Mortgage Rates: Time To Get Pre-approved or Rethink Your Mortgage

This article is from the Vancouver Sun written by Fiona Anderson. Many Kamloops residents are getting great rates on their mortgages; both refinance and pre-approval rates. Now many first time buyers have a chance to own a home. Read below for the full article.

Have a fixed-rate mortgage at 4.5 per cent or higher? Then you should be refinancing, says Steve Moffitt, senior mortgage consultant with Equimac Mortgage Centre in Vancouver. “There’s never been a better opportunity historically, never, for doing a refinancing, ” he adds.

If only it were that simple. In fact, determining whether you should refinance or not depends largely on the penalty you will pay to get out of your current mortgage, and the amount of money you could save with a new one.

The first part of the equation — the penalty — is not easy to calculate. Most fixed-term mortgages charge the greater of three months’ interest or what’s called the “interest differential.” This latter amount is the difference between the interest you would have paid for the remainder of your mortgage term and the amount the bank can earn lending out the money now.So if you have a five-year mortgage at 5.25 per cent with three years left to go, and the bank’s current three-year rate is 4.5 per cent, you’ll have to pay the difference.

Often the amount of the penalty is about the same as the savings to the borrower, “so it’s a wash,” says Feisal Panjwani, a senior mortgage consultant with Invis. Moffitt’s magic number of 4.5 per cent uses the penalty of three months’ interest, which he says he sees often. But which penalty will apply really depends on the particular mortgage. So both Panjwani and Moffitt encourage people to ask their mortgage professional to crunch the numbers for them.

The current best five-year fixed-rate available is 4.19 per cent for most borrowers, Panjwani says. And he believes the rate could go as low as 3.99 per cent in the near future. The best variable rate is the prime lending rate set by the banks plus 0.8 percentage points, which today translates into 3.3 per cent. With rates that low, everyone who currently is paying 4.5 per cent or higher should probably do the math because there could be thousands of dollars in savings.

One way to save may be switching from a fixed- to a variable-rate mortgage, because with the variable rate so low, the savings are more likely to outpace the penalty costs, Panjwani says. But because the rate does change, “that’s risky,” he adds.

Some people are refinancing their mortgages not for the savings but rather to lock in today’s low rates for five years, Panjwani says. For example, if someone has three years left in their mortgage term, they may not save any money in the first three years of the new mortgage because of the penalty. But they have guaranteed today’s rate for two years after that. Keep in mind, however, that there are costs associated with refinancing that have to be added to the equation, Panjwani says.

One group of borrowers who need not worry about refinancing are those who were already in variable-rate mortgages. In the past, those rates were calculated as prime less a premium, and some outstanding mortgages chop off as much as 0.9 percentage points. With prime now at 2.5 per cent, those people are paying 1.6-per-cent interest. That number can’t be beat, especially considering prime could go down even further. “Anyone on a variable floating below prime, I would say those people should probably hang onto that mortgage,” Panjwani says.

The low mortgage rates also have buyers knocking on lenders’ doors. Last month, 40 per cent of Panjwani’s business came from purchasers rather than those looking to refinance. While the split is normally 50-50 between the two, in the last few months only about 20 per cent were purchases, he says.

Carolyn Heaney, an area manager with BMO Bank of Montreal’s business development group, says her bank has seen a lot more first-time homebuyers. The combination of low mortgage rates and lower prices means people who have wanted to live in a particular area but couldn’t afford it now can, she says.

At the current variable mortgage rate, a $200,000 mortgage with a 25-year amortization, would have payments of about $980 a month, she says. At a fixed rate of 4.39 per cent, the payments would be about $1,100. “So it’s very affordable for people to get into the market,” Heaney says.

Kamloops Real Estate Open House Weekend: March 7 & 8, 2009, Aberdeen, North Kamloops & Juniper Heights

Open houses this weekend will be in Aberdeen, North Kamloops and Juniper Heights.

 Saturday, March 7th: 625 Windsor Ave, North Kamloops: 11:30-12:30

Windsor Street, North Kamloops Real Estate3+2 bedroom home in quiet area of North Kamloops. Close to elementary school and river’s trail. Main floor has all been extensively updated. 2 bedroom suite in basement. $289,900

Saturday, March 7th: 2410 Abbeyglen Way, Aberdeen: 1:00-2:30

2410 Abbeyglen Way AberdeenLarge, fully finished basement entry in Aberdeen home with 5 bedrooms, den & 3 full bathrooms. Living room, family room and formal dining room on the main floor. Fenced yard. 2 gas fireplaces, central air, central vac & underground sprinklers. $398,000

Saturday, March 7th: 22-2050 Qu’appelle Blvd, Juniper Ridge: 3:00-4:00

Qu'appelle Blvd Juniper Ridge Home for Sale4 bedroom 2 full bathroom Juniper Heights town home. Newer kitchen, open design and private patio off of the living room. Two car garage. $289,900

Sunday, March 8th: 1969 Kechika Street, Juniper Heights: 12:00-2:00

Kechika Juniper Heights Home for Sale

Beautiful family home with 3 bedrooms and two dens plus 3 full bathrooms. Two car garage, large kitchen and fully fenced yard. Immaculate home. $489,900

To view more listings in Kamloops and Area click here.

More Canadians Plan To Buy A Home: Study Conducted By Ipsos Reid

Here is an article written by Becky Rynor of the Financial Post. She summarizes a survey conducted by Ipsos Reid that details Canadians’ feelings about the current real estate market. It would be interesting to find out how Kamloops residents feel about the current real estate market here in our city.  I would love to hear your opinion. Read below for the full article.

Most Canadians believe it is a home buyers market, with more first-timers planning on purchasing their own homes, according to a study released today by Royal Bank of Canada. “The current economic environment does not appear to have dampened Canadians’ overall confidence in the housing market,” says Royal Bank spokeswoman Karen Leggett. “Canadians continue to have an overwhelming belief in the long-term value of a home and we’re seeing this in the buying intentions of many first time home buyers this year.”

In its 16th annual RBC home ownership survey, 65% of Canadians said they believe it’s a buyer’s market, with 27% saying they intend to buy a new home over the next two years. RBC says that’s up from 23% in 2008.

The survey, conducted by Ipsos Reid, shows that almost half of respondents, 48%, said it makes sense to buy a home now instead of waiting until next year.

Younger Canadians, those under 35 years old, are most likely to spark an upsurge in homes sales, with 48% saying they plan to buy a home. That’s up sharply from 36% last year. And even renters want to get in on the action: 38% of them want to buy in the next two years.

“Low mortgage rates and favourable housing prices are influencing home purchase intentions this year and may be the reason why more Canadians are poised to purchase over the next two years,” RBC says.

A large majority of Canadians, 83%, remain positive that home ownership is a good investment. That is down slightly from 85% in 2008 and from the all-time high of 90% in 2006. Fifty-four percent of respondents said they believe house prices will be lower in 2009, a substantial change from 31% in 2008.

Nationally, respondents in Alberta expressed most interest (35%) in buying. Quebec was lowest at 22%. Those in British Columbia believed most that now is a buyer’s market (78%), compared with Saskatchewan/Manitoba, where only 34% believe so.

In Ontario, home-buying intentions have increased over past year, with 30% saying they are likely to purchase a home within the next two years. That’s up from 21% in 2008.

The online survey of 2,026 adults was conducted between Jan. 6 and 9, 2009. Ipsos Reid said the results are accurate to within plus or minus 2.2 percentage points, 19 times out of 20.

Featured Property: 377 Basalt Drive, Logan Lake, B.C. $224,900

Basalt Logan Lake View

Basalt Back of Home, Logan LakeThis large Logan Lake bungalow is located in a quiet area with a beautiful view. Basalt Front of Home, Logan LakeThere are three bedrooms on the main floor, one bedroom down and two full four piece bathrooms. Recent updates include new bathroom on the main floor, new flooring, fresh paint, 90% efficiency furnace and newer hot water tank. There is over 2,400 square feet of living space in this home that sits on a 8,276 square foot lot. There is a Basalt Living Room Logan Lakedaylight walk out Basalt Bathroom, Logan Lake Home for Salebasement and patios both off of the main floor and out of the basement.

The yard is terraced into two levels and is flat, usable space.  The single car shop in the back yard has a bonus storage room in the bottom of the shop.Basalt Drive Logan Lake

Adding to the privacy of this property there is a wooded area off of the back yard. Great value at $224,900

To search for other Logan Lake listings click here.

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