Is loyalty to your bank worth the discount you get?
Canadian consumers are extremely loyal when it comes to different banking services.
They are great at getting discounts to their cell-phone contracts, hotel rooms or flight tickets, but when they need to solve the banking issue, they suddenly become so shy and modest, that are ready to receive at least something.
But it’s important to understand that it’s your fees that make Canadian banks so rich and profitable these days. Last week TD and RBC announced 15% hikes in the second quarter profit, setting a new share record.
Today, after its review of multi-unit mortgage loan insurance business, Canada Mortgage and Housing Corporation (CMHC) announced another set of new changes. There are two of them:
Starting July 31st, CMHC eliminates its mortgage loan insurance for the financing of multi-unit condominium construction. In the same time, this change doesn’t affect CMHC’s mortgage loan insurance for homebuyers who want to purchase a condominium.
CMHC aligns its low-ratio mortgage loan insurance with its high-ratio product, setting restrictions for the maximum house prices, amortization periods and debt servicing ratios.
According to CMHC, these changes are created for increasing the market discipline in residential lending sector, meanwhile decreasing taxpayers’ vulnerability to the real estate market volatility.
Last month one of Canada’s main housing markets showed another year-over-year increase in home sales and prices.
“Today we’re at the highest peak of the spring market, when the largest number of sales and the highest sale prices are generally reported,” - Dianne Usher, president of the Toronto Real Estate Board said. “May results show that Canadian buyers were more active this spring than a year ago.”
The average price for a house in Toronto was up by $53,466 to $652,681 compared to May 2013. In the same time, we saw 296 more sales last month than in 2013.
But despite the price increase, extremely low interest rates helped Torontonians to cope with their monthly mortgage payments.