Mortgage, Money and Dream – Our thoughts on Canadian Mortgage Market
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Variable rate – disappearing discount driven by consumer behaviour change?

Banks are in lending business. Historically they make profit from the interest charged on the borrowed sum. Sure enough, if interest rate is the sole determinant of profit margin then banks have to keep a sharp eye on that. Unfortunately, the businesses today are not that simple. […]

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Popularity has a price – Variable rate on the raise

Discounts on variable rates are narrowing. Today RBC and BMO announced a reduction of discounts on some of their discounted variable rate mortgage products by 0.20 and 0.15 percent respectively. The rate difference between BMO and RBC may be explained from rate compounding point of view. Other […]

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Variable rate expectation – Varies over time.

We are well aware that predicting the floating rate is next to impossible. It is a very human feature to pursuit something impossible, like predicting weather. May be I am incorrect here, we are mastering the skill to predict the weather, at least for a shorter term. […]

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Fun with variable mortgage interest rate compounding – You shall pay the price.

When it comes to fixed rate mortgage then the rule of the game is well known – the lender will compound the interest semi-annually. In simple words if a broker offers you a 5% annual interest rate (i.e. quoted rate) that will translate to roughly 5.0625% annual […]

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Variable rate – ups and downs in the market.

It is called variable rate. There are reasons it is called so, Volatile and Variable. Normally it is below the fixed rate as there is a premium to pay if one wants to buy peace of mind for a limited period of time. Same is true for […]

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Economic outlook by Bank of Canada

In an opening statement in Canadian house of commons governor Mark Carney has tried to explain the future economic recovery of Canada in global perspective. He said that The global economic recovery is entering a new phase. In advanced economies, temporary factors supporting growth in 2010, such […]

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Variable Rate outlook – Probability of staying as-is.

We all know about the close relationship between the prime rate and Overnight Target Lending rate. One goes up another follows. We can predict with almost certainty that when BOC policy rate goes up – Bank prime follows. The job Mark Carney has, is not as easy. […]

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Loonie and its strength – impact on variable mortgage rate

According to an UBS study – “Canadian Dollar to move above US Dollar by the end of this year”. At the same time few Canadian banks are saying that this may not be the case. Whoever is right – one thing is very certain that the central […]

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Overnight Indexed Swap (OIS) – what is it?

Overnight Index Swap rate from BOC We hear the term Overnight Indexed Swap (a.k.a. OIS) when a central bank meeting on overnight lending rate is due soon. Technically securities like bonds or stocks were swapped when there was a change in investment policy or future outlooks. Now […]

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Prime went up to 3% again – After 18 months

Mark Carney finally did it. He pushed the prime up. This was expected and at the same time was not expected. When one thinks logically then he/she may like to side with him. It is necessary – looking at the future. Look at the massive cash infusions […]

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