Prime rate drop, now what? - Mortgage Matters - Castanet.net | Canada News Media
Connect with us

Business

Prime rate drop, now what? – Mortgage Matters – Castanet.net

Published

 on


The Bank of Canada made a big announcement this week and dropped the overnight lending rate by 50 basis points to 1.25%.

Many banks and other mortgage lenders quickly reacted and also dropped their prime lending rate by 50 basis points to 3.45% other than TD Canada Trust that is higher at 3.60% for their variable rate mortgages.

It’s important to know that lenders control their prime lending rate, so you will have to wait for notification from your mortgage lender as not all lenders automatically lower their prime lending rate when the big banks do. It can take weeks or even months for some of the smaller credit unions and non-bank lenders to make any adjustments after the Bank of Canada has announced a rate change.

This is good news for those who have a home equity line of credit or a mortgage that adjusts with any changes in the prime lending rate. Your rate has just dropped by 0.5 per cent.

What should you know about this rate decrease, and what should you do – if anything?

The first thing you need to determine is whether you have a variable rate mortgage or an adjustable rate mortgage. Many believe that these two products are the same but they are not. The primary difference is how your payments are calculated which will determine what’s going to happen with your mortgage because of this rate decrease.

Here’s the difference:

Variable Rate Mortgage – the payment does not change when the prime rate decreases. The only time the payment would change is if interest rates rise so much that there is no principal reduction in the balance when a payment is made. Your payments won’t change.

Adjustable Rate Mortgage – the payment rises and falls with any change in the prime rate unless you have specifically requested that the payment be set at a specific amount. You should see some payment relief.

There are many strategies being recommended for variable and adjustable rate mortgage management, including making payments like you have a five-year fixed-term mortgage. The idea being that if you pay more then should interest rates rise you won’t be facing payment shock with a much higher payment at renewal time. Is it a good idea? Sure – why not, if you have nothing better to do with the extra funds? But it’s really just prepaying your mortgage.

Maybe a lower mortgage payment is best so you can pay off higher interest debt with the cash flow or invest the funds somewhere else for a higher rate of return on your money. 

Do have dead equity in your home? Perhaps it’s time to consider investing in real estate with these low interest rates. We will no doubt see a hot real estate market this spring with the now lower interest rates combined with a new lower mortgage stress test. Please reach out for a review and a mortgage preapproval so you are in the best position for a hot market.

Now that the rate has dropped on your mortgage, the best thing to do is have a review completed by your favourite mortgage broker. Have them crunch the numbers for you and discuss the best strategy to accomplish both your short-term and long-term goals. It’s a good idea to have a mortgage review regularly anyhow to ensure your current mortgage product is still working for you.

Let’s block ads! (Why?)



Source link

Business

Japan’s SoftBank returns to profit after gains at Vision Fund and other investments

Published

 on

 

TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.

Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.

Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).

SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.

The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.

WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.

SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.

SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.

SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.

The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.

___

Yuri Kageyama is on X:

The Canadian Press. All rights reserved.

Source link

Continue Reading

Business

Trump campaign promises unlikely to harm entrepreneurship: Shopify CFO

Published

 on

 

Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.

“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.

“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”

Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.

On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.

If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.

These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.

If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.

However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.

He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.

“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.

Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.

The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.

Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.

Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.

Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.

Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.

Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”

In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.

“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.

This report by The Canadian Press was first published Nov. 12, 2024.

Companies in this story: (TSX:SHOP)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Business

RioCan cuts nearly 10 per cent staff in efficiency push as condo market slows

Published

 on

 

TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.

The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.

The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.

RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.

The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.

RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.

This report by The Canadian Press was first published Nov. 12, 2024.

Companies in this story: (TSX:REI.UN)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Trending

Exit mobile version