15 Feb

First Draw for Free Mortgage Payments


Posted by: Chris Cavaghan

Harbourview Mortgages first draw for Great Payment Giveaway!

Date:  Tuesday March 1st 2011
Time: 6:00-8:00 PM
Place: Oyster Bar, 618 Humboldt St.

14 Feb

Great Payment Giveaway


Posted by: Chris Cavaghan

Free Mortgage Payments for a year, what a great deal. You have 4 chances to win. Draws will be done quarterly, first draw will be March 1st.

If your mortgage funds with me between Dec 1, 2010 and Feb 28, 2011, you will be entered in the March 1st draw and the next 3 consecutive draws. Mortgages funded between March 1st and May 31st, you will be entered in the draw on June 1st draw and the next 3.

Refinances and purchases both qualify. Let anyone you know that may be thinking about a mortgage to give me a call or check out my website, rules at the resources link on the left.

Good Luck!!

18 Jan

No increase to Prime Rate


Posted by: Chris Cavaghan

The Bank of Canada held their lending rate steady today, stating “the cumulative effects of the persistent strength in the Canadian dollar and Canada’s poor relative productivity performance are restraining this recovery in net exports and contributing to a widening of Canada’s current account deficit to a 20-year high.” This along with “a significant source of uncertainty” from the worldwide market is keeping our Prime rate at 3%.

At the same time, measures introduced Monday by Finance Minister Jim Flaherty to clamp down on household debt, by making it harder for people to take on more obligations than they can afford, will likely give the central bank more flexibility to wait until it makes sense to raise rates throughout the economy rather than doing so to discourage a small subset of borrowers.

Governor Mark Carney hinted that if he could raise rates he would. Most economists are expecting the next increase to come in the second quarter.

Any questions or comments? Please email or give me a call any time.





17 Jan

New Changes to CMHC guidlines


Posted by: Chris Cavaghan

The Honourable Jim Flaherty, Minister of Finance, and the Honourable Christian Paradis, Minister of Natural Resources, today announced prudent adjustments to the rules for government-backed insured mortgages to support the long-term stability of Canada’s housing market and support hard-working Canadian families saving through home ownership.

“Canada’s well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries and helped protect us from the worst of the recent global recession,” said Minister Flaherty. “The prudent measures announced today build on that advantage by encouraging hard-working Canadian families to save by investing in their homes and future.”

“The economy continues to be our Government’s top priority,” continued Minister Paradis. “Our Government will continue to take the necessary actions to ensure stability and economic certainty in Canada’s housing market.”

The maximum amortization for insured mortgages is now 30 years, down from 35.

The maximum loan to value for refinances is now 85%, down from 90%.

They have withdrawn government insurance backing on lines of credit secured by homes, such as home equity lines of credit, or HELOCs.

The previous changes made in 2008 did not affect the market too drastically. I think these changes will strenghten our ecomony more and secure it down the road.

If you have any questions, please do not hesitate to call or email me.

1 Nov

Forecasting rates


Posted by: Chris Cavaghan

Last week I sat in on a Firstline seminar and had the chance to listen to Benjamin Tal, the senior economist for CIBC. He made some very good points about the mortgage market, the global economy and where it is all headed.

He started off by saying the international markets used to affect our economy 2-6 months after the fact. That has completely changed and we are seeing the affects almost instantly.

Some the factors from other countries that are affecting us are from China, Europe and of course, the US.

China has increased their rates recently to slow down their economy. Their debt is actually quite higher than they are showing. They were using some creative ways to get government funding. Now the government doesn’t want it to get out of hand so they increased rates.

The US is showing some positive news but the numbers may not be as accurate as they are saying.

Most of the improvements in the economy have been due to the cash the Fed is injecting into the markets. There is not a lot of improvement in the economy and it will mostly likely stay that way for another 12 months so the Fed will have to continue to inject cash until the economy gets it footing.

The States is saving more and the debt to income ratio is falling which is good. Their income seems to be increasing as well but it is not from wages, it is from tax deductions.

Europe is still having their problems as well and it is not going to be over soon.

These factors will be affecting our markets and it will be very difficult for the Bank of Canada to increase rates until these international economies start to recover on their own without continuous help from their governments.

The bond market, which directly affects fixed rates, will also see the affects of these situations that are occurring in other countries and should stay low as well.

He concluded by saying that rates, both Prime and fixed, will be holding steady with minor increases over the next year.

Any questions of comments please feel free to let me know.


12 Oct

Another reason to use a mortgage broker and not use a bank.


Posted by: Chris Cavaghan

Now that rates are extremely low the IRD (interest rate differential) penalties are in full force.

Penalties from the big banks are calculated based on posted rates and discounts given at the creation of the mortgage.

They are calculated differently throughout the lenders. Most of the non-branch lenders use the rate on the mortgage, less the current rate of the term closest to what is remaining on your term, to calculate the differential.

The big banks calculate the differential. The first number is found by using the posted rate less your discount. The second is the current posted rate closest to what is remaining on your term less the original discount you received. The 2 numbers are subtracted and that is your differential. Sounds confusing.

For example;

Non branch lenders 5 year rate 2 years ago 4.99%

Big Banks posted rate 2 years ago 6.85% and discounted by 1.86% to equal 4.99%

Non Branch lenders current 3 year rate is 3.60%

Big Banks current posted 3 year rate is 4.1% less discount received 2 years ago, 1.86%, = 2.24%

That is a big difference when calculating a penalty.

For a $300,000 mortgage, the penalty for non branch lender, based on IRD of 4.99-3.60=1.39% is $12,500.

Same mortgage with HSBC is 4.99-2.24=1.75% is $24,750.

The discounts are higher with the longer term mortgages. So when they are used to calculate the penalties on shorter term mortgage rates the difference is substantial. That is how they tighten their grip on you. It limits your options.

The banks rarely explain this to you, and even if they did, there are very few people that would understand.

Options and knowledge are your friends. Using a bank limits them incredibly from the start of the mortgage to the finish because they are looking out for themselves.

They keep you because they limit your options by not giving you the knowledge. Using a broker like myself gives you both. I choose what is best for you with unlimited resources.

30 Sep

RBC red flagging Vancouver


Posted by: Chris Cavaghan

You may have heard the report that RBC published and was televised Monday night. I have attached the link to the actual report below.

 RBC red flagged Vancouver due to the lack of affordability.

 Since when has Vancouver been affordable? Why red flag it now? Why is only there only negative news coming from the big banks.

The say affordability is decreasing in Vancouver and I guess that would transfer over to Victoria a little, if it were the case.

 The reasons they used are recent increasing rates and increasing values.

 The percentage of household income taken up by ownership costs is not as high as it was in 2007-08 and the market is softening, prices are reducing.

 The fixed rates have decreased almost a full percentage since they started increasing prime this summer. And even though Prime has gone up to 3%, the variable rate mortgages have stayed the same due to the better discounts that are being offered.

 6 months ago the big banks released a publication saying that Prime rate and fixed rates are going up, and fast. Banks do not make as much money on variable mortgages as they do fixed. Since then, fixed rates have decreased substantially and prime is increasing slowly, so far, but looks like it won’t be going anywhere anytime soon.

It is hard to take these types of articles seriously when it looks like they only have their own best interests in mind.

30 Aug

Prime Rate Forecast


Posted by: Chris Cavaghan

CIBC World Markets Inc. trims forecast for rate hikes and currency strength in Canada as economic growth outlook dampens abroad
TORONTO, Aug. 18 /CNW/ – Continuing weakness in the U.S. economy may force the Bank of Canada to put interest rate hikes on hold after September, notes a new report from CIBC World Markets Inc.
“North America’s story is again darkening,” says CIBC’s Chief Economist Avery Shenfeld in the latest Global Positioning Strategy report. “We were looking for a material second-half slowdown for the U.S. but as it turns out, it’s already happened.”
Economic growth stateside from April to June is being revised downward, Mr. Shenfeld notes, and key indicators are pointing to growth that will be slower than anticipated by U.S. monetary policy makers.
And still ahead is a “further fiscal belt tightening in 2011 that will have to be softened, and accompanied by quantitative easing, if the U.S. is to stay out of recession in early 2011 and get back to potential growth by the end of that year.
“Forget about any rates hikes from the U.S. Federal Reserve until sometime in 2012 at the earliest.”
While Canada is in much better economic shape – it leads the U.S., Eurozone, U.K. and Japan in first-half growth and has a record gap over the U.S. in the share of working age population holding a job – it “cannot move all the way to normalized interest rates while the U.S. Federal Reserve is still on hold,” Mr. Shenfeld contends.
For starters, an interest rate differential of 300-400 basis points would take the loonie “substantially stronger” creating additional headwinds for Canadian economic growth, says Mr. Shenfeld.
Furthermore, the “external environment will be one of less-than-normal growth as fiscal tightening bites in Europe and the U.S., and with our own upcoming fiscal tightening also hitting domestic demand, monetary policy might have to be set at stimulative levels to allow the economy to return to potential and remain there. To keep moving at all, you have to step on the gas if your car is trying to roll up a steep incline.”
Mr. Shenfeld doubts that the Bank of Canada “has been shocked enough to forestall a rate hike in September” but his forecast that Canadian growth in Q2 and Q3 will fall below the BoC’s outlook will likely warrant a rethinking in the October Monetary Policy Report and in the months to follow.
The report also notes that there are limits to how far the Bank of Canada can diverge from the U.S. Federal Reserve without later regretting it. Episodes in recent years in which rate overnight rates were 2 per cent or more above those stateside resulted in sagging or sacrificed growth. These are “lessons learned, we hope,” says Mr. Shenfeld.
“Since a hike at every rate setting date through 2011 would take rates substantially higher than 2%, a pause is coming on the road to tightening.”
As a result of the dampened external growth outlook, Mr. Shenfeld has trimmed his call for rate hikes. He sees Canadian overnight rates going no higher than 2% next year as the U.S. Federal Reserve stays on hold.
A less hawkish monetary policy combined with a mixed outlook for commodity prices affected by slow global growth will also likely see the Canadian dollar roughly two cents weaker than earlier forecast over the same horizon, adds Mr. Shenfeld.
The complete CIBC World Markets report is available at: http://research.cibcwm.com/economic_public/download/gps_aug10.pdf
CIBC World Markets Inc. is the corporate and investment banking arm of CIBC. To deliver on our mandate as a premier client-focused and Canadian-based wholesale bank, we provide a wide range of credit, capital markets, investment banking, merchant banking and research products and services to government, institutional, corporate and retail clients in Canada and in key markets around the world.
For further information: Avery Shenfeld, Chief Economist, at 416-594-7356, avery.shenfeld@cibc.ca; or Tom Wallis, Communications and Public Affairs, at 416-980-4048, tom.wallis@cibc.ca
20 Jul

Bank of Canada ups overnight rate by 25 basis points and retains cautious stance


Posted by: Chris Cavaghan

The Bank of Canada boosted the overnight rate by 25 basis points (bps) to 0.75% this morning and reiterated that the timing of further reductions in policy stimulus will be contingent on developments both within and outside of Canada. The rate hike was widely expected by financial markets. The Bank characterized domestic economic developments as “unfolding largely as expected” although policymakers trimmed back forecasts for 2010 and 2011 GDP growth while boosting 2012. The global recovery was characterized as proceeding although the need for balance sheet repair by households, banks and governments will likely “temper the pace of global growth” relative to the Bank’s previous forecast. The central bank noted that the policy response to the European sovereign-debt crisis has eased pressures in financial markets, although the implied fiscal restraint will act to slow growth.

Canada’s economic forecasts were altered, so 2010 growth is now forecasted at 3.5% from 3.7%, 2011 at 2.9% from 3.1% and 2012 at 2.2% from 1.9%. As a result, the Bank now expects the economy to return to full capacity at the end of 2011, rather than in the second quarter as was forecasted in April. The forecast changes reflect an updated forecast for the global economy and a slower expected profile for Canadian consumer spending. The Bank now expects business investment and net exports to make “a relatively larger contribution to growth.” More details will be available on Thursday, July 22, 2010 with the release of the Bank’s Monetary Policy Report.

The inflation profile is little changed according to the statement, with both the headline and core measures forecasted to “remain near 2% during the projection period.” The Bank said that it will, “look through the transitory effects on inflation” from the implementation of the HST in Ontario and BC.

Once again, the Bank highlighted that there is significant uncertainty about the economic outlook and that, even with the two 25 bps increases in the overnight rate, there remains “considerable monetary stimulus in place.” 

Recent Canadian economic reports have been a mixed bag, with exports, imports and manufacturing sales all posting gains in May while housing activity slowed from the blistering pace earlier in the year. Sifting through these reports, we remain comfortable with our forecast that the economy grew at a 3.0% annualized pace in the second quarter of 2010. Importantly, the data signals that the domestic economy has not buckled under the strains created by the European sovereign-debt crisis and the weaker tone in some of the U.S. reports. While the data point to GDP growth in the second quarter running at a pace that is one-half of the 6.1% surge in the first quarter of 2010, the near-record pop in employment in the quarter (226,600 jobs were created in April to June) is consistent with the economy maintaining its solid growth momentum. We forecast growth at an above-potential rate in the second half of the year with the unemployment rate gradually to decline. 

The Bank’s summer Business Outlook Survey, released last week, suggested that pressures on capacity are starting to emerge and an increasing number of businesses are ready to up prices. With the core inflation rate already running close to the mid-point of the 1% to 3% target range, we expect that policymakers will want to withdraw stimulus gradually to ensure that price pressures remain on target. In our minds, the domestic data are consistent with the Bank raising the overnight rate to 1% at the September fixed-action date and 1.25% by the end of the year.  External developments related to Europe’s sovereign-debt crisis and concerns about the pace of U.S. growth remain a risk to Canada’s growth outlook, thereby opening the door for the Bank of Canada stepping to the sidelines to assess the effect of its rate hikes later this year. Our base case forecast, however, is that the strength in Canada’s domestic economy will persist, meaning that the current “emergency” level of rates is no longer warranted. Our forecast is that the overnight rate will be 1.25% at the end of 2010 and 2.75% at the end of 2011, higher than the rates implied by the futures market.  

Dawn Desjardins, Assistant Chief Economist, RBC Economics