True North Mortgage Blog
New location update
January 08, 2008
Plans for our new location are coming along well. If everything goes according to schedule we should be open for business on March 3, 2008.
Below is a view of the outside of the store from the front and the side. Sorry the writing is small and hard to read. We have hired a very capable design firm that has really taken our ideas to the next level. We are all very excited.
The new location will be at 321 6th Ave SW Calgary.
Regards,
Dan
Variable Rates Dropping?
November 23, 2007
The Experts at TD bank have changed their minds. They now believe
that the Bank of Canada will reduce Prime twice over the next 2
months. Previously they thought the Bank of Canada would leave prime
alone for the next 9 month at least.
Those who have a variable rate mortgage or are thinking about a
variable rate mortgage should be happy.
Why is the 5 year rate still at 6%
November 23, 2007
We, at True North Mortgage, have been stumped by the persistence of
the 5 year rate to not drop given the decline in rates in the
underlying bond market.
The following article from the Globe & Mail addresses this issue.
"Historically speaking, we should be paying somewhere around 5 per
cent for a discounted five-year mortgage right now.
The fact that we're paying close to 6 per cent shows how tough it is
to be a borrower of any type in a financial world turned squirrelly by
the troubles in the U.S. subprime real estate market. It's costing
banks more to borrow the money they in turn lend out as mortgages and,
naturally, this extra cost is being passed along to borrowers.
A good measuring stick for the cost of a five-year closed mortgage is
the yield on five-year Government of Canada bonds. Data provided by
Bob Dugan, chief economist at Canada Mortgage and Housing Corp., shows
that posted five-year rates at major lenders have on average been
priced at 2.44 percentage points above five-year Canada bonds for the
past 7? years. In other words, a five-year bond yield of 5 per cent
would suggest posted mortgage rates of 7.44 per cent on average.
In September, the spread between posted five-year mortgages and the
five-year Canada bonds was 2.9 percentage points, Mr. Dugan's numbers
show. In October, it rose to 3.21 percentage points and this week it
reached 3.61 percentage points.
People in the banking sector link the rising spreads to the increased
rates the banks must now pay on the investments they sell in order to
generate the funds lent out as mortgages. Whether the banks are
selling guaranteed investment certificates or pooling their mortgage
loans and selling pieces to institutional investors, they have to
offer higher rates today than they did before the implosion of the
U.S. subprime mortgage market this past summer.
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