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mortgage interest rates in canada
With current mortgage rates at historically low levels, many homebuyers and mortgage holders are asking whether a variable-rate mortgage or a fixed-rate mortgage is best for them. How, exactly, are mortgage rates offered by lenders determined? Many ...
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Understanding Trends Behind Current Mortgage Rates - HULIQ.com
TORONTO - ISADORE SHARP had a different coda in mind for the twilight of his career. The 77-year-old founder and C.E.O. of Four Seasons Hotels and Resorts, he was looking forward to some time with his wife, sons and grandchildren. A meticulous ...
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Pillow Fights at the Four Seasons - Star-Banner
TORONTO, June 24 (Reuters) - The Canadian dollar weakened on Wednesday after the U.S. Federal Reserve said it would keep interest rates unchanged and removed a reference about its concern that inflation could run below desired levels. Concluding a ...
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CANADA FX DEBT-C$ falls after Fed decision, bonds down - Reuters
TORONTO, June 24 (Reuters) - The Canadian dollar weakened on Wednesday after the U.S. Federal Reserve said it would keep rates unchanged and removed a reference about its concern inflation could run below desired levels. Concluding a two-day meeting ...
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CANADA FX DEBT-C$ weakens after Fed decision, bonds down - Reuters
WASHINGTON - With signs the economy is improving but still fragile, Federal Reserve policymakers are considering whether some programs intended to drive down rates on mortgages and other consumer debt should be slowed down. Federal Reserve Chairman ...
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Fed weighs whether economic revival programs should be slowed amid ... - Canada East
In Canada, core inflation has a slightly different definition than in most of the rest of the industrialized world. In most countries, core inflation is the change in the consumer price index for all items except energy and food products. Those are ...
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The Explainer's gone audible - Globe and Mail
I f Ben Bernanke is pondering a graceful exit from all the easy money on the table, he isn't tipping his hand just yet. Mr. Bernanke and his colleagues on the U.S. Federal Reserve's open market committee voted unanimously yesterday to stay the course ...
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No talk of exit strategy as Fed holds rate near zero - Globe and Mail
bewildering series of economic events over the past 12 months has put a large question mark over the global economy. Many have interpreted the recent stock market rally as a sign of recovery: the so-called “green shoots” concept. But this ...
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They could be weeds - Nationalpost.com
MORE than 150,000 companies, mainly small and medium-sized, risk failure in the next 12 months as their big business customers delay paying invoices and banks squeeze them on interest payments and tighten the criteria for business loans. Research by ...
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Rudd can ease pressure on SMEs - The Australian
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/ WINNIPEG, June 25 /CNW/ - Artis Real Estate Investment Trust ("Artis" or the "REIT") (TSX: AX.UN) ) is pleased to announce that in connection with the ...
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Mortgage Interest Rates In Canada Questions and Answers
Resolved Question: What could the US learn from Canada?
Guess which country has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it’s Canada. Last year, the World Economic Forum ranked Canada’s banking system the healthiest in the world…America’s ranked 40th. Here’s some other facts:
Home prices are down 25% in the US, but only 12% in Canada. Why? The Canadian tax code does not provide the massive incentive for over consumption that the U.S. code does: interest on your mortgage isn’t deductible and sub-prime loan schemes are illegal. In addition, home loans in the United States are “non-recourse,” which basically means that if you go belly up on a bad mortgage, it’s mostly the bank’s problem. In Canada, it’s yours. Ah, but you’ve heard people say there is a need for these expensive programs—(interest deductibility alone costs the US federal government $100 billion a year)—because they allow the average Joe to fulfill the American Dream of owning a home. So 68% of Americans own their own homes and what is the rate of home ownership in Canada?....68.4%
This might be a shocker - Canada’s health-care system is cheaper than America’s by far (9.7% of GDP vs 15.2% in the US), AND life expectancy in Canada is 81 years, versus 78 yrs in the US.
Theonlybeldin: That's funny! :-)
It-Is-What-It-Is: I think you also need to consider that according to most surveys 31% of Americans are obese (BMI over 30), whereas in Canada it is only 14% - Obesity leads to higher rates heart disease and diabetes.
Proud to be and American: I don't quite understand which country you are referring to that is in decline??
Patrick D: All stats here are normalized as a % of population for an apples – apples comparison. Canada is officially a bilingual country but roughly 68% speak English only, 13% speak French only and 18% speak both.
Lovinglife: For sure…the question is meant to highlight the things that work really well in Canada that don’t work so well in the US to see if there are things that can be learned. In terms of ethnic diversity Canada actually has the highest per capita immigration rate in the world with about 18% of it’s population comprised of immigrants (11% for the US) In addition Canada is one of only a few countries that has a federally implemented policy of multiculturalism. I agree with you about allowing business to flourish – but there needs to be well defined rules to play by or else everyone gets hurt. Canada is a free market, capitalist democracy just like the US – the only difference is that the government chaperones the party to make sure no one gets killed! :-)
moreVoting Question: what do you think, of the premier of Ontario raising taxes with 127,00 people layed off in one day?
How do you think the Prime Minister Feels when the premier of Ontario raises taxes, when he's trying to lower them? And will the prime minister take Action against this premier who is under-minding the authority of the federal Govt. with 127,00 people unemployed in one day in ontario you'd think the last thing they would do is look for way's to raise taxes... its not difficult to figure out how to turn things around, but as usual our politicians panic and come up with stupid idea's on how to save the economy. So here's my idea; freeze bank interest rates at .05% for 15 years on everything: lines of credit, car loans, mortgages, and all other loan types (this means on everything.).next reduce car ins to no higher than 800$ per person. cut income tax by 35 to 40 %,change the gst and pst to a gas tax rebate of $450. given to all ins motorist. so if you own say 9 cars you get 450. if you own one car you get 450. this is for ten years. Each year they reduce this amount by $50. dollars till its gone.Return the .07 cent tax on everything. in this way the economy will become stronger. and will give both the Gov't of canada and the big three ten years to come up with lasting alternatives to keep things going. Desperate times require desperate measures. so far all they have done is try to get people motivated to buy cars and that's not good enough now is it... And if I run For Prime Minister, all the other politicians would be looking for their copy of the yellow pages to protect their butt from my boot and it would serve them right for dusting off chairs with their unused brains..perhaps we are in this mess because they have been sitting on em for too long. what do you think? And do you think we Should LYNCH the Premier of Ontario?????
sorry type O 5% NOT ,05%.
Driving some of those ins companys out of business is a good idea glad you thought of it.after all they are such honest companies who pay out all those claims in such a timely fashion.... and as far as projected deficit, lets face facts we always had it even when Mr Martin waved his magic wand and poof it was gone overnight, right guess again... as for lynching well ya that was rant to add tone to message,now; for over 40 years the gov't has had this deficit. and has done little to change it. the economy is in a very bad way. why? people do not have extra money to spend why? is it the taxes being too High, car ins too High, Bank interest rates too High? Certainly looks that way. the best way to get the economy moving is people spending money, YOU CAN NOT SPEND WHAT YOU DO NOT HAVE...raising taxes is not the answer.So I offered a few idea's, you were quick to shoot them down but you did not offer any alternatives so your dumber then you think I am.
Putting money back in the workers pocket would help pay off his mortguage, buy a car , and other things besides.you must look for ways to put the money back into the workers pocket and not just keep raising taxes all the time and moving the numbers from one page to another does nothing. ok so here's a new idea; place all politians on un-empolyment for the first year-term of office and freeze all of their assets for that year so all they get is the 38 weeks of un-employment for the year no excutive jets or limo's they just drive their own cars to work.and no expense accounts. look at it this way they will keep raising taxes it will not change till some-one steps up and says enough is enough how many of us just shrug our shoulders and say Eh; what are you going to do. maybe I'm stepping up, maybe I'm just pointing out that its time to step up. they don't know unless you tell them in ways they understand...Now; maybe you will understand this more CLEARLY. rant is good to clean the soul.
moreVoting Question: can anyone help me with my economics hw?
need a little help with these questions.
1. On April 20, 2009 your wealthy aunt will give you a bond with a principal amount of
$10,000. Your aunt purchased the bond in 2003, and it matures on April 20, 2010. The
bond pays a coupon rate of 8%. When it arrives, the bond will have one remaining
coupon. Answer each of the following for 2 points each.
a. If the current relevant rate of interest is 5% for the type of bond your aunt is giving
you, what will the market value of the bond be on the day you receive it? Why?
b. Given the prospect of new wealth, you decide to check the business section of the
newspaper. It suggests that the Bank of Canada soon will reduce interest rates in Canada
by one half of one percentage point. If the relevant interest rate for the bond you will
receive drops by one half of one percentage point, what will be its market value on the
day you receive it? Why?
c. You read further in the business section and discover that the company that issued the
bond in 2003 used the $10,000 it received to issue subprime mortgages in the U.S. In
other words, the company used the funds it received by issuing bonds to provide
mortgages to homebuyers who had very poor credit ratings. Participants in the bond
market now (today) fear that defaults on mortgages have greatly increased the risk that
the original issuer will not be able to pay the principal amount of the bonds when they
mature. As a result, financial investors are suddenly requiring a risk premium of 25% on
the type of bond that your aunt is giving to you. Assume that without the risk premium,
the relevant annual interest rate would be 5%. What will the value of your bond be on
the day you receive it?
d. Suppose that on April 20, 2003 a brokerage firm (U.R. Stukk, Inc.) arranged for the
Top Security Bank (Mortimer “Mort” Gauge, CEO) to purchase 10,000 bonds of the
same type that you will receive from your aunt. The bank still holds these bonds, and
until a few days ago, the bank believed the relevant interest rate was 5%, and it was
listing the bonds on its balance sheet as an asset worth $102,857,100. What is the value
of this asset now that financial investors are requiring a risk premium of 25%?
2. Explain, for 2 points each, how each of the following transactions affects (i) the
current account balance and (ii) net capital inflows for Canada. In the case of each
transaction, the identity
CA + KI = 0
is preserved. (CA = current account balance; KI = net capital inflows.) In each case,
explain why it is preserved.
a. A Canadian pays $25, 000 for a new Toyota manufactured entirely in Japan. Toyota
uses the $25,000 to purchase land in Ontario.
b. A Canadian gas company sells $100 million of natural gas to customers in the U.S. It
uses the $100 million it receives to purchase port facilities in Boston.
c. A Canadian bank spends $1 billion to purchase a U.S. bank. The sellers of the bank
use the funds they receive to purchase treasury bills issued by the Government of Canada.
d. A tourist from France pays 5000 euros for a vacation in Canada. Canadians use the
euros to buy French wine.
3. Suppose that in 2009, Canada’s potential GDP is $1.5 trillion. In addition, assume that
at the end of the 2009 data show that the output gap for the year is 7 percent of potential
GDP. Answer each of the following for 2 points each.
a. What will GDP be for 2009? What will be the value of lost output for 2009?
b. Suppose that at the end of March 2009, data for the first quarter of the year show the
output gap to be one percent of potential GDP. Suppose also that the unemployment rate
at the end of March is 8 percent. Use Okun’s law to predict the unemployment rate at the
end of 2009.
moreResolved Question: Pay down my mortgage, or invest?
My husband and I just made our first mortgage payment on our $194,000 mortgage. Our interest rate is 4.5% fixed for 5 years (this makes our payments about 890.00). Right now we have almost NO other debt, and are making enough money to have at least an extra thousand or so per month of spending money. We are both very young (24 and 25) and I have just started an RRSP program through my work (between myself and my employer I will be putting away about $130/month to this).
The question is this: I have encouraged my husband to start making some investments on his own to at least match what I am contributing for retirement savings (he makes an hourly wage and has no benefits or plans at work). He thinks it would be smarter to just take that extra cash and pay down our mortgage first.
With no other investments on the go, is it smarter for us both to be putting our money into the mortgage or into investments? If investments, what is the best to invest in for a young couple with no kids looking to start saving for retirement?
Any advice would be appreciated. Pretty much everyone I've asked has given completely different opinions.
PS: I live in Canada so talking about 401k (whatever that is) and other American stuff won't make much sense to me.
moreResolved Question: March 3 interest rate drop in Canada?
What does this mean for my variable rate mortgage? Did it go down by 50 points are will it stay the same? Please help!
moreResolved Question: Obama has no faith in his ability or the US?
Here is why I say this Ronald became president inheriting a dismal economy.12% inflation rate 16% mortgage interest rate 10% unemployment gas lines yet turn it around President Bush inherited a recession and got hit with 911 further destroying the economy yet he turned it around I will post his record. 2 Republicans they both cut taxes were very positive and both time the US went through fantastic economic growth now we have a Obama that's gloom and doom like Carter a matter a fact Carter endorse his policy.... wonder where this is leading before the Bush Basher state how Bush screw up the economy here is a factual record by international organizations.
This is from the wall street journal Sept 8th 2008.
PRESIDENT BUSH HAS A GOOD ECONOMIC RECORD
The evidence shows that much of the Democratic Party's criticism of President Bush's economic record is wide of the mark, says Keith Marsden, a fellow of the Centre for Policy Studies.
How does the performance of the U.S. economy really compare with other advanced economies over the eight years of George Bush's presidency? Data published by the International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD), the World Bank, the International Comparison Program (ICP) (a cooperative venture coordinated by the World Bank) and the U.S. Census Bureau allow a nonpartisan, factual assessment, says Marsden.
Economic growth:
U.S. output has expanded faster than in most advanced economies since 2000.
The IMF reports that real U.S. gross domestic product (GDP) grew at an average annual rate of 2.2 percent over the period 2001-2008 (including its forecast for the current year).
President Bush will leave his successor an economy 19 percent larger than the one he inherited from President Clinton.
This U.S. expansion compares with 14 percent by France, 13 percent by Japan and just 8 percent by Italy and Germany over the same period.
The latest ICP findings, published by the World Bank in its World Development Indicators 2008, also show that GDP per capita in the United States reached $41,813 (in purchasing power parity dollars) in 2005; this was a third higher than the United Kingdom's, 37 percent above Germany's and 38 percent more than Japan's.
Household consumption:
The ICP study found that the average per-capita consumption of the U.S. population (citizens and illegal immigrants combined) was second only to Luxembourg's, out of 146 countries covered in 2005.
The U.S. average was $32,045; this was well above the levels in the UK ($25,155), Canada ($23,526), France ($23,027) and Germany ($21,742). China stood at $1,751.
Source: Keith Marsden, "Bush Has a Good Economic Record," Wall Street Journal, September 3, 2008.
moreResolved Question: What is my mortgage broker's ulterior motive?
My mortgage broker called me up out of the blue and asked if we wanted to refinance (which we already did about two years ago) because the rates were "so low" (I live in Canada). She asked if we needed some money to get a car, renovate etc. I said I didn't think it would be worth refinancing again (although we always need the money) due to the penalty we would get charged, the lawyers fees etc. She seemed to think we would just absorb the penalties because the interest was so worth it. Is she desperate for money and just looking to make a buck or does she really have our best interests at heart? I have refinanced twice already and am never going to pay off this mortgage if I keep it up. help!
moreVoting Question: Please edit this, it's a short paragraph (150 words)?
oh and i need a title for it so if you have and ideas let me know =]
Nothing like this has happened since the great depression. The financial crisis going on in America is worsening and leading to many problems. I think it is the most important event that has happened in the past year for multiple reasons. Firstly, it will lead to many job losses throughout the USA. Their economy lost almost 2 million jobs in the last four months of 2008. The crisis was basically caused by people abusing credit and the rising mortgage prices. This in return causes higher interest rates and it will also be harder to get a loan. Canada is currently well off in comparison, but eventually its economy will decline if America goes into depression. Already the number of full-time jobs in Canada is decreasing, and this will probably affect our generation. Not just Canada will be affected though, the whole world will be. As the old saying goes, “When America sneezes; the rest of the world catches a cold.” In conclusion, unwanted records may be broken in the following years if America’s financial crisis continues at this rate.
moreResolved Question: WHAT WOULD YOU DO IN MY SITUATION? ?
Ok, so I asked this question earlier but I did not make myself clear enough on one item as I had a lot of responses stating that I should not sell my home in this unstable market...which is true as I dont want to sell RIGHT NOW either. Think about my question as if I was selling during a strong & solid sellers market.
Thanks to all that answered before and to those of you for your incoming insight.
Scott in Canada:
OK, so here is the issue at hand...
I own a townhome in the province of BC which would sell today at 250K (this price is in tune with the current downturn in property value) This home is completely paid for ie mortgage free.
I currently rent this BC property out
I also own a condo in Alberta (where I live) and owe $310K to the bank with a 5.04% fixed interest rate.
The question is do I sell the rental in BC and take the 250K I would make and pay off the majority of what remains on the AB property which would leave me with only 60K to pay off?
I plan on living for the next few years in AB and while having a long term rental property is great, I question what I will lose in interest payments if I keep both.
What would you do?
moreResolved Question: HELP WITH MORTGAGE IN CANADA?
I am doing this as a last resort to try to keep my family and my home together .I had a back injury years ago and now it is at the point where I cant sit stand or even think Straight from the pain ,which is making it very difficult to keep a job ,as for in the past year I have been fired from job to job for not being able to handle what would be simple tasks due to my back injury..I am going to loose my home and I only owe $135.000 left on it and need help from someone who can help me out with money ,I know this is pretty silly to even ask but I am at a point where I will try anything to keep my family safe in out home.Due to not being able to hold a job down I have a very bad interest rate on my home of %10 and is to be renewed yearly which means I will never be able to pay it down from this point on ,I would like to meet the person or persons if and who helps me out so I can show you my family and house and such..Please help if you can..Steve..E mail me directly at hod333@hotmail.com or if you can help out with any amount of money my paypal is hod333@gmail.com
moreVoting Question: Question on Mortgage Amortization?
Hi, we are getting a mortgage shortly. I am 50, my wife 60yrs old. We are putting 50% down in cash. Can someone please give us an idea what would be the best terms to take for that mortgage? We were considering a 1 yr term, but I'm not sure. Years ago we had a variable rate and it was a very smart decision, maybe another variable rate, given the interest rate environment?
Also, do they still have 40 yr. amortizations in Canada? I think they do for someone like us putting 50% down don't they? It is only for high ratio mortgages that they don't allow the 40 years any more?
Thanks folks for your input!
moreResolved Question: Which of these reasons most convinced McCain to speak out in favor of the rich paying higher taxes?
http://www.youtube.com/watch?v=d8EyGpOU3qM
http://www.youtube.com/watch?v=X2JPbQOHEkY
For more than a century it's been generally recognized that the best taxes (admittedly this is an expression reminiscent of "the most pleasant death" or "the funniest Family Circus cartoon") are progressive-- that is, proportionate to income.
Lately, however, it's become fashionable to question this. Various Republican leaders have trotted out the idea of a flat tax, meaning a fixed percentage of income tax levied on everyone. And in their hearts they may be anxious to emulate Maggie Thatcher's poll tax-- a single amount that everyone must pay.
Isn't that more fair? Shouldn't everyone pay the same amount?
In a word-- no. It's not more fair; it's appallingly unfair. Why? The rich should pay more taxes, because the rich get more from the government.
Consider defense, for example, which makes up 20% of the budget. Defending the country benefits everyone; but it benefits the rich more, because they have more to defend. It's the same principle as insurance: if you have a bigger house or a fancier car, you pay more to insure it.
Social security payments, which make up another 20% of the budget, are dependent on income-- if you've put more into the system, you get higher payments when you retire.
Investments in the nation's infrastructure-- transportation, education, research & development, energy, police subsidies, the courts, etc.-- again are more useful the more you have. The interstates and airports benefit interstate commerce and people who can travel, not ghetto dwellers. Energy is used disproportionately by the rich and by industry.
As for public education, the better public schools are the ones attended by the moderately well off. The very well off ship their offspring off to private schools; but it is their companies that benefit from a well-educated public. (If you don't think that's a benefit, go start up an engineering firm, or even a factory, in El Salvador. Or Watts.)
The FDIC and the S&L bailout obviously most benefit investors and large depositors. A neat example: a smooth operator bought a failing S&L for $350 million, then received $2 billion from the government to help resurrect it.
Beyond all this, the federal budget is top-heavy with corporate welfare. Counting tax breaks and expenditures, corporations and the rich snuffle up over $400 billion a year-- compare that to the $1400 budget, or the $116 billion spent on programs for the poor.
Where's all that money go? There's direct subsidies to agribusiness ($18 billion a year), to export companies, to maritime shippers, and to various industries-- airlines, nuclear power companies, timber companies, mining companies, automakers, drug companies. There's billions of dollars in military waste and fraud. And there's untold billions in tax credits, deductions, and loopholes. Accelerated depreciation alone, for instance, is estimated to cost the Treasury $37 billion a year-- billions more than the mortgage interest deduction. (Which itself benefits the people with the biggest mortgages. But we should encourage home ownership, shouldn't we? Well, Canada has no interest deduction, but has about the same rate of home ownership.)
How about social spending? Well, putting aside the merely religious consideration that the richest nation on the planet can well afford to lob a few farthings at the hungry, I'd argue that it's social spending-- the New Deal-- that's kept this country capitalistic. Tempting as it is for the rich to take all the wealth of a country, it's really not wise to leave the poor with no stake in the system, and every reason to agitate for imposing a new system of their own. Think of social spending as insurance against violent revolution-- and again, like any insurance, it's of most benefit to those with the biggest boodle. (See also my page on whether welfare does any good).
Who gets to sit on the tax?
Come election season, Steve Forbes, among other millionaires, will be pushing plans for a flat tax. These proposals need to be absorbed with a carload of salt.
A plan where everyone's taxes are lowered is of course simply a tax cut. Here, once again, the question to ask as a voter and citizen is, what government services do you want to cut? Somehow I don't think Steve is proposing to slash corporate welfare or defense. It's more likely a way to attempt to cut social spending through the back door. People like to hear about tax cuts; they don't like to hear about service cuts, even though they're financially equivalent.
A revenue-neutral plan won't change total receipts any-- it'll just redistribute it. Here you have to ask, who gets shafted?
You can't exactly make the poor pay more taxes-- they don't have the money. That leaves only one way to flatten the tax rates-- that is, reduce the taxes the rich pay: soak the middle class. If tax rates go down on the rich, and we're not cutting total taxes, the middle c
Nice try, Steel Magnolia, but the rich should pay more is EXACTLY what McCain said in the videos I posted.
Sunny So Cal--you're the type of user who brings down Yahoo Answers. If you can't bother to read the info *directly* related to thh question, then don't waste all of our time with your non-answer. No one needs to read your whining about how your're too lazy to be involved.
Also, Sunny So Cal, you don't seem to know the meaning of "rant" either. Please go visit the Barney the Dino or Bob the Builder kiddie sites. Obviously more your speed.
moreResolved Question: If the Bank of Canada raises the prime lending rate to 8.8, does that effect mortgage rates? ?
I have a fluctuating mortgage - NOT applying for a new one. Also, the U.S. have lowered interest rates by 1/2 points. How does THAT effect our mortgage rates??
moreResolved Question: If inflation in the US goes upto 10% will this affect interest rates and inflation in Canada and if so why?
With the amount of money being printed in the states hyper inflation is more than likely. How is that going to effect inflation and interest rates in Canada>I'm on a variable mortgage (3.9%) in Canada and wondering if interest rates will go up rapidly in the next year.
moreResolved Question: What credit score do you need to get approved for a mortgage?
What other factors make you a good candidate for mortgage approval in Canada? Does your credit rating affect the interest rate that you will receive?
moreResolved Question: Does Obama have an integrity problem?
moreResolved Question: Any good advice on how to lower a interest rate when a lender won't bargain?
Any advice is welcome !
Our Citibank lender won't allow us to refinance to a lower interest rate...based on the stupid "Logic" that our credit rating is not "good enough" to qualify!
So basically what they are saying is...
even if we have been making mortgage payments for
12 years straight on the same house and at an grossly inflated (10.5%) interest rate ( reliably) for the last 2-3 years.
They are about to raise it another 1% in August!
Yet they say...
We don't qualify for a Lower interest rate which would obviously make our Mortgage Payement LOWER!!
How can we be a "risk" when we are already demonstrating an ability to pay a Higher amount ?
Please explain this ass backwards "logic" to me?!
Also,we Don't have Any credit card Debt, owe less than 5,000 in total on any debts and have Never filed Bankrupsy /or Chapter 13.
* We are both Self- employed and also own a piece of property in Canada ( that is ALL paided off)
What Do they want our First born?!!
Help!
moreResolved Question: Anyone else miss the Clinton/Obama debates?
moreResolved Question: obama lier? i think so?
moreResolved Question: 58 reasons not to vote for Obama TRUE? FALSE?
moreResolved Question: why do you want a mean first lady and a President that friendly with terriost like Hussein Obama?
moreResolved Question: Is it true that Obama has told many lies and nobody cares?
Want a source? Read his books! Most of it is in there!
moreResolved Question: Barrack Obama, why do you lie about everything?
Why would anybody vote for this guy?
I'm not some Republican blogger. I just listen to what our presidential candidates are saying and investigate back into it. This was several days in the making. I'm working on one for Hillary, but it might take a little longer than Obama's
Ok Ashley, you caught me. I didn't write it, but I didn't get it from that site either. I got it from someone else on here who probably got it from there. Either way, I hate Obama and what he stands for. I thought people deserved to see this.
moreResolved Question: Does it make sense to incur capital gains tax (on stocks) of 13% to prepay a mortgage with a 4.5% int. rate?
My marginal income tax rate, here in Canada is around 13% for capital gains. I would like to pay my mortgage early, but it just doesn't seem to make sense to pay it down quickly by incurring extra income tax. I have approximately 12 years left on the mortgage term.
By the way, Canadians do not get an income tax break on mortgage interest. Mortgage interest is compounded semi-annually in Canada.
moreResolved Question: What is the current mortgage interest rate in Canada?
moreResolved Question: Mortgage interest rates?
What is the highest interest rate possible on mortgage in Ontario Canada?
moreResolved Question: Can a Canadian obtain a mortgage from a US bank for a house in Canada?
With US mortgage rate dropping and a strong Canadian dollar, I am interested in finding out if I can have a portion or all of my mortgage from an American bank. Is this feasible? Please advise.
moreResolved Question: what R the Pros and Cons of a fixed mortage???
iam getting a mortgage but cant descide on how long. on one hand i dont want to suffer from future rising interest rates, on the other i may or may not move in 2 years. i understand there are penalties for leaving a mortgage early. i think locking in
at 5.9% would b wise.(canada) what should i do??
moreResolved Question: mortgage interest rates??
i live in toronto, canada & im thinking of buying a house. im looking for a good interest rate for a fixed mortgage for AROUND
5 years.
moreResolved Question: The FED bought What ??
The Fed Bought What?
By John Paul Koning
Posted on 8/13/2007
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The US Federal Reserve injected $38 billion dollars into the economy via temporary open market operations this Friday. This is the largest number of temporary repurchase agreements (specifically, one business day repos) entered into by the Fed since September 11, 2001. Back in 2001, Fed purchases of treasuries exceeded $30 billion for the four consecutive days after the collapse of the World Trade Towers, total temporary injections into the banking system amounting to a whopping $295 billion.
What is significant about Friday's repurchase agreements is not so much their size, but the securities that the Fed exchanged for money: mortgage-backed securities (MBS). Indeed, the entire $38 billion dollar injection went to MBS purchases, the largest open market purchase of this asset type ever conducted by the Fed, smashing the previous record of $8.6 billion set back in September of 2005. See chart, above.[1]
The type of mortgage-backed securities the Fed bought are created when bundles of individual mortgages originated by commercial banks are guaranteed by quasi-governmental agencies such as the Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae), then split apart and sold to investors. Homeowners pay interest on these mortgages, interest payments flowing through to the final holders of MBS.
For those who have gone through the Economics 101 treatment of the Fed, the sudden appearance of MBS in Fed open market operations might seem odd. Professors have always taught that when the Fed expanded the money supply it did so by buying government bonds and bills. Indeed back in September 2001, the Fed provided liquidity by buying what it has always traditionally bought; treasury securities. So why is the Fed buying MBS now, and when did it acquire the authority to do so?
First a note on how open market purchases work. The Fed uses what are called open market operations to control the Federal Funds rate, the rate at which large commercial banks lend cash to each other overnight to fulfill their reserve requirements to the Fed. The Fed sets a target for the federal funds rate and defends it by either withdrawing or injecting money according to the requirements of commercial banks. It injects by buying securities from the banks with freshly created checking deposits, or money. This injection increases the reserves commercial banks hold, allowing these banks to expand credit to businesses and consumers. The Fed withdraws money by selling securities to commercial banks and receiving money as payment, thereby reducing reserves and removing credit from the system.
The Fed conducts both temporary open market operations and permanent ones. Permanent, or outright operations, inject cash and remove securities from the banking system forever. The Fed keeps the securities it has acquired outright in the System Open Market Account, aptly initialed SOMA (in Aldous Huxley's Brave New World, the drug soma is produced to keep citizens in a steady state of happiness, much like the Fed's SOMA). Temporary operations, the ones entered into this Friday, involve 1–14 day repurchase or reverse repurchase agreements whereby the Fed purchases (or sells) securities in return for cash with an agreement that the commercial bank on the other side of the deal will buy back (or sell back) the securities after a period of days.
Temporary reverse repurchase operations, the short-term withdrawal of money from the banking system, are rare. The Fed has only engaged in 16 reverse repos since late 2000, versus 1247 repurchases. This imbalance means that the Fed is almost always augmenting commercial bank reserves by buying securities, allowing the banks to use their larger reserves to expand credit and borrowing. Thus the rate defended by the Fed is lower than the rate at which the commercial banks would be willing to lend each other if the Fed did not exist.
Back to Friday's MBS purchases. Historically, the Fed's open market operations have been confined to US Treasuries. Clauses 3 to 6 of the Guidelines for the Conduct of System Operations in Federal Agency Issues ensured that Federal Reserve operations could not engage in temporary purchases of securities issued by federal agencies like Freddie Mac and Fannie Mae.[2]
In an August 1999 Fed meeting officials temporarily suspended clauses 3 to 6, giving themselves the authority to freely purchase Ginnie Mae–, Freddie Mac–, and Fannie Mae–issued MBS on a provisional basis without hindrance on size and timing. The reason given: it needed full reign to inject money into the banking system in preparation for the year 2000 crisis.[3] The period for which the temporary suspension was to extend was from October 1, 1999 through April 7, 2000.
The year 2000 crisis proved a dud. But rather than removing the temporary suspension on buying MBS, the Fed renewed the suspension in 2000 and 2001 before permanently striking off clauses 3 to 6 in 2002. In recent Fed documents, only clauses 1 and 2 are listed. This storyline may sound familiar to Fed watchers. The Fed was founded in response to the crisis of 1907, and had its ability to increase the money supply dramatically increased during another crisis, the Great Depression, where gold convertibility was suspended.
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Since the Orwellian rewriting of the Guidelines the Fed has been gradually expanding its MBS purchases, which reached a crescendo this Friday. This (relatively) new power of the Fed is startling given the current liquidity crisis prevailing in the mortgage markets of late. By openly stating its willingness to buy thousands of mortgages and temporarily to expose itself to the financial health (or lack thereof) of the homeowning public, and doing so when the rest of the world is shunning them, the Fed is propping up mortgage markets, and thereby the housing market. This despite the fact that open market operations are not supposed to support individual sectors of the market or channel funds into issues of particular agencies[4]
While the purchases are only temporary — the cash must be returned by Monday — one wonders how long before the Fed grants itself the power to buy MBS permanently. Either way, the Fed's response shows that it is worried about the growing mortgage crises and willing to do anything to buy its way out of it. Unfortunately, by buying up MBS and propping up the market the Fed will only cause more harm than it already has.
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John Paul Koning writes for Pollitt & Co, a brokerage based in Toronto, Canada.
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