Money Matters Toronto

One of our favorite lenders Merix Financial is now offering 3.99% for a fixed 5 year mortgage through their exclusive mortgage broker channel in Toronto. The mortgage must fund before Oct 30th, 2009.

Merix Financial is a true leader in the Canadian mortgage market. Not only do they consistently offer the most competitive rates in the mortgage market, they also offer the most innovative products, like their 3 year variable rate mortgage (2.35%) and their awesome 50/50 mortgage . Not to mention they have excellent customer service.

Recently I have been getting a lot of questions and interest regarding the Merix 50/50 mortgage available for financing in Toronto. This product is only available through select mortgage brokers in Canada. The current effective rate for this mortgage is 3.37% for 5 years… an amazing deal!

The Merix 50/50 Wise Mortgage is a closed mortgage that lets borrowers take advantage of low fixed rate and low adjustable rate products all in one mortgage. 50% of the mortgage is in a 5 year fixed rate and 50% of the mortgage is in a 5 year Adjustable rate. The Adjustable rate can be locked in at any time to a fixed rate for the remainder of the term of the mortgage.

If you would like to find out more about this product and how you can use it, please call Christopher Molder, Toronto Mortgage Broker at 416.461.0204ext2.

Fixed rates are like one bullet.

Have you been burnt with a variable rate mortgage in Toronto in the past? Don’t think of variable rate mortgages as a long term strategy. There is a feature built into variable rate mortgages which allows you to lock into a fixed rate mortgage with no penalty and no extra cost.

Think about fixed rate mortgages like having one bullet in a gun. The moment you fire that bullet you forfeit the ability to lock in at any other rate. If you lock in off the get go, yes you are protected from rising rates but you also lose the ability to lock in at a lower rate… so lets look at the trend. At the beginning of July the fixed 5 year rate was 4.49%, at end of July the fixed 5 year interest rate was 4.39%, by the time August rolled around the rate was 4.29%, today most banks are posting a rate of 4.19%, today I can get you an approval  at 4.09%, and some banks are comfortable enough to sell you 3.99%… what does that tell you? Rates are coming down… so much so that the bank is comfortable enough to sell you 3.99% because they know that by the time you close your mortgage 3.99% is going to be the new norm.

If you had closed at any point during the last 2 months you would have forfeited the ability to lock in at a lower rate today or tomorrow.

Talk to me about our fantastic 3 year variable special 2.40%! Christopher Molder 416.461.0204ext2

Toronto Interest Rates

Fixed 3year – 3.39%

Fixed 5year – 4.09%

Variable 5year- P+.30% (2.55%)

Variable 3year – P+.15% (2.40%)

Canadian 5 yr bond yields -0.06 bps to 2.56 – Four weeks ago it was 2.67%. The spread, based on 5 yr fixed rate mortgage of 4.29%,  is at 1.73%.

Pressure on fixed 5 year: down
Financial Post – Markets

Lenders typically like to keep a NEW spread of 1.65% to 1.85% between their fixed five year rates and the current 5 year bond yield. If the bond yield increases then the spread will shrink putting upward pressure on mortgage interest rates. The reverse is also true. If bond yields decrease then the spread widens and there is downwards pressure on fixed rate mortgages.