Benchmark Qualifying Rate

→ EFFECTIVE March 23, 2020 ←

The Bank of Canada will be reducing the qualifying rate by 0.15%, from 5.19% down to 5.04%.

Resulting in a 3% increase in qualifying ability, also equivalent to $15,000 more house for every $500,000

This change will not only make it easier for first time home buyers to get into the housing market but also allows access to more equity for home renovations, debt consolidation, etc.
  • Access to more equity
  • Buy more home

Abbotsford, Mission & Chilliwack Gas Price VS. Mortgage Price

Is there a comparison here? Gas Prices go up every summer, even while Crude Oil Prices fall which should reduce refined petroleum prices at our pumps. As for mortgage rates, they are also being manipulated upwards right now. Much how Crude Oil Prices should drop Gas Prices(but don’t in the summer), Bond Rates have recently gone down but Mortgage Rates remain the same?? Oil Prices and Bond Rates have similar qualities to one another – their prices in theory should directly affect pricing for Gas and Mortgages – but that doesn’t always happen. Did you know every summer Mortgage’s are more expensive than in the Spring just like gas. But can you really compare these two very different products?

So we just got back from Vegas on Sunday. I went down with my brother Dave and our wives for a quick get-away to celebrate my cousins 21st birthday (happy b-day Julie!!.)

As we arrived back from that great trip and got in our mini-van to head home(don’t laugh, I love my mini-van), we looked up boarder times online trying to choose the best crossing. It became very clear, very quickly we had a minimum  line-up wait of 40 minutes at Aldergrove and 35 minutes at Sumas, so we rolled the dice and went to the Sumas boarder. Now the trick was picking the right line (Which by the way we did! – Always take the left lane in Sumas!!).

But even though we took the quickest lineup , it still required us to wait 20 minute in a mechanically driven slow crawl. This gave me plenty of time to check out all the American gas prices. The cheapest one was $3.79 per gallon, well above the price of $3.29 we could have paid in January – converted to Litre (our Canadian measurement) that price of $3.79 is only $1.001 in USD, obviously way cheaper than the Canadian Gas Station’s just across that imaginary line we call a boarder that I’m was in the middle of trying to cross…

Back in Canada the Shell Gas Station is $1.299 per litre USD….but the Canadian VS. American gas price is not the focus of this particular Fraser Valley Mortgage Blog. Rather I wanted to blog about the reason why these Summer Gas Prices always increase & compare that Price Manipulation to the Price Manipulation of Summer Interest Rates for Mortgages in Abbotsford, Chilliwack and Mission BC.

The reason banks tend to increase mortgage rates in the summer (similar to increases made by the gas stations in the Fraser Valley) is Banks tend to lower their mortgage rates in the spring to capture more business from the real estate market boom that happens annually. Where as with Gas, it seems, they never, ever lower their prices (wink,wink – just kidding) but the gas prices do tend to increase during peak travel months (Summer). SO I believe we see a similar trend between Gas and Mortgages in the fact companies manipulate their prices to increase profit.

The higher competition for the spring market consumers by banks gives everyone a good reason to try and do all of their mortgage purchasing and refinancing at this time of year if possible. (The other great time to snag a lower manipulated mortgage rate is near the banks “Reporting Year-End”. This happens generally across the board for all banks at the End of October.)

Now why do we have this spring market every year that causes mortgage rates to go down?? People tend to hibernate in the winter and vacation in the summer. Fall indicates a new school year for most young families so we see them avoiding interruptions. Therefore with three of the four seasons a year busy with other responsibilities, Spring becomes the most common months buyers home purchase each year. – It also doesn’t hurt the Spring Market that all the Realtors and Mortgage Brokers come out of Christmas hibernation and realize that they have to sell homes to make money to help payoff Winter/Christmas debt!! LOL.

The Abbotsford, Chilliwack and Mission spring market usually happens in April, May and June. In other warmer climates like say Los Angeles, spring markets can start as early as January to beat the pending heat waives.

But back to the original question: Can you really compare these two very different products? The answer we believe is yes. Market forces are in play to manipulate prices up in the summer for both products. These manipulation forces are not the same but act very similar especially when summer roles around. Still, in a vacuum, Mortgage Rates are much lower then what we paid a generation ago, and gas prices are higher so obviously the comparison begins and ends at the manipulation of prices by the markets at different times of the year only. Long term characteristics of these two commodities is polar opposite but still interesting.

Having a Great Mortgage Broker help you analyze these Mortgage Rate trends can help you save thousands of dollars by helping you time your mortgage just right, I just wish we could do the same for Gas….sorry everyone, when it comes to your gas prices your on your own. 🙂

 

Jordi Browne – Call or Text me anytime for more info. 604 615 1312