For the most part, the cut in mortgage rates has caught some off guard, though there have been overarching indicators pointing to a retrenchment in mortgage rates
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Toronto, Canada (PRWEB) January 24, 2014
Canadalend.com, the leading low-cost private mortgage solution provider in Canada, is releasing its expert opinion on the country’s major lending institutions cutting their lending rates in the lead-up to the spring housing market, the strongest real estate period of the year. The rate cuts, Canadalend.com explains, should make it more affordable for Canadians to buy homes.
On January 18, the Royal Bank of Canada, the nation’s largest mortgage lender, cut some of its mortgage rates, including the reduction of its five-year fixed-rate mortgages by 10 basis points to 3.69%. In an effort to stay more competitive, other banks have followed suit; the Bank of Montreal cut various fixed mortgage rates by 10 to 20 basis points, while the Bank of Nova Scotia cut its five-year rate by 10 basis points. Other lenders, including Home Trust and First National Finance LP, have also already reduced their rates. (Sources: Marr, G., “Here we go again with dropping mortgage rates,” Financial Post, January 20, 2014; http://business.financialpost.com/2014/01/20/here-we-go-again-with-dropping-mortgage-rates/; Perkins, T., “Canadian home prices stable, but still too high: Fitch,” The Globe and Mail, January 21, 2014; http://www.theglobeandmail.com/report-on-business/canadian-home-prices-stable-but-still-too-high-fitch/article16426869/.)
“For the most part, the cut in mortgage rates has caught some off guard, though there have been overarching indicators pointing to a retrenchment in mortgage rates,” says Bob Aggarwal, president of Canadalend.com. “For starters, Canada has reported some pretty weak economic numbers lately, most notably rising unemployment. On top of that, spring is traditionally seen as the strongest period for Canadian real estate, and cutting mortgage rates will make banks more competitive.”
Even though the spring housing season is still a couple months away, January is when potential home buyers think about getting pre-approved for a mortgage. That’s because pre-approval lasts for 120 days and the rate is guaranteed from the day home buyers start the process. But the cut in mortgage rates might be short lived, Aggarwal explains, as spring is a prime time for lenders to try to attract customers. In addition, most economists still expect mortgage rates to increase in 2014, on the heels of an improving U.S. economy.
“A 10-point cut in rates can add up over the course of a five-year fixed mortgage,” Aggarwal observes. “On a $250,000 mortgage, a 10-basis-point cut translates into $1,200 over five years, and it’s better for homeowners to have that than the banks.”
Still, he notes, the cut in mortgage rates at Canada’s big banks does not mean they are the lowest prices available to potential home buyers; in fact, the big banks often lower their rates to compete with discount lenders. According to Aggarwal, this means discount lenders might still have an edge over the big banks heading into the spring housing market.
While low mortgage rates are an incentive for first-time home buyers to jump onto the property ladder, Aggarwal says it’s important to remember that no one mortgage lender is right for everyone, and that there are other factors to consider when looking for a mortgage.
“Unfortunately, Canada’s big banks will only try to sell their products, whether they suit their clients needs or not,” he explains. “The independent, licensed agents at Canadalend.com put their clients’ needs first, drawing from hundreds of banks and lenders to help their clients find the mortgage that addresses their long-term financial and lifestyle needs.”
Canadalend.com is one of the largest and most trusted private mortgage brokers in Canada, with skilled independent, licensed professionals helping Canadians coast-to-coast. Canadalend.com provides its clients with residential and commercial mortgages, home equity credit,debt consolidation, and help addressing financing concerns. To learn more about Canadalend.com, visit the web site at http://www.Canadalend.com.