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Bank of Canada interest rate increase. Prime is at 3.20%.

Bank of Canada interest rate increase. Prime is at 3.20%.


  • I am not locking in myself and staying variable for a number of reasons


You most likely heard that Prime rate increased yet again last week. Prime is now 3.20% with most mortgage lenders (TD is an exception with TD prime at 3.35%). If your current mortgage is a variable rate mortgage, I believe it is still a great choice.

Reason #1

Payout penalty on a variable rate mortgage is only 3 months interest in case you will be looking to sell or refinance. Penalty on a 5 yr fixed closed mortgage could be as high as 4K per every 100K borrowed depending on a financial institution you are with.

Reason # 2

If your variable rate mortgage is with TD, your payment will not change. Their variable rate product has a static payment.

Reason # 3

Lenders want you to select a 5 yr fixed closed mortgage. Variable rate mortgages offer not a lot of benefit to the bank (lower interest / very low payout penalty) but this is something you can benefit from.  Taking no action to lock in, could be a good pro-active action on your part.

Reason #4

At this time the decision to lock in mainly comes from an assumption that since we have seen two prime increases in the very recent past, more will be coming in the future.

Not necessarily.

The government may have overstepped with this recent rate hike and we may see a pull back within the next year. For instance, back in 2010 prime increased 3 times and remained stagnant for 5 years before it got cut again. Something to consider.

The Bank of Canada will be meeting again on October 25, 2017.

Lena Larsen No Comments

So What Is Your Best Rate??

Condensed version of this post:

  • Insured mortgages (or with less than 20% down) are getting the best rate offers!
  • Uninsured mortgages (20% down or more) get a slightly higher rate
  • Rental purchases receive even higher rates

The Whole Story

So what is your best rate? I get this question asked daily….Several time a day actually. Not surprising though, mortgages are what I do and rates are very important to my clients.

Just over 6 months ago, it would have been quite easy to answer this question. These days, after the new mortgage rules got introduced, the answer is more in lines of “it depends on what kind of mortgage it is”.

Let me explain…Insured Mortgages aka high-ratio mortgages or mortgage with less than 20% down enjoy the lowest rate offers these days. This applies to both fixed rates and variable rates. Banks love insured mortgages! Insurance gives them extra security in case of default.  Banks’ main competitors like First National, MCAP and other AAA mortgage trust companies love insured mortgages even more. They insure all the mortgages and sometimes even pay the premium out of their own pocket where the down payment is over 20% just to have the mortgage insured. If your mortgage is coming up for a renewal and it was originally insured, you will get the lowest rate offer with your lender (hopefully!) or another lender. This applies even if you now have more than 20% of equity in the property. If your mortgage  insured originally, it is insured until it is paid in full.

Here is the ironic thing: if you are putting 20% down or more and your mortgage is not insured, you will not have access to those nice high-ratio rates.  Imagine a middle-aged couple with good long job stability, excellent credit looking to buy a house with some substantial savings are being offered a higher rate than their 22 yr old son buying his first apartment with only 5% down? Ironic, indeed.

For example, Scotiabank is offering 2.54% on the 5 yr fixed insured mortgage and 2.64% on their uninsured mortgages.

Mortgage on rental properties seem to have the highest rates. The same major bank  is offering 2.94% on their 5 yr fixed term.

I think we will see a lot of interesting changes in the mortgage market coming up since the new rules have been introduced. I see a tendency among AAA trust companies adjusting to the changes to stay competitive. For instance, MCAP,  one of the major AAA mortgage trust companies, has just recently announced their program for “insurable” purchases with 20% down or more where they offer an extremely low 5 yr fixed rate or 2.39%. To offer this rate, MCAP charges a 1% government related fee to off-set the cost of mortgage insurance.

NOTE: This program is available only to a very small number of top mortgage brokerages.  And guess what?  I have access to this program and can offer it to you!  

If your mortgage is coming up or you would like some more information, please get a hold of me and I would be more than happy to help you out!


Lena Larsen No Comments

Mortgage Insurance Premium Increase

You may have heard that mortgage insurance premiums went up effective March 17, 2017. A lot of people confuse mortgage insurance with life insurance. They are not the same thing. Mainly, mortgage insurance does not protect the consumer; rather it protects the bank’s investment in case of default. The banks look after their interests and will never lose…

With less than 20% down, mortgage insurance is mandatory on a standard purchase. On more “high-risk” programs like Mortgages for Self-Employed or Mortgages for New Immigrants, the bank will insist on having the mortgage insured unless the applicants are in the position to put 35% down.

We have three mortgage insurance companies in Canada:

  • CMHC
  • Genworth
  • Canada Guarantee

All three now raised their insurance premiums.   The curious thing is, the bigger the down payment, the more substantial the hike in the insurance premium. It doesn’t make a lot of sense. It seems like folks who are willing to put more down are getting punished. Please check out the chart below.










How does this affect you? If you already own a home, it will not immediately affect you. However, the statistics say 6 out of 10 families will move in the next 38 months. If your new purchase is with less than 20% down, your new mortgage will need to be insured.  From my experience, folks who sell their home and buy a new one will put more than 5% down. On average, it will be 15% down and this is when they will face higher insurance cost.



Lena Larsen No Comments

What’s in store for the Mortgage Market in 2017?

This information is the result of my in-depth research and also goes in line with the opinion of mortgage industry leaders whose expertise I value. This is not something you will hear on the news where the objective is to instill concern and sometimes panic.

So let’s get to it:

For Variable Rate Holders:
Enjoy the stability of your variable-rate mortgage.  Sounds kind of contradictory, doesn’t it? But this is what variable rate mortgages are now.  We are not anticipating Prime rate going up. Why? Prime rate is deeply influenced by the health of the Canadian economy. A good analogy is, imagine that the Canadian economy is like a car. Once the car starts accelerating a little too much (unemployment rates are low, consumer confidence and spending goes up, inflations picks up) the driver (the Canadian Government) steps on the brakes to slow things down.

This is when they increase the overnight lending rate and Prime rate goes up.

The reality is the Government is putting their foot all the way down on the gas in their effort to stimulate the economy….So it is very possible Prime may even drop down 0.25%.

For fixed rate holders:
Fixed Rates have been very “wild” lately jumping up 0.25 to 0.50% since the changes to the mortgage rules got introduced.  Longer term fixed rates ( 4, 5, 7 and 10 yr) are influenced not by Prime rate but by the bond market and the bond market has been very volatile lately trading between 1.00 and 1.20%.

A jump in bond rates means that fixed rates will always follow. What is happening with Prime has absolutely no influence on 5 yr fixed rates.

If you are set on a 5 yr fixed mortgage, my advice is to get pre-approved to have the rates locked for you! We can hold the rates for 4 months. If your mortgage is coming for a renewal this year, contact me 4 months prior to the renewal date and we will lock the best available rate for you. Or may I suggest looking at a variable rate mortgage? 🙂
Experts predict that 5year fixed rate will remain under 4% by the end of this year.

Wishing you a very calm and successful 2017!


Lena Larsen

Lena Larsen No Comments

Two Simple Strategies To Pay Out Your Mortgage Faster!

Equity Pig


In today’s world of ever-increasing prices and introduction of new taxes, most families’ budgets are already stretched to the max. Though most banks I work with allow 15% or sometimes even 20% prepayment and even doubling your payment option on top of it, for most Canadians putting 30K or even 10K towards their mortgage every year, may not be quite possible at this time.

I have some ideas that will still allow you to take proactive measures to pay your mortgage out faster:

  1. Choose Accelerated Bi-weekly payments:

Instead of paying your mortgage every monthly, select accelerated bi-weekly payment schedule.

Your accelerated bi-weekly payment will be exactly half of your monthly payment, but since there are 52 weeks in a year, you will make 26 bi-weekly payments. This puts two extra bi-weekly payments towards your principal every year.

For instance, on a 400K mortgage, the monthly payment @ 2.59% and 25 yr amortization is 1,810. Accelerated bi-weekly payment will be exactly half of it or $905.

Non-accelerated payment will be less or $835/biweekly.

Non-accelerated bi-weekly payment is calculated using the following formula:

Monthly payment x 12 months / 26 payments in a year.

By choosing bi-weekly accelerated payment, you will save 17,061 in interest and take 3 yrs off your 25 year amortization.

Non-accelerated payment of $835 will give you no such benefit.

  1. Round up your payment.

Your monthly mortgage payment is $1,810 but rounding it up to $1,900 will save you 10,102 in interest and take 2 years off your amortization.

Round up your payment and select accelerated bi-weekly – 33,029 in savings and 5 years off your amortization.

The extra amount will go directly towards your principal. You can also always revert back to the original amount if you choose to.

Please feel free to drop me a quick email or call me if you have any questions. If you know of anyone else who could benefit from my services, please pass my contact information to them. I will be happy to help!

Lena Larsen No Comments

Changes Coming on October 17th, 2016

I hope you had a wonderful Thanksgiving weekend!

You possibly heard on the news that the Government is introducing new mortgage rules on October 17th. These rules affect home buyers who are applying for a mortgage with less than 20% down.

To sum it up, now all homebuyers with less than 20% down will have to be qualified for a mortgage at a much higher rate. This rate (benchmark rate or 4.64%) is for qualification purposes only.

It is the so-called “stress test” to ensure the buyers could handle possible rate hike when the mortgage comes to maturity 5 years from now.

We have been already using benchmark rate to qualify for a term less than 5 years and for a variable mortgage.

Starting October 17th, banks will have to use the same benchmark rate to qualify for a fixed rate on a 5-year closed term.

The new rule significantly reduces the mortgage amount homebuyers could be approved for.

In some cases by 20% from the original amount!

For instance, if a person is making 70,000 per year and has no debts, prior to October 17th, with 5% down his maximum purchase price is approximately 384,000. After October 17th, the price drops to 304,000.

New rules possible outcome:

  1. In my opinion, we will see real estate price reduction. Cheaper homes, starter homes, and condos will benefit the most from these rules, since this type of real estate will be more affordable.

More expensive homes, estate homes, move-up homes will most likely see less demand.

  1. First-time homebuyers will be affected the most. In other words, your grown up children will most likely stay at home longer.
  1. Single income families, newly divorced buyers with less than 20% down will be forced to settle for a much cheaper home than they could originally afford.
  1. Higher demand on rental market with rent possibly going up

These measures may be necessary to address affordability issues in Canada’s hottest real estate markets, like Vancouver or Toronto, but they could have a very detrimental effect in the markets that are already very sensitive to any new changes due to the current economic downturn.

Lena Larsen No Comments

When you thought the mortgage rules couldn’t get any tougher

It is already tough to qualify for a mortgage these days, but things just got even tougher! Starting on October 17th, 2016, home buyers with less than 20% down will have to qualify for a mortgage based on Canada benchmark rate or 4.64%.

Qualifying at benchmark rate has been the rule for mortgage applications for variable rate and terms under 5 yrs. On October 17th, the same rule will now apply to 5 yr fixed rate which could be anywhere between 2.29 to 2.49% depending on the lender.

This will significantly reduce the mortgage amount and in turn affect the purchase price. This rule will force a lot of homebuyers to look at homes costing significantly less than they were planning to purchase and in turn apply downward pressure on home values.

Here is the link to the official Department of Finance announcement.

Lena Larsen No Comments

Are you a First Time Homebuyer?

I enjoy working with people who are buying their first home! The process of buying your first home is always very exciting and intimidating at the same time. First time home buyers have a lot of questions. They are looking for advice and guidance that they can trust. I appreciate the privilege I am given me to help them with their mortgage financing. I always make sure that they are well looked after.

But what does the term “A First Home Homebuyer” actually mean in the “mortgage world”?

Most people think that it means that you can buy your first property with the down payment of only 5%. In fact you can buy your second home with only 5% down as long as you are buying it for yourself and your family to move in.

The term “First Time Homebuyer” in the mortgage world means that that you are eligible to participate in the Home Buyer Plan and withdraw your RRSP savings tax-free to use towards your down payment.

To sum this program up:
– You are a first time homebuyer if you have never owned a home before or if you owned a home prior but sold it and didn’t own a property in the last 4 yr period. The countdown of the 4 yr period stars on January 1st.
– If you are a first time homebuyer you can withdraw up to $25,000 tax-free. Typically, you cannot withdraw funds from locked-in RRSP or a group RRSP, so check with your financial institution or employer first.
– You can only withdraw the balance that has been in the RRSP account for the last 3 months. In other words, if you had $15K in the RRSP account 3 month ago and now have $18K because you kept contributing over the past 3 months, you can only withdraw $15K tax free.
– You are buying a property for yourself or a disabled relative to occupy.
– You will have 15 years to replenish your RRSP account
How to withdraw RRSP?
You will need to make an appointment with the financial institution that holds your RRSP savings. They will provide you with a special form to fill out to withdraw your RRSP funds. The form has to be accompanied by a copy of the Real Estate purchase contract that will serve as proof that you are buying a property.

It typically takes 2-4 days to have the RRSP funds transferred to an account that you assign.

If you have any questions, please send me a quick email at lena@conexia.ca and I will be happy to help.