Toronto Mortgage Broker Brad Compton gives his thought on where variable and fixed mortgage rates are heading in the coming months. See how banks determine what they are going to charge for their fixed and variable mortgage rates. Also get up to date on the most recent changes to mortgages in Canada

1. INTEREST RATES
Brad Compton
Invis Mortgage Agent

2. Todayʼs Discussion

3. Todayʼs Discussion
•Fixed & Variable rates

4. Todayʼs Discussion
•Fixed & Variable rates
•What drives them?

5. Todayʼs Discussion
•Fixed & Variable rates
•What drives them?
•Where are they going?

6. Todayʼs Discussion
•Fixed & Variable rates
•What drives them?
•Where are they going?
•How can consumers protect themselves?

7. Todayʼs Discussion
•Fixed & Variable rates
•What drives them?
•Where are they going?
•How can consumers protect themselves?
•Recent changes to mortgage regulations

9. How To Build a Fixed Rate

10. How To Build a Fixed Rate
in 4 easy steps

11. How To Build a Fixed Rate
in 4 easy steps
5 Year Bond

12. How To Build a Fixed Rate
in 4 easy steps
5 Year Bond 2.92%

13. How To Build a Fixed Rate
in 4 easy steps
Default Risk
5 Year Bond 2.92%

14. How To Build a Fixed Rate
in 4 easy steps
Default Risk 0.35%
5 Year Bond 2.92%

15. How To Build a Fixed Rate
in 4 easy steps
Admin Costs
Default Risk 0.35%
5 Year Bond 2.92%

16. How To Build a Fixed Rate
in 4 easy steps
Admin Costs 1.00%
Default Risk 0.35%
5 Year Bond 2.92%

17. How To Build a Fixed Rate
in 4 easy steps
Hedging Costs
Admin Costs 1.00%
Default Risk 0.35%
5 Year Bond 2.92%

18. How To Build a Fixed Rate
in 4 easy steps
Hedging Costs 0.15%
Admin Costs 1.00%
Default Risk 0.35%
5 Year Bond 2.92%

19. How To Build a Fixed Rate
in 4 easy steps
Hedging Costs 0.15%
Admin Costs 1.00%
Default Risk 0.35%
5 Year Bond 2.92%
4.42%

20. Fixed Rates - Where are rates going

21. Fixed Rates - Where are rates going
UP!

22. Variable Rates - BOC Affect

23. Variable Rates - BOC Affect
•The Bank of Canada Prime lending rate - .25%

24. Variable Rates - BOC Affect
•The Bank of Canada Prime lending rate - .25%
•Banks add allowances for risk and admin costs - 2.25%

25. Variable Rates - BOC Affect
•The Bank of Canada Prime lending rate - .25%
•Banks add allowances for risk and admin costs - 2.25%
•Variable mortgages usually have a discount to prime

26. Variable Rates - BOC Affect
•The Bank of Canada Prime lending rate - .25%
•Banks add allowances for risk and admin costs - 2.25%
•Variable mortgages usually have a discount to prime
•Lines of credit and open mortgages usually have a
premium added

27. Variable Rates - BOC Affect
•The Bank of Canada Prime lending rate - .25%
•Banks add allowances for risk and admin costs - 2.25%
•Variable mortgages usually have a discount to prime
•Lines of credit and open mortgages usually have a
premium added
•Some variable mortgages keep payments the same
with rate fluctuations - ARM & VRM

28. Variable Rates - BOC Affect
•The Bank of Canada Prime lending rate - .25%
•Banks add allowances for risk and admin costs - 2.25%
•Variable mortgages usually have a discount to prime
•Lines of credit and open mortgages usually have a
premium added
•Some variable mortgages keep payments the same
with rate fluctuations - ARM & VRM
•Some lenders will adjust payments monthly and some
are quarterly

29. Variable Rates - Where are they going

30. Variable Rates - Where are they going
UP!

31. Variable Rate Outlook

32. Variable Rate Outlook
•Bank of Canada will be raising the prime rate in June/
July

33. Variable Rate Outlook
•Bank of Canada will be raising the prime rate in June/
July
•Increase should be gradual 1-1.5% by end of 2011

34. Variable Rate Outlook
•Bank of Canada will be raising the prime rate in June/
July
•Increase should be gradual 1-1.5% by end of 2011
•US economy still weak resulting in little rate movement
south of the border

35. Variable Rate Outlook
•Bank of Canada will be raising the prime rate in June/
July
•Increase should be gradual 1-1.5% by end of 2011
•US economy still weak resulting in little rate movement
south of the border
•Don’t want to repeat history - 1992 and 2002 Canada
raised rates too quick only to reverse within months

36. How To Protect

37. How To Protect
•Get pre-approved - Lock in rate for 120 days

38. How To Protect
•Get pre-approved - Lock in rate for 120 days
•Look at refinanicng - break mortgage - ask lender to
blend and extend

39. How To Protect
•Get pre-approved - Lock in rate for 120 days
•Look at refinanicng - break mortgage - ask lender to
blend and extend
•Longer term mortgage

40. How To Protect
•Get pre-approved - Lock in rate for 120 days
•Look at refinanicng - break mortgage - ask lender to
blend and extend
•Longer term mortgage
•Mixed mortgage - part variable and part fixed

41. How To Protect
•Get pre-approved - Lock in rate for 120 days
•Look at refinanicng - break mortgage - ask lender to
blend and extend
•Longer term mortgage
•Mixed mortgage - part variable and part fixed
•Look at locking in variable

42. New Mortgage Regulations

43. New Mortgage Regulations
•Minimum 20% down for rentals under 5 units

44. New Mortgage Regulations
•Minimum 20% down for rentals under 5 units
•Only 50% of rental income can be used to qualify

45. New Mortgage Regulations
•Minimum 20% down for rentals under 5 units
•Only 50% of rental income can be used to qualify
•Qualifying interest rate on variable & terms under 5
years now posted rate - 6.10%

46. New Mortgage Regulations
•Minimum 20% down for rentals under 5 units
•Only 50% of rental income can be used to qualify
•Qualifying interest rate on variable & terms under 5
years now posted rate - 6.10%
•Refinances up to 90% LTV only

47. New Mortgage Regulations
•Minimum 20% down for rentals under 5 units
•Only 50% of rental income can be used to qualify
•Qualifying interest rate on variable & terms under 5
years now posted rate - 6.10%
•Refinances up to 90% LTV only
•Stated income program only applies to individuals who
have been self employed for less than 3 years on
purchases up to 90% and refi’s up to 85%

48. Brad Compton
Invis Mortgage Agent
416-671-2183
bradcompton@invis.ca
@bcomp123