5 Things To Know About Mortgages Right Now

Here are five things you need to know about the mortgage market as the spring home-buying season gets going:

1. That 2.99 per cent Bank of Montreal five-year mortgage isn’t quite as good as it sounds.

BMO’s recent move to bring its rate below the psychologically significant 3-per-cent mark for fixed-rate five-year mortgages is being treated as a big deal because a similar move a year ago provoked then-finance minister Jim Flaherty to admonish the bank. Joe Oliver, Mr. Flaherty’s successor, istaking a more laissez-faire attitude.

What BMO is offering until April 17 is a competitive rate in a mortgage with uncompetitive terms. Most importantly, you can’t break this mortgage before it comes up for renewal in five years unless you sell the property, refinance with BMO or do an early renewal into another BMO product. All the usual prepayment penalties would apply in these situations. Veteran mortgage broker Vince Gaetano’s summary: “You’re handcuffed.”

Other issues:

CMHC To Increase Mortgage Insurance Premium

Canada's national housing agency has increased the amount of money that homeowners with less than 20 per cent down payments must pay to insure their mortgages.

Starting in May, the housing agency will charge an average of about 15 per cent more to insure mortgages, CMHC said in a release Friday.

Prior to the announcement, the premiums ranged between 0.5 per cent and 2.75 per cent. Under the new rules, they will range from 0.6 per cent to 3.15 per cent.

The changes are unlikely to have a major impact on the housing market, but in real-dollar terms, the move makes it incrementally more expensive to buy a home. A heavily leveraged buyer — someone with only five per cent down, and therefore borrowing 95 per cent of the home's value — would be most impacted by the hike, but even then not in a significant way.

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Meet Our Team

Maison Valley consists of Mase Dhirani and Sam Valimohamed, two top-producing RE/MAX Ultimate agents, who specialize in the various aspects of both residential and commercial real estate including selling properties, acquiring for buyers, investments & property management.

Sales Representative, RE/MAX Ultimate
Sales Representative, RE/MAX Ultimate