Mihir's Market Matters Report - October 2013

October 2013 Welcome to the October issue of Mihir's Market Matters Report. I hope everyone had a Happy Thanksgiving and are enjoying the last gasp of unusually high temperatures for the Fall season.  Variable Rate Update With recent speculation that the BoC may not raise Prime until 2016, Variable rate mortgages are the best option available. VRMs have traditionally outperformed Fixed rate mortgages over the past 25 years (see chart above, source: Bank of Canada).   Of course, VRMs are not for every client as some want the security of a Fixed Rate. I can help there too. Call me today to discuss all the options. Market Watch 5 year Bond Yield: 1.94% (as of 10/16/13) Prime Rate: 3.00% Qualifying Rate: 5.34%  Bond yields seem to have flattened out after the roller-coaster of the last few weeks. The US government shut down - and it's potential restart - will have an effect on bond yields, so stay tuned to see how this all works out.  Fixed rates are still very good and clients shouldn't be expecting dramatic changes in the short term. BEST RATES AS OF 17th OCTOBER 2013 Variable Rate: 5 years @ Prime - 0.55 or 2.45% 3 years Fixed @ 3.09% QUICK CLOSE SPECIAL - 3.34% FIXED FOR 5 YEARS Regular Rate: 3.49% FIXED FOR 5 YEARS Pre-Approvals: 3.69% FIXED FOR 5 YEARS Thanks Mihir Oza 647-710-7374 Mortgage Agent (License # M11000672) The Mortgage Practice My Motto: Right Advice. First Time, Every Time. Bank of Canada Interest Rate July 17, 2013 1.00 % September 4, 2013 1.00 % October 23, 2013 Next meeting date Source: Bank of Canada Bank Prime Lending Rate July 18, 2013 3.00 % September 5, 2013 3.00 % October 24, 2013 Next meeting date Source: Bank of Canada Conventional Mortgage - 5 Year Rate* August 14, 2013 5.14 % August 28, 2013 5.34 % September 25, 2013 5.34 % Source: Bank of Canada *Determinant for high ratio mortgage variable qualifying rate US Federal Reserve Board Discount Rate* July 31, 2013 0.00 % - 0.25 % September 18, 2013 0.00 % - 0.25 % October 30, 2013 Next meeting date Source: US Federal Reserve *US Federal Reserve has indicated it will now keep this rate until unemployment reaches 6.5% Exchange Rate $CDN($US) August 28, 2013 0.9537 September 11, 2013 0.9695 September 25, 2013 0.9696 Source: Bank of Canada Government of Canada Bonds Bond Type August 28, 2013 September 11, 2013 September 25, 2013 1 year Treasury Bill 1.11% 1.11% 1.07% 3 year Benchmark Bond Yield 1.32% 1.55% 1.42% 5 year Benchmark Bond Yield 1.90% 2.13% 1.89% 10 year Benchmark Bond Yield 2.63% 2.78% 2.57% Source: Bank of Canada Total New Housing Starts (Seasonally adjusted and annualized)  Source: CMHC Housing Now - September 2012 and September 2013. This seasonally adjusted data goes through stages of revision at different times of the year. Average MLS® Resale Price for Local Markets  Source: Canadian Real Estate Association  Canadian Housing Affordability Index Canadian Household Survey The measures are based on a 25% down payment, a 25-year mortgage loan at a five-year fixed rate, andare estimated on a quarterly basis Source TD Economics September 2013