“Hi David. Your photo needs an upgrade. Lol, my 18 yo son said you look so stressed. Please and thank you. I read your articles and I appreciate all your efforts”.
It’s good to know that my clients can be honest with me and care about me. Yes, you’re right, I am tired! But I actually like this picture. Other than a few strands of hair that have annoyingly disappeared, the picture is fairly accurate.
In a widely expected move, the Bank of Canada cuts the key overnight rate by 0.25%, down to 2.75%. That brings our BoC overnight Rate to 2.75%, and bank prime to 4.95%.
The BoC is going into economic protective mode, meaning, it will use the lending rate to spur on economic activity. The cheaper credit becomes, the more we spend money. Money flows more between banks and borrowers, and borrowers use that money in all sorts of ways. This money flow helps prop up our economy.
your interest rate is going to go down. Yay! If you’re in an ARM (adjustable rate mortgage), then your payment will go down along with the interest rate. If you’re in a VRM (variable rate mortgage), then your payment may not change, resulting in MORE of that payment going towards principal versus interest.
Most people have an ARM, so most of you will see your payment go down in the next couple days.
no changes. Sorry, but that’s kind of the point of a fixed rate mortgage. Your rate doesn’t change with the BoC announcements. Fixed rates are affected by bond yields. Not the overnight rate.
Then you’ll still benefit from the rate drop like everyone else in a variable rate mortgage, with an important caveat……
Little known and not talked about fact is that as the BoC lower their rates, the banks decrease their variable rate spread. The variable rate spread is the discount off the prime rate.
When you’re applying for a mortgage, the spread is determined and fixed when you finalize the mortgage. Once you finalize your mortgage, the spread is locked.
Decreasing the spread is a bank trick in order to keep more profit as the BoC drops the rate.
Back in June/July 2024, spreads on mortgages were 1.00% or higher, maybe even 1.20% on insured mortgages. Now, Spreads are maybe 0.20% for uninsured money, up to 0.65% on high ratio insured money.
So while the BoC has cut the overnight rate from 7.20% to 4.95% (a full 2.25% drop in less than a year), the rates that the banks are offering has gone from 6.20% down to around 4.75% for uninsured money and 4.30% for insured money.
The banks have not dropped by the full 2.25% that the BoC did, by manipulating the spread.
Not really. Even though spreads are lower now, I still think there’s more room for the BoC rate to come down further. The low during COVID was 2.45%. The high last year was 7.20%. If we’re at 4.95% now, we’re still sitting higher than the average of those two figures.
While I don’t think Prime will ever drop to 2.45% again, I don’t think it’s unreasonable to assume that we will end up at around 3.95% (another 1% drop still).
Sorry everyone, this was a bit of false advertising here. There are no specific tips to take advantage of the rate drop. I was trying to catch your attention and make a point about the state of information in our industry.
Those corporate, prefabricated “3 tip emails” and social posts just skim the surface on financial strategy. The “tips” tend to be very general and elementary in nature. You’ll read the email and perhaps be a little bit let down when you finish it. Did you learn any more? Did that “3 tip” email bring you any closer to your mortgage strategy? Probably not.
Call me! 250-858-7160. Here’s why. In 15 to 30 minutes, I’ll give you way more clarity and strategy, just about you. I’ll take your financial situation, and apply it to the current financial landscape.
A call with me is back and forth. You ask me questions, I answer you. You tell me what you think the situation is, and then I either agree with you, or correct your assumptions, and then give you even more insight into your situation.
The 3 tip email is too general. Our call is specifically about you.
I don’t generate tons of “tip emails”, because I’m too busy these days just helping people out. Phone call after phone call.
This lending environment is fraught with challenges and obstacles. You might get stuck with the junior broker or banker who don’t even know where to start.
I’m experienced and have been helping people since 2014 under the Olympic banner, since 2009 as a broker, and since 2004 as a banker. Olympic Mortgage is now at 341 google reviews and counting.
Well over 1000 purchases completed and not one deposit lost. We get the job done. 100% of the time.
Always CC Darla at the docs@olympicmortgages.ca email!
The phone is ringing, a lot. Experience and knowledge are in demand.
Here’s a tip: When you’re emailing me a question or request for a phone call, go ahead and throw docs@olympicmortgages.ca into the CC field. Darla and my team help me keep track of inquiries, and gets me to action them as they come in.
Email me, call me, text me, send me a carrier pigeon. Just get a hold of me!
Mortgage Memo gets going! Are you signed up? I had some great feedback on the blog a few weeks ago, and about 150 signups to mortgage memo. I’m not signing everyone up to mortgage memo, only those who ask. This blog only goes out once every two to three weeks, while mortgage memo is more […]
Full blogpost this weekend to your email! If you missed the last mortgage memo, two weeks ago, here’s the link! Lots of good conversation in this weekends edition, out Saturday or Sunday. Snippets below! Sorry for my slowness in getting “mortgage memo” out. It’s been a crazy few weeks! Current Mortgage Rates Insured/Insurable: Variable 5 […]
Today: Rates, then News, Then Your Mortgage Product of The Day First, let’s get to Rates, Thursday January 30, 2025: Important note: These are indicative rates only. They are basically what I’m seeing around the market and what I can offer. Rates are subject to change at anytime. Rates are very unpredictable. Everyone’s rate is […]