Mortgages - This is getting a little predictable now!

Hi…it's me.

Another Bank of Canada meeting this past week and no interest rate change again… this is becoming a bit boring, yawn.

The overnight rate has remained at .25% since last April and there's no sign of any changes anytime soon. A little inflation would help put some "zip" in my updates but employment will be an issue for at least another year so don't expect any inflation concerns in 2010/11. For now, the low financing costs allow home buying to continue at a healthy pace!

Recently you may have read that about 75% of borrowers chose fixed mortgages in 2009 and yet 28% of consumers used an independent mortgage broker. Therefore 72% of the borrowers would have followed the advice of their Banker - right? If you were a Banker would you suggest to your client to take a fixed/closed term at about 4% or a variable/convertible term at about 2%?

Hmmm?… I think the answer is obvious. Now for the 28% that used the services of a certified mortgage broker/planner, they most likely were exposed to neutral data on both fixed and variable mortgages and thus made a more educated decision. In this scenario, the odds are most chose variable even if rates are expected to go up, or they may have taken a 10 year fixed term. Some encouraging statistics are that those that did choose a fixed mortgage term, 70% of them took terms longer than 5 years.

So one can conclude that a traditional 5 year fixed term is not the choice that can be easily justified anymore… unless you are a Banker of course.

So then what is new for 2010? We here at Mortgage Architects are doing more for our mortgage clientele this year. Insurance is one of the most important financial decisions one can make because a proper insurance package will protect your most valuable assets… your family and home.

In my office, we take home insurance very seriously and therefore we have an independent "Certified Insurance Agent" on call that will comment on insurance options at no cost or obligation. Our priority is that the borrower knows that mortgage insurance is 100% optional (regardless of what your Banker may tell you) yet one should understand what is available before accepting or declining insurance.

The sooner one has a comprehensive understanding of their insurance needs the better. Murphy's Law is such that we need insurance when it is too late. The key to insurance is to start when you are young and healthy which typically keeps the costs down and the long term benefits greater. Connect with us anytime to ensure your coverage is adequate for both you and your family!

To complement our mortgage services, we will be reaching out with more products and services in 2010 so stay tuned… Here's to a "Healthy & Prosperous New Year for All".

Cheers… Peter, Andre & Team.