Placeholder Image

Subtitles section Play video

  • In this video we talk about mortgage rates in 2019 – what are theyhow do

  • they determineand how do you shop around for them that's starting right now.

  • Welcome to Homebuyer's School

  • brought to you by Brookfield Residential.

  • Hi everyone I'mk Karl, and welcome to another Homebuyer's School video,

  • a channel where you get the latest

  • strategies tactics and tips from home buying experts, and remember if this is

  • your first time on this channel and want to get the latest strategies from the

  • expertshit the subscription button below, hit the little notification bell

  • so you don't miss anything. So today I'm joined by Mujtaba Syed,

  • mortgage specialist with the Bank of Montrealand the question we're going

  • to answer today is mortgage rates in 2019. So I guesswell first of all,

  • what do mortgage rates mean? What are mortgage rates?

  • So the mortgage rate meansis technically an annual percentage we call

  • an APR, which is when you borrow money to buy a home for example, you're

  • borrowing it from the bank and then you're returning itand there's a cost for

  • that service so that's why I kind of look at interest rate is that this is the cost

  • for the service provided which is the interest rate that they lend you

  • their money or money in general, and then you just pay that back and it's based on

  • an annual rate, and is paidit could be paid monthly, semi monthly, bi-weekly,

  • weekly depending on how you want to set it up.

  • So where do I go to find the most current mortgage rate?

  • You can go onto your bank's website. You can go onto your lenders website.

  • You could do a quick google search. Finding rates are not difficult,

  • The only thing I would really stress is go to a reputable

  • source to find interest rates. Find it from a reputable lender. Sometimes you

  • see a really little rate and then you get enticed by it and you realize that

  • it's an insurance company or it's something that's a financial company

  • that is not considered to be a bank. You want to be able to see where those rates

  • are coming from, what kind of terms and conditions are attached to that rate.

  • You might get a lower rate today but after the five-year term when your term comes

  • up, you might not be able to renew at the same rate or they might give you a

  • higher rate, you might not be able to transfer, there could be a lot of

  • stipulations. Sometimes when you do decide which lender to go with it

  • depends on more than just rate alone. It depends on the terms and

  • conditions in the mortgage and the benefits added. So yes, definitely do your

  • research but do research properly on what rates to get and where they're

  • available.

  • So Mo, how our mortgage rates actually determined?

  • So there's two separate types of rates.

  • So we have let's see, the variable rate.

  • The variable rates kind of based on the overnight rate which is Bank of Canada.

  • So that's kind of based on prime rate. So that could fluctuate based on what Bank

  • of Canada wants to set their benchmark rateor their overnight rate at. And then

  • the banks will have their prime rate on top of the Bank of Canada's overnight rates.

  • Base rates on the other hand are actually based on the bond market. So for

  • example like, a five year fix is based on a five year bond. Whatever the five-year

  • bond yield is, there's going to be something similar to that

  • five year fixed rate. So that's a really good question because a

  • lot of people don't seem to understand that there are two different types of

  • rateshow they're calculated. It's not necessarily that since one is low one

  • should be high. It doesn't really technically work that way. Sometimes

  • you might have seen it be like that but that's not necessarily the case.

  • As of right now we are going into a very low rate environment so keep your eyes

  • out, interest rates should be dropping in the next few months.

  • As we do know the five-year bond yield rates are actually very low last time I

  • checked. They're trading at 1.45% meaning that that's technically

  • the same amount of rate yields that were trading around 2017 when we had little

  • rates. I'm not saying rates are going to come down to those levels again but we

  • are in the market for lower rates. So right now is a good time to get out, get

  • a pre-approval done. Come to a Brookfield show home, speak to an area sales

  • manager because rates are actually going to be in the decline.

  • Last question here is, how do you actually shop for mortgage rates?

  • The best thing to do for shopping for mortgage rates first and foremost is one,

  • find out what is most important to you. So terms and conditions to me are

  • the most important thing in a mortgage. So talking about skipping a payment

  • god forbid if you are sick, you fall ill, you've missed work for a whileskipping

  • payments is a really big one. So find out if your mortgage lender can offer you

  • those things first and foremost before you start looking into the rate options.

  • Some banks will have a relief program they might have 'take a payment vacation

  • program'. Those are the ones that you really need. All good job loss program,

  • job loss insurance, those are the things that really matter the most, and then

  • after that then we can start looking at rates. Because let's say for example you

  • go for a lender that had a great lower rate but they don't have any of these other

  • benefits and god forbid you fall on some hard times and the foreclosure on your

  • home, that extra 0.1 lower than a bank total of giving you this now

  • doesn't mean a lot because it hasn't really helped you when you need it the

  • most. So look at terms, conditions and what the product will be offering.

  • The benefits of the product which is the mortgage, those are to me are the most

  • important to look at, and then yes a hundred percent you should look at

  • interest rates as welland then most of lenders or specialists can actually

  • look at rates and tell you where these rates are coming from and the reason

  • why the rates are what they are.

  • So you mentioned that mortgage rates were headed down. The question I was

  • going to ask is, where do you think mortgage rates are headed,

  • and why do you think that?

  • So 2019 is the bond yield rates.

  • They're trading at a lot lower than they were in 2018. So we're going to

  • since five-year bond yields arethe five-year bond kind of determines

  • what the five your fix rate's going to be.

  • so just because of that it's going to translate into lower five year fix rates

  • in 2019. That's just how they work. So in the next couple of months we are already

  • seeing some decline coming and then we'll start seeing some more decline

  • coming in the next couple of months.

  • So the question of the day I have for you is,

  • are the mortgage rates in 2019 going to affect your decision to buy a home,

  • yes or no? Let us know in the comment section below. Thank you very much for

  • watching, and remember if you enjoyed and found this video helpful, make sure to

  • share and like, and subscribe. Thank you and we'll catch you next time.

  • That's another edition of

  • Homebuyer's School. Tune in next time

  • for more expert tips and tricks, and visit

  • homebuyersschool.ca to bring you one

  • step closer to finding your dream home.

  • As with everything, it would be great if you

  • like and share our videos. Also please let

  • us know if you have any home buying

  • questions you want us to answer.

In this video we talk about mortgage rates in 2019 – what are theyhow do

Subtitles and vocabulary

Click the word to look it up Click the word to find further inforamtion about it