Christie’s search started online, where she came across RateSupermarket.ca, a service that lets homebuyers compare mortgage rates as well as mortgage brokers across the country. Within a week, she had transferred her mortgage to a new lender at a variable rate below the prime lending rate.

“I wanted to take advantage while rates are so low,” she says, adding that the lower interest rate made paying the penalty worthwhile. “Even if prime doubles, I’m still below what I was locked in at.”

A majority of Canadians – 64 per cent – are expecting mortgage rates to rise over the next year and are thinking about how to best manage their mortgages, according to an RBC survery released on Wednesday. Roughly the same number of mortgage holders – 66 per cent – are worried about higher rates.

“The best advice for concerned homeowners is to review their mortgage holdings with a financial advisor regularly, just as they would an investment portfolio, to position themselves for any upcoming changes,” said Marcia Moffat, RBC’s head of home equity financing.

Ms. Moffat advises homeowners to review their options for reducing their mortgages while rates are low, such as doubling up on payments or paying large chunks of it annually.

According to RBC, six out of 10 mortgage holders are taking advantage of current low interest rates to pay more principal. Eighteen per cent of home owners say they have made a lump sum payment on their mortgage and 16 per cent have doubled up their payment to reduce their mortgage principal.

Still, for many Canadians, these options are simply out of reach. For those who want to benefit from the low-rate environment, this may be the right time to shop around to refinance or renew an existing mortgage.

“Mortgage rates are at near all time lows and many Canadians are missing an opportunity to get better rates by staying loyal to their existing mortgage providers,” says Kelvin Mangaroo, founder, RateSupermarket.ca.

According to a recent poll by RateSupermarket.ca, half of the Canadians surveyed renewed their mortgages without researching better rates.

While you may decide to stick with your bank, it makes sense to comparison shop for your next mortgage.

As Christie, the mom from Calgary, put it: “Bottom line, there are better offers and options out there. All you have to do is ask.”

More Canadians are looking to enter the housing market ahead of higher interest rates and home prices that are expected to arrive later this year, two surveys showed Wednesday.

More than two-thirds of Canadians expect mortgage rates to rise over the next year, with about the same number of mortgage holders concerned about higher rates, a Royal Bank of Canada annual homeownership survey showed.

But the survey, conducted by Ipsos Reid, also showed three-quarters of homeowners believe preparation is key to handling upcoming changes such as higher mortgage rates.

The survey showed six in 10 mortgage holders say they have taken advantage of current low rates to pay off more principal.

It also revealed that 18% of homeowners say they have made a lump sum payment on their mortgage and 16% have doubled up payments to reduce the principal.

Meanwhile, as many as one-third of respondents indicate that talk of rising house prices and higher interest rates has influenced their buying decisions, according to a Bank of Montreal survey conducted by Harris-Decima.

“There’s definitely a sense of urgency among home buyers,” said Lynne Kilpatrick, senior vice-president of personal banking at BMO.

The same survey found 71% of current and future homeowners think house prices are too high. It also found about 33% of respondents have lost sleep due to the stress of trying to buy a new home.

On Tuesday, Bank of Nova Scotia forecast in its real estate trends report that the number of home sales are expected to rise 10% to 510,000 this year, while average prices are expected to jump 8% to a record $345,000.

Like most economists’ expectations, Scotiabank said the housing market in the spring should see a flurry of activity, particularly ahead of new HST tax in Ontario and British Columbia and tighter qualifying criteria for insured mortgages.

The market is expected to cool in the second half of the year, coinciding with forecasts that Bank of Canada will then start raising interest rates.

Read more: http://www.nationalpost.com/homes/story.html?id=2726515#ixzz0jXAr0EtF
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Jim Murphy, CEO of the Canadian Association of Accredited Mortgage Professionals, told CBC News it’s “still not completely clear” whether imposing the GST would affect house prices.
Mortgage brokers are vowing to fight Ottawa’s proposal to broaden application of the GST to financial services.Mortgage brokers are vowing to fight Ottawa’s proposal to broaden application of the GST to financial services. (CBC)

In its budget earlier this month, Ottawa served notice of plans to broaden the application of the GST on financial services that had previously been exempt.

The services affected include those provided by mortgage brokers, investment dealers, financial planners and insurance advisers.

Ottawa has changed the definition of taxable financial services to include those that “facilitate” or “prepare,” and which is expected to include some commissions paid to mutual fund dealers, car dealers, and telemarketers.

Those services were made exempt when the GST was introduced in 1991.

Murphy said his association, as well as those representing the other professions, have provided information to Flaherty’s office and to the Canada Revenue Agency on how their members would be affected.

And each profession stands to be affected differently.

“We are all seeking clarification in terms of how it would affect our various professions,” Murphy said.
Out of brokers’ commissions

It appears, he said, that in the case of mortgage brokers, the tax would come out of the commissions now paid by banks and other lenders paid to those brokers.

That could potentially reduce those commissions by as much as 13 per cent in Ontario or 12 per cent in B.C., once those provinces adopt their harmonized sales tax (HST) in July.

The lowest hit would be in Alberta — where there is no provincial sales tax — but it would still be five per cent. Whether the broker would be able to pass that along to the homebuyer would depend on the degree of competition in the local market, Murphy said.

“The other option is that the mortgage broker tries to pass those costs along to the consumer, to the borrower, and that obviously is adding to costs,” said Murphy. “That makes the mortgage broker … uncompetitive versus other distribution channels for mortgages.”

He said he was hopeful that Ottawa would not proceed with the changes.

“We’re cautiously optimistic that they will listen to what the negative consequences of such a change would be,” said Murphy, “and that they will continue with the current status quo.”

Read more: http://www.cbc.ca/money/story/2010/03/26/gst-mortgage-brokers.html#ixzz0jX9DnRr5