VERICO Designer Mortgages

Bank of Canada cut its overnight lending rate by 0.25% to a historic low of 0.25%.

The Bank of Canada also stated that it will keep the key overnight rate at 0.25 percent until mid-2010.

Various Canadian Banks quickly cut their Prime Rates following this announcement by 0.25% to 2.25%.

The Bank of Canada’s next rate announcement is due June 4.

Gina Burgio, Mortgage Agent
VERICO Designer Mortgages Inc.
Toll Free: 1-877-345-6265
Fax: 1-877-345-6256
Email: gina@ginaburgio.com
www.ginaburgio.com

Each VERICO Broker is an independent owner operator.

Bank of Canada cut its overnight lending rate by 0.50% to 1.00%, the lowest since the central bank was formed in 1934. The decrease was inline with most economists expectations.

The previous lowest rate level set by the Bank of Canada was last seen at 1.12% in 1958.

In the past few days leading up to this morning’s announcement by the Bank of Canada, a few lenders began cutting some of their fixed term mortgage rates. Various Canadian Banks quickly cut their Prime Rates following this announcement by 0.50% to 3.00%.

Gina Burgio, Mortgage Agent
VERICO Designer Mortgages Inc.
Toll Free: 1-877-345-6265
Fax: 1-877-345-6256
Email: gina@ginaburgio.com
www.ginaburgio.com

Each VERICO Broker is an independent owner operator.

Many economists expect that the Bank of Canada will cut interest rates to a record low next week on January 20th to stimulate the economy. Its expected that the Bank of Canada will cut its rate by 0.50% to a record low of 1.00%. The Canadian Banks are expected to follow with a cut to their prime rates, which are currently sitting at 3.50%.

European Central Bank to cut its trendsetting interest rate to two per cent on Thursday.

Gina Burgio, Mortgage Agent
VERICO Designer Mortgages Inc.
Toll Free: 1-877-345-6265
Fax: 1-877-345-6256
Email: gina@ginaburgio.com
www.ginaburgio.com

Each VERICO Broker is an independent owner operator.

Finance Minister Jim Flaherty pledged today to triple the amount of mortgages the government can buy from banks to as much as C$75 billion.

The Canadian Gov’t, using its crown corporation, the Canadian Mortgage and Housing Corp. (CMHC), purchased $25 billion in mortgages last month.

Allow me to explain in simply terms what the government is in fact doing…

The gov’t via CMHC has insured many mortgages for the banks. In other words, CMHC has sold the banks default insurance on mortgages that the banks have provided to their clients, which guarantees that CMHC will cover any shortfall realized by the banks in the event of default by their clients. The banks issues these mortgages to their clients using their own money, and the bank waits for repayment based on the terms of the mortgage, as with any other typical mortgage.

As a result of the recent program announced by the Cdn Gov’t to purchase mortgages, CMHC is in essence purchasing mortgages from the banks that they have previously insured…. in other words, purchasing mortgages from the banks that they were already on the hook for. These purchases allow the banks to cash in these mortgages now (so that they can free up cash to ideally put towards lending to clients interested in new mortgages), while CMHC and the Cdn gov’t takes on no greater risk exposure for these mortgages since they were previously insured by them.

 Gina Burgio, Mortgage Agent
VERICO Designer Mortgages Inc.
Toll Free: 1-877-345-6265
Fax: 1-877-345-6256
Email: gina@ginaburgio.com
www.ginaburgio.com

Each VERICO Broker is an independent owner operator.