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November News & Rate Advisor

Blog by Sara Kalke | November 15th, 2011

I just received the November issue of the News & Rate Advisor from Eva Neufeld, Mortgage Broker extraordinaire.  I particularly enjoyed the article at the beginning "The Unlikely Retirement Savings Strategy".  The latest rate information, some statistics, and Eva's contact information are below as well.

As you can see from the numbers below, now is an EXCELLENT time to take advantage of the super low rates.  Have questions?  Call me anytime! (780) 710-7669.

Welcome to the November issue of the News & Rate Advisor.

The Unlikely Retirement Savings Strategy

One of the best risk-adjusted investments you can make requires no commissions, no buying and selling and no management fees. According to a new study from the Certified General Accountants Association of Canada (CGAAC), the boring old mortgage prepayment performs better than most common retirement savings vehicles, including RRSPs.
“…Single individuals and couples with no dependents may be better off accelerating their mortgage payments than contributing to a retirement account,” finds the study. “This is the case for all income levels and savings rates, but particularly for lower-income individuals.”

“Those earning $30,000 annually and saving 2% of their earnings will get a nearly twice higher return by accelerating their mortgage payments compared with saving through a RRSP.”

Once the mortgage is paid off, it’s assumed that one then takes the money formerly allocated to mortgage payments and starts investing it.

There is an exception to the above findings, however, and it applies to better-off homeowners with kids. The CGAAC says: “…In the environment of relatively low mortgage interest rates, savings through a RRSP may generate a higher return for the higher-income couple with dependents than saving through accelerated mortgage payments.”

In addition, relative performance depends on your investment alternatives. Some folks have access to investments yielding more (after tax and inflation) than  a mortgage prepayment. In that case, speeding up your mortgage burning party may not be your best option.

Exceptions aside, mortgage prepayments entail no principal risk and involve little effort. That makes them one of the best “lazy-man’s” saving strategies one can find.
Current Discount Mortgage Rates
Nov 2011  Variable Rate      2.70%
1 Year                               2.89%
2 Year                               3.09%
3 Year                               3.19%
4 Year                               3.09%
5 Year                               3.49%
7 Year                               4.59%
10 Year                             4.89%
Prime Rate                        3.00%
* Rates subject to change and OAC.

Canadian Qualifying Rate
Nov 2011 Rate                   5.29%
Source: Bank of Canada

Current Posted Mortgage Rates
                 Nov 2011         Nov 2010         Nov 2009
1 Year           3.50%              3.35%             3.60%
3 Year           4.05%              4.25%             4.25%
5 Year           5.29%              5.44%             5.49%

Source: Bank of Canada

Average House Prices by Province
                   Sep 2011          Sep 2010         Sep 2009
National         $352,581         $331,089         $331,602
Yukon           $277,654          $304,018         $258,852
NWT              $457,504          $382,188        $318,753
BC                 $523,568         $493,846         $474,270
Alberta           $359,637         $349,048         $346,560
Saskatchewan $253,300          $236,455         $232,876
Manitoba        $228,548          $216,327         $202,898
Ontario           $359,786         $335,083         $326,698
Quebec           $263,615         $252,280         $229,837
New Brunswick  $156,900         $151,660         $151,728
PEI                 $169,964         $146,537         $142,493
Nova Scotia      $202,090         $191,388         $193,236
Newfoundland   $262,481         $230,190         $203,903

Source: CREA - Most Recent Month Reported

Eva Neufeld
Mortgage Advisor
Tailored Mortgage Inc.
Phone:  780-244-0505
Fax:  1-780-665-7291
Email:  mortgagecoach@shaw.ca
Web:  www.tailoredmortgagesolutions.com
Twitter:  abmortgagecoch
Blog:  @edmontonmortgagecoach.com
""A good investment advisor can make you thousands of dollars. But a good
Mortgage Specialist will SAVE you thousands of dollars. Whether you are
buying a home or renewing a mortgage, consider making a Mortgage Specialist
part of your financial plan this year