set some background. The banks are huge and bureaucratic. They have sophisticated systems in place to manage giant fund portfolios and are well run well-regulated players in the financial industry.  A Kelowna Mortgage is no different.
When you meet with a bank employee you can be confident that they have some basic training in the product you’re after and that you will typically be treated in a fair and professional manner. Lets face it, they are good at what they do, hence the 80% market share.
So all is good and there really is no need to talk to an independent mortgage broker then is there?
The key to that answer is to understand that the friendly well-trained bank representative sitting across from you is an employee of the bank. Employees work for their employer, not you.

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Their job is to maximize profit for the bank. Their annual bonus, career advancement and all the rest of being good employees depend upon their performance in creating profit for the bank. They have volume targets, spread targets, cross sell targets, the list goes on. The bank is a demanding task manager and they work for the bank.
So that is a key distinction between a broker versus an employee.
The mortgage broker is paid either by you or the lender to get you sorted out with the best possible
product for you. Maybe you don’t fit in with the standard bank product lineup, maybe you’re self-employed, a new immigrant, or a small businessperson. All of these people don’t really fit well with bank products and when they go the bank are not likely to fare well.
The broker in most cases is a gatekeeper, and is under strict disclosure rules. If you want to know how much we make on your deal ask. Typically we make about 1% payable only if you deal with us.
You can use our quote and take it to your banker, the one that quoted you a higher rate before we got involved, and they will match that rate, not beat it, match it. But what does that tell you? They weren’t up front with you at the beginning of the process (because they don’t work for your interests). So you tell me, why would you deal with a bank?

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