I was on CTV’s Canada AM this morning along with Roberts Group mortgage broker & owner Paula Roberts, answering viewer’s mortgage related questions. I thought I’d share my answers here as well.
Q. How high and how quickly is the Bank of Canada expected to increase rates?
Answer: Well the Bank of Canada announced yesterday that they are keeping interest rates at their current levels for now. However, the big surprise was that they removed the conditional commitment to keep rates at their current 0.25% until July 2010.
This means that the Bank of Canada’s key interest rates, which is what influences variable mortgage rates, could start going up as early as June 2010.
Industry experts are forecasting that interest rates will go up by 1.5% by the end of 2010 and 3% by the end of 2011.
This means variable mortgage rates could be heading higher beginning in June and once rates start going up, they’ll most likely be increasing by 0.25% or 0.50% each time. This is a slow and steady rate increase as we move towards getting back to a more ‘normal’ rate environment.
Q. My friends used a mortgage broker when they bought their house last month, but we I’m with a bank. What are the differences between a bank and a mortgage broker?
Here are the main difference between working with banks versus mortgage brokers:
Starting with the banks:
- They are well-known, trusted brands
- Many people have multiple products with their banks such as: credit cards, bank accounts, savings accounts etc
- Many times people will get their mortgage their too – as it’s easier to deal with one company
- On the flip side, banks are only able to offer their own products and their own rates
Mortgage brokers on the other hand:
- Are licensed, mortgage experts
- Have access to various lenders and products (including some of the big banks themselves)
- Offer a free service and work for you the consumer
- They are compensated by the lenders when a mortgage deal funds
If you’re considering between working with either one, it’s really a personal decision. I’d recommend speaking to your bank and a mortgage broker and then seeing which one provides the best offer.
If you have any other questions or would like any further explanation on these, please feel free to email me at Kelvin (at) RateSupermarket.ca.