Economy Snapshot by Rebecca Awram – Mortgage Rates
2021 Economy Snapshot by Rebecca Awram – Mortgage Rates
RATES
Rates continue to stay low, with the sharpest of them going to high ratio insured purchases. Most lenders end up in pretty much the same place over time. For the same mortgage of course (you can’t compare an insured high ratio purchase to a conventional 30 year refinance). They just don’t all move on the same day. Chasing a rate is usually a waste of your time. Seek a solid mortgage from an awesome lender, with great terms, and you’ll never go wrong. Or, as I like to say to my clients, “Do you want the lowest rate or do you want to pay the least amount of interest?” 🙂
There has also been some speculation recently about a possible reduction to the overnight rate of 10-15 basis points, also referred to as a ‘micro cut’ by the Bank of Canada. The overnight rate is what drives the Prime rate, which is what drives the float on variable rate loans/mortgages and lines of credit. It will depend on how things go, economically, as we head into 2021.
The lowest mortgage rates in Canada are made possible through securitization. This is when the lender sells pools of insured mortgages to investors. This is why we see high ratio insured mortgages having access to the lowest mortgage rates. CMHC wants to make this more expensive for lenders, which will mean increasing pressure on fixed rates for many borrowers. Effective January 1st 2021 CMHC is making lenders pay 20 bps more in securitization ‘guarantee fees’ on five year mortgages and some others.
I WAS INTERVIEWED!
There’s something about being interviewed, regardless of how typical the content or mundane one’s story, that is exciting and makes you feel special 🙂
Mortgage Broker News
CANADIAN ECONOMY
Economists believe that the upcoming jobs report will show employment increasing, due to elevated restrictions in some of the country’s largest cities. A second wave and a slow vaccine rollout mean that expectations are not high for a rapid improvement in the short term.
US AND GLOBAL ECONOMY
Looking past the pandemic and suffering of so many small businesses, the market actually had a great year in 2020. The S&P rose 16% and the NASDAQ a whopping 44%. Gold up 24% and silver 47%, these two metals having their best year since 2010. Rationale for the quick recovery in the market while a pandemic continues to rage on, is the flood of stimulus and record low bond yields. The US dollar starts off the year trending lower.
The NYSE said it will no longer delist China’s three biggest state owned telecommunications companies, backtracking on a plan that had threatened to escalate tensions between the world’s largest economies. Not sure of the reason for the U turn, but it appears to defy the executive order from President Donald Trump. US officials are reportedly considering prohibiting Americans from investing in Alibaba Group Holdings, a potential escalation of the outgoing Trump administration’s efforts to unwind US investors in major Chinese companies.
The first few days of trading post Brexit saw no major glitches.
Subdued reaction from the markets yesterday during the violent riots in Washington that led to four deaths. The Dow even made a new high. Optimism reigns supreme even when Twitter, Facebook and Snap took the unprecedented step of suspending Trump’s accounts. Stocks are climbing as investors focus on the prospect for more economic stimulus and the likelihood that calm will prevail.
Want a 20 year mortgage at 0%? Move to Denmark 🙂
