Wednesday, July 18, 2007

TransUnion report, the impact of your credit score on the true cost of your mortgage

Personally I think it is just as much an issue of lack of education on the part of the clients Lenders as it is lack of knowledge on the part of the respondents. Regardless the "price matrix" as a result of your Credit Score can cost the YOU thousands of dollars in extra interest charges. Here is the Canada News Wire release:

TORONTO, July 18 /CNW/ -- Do Canadians really know how much a mortgage will cost them? With the summer home buying season now in full swing, TransUnion recently commissioned GfK Roper Public Affairs & Media to survey consumer perceptions and attitudes about mortgages. The findings indicate that 45 per cent of Canadians underestimate the lifetime cost of a mortgage.

Only one-fifth of respondents correctly answered that due to interest payments, the average Canadian homeowner will ultimately pay in the range of 151 to 200 per cent of the original loan amount over the course of a 25-year mortgage.

"By the end of a 25-year term, if you a have a traditional fixed-rate mortgage at 6.43 per cent, you'll actually pay close to $200,000 on top of your $200,000 mortgage, just in interest," says Tom Reid, director, Consumer Solutions at "That's a significant cost that could be reduced by tens of thousands of dollars if you have a higher credit score in hand when you go to secure your home loan."

Perceptions Similar across Demographics, with Education Proving the Exception

Surprisingly, home ownership makes no difference for mortgage loan knowledge. Only one in five home owners (20 per cent) gave the correct answer for true mortgage costs, identical to the 20 per cent among those who rent or live at the home of their parents. Similarly, 19 per cent of men and 20 per cent of women correctly identified the 151-200 per cent figure.

However, education level does seem to make a significant difference. Among those who completed no more than grade school, just 5 per cent chose the correct response, rising to 15 per cent among those who completed high school and to 25 per cent among those with at least some college education. Still, even among the most educated Canadians, just one in four gave the correct response.

"Reviewing your credit profile and score frequently and taking steps to maintain or improve your credit standing puts you in the driver's seat when shopping for a loan," adds Reid. "All else being equal, the higher your credit score, the stronger your position to negotiate lower mortgage or home equity rates. That's a fact you can bank on."

For more information on your credit score and how it will impact your mortgage contact:

Ontario Mortgage Team
Mortgage Intelligence Inc.
Leading the way to a better mortgage


Tuesday, July 10, 2007

Bank of Canada raises overnight rate target by 1/4 percentage point to 4 1/2 per cent

OTTAWA – The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 4 1/2 per cent. The operating band for the overnight rate is correspondingly increased, and the Bank Rate is now 4 3/4 per cent.

Economic growth and inflation in Canada in the first half of this year have been stronger than expected in the April Monetary Policy Report (MPR). Final domestic demand has remained the key driver of economic growth in Canada, bolstered by firm commodity prices. The Bank judges that the economy is now operating further above its production potential than was projected at the time of the April MPR. Both total CPI and core inflation have been higher than projected in April and are above the 2 per cent inflation target. Longer-term interest rates have increased and the Canadian dollar has appreciated sharply, moving well above the trading range assumed in the last MPR.

The Canadian economy is now projected to grow by 2.5 per cent in 2007, somewhat stronger than was expected in April, and to grow somewhat more slowly in 2008 and 2009 than previously projected. In this new projection, higher interest rates across the yield curve and a higher assumed range for the Canadian dollar of 93 to 95.5 cents U.S. act to moderate growth in 2008 and 2009 to an average of about 2 1/2 per cent. This brings aggregate demand and supply in Canada back into balance in 2009.

Inflation is projected to be slightly higher and more persistent than in the April MPR. However, as excess demand diminishes, total CPI and core inflation should decline to 2 per cent by early 2009.

There are both upside and downside risks to the Bank's inflation projection. The main upside risk is that household demand in Canada could be stronger than expected. The main downside risks are related to the higher Canadian dollar and the ongoing adjustment in the U.S. housing sector. In the context of the Bank's new projection, these risks appear to be roughly balanced.

In line with this outlook, the Bank is raising the target for the overnight rate to 4 1/2 per cent. Some modest further increase in the overnight rate may be required to bring inflation back to the target over the medium term.

An analysis of the Bank's outlook for growth and inflation, including economic and financial developments and risks to the projection, will be set out in the Monetary Policy Report Update, to be published on 12 July 2007.

Information note: The Bank of Canada's next scheduled date for announcing the overnight rate target is 5 September 2007.


For more information on this and other money saving strategies contact:

Ontario Mortgage Team
Mortgage Intelligence Inc.
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