In case you missed it, I was on the Drew Marshall show on Joy 1250 on this past Saturday afternoon. Drew talked to me about the mortgage industry and, specifically, about mortgage brokering and my services. In case you did miss it, I'll be getting an audio clip to put on my website.
I also wanted to mention, another incentive to purchasing as a first time home buyer is the government's land transfer tax rebate for first time home buyers. The maximum amount of the refund is $2,000. If the refund is claimed at time of registration, it may offset the land transfer tax ordinarily payable. Hope this helps.
Have a great week!
Monday, November 23, 2009
Wednesday, November 04, 2009
Federal Budget - Advantages to Purchasing or Refinancing
Home, Sweet Home
The federal budget offers several measures of interest to people who plan to renovate or buy a home. Here's how they could theoretically work in unison for a first-time buyer or those considering a refinance:
Step 1: Claim the First-Time Home Buyers' Tax CreditDetails: Offers tax relief of up to $750 to first-time buyers to help defray closing costs on their purchase.
Step 2: Take advantage of changes to the federal Home Buyers' ProgramDetails: You can take up to $25,000 out of your RRSP to buy a first home and pay no taxes, up from $20,000
Step 3: Renovate your new home with help from the temporary new Home Renovation Tax CreditDetails: Claim up to $1,350 in tax relief for upgrades to your home done before Feb. 1, 2010; available to everyone, not just first-time buyers; applies to renos costing $1000 to $10,000
Step 4: Get energy efficient using the ecoEnergy Retrofit program, which was expanded in the budgetDetails: Get a grant of up to $5,000 for changes to your home that add to energy efficiency: you can also claim the home reno tax credit for these upgrades
Have a great week, everyone!
The federal budget offers several measures of interest to people who plan to renovate or buy a home. Here's how they could theoretically work in unison for a first-time buyer or those considering a refinance:
Step 1: Claim the First-Time Home Buyers' Tax CreditDetails: Offers tax relief of up to $750 to first-time buyers to help defray closing costs on their purchase.
Step 2: Take advantage of changes to the federal Home Buyers' ProgramDetails: You can take up to $25,000 out of your RRSP to buy a first home and pay no taxes, up from $20,000
Step 3: Renovate your new home with help from the temporary new Home Renovation Tax CreditDetails: Claim up to $1,350 in tax relief for upgrades to your home done before Feb. 1, 2010; available to everyone, not just first-time buyers; applies to renos costing $1000 to $10,000
Step 4: Get energy efficient using the ecoEnergy Retrofit program, which was expanded in the budgetDetails: Get a grant of up to $5,000 for changes to your home that add to energy efficiency: you can also claim the home reno tax credit for these upgrades
Have a great week, everyone!
Thursday, August 27, 2009
Lower Rates and More Flexible Lending!
Hello everyone. As summer time winds down I hope everyone had a chance to kick back and enjoy some much-deserved holidays with family and friends amongst all the hustle and bustle that we tend create for ourselves throughout the year.
Some exciting news: variable premiums have dropped. You can now get (oac) a variable rate mortgage for 2.4%, ranging from a 33, 36, or 48 month term. This is becoming VERY popular, as you can take advantage of already low interest rates, you are not locked in for 5 years so that you can renew for an even better variable (if variable is the way you wish to go) or you can lock into a fixed term once they start to rise. They have recently fallen, by the way, and there are GREAT mortgages for 3 and 4 year terms 3.39% and 3.85% respectively (fantastic value!).
Below is a recent article from the Financial Post about the housing market which, by all accounts, is recovering steadily, with growth in almost all areas of the country. One point which diverges from several other sources, however, is the last comment about BOC keeping interest rates down - most of what I've read has stated that prime likely won't rise even beyond BOC's promised date of mid 2010 - but who knows for sure. Have a great weekend everyone!
John Morrissy, Financial Post Published: Wednesday, August 26, 2009
OTTAWA -- The worst is over for North America's beleaguered housing markets, with a steady stream of data out of Canada and the U.S. indicating the recovery is at hand, economists say.
"A similar pattern in both countries is unmistakenly suggesting we've not only bottomed in housing, but we're on the way back up," said TD Bank chief economist Don Drummond.
Canada's already brightening picture was helped along Wednesday by a report showing housing prices in major markets across the country jumped 1.5% in June, building on May's 2% advance.
The rebound in prices was evident even in most of Canada's hardest hit urban markets, like Toronto and Vancouver, the Teranet-National Bank report showed.
For National Bank senior economist Marc Pinsonneault, that means "the worst of home-price deflation in Canada is behind us," he said Wednesday.
"The improvement is consistent with the huge improvement in market conditions in most of the major cities in Canada," which show sales resales rising sharply - up 18% in July alone - and listings on the decline, Mr. Pinsonneault said.
The numbers out of the U.S. are also good, at least relative to bone-jarring declines that marked the subprime meltdown and drove housing prices 31% below their peak in 2006, Drummond said.
On Tuesday, the S&P/Case-Shiller composite index showed home prices in the U.S. also bouncing higher, for the second straight month.
And on Wednesday, the U.S. Commerce Department announced new-homes sales surpassed expectations by increasing 9.6% to 433,000 units in July, the biggest increase in more than four years and the highest level of activity in 10 months.
"The housing market has clearly turned the corner," BMO Capital Markets economist Jennifer Lee said in an interview.
"The items supporting a housing recovery have been working in tandem over the past while, and they are still going strong, like the Energizer bunny."
Renewed strength in the Canadian market was evident in four of six major markets tracked by the Teranet-National Bank survey. Vancouver posted its first price gain after 11 months of declines, up 1.6%; Montreal posted its fourth straight monthly increase, up 1.2%; Ottawa gained 2.1%; and Toronto recorded its second straight month of gains, up 2.3%.
Halifax and Calgary were the only laggards, each slipping 0.2%. For Calgary, it was the 12th consecutive losing month.
Economists were quick to point out that while the trend has shifted, markets on both sides of the border are way off previous peaks. In the U.S., for instance, about 600,000 new homes are being built annually, compared with the 2.3 million homes at the peak of the cycle.
Current conditions in Canada have created a seller's market, said Pinsonneault, although he expects greater balance to return as higher prices draw more properties onto the market.
Mortgage rates, meanwhile, won't rise over the next 12 month by more than 50 to 75 basis points from today's 5.85% posted rate on fixed five-year mortgages, he said.
One uncertainty is whether the Bank of Canada can hold lending rates steady, as promised, until the middle of next year, economists say.
Some exciting news: variable premiums have dropped. You can now get (oac) a variable rate mortgage for 2.4%, ranging from a 33, 36, or 48 month term. This is becoming VERY popular, as you can take advantage of already low interest rates, you are not locked in for 5 years so that you can renew for an even better variable (if variable is the way you wish to go) or you can lock into a fixed term once they start to rise. They have recently fallen, by the way, and there are GREAT mortgages for 3 and 4 year terms 3.39% and 3.85% respectively (fantastic value!).
Below is a recent article from the Financial Post about the housing market which, by all accounts, is recovering steadily, with growth in almost all areas of the country. One point which diverges from several other sources, however, is the last comment about BOC keeping interest rates down - most of what I've read has stated that prime likely won't rise even beyond BOC's promised date of mid 2010 - but who knows for sure. Have a great weekend everyone!
John Morrissy, Financial Post Published: Wednesday, August 26, 2009
OTTAWA -- The worst is over for North America's beleaguered housing markets, with a steady stream of data out of Canada and the U.S. indicating the recovery is at hand, economists say.
"A similar pattern in both countries is unmistakenly suggesting we've not only bottomed in housing, but we're on the way back up," said TD Bank chief economist Don Drummond.
Canada's already brightening picture was helped along Wednesday by a report showing housing prices in major markets across the country jumped 1.5% in June, building on May's 2% advance.
The rebound in prices was evident even in most of Canada's hardest hit urban markets, like Toronto and Vancouver, the Teranet-National Bank report showed.
For National Bank senior economist Marc Pinsonneault, that means "the worst of home-price deflation in Canada is behind us," he said Wednesday.
"The improvement is consistent with the huge improvement in market conditions in most of the major cities in Canada," which show sales resales rising sharply - up 18% in July alone - and listings on the decline, Mr. Pinsonneault said.
The numbers out of the U.S. are also good, at least relative to bone-jarring declines that marked the subprime meltdown and drove housing prices 31% below their peak in 2006, Drummond said.
On Tuesday, the S&P/Case-Shiller composite index showed home prices in the U.S. also bouncing higher, for the second straight month.
And on Wednesday, the U.S. Commerce Department announced new-homes sales surpassed expectations by increasing 9.6% to 433,000 units in July, the biggest increase in more than four years and the highest level of activity in 10 months.
"The housing market has clearly turned the corner," BMO Capital Markets economist Jennifer Lee said in an interview.
"The items supporting a housing recovery have been working in tandem over the past while, and they are still going strong, like the Energizer bunny."
Renewed strength in the Canadian market was evident in four of six major markets tracked by the Teranet-National Bank survey. Vancouver posted its first price gain after 11 months of declines, up 1.6%; Montreal posted its fourth straight monthly increase, up 1.2%; Ottawa gained 2.1%; and Toronto recorded its second straight month of gains, up 2.3%.
Halifax and Calgary were the only laggards, each slipping 0.2%. For Calgary, it was the 12th consecutive losing month.
Economists were quick to point out that while the trend has shifted, markets on both sides of the border are way off previous peaks. In the U.S., for instance, about 600,000 new homes are being built annually, compared with the 2.3 million homes at the peak of the cycle.
Current conditions in Canada have created a seller's market, said Pinsonneault, although he expects greater balance to return as higher prices draw more properties onto the market.
Mortgage rates, meanwhile, won't rise over the next 12 month by more than 50 to 75 basis points from today's 5.85% posted rate on fixed five-year mortgages, he said.
One uncertainty is whether the Bank of Canada can hold lending rates steady, as promised, until the middle of next year, economists say.
Thursday, August 06, 2009
Great New Resource For First Time Home Buyers
Hello Everyone,
Canada's most up-to-date website for first-time homebuyers is now up and running at yourfirsthomecanada.com -- this is a great resource.
First-time buyers can get the latest in property news, free downloads and expert advice with the click of a button. Current feature articles include how to tell if you're ready to purchase, how to begin searching for your dream home, the advantages of home inspections and a primer on mortgages. Also look for an exclusive Q&A from David Chilton, author of The Wealthy Barber, who discusses how buying your first home is crucial in attaining long-term financial freedom.
Yourfirsthomecanada.com also includes a comments section and a soon-to-launch forum for prospective homebuyers. The site is powered by The First-Time Homebuyers Guide, a sister publication of CMP magazine and Canadian Real Estate magazine, which brings property investors in-depth market information.
Hope this helps and hope everyone has a great week!
Canada's most up-to-date website for first-time homebuyers is now up and running at yourfirsthomecanada.com -- this is a great resource.
First-time buyers can get the latest in property news, free downloads and expert advice with the click of a button. Current feature articles include how to tell if you're ready to purchase, how to begin searching for your dream home, the advantages of home inspections and a primer on mortgages. Also look for an exclusive Q&A from David Chilton, author of The Wealthy Barber, who discusses how buying your first home is crucial in attaining long-term financial freedom.
Yourfirsthomecanada.com also includes a comments section and a soon-to-launch forum for prospective homebuyers. The site is powered by The First-Time Homebuyers Guide, a sister publication of CMP magazine and Canadian Real Estate magazine, which brings property investors in-depth market information.
Hope this helps and hope everyone has a great week!
Friday, July 03, 2009
The Canadian Housing Market - Fact and Fiction
Happy Canada Day, everyone! There has been a lot of debate in the last few months about the state of our economy and how closely our economy follows our neighbours to the south. Of late, more and more people are realizing how different the conditions are in these 2 countries.
Present conditions and forecasts (the realistic ones) are not similar. This article attributes a lot of the confusion to "lazy journalism". I couldn't agree more. This article was recently published in the National Post:
Posted: June 29, 2009, 1:00 PM by NP Editor
"Here is what is hopefully one of the last of a once-robust breed - The Apocalyptic Canadian Housing Market Story:
Judging by the latest real estate data, the Canadian housing market could scarcely be better. Average home prices are up more than 16 per cent this year, and in May they hit an all-time monthly high, according to the Canadian Real Estate Association. By those numbers, Canada didn’t just sidestep the housing market crash that continues to plague the United States, it sailed right through it virtually unscathed. And yet, there are plenty of signs that the Canadian housing market is still sitting on some very shaky ground—and even the potential that Canada’s big housing crash is yet to come.
Yadda yadda yadda.
We all know that the proximate cause of the U.S. recession was the bursting of its housing market bubble: it blew up banks, laid waste to personal balance sheets, and left millions of people stuck in homes whose mortgages were more than their market value.
And then Canada went into recession. Unfortunately, this set up the following error of logic that was repeated in all-too-many Canadian newsrooms:
The U.S. is in recession because its housing market blew up.
Canada is in recession.
Therefore, Canada's housing market must be blowing up as well.
And so it was the fate of any number of hapless Canadian journalists to be given assignments to bash out pieces that fit this narrative. But these exercises were all doomed to failure. The decline in house prices in Canada is a symptom of the recession, not its cause.
Let's look at how house prices have behaved since 2003:
U.S. house prices have fallen almost 40% (all changes are expressed in per cent log terms: 100 times the difference in the logs), while Canadian house prices are still within 10% of their peak. There are any number of lazy analysts who have swallowed the faulty syllogism enumerated above and have concluded that 'Canada is following the U.S. with a lag'. This only makes sense if you think that Canadian house prices rose for the same reasons that US prices rose, and that they have fallen for the same reasons that U.S. prices have fallen. This is not the case. As has been documented at great length here and elsewhere, the Canadian economy has avoided the worst of the bubble and its consequences for the following reasons (among others):
1. We never had restrictions on interstate banking, so Canadian banks spread their assets and liabilities across Canada. (So it doesn’t matter if a local housing market goes bust).
2. We don’t have Glass-Steagal. The investment banks joined the retail banks some years ago.
We don’t have mortgage interest deductibility from taxes. So paying down your mortgage is a tax-free investment. So most people want to pay down their mortgages.
3. (Except in Alberta), mortgages are fully recourse. You can’t just walk away from a negative equity home and hand the keys to the bank; the bank will come after you for the difference.
4. Yes, house prices have fallen. But the linkages that make the US story so compelling don't exist here. We don't have banks that are blowing up. We don't have massive waves of foreclosures (even the Globe and Mail has given up on its series of articles that culminated in this silliness). Nor do we have much in the way of evidence that lower house prices are causing undue inconvenience to Canadians: when Maclean's decided to jump on the OMGWTFBBQ housing market bandwagon, the best it could could come up with in the way of a victim was some flipper of 7-figure Vancouver condos who got caught mid-flip. Boo-hoo-freaking-hoo.
5. Moreover, it's becoming pretty clear that the decline in house prices is not so much a national story as it is one of falling house prices in Vancouver, Calgary and Toronto:
Vancouver is and always will be a special case whenever we talk about housing prices in Canada: its geography makes it extremely difficult for developers to respond to increases in demand. This is the sort of environment in which bubbles flourish so I'm not going to pretend that I can predict movements in Vancouver house prices. In Calgary, the incipient recovery in the oil sector will no doubt establish a floor on housing prices there fairly soon. And there's even not-entirely-bad news out of Toronto these days. So I don't see just how the national index is supposed to fall by another 30% or so.
It's worth following the housing market numbers. But they are going to be at best a coincident indicator in this cycle."
Thankfully, we are hearing more and more of these type of stories in our media. The doom and gloom reports just don't jive with the facts and figures we have and what we're observing as we climb out of this recession. Have a great weekend, everyone!
Present conditions and forecasts (the realistic ones) are not similar. This article attributes a lot of the confusion to "lazy journalism". I couldn't agree more. This article was recently published in the National Post:
Posted: June 29, 2009, 1:00 PM by NP Editor
"Here is what is hopefully one of the last of a once-robust breed - The Apocalyptic Canadian Housing Market Story:
Judging by the latest real estate data, the Canadian housing market could scarcely be better. Average home prices are up more than 16 per cent this year, and in May they hit an all-time monthly high, according to the Canadian Real Estate Association. By those numbers, Canada didn’t just sidestep the housing market crash that continues to plague the United States, it sailed right through it virtually unscathed. And yet, there are plenty of signs that the Canadian housing market is still sitting on some very shaky ground—and even the potential that Canada’s big housing crash is yet to come.
Yadda yadda yadda.
We all know that the proximate cause of the U.S. recession was the bursting of its housing market bubble: it blew up banks, laid waste to personal balance sheets, and left millions of people stuck in homes whose mortgages were more than their market value.
And then Canada went into recession. Unfortunately, this set up the following error of logic that was repeated in all-too-many Canadian newsrooms:
The U.S. is in recession because its housing market blew up.
Canada is in recession.
Therefore, Canada's housing market must be blowing up as well.
And so it was the fate of any number of hapless Canadian journalists to be given assignments to bash out pieces that fit this narrative. But these exercises were all doomed to failure. The decline in house prices in Canada is a symptom of the recession, not its cause.
Let's look at how house prices have behaved since 2003:
U.S. house prices have fallen almost 40% (all changes are expressed in per cent log terms: 100 times the difference in the logs), while Canadian house prices are still within 10% of their peak. There are any number of lazy analysts who have swallowed the faulty syllogism enumerated above and have concluded that 'Canada is following the U.S. with a lag'. This only makes sense if you think that Canadian house prices rose for the same reasons that US prices rose, and that they have fallen for the same reasons that U.S. prices have fallen. This is not the case. As has been documented at great length here and elsewhere, the Canadian economy has avoided the worst of the bubble and its consequences for the following reasons (among others):
1. We never had restrictions on interstate banking, so Canadian banks spread their assets and liabilities across Canada. (So it doesn’t matter if a local housing market goes bust).
2. We don’t have Glass-Steagal. The investment banks joined the retail banks some years ago.
We don’t have mortgage interest deductibility from taxes. So paying down your mortgage is a tax-free investment. So most people want to pay down their mortgages.
3. (Except in Alberta), mortgages are fully recourse. You can’t just walk away from a negative equity home and hand the keys to the bank; the bank will come after you for the difference.
4. Yes, house prices have fallen. But the linkages that make the US story so compelling don't exist here. We don't have banks that are blowing up. We don't have massive waves of foreclosures (even the Globe and Mail has given up on its series of articles that culminated in this silliness). Nor do we have much in the way of evidence that lower house prices are causing undue inconvenience to Canadians: when Maclean's decided to jump on the OMGWTFBBQ housing market bandwagon, the best it could could come up with in the way of a victim was some flipper of 7-figure Vancouver condos who got caught mid-flip. Boo-hoo-freaking-hoo.
5. Moreover, it's becoming pretty clear that the decline in house prices is not so much a national story as it is one of falling house prices in Vancouver, Calgary and Toronto:
Vancouver is and always will be a special case whenever we talk about housing prices in Canada: its geography makes it extremely difficult for developers to respond to increases in demand. This is the sort of environment in which bubbles flourish so I'm not going to pretend that I can predict movements in Vancouver house prices. In Calgary, the incipient recovery in the oil sector will no doubt establish a floor on housing prices there fairly soon. And there's even not-entirely-bad news out of Toronto these days. So I don't see just how the national index is supposed to fall by another 30% or so.
It's worth following the housing market numbers. But they are going to be at best a coincident indicator in this cycle."
Thankfully, we are hearing more and more of these type of stories in our media. The doom and gloom reports just don't jive with the facts and figures we have and what we're observing as we climb out of this recession. Have a great weekend, everyone!
Friday, June 12, 2009
Variable Rates and Refinances Today
Hello Everyone,
As prime stays low at 2.25% and doesn't appear to be going anywhere in the near future and fixed rates begin to rise, we see lenders dropping their variable rate products. What this means is that refinancing may make more sense than ever: The penalty to break an existing mortgage lowers as fixed rates rise, and you can take advantage of the even lower rates of present day variable rate products for greater savings. If this is something you've been considering, let us see if the numbers work for you. First you need to get an accurate cost of breaking your mortgage from your mortage holder. Then we can run some amortization scenarios and see if there are any substantial savings for what would be the remainder of the term. It's worth checking every now and then.
Below is an article written by our company's National Communications Manager, Steven Moyes, about Mortgage Intelligence in the media and the media's (not surprising) reliance on Mortgage Intelligence as a preferred source of mortgage expertise. Have a great weekend!
"More Than 100 Media Placements
for MI This Year
Hi everyone,
As of this week, Mortgage Intelligence has been mentioned more than 100 times so far this year in the Canadian news media.
We have secured placements in over 70 different outlets including national newspapers such as the Globe & Mail and the National Post, as well as major regional publications including the Toronto Star, the Calgary Herald, and the Chronicle Herald in Halifax. MI spokespeople have also appeared on the National, CBC Newsworld and BNN Business News Network.
MI is now increasingly sought after by the news media as a source of commentary on mortgage issues affecting Canadians. These interviews help raise the profile of MI and its brokers, and brand us as a preferred source of mortgage expertise.
Best Regards,
Steve
Steven J. Moyes
National Communications Manager
Mortgage Intelligence"
As prime stays low at 2.25% and doesn't appear to be going anywhere in the near future and fixed rates begin to rise, we see lenders dropping their variable rate products. What this means is that refinancing may make more sense than ever: The penalty to break an existing mortgage lowers as fixed rates rise, and you can take advantage of the even lower rates of present day variable rate products for greater savings. If this is something you've been considering, let us see if the numbers work for you. First you need to get an accurate cost of breaking your mortgage from your mortage holder. Then we can run some amortization scenarios and see if there are any substantial savings for what would be the remainder of the term. It's worth checking every now and then.
Below is an article written by our company's National Communications Manager, Steven Moyes, about Mortgage Intelligence in the media and the media's (not surprising) reliance on Mortgage Intelligence as a preferred source of mortgage expertise. Have a great weekend!
"More Than 100 Media Placements
for MI This Year
Hi everyone,
As of this week, Mortgage Intelligence has been mentioned more than 100 times so far this year in the Canadian news media.
We have secured placements in over 70 different outlets including national newspapers such as the Globe & Mail and the National Post, as well as major regional publications including the Toronto Star, the Calgary Herald, and the Chronicle Herald in Halifax. MI spokespeople have also appeared on the National, CBC Newsworld and BNN Business News Network.
MI is now increasingly sought after by the news media as a source of commentary on mortgage issues affecting Canadians. These interviews help raise the profile of MI and its brokers, and brand us as a preferred source of mortgage expertise.
Best Regards,
Steve
Steven J. Moyes
National Communications Manager
Mortgage Intelligence"
Tuesday, May 26, 2009
Canada's Recession - Deep But Short
OTTAWA -- Canada's recession, likely its deepest since the Great Depression, may also be its shortest.
Bloomberg News Published: Wednesday, May 20, 2009
Rising home and car sales, unexpected gains in building permits and employment, easing credit conditions and higher commodity prices signal Canada's slump may be nearing an end. Eight of 11 economists surveyed by Bloomberg this month predict the economy will return to growth next quarter.
"It doesn't feel quite like it's over yet, but people are breathing a little bit better," said Russ Girling, president of pipelines at TransCanada Corp., the country's biggest pipeline company, which recorded a 12% rise in revenue in the first quarter.
All but one of the country's five post-Second World War major recessions have lasted at least one year, with the shortest in 1957 at nine months, according to Philip Cross, who tracks the country's business cycles for Statistics Canada.
Canada's economy contracted at a 3.4% pace in the last quarter of 2008 and growth in the first quarter may shrink at a 7.3% rate, the Bank of Canada estimates.
The U.S. recession started in December 2007, according to the National Bureau of Economic Research, the arbiter of U.S. business cycles. Statistics Canada, which defines a major recession as a slump in which both employment and output post annual declines, has yet to date the start of Canada's recession, Cross said. The Bank of Canada has said the country entered into a recession in the fourth quarter of last year.
No Bailouts
While Canada has suffered from falling U.S. demand for exports, the country's banks have largely avoided credit losses. No government money has been given to any of Canada's 21 banks since global credit seized up in August 2007. The U.S. government oversees about US$200-billion in investments in banks through the taxpayer-funded Troubled Asset Relief Program.
Canada's housing market has also held up better than in the U.S., where prices declined 18.6% in February from a year earlier, according to the S&P/Case-Shiller index of 20 major cities. Average resale home prices in Canada dropped at less than half that pace during the same period, according to the Canadian Real Estate Association.
"We may not be in a recovery, but I think we might be in a position where it's not getting worse, where it's truly plateauing," Prime Minister Stephen Harper said in a May 8 interview, adding he'd like another "month or two" of data before coming to that conclusion.
Canada's benchmark Standard & Poor's/TSX Composite Index has posted a 50% gain in U.S. dollars since its low on March 9, compared with the 34% gain for the Standard & Poor's 500 Index over the same period.
Recession
Economists surveyed by Bloomberg this month said they expect Canadian growth to rebound at an annual pace of 0.5% in the third quarter and by 2% in the fourth quarter.
"In February, the rapid decline in demand had come to an end and by April, the rapid declines in employment had come to an end," Cross said. "Was that a temporary end or not? We don't know."
While Canada's jobless rate is at a seven-year high of 8%, the economy in April created new jobs for the first time in six months and sales of existing homes rose the most in more than five years. Credit markets are also improving. The Bank of Canada's composite index of financial market conditions is at its strongest since September.
Improved credit markets have allowed companies such as Enbridge Inc., the biggest transporter of oil to the U.S. from Canada's oil sands, to move ahead with the new debt sales to finance operations. Enbridge sold $400-million of bonds last week.
'Cross Our Fingers'
"Our approach is to watch for windows when we think there are opportunities to raise capital funds," said Richard Bird, Enbridge's chief financial officer. "This is a window and let's cross our fingers and hope that it's a trend."
A quick end to the recession would raise pressure on the Bank of Canada, led by Governor Mark Carney, to say it no longer plans to keep its benchmark lending rate near zero through June 2010. The country's central bank projected last month the economy will contract four consecutive quarters, bringing it closer to the average length of the last five major recessions.
"The Bank of Canada will have to revisit their own view of what they will do with interest rates," said Paul-Andre Pinsonnault, an economist at National Bank Financial. "GDP will be stronger than what they are looking for."
A quick end to the recession doesn't guarantee a strong rebound. DBRS Ltd., a rating company, predicts an L-shaped recovery for Canada, which it defines as "a prolonged period of flat or slowly improving performance."
"The earliest I can see an improvement is in October or November," said Jacques Plante, chief financial officer of Hart Stores Inc., a discount retailer. "I can't imagine we'll have anything positive this summer."
Bloomberg News Published: Wednesday, May 20, 2009
Rising home and car sales, unexpected gains in building permits and employment, easing credit conditions and higher commodity prices signal Canada's slump may be nearing an end. Eight of 11 economists surveyed by Bloomberg this month predict the economy will return to growth next quarter.
"It doesn't feel quite like it's over yet, but people are breathing a little bit better," said Russ Girling, president of pipelines at TransCanada Corp., the country's biggest pipeline company, which recorded a 12% rise in revenue in the first quarter.
All but one of the country's five post-Second World War major recessions have lasted at least one year, with the shortest in 1957 at nine months, according to Philip Cross, who tracks the country's business cycles for Statistics Canada.
Canada's economy contracted at a 3.4% pace in the last quarter of 2008 and growth in the first quarter may shrink at a 7.3% rate, the Bank of Canada estimates.
The U.S. recession started in December 2007, according to the National Bureau of Economic Research, the arbiter of U.S. business cycles. Statistics Canada, which defines a major recession as a slump in which both employment and output post annual declines, has yet to date the start of Canada's recession, Cross said. The Bank of Canada has said the country entered into a recession in the fourth quarter of last year.
No Bailouts
While Canada has suffered from falling U.S. demand for exports, the country's banks have largely avoided credit losses. No government money has been given to any of Canada's 21 banks since global credit seized up in August 2007. The U.S. government oversees about US$200-billion in investments in banks through the taxpayer-funded Troubled Asset Relief Program.
Canada's housing market has also held up better than in the U.S., where prices declined 18.6% in February from a year earlier, according to the S&P/Case-Shiller index of 20 major cities. Average resale home prices in Canada dropped at less than half that pace during the same period, according to the Canadian Real Estate Association.
"We may not be in a recovery, but I think we might be in a position where it's not getting worse, where it's truly plateauing," Prime Minister Stephen Harper said in a May 8 interview, adding he'd like another "month or two" of data before coming to that conclusion.
Canada's benchmark Standard & Poor's/TSX Composite Index has posted a 50% gain in U.S. dollars since its low on March 9, compared with the 34% gain for the Standard & Poor's 500 Index over the same period.
Recession
Economists surveyed by Bloomberg this month said they expect Canadian growth to rebound at an annual pace of 0.5% in the third quarter and by 2% in the fourth quarter.
"In February, the rapid decline in demand had come to an end and by April, the rapid declines in employment had come to an end," Cross said. "Was that a temporary end or not? We don't know."
While Canada's jobless rate is at a seven-year high of 8%, the economy in April created new jobs for the first time in six months and sales of existing homes rose the most in more than five years. Credit markets are also improving. The Bank of Canada's composite index of financial market conditions is at its strongest since September.
Improved credit markets have allowed companies such as Enbridge Inc., the biggest transporter of oil to the U.S. from Canada's oil sands, to move ahead with the new debt sales to finance operations. Enbridge sold $400-million of bonds last week.
'Cross Our Fingers'
"Our approach is to watch for windows when we think there are opportunities to raise capital funds," said Richard Bird, Enbridge's chief financial officer. "This is a window and let's cross our fingers and hope that it's a trend."
A quick end to the recession would raise pressure on the Bank of Canada, led by Governor Mark Carney, to say it no longer plans to keep its benchmark lending rate near zero through June 2010. The country's central bank projected last month the economy will contract four consecutive quarters, bringing it closer to the average length of the last five major recessions.
"The Bank of Canada will have to revisit their own view of what they will do with interest rates," said Paul-Andre Pinsonnault, an economist at National Bank Financial. "GDP will be stronger than what they are looking for."
A quick end to the recession doesn't guarantee a strong rebound. DBRS Ltd., a rating company, predicts an L-shaped recovery for Canada, which it defines as "a prolonged period of flat or slowly improving performance."
"The earliest I can see an improvement is in October or November," said Jacques Plante, chief financial officer of Hart Stores Inc., a discount retailer. "I can't imagine we'll have anything positive this summer."
Monday, April 27, 2009
New Lower Rates - Lowest Fixed Rates in Decades/Consumer Confidence Climbing
Hello Everyone,
Last week the banks dropped their rates again to what appears to be an all-time low for fixed rate mortgages. Interesting article from the April edition of Marketing Magazine regarding present consumer confidence in Canada:
Canadian consumer confidence bouncing back: TNS
April 23, 2009 By Kristin Laird
Canadians are feeling feel better about the economic future, with consumer confidence increasing 7% this month, according to the latest results from market research firm TNS.
The firm’s consumer confidence index is up to 90.5 compared to 83.7 in March. Throughout 2007 and into 2008, the confidence index hovered over 100, reaching as high 110.
Numbers are also up in the present situation, expectations, and buy indices—three categories produced each month to show how confidence in the economy is changing.
“Clearly, one snapshot does not a trend make,” said Michael Antecol, vice-president of TNS Canadian Facts and director of the firm’s monthly tracking study. “But these results do suggest that despite the troubling economic news dominating headlines, average Canadians are sensing the end is in sight.”
The present situation index, which captures evaluations of the overall state of the current economic and employment situations, is up just over three points to 75.3. (In late 2007 and into 2008 the present situation index peaked at around 120.)
The expectations index, which measures consumers’ estimation of the economy, household income and employment in the next six months, rose for the fourth consecutive month to 97.4, up 11 points from March.
The TNS buy index, which gauges the degree to which people think the current period is a good time to make major purchases, has increased 9% to 103.9—the highest it’s been since the second quarter of 2005.
“Consumers are saying now is a good time to make that major purchase while at the same time having fairly positive expectations about the future,” said Antecol. “It looks more and more like the ingredients for a consumer-led recovery.”
The TNS Canadian Facts’ Consumer Confidence Index, is based on 1,015 telephone interviews, and has a 3.1% margin of error.
Have a great week!
Last week the banks dropped their rates again to what appears to be an all-time low for fixed rate mortgages. Interesting article from the April edition of Marketing Magazine regarding present consumer confidence in Canada:
Canadian consumer confidence bouncing back: TNS
April 23, 2009 By Kristin Laird
Canadians are feeling feel better about the economic future, with consumer confidence increasing 7% this month, according to the latest results from market research firm TNS.
The firm’s consumer confidence index is up to 90.5 compared to 83.7 in March. Throughout 2007 and into 2008, the confidence index hovered over 100, reaching as high 110.
Numbers are also up in the present situation, expectations, and buy indices—three categories produced each month to show how confidence in the economy is changing.
“Clearly, one snapshot does not a trend make,” said Michael Antecol, vice-president of TNS Canadian Facts and director of the firm’s monthly tracking study. “But these results do suggest that despite the troubling economic news dominating headlines, average Canadians are sensing the end is in sight.”
The present situation index, which captures evaluations of the overall state of the current economic and employment situations, is up just over three points to 75.3. (In late 2007 and into 2008 the present situation index peaked at around 120.)
The expectations index, which measures consumers’ estimation of the economy, household income and employment in the next six months, rose for the fourth consecutive month to 97.4, up 11 points from March.
The TNS buy index, which gauges the degree to which people think the current period is a good time to make major purchases, has increased 9% to 103.9—the highest it’s been since the second quarter of 2005.
“Consumers are saying now is a good time to make that major purchase while at the same time having fairly positive expectations about the future,” said Antecol. “It looks more and more like the ingredients for a consumer-led recovery.”
The TNS Canadian Facts’ Consumer Confidence Index, is based on 1,015 telephone interviews, and has a 3.1% margin of error.
Have a great week!
Wednesday, April 22, 2009
Is Your House Paid For? See How You Can Potentially Pay Off All Your Debt in One Half to One Third the Time!
This might seem like a strange question, but as your mortgage lenders for life, we are constantly searching for ways to significantly benefit our clients. Through an innovative financial service, tens of thousands of American and Canadian homeowners are building equity and paying off their mortgage and all their debt in a fraction of the time.
The best part is:
1. You don’t have to refinance your existing mortgage.
2. Your mortgage payment doesn’t change.
3. There is little, if any, change to your monthly household budget.
To find out if you qualify for this revolutionary service, simply give us a call and schedule a time to learn more. After all, what have you got to lose….except your mortgage payment and all your debt!
Also, we can now help your friends who are not homeowners but have other debts to pay off!
Donna Lewczuk
Mortgage Agent, FSCO Lic M08001430
Mortgage Intelligence, FSCO Lic 10428
905.336.3545
donna.Lewczuk@migroup.ca
***Please Don’t Keep Us a Secret! Should you have family, friends or colleagues who may benefit from this or any of our mortgage and financial services, please have them contact us. Be assured that the people you refer to us will be represented professionally and honestly. Thank you for putting your trust in us.
The best part is:
1. You don’t have to refinance your existing mortgage.
2. Your mortgage payment doesn’t change.
3. There is little, if any, change to your monthly household budget.
To find out if you qualify for this revolutionary service, simply give us a call and schedule a time to learn more. After all, what have you got to lose….except your mortgage payment and all your debt!
Also, we can now help your friends who are not homeowners but have other debts to pay off!
Donna Lewczuk
Mortgage Agent, FSCO Lic M08001430
Mortgage Intelligence, FSCO Lic 10428
905.336.3545
donna.Lewczuk@migroup.ca
***Please Don’t Keep Us a Secret! Should you have family, friends or colleagues who may benefit from this or any of our mortgage and financial services, please have them contact us. Be assured that the people you refer to us will be represented professionally and honestly. Thank you for putting your trust in us.
Monday, April 06, 2009
Government Rebates For 1st Time Home Buyers
These two articles were published Friday April 3, in the National Post and Bloomberg News, respectively.
The first talks about the Canadian economy. It mentions, among other things, incentives for first time home buyers, such as: tax credits for closing costs, an increase in the amount of RRSP withdrawals for downpayments, and rebates on land transfer tax.
The second article highlights some positive signs of late in the U.S. housing and finance economy.
Have a great week!
"A Real Estate Market with Plenty of Reasons to Buy
Helen Morris, National Post, Published: Friday, April 03, 2009
For first-time buyers with secure employment, the housing market may look rather more appealing now than it has in recent years, when they struggled with affordability.
"We know for Toronto, and for Ontario as a whole, there's been a pretty dramatic shift since the fourth quarter of last year, into a buyers' market," says Pascal Gauthier, economist at TD Economics. "Looking ahead to the next, say, 12 to 18 months, it is very difficult to believe that that is going to turn around, just given the economic backdrop."
While a continued buyers' market is good news for them, house hunters shouldn't expect to see a dramatic drop in prices.
"In Toronto, we're not seeing huge price declines," says Laurin Jeffrey, an agent with Century 21 Regal Realty, "but buyers are finding a lot more selection."
While last year, clients would find many properties had been sold before they had a chance to view them, "Now we're going through a list of 50, taking 20 that are good and getting out to see 10 top ones."
Mortgage broker Maria Dominelli advises clients to look very closely at their finances and lifestyle before stepping on to the property ladder.
"The first thing we want to determine is if home ownership is really right for the individual. They've got to look at coming up with the down payment ... [and] maintaining the home. It requires not only money but a commitment in time," says Ms. Dominelli, who works with Invis. "Make sure you do a check on that reality ... so you know the disadvantages and advantages of buying."
Mr. Jeffrey also urges clients to think about potential lifestyle changes that come with home ownership.
"If all of a sudden you're now restricted to a weekend in Montreal and a couple of lattes, when you're used to having dinner out [and vacationing in] Cuba, well, you're not going to be very happy," says Mr. Jeffrey.
If first-time buyers decide they are psychologically ready to take the plunge, there are some new government policies that can help with the finances.
Under the recent federal budget, first-time buyers can qualify for a $750 tax credit to help with closing costs. In addition, they can now withdraw up to $25,000 from their RRSPs under the Home Buyers Plan to help with a down payment, up from the previous $20,000.
First-time buyers in Toronto buying properties of $400,000 or less will receive a maximum rebate of $3,725 on land transfer tax.
Ms. Dominelli says it is always crucial for purchasers to have a back-up financial plan, but especially now in these testing economic times.
"One of the strategies is for people to actually have their mortgages registered for a longer amortization [for lower payments on paper] but to actually make their payments as though they are in a shorter amortization," says Ms. Dominelli. "While you are working, you can afford it. If the sky falls in and you lose your job and need to bide some time, you can ask the lender to change the payments to the lower total again without having to go back and incur legal fees."
Mr. Jeffrey believes in the value of the real estate investment. If your job prospects are good, he says, "Relax, take a breath, be smart. If you don't need that big flat screen TV, don't buy it. But if you need a place to live, prices are down a bit, mortgage rates are stupidly low. It's not a bad time to buy".
"Eased Mortgage Rates Point to Consumer-Driven Rebound
Kathleen M. Howley, Bloomberg News Published: Friday, April 03, 2009
U.S. Federal Reserve Chairman Ben Bernanke is delivering what he promised five months ago, record-low mortgage rates and a refinancing boom that's putting cash in consumers' pockets.
Fixed 30-year mortgage rates fell to a record low for the second consecutive week last week, hitting 4.78%, Freddie Mac said on Thursday in a statement. The rates are the lowest in records dating to 1971, and come after Bernanke told Congress in November that helping the most creditworthy borrowers was essential to reviving the economy.
Mortgage applications in the U.S. rose for the fourth straight week last week as a decline in borrowing costs spurred homeowners to refinance, while purchases of new houses unexpectedly rose in February. The Fed's effort to bring down fixed rates may give consumers as much as US$25-billion, said Mark Zandi, chief economist of Moody's Economy.com.
"It certainly gives further fuel to consumer spending," said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies in Cambridge, Massachusetts. "It puts more money into circulation."
The extra cash may help boost first-quarter consumer spending by 1% to 1.5%, said Barton Biggs, managing partner at New York-based hedge fund Traxis Partners LLC. Consumer spending accounts for about two-thirds of the U.S. economy.
Creditworthy Borrowers
Bernanke signaled the Fed's effort to bring down fixed mortgage rates in Nov. 18 testimony to the U.S. House of Representatives' Committee on Financial Services.
"It is imperative that all banking organizations and their regulators work together to ensure that the needs of creditworthy borrowers are met," he said.
One week later, the Fed said it would buy up to $500-billion in home-loan securities, causing the biggest one-day drop in mortgage rates in at least seven years, according to Bankrate.com. On March 18, the central bank almost tripled the size of the program to up to $1.25-trillion in purchases during 2009. The intent is to lower rates and make real estate financing easier to get, the Fed said.
The plan to buy mortgage bonds this year is succeeding where US$11.6-trillion of government lending, spending, and guarantees so far have failed.
‘Successful Effort'
"This has been the most successful effort, at least so far in this crisis, to shore up the economy," said Zandi.
Bernanke's mortgage purchase program may help curb a recession that is in its second year and being driven by the highest jobless rate in a quarter century and shrinking household wealth.
"If you throw enough money at one credit market, you will bring down the price," said Gerald O'Driscoll, a senior fellow at the Cato Institute and former vice president of the Dallas Federal Reserve. "They are targeting the mortgage market in an attempt to speed the process of establishing a floor in the price of housing."
Homeowners who refinance with a half-point drop in fixed rates may save $150 a month on a $300,000 mortgage, said Stephen Stanley, chief economist at RBS Securities Inc. in Greenwich, Connecticut, and a former Fed economist.
Home Prices
Cheaper financing may also help spark a turnaround in the housing market. Sales of previously owned homes rose 5.1% to 4.72 million at an annualized pace in February from the prior month as low mortgage rates spurred demand, the National Association of Realtors said. The NAR's affordability index rose to a record in January, helped by lower home values and mortgage rates. The median U.S. home price in February was $165,400, the NAR said in a March 23 report, down 28 percent from its 2006 high.
Bernanke cited lower mortgage rates in testimony in February as evidence that Fed policies were working, noting that rates had fallen "nearly 1 percentage point" since the program was announced.
On April 1, Federal Reserve Bank of Cleveland President Sandra Pianalto said the Fed's program was resulting in "encouraging signs" for the economy. Besides falling rates, "we are also beginning to see a resurgence in refinancing activity in the residential mortgage markets, spurred on by these lower rates," she said.
The bankers' group boosted its forecast for 2009 home-loan originations by US$800-billion to US$2.78-trillion last month as a wave of refinancing and low interest rates spur homeowners to seek out new loans. Refinancing will increase to US$1.96-trillion in 2009 and purchase originations will total US$821-billion, the group said.
The London interbank offered rate, or Libor, for three- month dollar loans dropped to 1.17% on Thursday, down from 1.43% at the start of the year, showing banks have become more willing to lend.
TED Spread
The so-called TED spread, the gap between what banks and the Treasury pay to borrow money for three months, shrank to 96 basis points from 1.35 percentage points on Dec. 31. It touched a yearly low of 91 basis points on Feb. 2. The gauge reached a high of 4.64 percentage points in October, up from 1.35 percentage points on Sept. 12, the last trading day before Lehman Brothers Holdings Inc. filed for bankruptcy.
U.S. home prices fell 6.3% in January from a year ago, the smallest decline in five months, according to the Federal Housing Finance Agency in Washington.
"We have seen evidence that home sales are bottoming," said Jim O'Sullivan, senior economist with UBS Securities LLC, in Stamford, Connecticut. "This should be positive.""
The first talks about the Canadian economy. It mentions, among other things, incentives for first time home buyers, such as: tax credits for closing costs, an increase in the amount of RRSP withdrawals for downpayments, and rebates on land transfer tax.
The second article highlights some positive signs of late in the U.S. housing and finance economy.
Have a great week!
"A Real Estate Market with Plenty of Reasons to Buy
Helen Morris, National Post, Published: Friday, April 03, 2009
For first-time buyers with secure employment, the housing market may look rather more appealing now than it has in recent years, when they struggled with affordability.
"We know for Toronto, and for Ontario as a whole, there's been a pretty dramatic shift since the fourth quarter of last year, into a buyers' market," says Pascal Gauthier, economist at TD Economics. "Looking ahead to the next, say, 12 to 18 months, it is very difficult to believe that that is going to turn around, just given the economic backdrop."
While a continued buyers' market is good news for them, house hunters shouldn't expect to see a dramatic drop in prices.
"In Toronto, we're not seeing huge price declines," says Laurin Jeffrey, an agent with Century 21 Regal Realty, "but buyers are finding a lot more selection."
While last year, clients would find many properties had been sold before they had a chance to view them, "Now we're going through a list of 50, taking 20 that are good and getting out to see 10 top ones."
Mortgage broker Maria Dominelli advises clients to look very closely at their finances and lifestyle before stepping on to the property ladder.
"The first thing we want to determine is if home ownership is really right for the individual. They've got to look at coming up with the down payment ... [and] maintaining the home. It requires not only money but a commitment in time," says Ms. Dominelli, who works with Invis. "Make sure you do a check on that reality ... so you know the disadvantages and advantages of buying."
Mr. Jeffrey also urges clients to think about potential lifestyle changes that come with home ownership.
"If all of a sudden you're now restricted to a weekend in Montreal and a couple of lattes, when you're used to having dinner out [and vacationing in] Cuba, well, you're not going to be very happy," says Mr. Jeffrey.
If first-time buyers decide they are psychologically ready to take the plunge, there are some new government policies that can help with the finances.
Under the recent federal budget, first-time buyers can qualify for a $750 tax credit to help with closing costs. In addition, they can now withdraw up to $25,000 from their RRSPs under the Home Buyers Plan to help with a down payment, up from the previous $20,000.
First-time buyers in Toronto buying properties of $400,000 or less will receive a maximum rebate of $3,725 on land transfer tax.
Ms. Dominelli says it is always crucial for purchasers to have a back-up financial plan, but especially now in these testing economic times.
"One of the strategies is for people to actually have their mortgages registered for a longer amortization [for lower payments on paper] but to actually make their payments as though they are in a shorter amortization," says Ms. Dominelli. "While you are working, you can afford it. If the sky falls in and you lose your job and need to bide some time, you can ask the lender to change the payments to the lower total again without having to go back and incur legal fees."
Mr. Jeffrey believes in the value of the real estate investment. If your job prospects are good, he says, "Relax, take a breath, be smart. If you don't need that big flat screen TV, don't buy it. But if you need a place to live, prices are down a bit, mortgage rates are stupidly low. It's not a bad time to buy".
"Eased Mortgage Rates Point to Consumer-Driven Rebound
Kathleen M. Howley, Bloomberg News Published: Friday, April 03, 2009
U.S. Federal Reserve Chairman Ben Bernanke is delivering what he promised five months ago, record-low mortgage rates and a refinancing boom that's putting cash in consumers' pockets.
Fixed 30-year mortgage rates fell to a record low for the second consecutive week last week, hitting 4.78%, Freddie Mac said on Thursday in a statement. The rates are the lowest in records dating to 1971, and come after Bernanke told Congress in November that helping the most creditworthy borrowers was essential to reviving the economy.
Mortgage applications in the U.S. rose for the fourth straight week last week as a decline in borrowing costs spurred homeowners to refinance, while purchases of new houses unexpectedly rose in February. The Fed's effort to bring down fixed rates may give consumers as much as US$25-billion, said Mark Zandi, chief economist of Moody's Economy.com.
"It certainly gives further fuel to consumer spending," said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies in Cambridge, Massachusetts. "It puts more money into circulation."
The extra cash may help boost first-quarter consumer spending by 1% to 1.5%, said Barton Biggs, managing partner at New York-based hedge fund Traxis Partners LLC. Consumer spending accounts for about two-thirds of the U.S. economy.
Creditworthy Borrowers
Bernanke signaled the Fed's effort to bring down fixed mortgage rates in Nov. 18 testimony to the U.S. House of Representatives' Committee on Financial Services.
"It is imperative that all banking organizations and their regulators work together to ensure that the needs of creditworthy borrowers are met," he said.
One week later, the Fed said it would buy up to $500-billion in home-loan securities, causing the biggest one-day drop in mortgage rates in at least seven years, according to Bankrate.com. On March 18, the central bank almost tripled the size of the program to up to $1.25-trillion in purchases during 2009. The intent is to lower rates and make real estate financing easier to get, the Fed said.
The plan to buy mortgage bonds this year is succeeding where US$11.6-trillion of government lending, spending, and guarantees so far have failed.
‘Successful Effort'
"This has been the most successful effort, at least so far in this crisis, to shore up the economy," said Zandi.
Bernanke's mortgage purchase program may help curb a recession that is in its second year and being driven by the highest jobless rate in a quarter century and shrinking household wealth.
"If you throw enough money at one credit market, you will bring down the price," said Gerald O'Driscoll, a senior fellow at the Cato Institute and former vice president of the Dallas Federal Reserve. "They are targeting the mortgage market in an attempt to speed the process of establishing a floor in the price of housing."
Homeowners who refinance with a half-point drop in fixed rates may save $150 a month on a $300,000 mortgage, said Stephen Stanley, chief economist at RBS Securities Inc. in Greenwich, Connecticut, and a former Fed economist.
Home Prices
Cheaper financing may also help spark a turnaround in the housing market. Sales of previously owned homes rose 5.1% to 4.72 million at an annualized pace in February from the prior month as low mortgage rates spurred demand, the National Association of Realtors said. The NAR's affordability index rose to a record in January, helped by lower home values and mortgage rates. The median U.S. home price in February was $165,400, the NAR said in a March 23 report, down 28 percent from its 2006 high.
Bernanke cited lower mortgage rates in testimony in February as evidence that Fed policies were working, noting that rates had fallen "nearly 1 percentage point" since the program was announced.
On April 1, Federal Reserve Bank of Cleveland President Sandra Pianalto said the Fed's program was resulting in "encouraging signs" for the economy. Besides falling rates, "we are also beginning to see a resurgence in refinancing activity in the residential mortgage markets, spurred on by these lower rates," she said.
The bankers' group boosted its forecast for 2009 home-loan originations by US$800-billion to US$2.78-trillion last month as a wave of refinancing and low interest rates spur homeowners to seek out new loans. Refinancing will increase to US$1.96-trillion in 2009 and purchase originations will total US$821-billion, the group said.
The London interbank offered rate, or Libor, for three- month dollar loans dropped to 1.17% on Thursday, down from 1.43% at the start of the year, showing banks have become more willing to lend.
TED Spread
The so-called TED spread, the gap between what banks and the Treasury pay to borrow money for three months, shrank to 96 basis points from 1.35 percentage points on Dec. 31. It touched a yearly low of 91 basis points on Feb. 2. The gauge reached a high of 4.64 percentage points in October, up from 1.35 percentage points on Sept. 12, the last trading day before Lehman Brothers Holdings Inc. filed for bankruptcy.
U.S. home prices fell 6.3% in January from a year ago, the smallest decline in five months, according to the Federal Housing Finance Agency in Washington.
"We have seen evidence that home sales are bottoming," said Jim O'Sullivan, senior economist with UBS Securities LLC, in Stamford, Connecticut. "This should be positive.""
Wednesday, April 01, 2009
On-line Application up and Running!
Hello everyone,
Recently we have had some technical challenges withour on-line application. We are pleased to say that this problem has been corrected and the application is fully functional.
Below is an article taken from the National Post. It talks about the housing market in the U.S. mainly, and shows some signs of hope in terms of a recovery. Though the situation up here is far different, the U.S. market nevertheless affects us as well. Here it is:
"Sales of previously owned U. S. homes rose at their fastest pace in nearly six years in February, data showed yesterday, offering some hope to an economy battling a 15-month recession.
The National Association of Realtors said sales rebounded 5.1% in February to a 4.72 million-unit annual rate, notching their largest gain since July, 2003, but about 45% of these were foreclosure or short-sale transactions.
This was above market expectations for a drop to a 4.45 million-unit pace after January's 4.49 million rate. Compared with the same period last year, February sales were down 4.6%, the NAR said.
U. S. stocks, already rallying after the U. S. government released details of a plan to clean out toxic assets from banks' balance sheets, extended gains on the housing data.
The housing market is at the core of the economic, and financial meltdown and stabilizing it is seen as a key ingredient for the recovery from a recession that started in December, 2007.
"Because entry-level buyers are shopping for bargains, distressed sales accounted for 40%-45% of transactions in February," said NAR chief economist Lawrence Yun. "Distressed homes typically are selling for 20% less than the normal market price, and this naturally is drawing down the median price."
Sales were up in all four regions, with the West outperforming. In California, the median listing price rose for the first time in three years.
Government data last week showed a rebound in U. S. housing starts and new building permits in February.
"It suggests that the drop in prices and mortgage rates and an increase in affordability are having an impact in the market," said Alan Gayle, senior investment strategist at Ridgeworth Investments in Richmond, Va. "Stabilization in the housing market is critical for the economy to start, and this is a good report."
There is hope that the government's US$272-billion package to stem the tide of foreclosures, together with aggressive efforts by the U. S. Federal Reserve to keep interest rates down, could lay the foundation for the housing market's recovery.
NAR's Mr. Yun said the government's stimulus package could add a million sales this year, but depressed levels of consumer confidence and rising unemployment could derail this projection. The median national home price declined 15.5% in February from a year ago to US$165,400, the second-biggest decline on record."
Have a great week everyone!
Recently we have had some technical challenges withour on-line application. We are pleased to say that this problem has been corrected and the application is fully functional.
Below is an article taken from the National Post. It talks about the housing market in the U.S. mainly, and shows some signs of hope in terms of a recovery. Though the situation up here is far different, the U.S. market nevertheless affects us as well. Here it is:
"Sales of previously owned U. S. homes rose at their fastest pace in nearly six years in February, data showed yesterday, offering some hope to an economy battling a 15-month recession.
The National Association of Realtors said sales rebounded 5.1% in February to a 4.72 million-unit annual rate, notching their largest gain since July, 2003, but about 45% of these were foreclosure or short-sale transactions.
This was above market expectations for a drop to a 4.45 million-unit pace after January's 4.49 million rate. Compared with the same period last year, February sales were down 4.6%, the NAR said.
U. S. stocks, already rallying after the U. S. government released details of a plan to clean out toxic assets from banks' balance sheets, extended gains on the housing data.
The housing market is at the core of the economic, and financial meltdown and stabilizing it is seen as a key ingredient for the recovery from a recession that started in December, 2007.
"Because entry-level buyers are shopping for bargains, distressed sales accounted for 40%-45% of transactions in February," said NAR chief economist Lawrence Yun. "Distressed homes typically are selling for 20% less than the normal market price, and this naturally is drawing down the median price."
Sales were up in all four regions, with the West outperforming. In California, the median listing price rose for the first time in three years.
Government data last week showed a rebound in U. S. housing starts and new building permits in February.
"It suggests that the drop in prices and mortgage rates and an increase in affordability are having an impact in the market," said Alan Gayle, senior investment strategist at Ridgeworth Investments in Richmond, Va. "Stabilization in the housing market is critical for the economy to start, and this is a good report."
There is hope that the government's US$272-billion package to stem the tide of foreclosures, together with aggressive efforts by the U. S. Federal Reserve to keep interest rates down, could lay the foundation for the housing market's recovery.
NAR's Mr. Yun said the government's stimulus package could add a million sales this year, but depressed levels of consumer confidence and rising unemployment could derail this projection. The median national home price declined 15.5% in February from a year ago to US$165,400, the second-biggest decline on record."
Have a great week everyone!
Tuesday, March 17, 2009
Canadian Banks In The Media
More and more these days, we are hearing about the strengths of our Canadian Banks, both here at home and in the global marketplace. Below is a recent article from the National Post on this very topic, with comments from President Obama. Have a great week, everyone!
"Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia and Bank of Montreal pushed deeper into the ranks of North America's 10 biggest banks after U.S. counterparts stumbled or disappeared in the past year.
Royal Bank, Canada's biggest bank by assets, is now seventh-largest in North America after tripling assets in the past decade, according to data compiled by Bloomberg from company filings. At the end of 2007, Toronto-based Royal Bank was the sole Canadian firm among the top 10. Toronto-Dominion, Scotiabank and Bank of Montreal rank eighth, ninth and 10th.
Canadian banks have remained profitable, outperforming their peers, because of tighter government restrictions on lending and capital requirements. The country's six biggest lenders reported less than US$20-billion (US$15.7-million) in debt-related writedowns since the credit crisis began in 2007, about 2% of the US$887.1-billion recorded by banks and brokerages worldwide.
"It's a combination of the deleveraging that you're seeing at some of the U.S. banks and, frankly, the relative strength of the Canadian banks," National Bank Financial analyst Robert Sedran said in a March 13 interview. "They've been less disrupted on a relative basis than a lot of their U.S. peers."
While New York-based Citigroup Inc. lost US$17.3-billion in the fourth quarter, San Francisco-based Wells Fargo & Co. had a net loss of US$2.55-billion and Bank of America Corp., the biggest by assets, lost US$1.79-billion, Canada's six largest banks were profitable in the quarter ended Jan. 31, and each beat analyst estimates.
Obama Noticed
Canada's performance has been noticed. U.S. President Barack Obama said in a February interview with Canadian Broadcasting Corp. that Canada has been "a pretty good manager of the financial system and the economy." In October, the World Economic Forum ranked Canada as the soundest financial system.
"The Canadian system is more or less working," Scotiabank Chief executive officer Richard Waugh said in a Feb. 25 interview. "Even during this crisis, we have a lot of good assets on our balance sheet that are earning good, sustainable revenue."
U.S. banks have racked up record losses and received unprecedented financial support from the government in the past year. Shares of Citigroup, once the world's biggest bank by market value, dropped below US$1 in New York Stock Exchange composite trading March 5.
Canadian banks have climbed in rank as U.S. banks collapsed or were bought in the past year. Lehman Brothers Holdings Inc. filed for Chapter 11 bankruptcy protection in September and Bear Stearns Cos. agreed to be purchased by JPMorgan Chase & Co. last March. Wachovia Corp., which ranked sixth last year, was acquired by No. 4 Wells Fargo & Co. and Merrill Lynch & Co. was bought by Bank of America Corp., which ranked third at the end of last year.
Assets Triple
A decade ago, Canada's banks failed to make the top 10 list. Royal Bank had the equivalent of US$183.9-billion in assets at the end of 1999, making it the 12th-biggest bank on the continent. Royal's assets more than tripled to US$577.6-billion by the end of January, in part by adding a U.S. franchise based in Raleigh, North Carolina.
Toronto-Dominion has spent more than US$15-billion in the past four years expanding in the U.S., including purchases of Portland, Maine-based TD Banknorth and Cherry Hill, New Jersey-based Commerce Bancorp Inc. The lender's U.S. branches exceed its Canadian network. Scotiabank and Bank of Montreal have expanded from their Canadian base in recent years to increase revenue.
Shares of Canada's banks dropped amid the global financial crisis. The nine-member S&P/TSX Banks Index has dropped 4.2% so far this year, less than the 42% drop among the 24-member KBW Bank Index.
"We've beaten expectations to some degree, but I wouldn't overplay that," Royal Bank CEO Gordon Nixon told reporters in Vancouver on Feb. 26. "The expectation is the Canadian banks will continue to generate profitability throughout this turmoil and I think that's a real positive.""
"Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia and Bank of Montreal pushed deeper into the ranks of North America's 10 biggest banks after U.S. counterparts stumbled or disappeared in the past year.
Royal Bank, Canada's biggest bank by assets, is now seventh-largest in North America after tripling assets in the past decade, according to data compiled by Bloomberg from company filings. At the end of 2007, Toronto-based Royal Bank was the sole Canadian firm among the top 10. Toronto-Dominion, Scotiabank and Bank of Montreal rank eighth, ninth and 10th.
Canadian banks have remained profitable, outperforming their peers, because of tighter government restrictions on lending and capital requirements. The country's six biggest lenders reported less than US$20-billion (US$15.7-million) in debt-related writedowns since the credit crisis began in 2007, about 2% of the US$887.1-billion recorded by banks and brokerages worldwide.
"It's a combination of the deleveraging that you're seeing at some of the U.S. banks and, frankly, the relative strength of the Canadian banks," National Bank Financial analyst Robert Sedran said in a March 13 interview. "They've been less disrupted on a relative basis than a lot of their U.S. peers."
While New York-based Citigroup Inc. lost US$17.3-billion in the fourth quarter, San Francisco-based Wells Fargo & Co. had a net loss of US$2.55-billion and Bank of America Corp., the biggest by assets, lost US$1.79-billion, Canada's six largest banks were profitable in the quarter ended Jan. 31, and each beat analyst estimates.
Obama Noticed
Canada's performance has been noticed. U.S. President Barack Obama said in a February interview with Canadian Broadcasting Corp. that Canada has been "a pretty good manager of the financial system and the economy." In October, the World Economic Forum ranked Canada as the soundest financial system.
"The Canadian system is more or less working," Scotiabank Chief executive officer Richard Waugh said in a Feb. 25 interview. "Even during this crisis, we have a lot of good assets on our balance sheet that are earning good, sustainable revenue."
U.S. banks have racked up record losses and received unprecedented financial support from the government in the past year. Shares of Citigroup, once the world's biggest bank by market value, dropped below US$1 in New York Stock Exchange composite trading March 5.
Canadian banks have climbed in rank as U.S. banks collapsed or were bought in the past year. Lehman Brothers Holdings Inc. filed for Chapter 11 bankruptcy protection in September and Bear Stearns Cos. agreed to be purchased by JPMorgan Chase & Co. last March. Wachovia Corp., which ranked sixth last year, was acquired by No. 4 Wells Fargo & Co. and Merrill Lynch & Co. was bought by Bank of America Corp., which ranked third at the end of last year.
Assets Triple
A decade ago, Canada's banks failed to make the top 10 list. Royal Bank had the equivalent of US$183.9-billion in assets at the end of 1999, making it the 12th-biggest bank on the continent. Royal's assets more than tripled to US$577.6-billion by the end of January, in part by adding a U.S. franchise based in Raleigh, North Carolina.
Toronto-Dominion has spent more than US$15-billion in the past four years expanding in the U.S., including purchases of Portland, Maine-based TD Banknorth and Cherry Hill, New Jersey-based Commerce Bancorp Inc. The lender's U.S. branches exceed its Canadian network. Scotiabank and Bank of Montreal have expanded from their Canadian base in recent years to increase revenue.
Shares of Canada's banks dropped amid the global financial crisis. The nine-member S&P/TSX Banks Index has dropped 4.2% so far this year, less than the 42% drop among the 24-member KBW Bank Index.
"We've beaten expectations to some degree, but I wouldn't overplay that," Royal Bank CEO Gordon Nixon told reporters in Vancouver on Feb. 26. "The expectation is the Canadian banks will continue to generate profitability throughout this turmoil and I think that's a real positive.""
Tuesday, March 10, 2009
Prime Has Dropped Again!
Hello everyone,
This is probably old news for most of you, but the banks have dropped their prime lending rate by a half a percent over the past week! Now, variable rate mortgages are available for as low as 3.25%! And with fixed 5-years as low as 4.19%, what a time to renew or refinance! After crunching the numbers, many clients are finding that even with the penalty of breaking their existing mortgage, they are saving thousands! If you'd like to see what savings might be in store for you, give us a call at 1-877-336-3545 and I'd be glad to run some numbers by you, no obligation!
Here's a recent article on this topic from the National Post:
"Breaking Up With Your Mortgage
Anybody who bought their first house in the 1980s must marvel at mortgage rates today. Or perhaps fume.
Another rate cut this past week from the Bank of Canada led all of the major banks to lower their prime lending rate to a new low of 2.5%.
Consumers who locked into variable-rate mortgages tied to prime before credit markets tanked are getting as much as 90 basis points below prime and borrowing as low as 1.6%. It's the deal of the century.
In October, the banks suddenly changed the rules on borrowing and demanded consumers pay a 100-basis premium over prime if they wanted to go variable. The banks have eased up since and the premium on a variable-rate product is 80 basis points above prime for a 3.3% rate.
It poses an obvious question for anyone who has locked into rates as high as 5.75% on a five-year fixed-rate mortgage: Should they break that mortgage?
"It probably does make sense to break it now," says Vince Gaetano, vice-president of Monster Mortgage.
He gives the example of one client who came into his office this past week with a $205,000 mortgage and a 5.24% interest rate. The customer had 3½ years left on a five-year mortgage. The penalty to break his mortgage is the greater of three months interest or what is called the interest rate differential. The interest rate differential is the lost interest between your current rate and market rates.
In that client's case, his interest rate penalty is calculated based on the current four-year rate at his bank, now 4.14% on a discounted basis. The lost interest to the bank is about $7,800, which is what the customer will have to pay.
It's a big penalty but Mr. Gaetano argues that if that same customer breaks his mortgage and goes with the variable-rate mortgage at 3.3%, the savings would be in the $13,000 to $14,000 range over 3½ years -- more than offsetting the penalty.
There is also a nifty little trick you can pull off if you have a prepayment option on your mortgage. Mr. Gaetano's customer has a 25% prepayment privilege, so he can knock $57,000 off his mortgage and lower his penalty by about $2,800.
"You can access [that 25%] from an unsecured line of credit or some credit cards for a few days and reduce your penalty because the penalty is based on the balance outstanding," says Mr. Gaetano.
While not encouraging people to break their mortgages, the banks are acknowledging that some consumers who locked into higher rates can save money if they refinance at the new lower rates.
"I think it does make sense as an option for some people trying to lower their rate," says Joan Dal Bianco, vice-president of real estate-secured lending at TD Canada Trust.
She says if you are refinancing your mortgage, you can take the interest rate differential penalty and tack it on to your new mortgage. If you have credit card debt, you can add that on too, and the refinancing makes even more sense.
The office of consumer affairs for the federal government has a great site to help you make the decision: www.ic.gc.ca/eic/site/oca-bc.nsf/ eng/ca01817.html. Moshe Milevsky, a professor at York University's Schulich School of Business, who created the calculator used on the government site, says it ultimately comes down to how much money you will save on your mortgage if you break the contract.
To me, it's pure mathematics. There is nothing speculative or probabilistic about the decision to break a mortgage. It is the classic example of undergraduate finance time-value-of-money calculations. If the homeowner can refinance into a mortgage with an identical term that reduces monthly payments above and beyond any penalty costs, then go for it. Plain and simple," says Mr. Milevsky.
Breaking your mortgage based on a decision to go into a variable-rate mortgage is an entirely different decision.
"This decision shouldn't be confused or muddled with the classic long or short decision, or whether real estate prices or interest rates are headed up or down from here," he says.
So, it comes down to two choices: The first is to break your locked-in mortgage and renew for another fixed term. If it saves you cash, that is a no-brainer.
The second choice is whether to switch products and go with a variable-rate mortgage. Historically, consumers have saved money 88% of the time going variable, according to Mr. Milevsky's own studies.
I'm still in the camp that favours a variable rate.
Dusty Wallet This will not save you any money, but if you are strapped for cash because one of the breadwinners in your home has lost a job, the banks will let you lengthen your amortization period. If you have a 25-year amortization you can lengthen it to 35 years without any service charges -- other than the huge jump in interest charges!"
Have a great week everyone!
ps. don't forget to check out the latest article I've posted, "Worthwhile Canadian Initiatives" on my articles page. VERY interesting reading, originally published in Newsweek Magazine a few weeks ago.
This is probably old news for most of you, but the banks have dropped their prime lending rate by a half a percent over the past week! Now, variable rate mortgages are available for as low as 3.25%! And with fixed 5-years as low as 4.19%, what a time to renew or refinance! After crunching the numbers, many clients are finding that even with the penalty of breaking their existing mortgage, they are saving thousands! If you'd like to see what savings might be in store for you, give us a call at 1-877-336-3545 and I'd be glad to run some numbers by you, no obligation!
Here's a recent article on this topic from the National Post:
"Breaking Up With Your Mortgage
Anybody who bought their first house in the 1980s must marvel at mortgage rates today. Or perhaps fume.
Another rate cut this past week from the Bank of Canada led all of the major banks to lower their prime lending rate to a new low of 2.5%.
Consumers who locked into variable-rate mortgages tied to prime before credit markets tanked are getting as much as 90 basis points below prime and borrowing as low as 1.6%. It's the deal of the century.
In October, the banks suddenly changed the rules on borrowing and demanded consumers pay a 100-basis premium over prime if they wanted to go variable. The banks have eased up since and the premium on a variable-rate product is 80 basis points above prime for a 3.3% rate.
It poses an obvious question for anyone who has locked into rates as high as 5.75% on a five-year fixed-rate mortgage: Should they break that mortgage?
"It probably does make sense to break it now," says Vince Gaetano, vice-president of Monster Mortgage.
He gives the example of one client who came into his office this past week with a $205,000 mortgage and a 5.24% interest rate. The customer had 3½ years left on a five-year mortgage. The penalty to break his mortgage is the greater of three months interest or what is called the interest rate differential. The interest rate differential is the lost interest between your current rate and market rates.
In that client's case, his interest rate penalty is calculated based on the current four-year rate at his bank, now 4.14% on a discounted basis. The lost interest to the bank is about $7,800, which is what the customer will have to pay.
It's a big penalty but Mr. Gaetano argues that if that same customer breaks his mortgage and goes with the variable-rate mortgage at 3.3%, the savings would be in the $13,000 to $14,000 range over 3½ years -- more than offsetting the penalty.
There is also a nifty little trick you can pull off if you have a prepayment option on your mortgage. Mr. Gaetano's customer has a 25% prepayment privilege, so he can knock $57,000 off his mortgage and lower his penalty by about $2,800.
"You can access [that 25%] from an unsecured line of credit or some credit cards for a few days and reduce your penalty because the penalty is based on the balance outstanding," says Mr. Gaetano.
While not encouraging people to break their mortgages, the banks are acknowledging that some consumers who locked into higher rates can save money if they refinance at the new lower rates.
"I think it does make sense as an option for some people trying to lower their rate," says Joan Dal Bianco, vice-president of real estate-secured lending at TD Canada Trust.
She says if you are refinancing your mortgage, you can take the interest rate differential penalty and tack it on to your new mortgage. If you have credit card debt, you can add that on too, and the refinancing makes even more sense.
The office of consumer affairs for the federal government has a great site to help you make the decision: www.ic.gc.ca/eic/site/oca-bc.nsf/ eng/ca01817.html. Moshe Milevsky, a professor at York University's Schulich School of Business, who created the calculator used on the government site, says it ultimately comes down to how much money you will save on your mortgage if you break the contract.
To me, it's pure mathematics. There is nothing speculative or probabilistic about the decision to break a mortgage. It is the classic example of undergraduate finance time-value-of-money calculations. If the homeowner can refinance into a mortgage with an identical term that reduces monthly payments above and beyond any penalty costs, then go for it. Plain and simple," says Mr. Milevsky.
Breaking your mortgage based on a decision to go into a variable-rate mortgage is an entirely different decision.
"This decision shouldn't be confused or muddled with the classic long or short decision, or whether real estate prices or interest rates are headed up or down from here," he says.
So, it comes down to two choices: The first is to break your locked-in mortgage and renew for another fixed term. If it saves you cash, that is a no-brainer.
The second choice is whether to switch products and go with a variable-rate mortgage. Historically, consumers have saved money 88% of the time going variable, according to Mr. Milevsky's own studies.
I'm still in the camp that favours a variable rate.
Dusty Wallet This will not save you any money, but if you are strapped for cash because one of the breadwinners in your home has lost a job, the banks will let you lengthen your amortization period. If you have a 25-year amortization you can lengthen it to 35 years without any service charges -- other than the huge jump in interest charges!"
Have a great week everyone!
ps. don't forget to check out the latest article I've posted, "Worthwhile Canadian Initiatives" on my articles page. VERY interesting reading, originally published in Newsweek Magazine a few weeks ago.
Thursday, February 19, 2009
Saving Cash On Borrowed Money and Mortgage Brokers
Hello everyone and happy belated new year! I hope, despite the present economic conditions, the new year is treating everyone well.
Before I get into my update I'd like to introduce to you the newest member of my team: my husband Daniel. So if you hear a different voice on the phone, no, it's not me with a cold. Daniel will be sharing the responsibilities with me and I am thrilled to be working with him!
There has been a lot of speculation of late regarding the global recession and how this affects us here in Canada. We've been inundated with media reports on economic forecasts, many of which don't apply to our locale, and none of which have been very positive. In this latest post I'd like to copy an article published in the Globe and Mail Feb. 13, 2009. It mentions some present conditions in the Canadian housing market, specifically the GTA, and really is a positive outlook if you are a buyer, or someone looking to renew your mortgage. Read on:
The Globe and Mail
February 13, 2009
By: Terrence Belford
Saving cash on borrowed money.
While condo sales, especially new condo sales, may be flirting with record lows, the same certainly cannot be said of the mortgage market. Indeed, Toronto-area mortgage brokers are busy as beavers, says Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals, their national trade group.
With about 23,000 buyers closing deals they made up to two or three years ago when projects were in the preconstruction stage, and with home owners looking to refinance mortgages to shave dollars off monthly expenses, business is good, he says.
"It has really picked up quite a bit lately," adds Paula Roberts, a broker in the Unionville, Ont., office of Mortgage Intelligence Inc. "With rates down a percentage point or more from this time last year, those who can are looking at ways to save money and refinancing or negotiating better deals."
Rates are indeed down. Forget posted rates from banks, which currently run at about 5.4 per cent. Brokers say lenders are so eager to make loans, they can negotiate rates down to 4.49 per cent or even 4.39 per cent for a five-year mortgage with early repayment options.
Mr. Murphy suggests mortgage rates may drop even further as the year progresses and the Bank of Canada makes more key lending rate cuts to stimulate the economy.
"It is really a great time for borrowers," he says. "The credit crunch may affect corporations but banks see home loans as safe, secure, solid investments. "
Part of the reason lies in the Canadian psyche, he suggests. Unlike our southern neighbours, Canadians are firm believers in building equity in their homes.
"A survey we did earlier this year shows the average Canadian homeowner has 70-per-cent equity in their home," he says. "Compare that with the U.S. where a good many homeowners now have negative equity."
Back to the original point: The boom in mortgage lending.
On the new condo side, most people who bought two or three years ago in anticipation of a move-in date in 2009 got a commitment from a lender, either on-site or later through a mortgage broker at rates that prevailed at the time. But as Ms. Roberts points out, commitments are not closings and buyers have the option of saying no thanks and looking for better deals.
"Right now, we can give a four-month fixed commitment on rates," she says. "And many buyers are coming to us to find a better deal than they agreed to two years ago."
For existing condo owners, refinancing has become a viable option to trim expenses, especially if existing mortgages are nearing the end of their term.
"It all depends on how far you are into the mortgage," Mr. Murphy says. "If it is only a year or so, the penalties you would have to pay to refinance may not make the process worth it. If there is just a year to run, however, chances are you can save money even after paying penalties."
Ms. Roberts says she is seeing clients use low mortgage rates as an opportunity to rid themselves of much higher consumer debt.
"I had one client in here a week or so ago whose car was coming to the end of its lease. She wanted to buy it," Ms. Roberts says. "She would have had to pay at least 7 per cent or more on a standard bank loan. But instead, she could refinance her condo, take out extra money and pay off the car, all at a 4.5-per- cent rate."
Mr. Murphy says he can see such manoeuvres become increasingly popular as people take a sharp pencil to household budgets to reduce living costs as a defence against current economic storms.
Like many industry observers, Mr. Murphy thinks the condo action will shift this year from a preoccupation with new projects to the resale market where average prices are lower and there is a plentiful supply.
A happy combination of low mortgage rates, a plentiful supply of money, the
considerably lower prices resale condos command and a large inventory may be the spark that reignites the housing market in the Greater Toronto Area, Ms. Roberts suggests.
"It is a great time to buy a resale unit," she says. "Prices are down, financing is available at great rates. The only thing holding things back is consumer confidence in their own situation.
"If you are fairly certain you will continue to have a job, then there are great deals out there."
Speculations are that interest rates will drop yet again next month. So, if you are looking to refinance your mortgage, it might be a good time to calculate how much a penalty might cost to break your existing one. These days, the savings are often well out-weighing the cost!
Articles like the one ablove have been cropping up from time to time lately and although the future is never totally certain, I think they really help to clarify the situation where we live. We are still feeling the effects of the global recession, but we are probably in one of the best places in the world to be, while in the midst of it.
Until next time, have a great week!
D.
Before I get into my update I'd like to introduce to you the newest member of my team: my husband Daniel. So if you hear a different voice on the phone, no, it's not me with a cold. Daniel will be sharing the responsibilities with me and I am thrilled to be working with him!
There has been a lot of speculation of late regarding the global recession and how this affects us here in Canada. We've been inundated with media reports on economic forecasts, many of which don't apply to our locale, and none of which have been very positive. In this latest post I'd like to copy an article published in the Globe and Mail Feb. 13, 2009. It mentions some present conditions in the Canadian housing market, specifically the GTA, and really is a positive outlook if you are a buyer, or someone looking to renew your mortgage. Read on:
The Globe and Mail
February 13, 2009
By: Terrence Belford
Saving cash on borrowed money.
While condo sales, especially new condo sales, may be flirting with record lows, the same certainly cannot be said of the mortgage market. Indeed, Toronto-area mortgage brokers are busy as beavers, says Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals, their national trade group.
With about 23,000 buyers closing deals they made up to two or three years ago when projects were in the preconstruction stage, and with home owners looking to refinance mortgages to shave dollars off monthly expenses, business is good, he says.
"It has really picked up quite a bit lately," adds Paula Roberts, a broker in the Unionville, Ont., office of Mortgage Intelligence Inc. "With rates down a percentage point or more from this time last year, those who can are looking at ways to save money and refinancing or negotiating better deals."
Rates are indeed down. Forget posted rates from banks, which currently run at about 5.4 per cent. Brokers say lenders are so eager to make loans, they can negotiate rates down to 4.49 per cent or even 4.39 per cent for a five-year mortgage with early repayment options.
Mr. Murphy suggests mortgage rates may drop even further as the year progresses and the Bank of Canada makes more key lending rate cuts to stimulate the economy.
"It is really a great time for borrowers," he says. "The credit crunch may affect corporations but banks see home loans as safe, secure, solid investments. "
Part of the reason lies in the Canadian psyche, he suggests. Unlike our southern neighbours, Canadians are firm believers in building equity in their homes.
"A survey we did earlier this year shows the average Canadian homeowner has 70-per-cent equity in their home," he says. "Compare that with the U.S. where a good many homeowners now have negative equity."
Back to the original point: The boom in mortgage lending.
On the new condo side, most people who bought two or three years ago in anticipation of a move-in date in 2009 got a commitment from a lender, either on-site or later through a mortgage broker at rates that prevailed at the time. But as Ms. Roberts points out, commitments are not closings and buyers have the option of saying no thanks and looking for better deals.
"Right now, we can give a four-month fixed commitment on rates," she says. "And many buyers are coming to us to find a better deal than they agreed to two years ago."
For existing condo owners, refinancing has become a viable option to trim expenses, especially if existing mortgages are nearing the end of their term.
"It all depends on how far you are into the mortgage," Mr. Murphy says. "If it is only a year or so, the penalties you would have to pay to refinance may not make the process worth it. If there is just a year to run, however, chances are you can save money even after paying penalties."
Ms. Roberts says she is seeing clients use low mortgage rates as an opportunity to rid themselves of much higher consumer debt.
"I had one client in here a week or so ago whose car was coming to the end of its lease. She wanted to buy it," Ms. Roberts says. "She would have had to pay at least 7 per cent or more on a standard bank loan. But instead, she could refinance her condo, take out extra money and pay off the car, all at a 4.5-per- cent rate."
Mr. Murphy says he can see such manoeuvres become increasingly popular as people take a sharp pencil to household budgets to reduce living costs as a defence against current economic storms.
Like many industry observers, Mr. Murphy thinks the condo action will shift this year from a preoccupation with new projects to the resale market where average prices are lower and there is a plentiful supply.
A happy combination of low mortgage rates, a plentiful supply of money, the
considerably lower prices resale condos command and a large inventory may be the spark that reignites the housing market in the Greater Toronto Area, Ms. Roberts suggests.
"It is a great time to buy a resale unit," she says. "Prices are down, financing is available at great rates. The only thing holding things back is consumer confidence in their own situation.
"If you are fairly certain you will continue to have a job, then there are great deals out there."
Speculations are that interest rates will drop yet again next month. So, if you are looking to refinance your mortgage, it might be a good time to calculate how much a penalty might cost to break your existing one. These days, the savings are often well out-weighing the cost!
Articles like the one ablove have been cropping up from time to time lately and although the future is never totally certain, I think they really help to clarify the situation where we live. We are still feeling the effects of the global recession, but we are probably in one of the best places in the world to be, while in the midst of it.
Until next time, have a great week!
D.
Subscribe to:
Posts (Atom)
