Mortgage Term Review - November 2010
Mortgage Term Review - November 2010, by www.canadianmortgagetrends.com
Updated: November 15, 2010
Key developments since the August update:
•Economic growth concerns reached a peak for the year but have since subsided (slightly)
•The 5-year bond yield (which leads fixed mortgage rates) fell to 18-month lows before rebounding strongly
•Prime rate rose 25 basis points to 3.00%
•Fixed mortgage rates hit all-time lows...again
•Current deep-discounted market rates: 5-year fixed: 3.39%-3.49%; Variable: Prime minus 0.75%
Why is the "Term" important?
As the saying goes, "The lowest rate will save you hundreds, but the wrong term can cost you thousands."
Put another way, your mortgage term can have a far greater impact on interest cost than the up-front interest rate. That’s because your term determines the length of time you're locked into a rate. That, in turn, affects how long you'll overpay or underpay, relative to the other available options.
The wrong term can get mighty expensive if interest rates deviate from your assumptions, or if you need to break your mortgage early. It therefore pays to make the right choice from the get-go.
Almost anyone can find a low rate by browsing the Internet. Picking the right term isn't so easy. Take some time, get good advice, and nail the right term the first time. Below you'll find bite-sized term reviews to give you a running start.
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Popular Fixed Terms…
Here's a breakdown of the most common mortgage terms:
•1-year Fixed: If rates rise as economists expect (see: mortgage rate forecast), then a deeply discounted 1-year fixed is mathematically a good alternative to a variable. At the end of the term, you can move into another 1-year or consider a variable rate—possibly at a better discount than today.
•2-year Fixed: Rates on two-year terms are now low enough to make them slightly more attractive than variable and 1-year fixed rates. That's assuming prime rate increases 1.75% in the next two years. If your rate expectations are lower than that, then a 1-year fixed performs better "on paper."
•3-year Fixed: This is unquestionably the sweet spot thanks to 3-year rates under 3%. The three-year beats all other terms in our internal rate simulations. If we were forced to pick one strategy for the next five years, a three-year fixed followed by two one-year terms would be it. As always, the trade-off with a 3-year term is more risk in years 4 and 5.
•4-year Fixed: At today's rates, 4-year mortgages are still a waste of time unless you plan to break your mortgage in four years. (Remember, however, that people do refinance every 3.5 years on average.)
•5-year Fixed: This is the most popular term in Canada, and government restrictions on variable-rate qualification have made it more so. Fortunately, 5-year fixed rates have never been lower—literally. At under 3.50%, the conservative 5-year term has become attractive even to long-time variable-rate devotees.
Longer Fixed Terms…
•7-year Fixed: The spread between 5- and 7-year terms is over 120 basis points, which makes seven year terms mathematically pointless. If you’re that concerned about risk, take a 10-year term for 30 basis points more, and get three more years of rate protection.
•10-year Fixed: The decade mortgage is now available just under 5%. Some consider that a pittance for 10 years of knowing your payments. What’s more, 10-year terms let you out after 5 years without paying a dreaded IRD penalty. History has shown, however, that 9 out of 10 times, 10-year fixed terms cost more than consecutive 5-year fixed terms. For a 10-year to prevail, 5-year fixed rates would have to soar over 3.75 percentage points by the time one's 5-year term matured. Reputable analysts are calling on long-term rates to rise just 2.25 percentage points in the next 60 months.
Variable Terms…
•5-year Closed Variable: Prime – 0.75% has become the standard once again for 5-year variable rates. Most people choosing variables today don't believe prime rate will increase significantly. They tend to feel that history will repeat itself. (That "history" refers to the 77% of the time that variable rates have prevailed over 5-year fixed rates. See: Fixed vs Variable.)
Nonetheless, every major economist expects prime rate to continue climbing next year. If prime rate ascends 150 basis points in the next two years, our amortization simulations give the edge to 5-year fixed rates.
Are variables worth the gamble? Not for our money. 1, 2, 3 and 5-year Fixed rates are just too good to pass up. However, ask this question in two years and our answer could be very different.
•3-year Variable: 3-year terms let you renegotiate sooner—which is good if you might need to break your mortgage in 3 years, or if you think variable discounts will improve in 36 months. In the 3-year market, you can find slightly better variable rates on no-frills mortgages.
•1-year Variable: With 1-year fixed rates below 1-year variable rates, don't bother with 1-year variables.
•5-year Capped Variable: No benefit. Ignore.
•5-year Open Variable: Open mortgages are temporary solutions, and you'll pay a premium for their flexibility. Remember, closed variables are portable, and they only have a 3-month interest penalty. Even if you break a closed variable in 180 days and pay the penalty, it's still cheaper than taking an open...at today's rates anyhow.
Other Terms and Features…
•5-year Cash Back Down Payment: Most people considering these mortgages are pretty desperate to buy, so banks stick them with posted 5-year fixed rates. Here's a novel thought: If you can’t put down 5%, rent and build up a down payment.
•5-year No-Frills: No-frills mortgages will save you 20 basis points, but you'll usually give up standard pre-payment privileges and the ability to switch or refinance elsewhere mid-term. In addition, you'll sometimes:
◦pay "reinvestment" fees if you break early
◦Be without online account access (if that's important to you).
Giving up all this will save you roughly $26 a month on a $250,000 mortgage.
pay higher penalties
•Readvanceables: They remain the “must have” mortgage if you’ve got 20%+ equity. Readvanceables make you liquid, and you can’t put a price on liquidity. Just remember, choosing a readvanceable means you can't switch lenders without paying legal fees. More…
•Open HELOC: HELOCs are priced at least 125 basis points above closed variable mortgages. So don't put money into a HELOC unless you plan to pay it off quickly, need interest-only payments, or want to utilize interest offsetting. If you're planning to borrow a large amount and pay off less than 25% of your mortgage each year, save money and take a readvanceable closed variable or 1-year fixed instead. If you do choose a HELOC, avoid the uncompetitive lenders who are still at prime + 1.00%.
•Hybrids: A hybrid mortgage is part fixed and part variable (and/or part long term and part short term). Hybrids give you rate diversification, which makes some degree of sense since no one knows how high rates will be in five years. It's best to choose hybrids that contain the same terms (e.g. a 5-year variable and a 5-year fixed). If you instead get part short-term and part long-term, the lender may be less motivated to give you a great rate when the short-term portion matures (because the lender knows you're locked in with them on the longer-term portion). If you're considering a hyrbid, also look at a medium term like a 3-year fixed.
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The Disclaimer: There are a million and one exceptions to everything above and market conditions change almost daily. Therefore, be wise and get a mortgage professional to compare all the options based on current rates and your personal circumstances.
Above all, remember that these opinions are just that. They are not recommendations or advice. Qualifying is always contingent upon approved credit. All information is based on present market conditions, current economist forecasts (we do not predict rates ourselves), and today's rates and expectations—each of which may change drastically without notice. These opinions are intended for mortgages on owner-occupied properties only.
Canadian Mortgages, Insurance, Investment, Tax Planning
Wednesday, November 17, 2010
Innovative New Tools Launched In The Real Estate Industry This Week
Innovative New Tools Launched In The Real Estate Industry This Week
Toronto Sales Are Performing As Expected
Doom & Gloom Predictions In The U.S. As Report Compares Property Market Conditions To The Great Depression Era
Residential Property Prices Set To Fall In 2011, According To CREA
Housing Starts Will Return To Stable Ground In 2011, According To Report By CMHC
Survey Reveals Ways In Which UK Property Industry Copes With Real Estate Downturn
Toronto Sales Are Performing As Expected
Doom & Gloom Predictions In The U.S. As Report Compares Property Market Conditions To The Great Depression Era
Residential Property Prices Set To Fall In 2011, According To CREA
Housing Starts Will Return To Stable Ground In 2011, According To Report By CMHC
Survey Reveals Ways In Which UK Property Industry Copes With Real Estate Downturn
Tuesday, November 16, 2010
FN Mortgage rates as of 16/11/2010
FIRST NATIONAL
1 year fixed: 2.65 %
3 years fixed: 3.49 %
5 years fixed: 3.79 %
5 years 5% Cash back fixed: 5.44 %
First National Prime Rate: 3.00 %
Posted by
DataTracker Powered by CoolRent
1 year fixed: 2.65 %
3 years fixed: 3.49 %
5 years fixed: 3.79 %
5 years 5% Cash back fixed: 5.44 %
First National Prime Rate: 3.00 %
Posted by
DataTracker Powered by CoolRent
Monday, November 15, 2010
Thursday, November 11, 2010
Canadian Mortgage Broker News - BCREA forecasts moderate rise in home sales
Canadian Mortgage Broker News - BCREA forecasts moderate rise in home sales
Wednesday, 10 November 2010
The British Columbia Real Estate Association (BCREA) released its Fall Housing Forecast 2010, forecasting BC Multiple Listing Service (MLS) residential sales to decline 12 per cent from 85,028 units in 2009 to 74,950 units this year, before increasing six per cent to 79,700 units in 2011.
“Consumers are responding to a double-dip in mortgage interest rates,” said Cameron Muir, BCREA Chief Economist. “While housing demand waned in the province through the spring and summer, the added purchasing power from low borrowing costs combined with gradual improvement in the BC economy has trended home sales higher in recent months.”
“A moderate increase in BC home sales is expected next year coinciding with employment and population growth,” added Muir. “However, the 79,700 unit sales that are forecast for 2011 are well below the ten-year average of 85,500 units.” A record 106,300 MLS residential sales were recorded in 2005.
The average MLS residential price is forecast to climb seven per cent to $498,500 this year and remain relatively unchanged in 2011, albeit declining by one per cent to $495,600.
Wednesday, 10 November 2010
The British Columbia Real Estate Association (BCREA) released its Fall Housing Forecast 2010, forecasting BC Multiple Listing Service (MLS) residential sales to decline 12 per cent from 85,028 units in 2009 to 74,950 units this year, before increasing six per cent to 79,700 units in 2011.
“Consumers are responding to a double-dip in mortgage interest rates,” said Cameron Muir, BCREA Chief Economist. “While housing demand waned in the province through the spring and summer, the added purchasing power from low borrowing costs combined with gradual improvement in the BC economy has trended home sales higher in recent months.”
“A moderate increase in BC home sales is expected next year coinciding with employment and population growth,” added Muir. “However, the 79,700 unit sales that are forecast for 2011 are well below the ten-year average of 85,500 units.” A record 106,300 MLS residential sales were recorded in 2005.
The average MLS residential price is forecast to climb seven per cent to $498,500 this year and remain relatively unchanged in 2011, albeit declining by one per cent to $495,600.
Canadian Mortgage Broker News - More homeowners opting for long amortization
Canadian Mortgage Broker News - More homeowners opting for long amortization
Wednesday, 10 November 2010
Canadians are taking longer to pay off their mortgages but don’t expect it to affect their retirement plans.
A new study from the Canadian Association of Accredited Mortgage Professionals (CAAMP) showed 42 per cent of new mortgages in the last year went for an amortization period of more than 25 years. Five years ago, you couldn’t even qualify for an insured mortgage backed by the government that was amortized for more than 25 years.
In the same survey, CAAMP found those with extended amortization plan to retire on average at 61.9 years, while those with less than 25 years amortization plan to retire on average at 61.5 years.
“This data on expectations does not prove that actual retirement will be unaffected by recent trends in housing and mortgage markets,” the CAAMP report noted. “But it does suggest that consumers’ evaluations of their life-cycle options have not been materially altered.”
Homeowners opt for longer amortization periods because the monthly payment is lower when spread over 35 years instead of 25.
Wednesday, 10 November 2010
Canadians are taking longer to pay off their mortgages but don’t expect it to affect their retirement plans.
A new study from the Canadian Association of Accredited Mortgage Professionals (CAAMP) showed 42 per cent of new mortgages in the last year went for an amortization period of more than 25 years. Five years ago, you couldn’t even qualify for an insured mortgage backed by the government that was amortized for more than 25 years.
In the same survey, CAAMP found those with extended amortization plan to retire on average at 61.9 years, while those with less than 25 years amortization plan to retire on average at 61.5 years.
“This data on expectations does not prove that actual retirement will be unaffected by recent trends in housing and mortgage markets,” the CAAMP report noted. “But it does suggest that consumers’ evaluations of their life-cycle options have not been materially altered.”
Homeowners opt for longer amortization periods because the monthly payment is lower when spread over 35 years instead of 25.
Wednesday, November 10, 2010
Canada Independent Mortgage Brokers to Remain Strong in 2011 Despite the Decline of U.S. Brokerage Market, says Report
Canada Independent Mortgage Brokers to Remain Strong in 2011 Despite the Decline of U.S. Brokerage Market, says Report
Tuesday, 09 November 2010 21:21 Written by David Hatton, Editorial Team
Mortgage brokers were popping Champagne corks this week after news was released Monday that the residential market inched past the $1 trillion dollar mark in late August.
Canadians had $1,008,000,000,000 in mortgages outstanding at the end of August, a gain of 7.6 per cent in one year, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP). Over the past 15 years, the volume of outstanding mortgages has increased a even more whopping 194 per cent.
As the residential housing market emerged from the recession earlier this year, consumers rushed into buying properties before the market recovered, raising average prices to an all-time high of $346,881 in May. The market has since recovered slightly with prices around $331,000.
Canadians also borrowed heavily against their home equity during the economic crisis. The CAAMP report noted about 18 per cent of consumers took equity out of their homes – an average of $46,000 – with half stating it was for “debt consolidation or repayment”. Based on an estimated 5.65 million mortgage holders in Canada, that represents about $41-billion in borrowing.
“It is estimated that 30 per cent of the takeout was for debt reconsolidation and repayment,” the report stated. “Therefore, while the amount of outstanding mortgage debt would have increased by this amount, totals for other types of debt would be correspondingly reduced. About $15-billion was taken out for renovations, $6-billion for education and other spending, $7.5-billion for investments and $4-billion for other purposes.”
But the report also noted a larger proportion of mortgage holders increased their payments in the past year. CAAMP reported about thirty-five per cent of consumers surveyed paid more than they had to, with another 12 per cent making lump sum payments, 16 per cent increasing their monthly payments and another 7 per cent doing both.
That announcement came hot on the heels of a Deloitte Consulting report that the Canadian private mortgage broker channel will remain “strong, stable and established” as it continues to fight with the big six banks across the country for market share in the years ahead.The report, titled “Winning Strategies in the Brokered Mortgage Marketplace”, suggested mortgages issued by non-bank providers will likely provide for one-third of all mortgages in Canada for the foreseeable future.
"The Canadian mortgage industry is undergoing another significant paradigm shift," says Todd Roberts, consulting partner and leader of Deloitte’s Corporate Strategy Practice. "In the face of significant industry developments such as the recent credit crisis, industry consolidation and price competition, many banks and non-bank lenders are starting to seriously evaluate the economics involved in pursuing the mortgage brokerage channel. As more and more of these lenders enter this business, Canadian mortgage consumers will ultimately benefit in the form of increased choice of products, value-added advice, and more convenient services."
Independent mortgage brokers represent 38% of total mortgage originations in 2009, up from 26% in 2003, according to Canada Mortgage and Housing Corp (CMHC) data. And roughly the other half of their 2009 mortgage volume was from three of the big six banks – Scotiabank, FirstLine (CIBC) and TD - active n the mortgage broker channel.
The industry website www.canadianmortgagetrends.com noted that CAAMP said brokers had 25% of 2009 total market share, according to their calculations. That could be due to two things: banks putting more reps on the street and banks realizing that low rates and market share are correlated.
It added the 2800 bank mobile mortgage reps will increase, putting more pressure on brokers. Brokers represent objectivity and choice, however, because brokers typically know and sell multiple lenders’ products. Hopefully lenders do not get carried away with “preferred broker” lists and destroy this edge, however.
“Lenders who use top 100 lists and the like are so excited by the “efficiencies” they create that they’re completely blinded to the effects these policies could have on the industry long term,” the website noted, adding unless things change, “volume pooling and submission desks could become essential for brokers who want to compete with bank reps for larger clients”.
That becomes a sharp contrast when compared with their U.S. counterparts, who have seen their share of mortgage broker collapses, the Deloitte report noted. Major banks such as JP Morgan Chase & Co. and Bank of America Corp, no longer sell mortgages through independent mortgage brokers after the subprime market imploded due to mortgages with unrealistic rate increases, inaccurate readings from credit rating agencies and lack of proper regulation.
In the U.S., the number of mortgage brokerage firms has contracted to 20,000 in 2010 from 54,000 in 2007, the report said. According to the U.S.-based National Association of Mortgage Brokers (NAMB), in 2006, mortgage brokers originated 65% of U.S. mortgages. They now originate a "previously inconceivable" 15%, the report says.
In Canada, however, the broker model has evolved from "a fragmented lender of last resort" to a legitimate option, the report says.
The Canadian lender distribution model in particular has undergone several changes over the last two decades, and while the landscape of lenders continues to shift, the mortgage broker channel remains a viable alternative to the major banks' branch and mobile mortgage sales forces (MMSF). According to the report, while mortgage market share trends for bank branches have steadily decreased (trends which are expected to continue), by contrast, they have modestly increased for mortgage brokers (they are expected to be flat into the future), and steadily increased for bank mobile sales forces (they are expected to continue).
“Canada could not be more different,” says Rob Galaski, Toronto-based senior manager of Deloitte’s corporate strategy practice. “In Canada, most of our lenders, particularly the major banks, have exhibited considerable restraint during the credit crisis and were much more conservative.”
“Over the last decade, there’s been a lot of speculation as to whether the brokerage channel is here to stay,” he says. “We’re finding that the broker channel in Canada is extremely stable and definitely a viable channel for all types of lenders, including the major banks. And, that’s a large contrast to what you find in the United States.”
Canada was largely shielded from the global credit crisis because of stricter mortgage lending rules and more conservative underwriting standards, according to the report. Meanwhile, the big six banks and monoline lenders like Home Capital Group Inc. continue to tap the mortgage broker channel to expand their business.
The future for the mortgage broker in Canada "remains positive" although the scenario anticipated five years ago that brokers will represent the majority of origination volume is “unlikely”, the report says. "The channel will continue to stabilize, settling at approximately one-third of mortgage origination dollar volume," it says.
"Over the last decade, an increasing number of viable options for borrowers have surfaced," Deloitte’s Galaski explained. "In addition to the traditional options available at bank branches, Canadians seeking a mortgage can now consult the banks' mobile mortgage specialists, independent mortgage brokers, and online sources. In this changing and more customer-friendly environment, the mortgage broker channel has emerged as a legitimate competitor that is helping provide greater choice and convenience to Canadians."
"There are many groups of Canadians who are benefitting from access to the specialized lending services that mortgage brokers can provide. In particular, individuals who would have previously been faced with very few options due to their financial circumstances—such as new immigrants, the self-employed, and individuals with credit challenges—now have options that were not previously available to them even a few years ago," says Galaski.
Mortgage brokers are "so important because they are the primary access point for people who have credit challenges," says Galaski. "The major banks have strong programs now for new Canadians, for example, but the mortgage-broker channel provides for people with credit challenges, people with a short credit history, and people with income challenges access to lenders who exist outside the mainstream."
"Having a strong and established broker channel is an excellent thing because it facilitates consumer choice," he says.
The Deloitte report added imminent changes in legislation may remove penalties and barriers for switching lenders.
In response to consumer group concerns that mortgage prepayment penalties are complicated and lack disclosure, the federal government has stated its intention to standardize their calculation and disclosure. The typical repayment penalty is either three months' interest or the difference between the existing rate and the rate the lender could charge in the current environment — known as the interest rate differential (IRD). In a rapidly falling rate environment, the IRD method provides the lender with greater compensation for the foregone interest revenue—but it is typically more expensive for borrowers who plan to discharge their mortgages.
"If new government regulations remove the IRD penalty as a barrier to switching, more consumers will likely switch mortgages in periods of declining interest rates," explains Roberts. "In the absence of stiff payment penalties, lenders will therefore seek to minimize lost customers by building strong relationships through active cross-selling and retention strategies for at-risk groups."
According to Deloitte, emerging trends that are expected to shape the Canadian mortgage industry and ultimately impact Canadian mortgage holders include:1. The balance of power will shift from financial institutions to mortgage-seeking Canadians: As the mortgage lending landscape continues to shift, Canadians will have access to a wider range of options when selecting a mortgage. This has increased competition among lenders (bank branches, mobile mortgage specialists, independent mortgage brokers, and online sources) which in turn will result in more customer-friendly service, increased product offerings and convenience for Canadians seeking a mortgage.
2. Online and telephone banking will continue emerging as viable channels: Remote self-service options such as online and telephone banking are emerging as popular alternative channels for obtaining mortgages. Given the new level of sophistication telephone banking has recently achieved, Canadians no longer need to leave home to obtain a mortgage as some lenders are allowing borrowers to complete their mortgage applications using a voice signature. In addition, online features such as calculators, planning tools, and live chat options with lenders are giving Canadians access to more information than ever. Although these channels are not new, they are in the early stages of adoption and signify an important trend for Canadians interested in the self-service option.
3. Mortgage brokers will evolve from "rate shoppers"' to "advisors" in order to survive: Given Canadians now have increased access to mortgage rate information, mortgage brokers as "rate shoppers" are quickly becoming irrelevant. As such, the "mortgage broker as advisor" value proposition will be the most successful approach for this channel. To succeed in today's hypercompetitive marketplace, mortgage brokers will start to offer value-added advice to Canadian mortgage holders similar to the way investment brokers have evolved from transactional to advice-based roles.
4. Major banks will continue to compete for broker business: Major banks will continue to invest heavily in proprietary distribution to compete directly with the mortgage broker channel, and to a growing extent, each other. In particular, the emergence of bank mobile mortgage sales forces (MMSF) is challenging the perception of brokers as the low-rate/better customer service alternative (particularly among non-branch/ monoline lenders). As a result, bank MMSF are making major inroads due to convenience and customer service. Armed with differentiated products, more than 2,800 mobile mortgage sales agents are operating in Canada today. The evolution of MMSF and the role major banks choose to play in the broker channel will have significant implications for the future of broker originated lending in Canada. If banks choose to stay in the broker channel, Canadians will have more choice and competitive pricing. Brokers will also need to raise their game and increase their level of client service sophistication. However, if banks withdraw from the channel, it will dramatically restrict the supply of mortgages in the broker channel.
5. Investments in technology will benefit consumers in terms of speed and convenience in obtaining a mortgage: As more lenders make technological advances, quick turnaround and visibility on deal status will improve, ultimately benefiting consumers. Improvements to workflow management tools streamline back-office operations, facilitate accurate and timely front-end communication with consumers, and allow lenders to proactively handle exceptions and reduce turnaround times. For example, if a borrower wants to know whether they can increase their mortgage to win a bidding war, the lender can now evaluate the risk and provide them with an answer within four to six hours―compared to the several days it used to take using a manual process.
6. The super-broker networks will continue to consolidate: In recent years, increased competition, heightened compliance requirements and rising technology costs have pushed the broker market to consolidate, with smaller shops merging into super-broker networks. In 2005, almost 70 per cent of Canadian brokers were employed by one of five broker houses. Today, this figure tops 85 per cent as new mid-tier networks have emerged. As a result, the quality of the remaining firms is much higher (for example, more consistent training for brokers, better technological enablement, greater negotiating power with large lenders on behalf of consumers for better products and rates).
7. Niche lenders with specialized product offerings will emerge via the broker channel: As the participation of new lending institutions in the mortgage broker channel continues to evolve, niche lenders with specialized products will emerge via the broker channel. In doing so, they will provide new options to groups of Canadians who previously had few mortgage options available to them due to their financial circumstances (for example, new immigrants, the self-employed, and individuals with credit challenges).
Tuesday, 09 November 2010 21:21 Written by David Hatton, Editorial Team
Mortgage brokers were popping Champagne corks this week after news was released Monday that the residential market inched past the $1 trillion dollar mark in late August.
Canadians had $1,008,000,000,000 in mortgages outstanding at the end of August, a gain of 7.6 per cent in one year, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP). Over the past 15 years, the volume of outstanding mortgages has increased a even more whopping 194 per cent.
As the residential housing market emerged from the recession earlier this year, consumers rushed into buying properties before the market recovered, raising average prices to an all-time high of $346,881 in May. The market has since recovered slightly with prices around $331,000.
Canadians also borrowed heavily against their home equity during the economic crisis. The CAAMP report noted about 18 per cent of consumers took equity out of their homes – an average of $46,000 – with half stating it was for “debt consolidation or repayment”. Based on an estimated 5.65 million mortgage holders in Canada, that represents about $41-billion in borrowing.
“It is estimated that 30 per cent of the takeout was for debt reconsolidation and repayment,” the report stated. “Therefore, while the amount of outstanding mortgage debt would have increased by this amount, totals for other types of debt would be correspondingly reduced. About $15-billion was taken out for renovations, $6-billion for education and other spending, $7.5-billion for investments and $4-billion for other purposes.”
But the report also noted a larger proportion of mortgage holders increased their payments in the past year. CAAMP reported about thirty-five per cent of consumers surveyed paid more than they had to, with another 12 per cent making lump sum payments, 16 per cent increasing their monthly payments and another 7 per cent doing both.
That announcement came hot on the heels of a Deloitte Consulting report that the Canadian private mortgage broker channel will remain “strong, stable and established” as it continues to fight with the big six banks across the country for market share in the years ahead.The report, titled “Winning Strategies in the Brokered Mortgage Marketplace”, suggested mortgages issued by non-bank providers will likely provide for one-third of all mortgages in Canada for the foreseeable future.
"The Canadian mortgage industry is undergoing another significant paradigm shift," says Todd Roberts, consulting partner and leader of Deloitte’s Corporate Strategy Practice. "In the face of significant industry developments such as the recent credit crisis, industry consolidation and price competition, many banks and non-bank lenders are starting to seriously evaluate the economics involved in pursuing the mortgage brokerage channel. As more and more of these lenders enter this business, Canadian mortgage consumers will ultimately benefit in the form of increased choice of products, value-added advice, and more convenient services."
Independent mortgage brokers represent 38% of total mortgage originations in 2009, up from 26% in 2003, according to Canada Mortgage and Housing Corp (CMHC) data. And roughly the other half of their 2009 mortgage volume was from three of the big six banks – Scotiabank, FirstLine (CIBC) and TD - active n the mortgage broker channel.
The industry website www.canadianmortgagetrends.com noted that CAAMP said brokers had 25% of 2009 total market share, according to their calculations. That could be due to two things: banks putting more reps on the street and banks realizing that low rates and market share are correlated.
It added the 2800 bank mobile mortgage reps will increase, putting more pressure on brokers. Brokers represent objectivity and choice, however, because brokers typically know and sell multiple lenders’ products. Hopefully lenders do not get carried away with “preferred broker” lists and destroy this edge, however.
“Lenders who use top 100 lists and the like are so excited by the “efficiencies” they create that they’re completely blinded to the effects these policies could have on the industry long term,” the website noted, adding unless things change, “volume pooling and submission desks could become essential for brokers who want to compete with bank reps for larger clients”.
That becomes a sharp contrast when compared with their U.S. counterparts, who have seen their share of mortgage broker collapses, the Deloitte report noted. Major banks such as JP Morgan Chase & Co. and Bank of America Corp, no longer sell mortgages through independent mortgage brokers after the subprime market imploded due to mortgages with unrealistic rate increases, inaccurate readings from credit rating agencies and lack of proper regulation.
In the U.S., the number of mortgage brokerage firms has contracted to 20,000 in 2010 from 54,000 in 2007, the report said. According to the U.S.-based National Association of Mortgage Brokers (NAMB), in 2006, mortgage brokers originated 65% of U.S. mortgages. They now originate a "previously inconceivable" 15%, the report says.
In Canada, however, the broker model has evolved from "a fragmented lender of last resort" to a legitimate option, the report says.
The Canadian lender distribution model in particular has undergone several changes over the last two decades, and while the landscape of lenders continues to shift, the mortgage broker channel remains a viable alternative to the major banks' branch and mobile mortgage sales forces (MMSF). According to the report, while mortgage market share trends for bank branches have steadily decreased (trends which are expected to continue), by contrast, they have modestly increased for mortgage brokers (they are expected to be flat into the future), and steadily increased for bank mobile sales forces (they are expected to continue).
“Canada could not be more different,” says Rob Galaski, Toronto-based senior manager of Deloitte’s corporate strategy practice. “In Canada, most of our lenders, particularly the major banks, have exhibited considerable restraint during the credit crisis and were much more conservative.”
“Over the last decade, there’s been a lot of speculation as to whether the brokerage channel is here to stay,” he says. “We’re finding that the broker channel in Canada is extremely stable and definitely a viable channel for all types of lenders, including the major banks. And, that’s a large contrast to what you find in the United States.”
Canada was largely shielded from the global credit crisis because of stricter mortgage lending rules and more conservative underwriting standards, according to the report. Meanwhile, the big six banks and monoline lenders like Home Capital Group Inc. continue to tap the mortgage broker channel to expand their business.
The future for the mortgage broker in Canada "remains positive" although the scenario anticipated five years ago that brokers will represent the majority of origination volume is “unlikely”, the report says. "The channel will continue to stabilize, settling at approximately one-third of mortgage origination dollar volume," it says.
"Over the last decade, an increasing number of viable options for borrowers have surfaced," Deloitte’s Galaski explained. "In addition to the traditional options available at bank branches, Canadians seeking a mortgage can now consult the banks' mobile mortgage specialists, independent mortgage brokers, and online sources. In this changing and more customer-friendly environment, the mortgage broker channel has emerged as a legitimate competitor that is helping provide greater choice and convenience to Canadians."
"There are many groups of Canadians who are benefitting from access to the specialized lending services that mortgage brokers can provide. In particular, individuals who would have previously been faced with very few options due to their financial circumstances—such as new immigrants, the self-employed, and individuals with credit challenges—now have options that were not previously available to them even a few years ago," says Galaski.
Mortgage brokers are "so important because they are the primary access point for people who have credit challenges," says Galaski. "The major banks have strong programs now for new Canadians, for example, but the mortgage-broker channel provides for people with credit challenges, people with a short credit history, and people with income challenges access to lenders who exist outside the mainstream."
"Having a strong and established broker channel is an excellent thing because it facilitates consumer choice," he says.
The Deloitte report added imminent changes in legislation may remove penalties and barriers for switching lenders.
In response to consumer group concerns that mortgage prepayment penalties are complicated and lack disclosure, the federal government has stated its intention to standardize their calculation and disclosure. The typical repayment penalty is either three months' interest or the difference between the existing rate and the rate the lender could charge in the current environment — known as the interest rate differential (IRD). In a rapidly falling rate environment, the IRD method provides the lender with greater compensation for the foregone interest revenue—but it is typically more expensive for borrowers who plan to discharge their mortgages.
"If new government regulations remove the IRD penalty as a barrier to switching, more consumers will likely switch mortgages in periods of declining interest rates," explains Roberts. "In the absence of stiff payment penalties, lenders will therefore seek to minimize lost customers by building strong relationships through active cross-selling and retention strategies for at-risk groups."
According to Deloitte, emerging trends that are expected to shape the Canadian mortgage industry and ultimately impact Canadian mortgage holders include:1. The balance of power will shift from financial institutions to mortgage-seeking Canadians: As the mortgage lending landscape continues to shift, Canadians will have access to a wider range of options when selecting a mortgage. This has increased competition among lenders (bank branches, mobile mortgage specialists, independent mortgage brokers, and online sources) which in turn will result in more customer-friendly service, increased product offerings and convenience for Canadians seeking a mortgage.
2. Online and telephone banking will continue emerging as viable channels: Remote self-service options such as online and telephone banking are emerging as popular alternative channels for obtaining mortgages. Given the new level of sophistication telephone banking has recently achieved, Canadians no longer need to leave home to obtain a mortgage as some lenders are allowing borrowers to complete their mortgage applications using a voice signature. In addition, online features such as calculators, planning tools, and live chat options with lenders are giving Canadians access to more information than ever. Although these channels are not new, they are in the early stages of adoption and signify an important trend for Canadians interested in the self-service option.
3. Mortgage brokers will evolve from "rate shoppers"' to "advisors" in order to survive: Given Canadians now have increased access to mortgage rate information, mortgage brokers as "rate shoppers" are quickly becoming irrelevant. As such, the "mortgage broker as advisor" value proposition will be the most successful approach for this channel. To succeed in today's hypercompetitive marketplace, mortgage brokers will start to offer value-added advice to Canadian mortgage holders similar to the way investment brokers have evolved from transactional to advice-based roles.
4. Major banks will continue to compete for broker business: Major banks will continue to invest heavily in proprietary distribution to compete directly with the mortgage broker channel, and to a growing extent, each other. In particular, the emergence of bank mobile mortgage sales forces (MMSF) is challenging the perception of brokers as the low-rate/better customer service alternative (particularly among non-branch/ monoline lenders). As a result, bank MMSF are making major inroads due to convenience and customer service. Armed with differentiated products, more than 2,800 mobile mortgage sales agents are operating in Canada today. The evolution of MMSF and the role major banks choose to play in the broker channel will have significant implications for the future of broker originated lending in Canada. If banks choose to stay in the broker channel, Canadians will have more choice and competitive pricing. Brokers will also need to raise their game and increase their level of client service sophistication. However, if banks withdraw from the channel, it will dramatically restrict the supply of mortgages in the broker channel.
5. Investments in technology will benefit consumers in terms of speed and convenience in obtaining a mortgage: As more lenders make technological advances, quick turnaround and visibility on deal status will improve, ultimately benefiting consumers. Improvements to workflow management tools streamline back-office operations, facilitate accurate and timely front-end communication with consumers, and allow lenders to proactively handle exceptions and reduce turnaround times. For example, if a borrower wants to know whether they can increase their mortgage to win a bidding war, the lender can now evaluate the risk and provide them with an answer within four to six hours―compared to the several days it used to take using a manual process.
6. The super-broker networks will continue to consolidate: In recent years, increased competition, heightened compliance requirements and rising technology costs have pushed the broker market to consolidate, with smaller shops merging into super-broker networks. In 2005, almost 70 per cent of Canadian brokers were employed by one of five broker houses. Today, this figure tops 85 per cent as new mid-tier networks have emerged. As a result, the quality of the remaining firms is much higher (for example, more consistent training for brokers, better technological enablement, greater negotiating power with large lenders on behalf of consumers for better products and rates).
7. Niche lenders with specialized product offerings will emerge via the broker channel: As the participation of new lending institutions in the mortgage broker channel continues to evolve, niche lenders with specialized products will emerge via the broker channel. In doing so, they will provide new options to groups of Canadians who previously had few mortgage options available to them due to their financial circumstances (for example, new immigrants, the self-employed, and individuals with credit challenges).
XE.com - Currency Market Analysis - Cable Outperforms while Euro Struggles Overnight
Cable Outperforms while Euro Struggles Overnight
The Great British Pound was well supported overnight by more hawkish than expected comments from the Bank of England. BoE Governor Mervyn King surprised markets at his Inflation Report news conference, in which he highlighted the view that while risks exist, the recovery in the United Kingdom is likely to continue; he went on to predict a CPI of 1.6% in two years. He highlighted that for the time being downside risks, which were mostly external, are mostly balanced with the upside possibilities as increases in manufacturing output and the services sector propel the economy. Traders took this to mean that the BoE would not be expanding their asset purchasing program for the time being.
The mostly external downside risk King was alluding to was Europe, and that “Over 60 percent of [England’s] exports go to a part of the world that isn’t exhibiting particularly buoyant growth and clearly has quite significant challenges within the area in terms of sovereign debt problems”. These comments brought the common currency under pressure against the Cable, and helped push the EURGBP under the 50-day moving average at the 0.8600 figure, a level not seen since late September. At the time of writing, the pair has run into congestion in the upper 0.8500 region from the 200-day moving average and a 50% fib retracement of the August-to-October rally. Given the fundamental story in the Euro, more downside risks in this pair exist.
The Euro was also heavy against the Big Dollar overnight, dragged lower by cross-selling against the Cable, a Portuguese bond auction which saw the cost of capital to the embattled nation rise dramatically, and the gap between Irish & German benchmark bonds trading at a lifetime high. The EURUSD has been in a freefall since last week, dropping over 5 big figures from its 9-month high near the 1.4300 level. It seems now that QE2 in the United States has been announced and the uncertainty over, investors have once again turned their heads to Europe. Going forward, the potential for further losses in the Euro is likely to be tempered by the risks associated with an increase in the supply of dollars as a function of QE2 weighting on the Greenback.
The Great British Pound was well supported overnight by more hawkish than expected comments from the Bank of England. BoE Governor Mervyn King surprised markets at his Inflation Report news conference, in which he highlighted the view that while risks exist, the recovery in the United Kingdom is likely to continue; he went on to predict a CPI of 1.6% in two years. He highlighted that for the time being downside risks, which were mostly external, are mostly balanced with the upside possibilities as increases in manufacturing output and the services sector propel the economy. Traders took this to mean that the BoE would not be expanding their asset purchasing program for the time being.
The mostly external downside risk King was alluding to was Europe, and that “Over 60 percent of [England’s] exports go to a part of the world that isn’t exhibiting particularly buoyant growth and clearly has quite significant challenges within the area in terms of sovereign debt problems”. These comments brought the common currency under pressure against the Cable, and helped push the EURGBP under the 50-day moving average at the 0.8600 figure, a level not seen since late September. At the time of writing, the pair has run into congestion in the upper 0.8500 region from the 200-day moving average and a 50% fib retracement of the August-to-October rally. Given the fundamental story in the Euro, more downside risks in this pair exist.
The Euro was also heavy against the Big Dollar overnight, dragged lower by cross-selling against the Cable, a Portuguese bond auction which saw the cost of capital to the embattled nation rise dramatically, and the gap between Irish & German benchmark bonds trading at a lifetime high. The EURUSD has been in a freefall since last week, dropping over 5 big figures from its 9-month high near the 1.4300 level. It seems now that QE2 in the United States has been announced and the uncertainty over, investors have once again turned their heads to Europe. Going forward, the potential for further losses in the Euro is likely to be tempered by the risks associated with an increase in the supply of dollars as a function of QE2 weighting on the Greenback.
Canadian Mortgage Broker News - Canadian homeowners comfortable with mortgage debt: CAAMP http://ping.fm/WoZy1
Canadian Mortgage Broker News - Canadian homeowners comfortable with mortgage debt: CAAMP
Canadian Mortgage Broker News - Canadian homeowners comfortable with mortgage debt: CAAMP
Canadian homeowners comfortable with mortgage debt: CAAMP
Monday, 8 November 2010
Most Canadian homeowners are comfortable with their mortgage debt, according to the sixth annual State of the Residential Mortgage Market report from the Canadian Association of Accredited Mortgage Professionals (CAAMP). They also have significant home equity and can handle an increase in their mortgage interest rate.
“Canadians are being smart and responsible with their mortgages,” said Jim Murphy, CAAMP president and CEO. “They are building equity in their homes and making informed, long-term mortgage decisions. The survey results speak to the strength of our mortgage market, especially when compared to the United States.”
A few highlights from the report:
80 per cent of Canadian homeowners have more than 20 per cent equity in their homes
35 per cent of mortgage holders either increased their monthly payments or made a lump sum payment in the last year
84 per cent of mortgage holders said they could withstand an increase of $300 or more on their monthly payments
Canadian homeowners comfortable with mortgage debt: CAAMP
Monday, 8 November 2010
Most Canadian homeowners are comfortable with their mortgage debt, according to the sixth annual State of the Residential Mortgage Market report from the Canadian Association of Accredited Mortgage Professionals (CAAMP). They also have significant home equity and can handle an increase in their mortgage interest rate.
“Canadians are being smart and responsible with their mortgages,” said Jim Murphy, CAAMP president and CEO. “They are building equity in their homes and making informed, long-term mortgage decisions. The survey results speak to the strength of our mortgage market, especially when compared to the United States.”
A few highlights from the report:
80 per cent of Canadian homeowners have more than 20 per cent equity in their homes
35 per cent of mortgage holders either increased their monthly payments or made a lump sum payment in the last year
84 per cent of mortgage holders said they could withstand an increase of $300 or more on their monthly payments
Canadian Mortgage Broker News - Mortgage market surpasses $1 trillion http://ping.fm/OgMcb
Canadian Mortgage Broker News - Mortgage market surpasses $1 trillion
Canadian Mortgage Broker News - Mortgage market surpasses $1 trillion
Mortgage market surpasses $1 trillion
Monday, 8 November 2010
The Canadian residential mortgage market has surpassed $1 trillion for the first time this year as higher prices forced many to borrow heavily for new homes, and low interest rates encouraged more refinancing.
At the end of August, there were $1.008 trillion in mortgages outstanding, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP). This marked a 7.6 per cent gain from a year ago, and the volume of outstanding mortgages has increased by 194 per cent over the past 15 years.
Many Canadians have also been using their mortgages to free up extra money. Eighteen per cent of mortgage holders took equity out of their homes, with nearly half citing a need for “debt consolidation or repayment.” The average amount borrowed against home equity was $46,000.
CAAMP estimated total borrowing at $41 billion, about the same as last year. About $15 billion was taken out for renovations, $6 billion for education and other spending, $7.5 billion for investments and $4 billion for other purposes.
Mortgage market surpasses $1 trillion
Monday, 8 November 2010
The Canadian residential mortgage market has surpassed $1 trillion for the first time this year as higher prices forced many to borrow heavily for new homes, and low interest rates encouraged more refinancing.
At the end of August, there were $1.008 trillion in mortgages outstanding, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP). This marked a 7.6 per cent gain from a year ago, and the volume of outstanding mortgages has increased by 194 per cent over the past 15 years.
Many Canadians have also been using their mortgages to free up extra money. Eighteen per cent of mortgage holders took equity out of their homes, with nearly half citing a need for “debt consolidation or repayment.” The average amount borrowed against home equity was $46,000.
CAAMP estimated total borrowing at $41 billion, about the same as last year. About $15 billion was taken out for renovations, $6 billion for education and other spending, $7.5 billion for investments and $4 billion for other purposes.
Monday, November 8, 2010
"The Week Ahead" - November 8-12th
CIBC Economic's "The Week Ahead".
Key Highlights
In his Washington Post op-ed, Bernanke listed all of the potential benefits of QE with one key exception – its impact on the US dollar exchange rate. In the market’s eye, the more QE, the weaker your currency. However, much of the dollar-selling has been on the misconception that world is going to be flooded with “printed money” which will debase the dollar. We will likely have to push back the timetable for a significant correction in the US dollar’s favour into early 2011, given the tendency to see QE and currency weakness as twins
Key Numbers to watch this week:
Canada – Merchandise Trade Balance – September (Wed, 8:30 AM) – For four straight months, Canada’s merchandise trade balance has been in the red and September’s poor performance will take 2010 Q3 trade to the worst quarterly balance in decades.
US – Goods and Services Trade Balance – September (Wed, 8:30AM) – The US trade balance may have seen some improvement in September as softer oil and as prices that month helped lower America’s energy bill. The combination of lower imports and flattening exports should allow for some improvements.
Equity Insights:
Canadian reporting season appears to be off to an appreciably better-than-average start. Last quarter, 53% of TSX composite members beat the street expectation. This quarter, nearly 70% of the 180 firsts have reported positively.
TSX finally reclaimed all of the ground lost since the financial crisis’ defining moment – Lehman Brother’s 2008 collapse. Market healing has been swifter this time around then after the 2000 crash, but still behind the double dip in the 80’s.
‘Producing more for less’ was corporate America’s motto earlier in the recovery. That’s good new for earnings while it lasts, but not employment.
Currency Currents:
US$ depreciation gained momentum this past week as the Fed announced a slightly larger than expected QE. QE2 won’t put a dent in the unemployment rate, don’t rule out further liquidity injections next year.
CDS spreads for Brazil continued to dip following the national elections, pointing to confidence in the President-elect will control budget spending as promised
The RBS surprise rate hike this week was done preemptively as improved trade and a continuing recovery in emerging markets may stoke economic activity and inflation.
http://research.cibcwm.com/economic_public/download/nov05_10.pdf
Key Highlights
In his Washington Post op-ed, Bernanke listed all of the potential benefits of QE with one key exception – its impact on the US dollar exchange rate. In the market’s eye, the more QE, the weaker your currency. However, much of the dollar-selling has been on the misconception that world is going to be flooded with “printed money” which will debase the dollar. We will likely have to push back the timetable for a significant correction in the US dollar’s favour into early 2011, given the tendency to see QE and currency weakness as twins
Key Numbers to watch this week:
Canada – Merchandise Trade Balance – September (Wed, 8:30 AM) – For four straight months, Canada’s merchandise trade balance has been in the red and September’s poor performance will take 2010 Q3 trade to the worst quarterly balance in decades.
US – Goods and Services Trade Balance – September (Wed, 8:30AM) – The US trade balance may have seen some improvement in September as softer oil and as prices that month helped lower America’s energy bill. The combination of lower imports and flattening exports should allow for some improvements.
Equity Insights:
Canadian reporting season appears to be off to an appreciably better-than-average start. Last quarter, 53% of TSX composite members beat the street expectation. This quarter, nearly 70% of the 180 firsts have reported positively.
TSX finally reclaimed all of the ground lost since the financial crisis’ defining moment – Lehman Brother’s 2008 collapse. Market healing has been swifter this time around then after the 2000 crash, but still behind the double dip in the 80’s.
‘Producing more for less’ was corporate America’s motto earlier in the recovery. That’s good new for earnings while it lasts, but not employment.
Currency Currents:
US$ depreciation gained momentum this past week as the Fed announced a slightly larger than expected QE. QE2 won’t put a dent in the unemployment rate, don’t rule out further liquidity injections next year.
CDS spreads for Brazil continued to dip following the national elections, pointing to confidence in the President-elect will control budget spending as promised
The RBS surprise rate hike this week was done preemptively as improved trade and a continuing recovery in emerging markets may stoke economic activity and inflation.
http://research.cibcwm.com/economic_public/download/nov05_10.pdf
Saturday, November 6, 2010
Canadian Mortgage Broker News - An Islamic mortgage, semantics to some http://ping.fm/jKV0V
Canadian Mortgage Broker News - An Islamic mortgage, semantics to some
Canadian Mortgage Broker News - An Islamic mortgage, semantics to some
An Islamic mortgage, semantics to some
Monday, 1 November 2010
An Islamic mortgage may just be about semantics.
Islam religion forbids followers from paying interest in financial matters, which restricts observers of the Muslim rule from taking out a mortgage.
In Manitoba, where an estimated 13,000 Muslims live, the provincial-based Assiniboine Credit Union consulted with Islamic scholars to introduce Canada’s first Islamic mortgage earlier this year. Under this financing, a Muslim home purchaser and the credit union each contribute to buying a house and each has ownership in the property. A contract is drafted where the family buys the credit union’s share over an agreed period of time.
The Muslim family has exclusive rights to live in the home, and during the contract term pays the credit union a “profit.” The amount is comparable to what a credit union member with a standard mortgage would pay in interest for a best rate mortgage.
Though the two sound similar, the difference is important to Islam religious observers.
“The main issue is that trade is permissible in Islam but usury or interest isn’t,” said Omar Kalair, founder of Toronto-based UM Financial, Canada’s premier Islamic financial institution. “So how we structure our mortgage is on a trade concept,” which is what Assiniboine Credit Union has done also.
An Islamic mortgage, semantics to some
Monday, 1 November 2010
An Islamic mortgage may just be about semantics.
Islam religion forbids followers from paying interest in financial matters, which restricts observers of the Muslim rule from taking out a mortgage.
In Manitoba, where an estimated 13,000 Muslims live, the provincial-based Assiniboine Credit Union consulted with Islamic scholars to introduce Canada’s first Islamic mortgage earlier this year. Under this financing, a Muslim home purchaser and the credit union each contribute to buying a house and each has ownership in the property. A contract is drafted where the family buys the credit union’s share over an agreed period of time.
The Muslim family has exclusive rights to live in the home, and during the contract term pays the credit union a “profit.” The amount is comparable to what a credit union member with a standard mortgage would pay in interest for a best rate mortgage.
Though the two sound similar, the difference is important to Islam religious observers.
“The main issue is that trade is permissible in Islam but usury or interest isn’t,” said Omar Kalair, founder of Toronto-based UM Financial, Canada’s premier Islamic financial institution. “So how we structure our mortgage is on a trade concept,” which is what Assiniboine Credit Union has done also.
Canadian Mortgage Broker News - Ontario boomers to downsize homes: TD buyer report http://ping.fm/wVBd8
Canadian Mortgage Broker News - Ontario boomers to downsize homes: TD buyer report
Canadian Mortgage Broker News - Ontario boomers to downsize homes: TD buyer report
Ontario boomers to downsize homes: TD buyer report
Thursday, 28 October 2010
Most Ontario boomers are planning to move to smaller homes, according to the TD Canada Trust Boomer Buyers Report. Eighty-six per cent are looking to downsize. Half said the smaller size will help them save money, while 36 per cent want to enjoy more luxurious features.
“Many boomers find that their needs and priorities have changed since they moved into their current home,” said Farhaneh Haque, regional sales manager for mobile mortgage specialists at TD Canada Trust. “If you find you have more room than you need, consider ‘right-sizing.’”
The report found these other provincial trends:
Sixty per cent of Atlantic Canadian boomers, versus 49 per cent nationally, plan to spend retirement in their current homes. But only 41 per cent of Atlantic homeowners will be retiring mortgage-free. Further, 22 per cent still need to pay off more than half their mortgage.
Alberta boomers are the most likely in the country to have paid off their mortgage in full with six-in-ten being mortgage-free, compared to 44 per cent nationally. Albertans are also the most likely to spend retirement at their vacation home (nine per cent versus five per cent nationally).
Meanwhile 56 per cent of boomers in Manitoba and Saskatchewan, compared to 36 per cent across the country, would consider buying a retirement property in the U.S.
Boomers in British Columbia are the least likely in the country to own a home and be mortgage-free, as nearly one-third of homeowners have more than 60 per cent of their mortgage left to pay off.
Ontario boomers to downsize homes: TD buyer report
Thursday, 28 October 2010
Most Ontario boomers are planning to move to smaller homes, according to the TD Canada Trust Boomer Buyers Report. Eighty-six per cent are looking to downsize. Half said the smaller size will help them save money, while 36 per cent want to enjoy more luxurious features.
“Many boomers find that their needs and priorities have changed since they moved into their current home,” said Farhaneh Haque, regional sales manager for mobile mortgage specialists at TD Canada Trust. “If you find you have more room than you need, consider ‘right-sizing.’”
The report found these other provincial trends:
Sixty per cent of Atlantic Canadian boomers, versus 49 per cent nationally, plan to spend retirement in their current homes. But only 41 per cent of Atlantic homeowners will be retiring mortgage-free. Further, 22 per cent still need to pay off more than half their mortgage.
Alberta boomers are the most likely in the country to have paid off their mortgage in full with six-in-ten being mortgage-free, compared to 44 per cent nationally. Albertans are also the most likely to spend retirement at their vacation home (nine per cent versus five per cent nationally).
Meanwhile 56 per cent of boomers in Manitoba and Saskatchewan, compared to 36 per cent across the country, would consider buying a retirement property in the U.S.
Boomers in British Columbia are the least likely in the country to own a home and be mortgage-free, as nearly one-third of homeowners have more than 60 per cent of their mortgage left to pay off.
Canadian Mortgage Broker News - HST confusion abounds in Ontario
Canadian Mortgage Broker News - HST confusion abounds in Ontario
HST confusion abounds in Ontario
Thursday, 28 October 2010
It seems that the majority of Ontarians still don’t get it.
According to a recent Ipsos Reid survey, 56 per cent of Ontarians still mistakenly believe that the harmonized sales tax (HST) applies to the full purchase price of an existing home.
In truth, the tax only applies to the transaction fees for existing homes, and applies to the full price for new homes.
Since the average price of a resale home in Ontario is roughly $330,000, the majority of the survey’s respondents thought they would have to pay an additional $40,000 to purchase the home, according to the Ontario Real Estate Association (OREA).
The association says the province’s Realtors are become increasingly concerned that this persistent confusion is in fact dampening the housing market.
"We see it on the front lines every day. Clearly, Ontarians still don't know what the HST covers and what is exempt," OREA President Dorothy Mason said in a news release. "This is not helping the housing market, and it's not helping the Ontario economy. This confusion means that many buyers think the cost of a resale home is tens of thousands of dollars higher than it actually is.
"We're doing our part to inform our clients, but we shouldn't have to do it alone. We're calling on the Ontario government to launch an immediate public awareness campaign to educate taxpayers and end the HST confusion," said Mason.
Ipsos Reid surveyed 830 Ontarians, between October 4th and 11 th, on behalf of OREA. The estimated margin of error is +/-3.8 percentage points, 19 times out of 20.
HST confusion abounds in Ontario
Thursday, 28 October 2010
It seems that the majority of Ontarians still don’t get it.
According to a recent Ipsos Reid survey, 56 per cent of Ontarians still mistakenly believe that the harmonized sales tax (HST) applies to the full purchase price of an existing home.
In truth, the tax only applies to the transaction fees for existing homes, and applies to the full price for new homes.
Since the average price of a resale home in Ontario is roughly $330,000, the majority of the survey’s respondents thought they would have to pay an additional $40,000 to purchase the home, according to the Ontario Real Estate Association (OREA).
The association says the province’s Realtors are become increasingly concerned that this persistent confusion is in fact dampening the housing market.
"We see it on the front lines every day. Clearly, Ontarians still don't know what the HST covers and what is exempt," OREA President Dorothy Mason said in a news release. "This is not helping the housing market, and it's not helping the Ontario economy. This confusion means that many buyers think the cost of a resale home is tens of thousands of dollars higher than it actually is.
"We're doing our part to inform our clients, but we shouldn't have to do it alone. We're calling on the Ontario government to launch an immediate public awareness campaign to educate taxpayers and end the HST confusion," said Mason.
Ipsos Reid surveyed 830 Ontarians, between October 4th and 11 th, on behalf of OREA. The estimated margin of error is +/-3.8 percentage points, 19 times out of 20.
Canadian Mortgage Broker News - Canadas real estate market outlook for 2011 “decentâ€: PwC http://ping.fm/JKgPN
Canadian Mortgage Broker News - Canadas real estate market outlook for 2011 “decent”: PwC
Canadian Mortgage Broker News - Canadas real estate market outlook for 2011 “decent”: PwC
Canada's real estate market outlook for 2011 “decent”: PwC
Tuesday, 2 November 2010
2011 promises slowing, steady growth and decent prospects for Canadian real estate investors as long as the U.S. economy does not drag them down, according to the Emerging Trends in Real Estate 2011 report, released by PwC and the Urban Land Institute (ULI). The report reflects interviews with and surveys of more than 875 of the industry's leading real estate experts, including investors, developers, lenders, brokers and consultants in both Canada and the U.S.
According to the report, Canadian property owners and financial institutions cannot help contrasting their reasonably healthy condition with precarious U.S. markets. Canadian fundamentals trend near equilibrium, employment is recovering and banks boast sound balance sheets, putting Canada in a better place and boosting confidence that the local market can escape issues faced in the U.S. However respondents say a weak U.S. dollar and sputtering U.S. economy dampen cross-border commerce, especially hurting Ontario industrial markets, which serve Midwestern U.S. manufacturing centres.
"The big difference for Canada has been the sound condition of its banks," said Chris Potter, leader of the Real Estate Tax practice for PwC Canada. "We have no distressed banks and few distressed owners and sales. Now, rising interest rates coupled with tight bank requirements and broader economic concerns tamper down a recent home buying spurt, particularly in Ontario and B.C., where purchasers stepped up activity before HST went into effect."
While capital returns, investment opportunities will be limited. Institutions dominate the major central city markets, holding on to assets for steady income instead of trading. Emerging Trends respondents exemplify the hold-on mentality: they think it is a good time to buy, but do not want to sell. In this "compressing cap rate" environment, many deal-starved Canadians will be active in the U.S., where they should have greater opportunity to spend and find higher yields.
Canada has one of the world's healthiest capital markets and few borrowers confront refinancing issues. Overall in 2011, Emerging Trends respondents expect a reasonable balance in debt market capital availability and an oversupply of equity capital, the result of non-satiated buyers.
"In Canada, the real estate industry didn't get overleveraged and the markets never suffered any interruption of credit availability," said Holly Allen, leader of the Real Estate Deals practice for PwC Canada. "Canadian banks benefit from a combination of institutional risk aversion and relatively stringent government regulation."
Canada's real estate market outlook for 2011 “decent”: PwC
Tuesday, 2 November 2010
2011 promises slowing, steady growth and decent prospects for Canadian real estate investors as long as the U.S. economy does not drag them down, according to the Emerging Trends in Real Estate 2011 report, released by PwC and the Urban Land Institute (ULI). The report reflects interviews with and surveys of more than 875 of the industry's leading real estate experts, including investors, developers, lenders, brokers and consultants in both Canada and the U.S.
According to the report, Canadian property owners and financial institutions cannot help contrasting their reasonably healthy condition with precarious U.S. markets. Canadian fundamentals trend near equilibrium, employment is recovering and banks boast sound balance sheets, putting Canada in a better place and boosting confidence that the local market can escape issues faced in the U.S. However respondents say a weak U.S. dollar and sputtering U.S. economy dampen cross-border commerce, especially hurting Ontario industrial markets, which serve Midwestern U.S. manufacturing centres.
"The big difference for Canada has been the sound condition of its banks," said Chris Potter, leader of the Real Estate Tax practice for PwC Canada. "We have no distressed banks and few distressed owners and sales. Now, rising interest rates coupled with tight bank requirements and broader economic concerns tamper down a recent home buying spurt, particularly in Ontario and B.C., where purchasers stepped up activity before HST went into effect."
While capital returns, investment opportunities will be limited. Institutions dominate the major central city markets, holding on to assets for steady income instead of trading. Emerging Trends respondents exemplify the hold-on mentality: they think it is a good time to buy, but do not want to sell. In this "compressing cap rate" environment, many deal-starved Canadians will be active in the U.S., where they should have greater opportunity to spend and find higher yields.
Canada has one of the world's healthiest capital markets and few borrowers confront refinancing issues. Overall in 2011, Emerging Trends respondents expect a reasonable balance in debt market capital availability and an oversupply of equity capital, the result of non-satiated buyers.
"In Canada, the real estate industry didn't get overleveraged and the markets never suffered any interruption of credit availability," said Holly Allen, leader of the Real Estate Deals practice for PwC Canada. "Canadian banks benefit from a combination of institutional risk aversion and relatively stringent government regulation."
FN Mortgage rates as of 06/11/2010
FIRST NATIONAL
1 year fixed: 2.50 %
3 years fixed: 3.49 %
5 years fixed: 3.59 %
5 years 5% Cash back fixed: 5.29 %
First National Prime Rate: 3.00 %
Posted by DataTracker Powered by CoolRent
1 year fixed: 2.50 %
3 years fixed: 3.49 %
5 years fixed: 3.59 %
5 years 5% Cash back fixed: 5.29 %
First National Prime Rate: 3.00 %
Posted by
DataTracker Powered by CoolRent
Thursday, November 4, 2010
First National - Renewal
First National - Renewal
Should you change your mortgage terms when you renew?
When your mortgage comes up for renewal, you have the flexibility to pay down some or all of your outstanding principal, without penalty, and to select new mortgage terms to meet your current needs.
Here are three typical situations and what you might consider doing under the circumstances.
Situation Consider… Benefit
You received a promotion, and your cash flow has increased.
•Increasing your monthly payment.
•Making a lump-sum principal prepayment to put towards your principal amount.
Both choices will reduce your total interest costs and help you become mortgage-free sooner.
You anticipate a major expense in the near future or are experiencing cash-flow difficulties.
•Increasing your mortgage principal by refinancing your mortgage and using the additional amount to pay off your debts.*
•Decreasing your monthly payment to help increase your cash flow.**
You’ll get an immediate cash infusion to pay other debts or make essential purchases.
You’ll have more monthly cash available for other expenses.
Your financial situation hasn’t changed.
•Renewing your existing mortgage terms.
Your mortgage will continue to meet your needs, just as it has in the past.
* To refinance your mortgage, you will need to requalify based on your current circumstances.
** Refer to your mortgage documents for details.
If your mortgage is coming up for renewal, be sure to contact your mortgage broker. We’ll help you review your options and help you select the mortgage that’s right for you.
Should you change your mortgage terms when you renew?
When your mortgage comes up for renewal, you have the flexibility to pay down some or all of your outstanding principal, without penalty, and to select new mortgage terms to meet your current needs.
Here are three typical situations and what you might consider doing under the circumstances.
Situation Consider… Benefit
You received a promotion, and your cash flow has increased.
•Increasing your monthly payment.
•Making a lump-sum principal prepayment to put towards your principal amount.
Both choices will reduce your total interest costs and help you become mortgage-free sooner.
You anticipate a major expense in the near future or are experiencing cash-flow difficulties.
•Increasing your mortgage principal by refinancing your mortgage and using the additional amount to pay off your debts.*
•Decreasing your monthly payment to help increase your cash flow.**
You’ll get an immediate cash infusion to pay other debts or make essential purchases.
You’ll have more monthly cash available for other expenses.
Your financial situation hasn’t changed.
•Renewing your existing mortgage terms.
Your mortgage will continue to meet your needs, just as it has in the past.
* To refinance your mortgage, you will need to requalify based on your current circumstances.
** Refer to your mortgage documents for details.
If your mortgage is coming up for renewal, be sure to contact your mortgage broker. We’ll help you review your options and help you select the mortgage that’s right for you.
First National - Lifestyle
Why it pays to stay in touch with your mortgage broker
When you were researching your options for your current mortgage, you probably spent a fair bit of time speaking with your mortgage broker. You may not realize that your mortgage broker can still be a valuable resource many years from now.
Your broker understands your needs. Whatever situation you might find yourself in as a homeowner, your broker has extensive experience providing with mortgage advice to others in similar scenarios, whether it’s buying, selling, or refinancing.
Your broker understands the market. You can count on an independent view of what’s happening in the markets. Your broker stays on top of the trends in real estate financing and other economic conditions and is aware of new developments and products that could be useful to you.
Your broker is a source of advice and knowledge about refinancing. If you’re thinking of refinancing, your mortgage broker is one of the first people you should speak to. He or she will again review your goals and outline your options, so you can make an informed decision.
Your broker can refer you to good people. Your mortgage broker regularly works with lenders, real estate agents, home inspectors, and lawyers who specialize in real estate. If you ever need a referral – for example, if you are looking for a real estate agent to help you find your next home – your broker can provide you with recommendations.
When you were researching your options for your current mortgage, you probably spent a fair bit of time speaking with your mortgage broker. You may not realize that your mortgage broker can still be a valuable resource many years from now.
Your broker understands your needs. Whatever situation you might find yourself in as a homeowner, your broker has extensive experience providing with mortgage advice to others in similar scenarios, whether it’s buying, selling, or refinancing.
Your broker understands the market. You can count on an independent view of what’s happening in the markets. Your broker stays on top of the trends in real estate financing and other economic conditions and is aware of new developments and products that could be useful to you.
Your broker is a source of advice and knowledge about refinancing. If you’re thinking of refinancing, your mortgage broker is one of the first people you should speak to. He or she will again review your goals and outline your options, so you can make an informed decision.
Your broker can refer you to good people. Your mortgage broker regularly works with lenders, real estate agents, home inspectors, and lawyers who specialize in real estate. If you ever need a referral – for example, if you are looking for a real estate agent to help you find your next home – your broker can provide you with recommendations.
Welcome to your Fall 2010 issue of "You're Home"
Welcome to your Fall 2010 issue of "You're Home," your quarterly newsletter provided by First National Financial LP, your mortgage provider. Read about the pros and cons of selling a home yourself or with an agent, buying a new construction or resale home, reasons to stay in touch with your mortgage broker, and find out what My Mortgage can do for you.
Should you sell your home yourself or use an agent?
Find out what My Mortgage can do for you
Buying a new construction or a resale home: Make the decision that’s right for you
Why it pays to stay in touch with your mortgage broker
Should you change your mortgage terms when you renew?
FAQ
Send us your feedback
Web site
Contact us
Should you sell your home yourself or use an agent?
Have you wondered whether you should sell your home yourself or use a real estate agent? Make an informed decision by considering the pros and cons of hiring a pro versus going solo.
Should you sell your home yourself or use an agent?
Find out what My Mortgage can do for you
Buying a new construction or a resale home: Make the decision that’s right for you
Why it pays to stay in touch with your mortgage broker
Should you change your mortgage terms when you renew?
FAQ
Send us your feedback
Web site
Contact us
Should you sell your home yourself or use an agent?
Have you wondered whether you should sell your home yourself or use a real estate agent? Make an informed decision by considering the pros and cons of hiring a pro versus going solo.
Wednesday, November 3, 2010
FN Mortgage rates as of 03/11/2010
FIRST NATIONAL
1 year fixed: 2.50 %
3 years fixed: 3.49 %
5 years fixed: 3.59 %
5 years 5% Cash back fixed: 5.29 %
5 years variable: Prime minus 0.70%
First National Prime Rate: 3.00 %
Posted by DataTracker Powered by CoolRent
1 year fixed: 2.50 %
3 years fixed: 3.49 %
5 years fixed: 3.59 %
5 years 5% Cash back fixed: 5.29 %
5 years variable: Prime minus 0.70%
First National Prime Rate: 3.00 %
Posted by
DataTracker Powered by CoolRent
Find out the electricity costs for another home
NEW! Find out the electricity costs for another home
Are you thinking about renting or buying an apartment, house or cottage? In just a few clicks, you can get an estimate of the home's electricity costs. All you need is the address, including the postal code, of the home you're considering.
| Go to your Personal Page and click on Estimate the electricity costs of the home you are considering. | ||||||
| ||||||
Canadian Mortgage Broker News - Real estate market steady: Royal LePage
Canadian Mortgage Broker News - Real estate market steady: Royal LePage
Real estate market steady: Royal LePage
Canada’s real estate market is returning to normal with a year-over-year average price increase of less than five per cent, according to a Royal LePage survey released Tuesday October 19.
The survey suggests house price appreciation slowed in the third quarter to a rate historically typical of balanced property markets.
“Most Canadian housing markets cooled in the third quarter,” Phil Soper, president and CEO at Royal LePage Real Estate Services, said in the report. “In fact, the year is unfolding much as we predicted with the unusually active first half of 2010 giving way to slower markets in the later part of the year.”
Soper said the third quarter was slightly stronger than anticipated, helped by the low rates in a competitive mortgage financing market and new demand fuelled by improved affordability in many regions.
“House price growth now sits just below the long-term annual average of approximately five per cent,” added Soper. “But once this is adjusted for inflation, which is very low and expected to continue to be that way for some time, appreciation is right on track. Canadian homeowners will be pleased.”
St. John’s, Winnipeg, Montreal and Vancouver posted price increases above the national average, with St. John’s rising between 12.3 per cent and 14 per cent depending on housing type, while Winnipeg had increases of between eight and 11.7 per cent year-over-year. Prices in both cities were fuelled by a population influx.
Canadian Mortgage Broker News - BoC, gloomier economic outlook
Canadian Mortgage Broker News - BoC, gloomier economic outlook
BoC, gloomier economic outlook
In general, the economic forecast is gloomier than previously predicted. Canada is being pulled down by a U.S. recovery that will be weaker than expected, a global turnaround that is “entering a new phase” fraught with uncertainty, and a retrenchment by Canadian consumers, the central bank said in a statement on the decision.
The expected growth for 2010 has been cut to 3 per cent from 3.5 per cent, while 2011 growth was cut to 2.3 per cent from 2.9 per cent, and 2012 growth raised to 2.6 per cent from 2.2 per cent.
Canadian Mortgage Broker News - Real estate market steady: Royal LePage http://ping.fm/uZ8Fe
Canadian Mortgage Broker News - Real estate market steady: Royal LePage
Canadian Mortgage Broker News - Real estate market steady: Royal LePage
Real estate market steady: Royal LePage
Canada’s real estate market is returning to normal with a year-over-year average price increase of less than five per cent, according to a Royal LePage survey released Tuesday October 19.
The survey suggests house price appreciation slowed in the third quarter to a rate historically typical of balanced property markets.
“Most Canadian housing markets cooled in the third quarter,” Phil Soper, president and CEO at Royal LePage Real Estate Services, said in the report. “In fact, the year is unfolding much as we predicted with the unusually active first half of 2010 giving way to slower markets in the later part of the year.”
Soper said the third quarter was slightly stronger than anticipated, helped by the low rates in a competitive mortgage financing market and new demand fuelled by improved affordability in many regions.
“House price growth now sits just below the long-term annual average of approximately five per cent,” added Soper. “But once this is adjusted for inflation, which is very low and expected to continue to be that way for some time, appreciation is right on track. Canadian homeowners will be pleased.”
St. John’s, Winnipeg, Montreal and Vancouver posted price increases above the national average, with St. John’s rising between 12.3 per cent and 14 per cent depending on housing type, while Winnipeg had increases of between eight and 11.7 per cent year-over-year. Prices in both cities were fuelled by a population influx.
Canadian Mortgage Broker News - WEB EXCLUSIVE: Is the Canadian consumer overextended with debt? http://ping.fm/yB9yD
Canadian Mortgage Broker News - WEB EXCLUSIVE: Is the Canadian consumer overextended with debt?
Canadian Mortgage Broker News - WEB EXCLUSIVE: Is the Canadian consumer overextended with debt?
Is the Canadian consumer overextended with debt? Who knows? Who should care?
By David Johnston, M.T.I., CFP
Manager,
Residential & Select IPL Mortgage Specialist
The Johnston Mortgage Team, New Brunswick
I grow weary of reading reports and surveys suggesting that consumer debt in Canada is a problem. Is it a problem or not? How do telephone surveys, which seem to occur daily, add to a situation that should be looked at from a numbers perspective?
I went to Statistics Canada's website and couldn’t find any hard numbers to verify the "mythical" average Canadian debt load. Statistics Canada did report in 2008 "the proportions of debtors increases early in the lifecycle but declines steadily later".
Financial Planning 101 teaches us that Canadian households, which are led by individuals 32 years of age or younger had on average a negative net worth. Typically, debts are paid with income, not assets. So it would be good to also learn what the average Canadian has in assets.
I do know that a good estimate of the average equity in Canadian residential properties is about 70 per cent. Yes, that would mean about $2.8 trillion dollars of value with approximately $1.0 trillion dollars in debt as reported in Canadian Mortgage Industry Report Fall 09, commissioned by the Canadian Association of Accredited Mortgage Professionals (CAAMP).
Recently, I read two academic reports on the impact or potential rising rates on the mortgage borrower. With the exception of a small percentage, most borrowers are in fine shape. Employment rates and income are the main factors when forecasting the likelihood of making mortgage payments and meeting debt obligations. Reasonable rate increases overall will not be a problem.
I think there is a lot of misinformation out there from special interest groups who want to curtail reasonable access to credit for consumers. A recent survey by the Royal Bank of Canada urged lenders and government to "do something?
In 2003 the UK the government was dealing with similar "unknowns”. They created a task force to tackle the consumer debt issue and eventually stated there was no generally accepted definition of over-indebtedness and inadequate information on which to base one"
The recent TD bank report states that soon Canadian household indebtedness will be over 150 per cent of personal disposable income (PDI). I find it strange that companies compare debt to disposable income. Assets and liabilities are on a balance sheet for companies. Why not for families?
Personal disposable income (PDI) is money available for debt servicing. I looked at TD's 2009 financial highlights. I am not an accountant; I just wanted to see how a bank compared debt in financial ratios. It looks to me that net income (PDI) was almost $5 billion dollars. The same report showed $255 billion in outstanding loans. Perhaps we need to survey 1000 Canadian consumers to see if we should worry that a bank seems to have borrowings in excess of 150 per cent of its net income? Of course, that’s crazy!
It is always prudent to manage debt responsibly. As a financial planner I counsel clients in that fashion.
Canada has a system that is the envy of the world, well regulated and prudent that helps us manage the down times. Senseless handwringing without full and candid disclosure can’t help anyone. It can frighten some people, which would be fine if we had the facts. Personally I think our current system is as good as possible given what will always be competing interests.
Canadian Mortgage Broker News - Household debt to outpace income: TD http://ping.fm/sNPcr
Canadian Mortgage Broker News - Household debt to outpace income: TD
Canadian Mortgage Broker News - Household debt to outpace income: TD
Household debt to outpace income: TD
When interest rates rise, 10 per cent of Canadian households could be in financial trouble, according to a TD Economics study.
TD chief economist Craig Alexander said household debt, which includes mortgages, has become excessive as Canadians get more accustomed to easy borrowing.
“One in 10 is a high ratio,” Alexander told CBC News. “It looks to us that Canadians’ personal finances have gotten stretched.”
Alexander also expects those debt levels to increase more rapidly than income growth.
The TD study said that even if the Bank of Canada’s overnight rate only rises to 3.5 per cent by 2013, family debt might still rise five per cent annually. That should be a concern, the report said, given its prediction that incomes will likely grow only by four per cent a year.
Monday, November 1, 2010
FN Mortgage rates as of 01/11/2010
FIRST NATIONAL
1 year fixed: 2.50 %
3 years fixed: 3.49 %
5 years fixed: 3.59 %
5 years 5% Cash back fixed: 5.29 %
5 years variable: Prime minus 0.65%
First National Prime Rate: 3.00 %
Posted by DataTracker Powered by CoolRent
1 year fixed: 2.50 %
3 years fixed: 3.49 %
5 years fixed: 3.59 %
5 years 5% Cash back fixed: 5.29 %
5 years variable: Prime minus 0.65%
First National Prime Rate: 3.00 %
Posted by
DataTracker Powered by CoolRent
"The Week Ahead" - November 1-5th
"The Week Ahead" - November 1-5th
CIBC Economic's "The Week Ahead".
Key Highlights
The Fed looks likely to match what is now the conventional wisdom, offering up a mid-sized dose of, say, a half trillion in quantitative easing doled out at a pace of roughly $100 bn per month, with nothing said about what happens after that. Fiscal policy will be tricky work in Washington in the months ahead. Keeping the economy moving in the near term will require a soft hand on any fiscal tightening in 2011, and if things get worse, even another dose of stimulus.
Key Numbers to watch this week:
- Canada – Labour Force Survey – October (Fri – 7:00AM) – We see a gain of 10K jobs in October which would keep the unemployment rate at 8.0%, in line with the slowdown in the pace of job creation in recent months.
- US – Employment Situation - October - (Fri - 8:30AM) – We expect the jobless rate to increase slightly to 9.7%, the highest level since May.
Equity Insights:
- If there’s one message from expectations of a 28% rise in S&P 500 earnings in Q3 on the back of only a 7% yr/yr rise in sales, it’s that cost cutting is still alive and well in America’s mills, mines and factories.
- The Fed’s unlikely to leave investors in the lurch next Wednesday, but recent estimates by some observers of as much as $2 trillion of asset purchases do not square with the recent cautious remarks by Bernanke and Yellen.
- Relative to the average of the last ten years, utilities, materials, and consumer staples firms are paying out the least dividends at present, for each dollar of earnings. That would seem to suggest potential room for dividend hikes by some of those firms.
Currency Currents:
- The decrease in merchandise trade surplus over the past eight years should be attributed to the Canadian dollar’s appreciation which has effectively eroded our manufacturing base to the point that our share of the US market is now under 15% versus 20% before the loonie started its run in 2002.
- As recent restrictions on foreign capital inflows by the Brazilian government have dampened real sentiment, hot money flows may be finding their way into the Mexican bond market, adding support to the peso.
- If inflationary pressures persist, any upward moves in PBOC bill rates would increase the cost of draining yuan printed to buy US Treasuries. To take the pressure off, the PBOC may consider slowing the pace of its US Treasury purchases and allow a modest appreciation of the yuan over the next year.
Sunday, October 31, 2010
Canadian Mortgage Broker News - Canadian house prices overvalued
Canadian Mortgage Broker News - Canadian house prices overvalued
Canadian house prices overvalued
Wednesday, 27 October 2010
Canadian housing is overvalued, but not as much as those in Australia, Hong Kong or France, according to a new worldwide survey.
The Economist magazine’s annual survey showed Canadian homes cost on average 23.9 per cent more than they are worth. Meanwhile the scale ranged from the high end with Australian homes overvalued by 63.2 per cent, to Japan at the low end, where houses are undervalued by 34.6 per cent.
“Singapore, Hong Kong and Australia boast the gaudiest year-on-year price increases, even if the rate of appreciation is a down a bit from the summer,” the report states.
Canada’s house prices were up 4.5 per cent from one year earlier. From 1997 to 2010, prices have increased by 70 per cent, according to the report.
The Economist’s analysis of “fair value” housing is based on comparing the ratio of current house prices to rents with the long-term average. In other words, the purchase price of a house is divided by the rent it could have earned per year.
Canadian house prices overvalued
Wednesday, 27 October 2010
Canadian housing is overvalued, but not as much as those in Australia, Hong Kong or France, according to a new worldwide survey.
The Economist magazine’s annual survey showed Canadian homes cost on average 23.9 per cent more than they are worth. Meanwhile the scale ranged from the high end with Australian homes overvalued by 63.2 per cent, to Japan at the low end, where houses are undervalued by 34.6 per cent.
“Singapore, Hong Kong and Australia boast the gaudiest year-on-year price increases, even if the rate of appreciation is a down a bit from the summer,” the report states.
Canada’s house prices were up 4.5 per cent from one year earlier. From 1997 to 2010, prices have increased by 70 per cent, according to the report.
The Economist’s analysis of “fair value” housing is based on comparing the ratio of current house prices to rents with the long-term average. In other words, the purchase price of a house is divided by the rent it could have earned per year.
Saturday, October 30, 2010
"The Week Ahead" - October 25-29th
CIBC Economic's "The Week Ahead".
Key Highlights
This week, the Bank of Canada took a step back and issued a new growth projection. They indicate that growth in the years ahead will come from net exports and capital spending, less from consumer and housing activity. How confident can they be that trade performance can ultimately fill the gap as fiscal policy tightens?
Key Numbers to watch this week:
- Canada – Real GDP –August (Fri – 8:30AM) – Canadian GDP is poised to bounce back in August with indicators of economic activity showing a healthy performance for the month. However, the services sector show a more modest growth expectation.
- US –GDP (Q3 Advance) – September (Fri, 8:30AM) – The deepest recession since WWII basically began in the housing market. Now the slump in sales and starts, brought on by the tax credit's expiry, insures that sector will revert to being a drag on Q3 performance
Equity Insights:
- Four fifths of the 32% of S&P 500 members who have reported have topped the streets earnings estimates. Could it be that analysts are underestimating a company's offshore activities and earnings?
- AAII Consumer sentiment index has tested five-month highs recently. Typically a high reading suggests less money "waiting on the sidelines".
- China's Q3 GDP data shows that growth has moderated but remains healthy. Resource markets have overreacted in the past to rumours of China – savvy investors may want to keep their eyes open on potential buying opportunities.
Currency Currents:
- The C$ lost ground this week as the Bank of Canada's revised assessment of the negative output gap cemented a rate pause for the foreseeable future. We may now see the anticipated gradual approach to rate hikes.
- Our error-correction model has the C$ overvalued by roughly 7 cents (fair value – 1.10C$/US$). However, when looking at PPP, the IMF estimates the loonie should be closer to 1.22C$/US$
- China's authorities are taking steps to stem the nation's high inflation rate, now at 3.6%. Authorities may favour a higher level to the yuan, rather than policy rate increases to promote an orderly disinflation in the Chinese property market.
Thursday, October 21, 2010
CAAMP Stat
Bank of Canada Interest Rate
July 20, 20100.75 %
September 8, 20101.00 %
October 19, 2010Next meeting date
Source: Bank of Canada
Top of Page
Bank Prime Lending Rate
July 21, 20102.75 %
September 9, 20103.00 %
October 20, 2010Next meeting date
Source: Bank of Canada
Top of Page
Conventional Mortgage - 5 Year Rate*
August 23, 20105.49 %
August 30, 20105.39 %
September 15, 20105.39 %
Source: Bank of Canada
*Determinant for high ratio mortgage variable qualifying rate
July 20, 20100.75 %
September 8, 20101.00 %
October 19, 2010Next meeting date
Source: Bank of Canada
Top of Page
Bank Prime Lending Rate
July 21, 20102.75 %
September 9, 20103.00 %
October 20, 2010Next meeting date
Source: Bank of Canada
Top of Page
Conventional Mortgage - 5 Year Rate*
August 23, 20105.49 %
August 30, 20105.39 %
September 15, 20105.39 %
Source: Bank of Canada
*Determinant for high ratio mortgage variable qualifying rate
Canadian Mortgage Broker News - Building construction eases in August: StatsCan
Canadian Mortgage Broker News - Building construction eases in August: StatsCan
Friday, 8 October 2010
Building construction eases in August: StatsCan
The value of Canadian building permits issued in August fell 9.2 per cent compared with the previous month as contractors retracted from the non-residential sector.
Contractors took out $5.7 billion in building permits overall for the month, with the downturn in the non-residential sector outweighing an increase in the residential sector, according to a Statistics Canada report released Thursday October 7.
“It was a surprisingly large drop,” said Doug Porter, a Bank of Montreal economist, to the Canadian Press. “Of course, building permits are arguably the most volatile economic report that Statistics Canada releases. So you obviously have to treat it with a little bit of caution, especially permits in the non-residential sector, which can be extremely lumpy.”
After four months of decline, the value of residential sector permits issued by municipalities increased two per cent to $3.5 billion in August. At the same time, they issued just $2.2 billion worth of non-residential permits, down 22.9 per cent from July.
Canadian Mortgage Broker News - Ontario posts biggest housing starts decline http://ping.fm/LasKj
Canadian Mortgage Broker News - Ontario posts biggest housing starts decline
Canadian Mortgage Broker News - Ontario posts biggest housing starts decline
Tuesday, 12 October 2010
Ontario posts biggest housing starts decline
Ontario housing starts posted the biggest decline in all Canadian provinces as residential construction eased for single detached homes and condominium development.
Approximately 54,500 starts (seasonally adjusted and annualized figures) broke ground last month, down 10.9 per cent from August, according to the Canada Mortgage and Housing Corporation.
“Canadian housing demand has cooled significantly this year, and supply has begun to follow,” said economist Robert Kavcic for BMO Capital Markets to the Toronto Star. “Starts should continue to soften in the next few quarters, pulled down by the cooling we’ve seen on the demand side of the housing market.”
So far this year, Ontario new home construction is ahead by 29 per cent over 2009, though much of it is from the market’s strength earlier this year. Starts, which are counted when the concrete foundations are poured, are a key indicator of future economic activity, as new development generates job growth.
Canadian Mortgage Broker News - Housing starts rate down for September: CMHC http://ping.fm/pN1Y9
Canadian Mortgage Broker News - Housing starts rate down for September: CMHC
Canadian Mortgage Broker News - Housing starts rate down for September: CMHC
Tuesday, 12 October 2010
Housing starts rate down for September: CMHC
The seasonally adjusted annual rate of housing starts was 186,400 units in September, according to Canada Mortgage and Housing Corporation (CMHC). This is down from 189,300 units in August.
“Housing starts moved lower in September due to a decrease in urban single starts in Atlantic Canada and Ontario,” said Bob Dugan, chief economist at CMHC’s Market Analysis Centre. “Multiple starts were unchanged.”
The annual rate of urban starts decreased by 3.3 per cent to 163,200 units in September. In Atlantic Canada, urban starts decreased by 23.7 per cent and by 10.9 per cent in Ontario.
Meanwhile, urban starts increased by 6.4 per cent in British Columbia, by 3.9 per cent in Quebec, and by 0.6 per cent in the Prairie region.
Canadian Mortgage Broker News - Home prices rise in August: StatsCan http://ping.fm/xnIsU
Canadian Mortgage Broker News - Home prices rise in August: StatsCan
Canadian Mortgage Broker News - Home prices rise in August: StatsCan
Thursday, 14 October 2010
Home prices rise in August: StatsCan
Canadian new home prices rose unexpectedly in August after a decline the prior month.
The 0.1 per cent increase reversed its identical loss in July, and was led by a 0.9 per cent rise for Hamilton, Ont., according to Statistics Canada. Economists had predicted the index would decline by another 0.1 per cent, based on a Bloomberg survey of nine responses.
Home sales were helped by low borrowing costs. Canada’s average five-year fixed mortgage rate sat at 5.39 per cent the week of October 4, close to the 5.25 per cent set in April 2009 as the lowest in half a century.
New home prices had increased 2.9 per cent in August 2009.
Canadian Mortgage Broker News - TD bank overhauls mortgage program
Canadian Mortgage Broker News - TD bank overhauls mortgage program
Wednesday, 13 October 2010
TD bank overhauls mortgage program
TD bank is redesigning its mortgage program to make it easier for homeowners to tap into their equity and harder for them to switch to another lender when their mortgage renewal comes up.
The main difference of the overhaul is a switch to collateral-charge mortgages, which are similar to lines of credit. The bank is encouraging employees to approve customers at 125 per cent of a home’s actual value with certain conditions, so the homeowner can easily borrow more money if the property value increases.
Unlike traditional mortgages, collateral mortgages are difficult to transfer from one lender to another because they must be paid in full to be cancelled.
Wednesday, October 20, 2010
The Bank of Canada Monetary Policy Report
The Report is now available on the Bank of Canada’s website at:http://www.bankofcanada.ca/en/mpr/pdf/2010/mproct10.pdf
Canadian Mortgage Broker News - Home sales rise for second straight month http://ping.fm/VQAQm
Canadian Mortgage Broker News - Home sales rise for second straight month
Canadian Mortgage Broker News - Home sales rise for second straight month
Monday, 18 October 2010
Canadian housing sales have rose for the second straight month, according to the Canadian Real Estate Association (CREA).
In September, the seasonally adjusted annual rate of sales increased by 3 per cent, and prices has begun to stabilize. The average price of a home sold in Canada last month was $331,089, down slightly from the $331,683 average a year ago. But prices were up from a month earlier, when the average was $324,928.
“Supply and demand are rebalancing and that’s keeping prices steady in many markets,” said Georges Pahud, CREA president.
Monday, 18 October 2010
Canadian housing sales have rose for the second straight month, according to the Canadian Real Estate Association (CREA).
In September, the seasonally adjusted annual rate of sales increased by 3 per cent, and prices has begun to stabilize. The average price of a home sold in Canada last month was $331,089, down slightly from the $331,683 average a year ago. But prices were up from a month earlier, when the average was $324,928.
“Supply and demand are rebalancing and that’s keeping prices steady in many markets,” said Georges Pahud, CREA president.
Canadian Mortgage Broker News - High buy/rent ratio may lead to housing price correction http://ping.fm/43DUb
Canadian Mortgage Broker News - High buy/rent ratio may lead to housing price correction
Canadian Mortgage Broker News - High buy/rent ratio may lead to housing price correction
Tuesday, 19 October 2010
The current high buy/rent ratio may indicate a vulnerable housing market said Desjardins Securities, but others aren’t placing too much weight on the measurement.
Canadian house prices rebounded from the recession, hitting a new record in May and bringing the buy/rent ratio to about 1.85x. This means mortgages are increasingly difficult to afford compared to rent, as house prices increase and rents remain stable.
So, excluding major factors such as taxes and maintenance, homeowners pay about twice what renters pay.
“This is precipitously close to the 2.3x level reached in December 2007 and the 2.5x level reached in 1988, which preceded house price corrections of 13 per cent and 10 per cent, respectively,” Ed Sollbach and Deep Jaitly of Desjardins wrote in a research note.
They added that when the buy/rent ratio hit an “unsustainable” 3.6x in Toronto in 1989, it was followed by a 29-per-cent decline in house prices.
However, at that time unemployment was also rising and a spike in interest rates to 14 per cent forced many homeowners to sell.
The problem with the rent/own ratio is that half of the provinces employ rent control, so prices can’t rise with the broader housing market. For example, house prices in some Toronto neighbourhoods have gained 30 per cent in the last year but Ontario limits rent increases to 2.1 per cent.
“Maybe that’s just telling us that rents are just too low,” said Gregory Klump, the chief economist at the Canadian Real Estate Association in a recent interview with The Globe and Mail. “I’m not a fan of the price-to-rent ratio because it’s so skewed by the fact that rents are subject to rent control.”
Tuesday, 19 October 2010
The current high buy/rent ratio may indicate a vulnerable housing market said Desjardins Securities, but others aren’t placing too much weight on the measurement.
Canadian house prices rebounded from the recession, hitting a new record in May and bringing the buy/rent ratio to about 1.85x. This means mortgages are increasingly difficult to afford compared to rent, as house prices increase and rents remain stable.
So, excluding major factors such as taxes and maintenance, homeowners pay about twice what renters pay.
“This is precipitously close to the 2.3x level reached in December 2007 and the 2.5x level reached in 1988, which preceded house price corrections of 13 per cent and 10 per cent, respectively,” Ed Sollbach and Deep Jaitly of Desjardins wrote in a research note.
They added that when the buy/rent ratio hit an “unsustainable” 3.6x in Toronto in 1989, it was followed by a 29-per-cent decline in house prices.
However, at that time unemployment was also rising and a spike in interest rates to 14 per cent forced many homeowners to sell.
The problem with the rent/own ratio is that half of the provinces employ rent control, so prices can’t rise with the broader housing market. For example, house prices in some Toronto neighbourhoods have gained 30 per cent in the last year but Ontario limits rent increases to 2.1 per cent.
“Maybe that’s just telling us that rents are just too low,” said Gregory Klump, the chief economist at the Canadian Real Estate Association in a recent interview with The Globe and Mail. “I’m not a fan of the price-to-rent ratio because it’s so skewed by the fact that rents are subject to rent control.”
Monday, October 18, 2010
Mortgage rate promo - 5y 3.49%
Promotion de Taux 5 ans 3.49%
Pour les dossiers soumis et déboursés entre le 1 octobre et le 30 novembre 2010
Pour les dossiers soumis et déboursés entre le 1 octobre et le 30 novembre 2010
Tuesday, October 12, 2010
FN Mortgage rates as of 12/10/2010
FIRST NATIONAL
1 year fixed: 2.50 %
3 years fixed: 3.59 %
5 years fixed: 3.69 %
5 years 5% Cash back fixed: 5.29 %
5 years variable: Prime minus 0.65%
First National Prime Rate: 3.00 %
Posted by DataTracker Powered by CoolRent
1 year fixed: 2.50 %
3 years fixed: 3.59 %
5 years fixed: 3.69 %
5 years 5% Cash back fixed: 5.29 %
5 years variable: Prime minus 0.65%
First National Prime Rate: 3.00 %
Posted by
DataTracker Powered by CoolRent
Friday, October 1, 2010
FN Mortgage rates as of 01/10/2010
FIRST NATIONAL
1 year fixed: 2.50 %
3 years fixed: 3.70 %
5 years fixed: 3.79 %
5 years 5% Cash back fixed: 5.49 %
5 years variable: Prime minus 0.65%
First National Prime Rate: 3.00 %
Posted by DataTracker Powered by CoolRent
1 year fixed: 2.50 %
3 years fixed: 3.70 %
5 years fixed: 3.79 %
5 years 5% Cash back fixed: 5.49 %
5 years variable: Prime minus 0.65%
First National Prime Rate: 3.00 %
Posted by
DataTracker Powered by CoolRent
Thursday, September 16, 2010
FN Mortgage rates as of 16/09/2010
FIRST NATIONAL
1 year fixed: 2.50 %
3 years fixed: 3.70 %
5 years fixed: 3.79 %
5 years 5% Cash back fixed: 5.49 %
5 years variable: Prime minus 0.65%
First National Prime Rate: 2.75 %
Posted by DataTracker Powered by CoolRent
1 year fixed: 2.50 %
3 years fixed: 3.70 %
5 years fixed: 3.79 %
5 years 5% Cash back fixed: 5.49 %
5 years variable: Prime minus 0.65%
First National Prime Rate: 2.75 %
Posted by
DataTracker Powered by CoolRent
Friday, September 10, 2010
FN Mortgage rates as of 10/09/2010
FIRST NATIONAL
1 year fixed: 2.60 %
3 years fixed: 3.70 %
5 years fixed: 3.79 %
5 years 5% Cash back fixed: 5.49 %
5 years variable: Prime minus 0.65%
First National Prime Rate: 2.75 %
Posted by DataTracker Powered by CoolRent
1 year fixed: 2.60 %
3 years fixed: 3.70 %
5 years fixed: 3.79 %
5 years 5% Cash back fixed: 5.49 %
5 years variable: Prime minus 0.65%
First National Prime Rate: 2.75 %
Posted by
DataTracker Powered by CoolRent
Wednesday, September 8, 2010
Bank of Canada rises the overnight rate with 0.25% to 1% http://blog.danielkatev.com/feeds/2126498923609087500/comments/default
Bank of Canada rises the overnight rate with 0.25% to 1%
Bank of Canada hikes rates for third time
September 8, 2010 | 09:09
Money
Mortgage costs for many Canadians went up for the third time this year on Wednesday, with the Bank of Canada hiking its target for the overnight rate by a quarter point to 1%.
The bank rate is now 1.25% and the deposit rate 0.75%, the bank said in a statement. Echoing comments made in previous rate hike announcements, the central bank said any further hikes increases will need to be carefully considered in light of the “unusual uncertainty surrounding the outlook.”
Canada’s economy has cooled rapidly in recent months, leaving economists mixed as to whether Governor Mark Carney would up borrowing costs this time around. Most now expect him to pause in the tightening cycle until the economic recovery, particularly south of the border, gets on a firmer footing.
The bank said that the Canadian economy was softer in the second quarter than it had expected. However, business investment and consumer demand were in line with its forecasts.
Going forward the bank said it expects business investment to rise strongly and consumer demand to be solid.
The weak spot in the outlook for Canada is the U.S. economy, home to three quarters of the country’s exports.
“In the United States, the recovery in private demand is being held back by high unemployment and recent indicators suggest a more muted recovery in the near term,” it said.
Tuesday, September 7, 2010
Montreal is approaching 2011 at full speed | Construction Industry News | Reed Construction Data http://ping.fm/T3gJ6
Montreal is approaching 2011 at full speed | Construction Industry News | Reed Construction Data
Montreal is approaching 2011 at full speed | Construction Industry News | Reed Construction Data
Data source: Ontario Ministry of Labour/Chart: Reed Construction Data – CanaData
Montreal is approaching 2011 at full speed
August 25, 2010 - John Clinkard
As Montreal heads into the second half of 2010, it’s clear that the city must be doing something right.
For the past seven months it has consistently exhibited stronger year-over-year job growth than all but two of the 10 largest metro areas in the country.
Job growth has been particularly strong in wholesale and retail trade (+35,200), followed by finance insurance and real estate (+25,800); health services (+17,900); construction (+17,200); accommodation and food services (+10,600); and professional and technical services (+10,200).
This strong pattern of employment growth, accompanied by low interest rates and sustained net migration, has helped to underpin housing demand in Montreal.
According to the Greater Montreal Real Estate Board, sales of existing homes are up by 10% year to date, and median single family house prices ($258,000) are up by 5% year over year.
Demand for new housing is also strong, reflected by a 32% year-to-date increase in housing starts and a 48% year-to-date rise in residential building permits over the first six months of the year.
As is the case across much of the country, the combination of dissipating pent-up demand and deteriorating affordability is causing housing demand in Montreal to cool.
But the strong year-to-date increase in residential permits should sustain new residential construction into 2011.
While the pace of residential construction appears to be down-shifting, the outlook for both industrial and commercial construction is quite strong.
According to CB Richard Ellis, a gradual increase in manufacturing demand has caused the industrial availability rates in the Greater Montreal Area (GMA) to decline by 40 per cent since the end of 2009.
Reflecting this stronger pace of manufacturing activity, the value of industrial building permits has picked up since the beginning of the year and is now +73% year to date in June.
Also, despite relatively high office vacancy rates in the GMA, it appears that stronger retail and office-based employment growth is contributing to a turnaround in commercial construction, reflected by an 8% year-to-date increase in commercial building permits.
Employment growth - Montreal vs total Canada
Thursday, September 2, 2010
Canadian Mortgage Broker News - Atlantic Canada housing starts up in 2010 http://ping.fm/tq4jX
Canadian Mortgage Broker News - Atlantic Canada housing starts up in 2010
Canadian Mortgage Broker News - Atlantic Canada housing starts up in 2010
Wednesday, 1 September 2010
Atlantic Canada housing starts up in 2010
Atlantic Canada's housing starts for 2010 are predicted to be up from last year. Moncton, New Brunswick, will see 1,080 housing starts by the end of 2010 compared to 973 starts in 2009, according to the Canada Mortgage and Housing Corp.'s third-quarter 2010 Housing Market Outlook release.
Meanwhile in Saint John, builders expect to have put up 670 home units in 2010, a small increase versus the 659 from last year. But sales of existing homes are likely to drop by end of 2010 in New Brunswick to 6,750 from 7,000 in 2009.
Across Atlantic Canada, which includes New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland, housing activity is supposed to rise by nearly seven per cent in 2010 compared to the year before. Single-housing starts are forecasted to increase by nine per cent in 2010, as the economy continues to recover. Low vacancy rates and an aging population also suggests multiple starts should rise to five per cent by the end of the year.
Wednesday, September 1, 2010
Canadian Mortgage Broker News - CIBC: Slowdown may be healthy
Canadian Mortgage Broker News - CIBC: Slowdown may be healthy
Monday, 30 August 2010
CIBC: Slowdown may be healthy
The Canadian housing market is poised to strengthen after a brief slowdown, according to CIBC chief executive officer Gerry McCaughey.
In a television interview with Business News Network McCaughey said the slowdown in the Canadian housing market is healthy as it allows the industry to "catch a breath."
"The indications are Canada is doing reasonably well, the recovery in the U.S. and probably in Canada seems to be slowing somewhat, but I believe this is probably a pause," McCaughey said. "I think all recoveries from recessions have a lot of doubt and hesitation around them, and I think the main thing is for us to keep our eye on the ball for the future."
CIBC reported its Q3 earnings last Wednesday posting net profits that grew to $640 million.
FN Mortgage rates as of 01/09/2010
FIRST NATIONAL
1 year fixed: 2.60 %
3 years fixed: 3.70 %
5 years fixed: 3.89 %
5 years 5% Cash back fixed: 5.49 %
5 years variable: Prime minus 0.65%
First National Prime Rate: 2.75 %
Posted by DataTracker Powered by CoolRent
1 year fixed: 2.60 %
3 years fixed: 3.70 %
5 years fixed: 3.89 %
5 years 5% Cash back fixed: 5.49 %
5 years variable: Prime minus 0.65%
First National Prime Rate: 2.75 %
Posted by
DataTracker Powered by CoolRent
Canadian Mortgage Broker News - Ontario housing activity to stabilize in 2011 http://ping.fm/QmdNq
Canadian Mortgage Broker News - Ontario housing activity to stabilize in 2011
Canadian Mortgage Broker News - Ontario housing activity to stabilize in 2011
Tuesday, 31 August 2010
Ontario housing activity to stabilize in 2011
Ontario housing activity tapered off in recent months and the demand will continue to slow till stabilizing in early 2011. This is according to the 2010 Third Quarter Housing Market Outlook by Canada Mortgage and Housing Corporation.
"A number of temporary factors have boosted Ontario home sales and prices from this time last year," said Ted Tsiakopoulos, CMHC's Ontario regional economist. "However, higher mortgage carrying costs, increasing supply pressures and declining first-time buyer demand will temper Ontario's housing momentum later this year and into 2011."
Other highlights of the forecast included:
- Employment market on recovery and goods sector showing signs of stability
- Ontario existing home sales will come off of peak levels; then improved affordability will boost sales later in 2011
- Ontario sales will range between 175,000 and 210,000 unit sales this year and next
- Ontario home starts expected to reach 61,525 units in 2010; and will likely range between 47,000 to 66,000 units in 2011
- Demand for single detached homes will weaken in more expensive Ontario markets
- Rising mortgage carrying costs will increase demand for apartment ownership and rental accommodation
Canadian Mortgage Broker News - Canadian housing bubble still looms
Canadian Mortgage Broker News - Canadian housing bubble still looms
Tuesday, 31 August 2010
Canadian housing bubble still looms
Though home sales are slowing, prices in six of Canada's largest housing markets are in bubble territory.
Home prices are sitting at 4.7 to 11.3 times Canadians' annual income - much higher than historical comfort levels of between three and four times income, according to a report by the Canadian Centre for Policy Alternatives (CCPA). The report defines a bubble occurring when housing prices increase more rapidly than inflation, household incomes and economic growth.
"To see all of the major markets outside of that comfort zone is very unique and concerning," said David Macdonald, a research associate who wrote the report called "Canada's Housing Bubble: An Accident Waiting To Happen."
Sales have fallen by 25 per cent since reaching its peak at the begnning of the year. But canadian home prices were up 13.6 per cent in June from a year ago in Canada's major cities.
"The concern today is all six major markets, not just Vancouver and Toronto, are out of that comfort zone," said Macdonald, including Calgary, Edmonton, Ottawa and Montreal. "All six major markets now have an average price of over $300,000."
***The CCPA is an independent, non-partisan research institute concerned with issues of social and economic justice.
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