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.