Stability and Competitivity --Returning to the Mortgage Market

After over 12 months of instability, it appears that controlled chaos that defines the financing market has returned --or is at least starting to come back, in Canada.

Since late in 2007, mortgage lenders including banks, credit union and mortgage specific lenders have been feeling the pinch of what is now referred to as the 'Credit Crunch.' As money markets tightened, and investor confidence plummeted, mortgage lenders became increasingly hesitant to lend money. Mortgage products were pulled, interest rates moved up by almost 1 full percentage point, and a series of mortgage lenders closed their doors to new business. For a period of a few months, it almost seemed like mortgage lenders just didn't want to do business.

But all of a sudden, last week things changed. Lenders that had effectively shut their doors to new business (by pricing themselves out with high interest rates) are again competitively pricing their mortgage products, and re-introducing products discontinued over the past 18 months. An excellent indicator of the return of competition is the change in variable rate mortgage interest rates over the past 2 weeks.

After being discontinued in early 2008, and slowly coming back at Prime + 1, Variable Rate Mortgages are again becoming competitive. In the past two weeks, two lenders have dropped their rates on the Variable Rate Mortgage Product by nearly half of one percent, and more are expected to follow. This competition is a positive sign for the entire industry, as competition displays confidence --the result of some stability in otherwise economically challenged times.

For more information about the mortgage interest rates, call one of the qualified Alberta Mortgage Professionals @ 780-479-2222 or visit www.albertamortgagecentre.com.