Bonds and your Mortgage Interest Rates

Mortgage brokers watch the interest rates every day, and what effects them.  The biggest influence on the interest rates is the bond market. 

 Investors have also been closely observing changes in the U.S. and looking for signs of whether the economic situation has improved enough for the Federal Reserve to decrease the amount of financial assets it buys in the markets — so-called tapering. The quantitative easing program, involving the purchase of US$85 billion of bonds each month, has preserved interest rates low and also helped fuel a strong rally on U.S. stock markets.

Traders also observed to the start of a two-day hearing by Germany’s constitutional court on the validity of a key European Central Bank program that has been recognized with calming the 3 1/2 year-old euro debt crisis. The Federal Constitutional Court is considering arguments against the European Central Bank’s offer to buy government bonds and lower borrowing expenses for indebted countries.   Adversaries of the bond-buying program say the program oversteps the European Central Bank’s mandate, which forbids it from financing governments.


Now how do these two items effect you?    Well when the appetite for bond purchases from governments "tapers off" that send the price down, which sends yields upwards.  I would appear we could expect bond yields to continue to rise over the coming weeks/months ahead. If bond prices go up, so do mortgage rates as they are correlated.   Less bond purchases, equals higher mortgage rates.  Which means more finding the lowest mortgage rate become increasingly important.   Call or text your Alberta Mortgage Broker soon to lock in a rate 403-807-8779

When is the last time you had a annual reality check for your Mortgage?

I have talked to many over the years as a Alberta Mortgage Broker, and most tend to think of their mortgage as the ultimate “buy and hold” purchase. After all, who wants to spend any more time in the “borrower” chair than is absolutely necessary? You get a 5-yearterm, and then go on automatic pilot until it comes due again. You might wring your hands over your other finances, but your mortgage is set in stone, right?

Well, not exactly. In fact, it’s a great idea to have an annual mortgage review to see if it’s really working for you – especially in the context of the rest of your financial picture.  After all, a lot can happen in a year – especially during our “mortgage years”, when we tend to be juggling many commitments in our busy lives! Think of all the financial commitments we carry during these years: care of our children, tuition or school expenses, one or more cars, vacations, home renovations, travel… the list seems to go on and on.

Chances are that something in your financial life has changed since you took out your mortgage. Life doesn’t stand still, after all. Here is a list of the most common reasons why a mortgage may need some adjustment:

• You’re considering a move to a new home in the next year or two;
• You wonder if you can tap into some of your equity for a special renovation project to upgrade your home;
•  You’re wondering if you can afford a vacation property;
•   You’re considering the benefits of investment property ownership;
• You’re a bit concerned about a large expense looming in your future:  like university tuition, a wedding, a leave from work, a new career or business, a big vacation or a new vehicle, for example;
•  You’re making more money – or less money – than you were when you began your mortgage;
•  You’re carrying some credit card or other high-interest debt that is eating away at your monthly cashflow;
• You’re worried that you’re not saving enough for your retirement years, and you’ve heard there’s a way to convert your non-deductible mortgage debt into deductible investment loans using a re-advanceable mortgage.  You’re interested in collecting annual tax refunds, paying off your mortgage faster, and having an investment portfolio for the future.

If any of these sound familiar to you – and if you have held your mortgage for a year or more – then it’s worthwhile to contact a qualified mortgage planner to give your mortgage a reality check.

At Mortgage Architects, the company’s mortgage planners provide this service free of charge and with no obligation.  They tailor each mortgage to their client’s current needs and long-term goals, with an overall focus on mortgage planning, Alberta Mortgage Planners believe that a mortgage is not just a single transaction done in isolation of your goals and overall financial situation, but that a mortgage can accomplish so much more when property structured and integrated into your overall financial plan.

Calgary Mortgage Planners look at the mortgage as a financial keystone - the right mortgage can build your wealth, protect you from a financial downturn, and save you thousands of dollars. That’s why an annual mortgage review is part of their overall service offering.  It’s also a smart financial move for Canadian homeowners.  

Need a mortgage document checklist?

You are about to contact your lender or Alberta Mortgage Broker, and want to get some paper work ready.  Well this is what you might need.

You should get a nice little check list when you get the process started, but this will help you get things in order or at least give you some expectations around what you might need to dig out of the filing cabinet for this mortgage.  Of course every case is different, so if it does not apply to you don’t worry about it.  

• Proof of a minimum 3 year Employment History (Minimum 3 months at current job PLUS previous employment details, employment letter stating not on probation, last two pay stubs,

• Address of where you have lived for the last 3 years.

• Verification of Assets such as RRSP’s, vehicles, quads, trailers, or other property that you

• List of Liabilities and personal loans and the monthly payments for them

 

• Proof of your Down Payment for the home you are purchasing, including a 90 day history of those funds

• A signed Gift Letter if the funds you are using for the down payment are being gifted to you for your purchase.  Be mindful that most lenders have their own letters you might have to get signed.

• A Void Cheque for where your payments will be taken from

• A copy of the Purchase and Sale Agreement

• Your most recent Property Tax Assessment to prove there are no property taxes owing in your name

• MLS Listing of the property you are buying

• Statement of Existing Mortgage if you are paying it out to refinance, etc.

• The name and contact information for your Lawyer

• Separation or Divorce Documents if applicable

• Court Orders pertaining to child or spousal support payments, and 3 months of account statements to verify the payments are being paid and up to date

• Your most recent Notice of Assessment to prove there are no taxes owing in your name

• Bankruptcy Discharge Papers, if applicable

If the list seems over whelming, just take it one step at a time, as being a lender, or a Calgary Mortgage Broker its all about getting everything in order to paint the best possible picture we can.  We are trying to show stability, ability to pay back the loan, and that you have the character to pay it back.   If you have questions on your mortgage, pick up the phone and call or text  403-807-8779