Mortgage Watch

New Mortgage Rules

2010-03-17T09:12:00.000-07:00

Frank and Susan Williams bought a house near Hamilton, Ont., this month, they followed a time-honoured tradition of using leveraged financing.

With mortgage insurance they only had to put down 5% of the $270,000 purchase price. They went with a closed variable rate at 2.25% and amortized the loan over 35 years. The deal was initiated with a mortgage broker, with Bank of Nova Scotia providing the financing.

"It's a three-bedroom bungalow. That was attractive to us. We have a dog and we like to do things in the backyard. We did not have the type of money we thought we'd have to put into a house. We said let's just bite the bullet and get this over with," Ms. Williams says.

And getting it over with was probably a good idea. First, they were in a rent-to-own arrangement and had to exercise their option to buy before August 2010. And second, based on pending federal rules for government-backed insured mortgages that come into effect on April 19, the Williams would probably not have qualified for the variable-rate mortgage. In fact, as recent arrivals from the United States and its housing crisis, their credit history might not have passed any stress test.

"We really came from the United States with nothing. Everything we had disappeared with the housing crisis. In areas that had bad loans all the houses just hit bottom. We were expecting US$250,000 out of our house but we got nothing," Ms. Williams says. They walked away from the whole mess.

But while the Williams might have had good reasons for leveraging to get their dream home -- they are firsttime buyers in Canada -- the new federal rules governing mortgages have been widely misunderstood. In fact, the biggest fear among the young and house-less is fear itself.

Under current mortgage-lending rules, buyers with a down payment of less than 20% of the purchase price must purchase mortgage insurance, with the most common source being Canadian Housing and Mortgage Corp. The new rules affect only customers that are required to purchase the insurance.

Under the new rules, all buyers requiring mortgage insurance will have to meet the "ability to pay" for a higher, more expensive five-year fixed-rate mortgage even if they choose a mortgage with a lower interest rate and a shorter term.

"It's not just first-time homebuyers who are affected. It's anyone who wants a variable mortgage rate now who doesn't have one already, they now have to qualify at a higher interest rate. Some of them won't qualify.

And that's fine so they'll just take a fixed rate. It's not the end of the world," Ms. Wynhofen says.
Bernice Dunsby, director of home equity financing at the Royal Bank, says the new rules might even help save first-time buyers from themselves.

"We believe the new measures will have a small impact on mortgage growth, if any. First-time buyers should not be any more concerned about these changes. In fact, I believe the changes will actually help first-time homebuyers to ensure that not only can they afford their home today but in the future, especially if interest rates rise," says Ms. Dunsby.

Banks Foreclose ( part 2 )

2010-03-02T10:03:00.000-08:00

But even when lenders are willing, many borrowers may not be aware that they have to ask for release. So, if you are pursuing a short sale, be sure your attorney asks the bank to release you from any further obligation.

"People shouldn't have a false sense of security that a deficiency judgment may not be later sought," Zaretsky said. He expects many will be filed over the next few years, based on the fact that banks have sold many of these accounts to collection agencies and other third parties, at discount.

"The parties who bought those notes wouldn't have paid money for them unless they had the intention of acting," Zaretsky said. Ticking time bomb

What can be scary is that the judgments don't have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.

It doesn't have to be a large amount of debt for a lender or collection agency to come after borrowers. Richard Varno and his wife short sold their Nashville home back in 2004 after he lost his job.
It wasn't until 2008, when the second lien holder asked him for $25,000, that he realized he still was liable.

"I told them, 'Hey, you guys released the title,'" he said. "As far as I know, I'm off the hook."
He wasn't. Releasing title does not necessarily end the debt. It's complicated because of variations in state law, but, generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan.

Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale.

Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt.
"He had no idea what he was doing," said Zaretsky. "All the lender had to do was go to court to convert the confession into a deficiency judgment."

Lenders are also very inconsistent. One of Zaretsky's short-sale clients was ready, willing and able to pay, but the bank did not even ask; another lender always reserves the right to pursue the deficiency.

Strategic defaults
Sometimes lenders go after borrowers walking away from their homes if they have other assets, according to Florida real estate attorney Larry Tolchinsky.

"Banks are pulling credit reports to see if it's a strategic default," he said. "If you're behind on all your other payments, you're okay. But if you're not, they'll come after you."

If borrowers have any doubts about their risks, they should seek legal advice. Or, at least, call non-profit organizations such as NeighborWorks for advice. According to Doug Robinson, a NeighborWorks spokesman, its counselors always try to negotiate away deficiencies when they facilitate short sales or deeds-in-lieu.

"We don't favor any short-sale contracts that leave any deficiency that can be pursued," he said.
Robinson himself knows what can happen. He paid off a deficiency after his own New Jersey house went through foreclosure 11 years ago.

Banks Foreclose

2010-02-15T06:19:00.000-08:00

As terrible as it is to lose your house to foreclosure, at least it's a relief to put your biggest financial headache behind you, right? Wrong.

Former homeowners may still be on the hook if there's a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these "deficiency judgments" are ticking time bombs that can explode years after borrowers lose their homes.

It can even happen to people who got their bank to approve them selling their home for less than it is worth.
Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it.

"My understanding was that the deficiency was negotiated away," she said. "Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it."

Many homeowners are now in the same boat. And not just those who took out bigger loans than they could afford or who did so called "liar loans" where they didn't have to verify their income.

Because of falling home prices, borrowers who always paid their mortgage but who have run into unforeseen circumstances -- like unemployment or a job transfer -- can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments.

"After the banks foreclose, it's very common now to have large deficiencies with houses not worth the balances owed," said Don Lampe, a North Carolina real estate attorney. Lenders mostly declined comment. Although Corey's lender, BB&T did indicate it was pursuing more deficiency judgments.

"They follow the rise and fall of foreclosures," said the spokeswoman, who would not discuss Corey's account. Can they come after you?

Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there's a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them.

"Once they have a judgment, they can pursue you anywhere," said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. "They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail."

In the case of foreclosure, lenders can pursue deficiencies in more than 30 states, including Florida, New York and Texas, according to the U.S. Foreclosure Network, an organization of mortgage law firms.
Some states, such as California, are "non-recourse" and don't allow deficiency judgments. But, even there, if the original loan was refinanced, some or all of it may be subject to claims.

Deficiency judgments on short sales and deeds-in-lieu can happen in many more places. In these cases, extinguishing the debt is often a matter of negotiating with the bank.

Shopping for Mortgages

2010-02-01T07:20:00.000-08:00

Stephen Dupuis, chief executive of the Toronto-based Building Industry and Land Development Association, said the study by the mortgage brokerages confirms conservatism is still ruling the housing market.

He said first-time buyers, the most vulnerable to any change in rates, continue to overwhelmingly get long-term fixed-rate mortgages. While rates may be much higher in five years, he said the income of first-time buyers tends to climb by the time they get their second mortgage.

"There has been a massive overreaction," Mr. Dupuis said, about calls to shorten amortization periods and increase down payments.

Mr. Dupuis added that while 2009 purchases in the Toronto area rebounded sharply from 2008 lows, sales are still well off levels reached in 2007. The same is true for much of the country.

There is little doubt any move to tighten regulations will have negative consequences on the market, said Benjamin Tal, senior economist with CIBC World Markets. He estimates at least 25% of the new purchases would be affected by a change in the down payment.

"The industry is fighting back and asking the government to look at the data before making any decision," Mr. Tal said, referring to the latest salvo fired by the mortgage brokers.

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FINDINGS
- Eighty six per cent of these home buyers chose fixed rate mortgages.
- Among borrowers who chose fixed rates, a significant number opted for longer terms
- less than 5% chose terms of two years or less.
- Twenty per cent took three year terms, 5% four years, leaving 70% with a fixed rate for five years or more.
- The vast majority of people who took out their first mortgage last year borrowed less than they could afford to, as their Gross Debt.

Shopping For Mortgage

2010-01-18T20:58:00.000-08:00

The housing industry fired back yesterday at comments from Ottawa that the sector might be overheated with a new report that shows Canadians have become conservative in their mortgage choices, leaving little chance for delinquencies.

The Canadian Association of Accredited Mortgage Professionals surveyed its members, who issued more than 40,000 mortgages totalling $10-billion during 2009, and found 86% of loans went into fixed-rate mortgages. Of those, more than 70% had fixed rates for longer than five years.

Jim Murphy, chief executive of the Toronto-based group, said the report's results show the risk in the marketplace "is clearly manageable." He left little doubt about one of the reasons his group compiled the research.

"It was done in response to some of the musings at yearend by first the Finance Minister and then governor of the Bank of Canada," Mr. Murphy said.

Mark Carney, the Bank of Canada governor, has warned about rising levels of household debt, which is reaching record levels. He has said consumers may be failing to account for higher interest rates in the foreseeable future, leaving households "increasingly vulnerable" to any economic shocks.

Shortly after Mr. Carney's remarks, Jim Flaherty, the Minister of Finance, was asked by reporters whether he was considering tightening mortgage requirements.

"If we had to we could, and it is something that we are watching and monitoring. But so far there's relative stability in the sector," Mr. Flaherty said.

The CAAMP survey addressed the overall debt concern and found "the vast majority of people who took out their first mortgage last year borrowed less than they could afford to, as their gross debt service ratios are far below allowed maximums, even at the higher interest rates that are used to qualifying them for their mortgage."

Mr. Murphy said his group's report has been forwarded to the Minister's office which continues to look at whether it should apply any brakes to the housing market. About 18 months ago, the government did limit the maximum amortization period to 35 years and demand consumers have 5% down on all government-backed loans.

Booming Housing Market

2010-01-05T19:49:00.000-08:00

A red-hot housing market fueled by cheap money has helped Canada climb out of recession, but fears are growing that it could be a bubble much like the one that brought the United States to its knees.

Household debt is climbing as buyers use record low rates to stretch for previously unaffordable homes in markets like Toronto and Vancouver, where prices hit record highs. Sales have gone through the roof and bidding wars are common.

Yet even as the central bank warns Canadians to plan for higher rates, analysts say factors including housing supply, demographics and lending practices make a US-style crash unlikely.

"I don’t think we’re in a bubble. What we’re seeing is a monetary policy that is working very efficiently," said Benjamin Tal, senior economist at Canadian Imperial Bank of Commerce.

"There is a bit of overexposure, yes ... but a more reasonable scenario is it’s a redistribution of activity -- namely, what we are doing now is stealing activity from the future," he said. "There is almost an urgency to buy a house right now."

The market’s dynamism was highlighted by a report on Tuesday that showed existing home sales jumped 73 percent in November from a year earlier, while the average price rose 19 percent nationally.

There is no doubt that housing prices in some Canadian markets are rising quickly, and that more homes have changed hands this year than even when the market was at its peak in 2007.

But many analysts are wary about calling it a bubble, which would imply that home values have increased too fast to unsustainable levels relative to incomes and other economic elements.

Facing Foreclosure ( part 2 )

2009-12-07T08:13:00.000-08:00

Few of the low-income borrowers who were targeted by alternative lenders gave much thought to where their mortgage money was coming from.

"The way we understood it, as long as our mortgage was paid, they would just renew it. The joke was on me," said Joyce Marentette, a cook in Chatham, Ont., who was also told last year by Xceed that she would have to find other financing, when her three-year term came up.

The problem is more acute in depressed areas such as Southwestern Ontario and parts of Alberta, where there are fewer private financiers and property values have sagged, industry insiders say.

Mortgage brokers in Ontario cities such as Windsor, Chatham and St. Thomas say they regularly receive frantic phone calls from homeowners who are shocked to receive a letter explaining that their mortgage won't be renewed.

"We're not talking about a scoundrel that brought it upon himself. ... These are people that didn't do anything wrong," said Joel Katz, a Windsor mortgage broker. Mr. Katz said he believes the issue isn't on the government's radar because this type of lending accounted for such a small segment of the market compared with the United States. "The problem wasn't as big here, and there are people who are getting stepped on and overlooked."

But exactly how many people are being "stepped on?" Public records in Canada are so scarce, it's impossible - even for lawmakers - to know for sure. Ottawa relies on Canada Mortgage and Housing Corp. for data, but because none of these subprime players insured their mortgages through CMHC, the public agency knows very little about their state of their books. One source close to the Finance Department said officials at the Crown corporation figure that stranded borrowers account for only "a tiny sliver" of the country's homeowners.

Paul McGill, president of mortgage provider N-Brook and spokesman for the mortgage lenders lobby, argues Ottawa is understating the problem. He said he has supplied federal officials with data showing that $1.7-billion of healthy mortgages could be stranded and that these borrowers lack high enough credit scores to qualify for loans from more conservative lenders.

Mr. McGill said federal officials responded by asking mortgage lenders to supply extensive borrower details such as marital status and garage dimensions. Mr. McGill said the requests would have cost too much time and money to fulfill. Lenders have scaled back their proposal to call for a $1-billion Ottawa-backed fund that could renew stranded mortgages. He said Ottawa has not been supportive.

In response to questions, the Finance Department issued a statement saying: "The government is monitoring housing and mortgage markets in order to ensure they remain stable, strong and competitive."

Far away from the push and pull in Ottawa, Ms. Matthews has put her house up for sale. A handful of prospective buyers has wandered through, but she has received no offers. A few weeks ago, she received a letter from Xceed's lawyers, explaining that she owes the company nearly $128,000. This means that, despite paying Xceed about $40,000 over the past three years, she now owes $1,000 more than she originally borrowed.

When she opted to buy her first home, she had to get over the hurdle of her low credit score. An unpaid student loan had caught up with her. She had no down payment, and paid a 9.15-per-cent interest rate with Xceed.

"I just thought they were my foot in the door," she said.

Ivan Wahl, Xceed's CEO, said his company has identified 1,100 borrowers that his company will maroon over the next three years. For those people "it is an absolute disaster," he said. Despite his sympathy, he says he is contractually obligated to pay Xceed's investors, which means demanding full payment at renewal time. "The government certainly should step up to the plate to provide some facilities for people who got caught in the crunch."

Ms. Matthews said she doesn't expect the government to do anything for her, and is reserving her frustration for Xceed. She said the companies involved should be giving their customers more warning about their inability to renew. She received a warning letter 3½ months before her mortgage matured.

"If I knew it was going to end like this, I never would have done it."

Facing Foreclosure

2009-12-07T08:06:00.000-08:00

For the past three years, Lisa Matthews has never missed a mortgage payment - handing over $292, like clockwork, every week.

But if nothing changes, a bailiff, acting at the request of her mortgage lender, will ring her doorbell and tell Ms. Matthews, her two daughters and her boyfriend to vacate the two-storey house for good.

"This was a pure slap in the face," said Ms. Matthews, a 36-year-old clerk with the City of Hamilton, who was recently told that, despite her perfect payment record, her mortgage will not be renewed at the end of its three-year term.

Ms. Matthews is one of many Canadians being abandoned by a breed of alternative lenders that have stopped lending to customers, who, because of poor credit scores, lower-paying jobs, or minimal home equity, couldn't obtain financing from a traditional lender, such as a bank.

Everyone from the chief executive officer of Ms. Matthews' lender, Xceed Mortgage Corp., to senior officials in Ottawa, agree that borrowers such as Ms. Matthews, who have dutifully paid their mortgage bills, are being unfairly stranded. What they can't agree on is how many Lisa Matthews are out there.

Records obtained under the Access to Information Act show that a lobby group representing these lenders has warned the federal government that, unless taxpayers offer help, they will be forced to foreclose on as many as 30,000 homeowners over the next three years.

These "orphaned mortgages," as the industry is calling them, are held by customers who have impeccable payment histories.

But they can't be renewed because the credit crunch has shut off the funding pipeline of non-bank lenders, the lobby says.

This wave of forced sales and evictions will hit its crest this coming year when nearly half of these mortgages - most of which were issued during the real estate boom of 2007 - will not be renewed, the mortgage companies say.

Executives with alternative mortgage companies say they cannot renew the stranded mortgages because the once-thriving securitization market that attracted investors to these risky - and lucrative - mortgages collapsed in the wake of the U.S. subprime mortgage crisis. To replace the lost pool of capital, lenders are asking the federal government to back a special billion-dollar fund that would renew the healthy mortgages of borrowers who do not qualify for loans from traditional lenders.

Finance Department officials, however, have responded to the lobby group's alarm bells with caution and questioned their estimates, according to sources close to the negotiations. These sources say Ottawa is frustrated that some of the companies in this small segment of the Canadian mortgage market have been unwilling to hand over data so the problem can be fully assessed, one source said.

"The government thinks this group is asking for help for itself," said the official close to the talks, which bogged down this summer. "Had they been willing to co-operate with the government and provide that information, some sort of program could have been designed. But you can't design a program on anecdotes."

The roots of the problem can be traced back to the housing and lending heyday of half a decade ago, when an assortment of "non-conforming," or subprime mortgage lenders launched operations. Some, such as Xceed and Mississauga-based N-Brook Mortgage Group Inc., had roots in Canada, and others, such as San Diego-based Accredited Home Lenders, migrated from the saturated subprime market in the United States.

Many of these mortgage companies aren't federally regulated so, unlike a bank, they aren't required to insure mortgages when the down payment is equal to less than 20 per cent of the value of the home. And unlike banks, they could - and often did - give loans to people who couldn't afford a down payment. After extra fees were piled on, some of these mortgages added up to as much as 104 per cent of the value of the house being purchased. Interest rates hovered as high as 11 per cent.

Within a few years, this sort of lending started to explode and the new players quickly took hold of 5 per cent of the Canadian market.

But when the financial crisis struck last year, and "subprime" became a dirty word, the pension funds and investment banks that these companies relied upon to fund their mortgages, spurned them. Investors that previously had a ravenous appetite for securities backed by high-risk mortgages were now demanding their money back from companies like Xceed. These investment windows are closing at a time when thousands of mortgages, like Ms. Matthews' loan, are coming due.

Seven Ways To Damage Your Credit Score ( part 2 )

2009-11-16T09:49:00.001-08:00

Run up high balances

If using too little credit sends up red flags to lenders, using too much credit sends up road
flares and fireworks.

Loading up on high-interest credit cards isn’t a good idea even if the
reward programs are attractive. Lenders want to see people use credit just right -- not too
much, not too little.

It can be damaging to cardholders who run up a high balance every month on one card and
then pay it off each month. Scoring systems do not take those payments into account.
Restrict the amount and sources of your credit. Remember, credit is about a convenient
payment method, so make sure it fits your needs. It should never be used as money you
don’t have.

Apply for new credit repeatedly

New credit doesn't mean just a shiny new credit card stretching out your wallet; it means a
lower credit score -- at least in the short run. Multiple hard inquiries in a short period of
time can raise lenders' eyebrows and most banks or credit card companies try to avoid
consumers in these scenarios. Applying for too much credit over a short period of time can
affect your credit rating, so limit the number of credit applications.

Don't pay fines on non-credit-card bills

Other business relationships that don't normally report your good payments can turn around
and bite you if you decide not to pay as agreed. A lot of service providers don't report
positive information. But the minute you do something wrong, they can outsource that debt
to a collection agency who will report it.

Even if you never go over the limit on your credit card, being one day late on a bill can
affect your credit rating. By the way, experts recommend not spending more than 35 per
cent of your allowable credit limit.

Ignore mistakes on your report

Say what you will about credit bureaus, they do make it easy to dispute inaccuracies on
your credit report. In order to dispute something on a credit report, one must, of course,
check one's credit report. It's easier than it's ever been as consumers have unfettered
access to their own credit information.

Unlike other issues that affect credit scores, mistakes sometimes can be remedied easily
and quickly, so it's worthwhile to keep tabs on your report. By law, credit reporting agencies
must provide your Consumer Disclosure report, which differs from the credit report lenders
use, if ordered via mail or fax.

Make late payments or skip them entirely

It seems almost too obvious, but it bears stating that paying late and missing payments
altogether are stellar ways to ensure that your credit score will scrape the bottom of the
barrel.

If you experience cash flow problems or a downfall in your family economic situation for
some time, don’t hide, it’s the worst thing you can do. Instead, call organizations that have
loaned you money. Explain the situation and tell them you want to work out a repayment
plan. Remember, always pay something.

The further back in time the mistakes are, the less impact they have on your credit score.
Obviously, the fewer mistakes consumers make the better for their score.

We hope this information will prove helpful; should you have any further
questions, do not hesitate to call your Mortgage Specialist; he will be happy to
help you. And remember, you always play safer when you build savings; this is,
without a doubt, the best way to have a good night’s sleep.

Seven Ways To Damage Your Credit Score

2009-11-16T09:40:00.000-08:00

As mortgage professionals, we feel it is of the utmost importance to inform our customers
as to the significance of their credit standing and how it affects their capacity to obtain a
mortgage and, even worst, affects the cost of borrowing, especially in these uncertain
economic times. Making some of the following mistakes can ensure that lenders will put on
a hazmat suit to handle your credit report.

Remember the good old days, way back in 2007, when the streets were paved with Credit-
Gold as far as the eye could see and credit cards rained from the sky? Even the credit-
destitute were treated like kings by credit card companies and courted with lavish offers of
unlimited credit.

Here, in the future, the world has changed. And woe betides those who ask for loans with
glaring blemishes on their credit reports. An unpaid collection is apt to be regarded like a
cockroach in the consommé.

What affects your credit score and in what proportion?

35% - Your paying habit
30% - Amounts owed
15% - Lenght of credit history
10% - New credit
10% - Types of credit used

The Seven Pitfalls to Avoid

1. Close credit card accounts
2. Let credit cards collect dust
3. Run up high balances
4. Apply for new credit repeatedly
5. Don’t pay fine on non-credit-card bills
6. Ignore mistakes on your credit report
7. Make late payments or skip them all together

SO, WHAT TO DO?

Close credit card accounts

If you intend to close some credit card accounts, remember that only recently opened
accounts should be considered for closing. Length of credit history is an important
component of the credit score; therefore, it’s not a good idea to cancel a source that has
been long-held since payment history can have positive implications for your credit rating.

Do not let credit cards collect dust

It is suggested that people use their cards periodically. Burying cards in the backyard or
hoarding them in a shoebox in case of an emergency may also backfire. Consumers
encounter two pitfalls if a creditor closes an account for non-use: The available credit is
pared down and that account no longer contributes to their credit history.

Housing Market Continue To Rise

2009-11-10T20:04:00.000-08:00

New home construction rose by a seasonally adjusted annual rate of 157,300 units in October, up from 149,300 in the previous month, according to Canada Mortgage and Housing Corporation.

Economists had expected housing startsto increase by between 155,000 and 158,800 units during the month.

"The improvement in housing starts in October is attributable to improvement in the multiple starts segment," Bob Dugan, CMHC's chief economist, said Monday. "Despite a small decline in single home starts in October, the level of single home starts remains at its second highest level since October 2008."

Urban housing starts rose 5.2% on an adjusted annual basis to 139,900 units last month, with multiple-unit construction jumping 13.8% to 72,600 units. However , urban single-unit starts fell 2.7% to 67,300 units in October.

Overall, urban starts rose by an annual rate of 15% in British Columbia, while they were up 14.8% in Ontario, 6.5% in the Prairies and 1.2% in the Atlantic region. Meanwhile, Quebec saw urban starts fall 11.6%.

Rural starts increased to 17,400 units in October, up from 16,300 the previous month.

Canadian Economy Rebounding

2009-11-02T05:58:00.000-08:00

The stubbornly strong loonie is the major impediment to the Canadian economy rebounding more strongly from the recent deep recession, says Bank of Canada governor Mark Carney.

In a new warning about the currency that is approaching parity with the U.S. greenback, Carney says Canada would experience noticeably stronger recovery next year and in 2011 if the loonie had stayed at the 87-cent level the bank envisaged in the summer.

Carney said Thursday that's why the bank made it clear this week that barring an unforeseen spike in inflation, it will keep interest rates at the historic low of 0.25 per cent until at least next July.

Carney said the central bank has several tools at its disposal, including intervention in the currency market, but didn't specify which would be put to use.

"Intervention is always an option," he said.

"Markets should take seriously our determination to set policy to achieve the inflation target. Markets sometimes lose their focus. We don't lose our focus."

The loonie closed 0.16 of a cent lower at 95.44 cents US on Thursday, but many expect it to hit parity with the greenback in the next few months, mainly because of weakness in the American dollar, which has dropped against most of the world's major currencies.

A high loonie makes it cheaper to take U.S. vacations and buy imported goods. But it also harms the Canadian manufacturing sector because it makes exports of everything from minerals and metals to newsprint, machinery and lumber more expensive for buyers in the United States, Canada's main export market.

Carney called the loonie's persistent rise since July "the major downside risk" to the economy, noting that although the loonie was higher two years ago, the difference now is that it comes during a period of severe economic weakness.

His comments came after the central bank issued a comprehensive 28-page quarterly review of the global economy, showing a sharp rebound is underway, fuelled by government stimulus and the need to restock depleted inventories.

But in Canada, the strong burst in activity will last at most a few months more before giving way to the slow and difficult climb back from the deep hole that the recession dug over the past year, the review adds.

The bank is more optimistic about the second half of this year than it was three months ago, noting modest employment gains in August and September.

In a supporting report, Statistics Canada announced that retail sales jumped 0.8 per cent in August to $34.5 billion, largely as a result of strong activity at new car dealerships and at gas stations.

"When the labour market fares well, good things tend to happen to the rest of the Canadian economy," said CIBC economist Krishen Rangasamy.

The domestic economy is now expected to record a two-per-cent gain in the third quarter - the July-September period - and 3.3 per cent during the last three months of this year. The Bank of Canada's July forecast called for growth of 1.3 per cent and three per cent, in the third and fourth quarters respectively.

A number of things have broken right for Canada to make this happen. Commodity prices, particularly oil, have firmed up, financial markets have stabilized faster than thought, and the global economy, particularly China, has rebounded quicker and stronger than expected.

Variable-rate mortgages better deal

2009-10-26T06:21:00.000-07:00

Fixed mortgage rates may help you feel secure in your budgeting, but the Bank of Montreal says the more volatile variable rate mortgages will save you money in the long run.

The bank put out a report Friday showing that, over the past 30 years, variable-rate mortgages have been more cost-effective about 82 per cent of the time.

That may come as a surprise to some after studies have shown many Canadians prefer a fixed-rate mortgage.

A fixed rate locks the borrower into a set interest rate for a certain period of time.

That gives many borrowers peace of mind knowing how much money to set aside each month for their mortgage payment.

Variable rates change along with interest-rate moves.

BMO said the Bank of Canada's overnight lending rate is at its lowest possible point now, which could mean there are fewer benefits to a variable rate in the foreseeable future.

BMO highlighted two historical periods when fixed rates were considered beneficial - in the late 1970s and late 1980s - and both were just before interest rates started rising again.

The bank added that the current interest environment is similar to both of these periods.

"Short-term rates are at extreme lows and pressure is likely to build for higher rates in the year ahead," said deputy chief economist Doug Porter in the report.

"The question of whether to lock in to a longer-term fixed mortgage rate or stay in a variable rate has become an increasingly complex and important issue."

Canada has been in a long-term declining rate environment since the early 1980s, the bank suggested.

As a result, the spread between five-year fixed mortgages and variable mortgages has been pushed wider in recent years, and is now near an all-time high.

Where Does Your Money Go? ( part 2 )

2009-10-21T08:23:00.000-07:00

Step 2: Fixed expenses

Fixed expenses are recurring expenses. You must pay these amounts each month, no matter your income level or your mood.

Step 3: Variable costs

Variables expenses can vary from month to month as they are not necessarily recurrent. When due, you must pay these amounts, whether you expect to or not.

Estimate the costs as fairly as possible and try not to forget any. Some of these expenses are not payable on a monthly basis (taxes, registration, driver's license, etc...) while others are unpredictable (car repairs, illness, etc...).

Be as accurate as possible, based on your past years’ experience. Also, as it is better to save more than not enough, you'll appreciate having a cash surplus.

For those who really want the best way to assess monthly expenses, keep a financial journal for a few weeks. By registering everyday expenses, you might be surprised! These lattes purchased every morning at $3.45 costs $900 at the end of the year!

These small purchases add up! In addition, you will realize quickly that there are many expenses that you failed to include simply because you did not think of them when making a budget. You'll be surprised to see how fast these small amounts can accumulate, forming large amounts that can affect the balance of your budget.

You’ll have to decide what matters most in your life: a trip or a coffee every morning?

Step 4: The results

You have carefully compiled a list of your income and expenditure and, by completing the table, you now realize what your current situation is. Of course, you’ll make adjustments along the way to reflect your salary increases or add an expense account that you had forgotten.

Your budget completed, you have on hand an important tool to help you spend or save.

Once completed, you should print your budget and check it often during the first few months. Annotate it; this way, you’ll gain experience and make a better budget next month.

Remember, the primary purpose of a budget is to see where your money goes. This tool allows you to make adjustments in your financial behaviour and achieve goals you will set.

Generally, it is suggested to get rid of one’s debts as quickly as possible by first paying off the debt with the higher interest rate. A good trick is to tackle the debt with the smallest balance first and moving on to the next and so on, eliminating debts one by one.

In some cases, it is preferable to consolidate debts. This would achieve multiple objectives, reduce the monthly financial burden, reduce the cost of credit and reduce stress.

Do not hesitate to contact your Mortgage Financing Consultant at any time; he or she will be glad to guide you towards the best solutions.

Where Does Your Money Go?

2009-10-14T08:19:00.000-07:00

Your income is not increasing at the same speed as the cost of living, your grocery cart costs you more and more each week, as are taxes, back to school expenses (books, school supplies and clothing), registration for your car or your motorcycle, insurances, etc..

The list is long and the money flows away from you. If you're not in control of your finances, your debt will rapidly increase and you are likely to find yourself in an uncomfortable situation.

So, what to do, what are the necessary steps to gain control? You've tried to keep a budget, but you find it arduous and complicated. Nevertheless, it is necessary so, to help you, we offer a fairly simple and effective method to record your income and expenses.

To establish a budget, a first decision is required. You must choose the period covered by your budget. It may be a week, a month, a year or another period suitable to your situation.

A classic is to make a monthly budget. Indeed, revenues are easy to calculate for a month, as is spending. The rent or mortgage payment and utility bills, telephone, cable television - among others - are often monthly. For these reasons, we will set a monthly budget you can adapt to suit your needs (see Appendix at the end of this document).

Step 1: Income

Do not make the mistake of inflating your income; you will gain nothing counting an illusory or uncertain income. You must live with reality.
Be honest. Remember that the purpose of a budget is to grasp, at a glance, your financial situation. If you inflate your income and minimize your expenses, your budget will be useless.

Revenues are recorded. The time has now come to calculate your monthly expenses (spending).

Questions And Answers About The Home Buying Program (HBP) ( part 2 )

2009-09-28T06:53:00.001-07:00

13. I'm on the CSST permanently; would it be advantageous to take advantage of an RRSP loan
under the HBP? No, because CSST income is not taxable, it would be impossible to have a
tax return if you did not pay any.

14. I earn $22,000 per year and have two children in my charge, would it be advantageous for me
to make an RRSP loan in order to get a considerable tax return? No, because with the two
children to your office, the tax previously paid will be reimbursed almost in full by year-end,
there would be no other tax saving.

15. I buy a new property, can I use the HBP? Yes

16. I live in Canada; can I buy a property in the United States and use the HBP for my down
payment? No, the property must be located in Canada.

17. I do not intend to go live in the property that I am about to buy, can I use the HBP?

No, there must be intent to move to the property to be eligible for the HBP.

18. I am a tenant, can I buy the building where I live using my RRSP? Yes

19. I take my RRSP under the HBP to buy my first home, do I have to take that money specifically
as down payment on the purchase? No, the withdrawal of money from the RRSP can be used
to pay other expenses related to the purchase of the new house. (Legal fees, furniture, etc)

20. I made a RRSP loan on the 1st
of February, what is the earliest date that I can notarized?
60 days after the date of purchase: March 4th 2009

21. After notarized, what is the deadline to withdraw my RRSP under the HBP? 30 days after the
date of signing of the sale

22. I make a withdrawal from my RRSP under the HBP, what is the maximum date to notarize?
October 1st of the following year

23. Can I defer my RRSP deduction on my later years? Yes

24. How much do I have to repay yrarly to my RRSP if I make a withdrawal from my RRSP under
the HBP? A fifteenth (1 / 15) of the amount withdrawn.

25. If I sell my property, do I have to reimburse my RRSP immediately? No

26. I took advantage of the HBP to purchase my property. Sold it 5 years ago. And I have not
owned a home; I lived in, for 5 years. Can I purchase a principal residence and use the HBP?
Yes, but you need refund all the withdrawn to your RRSP under the first HBP before the 1st

of January of the year when the 2nd HBP will be done.

Questions And Answers About The Home Buying Program (HBP)

2009-09-28T06:49:00.000-07:00

The HBP permits an individual and spouse, if any, to use his RRSP to buy a house and pay the related expenses without income tax withholding; provided they return the money obtained in his RRSP over a period of 15 years.

1. I own my home and I buy another property: do I qualify for the program? No

2. I own my home and my new partner lives with me for 1 year: can I use the HBP if we decide to buy a new property? Theoretically not, against, if separated for more than 3 months (change
of address) on non-owner spouse could.

3. I own two rental properties and I do not live there: I can use the HBP if I buy a home now, to go live in? Yes

4. What is the maximum date of purchase RRSP in the current year, to deduct the tax year just
ended? 1st of March

5. I have my RRSP with the Quebec Workers Fund (FTQ): Can I withdraw under the HBP? Yes, but you must prove that the FTQ RRSP are the last to be removed and there is no other
RRSP placed elsewhere.

6. Buying a mobile home on leased land, can I qualify? Yes

7. I have $30000 in RRSPs, can withdraw all of it under the HBP? No, because the maximum
per taxpayer withdrawal under the HBP is $25000

8. My notice of assessment indicates that I have the right to contribute to my RRSP for $7,000, can I contribute $8,500 without penalty? Yes, a surplus contribution of $ 2,000 can be done, but the deduction of the surplus must be applied to the following year.

9. What is the maximum we can withdraw our RRSP under the HBP with no tax penalty? $25,000

10. Can I use my tax return as the only cash for the down payment for the property I want to buy, if the RRSP were bought with borrowed money? Yes, but the customer must qualify in the
CMHC Multi-Source Program and pay the required premium for the CMHC mortgage
insurance.

11. I have $5,000 in RRSPs that I will use as cash down for the purchase of my residence. If my
notice of assessment indicates that I have the right to contribute up to $22,000 in my RRSP, can I make an RRSP loan of $22,000? No, because the total withdrawal would be $ 27,000 and a
taxpayer has the right to withdraw only $25,000 in its RRSP.

12. I have $ 10,000 invested in RRSPs, I want to use these RRSP as down payment for the
purchase of my residence. I signed an offer to purchase with my real estate agent on December
1st, 99. The date of signature at the notary is scheduled for April 1st, 2009.

On the 22nd ofDecember 2008, I withdraw from my RRSP an amount of $2,000. On February 20th, I withdraw the balance of my RRSP, or $8,000. Are these withdrawals will be treated as withdrawn under HBP?

Only the first withdrawal will be considered as HBP, the second $ 8,000 will be taxed. Why?
RRSP withdrawals under the HBP must be made in the same calendar year.

THE TESTAMENT

2009-09-15T07:07:00.000-07:00

A will is a vital element of estate planning, but many people do not know why. A will is a document that speaks in your name after your death.

It transmits your last wishes and allows you – you, and not the State - to identify the persons to whom you will leave the assets you have accumulated during your lifetime and, more importantly, the person(s) who will take care of your underage children if both parents die.

A will facilitates the administration of your estate; you could save income taxes and avoid the serious consequences of dying without a will. Yet, despite the importance of wills, it is estimated that only half of Canadians have one.

This is alarming when one considers the benefits that a will provides and the relatively low cost of its preparation. We work very hard to accumulate wealth, so why not ensure it will not be wasted?

Protection for your family or your business

A will is the basis of an estate plan. A will properly prepared means that your assets will be distributed as per your wishes and that loved ones will benefit, unburdened by taxes. You can avoid unnecessary costs, endless payment settlements and the consequences of a State will.

You can also choose your estate executor and the guardian of your children. Given that the preparation of a will costs a few hundred dollars and knowing the potential consequences of the absence of such a document, it is obvious that everyone should have a Will.

What to do after having written a will?

Once your will is drafted, you must regularly review and change it whenever an event occurs in your life or the life of your heirs: marriage, divorce, birth, death, disability, new career or other major event. Note also that in most provinces, but not in Quebec, marriage annuls an earlier will unless specified otherwise.

A will must also be reviewed as soon as changes occur in laws governing income, family or inheritance taxes. Ideally, to ensure that it still reflects your intentions, a will should be reviewed annually or every two years, even if no major change has occurred.

Housing Activity

2009-09-07T07:42:00.000-07:00

Canada's national housing agency predicts home construction to make a comeback in the second half of this year and into 2010, however economists say it could be a long time before we see the same building frenzy that has dominated this decade.

Canada Mortgage and Housing Corp. said Thursday it believes housing starts will hit 141,900, of which 68,400 will be single-family detached homes and 73,500 multiple-housing units, such as condos.

CMHC chief economist Bob Dugan said economic uncertainty and lower employment tempered new-housing construction in the first half of this year.

"In the second half of 2009 and in 2010, we expect housing markets across Canada to strengthen," he said in releasing the agency's third-quarter outlook.

CMHC says improving activity on the resale market and lower inventory levels in both the new-and existing-home markets should prompt builders to increase residential construction.

CMHC predicts overall starts to reach 150,300 in 2010.

That compares to 211,056 housing starts recorded in 2008, of which 93,202 were single-family and 117,854 were multiple-housing units.

Annual housing starts have surpassed the 200,000 mark every year since 2002.

However, CIBC World Markets economist Benjamin Tal believes the recovery in housing starts will be much slower.

"I think those number are a bit on the high side," he said, predicting a "not very weak, but not very strong" recovery of about 140,000 units in 2010.

Tall also believes housing starts won't surpass 200,000 annually again for quite some time.

"We simply can't justify it. We don't have the demand," Tal said.

The new normal will be about 170,000 to 180,000 starts annually, which we could hit by 2011, Tal said.

Slower population growth and higher costs for new homes after provincial sales taxes are harmonized with the GST in provinces such as Ontario and B.C. next year will soften near-term growth in new home construction, Tal said.

Scotiabank economist Adrienne Warren also sees a slow recovery in new home building due to oversupply in some major markets, particularly in the condominium sector.

But Warren said the CMHC forecast is yet another sign Canada's real estate market is on the rebound, and performing better than previously thought.

"It reaffirms that the market is far exceeding expectations across the board," Warren said.

CMHC also said Thursday it expects total sales on the Multiple Listing Service (MLS) to hit 420,700 in 2009 compared with 433,990 in 2008.

That forecast is slightly higher than the Canadian Real Estate Association's recently revised 2009 resale forecast of 432,000 units.

CREA boosted its outlook last week, saying it expects resale activity to drop by 0.4 per cent in 2009 versus 2008. That's better than its previous forecast of a 14.7 per cent drop year-over-year.

CHMC said the average price of a home across Canada last year was $303,607 and is expected to fall slightly to $301,400 in 2009, before climbing to $306,300 in 2010.

Warren predicts 2009 sales and prices will be on par with last year's levels.

"By and large we are looking at matching last year's levels, and holding steady on average, which is far from what anyone expected a few months ago," she said.

She expects a "modest pickup" in sales in 2010.

"We will be looking at more of a balanced market."

Canada Home Prices Seen Rising

2009-08-31T06:51:00.000-07:00

Canadian resale home prices are likely to rise, not fall, and sales will nearly match those of last year, the Canadian Real Estate Association said in a revised forecast on Thursday.

A much stronger showing in the second quarter, and a solid start to the third quarter, prompted CREA to predict a dramatically smaller decline in sales of previously owned homes for 2009, and for prices to edge up.

It said the current resale market was like "night and day" compared with the beginning of the year.

The group said its new forecast for a 1.5 percent rise to C$309,500 ($283,945) for the average home price contrasts with a call for a 5.2 percent drop to C$287,700 in its May outlook.

CREA also revised its forecast for 2009 sales to 432,600 units, a 0.4 percent decline from 2008 when 434,477 units changed hands.

That is a much smaller retreat than the May forecast, when the association expected sales would drop 14.7 percent from 2008 -- itself a revision from a previous prediction of a 16.9 percent drop in sales.

"The recovery in Canadian housing I think was beyond the imagination of even the most strident optimist. It truly is remarkable and I think that revision just reflects it," said Doug Porter, deputy chief economist at BMO Capital Markets.

The Canadian residential property market was hit hard in the final quarter of 2008 as the recession choked off demand, and accounted for more than half of the decline in transactions from 2007, the record high year. Sales tumbled 17.1 percent in 2008 from 2007.

The data from the last six months has increasingly shown that people are venturing back into the market. Low mortgage rates and signs that the worst of the economic slump is over are stimulating demand.

There has also been a turnaround in consumer sentiment, underscored by Thursday's report from the Conference Board of Canada that showed confidence rose in August for the sixth straight month.

British Columbia and Ontario are now expected to see an annual increase in sales activity, while CREA cut its forecast declines for several provinces, including Alberta, Saskatchewan and Quebec.

Nearly all provinces are expected to see a higher average price this year, except Alberta, where the average is seen falling 4.4 percent. British Columbia is expected to be relatively stable with a 0.1 percent dip.

For 2010, the average price nationally is expected to rise 2.1 percent to C$315,900, while sales activity is seen gaining 5.3 percent to 455,400 units.

Bank Of Canada Unlikely To Raise Rates

2009-08-25T08:50:00.000-07:00

The Bank of Canada is unlikely to hike interest rates until 2011 because the lingering effects of the global economic meltdown will continue to mute both growth and inflation, according to a report issued Tuesday by CIBC World Markets.

"While the 2009 recession may already be over, the slack it created is both large and likely to persist," said CIBC chief economist Avery Shenfeld.

"Unlike the Bank of Canada, we don't expect growth to average above the non-inflationary potential until 2011," Shenfeld added.

"But even under (Bank of Canada) Governor (Mark) Carney's more optimistic trajectory, inflation will still be feeling the downward pressure of a sizable output gap next year, one as large as we saw in the early 1980s and 1990s downturns."

He predicted both headline and core prices would cross paths in the second quarter of 2010, at a level well under the Bank of Canada's two per cent target.

"As a result, Canada's inflation rate will be no threat to the bank easily fulfilling its pledge to keep interest rates at a slim quarter point through mid-2010," he said. "In fact, market expectations for rate hikes in the first half of 2010 could be a full year too premature."

While the core inflation rate did not decelerate as much as the Bank of Canada predicted earlier this year, there are reasons to expect a further easing in core inflation ahead, Shenfeld said, including "what economists call the income effect."

Shenfeld notes that by stripping out volatile items from the CPI, the Bank of Canada's core measure now excludes most of the items that have been deflating.

With the volatile measures included, headline CPI is negative, largely driven by the dive in gasoline prices from a year ago. Lower gas prices have pulled down costs for intercity transportation fares as well, which the Bank of Canada also excludes from core inflation. Other non-core items such as natural gas, fuel oil and mortgage interest costs have also eased off.

"The deep dive in non-core items has left those Canadians still working with some spending power," Shenfeld said in explaining the income effect.

"While nominal wages have begun to decelerate in a slack labour market, a negative year-on-year inflation rate has meant that in real terms, the buying power of the average wage has escalated."

"So after filling their gas tank and paying their new, lower, mortgage bills, Canadians simply have more money in their pockets when they go shopping for other items, keeping those prices aloft."

Shenfeld notes that economic slack usually takes time to exert its disinflationary force and believes the upward pressure on prices will ease in the coming months.

Meanwhile, less benign headline inflation expected next year "implies diminished buying power for other goods, contributing to a cooling in core CPI."

"With a lag, a strong Canadian dollar will also provide a dampening impact on retail prices for imported goods and services."

Meanwhile, unlike the central bank's outlook, the CIBC report does not see the Canadian economy gaining much benefit from a forecasted U.S. recovery.

CIBC's analysis finds that protectionist trade barriers and a tilt in U.S. stimulus spending towards industries that have less-than-average propensities to import from Canada, will dampen the benefits that this country typically sees from economic growth south of the border.

Lower Your Monthly Mortgage Payments

2009-08-17T09:39:00.000-07:00

When you decide to buy a home, getting the best possible loan is important. It can save you thousands of dollars.

How you can keep your monthly mortgage payments down? These are the different components of the loan that can affect your monthly mortgage payments.

1. Down Payment:
The down payment is how much cash you will put down up front. The rest of the price is how much you will finance with the lender. For example, if the purchase price is $300,000, and you are putting 20% down, that means you will be putting down $60,000, and the loan amount will then be $240,000.

The more money you can put down, the lower your monthly payment will be. Basically, the less you finance, the less will be amortized over the life of your loan. Also, you usually get a better interest rate when you put down at least 20%, so that helps out as well.

2. Loan Life:

The number of years the loan will be amortized over affects the monthly payments. The longer the life of the loan, the less you pay each month because it is spread out over a longer term. Typically, the longest term is 30 years. Of course, the longer the term, the more total interest you will pay, so be sure to weigh that in as well.

3. Interest Rate:

One major variable that will differ between lenders is the interest rate. This is the rate they are charging you for borrowing the money. The interest rate will change your mortgage interest payment each month. The higher the rate, the more your payment. For a $240,000 loan, the payment including just principal and interest at 6.5% would be $1,517. At 7.0%, it is $1,597. A $80 difference per month does not sound like a lot, but over 30 years, that is $28,800.

4. Property Taxes:

Property taxes are added into your monthly cost of owning a home either by escrowing it with the lender or by you saving to pay it at the end of the year. The area where your property is located will influence this more than anything. The higher the tax rate and higher the appraisal values, the more dollar amount you will pay each month.

5. Insurance Rate:

Similarly, the higher the insurance rate, the more you will pay per month. This is mostly affects houses that are in special insurance areas that need more coverage, like flood zones or hurricane areas.

6. Points:

Points are paid by the Borrower in order to buy down the interest rate. If you get some insanely low interest rate from one lender that seems completely out of whack from the other quotes, this might be because they are quoting you a rate with points.

A point is equal to 1% of the loan amount, and you pay this point as part of your closing costs. So for example, with a loan for $240,000, one point would be $2,400 and that point might buy your interest rate of 6.5% down to 6.25%. Buying down your rate will lower your monthly payment.

Housing Recovery

2009-08-04T06:59:00.000-07:00

Signs of recovery in the U.S. housing market and growing demand for wood as an energy source could herald a recovery in demand for forestry products, a United Nations agency said on Tuesday.

Officials from the U.N. Economic Commission for Europe , which covers North America, Europe and the former Soviet Union, made the forecasts of recovery at the presentation of a report showing the forestry products industry had suffered one of its biggest ever drops in consumption last year.

"We have just seen the early indications of a turn-up in housing in the United States, and that is the new housing starts have ceased to go down, which is a positive sign to us that perhaps we have hit the bottom," Ed Pepke, one of the authors of the report, told a news conference.

He said U.S. new house building needed to return to about a million a year, from unsustainable levels of 2 million or more a few years ago.

ENERGY DEMAND

Despite the financial crisis, which was triggered by lax U.S. mortgage lending, demand for wood as an energy source had been growing, UNECE said.

World wood fuel pellet production grew by 20 percent in 2008 to nearly 10 million tonnes and is expected to approach 12 million this year, with capacity doubling to more than 20 million by 2012, it said.

Europe is the largest consumer and producer of wood fuel pellets, while Canada is the single largest exporter, mainly to Europe, UNECE said in a statement.

Asia could become an important consumer, too, as the first large-scale industrial projects to co-fire coal with wood biomass took place in Japan in 2008, it said.

The UNECE region accounts for 42 percent of the world's forests, and its 56 countries account for 60 percent of production and 57 percent of consumption of global wood and paper products.

The fall in consumption last year reflected primarily the collapse in housing construction in the United States and to a lesser extent in Europe.

Fewer than half a million houses are being built in the U.S. this year, 75 percent down from 2.2 million in 2006, Pepke said.

The U.S. housing collapse devastated Canada's forestry industry, which sends 90 percent of its production to its neighbour. The strong Canadian dollar also hurt, he said.

Consumption of forestry products fell 8.5 percent in 2008 to 1.26 million cubic metres equivalent. Within the UNECE region, consumption fell 17.7 percent in North America and 10.6 percent in Europe, but rose 6 percent in the former Soviet Union.

The wood energy sector is increasingly sourcing material directly from forests instead of using wood-processing waste as a by-product because of the fall in timber production.

UNECE officials say wood energy has good prospects as a sustainable and carbon-neutral energy form, as felling of trees in the region is less than growth, in contrast to deforestation seen in South America, Asia and Oceania.

"The forests in our region are accumulating more and more wood every year ... There is potential for using more wood for industry and for energy," Pepke said.

New Home Sales

2009-07-28T10:49:00.000-07:00

New single-family home sales recorded an uptick in June, increasing 11 percent compared with May, to an annualized rate of 384,000, the Commerce Department said. It looks like a little pent-up demand for new homes is being unleashed, especially since prices are still falling.

The Commerce Department also reported that the median price for a new house stood at $206,200 in June, down 12 percent from last June.

An uptick, but how serious an uptick? When compared with June 2008, new housing sales were still down 21.3 percent, so the housing market has a ways to go before recovery sets in. Still, investors seem to be looking around for reasons to be cheerful about housing, since news of the uptick moved the Dow Jones U.S. Home Construction Index up 4.5 percent on Monday.

First American CoreLogic, which tracks commercial mortgage data, had no such limited good news for the commercial real estate sector on Monday, reporting that roughly $165 billion in commercial real estate loans will mature by the end of 2009. That's a lot of cans that need to be kicked down the road, and soon, with the problem being especially tricky for the loans that were bundled with other loans in CMBS back in the heyday of that vehicle in the mid-2000s.

It might not be the best time to enter the retail world, but when you're an 800-pound gorilla, you can elbow your way in. In any case, Microsoft has confirmed that it indeed has detailed plans for retail stores, which has been the subject of speculation for some time now. Somehow or other last Friday, a tech web site got ahold of PowerPoint slides illustrating various aspects of the retail concept, created by New York-based consulting firm Lippicott for the software giant. Microsoft duely acknowledged its efforts to enter the tech retail realm so ably occupied by Apple at the moment.

But the company denied that the slides actually represented a final retail product. It also didn't comment on exactly what form its version of the Apple Genius Bar would take, which will possibly be called the "Answer Bar," "Guru Bar" or "Windows Bar," or whether there will be a special room in which customers can vent frustration by hitting punching bags with Bill Gates' mug on them.

Federal Reserve chairman Ben Bernanke, who seems to be out on a campaign tour these days, might still be preaching caution about the state of the U.S. economy, but the governor of the Bank of Canada, Mark Carney, is decidedly more optimistic about his country's economy. Late last week, Canada's central banker asserted that the nation's recession is virtually over.

Carney has, in fact, predicted that Canada's economy is going to start expanding during this quarter, earlier than previously anticipated. He forecast annualized growth of 1.3 percent in 3Q09.

On the other hand, he also said that the recovery is going to be "a long road," with no growth in jobs any time soon, adding that the bank plans to keep its benchmark interest rate at 0.25 percent, same as the Fed. Such statements may be part of an effort Carney has undertaking lately to talk down the Canadian dollar, since a too-strong loonie against the greenback is a recipe for poor exports to the United States, one of the linchpins of the Canadian economy that has already suffered because the U.S. recession.

Wall Street had a busy day on Monday, mostly in negative territory, but by the time the final bell rang, the Dow Jones Industrial Average was up 15.27 points, or 0.17 percent. Gains by the S&P 500 and the Nasdaq were likewise scant: 0.3 percent and 0.1 percent respectively.

Canada's Highest Net Worth City

2009-07-21T08:41:00.000-07:00

Vancouver has stolen Calgary's crown as the city with the highest net worth.

In a soon-to-be-published database that looks at how Canadians handled their wealth during the rapid change of fortunes that marred 2008, Analytics exposes profound changes in the way people approach their wealth.

Canadians have seen their nest eggs shrivel, beefed up their savings, scaled back their borrowing, and embraced caution, an abrupt change in attitude that will likely persist, says Catherine Pearson, vice-president of Analytics in Toronto.

Generally, the research, which crunches and dissects numbers from 80 different sources and goes into deep local detail, found that the richer Canadians were, the harder they fell.

"The more money you have, the more you have to lose," Ms. Pearson said.

In Calgary, net worth fell as the value of household investments plunged and debt climbed.

In Vancouver, though, consumers saved more and real estate fared better last year.

Net worth, which measures someone's assets minus debts, dropped 6.2 per cent for Canadians as a whole last year. But Calgary residents saw their wealth plunge 12.3 per cent, while Vancouver's residents were able to hang on to much of their riches. There, net worth fell just 3.1 per cent between December, 2007, and December, 2008.

Now Vancouver's residents have taken first place for household net worth, while Calgary has fallen to second place.

Vancouverite Sebastian Albrecht rode that Pacific wave. He has a lot of his money tied up in real estate. And it's these investments - with prices down less than 10 per cent from their peak last year - that has made the city surrounded by mountains and ocean the richest in Canada, supplanting the country's energy capital Calgary.

Mr. Albrecht bought his first condo a decade ago, after university. He stretched himself - and slept in a sleeping bag on the floor for a couple months in the unfurnished home.

A decade later, he lives in a $600,000 home that he bought two years ago for $500,000 and also owns - and rents out - a $350,000 town home and a $300,000 condo. He has some money in stocks, but only about 10 per cent of his net worth.

Born in the city, an entrepreneur at heart, the 34-year-old worked in IT and then started a clothing import-export business and dabbled in real estate - until he became a realtor himself three years ago, a perch from which he sees a cross-section of Vancouver and the people who generate the city's wealth. From movie makers to junior mining players, it is a diffuse mix.

"The difference in Vancouver is it's more diverse than a lot of areas in Canada," Mr. Albrecht says. "Calgary has oil. Toronto is finance. Here, there's a lot of creativity. I'm amazed how some people make money here."

Vancouver's net worth per household is an average of $575,826, while Calgary's is $569,926, the research shows.

Compare that with Newfoundland, where household net worth is typically $140,706, or even to Ontario, where average household wealth is $354,968.

Most of Calgary's losses stemmed from a plunge in the value of investments held by households, such as stocks, bonds and mutual funds. At the same time, Calgarians took on large liabilities in the past year, and Calgary is now the home of the most heavily indebted people in Canada. Albertans in general have 30 per cent more consumer debt than the average Canadian, the research shows. And the mortgage debt of many young people has soared.

"Perhaps they simply haven't realized the fact that the heady boom days are now over," the researchers said in their analysis.

Vancouver residents, on the other hand, were able to mitigate their exposure to the ravages of the recession by increasing savings, and by benefiting from more stability in the housing market in 2008.

The survey doesn't cover 2009. In the first six months of this year, prices for existing homes were down 8.6 per cent in Vancouver from the same period of last year, and 9.8 per cent in Calgary, resale statistics show.

Perhaps because they're less wounded than the rest of the country, British Columbians are piling back into the stock market faster than elsewhere.

But people in Quebec and Ontario are gun-shy, and are stashing away any extra money they have in safe places. Quebec households in particular have low credit card debt, and boosted their holdings of sure-thing guaranteed investment certificates by 5 per cent over the course of the year. Deposits in banks and credit unions have risen 4.9 per cent.

People in Ontario, where the recession has hit hardest, increased their term deposits by 15.3 per cent and increased their debt loads by just 3.0 per cent - much less than the national average increase of 8.1 per cent.

"Hats off to Ontario households for being fiscally responsible," the researchers said.

Still, Ontarians were paying dearly for such debt. Residents were using 7.1 per cent of their disposable income to pay interest charges - 20-per-cent higher than the national average of 6.3 per cent. In Alberta, servicing non-mortgage debt ate up just 6.1 per cent of discretionary income, despite the rising debt loads.

Indeed, Albertans' discretionary income was higher than anywhere else in the country, at $53,237 per household. That was 29-per-cent higher than second-place Ontario.

The oil-rich province may have been hammered by the global recession, but households still have plenty of wealth. "Alberta's got the spending power," the researchers conclude.

June Home Sales Rise 8.7%

2009-07-16T07:04:00.000-07:00

Canadian sales of existing homes rose for a fifth month in June, adding to evidence that record low borrowing costs are fueling housing demand.

Sales rose 8.7 percent to 41,304 homes from the previous month on a seasonally adjusted basis, the Canadian Real Estate Association said today in a statement from Ottawa. Average home prices rose 3.6 percent from a year earlier and the inventory of unsold homes fell to its lowest since August 2007.

Recent data on Canada’s housing market suggest the Bank of Canada’s efforts to stimulate spending with interest rate cuts are helping fuel demand for homes and may be reversing a slump in home construction. The Bank of Canada, which forecast that housing will shed 1.1 percentage points from growth in 2009, has cut its benchmark lending rate to a record 0.25 percent.

“Obviously there is one segment of society that doesn’t believe this will be a lengthy downturn,” said Doug Porter, deputy chief economist with BMO Capital Markets in Toronto.

New home sales jumped a record 32 percent during the second quarter to 114,173 units, the realtor group said. The number of months needed to sell current inventories fell to 4.2 in June, the lowest level in more than two years.

Agents and Brokers

Output of real estate agents and brokers was up 8.2 percent in April, Statistics Canada said June 30. Canada Mortgage and Housing Corp. said July 9 that new home construction rose for a second month in June, while the total value of permits issued by municipalities jumped 15 percent in May.

One explanation for the pick-up in the real estate market, Porter said, may be that the decline earlier this year was “extreme” and created pent-up demand for homes. Existing home sales fell in January to their lowest since 2000.

“I can’t help but wonder whether these gains are sustainable,” Porter said.

The country also may be benefiting from a financial system that has largely escaped bad-asset problems plaguing other countries.

“The positive impact of low interest rates on mortgage demand is clearly much more powerful in Canada than in the U.S.,” Derek Holt, an economist at Scotia Capital in Toronto, said in a note to investors.

2009-07-07T07:38:00.001-07:00

ONE of the most influential debt ratings agencies, Standard & Poor's, this week issued a paper on why Australia's big banks should retain their AA credit rating over the medium term.

That the Australian banks have a stable ratings outlook is an unadulterated positive for investors, and should be a matter of national pride commensurate with the charms of the Great Barrier Reef and consecutive appearances in the World Cup.

Two years ago there were more than 50 banks around the globe with AA credit ratings, but now there are just nine:

ANZ (AA)

Commonwealth (AA)

National Australia Bank (AA)

Westpac (AA)

Bank of Nova Scotia (AA-)

DBS Bank (AA-)

Nordea Bank (AA-)

Royal Bank of Canada (AA-)

Toronto-Dominion Bank (AA-)

Overseas investors have questioned why the Australian banks have retained their strong ratings through the credit crisis while bigger global players have been downgraded.

The Australian banks' stable outlook has come about through a mixture of good management and regulation, and what the ratings agency refers to as a "less fiercely competitive environment" than in some overseas markets, which has meant less risky lending practices.

A rating of AA and a stable outlook for that rating means the big banks can raise money in overseas capital markets at relatively attractive rates and are among the first to raise funds without the help of the costly Government guarantee.

This is a good thing when, according to the Reserve Bank, they are reliant on offshore wholesale sources for about 80 per cent of their long-term funding, a disproportionate level when compared with most of their overseas peers.

These are no small numbers. In the first six months of this year, industry publication DCM Review estimates Australian banks raised about $64 billion in overseas capital markets, putting them well on the way to eclipsing last year's record offshore issuance.

If home prices hold up and our economy stays out of recession, it will be due to two key factors: the willingness of the Chinese to buy our natural resources and the credit intermediation powers of our Big Four banks.

But nothing can be taken for granted.

Standard & Poor's warns that it would have to review its position if bad debt charges increased materially or stress re-emerges in wholesale funding markets.

Indeed, a few weeks earlier it downgraded the prospects for more than 20 mostly small US banks but also including big mortgage bank Wells Fargo.

Many of the comments that accompanied the notice of the downgrade could be applied to the Australian banks if you shut one eye. For instance, the agency said that the downgrades reflected its belief that "operating conditions for the industry will become less favourable than they were in the past … and (incur) tighter regulatory supervision".

The other major ratings house, Moody's, already describes the outlook for the big Australian banks as negative, saying business asset quality is likely to be the most important near-term driver of ratings.

Crucially, the prospects of all the major banks holding their ratings are not homogeneous.

In other words, it is quite possible that one of the big banks could have a downgrade while the others hang on to their rating. Share investors need to be aware of this and seek advice about which bank is the most at risk over the longer term.

Having to operate under a single A credit rating could cost a major bank about $200 million in extra annual funding costs.

S&P says that while the Big Four banks are similar in many ways, the impact of market developments on individual banks will be assessed case by case. Ratings could be lowered in the event of mergers and acquisitions, a bank pursuing a riskier business model or adverse investor sentiment.

It also notes that some banks have been more prone to one-off events, suggesting potential differences in risk management and culture (it does not include examples).

The banks are working hard to ensure they are not delivered any nasty credit rating surprises. For instance, NAB in its May interim results presentation cited the maintenance of its AA credit rating as one of its eight priorities in navigating a recession.

In S&P's eyes, NAB's British exposure means that it has a moderately higher credit risk than its peers in the shorter term, but over the longer term this exposure should be a source of diversity and growth.

Economy's Recovery

2009-06-28T21:29:00.000-07:00

Bank of Canada governor Mark Carney has economists, and perhaps the markets, trying to read between the lines again, if not scratching their collective heads.

The youthful central banker has made three public pronouncements in the past two weeks that have surprised listeners for their foreboding tone on economic developments, particularly since Carney is widely regarded as being in the glass-half-full crowd.

But just as many economists are pointing to signs of recovery - with the World Bank a notable exception - Carney has been warning about putting too much stock in so-called "green shoots" - the now-common catch phrase used to indicate the first signs of life in a moribund economy.

In recent speeches in Montreal and Regina, the bank governor was almost dismissive of indicators of economic improvement, warning that whatever good news existed was caused artificially by massive government and central bank stimulus. The private sector "is not there yet," he cautioned.

And in a report from an off-the-record speech Tuesday at the Woodrow Wilson International Centre for Scholars in Washington, Carney broke with official Ottawa dogma in declaring Canada's recession to be as deep as that in the U.S.

Bank officials refused to confirm or deny the remark, instead pointing to Carney's last official forecast in April, which indeed has Canada's gross domestic product shrinking by three per cent this year, as opposed to 2.4 per cent for the U.S.

"Nobody expects policymakers to be cheerleaders, but do they have to be naysayers?" asked Douglas Porter, deputy chief economist with the Bank of Montreal, who is among several who wonder at Carney's transformation from Mr. Sunshine to Dr. Gloom in four months.

"The Bank of Canada is one of the few forecasters in the world that sees Canada underperforming the U.S. this year," Porter notes.

But there's more. Carney is also in an exclusive club of economic forecasters that sees Canada rebounding from the bottom at twice the rate of the U.S. next year, a prognosis he was reported have repeated last week in Washington. Most see the two economies returning to slow growth of between 1.5 and two per cent next year.

As economists will readily admit, predicting how thousands of businesses and millions of consumers will behave next month or next year is part science and part black magic, particularly in volatile times such as these when stock markets appear to fluctuate wildly on the thinnest of premises.

And Carney has bristled in the past of criticism that he is too optimistic.

"We don't do optimism; we don't do pessimism," Carney responded in February over criticism of his rosy and now discarded 3.8 per cent growth call for the Canadian economy in 2010. "We do realism at the Bank of Canada."

One explanation, says economic consultant Dale Orr, who was among Canada's leading forecasters when he worked for Global Insight, is that Carney is overcompensating for his most widely criticized forecast in January.

Even former bank governor David Dodge dismissed as "unrealistic" notions that Canada would soon return to normal as if no fundamental damage had occurred.

Another, however, is that Carney is seeing dark clouds forming on the horizon and is setting the stage for yet another downward revision of his outlook.

"I think he's walking down the middle, not prepared to revise his forecast just yet but the tone is definitely shifted toward all the downside risk," said Derek Holt, vicepresident of economics with Scotia Capital.

"They (bank officials) are less convinced that the domestic fundamentals are looking as rosy as they were just a few months ago."

Carney has a long way south to go before he becomes as pessimistic in the numbers as he appears to be in his tone. The Bank of Canada's 2.5 per cent growth projection for next year is at least half a point above consensus, and some, like the Organization for Economic Co-operation and Development, see Canada growing a paltry 0.7 per cent in 2010.

Orr notes that the governor has expressed concern about the impact of the stronger Canadian dollar, and he may be attempting to "take the steam" out of the currency lest in keep a lit on recovery by hamstringing manufactured exports.

There are other problems coming into view, says Holt.

"We lag most other countries in terms of the speed by which we've addressed the problems," he said. "Japan started to burn off its excess inventory in quarter four (2008) and quarter one (2009), whereas Canada still had in quarter one the highest inventory to sales ratio as we've had since the early '90s recession and it's trending upwards."

Another sign of trouble is in bond yields, which have pushed long-term mortgage rates up just when the economy desperately needs Americans and Canadians to start buying homes again.

And there's the long-recognized hangover from the pre-recession spending binge which depleted household reserves, points out TD Bank economist Diana Petramala. Households have lost $510 billion in the last three quarters through a combination of lower home values and stock market deterioration.

"The damage to the household balance sheet... will take time to repair, and during the period, consumers will continue to scale spending growth increase savings," she predicted.

Holt, who remains bearish about the next few years, agrees with Carney about the lacklustre response of the private sector economy to government stimulus. He says although central banks have done all they can to cut interest rates, consumers and businesses are just not borrowing.

Porter concedes that most of the recent good news points to an ailing economy that has entered a period of convalescence. There could be a relapse, he admits, but it is also possible for the patient to make a better recovery than many suspect.

"I'm concerned because part of the puzzle that we need is to see some repair in confidence, and to have one of our policy-makers stepping on the green shoots is not helpful," he said.

Given the fragile nature of the economy, a little encouragement couldn't hurt and might even help, he says.

Canada Recovery...

2009-06-21T19:54:00.000-07:00

In the midst of recession, the average national price of Canadian resale homes hit a record level in May, and sales activity increased for the fourth consecutive month. While U.S. residential real estate prices have been falling for almost three years, Canada seems to have stumbled and picked itself up again in a span of 12 months.

To some real estate agents, the market looks as good as it did before the global financial crisis began to bite last summer.

“Without getting nitpicky, yes it does,” said Toronto real estate agent. “I just lost out on a multiple offer last night on a house, and my client asked me to have a look at what's going on with that sort of a house. In that price range and style of home, 14 out of 19 sales in the past 30 days have been at or above the asking price.”

The average national resale home price in May reached a record $319,757, up a tick from the previous record set in May, 2008, the Canadian Real Estate Association (CREA) reported this week. The group noted that the sales activity behind this increase was skewed by expensive markets such as Vancouver, Calgary and Edmonton, but it nevertheless declared that the “national resale housing market activity returned to prerecession levels in May 2009.”

Crisis averted in the housing market? Forget it. Prices may be climbing in some markets, but so are the interest rates that have fed the recent rise in sales. Meanwhile, incomes are stagnant, and jobs are disappearing in bunches.

If you're thinking of getting into the housing market right now, mind the cracks in its foundation.

The house that Mr. Jeffrey's client failed to get was a semi-detached, two-storey, all-brick home in the leafy mid-town neighbourhood of Leaside. With three bedrooms, one bathroom, a detached garage and a mutual drive, it was listed at $529,900 – and went for $551,000. According to Mr. Jeffrey, houses in that price range have sold for an average of 105 per cent of their asking price in the past 30 days.

And Toronto, where the number of homes sold rose 1.9 per cent last month, wasn't even one of the hottest markets in terms of sales activity. CREA figures show that sales in Victoria, Vancouver, Calgary and Edmonton were up between 11.3 and 18.7 per cent.

It would be reasonable to expect that housing sales would be in a slump during a recession. But strangely, the economic downturn has actually helped to propel the real estate market higher.

For one thing, many people were too unnerved by the global financial crisis to buy late last year. So pent-up demand for housing in the first several months of 2009 played a role in the spring numbers.

“The kind of month-over-month increases we've seen in the last four months can't go on forever,” said CREA chief economist Gregory Klump.

The Bank of Canada has also helped to juice the market, though inadvertently. By ratcheting interest rates lower to stimulate economic growth, the central bank has cleared the way for mortgage rates that remain at historically cheap levels even after recent increases.

Fixed-rate mortgages with a five-year term can be had for about 4.25 per cent with a top discount right now, compared with 5.5-to-6 per cent in spring, 2008. A couple of months ago, five-year mortgages were less than 4 per cent.

But low rates are also one of the reasons analysts are worried about the surprising surge in the housing market. “It's all happening because of the crack cocaine of housing, which is rock-bottom interest rates,” said Garth Turner, author of Greater Fool: The Troubled Future of Real Estate . “They're so irresistible, especially to inexperienced first-time buyers. That's what's propelling the market.”

Mr. Turner's concern is that rising rates will eventually propel the market lower by making houses less affordable. His level of confidence that the boom will last? Zero.

In his book, published in early 2008, Mr. Turner warned that the Canadian housing market was in a bubble just like its U.S. counterpart. After a peak-to-valley decline of almost 14 per cent in Canada's national average price, he's predicting another plunge for home prices that will be triggered in large part by rising interest rates.

“We're now into the housing bubble, Part Two,” said Mr. Turner, a former member of Parliament who now gives financial seminars and promotes his books. “I think this bubble is going to burst later this year. It's going to be short and intense.”

In the near term, though, he sees rising rates being used to get buyers to jump into the market immediately. “People are being told, ‘Your affordability is going down if you don't buy now, you're going to be forever shut out of the market.' It's the eternal siren song of real estate.”

Many economists doubt that the prime rate – the rate banks use as a base to calculate other lending rates – will increase before next spring, but it's a different story with the longer-term rates that influence fixed-rate mortgages. They've already bounced off the lows they hit in the depths of the global financial crisis, and more increases are expected.

Rising rates make houses less affordable, but this can be offset if housing prices are falling and incomes are rising. In many cities, though not all, prices are actually rising. As for income gains, they're constrained by the recession.

Robert Hogue, senior economist at Royal Bank of Canada, said wages are still creeping higher, but many families have been affected by job losses. “Over all, household income has at best increased very slowly, if not kind of stalled for a bit,” he said.

For Mr. Hogue, rising rates and house prices are a threat to a housing market that appears to be stabilizing. But his outlook isn't all negative. When the job market improves, he believes that household income will rise and help make houses more affordable.

“The moment we have the labour market picking up, to me that would be the sign that says we're in the clear now.”

Dont change Your Mortgage Plan

2009-06-15T10:23:00.000-07:00

Would you like to pay an extra $300 per month on your mortgage? Not likely.

That hasn't stopped a number of Canadians, with the deal of a lifetime on a variable-rate mortgage, from switching over to a more expensive fixed-rate product and paying the extra freight.

A fear of rising rates is driving the rash decision. But if you've finally managed to pin your banker to the ground, why on Earth would you let him off the mat?

More than 28% of Canadians have a variable-rate product tied to prime, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP). If you negotiated a deal before October of last year, chances are you are now borrowing money for as little as 1.35%. That's based on deals that at one point saw the banks giving 90 basis points off prime. Prime is now 2.25%.

The average sale price of a home last month in Canada was $306,366. Based on a 25% downpayment and a 25-year amortization, your monthly payment would be $962.61 at 1.35%. Convert that to a five-year fixed-rate term and you're probably going to have to consider a 4% mortgage rate and a monthly payment of $1,289.04.

Rates are rising fast. Most major banks upped their five-year rate by 40 basis points this week, although discounters were still offering 4% this past week.

"It's not a mass rush yet, but we are starting to see ... people locking in. But variable rates are still so good," says Joan Dal Bianco, vice-president of real estate-secured lending, TD Canada Trust. She stops short of questioning why a consumer would pull out of these "deals" that are no longer available on the market.

Try to get a variable-rate mortgage today and the best you can probably hope to get is 60 basis points above prime, or 2.85%.

The landscape changed dramatically in October during the credit crunch. As the Bank of Canada lowered rates, the major banks reluctantly lowered prime because of the massive amount of customers with variable-rate products negotiated under the old, higher terms.

"Bonds yields are going up rapidly and people are starting to realize the rates are going to go up," Ms. Dal Bianco says . Throw in the fact the Bank of Canada used the weasel word "conditional" (on inflation rates) when it promised not to raise rates until June, and you can understand why some people think today's record-low prime rate might not hold.

But if you're someplace between 60 to 90 basis points below prime, the rate is going to have to go up pretty fast to justify locking in today at 4%, even though that is just slightly above the all-time low hit last month for a five-year term.

"I don't understand why you would lock in," says Jim Murphy, chief executive of CAAMP. "Sure, if they start to rise, but [Bank of Canada governor Mark] Carney says they won't rise, so you've got another year at that prime-minus rate."

Don Lawby, chief executive of Century 21 Canada, says even when rates do start to increase, they are not going to jump significantly right away. You are not going to get 4% on a fixed rate again, but double-digit rates seem unlikely. "The only logic to locking in would be for someone very sensitive to any rate change and they just want to be secure," Mr. Lawby says.

But at what price? If you're using the "feeling secure" logic, why not go for the 10-year fixed-rate product? Rates on that product can be locked at 5.25%, ridiculously low by historical standards. Yet fewer than 10% of Canadians consider a 10-year product.

There are some compromises you can make. For starters, there is nothing to prevent consumers from having a blended mortgage at most Canadian banks. Some banks will let you take half your outstanding debt and lock it in. Diversity is preached for stock portfolios, but few people seem to adhere to the same philosophy when managing their debt.

Consumers might want to take their cue from business. Few companies would want all of their debt coming due at the same time - it presents too much risk. The other option is knocking down principal: Make payments based on a 4% rate and have that extra $300 go straight to your principal every month.

The bottom line is if you've got a deal on your mortgage, why would you give it back?

Mortgage Rates On The Rise

2009-06-10T05:59:00.000-07:00

Soaring bond yields have set the stage for a second round of interest rate hikes on residential mortgages in about a week.

After nudging rates higher on longer-term mortgages last Wednesday, Toronto-Dominion Bank yesterday raised borrowing costs on its five-year, fixed-rate loan by 40 basis points to 5.85 per cent, effective today.

Last week, TD and the other banks increased rates on five-year, fixed-rate mortgages by 20 basis points to 5.45 per cent.

While no major competitor had followed TD's move by late yesterday, experts suggested higher rates are likely inevitable because banks are facing higher borrowing costs on the bond market. Banks tap the bond market to finance mortgages because they lend out more money than they attract through deposits.

"We don't have a fully matched book and I would guess that none of the Canadian banks have a fully matched book in terms of deposits matching loans," said Joan Dal Bianco, vice-president of real estate secured lending at TD Canada Trust.

While mortgage rates rose slightly last week, that move was insufficient to offset the bank's higher costs because bond yields have climbed higher since then.

"And unfortunately, we're now having to cover that gap, or at least close it a little bit," Dal Bianco said.

When asked if consumers should expect more mortgage rate increases, she replied: "I think we're going to see, over the next year, lots of changes as the economy starts showing positive signs."

The sharp spike in bond yields is a global phenomenon and the rise in Canadian yields has been milder compared with other countries, said Doug Porter, deputy chief economist at BMO Capital Markets.

The main reason that yields are rising is because the bond market is beginning to price in the prospect of an economic recovery later this year or next year, he said.

"I guess that's the good news part of the story. The bad news is that there is actually a cost for the economy in terms of raising the cost of money for some borrowers."

To a lesser degree, longer-term yields are also rising because the bond market is worried about the future prospects for inflation as governments around the world issue massive amounts of debt to stimulate economic growth.

Porter, however, also noted that home sales have "perked up" a bit in the past couple of months, fuelling more consumer demand for mortgages. "That's probably played a small role in this rise in mortgage rates as well," he said.

While TD is experiencing increased demand for mortgages, Dal Bianco insisted that played no role in the rate change. "It is strictly the bond market," she said.

Mark Chandler, a senior fixed income analyst at RBC Capital Markets, said long-term mortgage rates are still at near-historic lows.

"The hope that you can do better than that – or even maintain that for an extended period of time – that may be hoping for a little too much, really."

Attractive Investments

2009-06-03T13:30:00.000-07:00

Every downturn has its upsides -- and in the case of condominium buyers, current economic conditions mean lower prices and mortgage rates, making now an ideal time to buy.

According to the 2009 TD Canada Trust Condo Poll, this is only one of the reasons why homebuyers are looking towards the multi-family lifestyle.

"For Canadians looking to purchase their first residence or make a long-term investment, condos offer a lower maintenance and lower-cost alternative to houses," says Joan Dal Bianco, vice-president of real estate secured lending for TD Canada Trust.

"This is a good time to explore a condo purchase, given that mortgage rates are very attractive right now and many condos have dropped significantly in price."

And thanks to increased affordability, survey responses show the perceptions of the condo market have improved significantly over 2008, with 44% of urban Canadians believing the current conditions have improved for buying a condo as an investment -- versus 21% in 2008.

In Calgary, affordability is key -- 23% locally versus 21% nationally say price is an important factor in whether to make a purchase.

And 52% say market conditions are better than they were one year ago for buying a condo.

However, condo purchasers won't throw money at any old multi-family development.

In fact, for a two-bedroom condo, 64% of Calgarians say they'd be willing to pay between $200,000 and $400,000, while 57% say they would pay between $200 and $400 per month in condo fees.

Dal Bianco says that's because prospective condo buyers want to keep their costs low.

"I imagine there are many people who believed just a year ago that they would not be able to get in to the housing market," she says.

"Now, current market conditions are allowing them to reconsider their options."

Lower costs and improved affordability aren't the only things potential buyers consider, though.

What makes a condo an attractive investment, respondents say, are low condo fees (97%), good security (96%), energy efficiency (93%) and an attractive design (95%).

Also important to survey respondents is buying new -- 58% say they would prefer to purchase in a new building as opposed to an older one.

Of course, with new buildings come new amenities. But it turns out it's old favourites that have the widest appeal.

Parking is a driving force in deciding whether or not to purchase a particular condominium.

Calgarians were most likely to pass over a particular condominium due to lack of parking at 87% versus 75% nationally.

Altogether, Dal Bianco says condo buildings that offer everything buyers are looking for should have no problem selling in today's market.

"Low interest rates, affordability, the range of condo options and amenities make a condo an attractive purchase for many Canadians.," he says.

Firm Real Estate Market Positive Sign

2009-05-25T08:52:00.000-07:00

Entry level purchasers are now the engine driving home buying activity in almost every major centre throughout the country and Grand Falls-Windsor is no exception.

Real estate companies in Grand Falls-Windsor say despite the collapse of the forest products industry in central Newfoundland it's still a good time to buy or sell a home.

Improved affordability is prompting many first time buyers to get off the fence, out of rentals and into the housing market.

While a sense of caution prevails because of the world wide economic recession and the closure of the AbitibiBowater paper mill, low lending rates are presenting opportunities that have not been seen in a while.

John Locke of Royal Lepage Generation Realty says it's an excellent time to look at a new home.

"A healthy mix of first time buyers and retirees returning from Alberta are driving the housing market right now," he said. "While it's hard to predict where the market is heading new home sales are hopefully going to remain strong. While real estate generally is not as brisk as say the past two years it's not all that bad-not yet."

Mr. Locke points out that the past two years were probably above average in this region and while he admits it's probably too early to tell where things are going this year low interest rates are a big help.

"You can probably pick up a mortgage for as low as three per cent variable or lock in for five years at five and a half per cent. That's a big help, especially for first time homebuyers. I'm optimistic, despite the economy, that we will still be on track for a healthy summer market," he said.

Mr. Locke, who has over 15 years experience in real estate, says the market is still relatively solid despite the doom and gloom. He says there appears to be a strong level of consumer confidence despite the mill closure.

A real estate veteran for over 20 years, Doug Barnes of Home Finders Real Estate in Grand Falls-Windsor says the negativity of the local economy certainly hasn't impacted the real estate market here.

While he admits there are less overall transactions year to date it's still a good time to sell or purchase a home.

"The bottom certainly hasn't fallen out of the real estate market in Grand Falls-Windsor," he said. "There are a lot of out of the region inquiries, which is a positive sign. There is even a waiting list for cottage properties. While it could change overnight, so far the market is holding firm."

Mr. Barnes said that with low interest rates expected to remain reasonable, that could be what is needed to keep the housing market here solid for the immediate future. He says there is also a strong interest in land sales that indicates there are people who believe Grand Falls-Windsor has growth potential.

"It doesn't appear to be as strong as previous years, but the recession hasn't turned everything upside down either. I'm optimistic we will see positive growth by year end," he said.

Dorothy Woodd of Exit Reality On The Rock said the market isn't weak by any means. In fact, she said it's still relatively strong given the local economy has taken a severe hit with the closure of the paper mill.

"We're finding that towns that have access to services such as hospitals, schools and even close proximity to airports tend to do well. There is interest from first time buyers and seniors which is also a good sign."

The only negative, said Ms. Woodd, is that first time homebuyers still need the down payment needed to purchase a home.

"That turns out to be a catch-22 situation for potential buyers," she said. "If their employment situation is uncertain in any way it's hard to make that down payment and will tend to drive them away from a new home purchase. We will just have to wait and see what happens with the economy."

Robert MacDonald of Re/Max Real Estate in Grand Falls-Windsor declined an interview, but he told the Advertiser it's hard to speculate in light of the regional economy and the closure of the paper mill here.

An Atlantic Canada Market Trend Report published by Re/Max, however, says Alberta's red hot economy the last few years is still fuelling demand and while it has cooled considerably the spill over effect continues to drive new home purchases throughout Atlantic Canada. The report says Grand Falls-Windsor, Corner Brook and St. John's led the Newfoundland region in both unit sales and average price with the number of homes sold up close to 18 per cent and average price up almost 15 per cent.

That was over a year ago, and while things have changed, there is a feeling of confidence real estate sales will hold their own as the economy adjusts itself.

Michael Polzler, executive vice president and regional director Re/Max Ontario-Atlantic Canada said the tremendous growth opportunities in Alberta that allows commuting to and from the east coast have served to further strengthen home buying activity in the region. Just how long that trend will continue, however, isn't known.

"While the current economic crisis has caused some first time buyers to either take it slowly or apply the brakes, home ownership remains a top priority for those who are able to take advantage of reduced carrying costs, rock bottom interest rates and lower house prices," he said.

In a March 11, 2009 report released by Re/Max, Polzler said while the year got off to a slow start, February home sales were ahead of those reported in January of this year. The upward trend, the report said, is expected to continue as more first time buyers enter the market despite the weak economy.

If that trend continues it could spell good news for Grand Falls-Windsor as it attempts to recover from the blow left by AbitibiBowater.

Housing starts to improve in 2010

2009-05-19T08:16:00.000-07:00

Housing starts are expected to decline this year but recovery slightly in 2010 as the Canadian economy begins to recover, according to Canada Mortgage and Housing Corporation.

The federal agency said Tuesday that new construction should fall to 141,900 units in 2009, but increase to 150,300 units for 2010,

"The decline in housing starts in 2009 can be attributed to several factors, including the current economic climate, increased competition from the existing home market, and the impact of strong house price growth between 2002 and 2007," Bob Dugan, CMHC's chief economist, said in agency's second-quarter outlook.

"However, housing market activity will begin to strengthen in 2010 as the Canadian economy recovers, bringing housing starts more in line with demographic fundamentals over the forecast period."

Meanwhile, CMHC said existing home sales would fall to 357,800 units in 2009 from 433,990 the previous year but rise to 386,100 units in 2010.

The average sales price is expected to decline to $283,100 in this year before stabilizing in 2010, it said.

Provincial housing starts (2008 / 2009 / 2010):

Newfoundland and Labrador 3,261 / 2,675 / 2,975

Prince Edward Island 712 / 575 / 625

Nova Scotia 3,982 / 3,100 / 3,425

New Brunswick 4,274 / 3,475 / 3,650

Quebec 47,901 / 40,000 / 41,350

Ontario 75,076 / 51,325 / 52,300

Manitoba 5,537 / 3,950 / 4,250

Saskatchewan 6,828 / 3,400 / 3,850

Alberta 29,164 / 13,700 / 16,200

British Columbia 34,321 / 19,725 / 21,700

Low Interest-Rate Strategy

2009-05-17T13:46:00.000-07:00

When interest rates are low - particularly now with the Bank of Canada benchmark rate pegged at an historic low of .25 basis points - many people automatically think they should refinance their mortgage.

This isn't surprising since a home is the largest purchase that most people ever make in their lives, usually with mostly with borrowed money.

This may or may not be a good strategy.

Whether you should refinance your mortgage in a period of low interest rates depends on how much it will cost you to break your existing mortgage compared to how much you will save in interest payments. If you break an existing mortgage you will have to pay the greater of three month's interest or the interest rate differential (IRD).

An IRD is a penalty for early prepayment of all or part of a mortgage outside of its normal prepayment terms. Usually this is calculated as the difference between the existing rate and the rate for the term remaining, multiplied by the principal outstanding and the balance of the term.

For example, if you had a $100,000 mortgage at nine per cent interest rate with 24 months remaining and wanted to renegotiate your mortgage at 6.5 per cent for 24 months, your IRD would be $5,000 ($100,000 x 2.5% $2,500 x 2 years $5,000).

It may only make sense to refinance your mortgage if the interest rate savings over the remaining life of your mortgage exceeded the value of the IRD.

"The re-financing decision depends on the cost of breaking the mortgage versus how much you save," says Patricia Lovett-Reid, Senior Vice-President of TD Waterhouse. "You may find you should just stay where you are."

Another strategy is to take a variable rate mortgage. If interest rates go down and you keep your mortgage payments the same, you will be paying off more of your principal with each payment and will pay down your mortgage faster.

Debt is a destroyer of wealth in good times and bad, and eliminating it is a good strategy.

Borrowing to invest when interest rates are low is another strategy. This is called leveraging.

Leveraging has a tax advantage because you can write off the interest on the money you borrow to invest.

If your investments perform well and earn a return high enough to make a profit, leveraging has great appeal. But there is some risk if your investments go down. Just as your gains are magnified with leveraging, so are your losses. "Investors should use leveraging prudently as part of an overall balanced financial plan," says Lovett-Reid.

Low interest rates can affect your investment portfolio as well. Some stocks are more sensitive to interest rates than others. Lower interest rates make companies with high debt loads, such as utilities, more attractive, as well as automobile manufacturers and real estate companies, whose products become cheaper for consumers to buy when rates are low.

Low rates also are affecting fixed income securities such as Guaranteed Investment Certificates (GICs), which have been yielding 1.25 per cent for one year and 2.75 per cent for three years. Lovett-Reid suggests investors who are looking for higher returns should consider high quality, investment grade corporate bonds, which are yielding around 4.50 per cent for a three-year maturity.

Another way to build wealth in a low interest rate environment is simply to spend less. Review your spending and eliminate what is unnecessary. It's more money in your pocket.

Refinance Mortgage Lenders

2009-05-11T06:34:00.000-07:00

Finding a good lender to refinance your mortgage can be almost as important a decision as the actual mortgage you choose. In order to make a wise selection of a refinancing lender you should do four things:

1. Know the objective of your mortgage refinance

Do you want to lower your current interest rate? Generally, refinancing your mortgage can be profitable if your current mortgage is 2% higher than the prevailing rates. Do you want to move from an adjustable rate mortgage (ARM) to a fixed rate mortgage?

If interest rates are creeping up this may be a good idea. Do you want to shorten the term of your mortgage to accumulate value more quickly? Do you want to take cash out of your home’s equity? The mortgage refinance lender you pick will want to know your reason for refinancing so that the appropriate mortgage product can be chosen. You will also want to be aware of your credit score and the terms of your current mortgage.

2. Know the different types of mortgage refinance lenders and the different types of mortgage refinance products that are available

Just like when your home’s mortgage was originally financed, there are a variety of lenders who can refinance your mortgage: Banks, credit unions, mortgage companies. There are also brokers who will find a variety of lenders for you. You should be aware, however, that unless specifically contracted to do so a mortgage broker does not have to find the mortgage refinance package that might be the best for you.

Refresh your knowledge of the mortgage financing vocabulary. Be fluent with terms such as interest rate, point and prepayment penalties. Also, most newspapers publish a daily listing of current interest rates for different types of mortgages. Become familiar with these listings and check them on a daily basis.

3. Shop around and find several different lenders to refinance your mortgage

The market for refinancing mortgages has become so crowded and competitive that it is fairly easy to find several lenders to compare. You might use a broker. The newspaper and the yellow pages are also good places to start. If you are comfortable negotiating the Internet, it is an excellent resource. There are many services online which will perform a preliminary search for a lender. Your current mortgage lender should also be included in this group.

4. Negotiate the mortgage refinance loan that suits your needs

Many times the compensation a lender makes on refinancing a mortgage is dependent on the terms of the mortgage so it is up to you to make sure that the loan received is the most advantageous for you.

You might want to investigate mortgage refinance lenders who offer no closing cost loans or free appraisals. It is important to make sure that you are comparing like products. In order to do this, have your lender present proposals in writing and require ample time to compare the different offers.

Prepare a list of the features of each loan. The type of loan, interest rate, points, prepayment penalties, closing costs are a few of the loan elements which should be compared. Check the rate you are being offered against the rates from the most current newspaper listings. The more organized, thorough and knowledgeable you are, the better your decision will be.

Deciding to refinance your mortgage is an important choice that should not be made lightly. Know why you are doing it. Know the possibilities for refinancing lenders and products that are available. Be willing to shop amongst the different lenders and to negotiate a beneficial deal. If you follow these steps, finding a good mortgage refinance lender will be much easier.

Want To Buy A Condo

2009-05-04T20:00:00.000-07:00

In a buyer's market, if you can't go it alone, find a good friend. The results of the 2009 TD Canada Trust Condo Poll show that the perceptions of the condo market have improved significantly over 2008 with 44% of urban Canadians believing the current conditions have improved for buying a condo as an investment (versus 21% in 2008).

Why? Respondents say it is a buyer's market and condo prices are declining. If they can't afford to buy one on their own, 43% are willing to consider a joint purchase with a friend or relative to make the condo purchase possible.

"For Canadians looking to purchase their first residence or make a long-term investment, condos offer a lower maintenance and lower-cost alternative to houses," says Joan Dal Bianco, Vice President, Real Estate Secured Lending, TD Canada Trust. "This is a good time to explore a condo purchase given that mortgage rates are very attractive right now and many condos have dropped significantly in price."

WHY BUY A CONDO?

The 2009 TD Canada Trust Condo Poll showed that the top reason urban Canadians would consider a condo purchase is because condos require less maintenance than houses (39%). The second most popular reason is that condos are more affordable than houses (21%). Not surprisingly, in Vancouver, where housing costs have traditionally been high, the responses differed from the rest of Canada, with 35% of Vancouver respondents citing affordability as the top reason for a condo purchase.

HOW MUCH ARE CANADIANS WILLING TO SPEND?

While 44% of survey respondents believe the current conditions for buying an investment condo are better than a year ago, versus just 21% agreeing with that statement in 2008, the amount Canadians are willing to spend has remained consistent. For a two bedroom condo, 82% say that they would be willing to pay less than $400k (compared to 84% in 2008). Prospective condo buyers continue to want to keep their costs low with 83% saying they would pay less than $400 per month in condo fees (compared to 84% in 2008).

"I imagine there are many people who believed just a year ago that they would not be able to get in to the housing market -- and now current market conditions are allowing them to reconsider their options," says Dal Bianco. "Low interest rates, affordability, the range of condo options and amenities make a condo an attractive purchase for many Canadians."

WHAT DO CANADIANS WANT?

Ninety-seven per cent of survey respondents chose low condo fees as their top condo feature or amenity, followed closely by good security at 96%. An energy efficient building is also important (93%), as is attractive design (95%). A brand new condo climbed the list of important features in 2009 with 58% selecting it as very or somewhat important compared to 45% selecting it in 2008.

 TD CANADA TRUST CONDO POLL - OTHER FINDINGS

     -   Parking is a driving force in deciding whether or not to purchase a
         particular condominium. Calgarians were most likely to not want to
         purchase a particular condominium because there is no parking (87%
         versus 75% nationally). Torontonians were the least concerned about
         parking (72%)
     -   Vancouver residents are more willing to raise a family in a
         condominium (43%) while residents of Montreal and Halifax are least
         likely to consider a condo as a family option (24% and 26%
         respectively)
     -   Those in Halifax are more likely than other urban Canadians to
         purchase a condominium because they are approaching retirement (24%
         versus 17% nationally)
     -   Vancouver and Calgary residents are most likely to purchase a
         condominium for the reason that they are more affordable (35% and 23%
         respectively). People in Halifax are least likely to purchase a condo
         for this reason (6%)
     -   Montrealers are willing to pay the least in condo fees with 60%
         willing to pay less than $200 in monthly condominium fees.
         Torontonians will pay the most in monthly condominium fees with 72%
         willing to pay more than $200 a month
     -   Residents of Calgary, Toronto and Vancouver are most likely to
         consider owning a condo as an investment (that is not their primary
         residence) and residents of Montreal and Halifax are least likely

ABOUT THE 2009 TD CANADA TRUST CONDO POLL

The 2009 TD Canada Trust Condo Poll was conducted through interviews with 200 adult Canadians in each of Greater Vancouver, Calgary, Greater Toronto Area, Metropolitan Montreal and Halifax, to understand condominium choices among residents in Canada's urban centres. The survey was conducted by Angus Reid Strategies between March 30 and April 7, 2009. The sample size includes 1,000 men and women.

New Mortgage to Reward Savers

2009-04-29T05:51:00.000-07:00

HSBC Bank Canada has launched a mortgage option for homeowners looking to pay down their mortgage faster without having to forego the security and liquidity of maintaining a cash reserve in their savings account.

The new HSBC Smart Savers Mortgage enables homeowners to link their savings accounts to their mortgage and use the balances in these accounts to ‘offset’ or lower the interest rate on the mortgage. As the actual monthly payment remains the same, this feature will allow more of each monthly mortgage payment to be applied directly to paying down the mortgage principal and help the homeowner become mortgage-free faster.

This type of mortgage has already been pioneered by HSBC in several other international markets such as the UK and Hong Kong with great success, HSBC Bank Canada says.

“In times of economic uncertainty many homeowners have traditionally looked for ways to pay down their mortgage more quickly, but have held off because of the competing instinct to hold on to strong cash reserves as a fund for emergencies or other future uses,” says Linda Seymour, senior vp, personal financial services, HSBC Bank Canada. “This new deposit linked HSBC Smart Savers Mortgage will allow them to do both.”

As interest rates charged on mortgages have traditionally been higher than interest rates offered in savings accounts, an additional benefit to users of the HSBC Smart Savers Mortgage program would be that they would in effect be generating an interest “premium” over what they would receive on their regular savings.

For example, a home owner with a HSBC Smart Savers Mortgage with a balance of $300,000 at an annual percentage rate (APR) of 4.59% (for a 5-year fixed term, renewed at the same rate, amortized over 25 years) who links $45,000 in deposits throughout the life of the mortgage, effectively reduces their interest rate to 3.9% APR.

While the monthly payments stay the same throughout the term of the mortgage, more money goes towards the principal. In this example, the amount of deposits equals 15% of the mortgage balance, so the interest rate is reduced by the same 15%. This allows the home to be paid off more than three years faster than with a traditional mortgage and will save nearly $50,000 in interest over the life of the loan.

Interest Rates Cut

2009-04-22T21:36:00.000-07:00

Canada's central bank cut its trendsetting interest rate by a quarter point to a record-low 0.25 percent and said it will likely stay there through June 2010.

The Bank of Canada said Tuesday the global recession has intensified and it expects the recession in Canada will be deeper than anticipated.

The bank said it is conditional on inflation but they expect the rate to remain at its current level until the end of the second quarter of 2010. It said it is appropriate to provide more explicit guidance than is usual regarding its future path so as to influence rates at longer maturities.

The central bank said the economy will shrink by three percent this year, almost three times as much as the 1.2 percent it forecast as early as last January.

And it said the economy won't rebound nearly as strongly as it thought, saying any recovery won't start until the last three months of the year and growth next year will be more muted, at 2.5 percent instead of the 3.8 percent previously expected.

"In an environment of continued high uncertainty, the global recession has intensified," the bank said in its statement.

"Deteriorating credit conditions have spread quickly through trade, financial, and confidence channels. While more aggressive monetary and fiscal policy actions are under way across the G20, measures to stabilize the global financial system have taken longer than expected to enact."

Mark Carney, the head of Canada's central bank, has said that the success of America's bank bailout plan is crucial to economic recovery. Canada has avoided government bailouts and has not experienced the failure of any major financial institution. There has been no crippling mortgage meltdown or banking crisis north of the border where the financial sector is dominated by five large banks.

But Canada and the U.S. have the largest trading relationship in the world. The financial crisis and the global sell-off of commodities have hit Canada hard since last fall. Alberta's once-booming oil sands sector has cooled as every major company has scrapped or delayed some expansion plans.

Canada lost a record 273,300 jobs in the first three months of the year.

The latest interest rate cut means the bank has cut 4.25 percentage points off the overnight rate since it began the current easing policy in December 2007.

Mortgage Rates Bringing Out First-Time Home Buyers

2009-04-15T07:46:00.000-07:00

Real estate experts say low mortgage rates and more affordable homes in many markets are drawing out first-time home buyers in droves, but one independent analyst says the correction in Canadian home prices hasn't been nearly as dramatic as some believe.

Phil Soper, chief executive of Brookfield Real Estate Services, which operates under the Royal LePage banner, said prices are falling and lenders are lowering their rates, making the market more attractive to people looking to buy their first home.

"The uptick in first-time home buyer purchases across the country is quite astonishing,'' said Soper, speaking yesterday at a BMO conference on Canada's housing market.

"Affordability in places like Vancouver has improved for the first time in a very long time.''

BMO senior economist Sal Guatieri said the average mortgage payment has fallen by one-third, or $600, a month from its peak, while average resale home prices have fallen 14 per cent from their highs.

Guatieri said he expects resale prices to fall "moderately further'' this year for a cumulative decline in prices of approximately 20 per cent.

But Peter Norman, a consultant with independent real-estate adviser Altus Group, said the dramatic drops in home prices seen in places like Vancouver, Edmonton and Calgary are the exception rather than the norm.

"This is not a housing adjustment period in Canada,'' Norman said in an interview.

"Certainly, housing demand has slowed down because the economy is the pits, but housing supply has slowed down a lot as well as a result.

"Outside of a couple of submarkets, there hasn't been much of a downward adjustment on price.''

Still, other changes in the market are making this a good time to buy a first home -- as long as the buyer can afford it, Norman said.

"There are a lot fewer of those stories of really rapidly selling houses, bidding wars, all that kind of stuff, so I think it can be a bit more of a sane market for somebody who's trying to buy right now,'' Norman said.

"It may take away some of the anxiety or it may help you make a better decision.''

And most important, overall affordability in the housing market has improved.

"If it wasn't for the recession and the aversion to financial risk that people have right now, it would probably be a very active market and a very good market,'' Norman said.

The Canadian Real Estate Association reported that house prices and sales continued to slide across Canada in February -- the latest month for which data are available -- compared with the same time last year, but activity was up for the first time since September.

The association said resale home prices fell 9.2 per cent across Canada in February to an average of $281,972, while sales fell 31 per cent to 25,373 units, the smallest year-over-year decline since October 2008. Seasonally adjusted sales fell 26.8 per cent.

Meanwhile, the number of homes that traded hands on the multiple listing service, or MLS, was up 8.6 per cent above seasonally adjusted levels in January.

2009-04-10T22:30:00.000-07:00

The continued drop in rates has revived the ongoing debate all homeowners face over whether to choose a variable or fixed mortgage rate.

With interest rates so low, a lot of people are spending a whole lot of time worrying about whether or not to lock in their mortgage payments.

The rate-watching game has been a little more uncertain lately as rates have reached a point where they seem to have little room left to move.

Overall, mortgage rates have been on the decline for years now. As a result, those Canadians who opted for variable mortgages, where the mortgage rate fluctuates with any changes in prevailing interest rates, have clearly come out ahead.

Not that they're in the majority. Statistics show that only about 20 per cent of Canadians homeowners opt for a floating rate.

The big move into variable mortgages has really only come in the past few years, with many institutions pushing floating products that allow you to lock in a rate at any time during the term of your mortgage. If you're one of these astute buyers, you'll want to hang on as long as your term allows since lenders are actually losing money on your loan right now.

But, given current bargain basement borrowing costs, will this be the way to go from here on out?

Currently, the Bank of Canada's trend-setting overnight rate is at 0.5 per cent, and Canadian banks' prime rate is at 2.5 per cent. Most major financial institutions are now charging good customers roughly 3.5 per cent for a one-year closed rate and closer to 4.5 per cent for a five-year term. On the variable side, you're looking at prime plus 0.8 percentage points, which today translates into 3.3 per cent for a five-year term.

So, if you're buying a house or simply coming up for renewal, which is it to be? Fixed or variable?

Based on several studies going back as far back as 1950, York University professor Moshe Arye Milevsky has found that homebuyers would have been better off, roughly 88 per cent of the time, financing their home with a variable rather a fixed rate mortgage.

If you don't mind a few ups and downs, the benefits of variable-rate mortgages are very compelling. But a lot has changed since those studies were first done and subsequently updated.

For one thing, lenders have been eliminating the discounts that were once prevalent on many variable mortgages. In the past, rates were calculated as prime less a premium, often as much 0.9 percentage points. But you won't anything like that today. And, although it varies from city to city, housing prices are falling, thus raising the spectre of negative equity for some homeowners.

More importantly, if you look at rates right now, the difference between the two options just isn't that sharp. Right now, you might pay as little as 1 per cent more to lock in a long-term rate.

Economists expect rates to remain low and even decline slightly for another year or so, then rise by as much as 3 per cent as a recovering economy produces an increase in inflation.

This has prompted observers like Canadian Imperial Bank of Commerce's chief economist Benjamin Tal to suggest that while variable rate mortgages might still prove attractive for a bit longer, the threat of interest rates rising makes in locking in a fixed rate much more appealing than it once was.

With some variable mortgages, as rates fluctuate, so does the amount of your mortgage payments. Or, with set payment amounts, the portion of the payment that covers your mortgage principal will vary.

In a falling-rate environment, this means you'll pay down more principal and pay less interest. But if rates go up, your principal payments will shrink and it may take you longer to pay off your home. For every half point interest rate increase, the monthly payment on a typical mortgage of $200,000 jumps roughly $80 - or more than $900 a year.

The right mortgage decision is really a matter of your attitude towards risk and your need for certainty. If the prime rate does drop a bit further and you're working with a variable rate, you'll see the decrease in your mortgage rate almost immediately.

On the other hand, if you lose sleep worrying about the impact of every blip in rates on your monthly budget, then a fixed rate mortgage is for you.

Should you refinance your mortgage?

2009-04-01T16:53:00.000-07:00

With interest rates low, Canadians are thinking about refinancing their mortgages. Here's how to tell if it's worth it.

Equity markets are see-sawing back and forth and yet there is an opportunity to build wealth in a low interest rate environment.

Where do interest rates touch most Canadians? Canadian mortgages. As rates have inched lower and lower, refinancing your existing mortgage becomes more and more appealing. Typically, the decision rests on the trade-off between how much it will cost to break out of the current mortgage and how much you would save in interest payments going forward.

Let us discuss an example where there is $100,000 outstanding on a locked-in fixed rate mortgage set up in January 2008 at six per cent for a five-year term. With 45 months still remaining on the term and posted rates for four-year fixed rate mortgages now at 4.4 per cent seems like a savings of 1.6 per cent!

However, to break the existing mortgage you would need to pay the greater of three months interest or the interest rate differential (IRD).

A back-of-the envelope calculation shows that three months interest would be $1,500, whereas the IRD would be $6,000. So the cost of breaking the mortgage would be $6,000. For arguments sake, let's assume you went ahead with this, and locked in for that four-year term at 4.4 per cent.

The interest saving over the next four years on $106,000 would be $5,176. That's less than what it cost to break the mortgage. It doesn't make sense in this scenario. It might make sense if you went from a 6 per cent fixed rate to a variable rate at prime + 0.8 per cent (Current 3.3 per cent). This time, you would be taking on the potential risk of an increase in interest rates over the course of the remaining four years.

What if you already have a variable rate mortgage? If you began the year with a $100,000 mortgage at Prime + 0.8 per cent and 25-year amortization, it would require payments of $517 each month over a five-year term. But then the Bank of Canada cut its benchmark lending rate by 50 basis points to 0.5 per cent - the lowest ever.

The savings on interest would mean that you could consider lowering your monthly payment to $490 a month. That's a saving of $27 a month. Big deal, right? Actually it equates to $2,400 interest savings over the five year term assuming rates hold steady. Don't lower your payments. Use the $27 savings in interest rate to reduce your principal by an additional $1764 over the five years.

And the Bank of Canada has left itself open to further easing which means we could see the rate drop to 0.25 per cent on April 23. Those savings could get even bigger!

Alternately, you could use this saving to jump-start your Tax Free Savings Account or contribute into your RSP and link to a Systemic investment plan of balanced mutual funds.

There's another way to save on your mortgage payments. Simply increasing the frequency of your payments will reduce your interest payments over the life of the mortgage. You'll also be rid of it sooner.

Let's take an example of a $200,000 mortgage at 4.5 per cent (fixed rate) and 25 years amortization.

Now compare the monthly payment to the weekly rapid payment. By converting your monthly payment to weekly rapid, you benefit from sneaking in an additional four weeks of mortgage payments each year. Over the life of the mortgage you'll shave four years of its life and keep more than $21,000 in your pocket.

Taking care of your mortgage first helps you ignore the wild swings we're seeing in the markets these days. Next week I'll tell you how your portfolio can benefit from this low interest rate environment - in spite of the market volatility.

Mortgage Decisions

2009-03-27T06:26:00.000-07:00

Variable or fixed? It's the question homeowners and homebuyers ask most often and inevitably elicits an unsatisfying answer.

Whether it's worth paying the penalty to terminate a fixed-rate mortgage to obtain the lower rates available on variable-rate Canadian mortgages is a calculation that forces assumptions about future monetary policy even the Bank of Canada is hedging its bets on.

Over the past few years, the focus of monetary policy has been inflation control. What this has to do with mortgages is that the principal tool for controlling inflation is the interest rate lever. The bank has set an inflation target of two per cent and interest rates are raised or lowered to increase or reduce borrowing, which in turn stimulates or depresses demand. In this way, the bank ensures demand doesn't overwhelm the economy's capacity to satisfy it and inflation is held in check.

Since December 2007, as the economy has slid into recession, the central bank, in concert with other industrialized nations, has cut its overnight lending rate by 400 basis points to 0.5 per cent in an effort to bolster demand. Clearly, it can't go much lower.

The bank has also been trying to encourage lending by injecting liquidity into the financial system. There has been concern that this infusion of money will be inflationary, raising the threat of stagflation -- inflation with no economic growth.

However, the bank is not "printing money" to carry out this task. Rather, it is purchasing assets, such as commercial paper and bankers' acceptances, from financial institutions that have been unable to trade them because of tight credit markets and replacing them with cash or more liquid government securities.

These purchase and resale agreements are temporary and unwound after 28 days so they are, in effect, simply exchanges of assets with no increase in the monetary base.

Similarly, the federal government's infrastructure spending program should have no significant impact on inflation since government demand is replacing private sector demand. In other words, there is no increase in aggregate demand.

For inflation watchers, this should be good news. And it gets even better. In January, the bank said it expected inflation to return to the two-per-cent target in the first half of 2011 as the economy returns to its potential. It has since hinted that it might be later, sometime after mid-2011.

Variable rate mortgage rates are derived from the prime rate, which financial institutions usually, but not always, set in accordance with Bank of Canada interest rate adjustments. But negotiations on mortgage rates are getting tougher. Lenders are beginning to set variable rates at a premium over prime instead of the past practice of a discount to prime.

Fixed-rate mortgages are based on bond yields, which are market driven and largely independent of central bank moves. Higher yields increase funding costs for financial institutions which raise fixed mortgage rates in response.

As it happens, bond yields have been bumping record lows in a slumping economy, making fixed rate mortgages a better deal than they've been for decades.

So, variable or fixed? It's up to you.

Mortgage market

2009-03-18T09:39:00.000-07:00

The Canadian government’s plan to buy up to $75 billion in mortgages might not have been the flashiest stimulus measure announced by Finance Minister Jim Flaherty in his recent budget, though it could turn out to be one of the most expensive. But the salient point about the mortgage bailout might end up being this: it’s not necessary.

That, at least, could be the takeaway from a reverse auction of mortgage securities held by the Canadian Mortgage and Housing Corp. During the weeklong auction that ended on Feb. 20, the CMHC failed to attract many sellers for its offer to buy billions in mortgages.

The Crown corporation purchased about $2.34 billion in five-year variable-rate mortgages, far short of the $7 billion it had offered to purchase. That contrasts sharply with a similar auction in January, in which CMHC had no trouble finding sellers for an offer to buy $7 billion in similar mortgages. A $5-billion auction held in October was also fully subscribed.

Why the decline in interest? It could be that the mortgage market is stabilizing, says Roger Quick, director of fixed income research at Toronto-based Scotia Capital. “This is a reasonably positive sign that Canada’s banks don’t seem to be in dire need of financing,” he says. That’s a sentiment backed up by the strengthening of the market for Canadian bank bonds, as well as a significant drop in the Canadian Dealer Offered Rate, says Quick. The CDOR is the interest rate Canadian banks charge each other for short-term loans, and it tracks both the cost of borrowing and the willingness of banks to lend money to one another.

Unlike the toxic assets clogging the balance sheets of U.S. financial institutions, most of the loans the CMHC has purchased were already guaranteed by its own mortgage insurance program. Rather than take distressed assets off banks’ balance sheets, the purchase is intended to inject liquidity into the mortgage market. “At a time of considerable uncertainty in global financial markets, this action will provide Canada’s financial institutions with significant and stable access to longer-term funding,” Flaherty said when he announced that CMHC would buy $50 billion in mortgages back in November.

He expanded the program to $75 billion in the recently passed budget. (Federal liquidity efforts go beyond mortgages; they’re trying to address the drying-up market for auto loans, as well, earmarking $12 billion to purchase securities backed by auto loans and leases. The department of finance is now asking for submissions on how to structure the purchase of those loans.)

While the U.S. government is debating whether to buy toxic mortgages at higher prices than the banks could get in the current depressed market, Ottawa is actually charging the banks a fee to take mortgages off their books. To sell mortgages to the CMHC in the most recent auction, banks had to pay an average interest rate of 76 basis points above CDOR. That’s down from an average of 112 points last month, but it still may not have been to the banks’ liking.

“It’s also about the pricing,” says Jim Murphy, president and CEO of the Canadian Association of Accredited Mortgage Professionals, which represents mortgage lenders, brokers, insurers and other industry players. “Some of the lenders may not have found the pricing of this to be very attractive.”

Despite what appears to be waning interest, Quick suggests that it’s unlikely the mortgage purchase program will disappear anytime soon, since it’s still an inexpensive way for lenders to raise money. Next month CMHC is expected to offer to buy several billion dollars in fixed-rate mortgages. If the lack of interest continues, it might be time for the government to figure out something else to do with its billions. ( article from the Canadian Business )

Mortgage penalty can be a shocker

2009-03-11T05:51:00.000-07:00

As interest rates fall to record lows, you may want to break your mortgage and negotiate a lower rate.

But the penalty charges can be prohibitive if you're in the early years of a long-term mortgage at a fixed rate.

Take Marilyn, who recently sold her house because she couldn't afford to keep it. She had a $308,000 mortgage, with three years left on a five-year term at 5.74 per cent.

She was shocked when told by the bank that the penalty cost would be about $20,000.

"That means I only pay off the bank, the real estate agent and the lawyer," she says.

"I was hoping to have enough cash in my pocket to cover my basic survival needs while searching for my next position."

Another customer, Michael, sold his condo just a year after taking out a $208,000 mortgage at 5.85 per cent.

He was charged $11,000 to break the mortgage, despite having applied for financing on another property he bought.

Both customers assumed they would pay a penalty of three months' interest. That used to be the case many years ago.

Today, most lenders charge a penalty based on the gap between current and past interest rates, the outstanding balance and the number of months left in the mortgage term.

Called the interest rate differential (or IRD), the penalty is higher now than in the past because of how far interest rates have fallen in the past six months.

There's no standard way for lenders to calculate the IRD, says Isabelle Rodrigue, acting team leader of consumer education at the Financial Consumer Agency of Canada.

"It's not an easy thing to understand and most people can't do it on their own. We advise them to shop around and talk to lenders about the benefits of renewing early."

If you're faced with a stiff penalty, you may have some leverage by negotiating with other lenders first.

"Then, go back to your current lender and say: `I'm planning to leave. Can you do something about the penalty if I stay?'" says Robert McLister, a mortgage planner.

Another tip is to make a lump-sum payment before renegotiating.

Many mortgages allow you to pay up to 20 per cent of the balance in any given year.

This lets you lower the penalty, which is calculated on the balance after you have made your prepayment.

Some mortgage brokers find that people are changing their minds about floating rate mortgages.

"There's a significant trend toward variable-rate clients moving into longer term fixed-rate loans," says Calum Ross, senior vice-president at The Mortgage Centre.

"Yes, they're paying a higher rate. But with the current economic uncertainty, they don't feel comfortable taking on additional risk."

With variable-rate mortgages at 3.3 per cent to 4 per cent and five-year closed mortgages at 4.99 per cent to 5.25 per cent, the price gap has narrowed.

In an influential study in 2001, finance professor Moshe Milevsky said that most of the time, people pay less interest over the long run by choosing a variable-rate mortgage.

But in an interview last month , he said it pays to be in a fixed-rate mortgage 10 to 12 per cent of the time – and this might be one of those times.

Not only has the premium of fixed rates over variable rates largely disappeared, but there are added risks from falling home prices, reduced availability of credit and employment instability.

An environment like we're seeing today brings into question any type of historical study, Milevsky added.

Bank of Canada cuts rate

2009-03-03T15:16:00.000-08:00

The Bank of Canada slashed its key short-term interest rate about as low as it can go Tuesday and said it may have to resort to extraordinary measures to stimulate the economy which, it acknowledged for the first time, is unlikely to recover this year.

The central bank did what most private-sector economists advised it to do, cut the trend-setting overnight rate to an all-time low of 0.5 per cent and Canada's commercial banks quickly followed, cutting their prime rate by half a percentage point.

The lower prime rate, which falls to 2.50 per cent on Wednesday, will benefit some mortgage holders but will have little or no immediate impact on many corporate borrowers or credit card holders and will further reduce some interest rates paid to savers.

Scotiabank chief executive Rick Waugh said at his bank's annual meeting in Halifax that the lower interest rates is "a step forward" for the economy but insisted that the No. 1 priority is to "stabilize the world financial system"

"There's a huge amount of incentives that the governments are putting in. But unless we get our financial sector stabilized, then all these incentives will not work as well," Waugh said.

Bank of Canada governor Mark Carney said earlier that even with the central bank's overnight rate at unheard-of lows, the stimulus provided by traditional monetary policy is likely not enough help for the economy.

And Carney said the bank now sees recovery coming later than it had last projected, possibly in early 2010 instead of the third quarter of this year.

"Given the low level of the target for the overnight rate, the bank is refining the approach it would take to provide additional monetary stimulus, if required, through credit and quantitative easing," Carney wrote in a statement.

From the outset, the central bank's January economic outlook had been described by many observers as overly optimistic but Carney has said since then that the outlook acknowledged both the potential upside and downside.

A lot depended on how the situation unfolded in the global financial system, Carney said at the previous rate setting on Jan. 20, coincidentally the same day Barack Obama officially became president of the United States.

Obama and his administration has been quick to push for several massive stimulus efforts, aimed at propping up the financial sector, the automotive sector and some hard-hit American consumers, such as homeowners who are unable to afford their mortgages.

While the Canadian economy as a whole has been shrinking dramatically, as a result of lower U.S. and world demand for oil, gas, minerals and manufacturing goods, the Canadian banking system continues to be solid and the five biggest banks remain profitable.

The Bank of Canada didn't give specific examples on Tuesday on what type what specific measures are available to provide monetary stimulus to the Canadian economy, which shrank by 3.4 per cent in the October-December quarter.

BMO deputy chief economist Doug Porter said the central bank is considering a process whereby it injects money into the financial system by buying up assets such as government bonds, asset-backed commercial paper and even corporate bonds directly.

"Simply put, the bank is preparing to pull out all the stops to support the economy," Porter said.

Canada's major banks appeared ready to play ball with Carney: shortly after the announcement, Royal Bank (TSX:RY), Bank of Montreal (TSX:BMO), TD Bank (TSX:TD), CIBC (TSX:CM) and Scotiabank (TSX:BNS) announced that they would cut their prime rates by half a percentage point, in step with the central bank.

But while variable mortgage rates tied to prime are being reduced, longer-term and fixed rates have not kept pace with the central bank's moves, partly because chartered banks are reluctant to lend into a recession for fear of failures and partly because their own borrowing costs are higher than would be expected.

Still, Jim Rawson, a regional manager Toronto-based mortgage firm Invis, says the most recent cut in combination with measures in the government's January budget will increase borrowing.

"A lot of people will be interested in re-financing mortgages and it will spur a lot of first-time buyers," Rawson predicted.

The federal budget, yet to make its way through Parliament, offers $750 in tax relief for first-time home buyers while increasing the limit that can be withdrawn from RRSPs for a down payment by $5,000.

"Quite honestly, people are saying nobody is buying, but there seems to be a lot activity right now. In my region, applications doubled in January from December," Rawson said.

By most measures, Canada's credit markets are in better shape than in most industrialized countries, although still far from normal.

Carney has noted that while Canada's chartered banks continue to lend, many other financial institutions have tightened their practices or shut down altogether, reducing the availability of credit as a whole.

His reference to non-traditional monetary measures confirms that the central banker knows he has exhausted interest rate cuts as a means of stimulating lending and borrowing in the economy.

Darcy Briggs of Bissell Investment Management in Calgary said the bank could trim rates to 0.25 per cent - and likely will, as the U.S. Federal Reserve has done - but "practically, what would that do?"

There are technical reasons why a zero interest rate is impractical, economists say.

The other surprise in Tuesday's statement was that Carney appeared to back off his relatively rosy forecast for the Canadian economy, which envisioned growth returning in the third quarter of this year and rebounding to 3.8 per cent next year.

"The outlook for the global economy has continued to deteriorate since the bank's January... update, with weaker-than-expected activity in major economies," Carney said Tuesday.

"National accounts data for the fourth quarter of 2008 and other indicators of aggregate demand point to a sharper decline in Canadian economic activity and a larger output gap through the first half of 2009 than projected in January."

Carney said potential delays in stabilizing the global financial system, along with low consumer confidence and larger hit on household wealth, "could mean that the output gap will not begin to close until early 2010."

Tuesday's statement does not officially alter the forecast, but strongly implies that both this year's 1.2 per cent contraction will be worse and that the recession may last until next year.

"Reading between the lines, it's a safe assumption that their (January) forecast has already gone out the window," said Porter.

Most economic indicators have come in far weaker since January's much-criticized bank outlook, including Monday's report that the Canadian economy has shrunk by 3.4 per cent in the last quarter of 2008, far worse than the bank's negative 2.3 per cent projections.

As well, Canada lost 129,000 jobs in January, a massive amount, which Carney did not know when he made his forecast.

But possibly the most critical factor is that the global economy, especially among industrialized nations, appears to be in free-fall.

The fourth quarter saw GDP fall by 6.2 per cent in the United States, six per cent in the United Kingdom, 5.7 per cent in the Eurozone, 10.3 per cent in Mexico and a massive 12.7 per cent in Japan.

And far from stabilizing, the U.S. financial system is lurching from crisis to crisis. On Monday, the U.S. government said it was adding another $30 billion to the bail-out package for the giant insurance company American International Group Inc. after it reported a staggering US$61.7-billion in quarterly losses.

"Stabilization of the global financial system remains a precondition for the global and Canadian economic recoveries," Carney noted in his statement.

Bleak times ahead

2009-02-25T06:50:00.000-08:00

Finance Minister Jim Flaherty says Canada's bleak economic picture is going to get worse before it gets better.

"I expect that the numbers are going to continue to deteriorate for the time being," he said yesterday when asked about the latest grim economic news – a 5.4 per cent drop (the worst in 15 years) in retail sales in December.

"The situation is very serious, economically," Flaherty told reporters.

Earlier, in an appearance before the Commons finance committee, he said: "We are experiencing a very difficult year, a year in which there will be a contraction in our national and global economies."

As Flaherty was sounding a note of caution in Ottawa, Prime Minister Stephen Harper was in New York – the heart of America's economic meltdown – to tout the stability of Canada's banking system while warning the U.S. financial system remains on shaky ground.

Harper said he remains "hugely worried" about the financial system in the United States as well as several other unnamed countries.

"Until that problem gets fixed, it's hard for me to see how we're going to turn the corner on this recession that we're in now," he told Fox Business News.

Yesterday's retail sales numbers reinforced a litany of gloomy statistics from December, including a record loss of 129,000 jobs, a 47 per cent spike in bankruptcies and a trade deficit of $458 million, the first since 1976.

Flaherty said one of the major problems with the economy is the trouble businesses and consumers have trying to borrow money.

"Even in Canada, we have some credit restrictions now" because some foreign banks and some leasing companies are no longer providing credit, he told reporters. "The banks have continued to lend, but they're being cautious ..."

Flaherty said banks need to do more to ease credit conditions.

He also said Ottawa's stimulus package, outlined in the Jan. 27 budget, will help beat back the recession by pumping $35 billion in fresh spending and tax cuts into the economy over two years.

"I'm looking forward to getting the stimulus into the economy, I think that will help," Flaherty said. He said he hopes the budget can be passed by Parliament by the end of March so the pro-growth measures can begin to be felt in the economy.

Harper hit the Big Apple yesterday for a round of interviews with U.S. television networks to capitalize on the media attention sparked by U.S. President Barack Obama's high-profile visit to Ottawa last Thursday.

"Because we're not a squeaky wheel, we often don't get the grease and we're forgotten. So it was great to have that kind of attention from our great friends in the United States," Harper said during a morning interview with Alexis Glick of Fox Business News.

The Prime Minister sang the praises of Canada's prudent banking and financial system, which he said can be attributed to "activist" regulation by Ottawa.

"We're helped by the fact we have six major banks, three major insurance companies, so it's easier for the government to exercise moral suasion on the sector," Harper said.

He said Canada, while hit by the economic downturn, hasn't suffered the kind of meltdown of the financial sector or the mortgage foreclosures that have hit the U.S. economy so hard.

"We haven't had to bail out any of our financial institutions," Harper said. "There will be no government bailout of mortgages in Canada."

He also sounded a caution against trade protectionism by U.S. politicians, calling it the "biggest risk" to the already unsteady world economy, a theme he's hit often recently.

"Protectionism is the one thing that could turn a very deep recession into a very deep depression if we are not careful," Harper said.

The Prime Minister was asked about Alberta's oil, which has come under fire because of the high environmental price to extract it. But Harper fired back that "Americans should be under no illusion.

"When I look at the energy needs of the United States, there's going to be lots of demand for all kinds of oil, particularly Canadian oil, which is a secure, safe supply from a reliable ally," he said.

The Prime Minister was due to make several other appearances on Fox News, CNN and CNBC. He also held a round table with business leaders in the city.

How to Sell a House Fast in a Declining Housing Market

2009-02-17T05:23:00.000-08:00

Minor Home Improvements that will Sell your House

When the housing market is declining and you want to sell your house it is more important than ever that your home look the best it can. Though making sure your home is clean, organized and uncluttered are critical factors in successfully selling a house; making some minor home improvements can also be key. Painting, fixing crack tiled floors, gluing down curled vinyl or linoleum floors, refinishing wood floors, replacing old exterior lighting fixtures, trimming shrubs around the home exterior, eliminating old ceiling water stains from previous roof leaks are just a few of the ideas. All of these minor home improvements can transform an older home into a new home with limited costs and time.

Paint Interior Walls
If your interior walls are looking shabby with marks and dents, and old nail holes then fill in the holes and repaint the walls. However, make sure you do a quality job by taping all trim first and cutting carefully around the ceiling. Nothing can hurt the appearance of a room more than a poor paint job.

Fix Cracked Tile Floors
If you have tile floors in your home’s entrance way and kitchen, make sure that you have fixed any broken tiles prior to attempting to sell your house. These are two highly visible and important areas of your home and poor flooring in these areas can make or break the selling of your home.

Glue Down Curled Edges on your Vinyl or Linoleum Floors
If your vinyl or linoleum flooring was put in after your kitchen or bath cabinets and appliances were installed, chances are there has been some curling at the edges of the Vinyl or Linoleum flooring. Apply some glue underneath the curling edges and press the vinyl or linoleum flooring back into place. You will need something heavy to hold down the edges while the glue dries.

Re-sand and Refinish your Wood Floors
If you wood floors are in rough shape then re-sand and refinish them. Quality wood floors can be a real selling point in a home. Scratched up wood floors, however, can be a real turn off to potential homebuyers.

Re-Paint the Ceiling to Eliminate Water Stains
If you roof at one time had a leak, make sure there are no ceiling stains. If there are, then repaint the ceiling. Ceiling paint is very inexpensive and can be easily applied with a roller and a couple hours of work. Leaving ceiling stains visible to potential homebuyers invites questions about your roof’s integrity. No future homeowner is interested in having to replace the shingles on the home as soon as they move in.

Update your Exterior Home Lighting
If your home is at least 5 years and your exterior home lighting is made out of brass, or brass plating, chances are that is dingy and faded and quite frankly an eye sore. Again, outdoor entrance way lighting is one of the first things a potential homebuyer sees. Installing two or three exterior lights is relatively inexpensive compared to delaying the selling of your home in a declining housing market.

Trimming Exterior Shrub
If your home’s front exterior shrubs are overgrown and swallowing up your home’s front exterior then pull out the trimmers and aggressively remove the overgrowth so that the homes front exterior can be seen again.

Power Wash the Exterior Siding
Make sure there is no mold and dirt visible on your home’s siding. Use a power washer and a proper detergent to remove any mold and mildew on the exterior of the home. Nothing looks worse to a potential homebuyer than to see a green sheen running up the home’s exterior.

With these minor home improvements, and pricing your home right to begin with, you can dramatically increase the chances of selling your home quickly. It is important to note that a potential homebuyer usually makes an impression of your home in the first 8 seconds of seeing it. Thus, it is critical that the home’s exterior, entranceway, and key rooms look as good as new before they show up at your door.

Housing starts fall 11% in January

2009-02-09T18:40:00.000-08:00

Housing starts declined last month in Canada as falling sales for existing homes weakened demand for new construction, Canada Mortgage and Housing Corporation said Monday.

Construction began on 153,500 units in January, on a seasonally adjusted annual rate, down from 172,200 the previous month, CMHC said.

Urban housing starts dropped 15.6% to 126,700 units last month, with single units falling 20.2% to 50,000 and multiple dwellings declining 12.1% to 76,700.

"To a certain extent, the decline in housing starts coincides with recent developments in the existing home market," said Bob Dugan, CMHC's chief economist.

"Reduced sales and increased listings in the existing home market have led to reduced spillover demand in the new home market."

All regions of Canada saw declines in housing starts in January, CMHC said.

Urban construction fell 8.6% in Atlantic Canada, while Quebec experienced a 1.4% drop, Ontario at 14.6% decline, the Prairies 30.3% and British Columbia 29.1%.

Meanwhile, there were 26,800 units stared in rural areas.

Charmaine Buskas, economics strategist at TD Securities, said Canada's housing market "is under a great deal of pressure."

"The combination of an increasingly weak labour market and lingering concern about the state of the economy has left consumers unwilling to take the plunge into the housing market," she said.

"The correction in Canada's housing market continues to unfold and it appears the pace is a bit quicker than we had originally anticipated. In the face of continued economic weakness, housing may not see a rebound until early 2010."

Biweekly Mortgage Payment Calculator

2009-02-04T06:41:00.000-08:00

A Biweekly Mortgage Payment Calculator will make you think differently about how you pay your mortgage.

If you own a home and are currently paying on your mortgage, there are some shocking truths you need to know about. First of all, by the time you have finally paid the balance on your loan you'll have paid nearly 3 times the amount of the original loan. And in addition, if you have a 30 year loan it will have taken 23 years to pay a mere half of the balance!

A sobering thought to say the least!

Now given that fact the question is - what's to be done about it? There are those who look at refinancing for a solution. But although it could mean a lower interest rate the fact remains that you'll still have to pay interest that far exceeds the amount of the loan. And what's more there are still closing cost to consider and the inevitable paperwork to deal with.

But there's a far better alternative than refinancing. A biweekly mortgage payment plan will cut your interest paid in terms of not hundreds, or even thousands - but TENS of thousands - of dollars!

The actual amount you will save is dependent on your remaining balance, term, and the current interest rate on your current loan. But a biweekly mortgage loan payment calculator will promptly give you the figures and include an amortization schedule showing a comparison of your present payment method to a biweekly payment schedule.

In case you've never heard of "biweekly mortgage payments", a bi weekly payment plan doesn't call for changing your lender nor the amount of your monthly payment. Simply put, it changes only the WAY to make your mortgage loan payments. Rather than make one monthly payment, you pay half the normal payment but pay every two weeks.

By looking at a biweekly mortgage loan payment calculator you will see the advantages of the biweekly plan, in terms of the total amount of interest you pay and the number of years it will take to pay off the balance of your loan.

But the biweekly plan also offers convenience!

Rather than having to budget your finances and come up with one huge payment at the end of the month, you'll pay on a bimonthly basis and pay only half the normal payment. And since most people get a paycheck every 1 - 2 weeks, the payment schedule can be set up to coincide with payday, making it easier to plan your budget.

If you're curious to know how much YOU can save by going to a biweekly payment plan, it takes only a few seconds to find out.

Take a look at a Biweekly Mortgage Loan Payment Calculator and get your answer!

MORTGAGE INSURANCE

2009-01-28T05:27:00.000-08:00

Private mortgage insurers face a tougher future in the Canadian market after an intense lobbying campaign failed to persuade Ottawa to fully guarantee their home insurance policies.

Canada's two remaining private insurers, Genworth Financial Inc. and American International Group Inc., had pushed for the government to raise guarantees of their mortgage insurance policies to 100 per cent from the 90 per cent that has been in existence since the late 1980s.

Without the full guarantee, the two U.S.-based insurers, according to sources, have privately warned Ottawa that their business is unsustainable, leaving Canada Mortgage and Housing Corp. with a monopoly.

In the wake of the global credit crisis, Canada's banks have shifted virtually all new mortgage insurance business to CMHC to eliminate any risk that they might be left on the hook to pay home insurance policies that are not fully guaranteed by Ottawa.

CMHC's mortgage insurance business is backed 100 per cent by the federal government.

Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals, declined to talk directly about Ottawa's decision not to fully guarantee private insurers, other than to say "we support competition."

Home Prices Continue to Drop

2009-01-19T10:55:00.000-08:00

New home prices fell in November for the second consecutive month-to-month decrease, Statistics Canada said Monday.

The average price on a new house declined 0.3%, the federal agency said, as demand continued to cool across the national real estate market in the fall.

The dip continues the first reverse in home prices in more than a decade, following the 0.4% decline experienced in October.

Yet the results varied from region to region, with some markets still witnessing considerable price increases.

St. John's recorded the largest annualized gain, with the value of a new home up more than 25% from 2007, a clip that narrowly outpaced Regina.

The monthly increase in St. John's was 3.4%.

In a sign that Saskatchewan is beginning to feel the bite of a recession it has largely avoided so far, home prices were flat in Regina in November while in Saskatoon prices continued to come down.

New home prices were down 0.5% in Saskatoon "confirming a trend of deceleration in this city," Statscan said. "Builders continued to report difficult market conditions."

The drops continued further west.

New home prices in Edmonton recorded a 12-month plunge of 7.9% - largest monthly decline since May 1985. Prices dipped 2.5% in Calgary.

On a monthly basis, prices fell 0.3% in Edmonton and 1.1% in Calgary between October and November.

On the West Coast, builders cut new home prices in Vancouver by 1.7% in November, a trend continued in Victoria, Statscan said.

Markets in Eastern Canada, which have shown more stable supply-demand conditions, continued to rise, Statscan said.

Compared with November 2007, contractors' selling prices were 4.3% higher in Ottawa and 2.0% higher in Toronto.

In Québec, the 12-month growth rate was 5.4%, while in Montréal, prices increased 4.6%, the agency said.

No market east of Saskatchewan experienced a month-to-month decline in new home prices.

Time to Buy- not to Sell in Edmonton

2009-01-16T07:48:00.000-08:00

Now is not the time to sell your home.

Assessed property values are down an average of 10 per cent across the city according to figures released last week, hitting Mill Woods the hardest of Edmonton’s six wards (12.7 per cent) and leaving the downtown core in the best shape with a less drastic 6.6 per cent drop.

The neighbourhoods of Bergman, Newton and North Glenora saw values drop the most, all plummeting by more than 20 per cent between July 2007 and July 2008.

According to the Realtors Association of Edmonton, the local housing market is “repositioned after an uncertain year” and the worst is over. Charlie Ponde, the new RAE president, says house prices are entering a “levelling-off” period.

Ponde is “confident that we have a reasonably good year ahead of us.” The average price of a single detached house was $351,870 last month and the association is forecasting that next December that same house will be $352,000, or virtually unchanged.

Rod Risling with the city’s assessment and taxation branch pointed out at a media briefing last week that there is good news for some since a price decrease means the property owners should face a smaller increase in property taxes this year.

“If you’re a homeowner, you’re happy if the assessed value of your property decreased more than the average,” he said.

On the other end of the spectrum, some areas saw property values increase dramatically. Assessed values in the Weir Industrial, Clareview Business Park, Winterburn Industrial Area West and Rural North Horse Hill neighbourhoods all rose over 20 per cent.

Homeowners whose property values dropped more than 10 per cent will likely pay less than the city’s average 7.3-per cent tax hike this year. Owners whose values dropped less than the average, or increased, will likely pay more.

“One thing to realize is that over time, these increases or decreases in market value even out,” Risling said. “So, even though this year you may have a higher than average decrease, over a period of time you’ll see that this actually evens out.”

The city mailed out about 287,000 residential and 23,000 non-residential property assessment notices on Jan. 2. Property tax bills will be mailed out in May.

Canada new home prices fall

2009-01-12T08:05:00.000-08:00

Prices fell 0.3 percent from October, in line with market expectations. That knocked down the year-on-year price increase to 0.7 percent from 1.5 percent in the previous month -- the lowest since August 1999.

Every major city west of Winnipeg, Manitoba posted flat or falling prices in the month.

Compared with a year earlier, Statscan reported price declines in Calgary, Edmonton, Vancouver and Victoria as those markets cooled from their previous sizzling pace of price growth. Prices in central and eastern Canada rose in the same period.

While the housing market in Canada is softening alongside the overall economy, economists have ruled out a U.S-style meltdown largely because of the country's more conservative mortgage lending practices.

Housing market in 2009

2009-01-05T09:25:00.000-08:00

At Christmastime a year ago, Toronto-area realtors had good reason to celebrate. The year ended with record high sales and the industry never looked healthier.

"Home buyers had to stop at Chapters last year for reading material just to stand in line for a condo," says realtor Mike Donia. "The banks were lending you money hand over fist."

One year later the turnaround has been dramatic and unprecedented.

At the end of 2007 prices rose by 7 per cent and sales by 12 per cent over the previous year.

But in September, as the global credit crunch started to exact a toll, the Toronto market finally succumbed to a 3 per cent price decline, the first such drop in more than a decade. By the end of November, the average home was some $25,000 cheaper than it was during the same time last year.

"The swiftness of the change in real estate market conditions and market sentiment was quite surprising," says RBC senior economist Robert Hogue. "For most of us looking at where the GTA economy was heading it was fairly clear there would be some dampening, but over the last few months it looked as if the market just priced in all the problems at once."

Given the credit crunch on Wall Street that has spread to markets globally, the question remains as to how much further Canadian households will be affected in 2009? For the average homeowner, the worry is whether prices will fall further and, if so, by how much.

Economists missed calling the real estate decline by a wide margin, to the point that last month the Bank of Canada warned ominously that many Canadians were in danger of losing their homes if the economic crisis gets worse.

But how did we get to this point?

The mantra, repeated endlessly by the real estate industry and some analysts, was that Canada was largely isolated from the pain in the United States, and that high oil prices and a more conservative approach to lending had helped us to partially decouple from sectors of the global economy.

"We're fine – it's the rest of the world that has problems" seemed to be the key message over the past few years.

"Canadians have watched with amazement for nearly two years now at the collapse of the housing sector in the United States, the United Kingdom and other countries that experienced overvalued housing prices with the sense that markets in this country stand on more solid ground," says Hogue.

It wasn't until last year, when prices started to fall in western provinces that some economists started to question the strength of the Canadian housing market.

And while sales in Toronto fell every month last year compared with the previous year, prices seemed to be holding the line.

"We're fine – it's the western provinces that have the problems – they appreciated too far and too fast" seemed to be the consensus then.

Analysts forecast that, after a decade-long run, the Greater Toronto Area's real estate market would be in for a "soft landing," and they seemed to be right.

In January, sales were down by only 2 per cent – a rounding error compared with the record numbers of 2007.

As the year progressed, sales started to decline further, but more importantly for homeowners, prices didn't.

But since September, prices and sales started to fall. The most recent numbers from the Toronto Real Estate Board show that, in the first two weeks of December, there were 1,487 sales, or about 48 per cent less than the same time in 2007.

Most people are hoping this is just a blip on the way to greener pastures.

After all, the Canadian economy is still fundamentally sound. It's true that our export earnings, job growth and corporate balance sheets are better than other nations, and the Organization for Economic Co-operation and Development said last month that Canada will lead the G7 nations in economic recovery in 2010.

A lot, of course, depends on what happens to our neighbours to the south. A prolonged recession means that fewer Americans will be buying cars from Ontario or lumber from British Columbia.

During the last bubble, average prices of existing home in Toronto hit $280,000 in 1989 and took seven years to sink downward, hitting bottom in 1996 at $196,000 before taking off again in 1997.

No one expects this market to be as brutal, but then again, no one expected oil to be below $50 U.S. per barrel, and a Canadian dollar more than 20 per cent less than at the start of the year.

To see what's in store for this year, the Star asked some of the country's top economists what they thought 2009 would bring for the real estate market:

Benjamin Tal
Senior economist, CIBC Capital Markets

"The question is what kind of correction are we having?" asks Tal. "Are we seeing a U.S.-style meltdown, or simply a recessionary correction?"

Tal says that Canada never had a subprime problem in the league of the United States, which means a market correction here will be more moderate.

"What we have is the U.S. situation minus the subprime problem, which gives you Canada," says Tal. "It's not a freefall, but it will still be a recession.

"In that case it's reasonable to expect to see a notable decline in major cities."

Tal expects average prices across the country to fall another 10 to 12 per cent by the end of 2009.

"Is this a crisis? No. Is it pretty? Still no, and you will lose two years of price appreciation. But this is part of the economic cycle."

Tal predicts that there may be a slight uptick in sales in the spring but "nothing significant" as the market will continue to level off till the end of the year.

After 2009, he is forecasting that the market will "flatline" for three or possibly four years, with not much activity, similar to the 1992 to 1997 period in the Toronto market after the last real estate bubble burst.

The most immediate problem for the Toronto market is a potential oversupply of newly built condominiums, says the economist.

Condo pricing will lead the correction down, even as he expects some future supply to be cut as developers are unable to get financing for some projects. He is bullish on the condo market in the longer run of at least five to 10 years, because new immigrants and baby boomers still will be attracted to that form of housing, says Tal.

Carl Gomez
VP research, Bentall Capital

Canada's housing market is "modestly overvalued" with home prices needing to fall by as much as 25 to 30 per cent from the peak in Alberta and British Columbia, says Gomez.

Ontario prices, he figures, are about 10 per cent overvalued.

"The market is in correction phase, and the question is how far back will we continue to go?" asks Gomez.

Protracted job losses in the key Ontario market, for example, would mean further pain. And while manufacturing has been hit over the years, Toronto has been largely isolated from the problems because of its strong financial services sector, says Gomez.

"You are starting to see some problems in the services sector now. They have been a major driver of growth in Toronto, everything from banks to insurance companies to accountants and realtors. We haven't really seen this shoe drop yet, but if you see things coming off dramatically, then things will definitely get worse and prices will be pushed down further."

Like Tal, Gomez sees the most vulnerability in the Toronto condo market.

"In some pockets it's dominated by speculators. If they sense they are not getting the kind of return they want, they are the first to pull the plug," says Gomez.

Robert Hogue
Senior economist, RBC

The next few months will be significant to determine where the market is heading, says Hogue.

"But given the economic context where conditions have deteriorated quite significantly, you'd be hard pressed to see a quick recovery," he says. "For 2009 we will likely remain in a period of fairly soft sales and declining prices."

A housing affordability study prepared by Hogue shows that homes are becoming modestly more affordable in the Toronto market.

It takes 53.3 per cent of pre-tax earnings to afford a bungalow in the Toronto market. But that's still up from the long-term average of 48.3 per cent.

"That means you've got to have a decline in interest rates or prices of homes coming down to meet the long-term average."

Still, Toronto looks solid compared with some other Canadian cities, where the affordability index is 33 per cent higher than long-term averages for Vancouver and 40 per cent for Saskatoon.
For Toronto economist Will Dunning, the most important numbers are the jobs figures; employed Canadians mean mortgage-paying customers for new and existing homes.

Canadian employers cut 71,000 jobs in November, the worst single-month figure in 26 years.

As a result, Dunning isn't looking for a bright 2009 – and his forecast is for average prices to fall by up to 8 per cent by the end of next year.

Last month, he released a report that forecast that there would be "substantial correction" in the condominium market, given that there were more than 30,000 completions in the pipeline for the Toronto area.

Housing market turned to favour buyers in '08

2008-12-29T08:28:00.000-08:00

Canada's housing market made skeptics proud and put eternal optimists to shame in 2008 as the favour turned quickly to buyers, after years of smug sellers having the upper hand.

The shock was how quickly the tables turned.

House prices across Canada have dropped 11 per cent since hitting a peak of $316,896 in May 2008, down to $280,880 in November, according to latest figures from the Canadian Real Estate Association.

The drop is weighed heavily by cities such as Vancouver, Canada's most expensive housing market, where prices have also fallen almost 13 per cent since May.

Across Canada, prices have dropped 10 per cent since November 2007, when the average home cost $311,485. Sales slipped 42 per cent year-over-year.

With consumer confidence at 25-year lows and the economy in recession, potential home buyers are staying on the sidelines until prospects brighten. Banks are also more reluctant to lend money to finance home purchases in markets where prices have been falling.

"It was back to reality in 2008, " said CIBC World Markets economist Benjamin Tal.

"The realization was that house prices can fall, and will fall."

Tal said we moved from a seller's market to a buyer's market "in a matter of months."

"This was a transitional year. A reflection of not a subprime-type meltdown, not of a bubble, but rather of recessionary conditions," said Tal.

The puncturing of the real estate bubble in 2008 has happened before. In the early 1990s, property values fell between 10 per cent and 20 per cent in many Canadian markets. In the 1980-81 recession, interest rates of more than 20 per cent in Canada squeezed inflation out of the economy but also caused thousands of homeowners to lose their houses because they couldn't afford their new payments when they refinanced their mortgages.

In both cases, recessions were followed by a runup in house prices when economic recovery came.

Tal expects national house prices to drop about 10 per cent in the next 12 months as the recession deepens in Canada. He said prices will drop the most in Western Canada, because that is where they had the biggest run up in the housing boom, which has lasted nearly a decade.

"The decline is going to be significant, but it's not going to be a freefall," Tal said.

"The U.S., minus subprime, equals Canada."

Canada's falling housing market is often compared to the United States, where prices nationally have fallen by 20 per cent since their peak in mid-2006, and up to 40 per cent in some cities.

The market crashed as a result of a risky and reckless mortgage practices, which led to billions of dollars in defaults, and turn caused millions of Americans to lose their homes. A second wave of those mortgage renewals is expected to hit in 2009, causing prices to fall further and defaults to rise.

While many real estate experts say Canada does not have the same problem with risky lending practices, Merrill Lynch Canada economist David Wolf maintains Canada is following the same path as the U.S., but with a two-year lag.

He said while Canadian mortgage defaults might seem low at 0.29 per cent of about 3.9 million mortgages as of September, it's a 17 per cent year-over-year increase. It's also larger than the 0.18 per cent of mortgage defaults in Canada in 1990, "right around the peak in house prices and just after the cyclical trough in unemployment."

He also cited a Bank of Canada study released a year ago that said mortgage default rates would rise to 2.25 per cent under a "very extreme" scenario of a 23 per cent aggregate drop in house prices.

"In sum, the relatively low level of mortgage arrears in Canada is of no comfort to us," said Wolf, who in recent reports has turned bearish on the Canadian housing market.

Gregory Klump, chief economist at the Canadian Real Estate Association, said he has been struck by how quickly sales have dropped in Canada in recent months, noting that 2007 was the strongest sales year on record.

He said many buyers are nervous about the current economy, but he is also seeing the impact of "very cautious" lenders.

Klump said he is hearing more stories than ever before of people with pre-approved mortgages that don't get the money from the bank when it comes time to try and close the deal.

"The last time I heard about such things happening ... would have been at the last housing recession," Klump said.

The Bank of Canada warned recently that, in a worse-case scenario, mortgage and consumer debt defaults could rise "significantly" if the global financial crisis deteriorates. It said the number of "vulnerable households" - the three per cent with a debt-to-income ratio above 40 per cent - could double by the end of next year.

The Canadian Association of Accredited Mortgage Professionals predicts mortgage approval activity to fall nearly 12 per cent to $193 billion in 2008, compared to $218 billion in 2007. Approvals are forecast to fall another 10 per cent to $174 billion in 2009 and another 1.6 per cent in 2010 to $171 billion. That follows a growth rate of about 11.5 per cent annually for the three years ended August 2008.

Scotiabank economist Adrienne Warren said she too expects the housing market in Canada to soften next year, particularly in the next six months as the recession creates higher unemployment.

"I think it's the type of environment where we won't see a lot of activity from buyers or sellers," said Warren.

She said the housing boom had to end eventually, after lasting more than a decade. The normal cycle is usually about six or seven years, she said.

Warren said she doesn't anticipate another boom once the market recovers, which she predicts will be in the last half of 2009.

Face the recession

2008-12-22T10:21:00.000-08:00

Bank of Canada Governor Mark Carney said on Wednesday that 2009 would be difficult for many Canadians but he cautioned against overplaying the "extreme scenario" of a possible collapse in household incomes.

"Partly as a consequence of financial instability, next year will be a trying one for many Canadians," he said in a speech. "While the Canadian household sector remains relatively healthy, its resilience will be tested during the recession."

But Carney said measures taken in Canada and around the world were working their way through the system and would pull the economy out of the "full-blown financial crisis" it is in.

"Policy-makers have had to respond with bold measures. These will work, although it will take time for confidence to return and for capital to flow once again."

The focus on the Canadian central bank was sharper on Wednesday after the U.S. Federal Reserve lowered its benchmark rate to near zero on Tuesday.

The Bank of Canada has obviously studied nonconventional measures other than rate cuts, Carney said. The bank's overnight target rate is at 1.50 percent so it still has a little room left for cuts.

"We continue to do contingency plans at the bank," he told a business audience in Toronto. "We're very up to speed on scenarios ... but it's premature to talk about that."

Carney dished out implicit criticism of media coverage last week of a Bank of Canada report on the possibility of problems in the mortgage and household sectors.

He referred to one scenario the bank had examined in which nominal household income would fall by 2 percent a year for six quarters and Canada's banks would incur significant losses.

"However, it is important not to overplay this scenario, since it actually illustrates the strength of our system," he said.

Carney said annual growth in nominal income had never been negative during any quarter for at least 37 years, and Canada's banks would still have strong capital ratios.

"There are a number of reasons why the risk posed by household balance sheets is significantly lower in Canada than elsewhere, not the least of which is Canada's more conservative lending culture," he said.

Subprime mortgages account for less than 5 percent of mortgage lending, one third the U.S. level. And because Canada requires insurance on mortgages with small downpayments and Canada Mortgage Bonds carry a sovereign guarantee, there has been no negative feedback loop between the housing market and the financial sector, he said.

Though households' debt-to-income ratio was at a record 140 percent, the debt-service ratio had declined to below the historical average because of lower borrowing costs, and this gives "a measure of assurance that most households can comfortably manage their debts," Carney said.

Still, the bank will closely monitor the risk posed by household balance sheets and consider the possibility that some may be more sensitive to shocks to their income or wealth.

He said Canadian banks are in such a good position that they can expand lending faster than their international peers. Asked by a member of the audience if the Bank of Canada might take equity stakes in chartered banks -- as in the United States -- he said there was "no interest".

Credit conditions in Canada continue to be difficult at the moment, he said, but he added that "credit, on an aggregate level, is still growing" and that "our banks are well-capitalized."

Get The Most Out Of Your Mortgage

2008-12-16T05:31:00.000-08:00

You may need money for a project or some sort of property one day when you have no other sources of funding. You may have one of the best bartering tools around in your possession, and you may be in it right now! Using your home to take out a mortgage loan is one of the quickest and easiest ways to get the money you need fast.

A bank or lender will offer a mortgage loan to those who own their own homes while using the equity of the home or property towards the loan amount. Secure loans such as these are very easy to come by and can have many different benefits for the borrowers. There is a risk of losing the home if repayments are not made on time.

Mortgage loans are really good for buying a new vehicle that is reliable and fuel efficient. You can use a mortgage loan to refinance other loans or consolidating debts. You can even use it to purchase another home or even towards making improvements on the home to increase its value.

Mortgages give people the chance to better their lives by allowing them opportunities to use the money in a constructive manner. The better your credit situation is the more likely it will be that you will have better interest rates and repayment terms for your mortgage loan. Cars, small planes and boats will often never reach the loan amount offered by most mortgage opportunities.

The interest rate that you get with your mortgage may be derived from information tied to your credit history. A borrower may miss a payment or pay late causing their interest rate and repayment terms to change as listed in their repayment terms.

Mortgage loans can be received from both banks and independent lenders. Usually going to the website for your bank or another bank or lender will give you options towards applying for a mortgage loan. If you do not have a bank preference or are new to the concept of mortgages, make sure to search online to find better loan options if available to you. You can usually get a quick approval response and have your money sooner through online application.

Mortgages are a wonderful tool for those who need money quickly and easily in great amounts. Many people even take out a second mortgage on the same property with different lenders as they permit it for refinancing and other reasons.

Mortgage in Canada- tax deductible ?

2008-12-03T06:40:00.000-08:00

Canadian homeowners are green with envy over the fact our neighbours to the south are allowed to deduct the interest paid on their mortgages from their taxes. Is it possible to do the same thing here?

I received an elegant little flyer in my mailbox the other day. It was a small glossy fold-over, and it had a quality look and feel to it. The only text on the front flap of the flyer asked me a provocative question: "Is your mortgage tax deductible?" The inside of the flyer told me that I could learn how to collect tax refunds from my mortgage. "Canadian homeowners are entitled to collect Tax Refunds from their mortgage payments under Canada Revenue Agency (CRA) guidelines for 'Cash Damming'.

By following CRA's specific guidelines for borrowing and investing, you will claim thousands of dollars in Tax Refunds every year from your mortgage loan." The small flyer mentioned "Tax Refund" five more times, and twice pointed out that I could use my Tax Refund to pay off my mortgage faster. That's pretty exciting,

The biggest single expense of many Canadian families is their mortgage payment, and we've all been making those mortgage payments with after-tax dollars. Many a Canadian has looked across the border in envy at the tax deductibility that Americans enjoy on their home mortgage interest. If it turns out that we can be getting Tax Refunds from our mortgage payments too, well, that's just a no-brainer.

As it happens, I am quite familiar with this topic and strategy, so I can spare you the inconvenience of having to leave the comfort of your home to discover how this works. In fact, I'm going to provide you with all the essential information that you really must know about Canadian mortgage deductibility and Tax Refunds, all in the very next paragraph! How can I possibly do that? By using an enhanced information conveyance technology I like to call No Baloney™.

Ready? Here's what you really need to know about Canadian mortgage deductibility and Tax Refunds: In Canada, when you borrow money to buy your home, you can't deduct the interest. When you borrow money to make certain investments, you may be able to deduct the interest. There. Now that we've covered all the really important stuff, let's review some of the details. First of all, nothing about buying your personal residence is tax-deductible. You don't get to deduct your mortgage interest, there are no special tricks that have escaped your notice, and you will not be getting "Tax Refunds" from your mortgage payments. Period.

That being said, when you borrow money to make investments which have a reasonable expectation of income, you may be able to deduct the interest on the debt. So if you use your home as collateral when you borrow money to invest, you may be able to deduct that interest expense from your income taxes. You could, therefore, have a mortgage with interest that is partially or entirely tax deductible.

However, it's very important to remember two things: (1) No matter how you twist it, turn it, or wordsmith-manoeuvre-it, the money you borrow to buy your principal residence is not tax-deductible; (2) The only way the interest on your home mortgage can be tax-deductible is if you borrow against the equity you already own in your home, and use that money to investment.

The reason it's so very important to be clear about this issue is that borrowing to buy a home is something that most people must do in order to buy a home, and as long as they can afford their mortgage payment, they're psychologically comfortable doing so. They generally don't worry that their money is at risk. In fact, they feel a sense of security about the equity they are building as they pay the mortgage down. Borrowing to invest, on the other hand, is not something that anyone needs to do, and most people are not psychologically comfortable with it. In order for borrowing to invest to make sense, the average long-term, after-tax return on the underlying investment has to be higher than the after-tax interest rate on the loan.

That invariably means taking on investment risk. And for most people, tolerating investment risk is already sufficiently challenging without the added stress of knowing that those investments were made with borrowed money. Think about the recent gyrations in the stock markets, and consider how using leverage might change your emotional response to the hysteria. Don't get me wrong - I'm not picking on leverage as a concept. Using "other people's money" is an age-old investment strategy, it absolutely has its place as a financial planning strategy, and I've used it myself.

What I am picking on is the packaging of leverage - a strategy that inherently adds risk to investing - as a clever and heretofore overlooked way to get tax benefits on your home mortgage. Let's be No Baloney™ clear: For some people, borrowing money to invest may be an appropriate investment strategy. But borrowing money and investing it because you can get a tax deduction on the interest expense is a ridiculous tax strategy.

Save by paying more

2008-11-25T11:19:00.000-08:00

How can I know how much I will save by paying more on my monthly mortgage payments?

Taking a mortgage on your home is the largest and the longest debt that you will take in your life. However, investing in a house is a necessity, so you must be smart and try to see how you can save by paying more on your monthly mortgage payments. Your mortgage statement should show the amount repaid towards principal and interest. Calculate how much extra you can afford to add to your monthly installment based on your income and expenditure.

Why should you want to know about savings on your mortgage payments?

Its really as simple as controlling the future of your finances and saving thousands of dollars towards interest payments every year. You may never have enough finances to pay off the mortgage right away, or enough equity in your home to opt for a refinance. But you can make additional payments to reduce the accruing interest on your mortgage. This is important because interest payments over the life of the mortgage amount to nearly twice the value of the home. You must realize that the mortgage accrues interest every day and your lender has a vested interest in a long-term mortgage. So you be wiser and add just $50, $100 or $500 depending on your monthly budget, towards paying off the principal amount of your mortgage.

How can a mortgage calculator help you calculate the savings on your monthly mortgage payments?

You will usually take a 15 year or a 30 year mortgage. Manually calculating the savings every month of this long tenure is tiring and you are bound to make errors. Instead it is better to use an additional payment mortgage calculator available at several financial websites for the same.

Example

For example, for a loan amount of $120,000 with a 30 year mortgage, the monthly mortgage repayment at 9% works out to be $733.76. If you simply add $100 to this monthly payment, you can repay the mortgage in 20 years and nine months with a huge saving of $82,000 in interest. This is because your additional amount goes towards repayment of the principal. The $100 you pay in the first month would actually be $270 with interest. The next month you save $268 and so on. So you save about ten years and more than eighty thousand dollars in interest by just making an additional payment of $1200 a year.

Additional points to consider when increasing the monthly mortgage repayment amount.

Ensure that the additional taux amount goes towards repayment of the principal amount. Your lender is quite likely to add it to the interest amount due for the next monthly installment.

The lender may apply only a small amount as repayment of principal and deduct the rest as service charge. To avoid any such mistakes send a separate check with precise instructions stating that the additional amount is repayment of the principal.

Check to see that the lender has no penalties for early repayment.

Enquire if you can make bi-weekly payments instead of a lumpsum monthly payment. Ignore this option in case the processing fee is high.

How not knowing about this saving can hurt you

The mortgage calculator helps you automatically calculate the interest savings in pre-paying the mortgage. You simply enter the additional payment you will make each month and the time from which you will do so. The calculator will give you a comparison of the savings in interest instantly. Moreover, you can start by just adding $100 to your monthly installment and still benefit. However, ignorance of this fact means that you carry the interest burden for a longer time and waste money that can be better used elsewhere.

Mortgage Application & Credit rating

2008-11-19T05:58:00.000-08:00

As everyone knows, your credit rating is one of the most important numbers that you have it affects your ability not only to get a mortgage, but a car loan, credit card, or store credit, as well the interest rate you are given. A good credit rating is so important that some financial experts even advise you to make sure you have a good credit rating before even thinking of applying for a mortgage.

When you apply for a mortgage, the lender can access your credit report that is compiled by information supplied by the three main credit-reporting agencies, Equifax, Experian and TransUnion. Your credit score is going to be somewhere between 300 and 850, based on your record of paying back loans in the past.

Your all-important credit score is based on several factors, including the length of your credit history as well as the credit you have available and the amount of credit you have used. Whereas everybody is late with a bill occasionally, a lender is also looking for a stable record of paying bills on time to many late or missed payments can have an adverse effect. Your employment history and the number of credit cards issued to you are also important factors.

It is basically all about the risk factor home buyers who have a history of paying back loans and paying bills on time have much less of a chance of defaulting on their mortgage loan and are therefore less of a risk. The mortgage industry has calculated that if a person has a high credit score for example 780 the chances of them becoming three months behind in their payments are almost 1 in 600 and statistically, a person with a low credit score of 600 has a 1 in 4 chance of becoming three months behind on payments.

Borrowers who have high credit scores defined as being 760 or over will generally have more choices available when it comes to qualifying for a mortgage, as well as being able to benefit from lower interest rates. If you have a score in the 600 to 700 range, you will not have any trouble getting a loan for your new home but you may be paying back the loan at a higher interest rate.

Generally speaking, a score of around 500 is about the lowest that will qualify for a mortgage. If you fall into this category, you may have to shop around to find a lender that is willing to work with you; and your interest rate will probably be higher. Some lenders specialize in providing loans to borrowers who have poor credit - these lenders are often referred to as sub-prime lenders. One possible solution for those with a very low credit score is to consider applying for an FHA loan, which tends to use different criteria to qualify people.

A low credit score can make a big difference in the amount for which you will qualify, as well as the amount of your monthly mortgage payment. An interest rate of just one point less will mean a savings of around $5,000 on the average 15-year mortgage and even more on a typical thirty-year mortgage around $50,000. In addition, a credit score below 630 can mean monthly payments that are between $50 and $250 higher.

There are some things you can do if you need to raise your credit score. Firstly, check your credit score and make sure it is accurate an estimated 25% of credit reports have what might be described as serious errors on them. These mistakes can be corrected, but this can often take up to several months not an ideal situation if you are just about to apply for a mortgage. Even a small error on your report can affect your score and the mortgage interest rate, which you are offered.

If at all possible, try not to make a major purchase such as a new car just before applying for a mortgage, as it will lower your credit score. And pay off as much debt as you possibly can this will help to lower your debt to income ratio and raise your score. If there are some small outstanding debts on your credit report, consider taking care of them before applying. Do not let bad credit stop you from applying for a mortgage even with a low score; it is still possible to be a homeowner. Your credit rating is very important when it comes to obtaining a mortgage and it can affect your chances of purchasing that new house. If your score is low, consider looking into ways to improve it, and you should be able to get a mortgage at a great rate.

Compare Mortgage Rates

2008-11-14T15:05:00.000-08:00

Most people know it's important to compare mortgage rates before they purchase or refinance a home. Some may even know to compare fees, points and other costs associated with purchasing or refinancing their home but, there are some things you didn't think about or just don't know.

You may not be able to get or even want the advertised rate. The super low rate may be for a 2-week lock in period. Unless the lender can guarantee you will close escrow in 2 weeks, you need to find out what rate you can get for a 30-45 day interest rate lock, or whatever you feel comfortable with.

You should try to avoid having your credit run until you've decided between 2-3 lenders. You can request a pre-approval from 3-4 mortgage companies, some of whom will get rates quotes from several lenders and give you the best 4, giving you a total of 10-12 quotes. Note that these are only estimates if they haven't run your credit. Be sure to read the terms for the pre-approval estimate

Ask the lender if they will provide your credit score when they do run your credit. You should have an idea of what it is, but it's nice to know what the recent score is as this will affect the interest rate you get.

Beware of the "no cost loan". It will probably have fees included in the loan, increasing the interest rate and simply not cost you any out of pocket costs. If you don't have the money, try to get it somehow if you can.

Ask for all the fees you will have to pay before having lenders run your credit. Some may not want to give it to you. The good/honest ones with nothing to hide will, at least as much as they can before running your credit. Some fees may depend on your credit score.

Be sure you can prepay the loan or have a bi-monthly plan set up if you want to without additional charges. Find out how often they re-calculate the outstanding mortgage interest. You want them to do it daily or at least monthly, but definitely not yearly. What if you want a bi-monthly mortgage later on or you get a large bonus and want to apply a little to the mortgage; if they don't re-calculate often, you'll pay the interest on the old balance and not the new one. This can add up if it's for a whole year.

When shopping online for mortgage rates, be sure you are on a secure page when sending your social security number over the Internet. You should see a small yellow lock in the lower left corner of your browser window and an "s" next to the "http" in the URL area of the browser window.

Another tip when shopping online for mortgage rates, find out if they process everything online and send you an email or if they have to call you with the quote. Try to get the former. You don't really want a bunch of people calling you to try to talk you into a loan. You do want the option to call them and ask them questions without having to wait.

Sometimes you can get a small percentage point off if you have your mortgage automatically deducted from your checking account. This is a good thing, just be aware with whom you are dealing with and what you are signing, read the fine print. Buying or refinancing your home is important and will affect your life for a long time, so don't take it lightly, be careful and be prepared, you'll be glad you did.

Sept erreurs importantes à éviter quand on projette de vendre sa maison

2008-07-28T09:36:00.000-07:00

Tous les ans, dans votre secteur, beaucoup de gens désirant vendre leur maison font les mêmes erreurs ! Vu que cela me désole de constater ces mêmes erreurs encore et encore, j'ai décidé de faire quelque chose à ce sujet et préparé ce guide, décrivant les sept erreurs (la plupart très coûteuses!) les plus fréquentes faites par les vendeurs de maisons.

Erreur # l : La survente durant la visite.

Le choix d’acheter une maison est une décision non pas logique, mais émotionnelle. C’est toujours émotif. Les gens aiment ressentir une impression pour une maison, ils ont besoin de sentir qu’ils y seront confortables. Il est difficile pour eux de s’y sentir confortables quand vous les suivez pas à pas, en les bombardant continuellement d’informations, en leur expliquant tous les travaux que vous avez faits sur la maison, en détaillant chaque amélioration que vous y avez apportée, etc. Les acheteurs éventuels risquent de croire qu’ils envahissent votre espace privé et vous obtiendrez l’effet contraire de celui que vous recherchez. Résistez à la tentation de parler aux acheteurs tout le temps que dure la visite. Laissez-les découvrir la maison à leur propre rythme.

Je recommande néanmoins de souligner les accessoires ou dispositifs qu'ils pourraient ne pas remarquer. Une autre bonne idée consiste à laisser un album photo sur le comptoir de cuisine avec des photos de la maison pendant les autres saisons de l’année.

Erreur # 2 : Confondre les « curieux » avec les acheteurs.

Si vous vendez votre maison vous-même, vous aurez toujours plus d'activité à la porte et au téléphone que si votre maison est inscrite auprès d’une agence immobilière reconnue. Si vous ouvrez votre porte à tout le monde qui passe devant chez vous, vous risquez de tourner en rond. Je recommande que vous posiez d'abord quelques questions aux visiteurs pour vous assurer qu'ils sont qualifiés, avant d’investir beaucoup de temps avec eux. Un acheteur qualifié est quelqu’un qui est prêt à passer à l’action et en a les moyens. Au cours des années, j'ai constaté que beaucoup de gens qui magasinent les maisons « À vendre par le propriétaire » sont souvent des curieux, des voisins fouineurs ou des personnes ayant des problèmes de solvabilité et qui espèrent vous obliger à les aider pour le financement. D'autres acheteurs peuvent être qualifiés, mais ne seront pas prêts à acheter avant six à vingt-quatre mois. Ils seront gênés de déranger un agent immobilier, mais ils appelleront et visiteront les maisons « À vendre par le propriétaire » pour voir ce qui est disponible sur le marché. Plusieurs de ces gens doivent d'abord vendre leur maison, ou bien économiser l'argent pour la mise de fonds, ou encore elles peuvent devoir améliorer leur degré de solvabilité. Finalement, quand tout sera en place, elles commenceront sérieusement leur recherche de maisons en travaillant avec un agent immobilier.

Je m’assure toujours que les acheteurs sont qualifiés avant de leur montrer des maisons. Je ne ferai pas visiter une maison à un client, à moins de croire qu’il peut se permettre de l’acheter, qu’il dispose de la mise de fonds nécessaire, que son crédit est adéquat et de savoir de combien d’équité il va disposer en vendant sa maison actuelle. Ce sont là juste quelques-unes des questions que je vous recommande de demander aux candidats avant que vous ne leur montriez votre maison.

L’expérience m’a appris à poser des questions avant de gaspiller mon temps avec un acheteur non qualifié ou qui recherche seulement des idées de décoration.

Erreur # 3 : Mal estimer la valeur de votre maison.

À titre de vendeur, vous voulez le maximum d’argent possible lors de la vente de votre maison et c’est tout à fait normal. Cependant, en demandant un prix trop élevé pour votre maison, souvent vous obtiendrez moins d'argent que vous pourriez avoir en demandant un prix correspondant réellement à la valeur marchande de votre maison. Gardez cette information en tête : en moyenne, les acheteurs comparent votre maison à quinze ou vingt autres maisons. Si votre maison n’affiche pas un prix relativement compétitif, les gens peuvent rejeter votre maison et opter pour des maisons supérieures à prix très comparables. Demander un prix trop élevé pour votre maison augmente habituellement le temps de vente sur le marché et beaucoup d'acheteurs savent très bien depuis combien de temps les maisons sont en vente. Plus votre maison est en vente longtemps, plus les acheteurs risquent de penser qu'il y a quelque chose « qui ne va pas » et plus les offres seront basses.

Erreur # 4 : Ne pas préparer votre maison pour qu’elle soit agréable à l'oeil de l'acheteur.

Les acheteurs recherchent un chez-soi, pas une maison. Ils finissent toujours par acheter la maison où ils se sentent le plus confortables. J'ai observé des douzaines de fois l’expression des acheteurs franchissant la porte avant d’une maison; leurs réactions sont immédiates, ils aiment ou ils n’aiment pas ce qu’ils voient.

Les propriétaires qui négligent d’effectuer les réparations nécessaires, qui ne la rendent pas impeccable à l’intérieur comme à l’extérieur, reçoivent généralement des offres basses et le temps de vente est plus long.

Si vous vouliez vendre une voiture, est-ce que vous ne la laveriez pas à l'intérieur et à l’extérieur pour en obtenir le prix le plus élevé possible ? Un acheteur qui regarde votre voiture usagée, tout comme celui qui regarde votre maison, va être influencé par ses émotions dans son processus de décision.

Erreur # 5 : Ne pas donner efficacement toute l’information sur la propriété aux acheteurs potentiels.

Les consommateurs pensent, à tort, que les deux meilleurs outils de vente des conseillers en immobilier sont les portes ouvertes et les petites annonces. En réalité, elles ne sont pas très efficaces. Étonnamment, moins d'un pour cent de toutes les maisons vendues le sont lors de journées porte ouverte. En fait, cette méthode est utilisée par les conseillers en immobiliers pour attirer des clients potentiels et la maison en question est très rarement vendue lors de ces visites. En outre, des études prouvent que moins de trois pour cent de personnes achètent leur maison après l’avoir vue dans les petites annonces.

Les personnes qui appellent suite à une petite annonce de maison « À vendre par le propriétaire » n'obtiennent que rarement l'information désirée lors d’un premier d'appel (souvent ils sont invités à laisser un message sur le répondeur ou à un enfant). Il arrive fréquemment que personne ne les rappelle. Je recommande que vous utilisiez une boîte vocale, disponible 24 heures sur 24, consacrée spécifiquement à décrire votre maison, de sorte que les acheteurs puissent obtenir l'information sur votre maison en tout temps. Une autre technique de vente que j'utilise consiste à distribuer 5 000 à 10 000 dépliants dans tout le voisinage et autour, là où les propriétaires de maisons pourraient être intéressés par une maison aussi attirante que la vôtre.

Quand vous voulez vendre votre maison, ne croyez pas qu'une simple petite annonce va faire tout le travail pour vous. Cela nécessite des efforts et de la persévérance. Habituellement, c’est ce qui est le plus rentable à long terme.

Erreur # 6 : Ne pas rédiger correctement une promesse d’achat.

Beaucoup de vendeurs pensent à tort que leur maison est vendue et découvrent quelques semaines ou même des mois plus tard que l'acheteur ne pouvait pas obtenir un prêt hypothécaire. D'autres vendeurs découvrent trop tard les douzaines de clauses qui composent une promesse d’achat; les inspections du bâtiment et une foule d'autres détails peuvent revenir les hanter s’ils n’ont pas été rédigés correctement dès le départ.

Il n'est pas rare de voir un acheteur menacer d’annuler la transaction dans le but de faire pression sur le vendeur pour obtenir une réduction du prix de vente ou d’autres avantages, comme faire assumer par le vendeur des dépenses normalement à la charge de l’acheteur.

Erreur # 7 : Ne pas obtenir une préapprobation de prêt hypothécaire en vue de votre prochain achat et ne pas l’exiger de votre acheteur.

Rien n'est plus déchirant que de vendre votre maison, de trouver la maison de vos rêves et de découvrir seulement après que vous ne pouvez pas obtenir le financement requis pour cette nouvelle maison. Ou bien, que l'acheteur n'a pas pu obtenir le financement pour acheter votre maison.

Une préapprobation écrite de prêt hypothécaire est une promesse formelle, faite par une institution financière, de prêter les fonds nécessaires à l’achat d’une maison; elle spécifie, entre autres, les conditions dudit financement. Ne confondez pas une préqualification verbale avec une préapprobation écrite formelle. Les préqualifications verbales ne sont juste que verbales. Elles ne lient pas le prêteur à la maison. Beaucoup d'acheteurs ont déjà obtenu des préqualifications verbales pour se voir plus tard refuser un prêt hypothécaire.

S.V.P., sentez-vous bien à l’aise de me téléphoner, c’est sans aucune obligation de votre part. Je me ferai un plaisir de vous fournir le nom des conseillers en financement que je recommande à mes clients. Sur ma recommandation et sans aucun frais, pourront vous obtenir un prêt préapprouvé en bonne et due forme.

Tous ces conseils sont le résultat de plusieurs années d'expérience en immobilier, dans les situations de vente comme dans les transactions d’achat, dans des marchés à la hausse comme à la baisse, alors que les taux d'intérêt sont élevés et aussi lorsqu’ils sont bas. Cependant, dans n'importe quelle économie, les recommandations énumérées s'appliquent dans toutes les situations. Suivez ces directives et vous réduirez sensiblement les erreurs qui sont souvent cause de stress important et parfois cause de pertes financières substantielles, subies par des centaines de vendeurs de maisons dans notre secteur chaque année.