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13 October 2009

Dave's email: 10/13/09

RBC raises residential fixed-rate mortgage rates by up to 0.35 percentage points

TORONTO - Royal Bank (TSX:RY) is raising its residential mortgage rates for fixed rate mortgages by up to 0.35 percentage points effective Saturday.

The bank said Friday its posted rate for a five-year closed mortgage is going up 0.35 percentage points to 5.84 per cent, while the rate for a one-year closed is going up 0.1 percentage points to 3.8 per cent.

RBC's special fixed rate offer is also going up 0.35 percentage points to 4.54 per cent.

RBC’s “5 Year Fixed Rate SPECIAL” is not so special……

Their advertised rate special is 4.54%, my best 5 year fixed rate is still at 3.74%(oac…**)

That is a staggering .80% bps rate advantage. You could save almost $8000 over a 5 year term on a $200,000 mortgage.

It looks like the rest of the lenders are going to increase their rate as of 12:00 pm tonight, the 3.74 rate requires a quick close in 30 days. If you are looking for a 120 day rate protection I can still offer 3.99% to hold the rate to Feb 13, 2009 for today only. I only require a name and Email address and approx mortgage amount, which is it. No obligation, lender is ING Direct….. This lender has the shortest rate hold application of all the lenders

But with our dollar once again approaching the par status with the US $ and the lower than anticipated unemployment figures late last week there has been a sudden increase in the Cdn bond market. If this continues then we may see our government step up and follow Australia and increase the Bank rate.

The problem is that most clients who have been benefitting with Variable rate mortgages have had a change in perspective with regards to mortgage rates. Some clients who are still in the Prime -. 75% to Prime -1.00% have unbelievably low rates. So it looks like an expensive move to convert from Variable to Fixed, in some cases they would be tripling their mortgage rate…. How can that make any sense ??

But keep in mind the Bank of Canada keeping the Bank rate at .25% is not likely to remain that way for a long period of time, maybe for the next 6 months. We are starting to see some cyclical movements on fixed rates. If we go back 6 months our 5 year fixed rates went down to 3.60%, then very quickly shot up to 4.39%, many clients chose to leave the variables when rates went to 4.39% because at that time there was talk that things were going to go even higher. As it turned out the was the absolutely the wrong decision at the time. Now we are once again approaching the 3.60% 5 year fixed rate range, and once again it looks like rates may start to move upward again. It almost seems that the 3.60 – 3.75% is potentially the floor with regards to 5 year fixed rates.

Waiting for the day that the Bank of Canada officially raises the Bank rate, it is not likely the lowest of 5 year fixed rates will be available on that same day. Then all of a sudden you will be wishing you could get back to the 5 year fixed rates that were available today. There is risk either way, staying floating vs converting to a fixed rate. Historically speaking, a 5 year fixed rate at 3.74% is once again very close to the 75 year historical low. Getting the piece of mind that you have locked in your mortgage payment for the next 5 years could provide an element of stability, in these unstable times.

Don’t miss the boat, with regards to the lowest of the fixed rates. I am not suggesting everyone immediately convert their variable rate mortgages, but it is time to evaluate your current financial situation, can you afford you mortgage payment if rates went to 4.5 to 5%, if the answer is no….. Then give the conversion idea some thought.

Call me if you would like more information on the fixed rate mortgages that you could get today.

** Rate subject to change without notice.



Thanks,

David Kendall

Mortgage Agent
License # M08004045

211 York Road, Unit 3, Dundas, Ont. L9H 1M9
OAC Mortgages Brokerage License # 10928
An independently owned and operated franchise of the Mortgage Alliance Network

You could win up to $100,000.00 toward your Mortgage!!!
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