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Bank of Canada maintains overnight rate target

2011-01-18T22:18:00.000-05:00

Bank of Canada maintains overnight rate target at 1 per cent
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OTTAWA, Jan. 18 /CNW/ - The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economic recovery is proceeding at a somewhat faster pace than the Bank had anticipated, although risks remain elevated. Private domestic demand in the United States has picked up and will be reinforced by recently announced monetary and fiscal stimulus. European growth has also been slightly stronger than anticipated. Ongoing challenges associated with sovereign and bank balance sheets will limit the pace of the European recovery and are a significant source of uncertainty to the global outlook. In response to overheating, some emerging markets have begun to implement more restrictive policy measures. Their effectiveness will influence the path of commodity prices, which have increased significantly since the October Monetary Policy Report (MPR), largely reflecting stronger global growth.

The recovery in Canada is proceeding broadly as anticipated, with a period of more modest growth and the beginning of the expected rebalancing of demand. The contribution of government spending is expected to wind down this year, consistent with announced fiscal plans. Stretched household balance sheets are expected to restrain the pace of consumption growth and residential investment. In contrast, business investment will likely continue to rebound strongly, owing to stimulative financial conditions and competitive imperatives. Net exports are projected to contribute more to growth going forward, supported by stronger U.S. activity and global demand for commodities. However, the cumulative effects of the persistent strength in the Canadian dollar and Canada's poor relative productivity performance are restraining this recovery in net exports and contributing to a widening of Canada's current account deficit to a 20-year high.

Overall, the Bank projects the economy will expand by 2.4 per cent in 2011 and 2.8 per cent in 2012 - a slightly firmer profile than had been anticipated in the October MPR. With a little more excess supply in the near term, the Bank continues to expect that the economy will return to full capacity by the end of 2012.

Underlying pressures affecting prices remain subdued, reflecting the considerable slack in the Canadian economy. Core inflation is projected to edge gradually up to 2 per cent by the end of 2012, as excess supply in the economy is slowly absorbed. Inflation expectations remain well-anchored. Total CPI inflation is being boosted temporarily by the effects of provincial indirect taxes, but is expected to converge to the 2 per cent target by the end of 2012.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.

New Mortgage Rules

2011-01-18T12:26:00.000-05:00

New Mortgage Rules
from the Department of Finance Canada

Ottawa, January 17, 2011
2011-003
The Harper Government Takes Prudent Action to Support the Long-Term Stability of Canada's Housing Market
________________________________________
The Honourable Jim Flaherty, Minister of Finance, and the Honourable Christian Paradis, Minister of Natural Resources, today announced prudent adjustments to the rules for government-backed insured mortgages to support the long-term stability of Canada's housing market and support hard-working Canadian families saving through home ownership.
"Canada's well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries and helped protect us from the worst of the recent global recession," said Minister Flaherty. "The prudent measures announced today build on that advantage by encouraging hard-working Canadian families to save by investing in their homes and future."
"The economy continues to be our Government's top priority," continued Minister Paradis. "Our Government will continue to take the necessary actions to ensure stability and economic certainty in Canada's housing market."
The new measures:
• Reduce the maximum amortization period to 30 years from 35 years for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent. This will significantly reduce the total interest payments Canadian families make on their mortgages, allow Canadian families to build up equity in their homes more quickly, and help Canadians pay off their mortgages before they retire.
• Lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 per cent from 90 per cent of the value of their homes. This will promote saving through home ownership and limit the repackaging of consumer debt into mortgages guaranteed by taxpayers.
• Withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit, or HELOCs. This will ensure that risks associated with consumer debt products used to borrow funds unrelated to house purchases are managed by the financial institutions and not borne by taxpayers.
Our Government's ongoing monitoring and sound underlying supervisory regime, along with the traditionally cautious approach taken by Canadian financial institutions to mortgage lending, have allowed Canada to maintain strong and secure housing and mortgage markets.
The adjustments to the mortgage insurance guarantee framework will come into force on March 18, 2011. The withdrawal of government insurance backing on lines of credit secured by homes will come into force on April 18, 2011.

Mortgage Monitor

2011-01-18T12:25:00.001-05:00

Using the Mortgage Monitor, you can manage your mortgage and track your debt from day to day. (Note: To save and track your mortgage information, you’ll need to REGISTER.)

Even better, it allows you to see what happens when you add extra payments, change your mortgage type or term, or decrease your interest rate by a point or two.

http://www.mortgagemonitor.ca/index.cfm?myom_template=calc/rPayments

Bank of Canada raises key interest rate a quarter point to one per cent

2010-09-08T15:17:00.000-04:00

Bank of Canada raises key interest rate a quarter point to one per cent

Julian Beltrame, The Canadian Press
OTTAWA - The Bank of Canada raised the trend-setting interest rate a quarter point to one per cent on Wednesday, even as it acknowledged that the country's economic growth will be more gradual than previously thought.

It was the third hike in three months, taking the overnight rate up in stages from the rock-bottom 0.25 per cent that was set by the central bank during the recession to help stimulate the economy.

The hike, which most economists had predicted and supported, will likely have the effect of increasing borrowing costs on short-term loans, such as variable mortgages and lines of credit.

The Canadian dollar got an immediate boost following the announcement, rising 1.11 cents to 96.53 cents US.

Analysts had been looking for acknowledgment from bank governor Mark Carney that the recovery has taken a few surprise body blows of late and that he will now pause for the next few months until the picture clears.

Instead, the bank's governing council appeared content to stick to its previously optimistic outlook and gave no hint about plans for future decisions, saying that will depend on the "unusual uncertainty" of the outlook.

The council remained upbeat on the economy, downplaying its overly optimistic April and July forecasts.

"Economic activity in Canada was slightly softer in the second quarter than the bank had expected, although consumption and investment have evolved largely as anticipated," the council wrote.

"Going forward, consumption growth is expected to remain solid and business investment to rise strongly."

The tone of the central bank's statement was "a bit more hawkish than we expected," said Bank of Montreal economist Douglas Porter.

"The Bank of Canada clearly retains its tightening bias and seems generally unfazed by the recent cooling in the Canadian economy," Porter wrote in a note to clients.

"While we had been expecting the bank to now move to the sidelines for a spell, it appears that it will take a deeper slowdown in domestic spending (as we suspect) than what we have seen so far to prompt them to stop raising rates."

In July, the bank downgraded its previous call for a 3.8 per cent advance in the second quarter - the April-June period - to three per cent.

But in fact, both were wildly off. Statistics Canada reported last week the period only produced a two per cent increase in output, about one-third the pace of growth seen in the first three months of the year.

The bank conceded that the growth profile for the economy going forward will be "slightly more gradual" than it had thought and that since proceeding to withdraw monetary stimulus in April "financial conditions in Canada have tightened modestly."

Even so, with a one per cent policy rate the cost of borrowing in Canada remains "exceptionally stimulative," the bank said.

It blamed weakness in the U.S. economy, which is being held back by the high levels of unemployment, for the slowdown in Canada. Canada's recovery has outpaced most, if not all, of the G7 leading economies, particularly the U.S., which continues to shed net jobs while Canada has recouped almost all of those lost during the 2008-2009 recession.

The bank said its policy rate is consistent with reaching a two per cent inflation target in the medium term.

But economists question how much further Carney can go with the U.S., Canada's largest trading partner, contemplating more stimulus.

Uncertainty Surrounds Rate Announcement

2010-09-06T22:15:00.000-04:00

Uncertainty surrounds rate announcement; markets try to counter September effect

05/09/2010 6:00:00 AM

Malcolm Morrison, The Canadian Press
TORONTO - The Canadian dollar could be in for some volatility this coming week as the Bank of Canada comes out with its latest announcement on interest rates Wednesday.

The dollar ended last week at the 96-cent mark and currency markets aren't really sure which way the central bank will lean. That's because analysts were putting the odds of another quarter-point hike - to one per cent - at 50-50, reflecting a slowdown in the Canadian and particularly the U.S. economies over the last quarter.

"We are officially calling for the Bank of Canada to raise rates by a quarter point next week," said Doug Porter, deputy chief economist at BMO Capital Markets.

"But I would say an informal poll of the economics department here would probably put the odds of that at about 55 to 60 per cent. We do see it as a very close call and that's the way the market is pricing for a rate hike right now."

Meanwhile, stock markets could find momentum going into trading this week as readings last week on U.S. manufacturing and employment data could counter seasonal effects which have given September the reputation of the worst trading month of the year.

The Bank of Canada has raised rates from an historic low of 0.25 per cent twice this year, in June and July, as the Canadian economy mended from recession faster than just about any other country.

But even with another quarter-point rise, the central bank could well decide to take a pause after recent data showed North American economies slowing.

The U.S. economy grew at an annualized rate of only 1.6 per cent during the second quarter.

And Statistics Canada reported last week that the domestic economy grew at annualized reading of two per cent during the second quarter, down sharply from 5.8 per cent in the January-March period.

Back in April, when things looked rosier for the global economy, Porter thought "the bank would raise its rates to about two and a half to three per cent over the next year. Now we're thinking one to maybe 1.5 per cent."

And even before the central bank gets to that point, the question is how long it will keep rates at one per cent.

"We now see that possibly right through the middle of next year and that's really the big change in recent months for us - beyond just taking a little bit of a trip to the sidelines later this year, we think that could last longer," Porter said.

"Because frankly it doesn't look like the U.S. Federal Reserve is going to raise rates for at least the next year, and could drag well into 2012 even, unless we really get a very pleasant surprise from the U.S. economy."

However, the revised forecast is certainly good news for consumer borrowing costs and could breathe new life into a flagging housing market.

"We have seen the longer-term mortgage rates coming down in recent months as that expectation of a less aggressive Bank of Canada has been built into the market," Porter noted.

But no matter what the bank announces on Wednesday, Porter thinks there will be an effect on the loonie, particularly from the bank's commentary.

"Let's say they hike, and they come out and signal they might move to the sidelines, then the rally on the dollar won't last long," he said.

"If they hike and they still sound like they could hike further, then the currency will strengthen quite a bit. That's not even getting into what it would do if they don't hike."

Meanwhile, stock markets ended the week on a strong note as positive manufacturing data from China and the U.S. and the U.S. employment report for August, which showed private-sector job creation exceeding expectations, left the TSX at a three-and-a-half month high.

The biggest headwind might just be the fact that it is September - the worst trading month of the year.

There are a few theories why this is so. For example, mutual fund managers take profits on winning stocks and ditch the losers as they make the third quarter look as good as possible.

Last year was a happy exception, as markets were in the course of a long positive run from the depths of March 2009 as investors started to price in a strong economic rebound.

The S&P 500 has shed at least five per cent in September four times in the past decade alone.

However, this September could also prove to be a decent month.

"And that could be based on valuation that we're seeing in the marketplace, it could be based on the fact that investors will be focusing on the positives as opposed to the negatives," said Philip Petursson, director of institutional equities at MFC Global Investment Management.

"You have to focus on the fact that companies seem to be tripping over themselves to acquire each other. They are more confident and, from what we are seeing, there is much better investment opportunity in equities now than there has been over the past couple of years based on valuation, companies' balance sheets (and) pending activity through merger and acquisition activity."

Petursson added that another reason to be more optimistic on the equity markets is that, relative to bonds, stocks are cheaper than they have ever been.

Bank of Canada

2010-09-05T23:11:00.001-04:00

Bank Prime Lending Rate
June 2, 2010 2.50 %
July 21, 2010 2.75 %
September 9, 2010 Next meeting date
Source: Bank of Canada

Bank of Canada Interest Rate
June 1, 2010 0.50 %
July 20, 2010 0.75 %
September 8, 2010 Next meeting date
Source: Bank of Canada

Conventional Mortgage - 5 Year Rate*
August 16, 2010 5.59 %
August 23, 2010 5.49 %
August 30, 2010 5.39 %
Source: Bank of Canada
*Determinant for high ratio mortgage variable qualifying rate

JCI Durham Challenge

2010-09-01T00:30:00.001-04:00

Visit www.jciwhitby.com to be involved in this great fundraising event in support of Eastview Boys and Girls Club.

Sept 11/10 10-4

Many great mortgage rates and products available

2010-09-01T00:26:00.001-04:00

There are a lot of great mortgage products available. Some of the great rates

3 yr fixed mortgage 2.90%
3 yr variable rate prime -0.70
5 yr fixed from 3.64%

The services of a mortgage agent are normally at no cost to you. We are paid by the lender. I work for you to find you the best mortgage product and rate to suit your needs.

Housing Prices News Article

2010-09-01T00:25:00.000-04:00

Housing prices in hottest Canadian markets a concern
Norma Greenaway, Postmedia News • Tuesday, Aug. 31, 2010
OTTAWA -- Steep housing price increases in six of Canada’s hottest real estate markets since 2002 have all the hallmarks of an “accident waiting to happen” if mortgage rates rise too sharply, warns a new report.
The report by the Centre for Policy Alternatives says smart mortgage rate setting is needed to prevent the bubbles hanging over the housing markets in Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal from bursting.
“The hottest six real-estate markets could be in for a correction at best or, at worst, a bubble burst,” writes David Macdonald, author of the report. “Rate setters at the big banks are in the driver’s seat now as mortgage rates inch up. They need to hit the breaks lightly.”
The chief concern is the price increases in those markets are outside the “historic comfort level,” which makes them much more susceptible to mortgage rate changes, the report said.
The average, inflation-adjusted house price in the cities has historically held stable at between $150,000 and $220,00 in today’s dollars. But the current average price in all six major markets now is over $300,000, it said.
Macdonald says a housing bubble burst has been a rare phenomenon in Canada. Since 1980, it has only happened three times — in Vancouver in 1981 and 1994 and in Toronto in 1989.
“But the steep rise in house prices in so many cities displays all the hallmarks of an accident waiting to happen,” Macdonald writes, adding the price increases have exceeded the growth in inflation, household incomes and economic growth.
“Canada is experiencing for the first time in the last 30 years, a synchronized housing bubble across the six largest residential real-estate markets in Canada.”
The report traces the trend in large part to low mortgage rates and access to easy credit, which can encourage buyers to purchase homes they might not otherwise be able to afford.
“While housing may be ‘affordable’ based on record low rates, the affordability situation in Canada could change rapidly if mortgage rates return even part way to their historic norms,” the report says.
Macdonald, a research associate with the centre, said in an interview he doesn’t expect mortgage rates to increase much in the near term. His concern is three to five years down the road.
Macdonald called on the big banks and other mortgage lenders to stick to slow, gentle increases to avert the bottom falling out of housing prices.
He also recommended returning to pre-2006 mortgage rules, which required a down payment of 10% and a 25-year mortgage. The current rules call for five per cent down and a 35-year mortgage.
Macdonald says the best scenario would be to have housing prices stagnate over the next five to 10 years while inflation slowly eats away at their value.
The goal should be to get prices back to the “comfort zone” where house prices are in line with inflation, he said, and where owners will neither gain nor lose a lot of money when they sell.
Read more: http://www.financialpost.com/news/Housing+prices+hottest+Canadian+markets+concern/3463776/story.html#ixzz0yBPfRm5D

Variable Rate Article

2010-09-01T00:24:00.001-04:00

Variable rate may no longer win
Garry Marr, Financial Post • Tuesday, Jul. 27, 2010
Not that there are a lot of people buying houses these days, but the answer to the age-old question of whether to go long or short on your mortgage is unclear yet again.
The Bank of Canada’s second quarter-of-a-point rate increase in the past two months is likely not going to do much to boost a real estate market that saw sales drop almost 20% across the country in June from a year ago.
The popular variable-rate product tied to prime that helped people buy a lot more house with more debt is going up too. The prime rate at the major banks, which tracks the Bank of Canada’s rate, is now at 2.75%.
But a funny thing happened as the Bank of Canada was raising rates. With much of the credit crisis seemingly behind us, the discounts on short-term borrowing are increasing as the cost of funds for banks also fall. Instead of borrowing at 100 basis points above prime, it’s now 70 basis points off prime.
At 2.05%, a variable-rate product today may look as attractive as ever, but the five-year fixed-rate closed mortgage is falling fast. It can now be had for a shade under 4%, says Rob McLister, editor of Canadian Mortgage Trends.
“Bond yields have fallen out of bed and nobody expected that,” said Mr. McLister, adding the spread between the five-year Government of Canada bonds and five-year mortgages is still large enough that the banks may reduce long-term rates even more. However, at about 4%, the five-year closed fixed-rate mortgage isn’t far off its record low.
Bank of Montreal senior economist Sal Guatieri does agree that variable-rate products have worked out better than fixed-rate mortgages throughout history, but says the tide may be turning.
“Given that the central bank has already raised rates a couple of times now and will likely continue to raise rates, it probably is a correct assumption to make,” says Mr. Guatieri, noting variable usually works in a declining interest-rate environment. “The next five years might not quite follow the past. You could probably argue it’s wiser to lock in now. It’s a close call.”
Bank of Montreal is forecasting another 25 basis point move in September and says rates will climb another 1.5 percentage points by the end of 2011. If Mr. Guatieri and others are right, by 2012, the variable-rate products out today would clock in at just above 3.75%, if the discounting remains the same.
“If you are still in that variable-rate product then, you’d have to sweat out the next three years because there would still be possibly more increases,” says Mr. Guatieri, who adds his bank sees the overnight rate eventually going to 4% in the following three years. Based on the present gap between the Bank of Canada and prime, that would place the variable-rate product you get today at 6% by around 2015.
Fears of such a scenario are driving people into fixed-rate products again. That, plus new mortgage rules that make it easier to qualify for a mortgage if you go for a fixed-rate product with a term of five years or longer.
“The Bank of Canada is doing what it said — it’s going ahead with rate increases. If I was counselling someone, the prediction is rates are going up, so now is a good time to consider locking in for a term,” says Don Lawby, president of Century 21 Canada.
It makes sense, but with variable rate still at around 2%, it’s easy to see why people wouldn’t want to lock in. Even Mr. Guatieri says if you are secure in your financial situation and don’t need to fix your mortgage payments, “you might just want to let it ride.”
There just never seems to be a clear answer on whether to lock in or stay variable.
Read more: http://www.financialpost.com/personal-finance/Variable+rate+longer/3329442/story.html#ixzz0yBQrPwKB

Home sales plummeted 30 per cent in July

2010-08-16T21:17:00.001-04:00

Home sales plummeted 30 per cent in July

Housing sales dropped by 30 per cent nationwide last month, largely due to a new tax in British Columbia and Ontario experts say deterred home buyers in two of the country's hottest housing markets.

The Canadian Real Estate Association on Monday reported a 6.8 per cent drop in home sales through its MLS service, compared with June numbers. The decline is part of a gradual dampening of Canada's once-booming real estate market.

B.C. and Ontario account for roughly 85 per cent of the slump, as the implementation of the harmonized sales tax this summer pushed many home buyers to purchase earlier this year, the association said in a statement.

The two provinces typically represent more than half of the country's sales.

"We're not seeing a huge slide," BNN's Andrew Bell told CTV News Channel on Monday.

"Things were pretty frenetic last year… We're actually still up year-on-year on sales, prices are holding -- so we're not seeing a dive in the housing market by any means."

So far, this year's sales are up 5.6 per cent from the first seven months of 2009. But experts predict that lead to fade in the next few months, since sales grew dramatically in the second half of last year.

Activity peaked last December as home buyers who had held off during the recession let loose on the market and took advantage of low interest rates.

That momentum lasted through the first half of this year, fuelled by fear of the HST, interest rate hikes and changes to mortgage rules.

Still, sales fell in six of the last seven months, dropping 25 per cent in the past three months alone, said Douglas Porter, deputy chief economist at the Bank of Montreal. That signals a shift towards a buyer's market, he added.

British Columbia showed the largest decline at 14.1 per cent, with Ontario in second place with an eight-per-cent decrease. Activity in the Prairies and Quebec was level with June numbers.

"We (and many others) were consistently warning of a significant second-half slowdown in housing activity but, if anything, the cooling looks even a bit chillier than expected," Porter wrote in a report Monday.

With files from The Canadian Press

Interest rates expected to edge up

2010-07-19T21:14:00.001-04:00

Interest rates expected to edge up

19/07/2010 2:23:11 PM

CBC News
The Bank of Canada, weighing strong domestic growth against weakness internationally, will likely raise its key lending rate by another quarter of a percentage point Tuesday morning, economists say.

That would bring the central bank's overnight lending rate to 0.75 per cent.

Increases in the overnight lending rate generally lead directly to increases in lines of credit rates, variable-rate mortgages and other demand loans.

All 12 primary securities dealers expect the central bank to announce a quarter percentage point hike. A survey of 20 economists by Bloomberg found similar unanimity.

If that rate hike does materialize, it would be the second straight hike by the bank, which had left its benchmark lending rate at a rock-bottom 0.25 per cent for more than a year to provide a shot in the arm to a struggling economy.

Canada's central bank was the first in the G7 group of industrialized economies to raise interest rates since the global financial crisis began unfolding.

Canada's economy faring better than most

Recent data has shown the Canadian economy continuing to shake off the effects of the recent slowdown.

The most recent employment report issued showed that Canada created 93,200 jobs in June, far above economists' forecasts. The Canadian economy has now recouped almost all of the jobs lost in the recession.

The unemployment rate fell to 7.9 per cent - its lowest level in more than a year.

Bank of Canada surveys released last week suggest that Canadian businesses remain optimistic as far as sales and hiring are concerned.

"With solid employment growth powering consumers, and business investment now surging, Canada's domestic economy still looks solid," noted Bank of Montreal economist Benjamin Reitzes.

The international economic recovery has been more uncertain. Recent U.S. and European economic data, for instance, has been tentative at best.

Analysts say that weakness should be enough to keep the Bank of Canada from aggressively raising rates.

TD Bank economist Grant Bishop agrees that the central bank will hike by a quarter point Tuesday, but thinks the bank will underscore "the economic uncertainties in its communiqué, leaving an open door to a pause on rate hikes if conditions warrant."

A survey of 20 economists by Reuters finds that most expect the central bank's key lending rate will be at 1.25 per cent the end of the year, meaning that a couple of additional small rate hikes may be in the offing after Tuesday's, along with a pause or two.

Dinner with a CEO June 10,2010

2010-06-01T17:44:00.001-04:00

Location
Bella Notte Ristorante

3570 Brock Street North
Whitby, ON L1R 0G2
(905) 430-5744
Change Place

Who’s coming?
4 Young professionals

16 spots left — RSVP deadline: June 9, 2010 1:00 PM

CAD30.00 per person
refund policy

The Dinner with a CEO series aims to provide the opportunity for a small group of people to learn leadership insights from, and share fellowship with, leading current and former CEO's and Board Chairpersons in a small group setting.

For our first event of the year we have invited Todd Skinner

Todd Skinner is Founder and Partner of The Business Accelerator Group, a global consortium of business executives that specializes in helping businesses with their growth and transition strategies. In Durham Region Todd is better known as “The Growth Coach”.

Todd has a passion for helping businesses to succeed. Coming from an entrepreneurial background, he draws from almost two decades of personal experience in both entrepreneurial ventures and corporate executive positions. Todd has an extensive Global perspective living and working in the United States and England. He has also conducted business in over 45 countries; including turning around a failing business in England, starting a business in Russia, China and a joint-venture in India all before his 30th birthday.

He was member of the Board of Directors of the Whitby Chamber in 2008 and currently Host "Business Today" a Rogers TV show.

Price:
JCI Whitby members: FREE
Non-members: $30

Price includes dinner.

Credit Score Secrets

2010-06-01T17:28:00.000-04:00

Credit Score Secrets
by Gail Vaz-Oxlade, for Yahoo! Canada Finance
Thursday, May 27, 2010
Ever wonder how that magical number – The Credit Score – is computed?

Whether you’re obsessing over your FICO score or your Beacon score, you’re likely shopping for credit. The FICO score was developed by Fair Isaac & Co., which began credit scoring in the late 1950s. The point of the score is consolidate your credit profile into a single number. The Beacon score is a brand name used by Equifax, the largest credit-reporting agency in Canada. While Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed, whether you get a loan or not is a numbers game: The more points you score on your credit app, the better you do.

There’s a reason you have to fill out so much information when you’re applying for credit. Everything counts. Your age, your address, and even your telephone number all have a role to play in whether or not you’ll get credit.
Young ‘uns and old folk are at a disadvantage since under 21 and over 65 likely means you aren’t working; no points for you. If you're married, you’ll get a point for being “stable.” And while you might think that being divorced would work against you (all that spousal and child support), most creditors don’t give a whit.
No dependents? Zero points. You’re probably still gallivanting like a teenager since you haven’t yet “settled down.” One to three dependents? Score one point. You’re a solid citizen. More than three dependents? Score zero. Have you no self control! And don’t you know you that with all those mouths to feed you could get in debt over your head?

Your home address counts too. Live in a trailer park or with your parents? Bad risk, score zero points. You could skip town with nary a look over your shoulder. Rent an apartment? Give yourself one point. Own a home with a big fat mortgage and you’ll score major points since someone has already done some checking and you qualified for a mortgage. Own your home free and clear? Even better. You’ve proven you can pay off a sizable debt and now you have a pile of equity that the card company would love to help you spend.

Previous Residence? Zero to five years (some applications only go to three years), score zero points since you move around too much. No land-line: zero points. How the Dickens are they gonna find you when you fall behind in payments. Since they can’t use your cell phone to actually locate you physically, it doesn’t count.
Less then one year at your present employer earns you no points. Again, it’s a stability and earning continuity thing. The longer you’re on the job, the more likely you are to be bored out of your mind but you’ll score more points. And, not to overstate the obvious, the more you make the better.

The more willing you are to make your lender rich, the higher your score will be. Since the FICO score was originally designed to measure customer profitability, if you pay off your balance in full every month, you’re going to score lower than the guy who only makes the minimum payment and pays huge amounts of interest.

Scores range from 300 to 900 and if you manage to hit 750 or above you’ll qualify for the best rates and terms. Score 620 or lower and you’ll pay premium interest if you even qualify; 620 is the absolute minimum credit score for insured mortgages.
Your credit score can change quickly. Payment history accounts for about 35% of your credit score and just one negative report can drop your pristine score into the doldrums. Since scores are updated monthly, your bad behaviour won’t go unpunished for long.

The type of credit you have counts for about 10% of your score. And your current level of indebtedness accounts for about 30% so going too close to your credit limit is another way to deflate your score. One rule of thumb is to keep your balances below the 65% mark. So if you have a limit of $1,000, you won’t ever carry a balance that’s more than $650.

Having too much credit available can also hurt your ability to borrow since the more credit you have, the more trouble you can get yourself into. If you’ve got a walletful of cards, canceling credit you’re not using can be a good thing – for both you and your credit score – over the long haul. Careful though. If the card you’re eliminating is one with a long, positive history, you’ll eliminate what could be a very good record of your repayment when you cancel the card. You’d be better off cutting up the card so you aren’t tempted to use it, while you establish a track record (six months or more) before you actually cancel the account.
Credit shopping can also cost you points. Since about 10% of your credit score relates to the number and frequency of new credit enquiries, applying willy nilly for new credit will end up costing you. However, it’s only when a lender checks your score that this registers on your score. Checking your own credit report/score is considered a “soft” inquiry and does not go against your score.
http://ca.finance.yahoo.com/personal-finance/article/yfinance/1623/credit-score-secrets

Bank of Canada raises interest rate to 0.5 per cent

2010-06-01T17:27:00.000-04:00

Bank of Canada raises interest rate to 0.5 per cent

01/06/2010 2:51:23 PM

CTV.ca News Staff
The days of record low interest rates in Canada appear to be coming to an end, as the Bank of Canada announced Tuesday its first interest rate increase in three years.

The central bank hiked its overnight lending rate from 0.25 per cent to 0.5 per cent, an increase that was quickly matched by major banks.

BNN's Michael Kane told CTV's Canada AM that GDP numbers released Monday were likely "the final nail in the coffin for record low interest rates."

Those figures showed the country's gross domestic product expanded by a whopping annual rate of 6.1 per cent in the first three months of this year -- the largest quarterly increase in more than a decade.

Indeed, the statement from the Bank of Canada suggested those results figured prominently in its decision.

"Activity in Canada is unfolding largely as expected. The economy grew by a robust 6.1 per cent in the first quarter, led by housing and consumer spending. Employment growth has resumed," the statement read.

"...In this context, the Bank has decided to raise the target for the overnight rate to 1/2 per cent and to re-establish the normal functioning of the overnight market."

The bank's optimism was tempered by worries about "spillover" from the European debt crisis -- which, it noted, has so far been limited -- and said there remains "considerable uncertainty" about an "increasingly uneven" global recovery.

The Bank of Canada's rate hike is the first among the Group of Seven wealthy nations since the global recession began two years ago.

Prime lending rates, which banks extend to their best customers, quickly followed the Bank of Canada increase.

The TD Bank was the first to announce a quarter-point hike in its prime lending rate to 2.5 per cent, effective Wednesday. The Royal has followed suit and all the other major banks are expected to announce the same increase to their primes, which influence variable rate mortgages and lines of credit.

Short-term, variable mortgage rates will also likely rise, but longer-term fixed mortgage rates -- which are more influenced by the bond market -- are expected to remain unchanged for now.

The rate hikes may not stop here. Many expect further tightening, with some predicting the overnight lending rate could rise as high as 1.5 per cent by the end of the year. The central bank tried to keep such expectations in check in its statement.

"Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments," it said.

Ontario's housing market continues to sizzle:RBC

2010-05-27T08:44:00.001-04:00

Ontario's housing market continues to sizzle: RBC Economics
TORONTO, May 25 /CNW/ - Ontario's hot housing market is showing few signs of letting up, causing housing affordability measures and property values to reach record highs in many parts of the province during the first quarter of 2010, according to the latest housing report released today by RBC Economics Research.
"Despite an increased supply of homes on the market, prices continue to rise which has undermined affordability," said Robert Hogue, senior economist, RBC. "While still well below peak levels, most of the housing affordability measures now stand above their long-term average, suggesting that more and more buyers are being priced out of the Ontario market."
The report found that housing activity in Ontario remained in top gear in the early part of the year. The RBC Housing Affordability measure for Ontario, which captures the province's proportion of pre-tax household income needed to service the costs of owning a home, rose across all four housing classes in the first quarter of 2010.
Affordability of the detached bungalow benchmark edged up to 39.6 per cent (up 0.4 of a percentage point over the last quarter), the standard townhouse to 32.7 per cent (up 0.4 of a percentage point), the standard condo to 27.8 per cent (up 0.4 of a percentage point) and the standard two-storey home to 45.4 per cent (rising 0.2 of a percentage point).
With the clock ticking toward the implementation of the HST on July 1, 2010, which will increase the transaction costs associated with a home purchase, both the demand for and supply of housing units in the province are likely being boosted by the rush of buyers and sellers to beat the tax.
The Toronto market reached new heights as strong demand catapulted sales of existing homes and property values to record highs in late 2009 and the early part of 2010. Affordability generally continued to weaken in Toronto in the first quarter, with RBC's measures creeping up between 0.3 and 0.6 percentage points for three of the four housing categories (condominiums were the only exception).
"While previously undecided sellers finally joined the fray in recent months, they continue to be outnumbered by buyers with bidding wars and quick sales still common," added Hogue. "All Toronto housing affordability measures now exceed their long-term average, suggesting that the market's dizzying flight could soon run into some turbulence."
The Ottawa-area market continued to chart a record-breaking path in the first few months of 2010, driven higher by motivated buyers. This strong demand added upward pressure on pricing, accelerating the pace of increases relative to the subdued gains recorded during the second half of 2009, although more homes were put up for sale. The higher prices eroded affordability in the area in the first quarter, with the RBC measures rising between 0.3 and 1.0 percentage points, reversing most of the surprising improvement in the fourth quarter.
"Although demand momentum is likely to remain brisk in the very near term, the historically-elevated costs of homeownership in the Ottawa area could well become a factor deterring buyers later this year," noted Hogue.
RBC's Housing Affordability measure for a detached bungalow in Canada's largest cities is as follows: Vancouver 73.4 per cent (up 4.8 percentage points over the last quarter), Toronto 49.1 per cent (up 0.4 of a percentage point), Ottawa 40.3 per cent (up 0.3 of a percentage point), Montreal 39.7 per cent (up 0.9 of a percentage point), Calgary 36.5 per cent (down 0.3 of a percentage point) and Edmonton 32.0 (down 0.5 of a percentage point).
The report also looked at mortgage carrying costs relative to incomes for a broader sampling of cities across the country, including Toronto and Ottawa. For these cities, RBC has used a narrower measure of housing affordability that only takes mortgage payments relative to income into account.
The RBC Housing Affordability measure, which has been compiled since 1985, is based on the costs of owning a detached bungalow, a reasonable property benchmark for the housing market. Alternative housing types are also presented including a standard two-storey home, a standard townhouse and a standard condominium. The higher the reading, the more costly it is to afford a home. For example, an affordability reading of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household's monthly pre-tax income.
Highlights from across Canada:

- British Columbia: Homeownership became even more expensive in B.C.,
as strong home price momentum continued in the first quarter. Housing
affordability measures have now returned close to the all-time highs
reached in early-2008. This trend represents a risk that could weigh
heavily on the province's housing market in the near term.

- Alberta: Affordability measures eased in the first quarter, as
Alberta was the only province to show a decline in the costs
associated with owning a home. Housing price increases in the
province were fairly modest over the past year, which has kept home
ownership relatively affordable. RBC affordability measures are at or
below the long-term averages.

- Saskatchewan: Housing prices picked up in the province in early 2010,
causing home affordability measures to rise significantly in the
first quarter. This is a change from previous quarters, which showed
an improvement in affordability. Despite this increase, affordability
measures still remain well below the all-time peak levels reached in
early-2008.

- Manitoba: Prices for most housing types surged ahead in the first
quarter of 2010, pushing affordability measures above the long-term
average for the province despite a slower pace of resale activity.
Affordability in the province has reached a point where an additional
decline in home affordability may temper housing demand.

- Quebec: Quebec's housing market rally continued in the first quarter
of the year, with record-levels of buying activity and rising
property values. This escalation in home prices, while more moderate
than in the previous two quarters, weakened affordability in the
province. All affordability measures now exceed their long-term
average, which may soon slow housing demand in the province.

- Atlantic Canada: Resale activity on the East Coast remained solid,
with an increase in sales met by a rise in the supply of available
homes. These broadly balanced conditions have limited the pace of
price increases in the region. Overall housing affordability in
Atlantic Canada continues to be among the most attractive in the
country, with measures still below long-term averages.

The full RBC Housing Affordability report is available online, at www.rbc.com/economics/market/pdf/house.pdf.

The Latest Read on Interest Rates

2010-05-14T08:23:00.000-04:00

Globe and Mail Wednesday, May 12, 2010
The latest read on interest rates
Andrew Willis
Bond traders are still expecting the Bank of Canada to raise short term interest rates on June 1, but the move is no longer the sure bet it was a few short weeks ago.
Credit markets are currently putting a 84 per cent probability on a 25 basis point hike in overnight rates after the central bank meeting in June, according to a report that TD Waterhouse published late Tuesday on BAX sentiment, a reflection of what the futures market is predicting. BAX sentiment put a 100 per cent probability on a hike prior to the most recent Greek credit crisis, and European financial bailout.
BAX sentiment puts a 94 per cent probability on another 25 basis point rise in rates at the July 20 Bank of Canada meeting

Mortgage Hunters Get Temporay Reprieve

2010-05-12T10:06:00.001-04:00

Mortgage hunters get temporary reprieve
11/05/2010 5:11:14 PM

The Greek debt crisis has led to an unexpected - but likely brief - dip in fixed mortgage rates at most Canadian banks.
The rate for the popular five-year fixed closed mortgage is down 0.15 percentage points to 6.10 per cent at all of the big five banks Tuesday.
That's the posted rate. Most banks also dropped the benchmark rate for their discounted five-year mortgage by a similar amount to 4.70 per cent. Some online and smaller lenders charge less.
That's a welcome change for mortgage shoppers who've seen fixed rates rise by more than a full percentage point in the last month.
The latest drop started last Friday, when TD Canada Trust and Bank of Montreal both announced similar trims. The other banks followed Monday, with their cuts effective Tuesday.Longer-term fixed mortgage rates typically follow longer-term bond yields. The Greek debt crisis put a stop to rising bond yields as traders moved money out of risky assets.
"Both treasuries and Government of Canada bonds have recently benefited from a flight to quality on the back of renewed sovereign debt concerns in Greece and other parts of Europe," CIBC World Markets noted in a recent commentary.
Many mortgage experts say the pause is just temporary and note that bond yields are already edging higher as the EU's bailout package eases Greek default concerns.
Variable mortgage rates are tied to the Bank of Canada's overnight lending rate. After recent healthy signals coming from various sectors of the Canadian economy, including last Friday's unexpectedly strong jobs report, the markets now expect the central bank to bump up its key rate on June 1. That rate has been at a rock-bottom 0.25 per cent for more than a year.

Possible Rise In Mortgage Rates Pitting Couples Against One Another

2010-04-27T10:37:00.001-04:00

Possible rise in mortgage rates pitting couples against one another
Steve Ladurantaye and Carly Weeks From Saturday's Globe and Mail
When Rae Whitton started house shopping with Dan Madge last year, she agreed to a variable mortgage rate after their broker explained rates were likely to remain low until spring, at which point they could lock into a fixed rate.
But when February came and signs indicated the economy was getting stronger, anxiety kicked in. Ms. Whitton e-mailed Mr. Madge newspaper articles warning of possible mortgage rate hikes, and worried about worst-case scenarios, remembering how her parents paid up to 18 per cent on their mortgage.
“I was just freaking out. Not that I think it will ever be like that again, but what if this happens? What would we do?” she said. “You always think of the worst thing.”
With mortgage rates set to climb in coming months from historic lows, the emotionally charged decision to lock into a predictable fixed-rate mortgage or gamble on a variable rate that could change at any time is pitting couples against each other as they try to plan their future.
Call it the Battle of the Sexes: the Housing Boom Edition.
Ms. Whitton was terrified that rocketing rates would price them out of their new Toronto home and pushed for the certainty of a fixed-rate. Mr. Madge wanted to take a chance that rates would be lower.
“I didn’t like the uncertainty of it,” Ms. Whitton said. “I like knowing how much our payments are going to be every month.”
The conflict is based on fear of the unknown, and the fear of losing a home if circumstances spiral out of control.
A study commissioned by the Bank of Montreal indicated that women were more likely to be overwhelmed when buying a home than men, at 44 per cent versus 28 per cent. Men were also more likely – 39 per cent vs. 26 per cent – to take interest rates into account when deciding whether to buy.
“When it comes to a risky situation which usually involves some kind of uncertainty, women tend to perceive negative consequences to be more likely and perceive negative consequences to be more severe,” says Li-Jun Ji, a psychology professor at Queen’s University in Kingston, Ont., who studies how decisions are made.
After debating for several months, Ms. Whitton and Mr. Madge went to the bank a few weeks ago and locked into a three-year fixed-rate mortgage. And while Ms. Whitton said she knows more of their payment is now going to interest, she’s not going to let it get to her.
“I just try not to look at the statements,” she said.
Variable rate mortgages can be had for about 1.75 per cent right now, while a 5-year fixed-rated can be had for about 4.5 per cent. A homeowner can save thousands by choosing variable, but their monthly payments will get higher every time interest rates increase.
With the Bank of Canada expected to move its key lending rate higher in June, the variable rate will increase as well. And if history is any indication, rates go up a lot faster than they go down. From 1980 to mid-1981, rates gained 67 per cent, making many mortgages unaffordable.
There’s no sense that will happen this time, but even small increases can mess up a tight budget.
For example, a five-year variable rate mortgage at 2.25 per cent on $300,000 would carry a monthly payment of about $1,300, assuming a 25-year amortization period. A move to 5 per cent would boost the payment to $1,750.
It’s that kind of uncertainty women may be hardwired to avoid, said Lise Vesterlund, a professor at the University of Pittsburgh who has studied the role gender plays in financial decisions.
“My own work has shown that women are less confident about their decisions,” she said. “There are evolutionary reasons for that, and you can also argue there are circumstantial reasons as well.”
She said men are natural risk-takers - after all, there was a time when they could reproduce indiscriminately and not worry about consequences, while the women had to be prudent and think about the future.
That sense of risk is still fostered by parents today, she said, with the majority of boys playing games that have measurable results while girls are offered activities that have no discernible conclusion.
“From an evolutionary standpoint, men have always had more to gain by taking gambles,” she said. “Women tend not to get the same kick out of taking risks – part of the reason they like to lock in to something is they want to have more information about what their prospects will be like in the future.”
http://www.theglobeandmail.com/report-on-business/possible-rise-in-mortgage-rates-pitting-couples-against-one-another/article1545411/

Highlights of Benjamin Tal Weekly Market Insight

2010-04-27T10:13:00.001-04:00

The Bank of Canada is very clear about its intention to raise rates as early as June. The key question is not
about timing but rather of magnitude. At this point, it appears that the market is in a process of pricing in a
significant rate increase by the Bank, with many observers suggesting that the Bank rate will reach 4% or 5%
by the end of 2011. It appears that the Bank of Canada itself is uncomfortable with this recent move by the
market to discount an aggressive tightening program. The Bank knows very well that this recovery is going to
be extremely non-linear with an array of factors limiting growth and inflation in the second half of the year and
into 2011. These factors include a strong dollar, the end of fiscal stimulus, a significant softening in real estate
activity following this spring, a slower pace of economic activity in the US in the second half, and the impact of
higher interest rates on over-extended consumers. In fact, our consumer capability index is at a 15-year low
and we estimate that consumers are now 40% more sensitive to higher rates compared to the last times the
Bank of Canada raised interest rates. This environment is consistent with a gradual approach towards removing
liquidity from the market with the Bank rate likely to rise to only 2.5%-3.0% by the end of 2011.

What does the coming rate hikes mean for the stock market? The common thinking is that higher rates are
negative for stocks, but history does not support this claim. Looking at data going back to the 1950s we found
that in the six months before the Bank started to lean into the wind, Canadian stocks historically provided, on
average, a 22% annualized return (dividends plus capital gains) measured by the total return index for the TSX
Composite. In the six months after a rate trough, Canadian stocks in comparison returned 8.3% in annualized
terms. That’s less, on average, than in the pre-hike period, but within a per cent of the TSX’s longer term
performance. Total returns were significantly negative in only one of the thirteen half-year periods after a rate
trough. Stocks outshone bonds, the main competing asset class, about 70% of the time in the half year before
the trough in rates and over 85% of the time in the half year after.

Along with the expected limited monetary tightening, this historical observation suggests that the coming rate
hikes may well be an annoyance but are unlikely to deliver a knockout blow to equity markets.
Benjamin Tal
CIBC Senior Economist

Mortgage Rates On the Rise Again

2010-04-27T10:12:00.000-04:00

Mortgage rates on the rise again
Garry Marr, Financial Post
A new survey says more than four out of five home buyers feel comfortable with their debt, but another hike in interest rates might get Canadians squirming next time they're polled.
Canada and Mortgage and Housing Corp. surveyed 2,503 mortgage consumers between Feb. 11 and Feb. 28 and found 81% were comfortable with their current debt levels. However, the survey was done before three successive hikes in interest rates that have pushed the five-year, fixed-rate, closed mortgage from 5.25% to 6.25% in less than a month.
"Rates were low throughout most of the time [of the survey]," said Pierre Serré, CMHC vice-president of insurance products and business development, adding it was unclear whether the 81% figure might fall because of the hike.
Based on an average Canadian home-sale price of $340,920 in March and a 5% down payment, the minimum allowed, mortgage payments for a five-year, fixed-rate product have climbed almost 10%.
As it has throughout this rate-hike cycle, Royal Bank of Canada got the ball rolling Monday by adding another 15 basis points to its fixed-rate product. Toronto-Dominion Bank was next, with most of banks expected to follow shortly.
The hike means that a typical Canadian homeowner with a 25-year amortization with that $340,920 home and 5% down is now paying $2,120.54 per month in mortgage costs, up sharply from the $1,930.03 it was costing them before the latest hike in rates. The dramatic shift is likely once again to push people back toward a variable product linked to prime.
The same mortgage based on the current prime rate of 2.25% would cost only $1,410.84 to carry. Still, many economists predict the Bank of Canada will begin raising its rates as early as June, lifting the prime rate.
The survey also found homebuyers are relatively cautious when taking out their mortgages. Only 20% of them took out mortgages based on amortizations of longer than 25 years. CMHC also said 68% of consumers plan to pay off their mortgage sooner than current amortizations.
"In talking to some lenders I've heard of lots of people who get extended amortizations but accelerate their payments," Mr. Serré said.
The survey came out the same day as new statistics from Re/Max which show the high-end of the housing market continues to soar. Re/Max surveyed 13 markets in the first quarter and found records for high-end homes sales in nine of them.
Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada didn't think the latest hike in rates would do anything to slow the market. "It's still minor. Interest rates overall, as far as I'm concerned, are still at historic lows," he said. "Are they climbing up? Yes. It's time to consider locking in. Are they going to skyrocket? I don't think so."
Bernice Dunsby, Royal Bank's director of home equity, said the one percentage point rise in rates was not that large a leap on a historical basis.
"It has been widely anticipated that rates would be on the rise. The cost of funds just continues to raise," said Ms. Dunsby. "The thing our clients are looking for is options that provide additional rate protection."
She said customers have been opting for mortgage products that divide their debt in half, some of it going long and some of it going short. But the percentage of customers just going short continues to slide with variable rate products becoming less popular at Royal Bank.
Read more: http://www.financialpost.com/news-sectors/story.html?id=2952380#ixzz0mIZFfOdu

RBC raises mortgage rates Again

2010-04-26T14:00:00.000-04:00

RBC hikes mortgage rates again
Tavia Grant and Steve Ladurantaye
Globe and Mail Update Published on Monday, Apr. 26, 2010 12:14PM EDT Last updated on Monday, Apr. 26, 2010 12:34PM EDT
Royal Bank of Canada , the country’s largest bank, is leading the way on another round of mortgage-rate hikes, boosting borrowing costs Monday for the third time in recent weeks.
The rate on a five-year closed mortgage is now 6.25 per cent, an increase from the previous rate of 6.10 per cent. A one-year closed rate will, as of tomorrow, be priced at 3.80 per cent. All rates were increased by 15 basis points.
It’s the third move in a month as Canadian banks prepare for an era of rising interest rates . The Bank of Canada last week signalled that its key lending rate will rise, as early as June, as the economy recovers.
Banks can adjust the rate they charge, so customers could still pay a lower rate than what’s posted. Other banks tend to follow with rate hikes once one does, and the actual rate a customer pays depends on a variety of factors, including their financial situation, whether they use a mortgage broker, and how good they are at negotiating.
The hike comes the same day as Canada Mortgage and Housing Corp. released a study showing that 81 per cent of recent home buyers feel comfortable with their current level of debt.
Two thirds of the 2,500 people surveyed said there is a chance they will pay off their mortgage sooner than required, while 27 per cent said they have increased regular payments to eliminate their mortgage sooner.

If you were thinking of getting pre approved beter do it now!

2010-04-13T14:00:00.001-04:00

if you were thinking of getting pre approved for a mortgage now is a could time to do it. With RBC raising rates today most lender will follow suit over the next couple of days.

RBC raises mortgage rate

2010-04-13T13:52:00.000-04:00

Tara Perkins
Globe and Mail Update Published on Tuesday, Apr. 13, 2010 12:59PM EDT Last updated on Tuesday, Apr. 13, 2010 1:19PM EDT
Royal Bank of Canada (RY-T59.39-0.18-0.30%) , the country's largest bank, has raised mortgage rates again.
The move, which will result in a 0.25 percentage point increase in the cost of a number of fixed-rate mortgage products that the bank offers, is likely to spark another round of rate hikes among the country's mortgage lenders.
RBC kicked off one series of hikes a little more than two weeks ago, and most experts said that was the start of a steady rise in mortgage rates.
At that time the cost of a five-year closed rate mortgage from RBC and many of its competitors rose by 0.60 percentage points to 5.85 per cent.
More Discussions in our Globe Investor forums

Is this a good time to lock in or refinance your mortgage?
Started by: Roma Luciw
41 replies
Last post by chris_bullard
4/4/2010 5:22:08 PM
Tuesday's increase will raise the rate for a five-year mortgage from RBC further, to 6.10 per cent, effective Wednesday.
Royal Bank's Canadian mortgage portfolio amounted to about $148.5-billion in the latest quarter.
The banks say they are raising rates because their cost of funds is increasing.

VAriable Rate Mortgages

2010-04-08T10:06:00.001-04:00

Variable mortgages (almost) always win
Whether They're Taking On New Mortgages Or Renewing Ones They've Held For Years, Homeowners End Up Asking Themselves The Same Question: Should They Lock In Their Mortgage Or Should They Let It Float With A Variable Rate. Here, Toronto-Based Wealth Manager Scott Tomenson Makes The Case For Variable.
http://www.financialpost.com/magazine/story.html?id=2766742
ARE VARIABLE MORTGAGES AS GOOD AS THEY LOOK?
Q: My fiancé and I have just bought our first home and we are going in circles about what is the best mortgage for us before we close. We currently have a locked-in fixed rate with a bank of 3.98%, which we prefer to the uncertainty of taking a variable mortgage. But would we be better off with a variable-rate mortgage, especially if we saved money during periods when rate are low and use that to make payments on principal? Will that offset costs when our payments are higher than our current fixed rate? Getting Dizzy, Ontario
A: Historically, as far as interest rates are concerned, it is better to float your mortgage interest rate (i. e., choose a variable rate mortgage). This is a result of the "yield curve." The "normal" yield curve is positively sloped, with interest rates lower for short-term maturities (one to two years) and higher for longer-term maturities (five to 30 years). When the economy strengthens, the Bank of Canada will raise short-term interest rates (they only have control over short-term rates) and the base for variable-rate mortgages (usually the prime rate) is moved higher. This action signals a period of "tightening" of monetary policy to cool the economy and reduces inflationary pressures.
The vehicles that determine longer-term interest rates -- bonds -- tend to move according to inflationary expectations: If bond investors anticipate inflation (because of economic growth), they demand higher returns (interest rates) as protection from inflation. When the Bank of Canada is perceived as "fighting" inflation by raising short term interest rates, long-term rates have a tendency, in most cases, to remain stable or improve, because long-term bond investors are content that inflation will not grow.
In essence, while short-term interest rates may go up, they do so only until the Bank of Canada has slowed the economy enough to curb anticipated inflation. Then, as economic growth slows, the bank starts to lower them. The yield curve will flatten (with higher short-term interest rates) for a time, but when the economy slows, short-term rates will go back down and the yield curve returns to its "normal" positive slope.
Over this time, variable-rate mortgages will move up to being approximately equal to locked-in five-or 10-year rates, but that's followed by a period when they return to lower levels. More often than not, over this time, it is less costly to have held the variable rate debt. Exceptions to this situation would be times of hyper-inflation (like in the 1980s) when short-term interest rates went to extreme levels.
If you had a variable mortgage at prime minus over the past few years, as I did, it's been a great ride. I kept my payments level and the low interest rates allowed to me to pay off massive amounts of principal. True, the economy is strengthening and short term rates will go up a bit over the next couple of years, but I don't think it will be dramatic. The case for variable-rate mortgages remains strong.

Mortgage Changes in April

2010-04-07T11:59:00.001-04:00

There are new mortgage lending rules that are taking effect April 9th and 19th. Here is an overview of the new policies:
Purchasing a Home
Any mortgage with less than 20% down payment and subject to mortgage insurance will be required to qualify at the 5 yr fixed rate. This is regardless if you select a variable or fixed rate for a shorter term or lower interest rate. The purpose of this change is to make sure that homebuyers will be able to afford their mortgage payments if interest rates rise in the future.
Home Refinancing
The amount that a home owner can withdraw from the value of their home is changing from 95% to 90%. For example, a home with a value of $300,000 the maximum amount will decrease from $285,000 at 95% to $270,000 at 90%
Investment Property(non owner Occupied)
The required down payment will increase from 5% to 20% of the purchase price.
Self Employed and 100% Commissioned Individuals
Under CMHC’s Self Employed No-income Qualifier program, a 10% down payment will be required for purchasing a home which is increasing from 5%. Home refinancing will be capped at 85% loan-to-value down from 90%.
If you have been self employed for less than 3 years or are a 100% commissioned, you can no longer qualify for financing under CMHC’s Self Employed NIQ. You will now be required to verify you income.

Royal, Td Raise Mortage Rates

2010-03-29T14:30:00.000-04:00

Royal, TD raise mortgage rates in sign era of historically low rates ending

29/03/2010 1:27:00 PM

THE CANADIAN PRESS
TORONTO - Two of Canada's biggest banks are increasing some of their residential mortgage rates effective Tuesday in the latest sign that the era of historically low rates could soon come to an end.

The changes affect closed mortgages with terms of three, four and five years at RBC Royal Bank (TSX:RY) and TD Canada Trust (TSX:TD). Rates for mid-term mortgages like these tend to reflect the banks' borrowing costs on bond markets.

The biggest increase announced Monday affects five-year mortgages. Both banks are hiking their posted rate by six-tenths of a per cent to 5.85 per cent from 5.25 per cent.

A homeowner taking on a mortgage of $250,000 at the new rate of 5.85 per cent over a 25-year amortization period would pay $1,577 per month. Prior to Tuesday's hike, that mortgage would have cost $1489 a month, or $88 less.

The Bank of Canada is expected to begin raising lending rates this summer as it moves to fight growing inflationary pressures in the economy. The bank has kept its key overnight rate at a historic low of 0.25 per cent for more than a year to help stimulate the economy.

CIBC (TSX:CM) chief economist Avery Shenfeld said the central bank begins to step on the brake when it sees overheating in the economy, and economic growth in the first quarter has outperformed the central bank's forecast.

CIBC has lifted its own growth outlook for the first quarter of the year to over five per cent, due to strong indicators of recovery.

"The only reason the market is building in expectations for rate hikes is because it's seeing the economy as better able to withstand them," he said.

"Once the Bank of Canada starts pushing up short-term interests rates, and even in anticipation of that, it tends to spill out across the rest of the curve."

Mortgage rates hikes are a trend consumers should expect to continue, Shenfeld added.

He predicts the Bank of Canada will gradually raise key lending rates this summer, resulting in an increase of 0.75 per cent to one per cent by the end of the third quarter.

That would raise the average prime rate at the banks from 2.25 per cent to three per cent, which could tack on three-quarters of a per cent to the rates of homeowners with floating mortgage rates, Shenfeld said.

"Consumers are forewarned that when they look at borrowing today they have to factor in potentially higher costs," he said.

"Consumers have to be aware in taking on debt at historically low interest rates that down the road they will be higher and have to leave room for their ability to pay those higher rates."

When the Bank of Canada lifts rates, part of its intention is to take the fire out of the most interest sensitive segments of the economy, including the housing market, which has seen a particularly strong recovery, Shenfeld said.

The hot housing market is being driven, in part, by an influx of consumers willing to pay a premium for home ownership before interest rates rise.

Shenfeld said the rate increase could help dampen the house price inflation seen over the past several months.

And he added that the outperformance of the economy in the first half of the year will be countered by a slowdown in the second half.

"Not only do we expect weaker growth in the key US export market by then, but Canadian consumers may also be more temperate in the wake of a debt financed binge."

Interest Rates maybe on the rise

2010-03-29T11:06:00.001-04:00

RBC, TD hike mortgage rates
http://www.cbc.ca/money/story/2010/03/29/mortgage-rates-up.html
Other banks expected to follow suit
Last Updated: Monday, March 29, 2010 | 10:24 AM ET Comments44Recommend43
CBC News
Royal Bank and TD Canada Trust announced Monday they are increasing several mortgage rates by up to 6/10ths of a percentage point.
The biggest jump is attached to the popular five-year fixed closed rate, which moves from 5.25 per cent to 5.85 per cent at both banks. That's the posted rate, which is routinely discounted by the big banks.
RBC's new discounted rate for the five-year term also rises 6/10ths of a percentage point to 4.59 per cent. TD's rises the same amount to 4.55 per cent.
Both banks also raised their three-year and four-year fixed closed rates. The posted three-year rate at Royal Bank climbs one-fifth of a percentage point to 4.35 per cent, while the posted rate at TD jumps 4/10ths of a point to 4.70 per cent.
The posted four-year rate at both banks jumps 4/10ths of a percentage point to 5.34 per cent.
Other banks are expected to follow suit. The new rates, effective Tuesday, represent the first hike in Canadian mortgage rates since last October.
Variable mortgage rates, which rise in tandem with the Bank of Canada's key overnight lending rate, are unchanged. But they are likely to be heading up soon too.
Bank of Canada governor Mark Carney warned last week that inflation was higher than expected. That had some market watchers forecasting that the central bank could move to raise its key lending rate as early as June.
The key rate has been at a rock-bottom 0.25 per cent since April 2009 to help the economy recover.
Fixed-rate mortgage rates tend to move higher when long-term bond yields rise.
A survey released last week by RBC found almost two-thirds of respondents expected the cost of servicing a mortgage to rise this week.

Read more: http://www.cbc.ca/money/story/2010/03/29/mortgage-rates-up.html#ixzz0jZs0hdne

Days of Rock Bottom Interest Rates are Numbered

2010-03-24T10:06:00.000-04:00

Days of rock-bottom interest rates are numbered
http://www.theglobeandmail.com/report-on-business/days-of-rock-bottom-interest-rates-are-numbered/article1506701/
Jeremy Torobin
Ottawa — From Saturday's Globe and Mail Published on Friday, Mar. 19, 2010 10:21PM EDT Last updated on Monday, Mar. 22, 2010 6:16AM EDT
The clock is ticking on Canada's record-low borrowing costs, as inflation continues to move at a faster rate than the central bank had expected.
The hot reading on inflation issued by Statistics Canada Friday is raising expectations that the Bank of Canada could lift interest rates as early as June.
Economists, meanwhile, rushed to boost their growth forecasts as the country's economic rebound gathers steam.
The inflation figures, along with a report that showed retailers are benefiting from higher prices, pushed the Canadian dollar well past 99 U.S. cents Friday morning, before it fell back to close at 98.39 U.S. cents.
Consumer prices climbed 1.6 per cent in February, a slower pace than the 1.9 per cent in the previous month, according to Statscan. But the core rate – which strips out volatile items such as fuel – rose to 2.1 per cent from 2 per cent.
The Bank of Canada is guided by the core rate. Policy makers hadn't expected the core rate to reach the central bank's 2-per-cent target until the third quarter of 2011.
That, coupled with an improving economy, means Bank of Canada Governor Mark Carney is likely to boost rock-bottom interest rates sooner rather than later, some economists say.
“We're progressively leaving the recovery phase,” said Yanick Desnoyers, assistant chief economist at National Bank Financial in Montreal. Policy makers “are going to change their tone on the economy in April, and they're going to move in June. The longer they wait, the more aggressive they'll have to be.”
Mounting speculation that the central bank will begin boosting interest rates before the U.S. Federal Reserve moves has helped push the loonie close to parity with the U.S. currency.
Canada is on course to become the first in the Group of Seven – which also includes the United States, Great Britain, France, Germany, Japan and Italy – to raise borrowing costs since the global crisis. The U.S., in contrast, shows no signs of hiking rates any time soon. U.S. consumer prices last month failed to increase for the first time in almost a year, and producer prices dropped.
In Asia, however, inflation is roaring back as growth accelerates. India's central bank surprised markets yesterday with a rate hike, calling a fight against inflation “imperative.” China, which the World Bank suggested this week should do more to keep a lid on a potential bubble in its property market, posted a 16-month high in its consumer price index last month.
Still, many economists said Canada's core inflation numbers were skewed because of hotels in Vancouver that charged exorbitant rates during the Winter Olympics. In one case, a hotel that normally marketed itself as a discount option was charging $1,200 a night for a suite that sleeps six people, a steep markup from the usual maximum of about $280.
But Mr. Desnoyers noted that, assuming the “Olympic effect” temporarily added 0.2 percentage point to core inflation, a reversal of that boost would still leave the rate above the Bank of Canada's 1.6 per cent projection for the first quarter.
“It's going to be very hard to meet the Bank of Canada's projected inflation path with the kind of numbers we've seen recently,” he said.
Retail sales, meanwhile, rose 0.7 per cent in January, Statscan said, largely because of a rush for home-improvement products before the federal government's Home Renovation Tax Credit expired. In volume terms, overall sales were up just 0.1 per cent, which means the gains were driven by higher prices.
Mr. Carney pledged last April to keep the benchmark rate at 0.25 per cent through the middle of this year, or longer depending on the inflation outlook. He will update his inflation and growth forecasts during the week of April 20.
Increasingly, economists say if he doesn't start tightening in June, then he'll likely hike rates the following month.
Avery Shenfeld, chief economist at the Canadian Imperial Bank of Commerce, said Mr. Carney may be getting an “itchy trigger finger” but will likely wait until July, having said in a March 11 speech that borrowing costs staying where they are until the end of June would be “appropriate.”
Nonetheless, Mr. Shenfeld said CIBC is now raising its first-quarter growth forecast to “roughly 5 per cent” from 4.1 per cent. Bank of Montreal deputy chief economist Douglas Porter said Friday that his firm has lifted its forecast to 4.7 per cent from 3.7 per cent, “and that may not be the final word.” If they're right, it would be the second straight three-month period with growth at or close to 5 per cent. That compares with the central bank's estimate of 3.3 per cent for the final three months of 2009, and its prediction of 3.5 per cent for January through March.
There is an outside chance Mr. Carney could use a speech in Ottawa on March 24 to lay the groundwork for a rate hike on April 20, but virtually all analysts say the earliest he could possibly tighten would be at a June 1 decision, and most maintain that he'll wait until his next opportunity on July 20.
Most economists say Canada's central bank will lift rates in increments of no more than 0.25 of a percentage point and may stop after a few moves to re-evaluate. That's how the Reserve Bank of Australia has proceeded since last fall, when it became the first major central bank to tighten as the dust started to settle on the crisis.
Scotia Capital's Derek Holt, who has said for weeks that Mr. Carney could start raising rates as early as next month, predicts “non-emergency, but low” rates for years.
With a report from Bloomberg News

Changes irk Real Estate Agents

2010-03-24T09:53:00.000-04:00

Changes irk real estate agents

By JENNY YUEN, Toronto Sun

Last Updated: March 23, 2010 12:19am

TORONTO -- New changes to the Multiple Listing Service, a Canadian Real Estate Association system that allows home sellers to widely advertise their properties online, will cause great headaches to both buyers and sellers, said a Toronto real estate client co-ordinator.

The changes, which were adopted Monday by representatives of 300 real estate boards across Canada, make it possible for homeowners to pay a one-time fee to list a property on the MLS and have prospective buyers contact them directly by phone ‹ potentially saving money by cutting out the middleman.

"You can advertise on MLS but you still have to show the house and write the offer and do all that stuff," Neil Harris, previously a real estate agent with 10 years' experience in Mexico and Toronto, said Monday night.

"The lawyers will like it because they'll have a lot of lawsuits. People will learn very quickly that private sales is not the road to go." Harris used an example of a private seller unknowingly telling a buyer that they could build a second storey to the home when city bylaws wouldn't allow such construction.

"They don't know the legalities," Harris said.

Thomas Cook, a Re/MAX agent with 30 years of experience, said that the amendments are insulting to to agents.

"Imagine, you want to sell your car so you go to the local car dealer and say you want to sell your car on your lot and put a for sale sign on it and not pay anything for it. What do you think they'll say? No," he said.

"That's exactly what the Competition Bureau is saying here." North America has one of the smoothest real estate systems in the world because of MLS, Cook said.

"You go to Europe and there aren't any countries that have an MLS system and it's extremely chaotic," he said.

Housing Boom to Continue

2010-03-24T09:48:00.000-04:00

Housing sales boom to continue: Scotiabank

23/03/2010 1:59:20 PM

CBC News
The prospect of rising interest rates will keep Canada's housing boom going this spring, a Scotiabank report predicted Tuesday.

The report predicted most regions of the country will remain sellers' markets for the first half of the year.

"I think you're going to have a very active spring market, probably some cooling off in the second half of the year," Adrienne Warren, the Scotiabank economist who wrote the report, said in a presentation Tuesday.

"We're looking at once in a lifetime interest rates that people are taking advantage of - but certainly confidence is coming back, the job markets are stabilizing," she said.

Scotiabank predicted 510,000 home sales this year, up 10 per cent from 2009, but just shy of the 2007 record. It expected the average price will increase by about eight per cent to a record $345,000.

Housing starts, Scotiabank expected, will reach 190,000, up from 149,000 last year.

Warren said the spring rush will also be helped by an influx of buyers hoping to avoid tighter lending rules for mortgages and the introduction of the harmonized sales tax in Ontario and B.C.

Economists expect the Bank of Canada to raise interest rates by between half a percentage point and a full point over several months beginning in late spring or early summer to fight inflationary pressures in the economy.

With files from The Canadian Press

Home Sales Slow in Feb

2010-03-18T20:06:00.001-04:00

Home sales slow in February

15/03/2010 11:05:52 AM Sympatico

The number of listings sold through the Multiple Listing Service Systems (MLS) dropped slightly in February, signaling a more balanced national resale housing market, says the CREA.

The Canadian Real Estate Association's (CREA) new statistics show a surge in home listings but a drop in sales of 1.5 per cent between January and February. Most of the buying activity centered in Toronto, while Vancouver's sales dropped the most sharply.

The seasonally-adjusted number of new listings in February rose 2.4 per cent over the previous month to 73,849 units - the highest number since October 2008.

"Activity is expected to remain elevated in Ontario and British Columbia over the first half of the year, with buyers looking to beat the introduction of the HST and expected interest rate hikes," said CREA president Dale Ripplinger, in a release.

The Harmonized Sales Tax, a 13 per cent sales tax, comes into effect in July in Ontario.

According to the CREA report, the average price of a home was $335,655 in February - up 18.2 per cent year-over-year.

According to new data released by the Royal Bank of Canada Monday, home affordability detoriorated considerably at the end of 2009, as home prices rose.

"The effect of higher prices was largely mitigated by a small decline in mortgage rates and continued gains in household income," Robert Hogue, a senior economist with RBC, said in a release.

The report predicts that the cost of home ownership will continue to increase due to a high demand for homes and a limited number of homes on the market.

"The anticipated and gradual rise in interest rates indicates that affordability is likely to gradually get worse as rates return to normal levels," said Hogue.

Mortgage Insurance Rule Changes

2010-02-22T10:32:00.001-05:00

MORTGAGE INSURANCE RULES ANNOUNCEMENT

Federal Finance Minister Jim Flaherty announced prudent changes to mortgage insurance rules intended to come into force on April 19, 2010. The changes are as follows

All borrowers must meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term;
The maximum amount one can withdraw in refinancing their mortgage will be reduced to 90% from the current 95% of the value of one's home;
Non-owner occupied properties will require a minimum down payment of 20%. Currently you can purchase an investment property with 5% down payment.

There were no changes to down payment requirements or length of amortizations for owner-occupied residences.

Flaherty to toughen mortgage rules

2010-02-15T23:55:00.000-05:00

Flaherty to toughen mortgage rules

Last Updated: Monday, February 15, 2010 | 9:45 PM ET Comments144 Recommend65

CBC News

Finance Minister Jim Flaherty will announce new rules Tuesday aimed at preventing homebuyers from getting into financial difficulty when mortgage rates rise, CBC News has confirmed.

Finance Minister Jim Flaherty is set to impose new rules aimed at preventing homebuyers from getting in over their heads with mortgage debt. (Fred Chartrand/Canadian Press)Sources say the measures will discourage reckless real estate speculation, such as borrowing heavily for an investment property that is not the investor's primary residence. Flaherty is also set to deter households from taking on more mortgage debt than they can afford to repay when interest rates rise, as they are expected to do later this year.

The finance minister is also expected to discourage people from raising cash by refinancing their homes with larger mortgages — again because they may not be able to make the payments at higher interest rates.

The Canadian Press reports that Flaherty will implement a debt affordability or income test that applicants must pass to qualify for mortgages insured by the Canada Mortgage and Housing Corp.

There has been speculation that Flaherty might raise the minimum down payment on a home — now five per cent — and lower the maximum amortization period for mortgages — currently 35 years.

Sources have told CBC News that those measures are not part of Tuesday's announcement. However, they could be considered in the future.

Economists and policy-makers have expressed concern that very low interest rates have encouraged Canadians to take on too much debt.

In the case of home mortgages, there are fears that rising rates would force people to walk away from properties they could no longer afford — as happened in parts of the U.S. in 2007 and 2008 — flooding the market with homes for sale and causing prices to collapse.

Finance Minister makeing changes to Mortgages

2010-02-15T23:51:00.000-05:00

Tara Perkins and Jeremy Torobin

Toronto and Ottawa — From Tuesday's Globe and Mail Published on Monday, Feb. 15, 2010 8:50PM EST Last updated on Monday, Feb. 15, 2010 10:43PM EST

Finance Minister Jim Flaherty is tightening up the country's mortgage rules in a bid to stop borrowers from taking on potentially crippling debt loads.

Mr. Flaherty will announce in Ottawa Tuesday morning that he is imposing new rules that will dictate how banks approve mortgages, and that certain borrowers will have to come up with larger down payments.

While he is expected to stress that the government does not believe there is a housing bubble right now, his fear is that low interest rates are enticing some consumers to get in over their heads.

Specifically, Ottawa has been concerned that some borrowers who are taking out variable-rate mortgages will struggle with their monthly payments when interest rates rise.

That could damage the economic recovery if consumer spending suffers as homeowners dedicate a greater proportion of their income to mortgages.

Tuesday's announcement comes after informal consultations with mortgage market players, banks, and other experts. Late last year, CEOs of Canada's major banks privately cautioned Ottawa that they had concerns about the level of mortgage debt some consumers are taking on.

The changes to be announced Tuesday will ensure that banks add an extra level of assurance into their evaluations when they are weighing whether to approve a mortgage. The goal is to ensure that the bank is comfortable that the borrower will be able to afford the monthly payments when interest rates rise.

A debate has been brewing recently about whether Canada is experiencing a bubble in housing, one of many asset markets around the world that economists are keeping an eye on as low interest rates and massive stimulus funds create hot pockets.

China last week took steps to rein in lending for the second time in a month, ordering banks to increase their reserves in a bid to slow the country's property market and soaring global prices for commodities, which have been buoyed by China's liberal lending policies.

The government does not believe that there is a bubble in Canada, but will act to stave off future trouble, sources say.

Many experts have cautioned the government to tread carefully and avoid taking too much steam out of the housing market, a key driver of the economy's turnaround.

As a result, the government began looking to change the rules that govern whether a bank approves a mortgage borrower.

Ottawa deliberately stoked the housing market during the crisis. It bought more than $65-billion worth of mortgages from lenders, giving them a cheap source of funds and allowing them to lend more.

Like Mr. Flaherty, Bank of Canada Governor Mark Carney has expressed doubt as to whether the months-long buying spree in housing will form a bubble.

The central-bank chief has warned since December that some Canadians may be taking on more debt than they will be able to handle when interest rates rise – which could be as early as July.

But he and other Bank of Canada officials have also suggested that a regulatory approach to cooling the housing market would make more sense.

Bank adviser David Wolf, speaking on behalf of deputy governor Timothy Lane last month, said that because the central bank's mandate is to set rates to keep inflation on target throughout the economy, any tinkering in a specific sector, such as housing, is up to Mr. Flaherty.

“If the bank were to raise interest rates to cool the housing market now – when inflation is expected to remain below target for the next year and a half – we would, in essence, be dousing the entire Canadian economy with cold water,” Mr. Wolf said in Edmonton.

Former Bank of Canada governor David Dodge last week argued that because house prices are more likely to go down than up over the next few years, standards for insuring certain mortgages should be tighter.

The Canadian Real Estate Association is expected Tuesday to provide the latest figures on the home resale market, which has smashed records for months.

An interest rate hike this summer?

2010-01-31T20:18:00.000-05:00

An interest rate hike this summer?
Don't count on it. For the Bank of Canada to raise rates before the middle part of 2011 would be totally inconsistent with its current forecast

David Rosenberg Published on Wednesday, Jan. 27, 2010
David Rosenberg is chief strategist for Gluskin Sheff + Associates Inc. and a guest columnist for Report on Business

Canadian market watchers will get some good news this week. The predictions for a "blowout" reading on fourth-quarter GDP are already out there and it is likely to be an abnormally strong number. But for anyone who thinks a big number is likely to help lock in a rate hike this summer, I would suggest that is not going to happen. In fact, my view is that the Bank of Canada will not be raising rates until mid-2011 - at the earliest.

This is critical to the outlook for Canadian money market and bond yields since futures have priced in nearly 100 per cent odds of a 25 basis point rate hike this June, and another 25 basis points by September. (A basis point is 1/100th of a percentage point.) The central bank has already told us that its base case is for 2.9 per cent real GDP growth this year and 3.5 per cent next year, with the starting point on the "output gap" being 3.7 per cent ("output gap" is the gap between the actual level of real GDP and where real GDP would be if the economy were at full capacity). Remember that an output gap that big in any given quarter classifies as a 1-in-20 event. Moreover, baselining these expected growth rates against the latest estimates of potential growth puts the output gap at a smaller level of 1.55 per cent this year, narrowing further to 0.25 per cent in 2011.

The history of the Bank of Canada is such that - outside of when it had to defend the Canadian dollar - it typically does not embark on its tightening phase until the output gap is close to closing. Even during the aggressive John Crow era, the bank's modus operandi was to time the first rate hike just as spare capacity was being eliminated, and not much before. On average, the first central bank rate hike following a recession takes place one quarter before the output gap closes (there is still a gap, but it is small at 20 basis points). If such a strategy is replicated this time around - and the cause for being on pause longer in the context of a historic deleveraging cycle is certainly quite strong - then the very earliest the bank will move is the second quarter of 2011.

Under this scenario, based on some back-of-the envelope calculations I just did, the unemployment rate at no time declines below 7.5 per cent through to the end of 2011. The peak in the jobless rate was 8.7 per cent in August, 2009. Going back to prior recessions, the central bank does not begin to tighten rates until the jobless rate is down an average of 150 basis points with a range of 130 basis points to 170 basis points.

Unless the bank wants to be pre-emptive - highly unlikely when it acknowledges in its economic outlook last week that "the recovery continues to depend on exceptional monetary and fiscal stimulus" and that "the overall risks to its inflation projection are tilted slightly to the downside" - then to raise rates before the middle part of 2011 would be totally inconsistent with its current forecast. More to the point, while bored Bay Street economists analyze every word to see if the bank is more or less "hawkish" than in its previous outlook, what is important for investors is to assess the bank forecast and decide what it means for the degree of excess capacity in the economy and what that implies for the future inflation rate.

The bottom line is that even with the fragile recovery, the bank sees more downside than upside risk to its inflation projection, and, to reiterate, for it to start tightening policy until the jobless rate falls below 7.5 per cent would be a break from past post-recession actions.
And whatever future "policy tightening" is needed could also come via the overextended loonie, limiting any need for an interest rate adjustment in the time horizon that the markets have discounted. This is a source of debate on Bay Street, but the bank is still sensitive to the growth-dampening impact of an exchange rate too firm for its own good. To wit: "The persistent strength of the Canadian dollar and the low absolute level of U.S. demand continue to act as significant drags on economic activity in Canada," the bank says.

In a nutshell, the Canadian market is already braced for 50 basis points of tightening from the Bank of Canada by September. With that in mind, it is difficult to believe that there is any significant rate risk here; if anything, the surprise will be that the bank is on hold for longer. If that proves to be true, then there is actually more downside than upside potential to Canadian bond yields, particularly at the front end of the coupon curve.

The reason the markets think the bank may pull the trigger is because of this one sentence that
shows up in every press statement: "Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target."

So the central bank has really only given a pledge to keep rates where they are until mid-year. But June is only five months away and so one would have to think that at one of the next three meetings, the Bank is going to have to update this particular sentence or cut it entirely and leave the market without a de facto time commitment. Either way, the moment the bank changes this sentence is the moment the market will put on hold its expectations of a new rate-hiking cycle coming our way.

Until then, homeowners opting for variable rate mortgage financing will likely not have to face the interest rate music.

Bank Slightly lowers growth forecast for 2009-2010; interest rates unchanged

2010-01-19T16:56:00.000-05:00

Bank slightly lowers growth forecast for 2009-2010; interest rates unchanged
19/01/2010 1:09:00 PM
Julian Beltrame, THE CANADIAN PRESS

OTTAWA - The global recovery is strengthening, but still needs a boost from massive "extraordinary" stimulus measures to sustain growth, the Bank of Canada said Tuesday.
And the central bank also signalled once again it intends to keep interest rates at historic lows until at least mid-year despite growth returning to the Canadian economy.
"Economic growth in Canada resumed in the third quarter of 2009 and is expected to have picked up further in the fourth quarter," bank governor Mark Carney and his policy-making council said in an accompanying note.
"Nevertheless, considerable excess supply remains, and the bank judges that the economy was operating about 3.25 per cent below its production capacity in the fourth quarter of 2009."
The statement, which included a minor downgrade in projected growth for this year, suggests Canada will be taking a message to the G7 meeting of finance ministers and bank governors in early February that now is not the time for governments to exit stimulus strategies.
In the statement Tuesday, the bank said it would do its part by keeping its trendsetting rate at 0.25 per cent until at least mid-year.
To reinforce the commitment, it extended its emergency lending instruments to April, allowing chartered banks to access funds at the historically low rate.
The bank said the private sector won't become the sole driver of domestic demand until 2011.
As well, the bank tweaked its October economic growth forecast for this year a tenth of a point lower to 2.9 per cent. However, it said 2011 would be slightly better than it thought, with growth projected at 3.5 per cent.
Some analysts saw a brightening hue to Carney's language from October.
Scotiabank economist Derek Holt noted that central bank removed from its text an earlier comment that "significant fragilities remain," and forecast that global expansion would be somewhat stronger in 2010 and 2011 than it thought three months ago.
As well, a new report on leading indicators from Statistics Canada, released half an hour before the bank's announcement, offered more evidence that economic activity picked up last month. The index rose 1.5 per cent, the biggest one-month advance since 1958, with none of the 10 major components registering losses.
Economists are now projecting that Canada's gross domestic product grew by between three and four per cent in the last three months of 2009, and will likely advance at a similar pace this winter.
Given the firming conditions, Holt said it was becoming increasingly difficult for Carney to justify a policy rate near zero.
"The justification for giving away free money is a lot tougher now," he said, even if growth is muted.
But analysts also pointed out that Carney does not want to signal too early he is thinking of raising interest rates for fear of stoking the dollar, which would make exports an even harder sell in foreign markets.
The bank blamed low American demand and the high loonie, currently trading near 97 cents US, with restraining growth in Canada, and leaving the heavy lifting to consumers and homebuyers.
The bank's minor adjustments on growth rates puts it more in line with many private sector economists, particularly the Conference Board, which Tuesday estimated growth of 2.8 per cent for this year.
As the bank noted, Canada's export-dependent manufacturing sector will continue to be weighted down by the strong dollar and the weak consumer recovery south of the border.
A new industrial outlook report from the TD Bank shows just how enfeebled Canadian factories have become by the global meltdown of 2008 and 2009. While manufacturing output will outperform the overall economy in the next few years, it has sunk so far that by the end of 2011 it will still be below levels of a decade ago, the report said.
In another aspect of the Bank of Canada statement, the central bank said inflation has been rising faster than anticipated but it did not appear to be overly concerned at this point.
Although economists say inflation likely hit 1.6 per cent in December, after being below zero through much of the summer and part of the fall, the bank said it still doesn't believe it will return to the two per cent target until the third quarter of 2011.

Home Buyers Opt for Fixed Rates

2010-01-15T11:18:00.000-05:00

Home buyers opt for fixed rates
14/01/2010 2:38:10 PMCBC News Despite close to record-low rates for variable mortgages, a strong majority of home buyers are choosing to pay a little more for the stability of a fixed rate, industry data shows.
A full 86 per cent of borrowers signing up for mortgages in 2009 opted for fixed rates, data compiled by the Canadian Association of Accredited Mortgage Professionals suggested Thursday.
The agency surveyed more than 40,000 mortgages issued in 2009, worth some $10 billion in total, to look for lending trends.
The $10 billion examined is a tiny slice of the overall mortgage market, but was tailored toward first time buyers, the borrowers CAAMP deemed to be most vulnerable to rate fluctuations.
The 86 per cent figure seems high, but it's actually lower than where it was earlier in the year as variable rates became more attractive later on, CAAMP president Jim Murphy said, with some variable mortgages coming in as low as 2.25 per cent, compared to four per cent for fixed terms.
The trend toward fixed rates speaks to the oft-cited Canadian predilection for stability, Murphy says.
"Canadians have always been more cautious," he said "And you can see that bearing out in the fact that most go for the fixed product."
Among those who opted for fixed terms, the majority (70 per cent) opted for a term of five years or longer. And the vast majority of people who took out their first mortgage last year borrowed less than they could afford to, as their gross debt service ratios - a closely watched ratio of how much income it takes to service a debt - are far below allowed maximums.
"This group is the most vulnerable group of borrowers in Canada [but] they are being prudent and the vast majority of Canadian mortgage borrowers are not taking on undue risks," Murphy said.
A small minority of buyers, however, might be cutting it close, CAAMP said. "Our data shows that only a small percentage of them are pushing-the-envelope [by coupling near-maximum debt levels with short-term low rates]," the group's economist Will Dunning said. "About 4,000 households, which amounts to a tiny fraction of the 13.25 million homeowners in Canada."
In late 2009, both Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney banged the drum on excessive debt levels, and urged Canadians to get their financial houses in order. Flaherty mused publicly about raising the minimum down payment level when buying a home from five per cent, or possibly reducing the maximum amortization period lower than it's current level of 35 years.
The Bank of Canada is set to reveal its next decision on interest rates on Tuesday.

Home inspectors not finding grow-op clues:Marketplace

2010-01-08T20:45:00.003-05:00

Home inspectors not finding grow-op clues: Marketplace
07/01/2010 11:33:28 PM

Several homeowners have been shocked to discover their newly purchased homes hosted grow-ops, despite the fact they paid for a pre-sale inspection, a Marketplace investigation has learned.
Marketplace met with homeowners in Toronto and in Kamloops, B.C., who recently learned their homes had once been used to grow marijuana.
In both cases, the homeowners had paid for a pre-sale home inspection and had no idea they were about to buy a former grow-op. In both cases, they were left with huge bills after problems began turning up.
Houses used for grow-ops can sometimes be left unlivable once they've been busted and closed down. Shoddy work to run vents can result in structural damage, electrical wiring tampered with to hide high energy use can be a fire hazard - and there's the issue of mould.
Marketplace enlisted construction guru Mike Holmes to do a thorough inspection of a Toronto home that had once been a grow-op before being patched up and sold to Jagat and Nirmala Prasad four years ago.
According to Holmes, the tell-tale signs of a grow-op should have been obvious to the first inspector: mould in the attic, a large vent hole in the fireplace, patch work over large holes in the ceilings.
Marketplace wanted to find out if other inspectors would see the grow-op clues and hired four inspectors to come through the house. They all had a look, checked out the basement, climbed into the attic, but not one detected that the house had been a grow-op.
Went with police on raid
Marketplace began its investigation by accompanying police on a drug raid in Brampton to see how a grow-op can destroy a house and to look at the modifications throughout the home.
Peel Regional Police Det. Jason Kirkpatrick pointed out a hydro bypass.
"This is your theft of electricity. Just be careful of all the wiring. It's very dangerous here," he said to the Marketplace team.
"It's terrible. The structural damage that they do from breaking the foundation, and this is just the basement we've seen so far," said Kirkpatrick. "What will happen is over time, we've seen houses start to leak because of these breaks in the foundation."
There were marijuana plants in every room, along with wiring and vents.
"They want to get the hot air and the smell out or they'll get detected," said Kirkpatrick. "The watering will take place right inside of this bedroom. Mould is going to grow on the wall and on the floors."
"I think a proper inspector would notice some of the telltale signs, such as ventilation being left in the attics," he said.
The Prasads thought they did everything right by buying a four-bedroom home in a quiet neighbourhood.
Now, they're faced with tens of thousands of dollars to deal with a bad mould problem and much more to repair structural damage caused when floor joists were cut to make way for venting.
Holmes, whose motto is "Make it right," is known for his criticism of shoddy construction and bad contractors, and he doesn't hold back when it comes to home inspectors.
"Do you think it should be part of an inspector's job to know about grow-ops? I say yes!" said Holmes.
At the Prasad house, Holmes found his first "red flag": a hole in the basement foundation.
"What did the home inspector say about this?" Holmes asked Jagat Prasad.
"He didn't say much about it. He just said you have to put [an] insert in there," Jagat replied.
"They don't care what they do to the house. They're in here to make money. Somebody covered it up and then sold it to you," said Holmes. "This is going to cost you one crap load of money."
Kamloops resident Theresa Denton is facing even worse problems. After spending $8,000 to try to solve her mould problem, she's learned her home has so many toxic mould spores she shouldn't be living there.
Her son has developed a severe mould allergy and must take steroids, and the repairs to solve the problem are calculated at more than $100,000.
"It's devastating you know. First, of course, we don't want to live in this house, but it's the only house we've got," said Denton, who is suing the former owner, her real estate agent and her home inspector.
The biggest sign her home had been used as a grow-op is the black mould that coats one wall in her attic, caused by moisture that had been vented there from the grow rooms.
Denton said her inspector did check the attic with a flashlight.
"Either he's not telling the truth or he's just completely incompetent," she said.
Marketplace spoke with Denton's home inspector, David Mahoney, about attic mould.
"Mould will happen very quickly so," he said. "I didn't see any mould when I was there. Remember, I'm not looking for mould. I'm not a mould expert. I don't have the equipment for that so that's not part of this inspection. If I had seen something that needed to be exposed to her then I would have told her."
"I say right in my report I don't look for mould," said Mahoney.
But Holmes doesn't buy that answer.
"Well, I got a question. What the hell do you look for? You know, what are you looking for? Dog hair?" he said. "I think we need to do something about the home inspection industry. It's obvious that it's not working."
Glenn Gogal, president of the Ontario chapter of the Canadian Association of Home and Property Inspectors, said a property inspection is no guarantee the new homeowner won't find problems that were missed.
"There is a lot of protection in hiring a home inspector to give you an evaluation of your property, but it's not a 100 per cent. It can't be," said Gogal.
He admitted it didn't look good that all four inspectors missed signs that the Prasad house had been a former grow-op.
"Can a random sample of four different inspectors miss something like this on one house. I think that's just wrong, personally, I really do," he said.
Asked what action he would take on the matter, Gogal replied: "I can send out an email to our membership saying that this is the scenario, and it was four out of four, so like heads up and pay attention."
As for the Prasads, the only good news they've received so far is that an air quality check found the mould spore count is low enough for them to remain their house while repairs are done.
"It's a major concern because right now we thought we were paying a mortgage towards an asset," said Jagat. "But we're paying it toward a liability now."

November Home Sales Rise 73%

2009-12-16T16:38:00.001-05:00

November home sales rise 73%: CREA

Sales of existing homes were up 73 per cent in November compared to last year's level, the Canadian Real Estate Association said Tuesday.

A total of 36,383 residential properties traded hands via the association's Multiple Listing Service of homes for sale. That was only 0.4 per cent off of the all-time high for November sales activity that was set in 2007. New monthly sales records were set in Ontario and Quebec.

"For housing, the recession was oh so last year," BMO economist Doug Porter said in a report released Tuesday, entitled It's Beginning to Look a Lot Like a Bubble.
The national average price gained 19 per cent compared to November 2008, at $337,231, the CREA said Tuesday. Year to date, the average price rose 4.4 per cent compared to the same period last year. But the average price in Canada's major markets was up 20 per cent year-over-year, to $368,665. Nationally, the average price in November edged back from the peak reached in October.

But Porter stopped short of calling an outright real estate bubble, noting that the reported price change was skewed by the surge in Vancouver and Toronto sales, two of the priciest markets.
"Using a fixed-weight measure, average home prices in the major markets have risen by a milder 11 per cent year over year - still robust, but short of a warning-bell-ringing pace," Porter noted.

Still, because home sales were extraordinarily weak for four months beginning in November 2008, "this will be but the first in a string of China-style gains for Canadian home sales and prices," Porter said.
Boost in new listings

Strong demand and price increases appear to be drawing more sellers into the market. New listings on the MLS system rose five per cent on a month-over-month basis in November to 69,110 units, the biggest monthly increase since January 2008.
But the surge in new listings hasn't pushed inventories higher, as much of the new housing stock is being gobbled up by buyers eagers to capitalize on record low interest rates.

There were 183,710 homes listed for sale on MLS at the end of November 2009. This is down 23 per cent from levels reported one year ago, and the seventh month in a row in which inventories have declined from year-ago levels. An increase is normal at this time of year, since demand tends to ease relative to supply over autumn and winter months.

Nationally, there were four months of inventory in November 2009 on a seasonally adjusted basis, the lowest level in more than two years.

Since the beginning of 2009, some 437,507 homes have been sold on the MLS system

Interst rates may rise despite BoC deadline

2009-12-15T14:53:00.000-05:00

Interest rates may rise despite BoC deadline
Scotia economist warns of bond, mortgage hikes

Jonathan Chevreau, Financial Post Published: Thursday, December 10, 2009

Read more: http://www.nationalpost.com/news/story.html?id=2323217#ixzz0ZhT6MHQc
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Bond yields and mortgage rates could head higher before the Bank of Canada's pledge to hold interest rates steady expires in July, the chief economist at Bank of Nova Scotia said this week.
"There's a very good chance long-term rates will head up before then," Warren Jestin said in Toronto at a briefing sponsored by the Investment Funds Institute of Canada.
He warned new homeowners with variable-rate mortgages not to be influenced by the central bank's neutral statements on rates on Tuesday. The bank has pledged to hold rates at a historic low of 0.25% until the end of the second quarter of next year, inflation conditions permitting.
Read the "fine print" and he believes it's likely three-year and five-year mortgage rates will be higher before July 2010.
Mr. Jestin does not foresee a double-dip recession. "Those who expect renewed recession next spring will be proved wrong." For North America, "2010 is a year we fill in the hole we dug for ourselves in one of the most vicious recessions in our lives." But the global economy will grow at a "slower rate than we'd consider normal a few years ago. We believe expansion won't be that strong in 2011 so we don't see rates continuing up in 2011."
Christopher Probyn, managing director and chief economist for State Street Global Advisors, expects the U.S. Federal Reserve will raise interest rates by 0.75% to 1.5% in the second half of 2010. However, he said inflation may run surprisingly low so the Fed could "be on hold much longer than people anticipate."
The 2008-2009 period was by far the worst economy since the International Monetary Fund started collecting data in 1970. "For the first time, there was a contraction in the global economy." Growth in world gross domestic product fell from over 5% in 2007 to 3% in 2008 but went to -2.5% in 2009.
The low was the first quarter of 2009, when the economy contracted at a rate of 6% annualized. But it was flat in the second quarter and returned to positive growth in the third, "so throughout 2009 there has been progressive improvement."
Mr. Probyn foresees a sustained but "rather gradual" recovery, with GDP expanding 2.5% in 2010. Last week's favorable employment report suggests the next stage in recovery may already have arrived. "Maybe we're very close to achieving stability in the labor market," Mr. Probyn said.
Like Mr. Jestin, he doesn't foresee a double-dip recession in 2010. He said the recovery is more likely to be U-shaped, with some bouncing along the bottom, than the instant rebound of a Vshaped comeback.

Housing Starts Hit their Highest Level This Year

2009-12-13T20:33:00.000-05:00

Tavia Grant
Published on Tuesday, Dec. 08, 2009 8:17AM EST Last updated on Tuesday, Dec. 08, 2009 8:33AM EST
Housing starts hit their highest level this year in November, more proof that Canada's real-estate market has clawed out of recession.
Starts rose slightly to 158,500 units, on a seasonally adjusted basis, up from 157,400 in October as single-home construction outweighed a drop in multiple home activity, Canada Mortgage and Housing Corp. said Tuesday.
“The improvement in housing starts continued in November,” said Bob Dugan, CMHC's chief economist.
The results were slightly less than the 165,000 starts economists had expected. Still, they're running at a much stronger level than in April, when they sunk to the 118,500 mark.
Record low interest rates are fuelling a rebound in Canada's real-estate market, spurring rising prices and a flurry of buying activity. The Bank of Canada will provide its current view of lending rates and the economy today at 9 a.m. Eastern time.
More builders have plans in the works, a report showed yesterday. Building permits jumped 18 per cent in October to the highest value in 13 months, Statistics Canada said yesterday.
Multiple starts eased in November, CMHC said, to 71,300 units from 72,500 units a month earlier. Single starts rose 3.4 per cent to 69,800 units.
The annual rate of urban starts has risen the most in Quebec, at 10 per cent, followed by Atlantic Canada.
http://www.theglobeandmail.com/report-on-business/housing-starts-hit-2009-high/article1392416/

Bank of Canada Forcast

2009-12-13T19:54:00.000-05:00

Louise Egan
Ottawa — Reuters Published on Sunday, Dec. 06, 2009 10:57AM EST Last updated on Sunday, Dec. 06, 2009 4:56PM EST
The Bank of Canada is widely expected to keep its hands off interest rates Tuesday, holding them at near zero and committing to do so until at least July, despite growing evidence the economy is kicking back to life.
Fears of prolonged economic stagnation eased Friday with a report showing employers hired five times as many workers as expected. The data supported the Bank of Canada's view that economic growth will speed up in the fourth quarter after a disappointing third-quarter, when it barely crept out of recession with tepid 0.4 per cent annualized growth.
All 12 of Canada's primary securities dealers , surveyed by Reuters after the jobs report Friday, forecast the central bank would hold its overnight target rate unchanged at 0.25 per cent at its final policy-setting meeting of the year.
The bank releases its rate decision and accompanying statement at 9 a.m. ET Tuesday.
Two-thirds of the traders think the bank will follow through on its pledge to hold rates at that level through mid-2010, conditional on inflation staying on track.
“They will lean over backward to make their conditional forecast come true,” said David Laidler, an economist with the C.D. Howe Institute.
“What they might start doing between now and June or July, is they might start making more and more public noises about the need to raise interest rates immediately afterward. That's the kind of thing you'll see but not in this announcement,” he said.
Others think the bank's job will be to dampen any speculation that it will abandon its zero-rate policy at the earliest opportunity.
“We expect the bank to attempt to temper early rate hike expectations at next Tuesday's policy announcement,” said Sheryl King, head of Canadian economics and strategy at Bank of America Merrill Lynch.
The Bank of Canada will be pleased with the November job gains, not just because its prophecy of a robust 3.3 per cent fourth quarter may be fulfilled but because it lessens the bank's concerns about the strong Canadian dollar hindering a robust recovery.

7 Ways to Raise Your Creidt Score

2009-11-25T10:18:00.002-05:00

7 Ways To Raise Your Credit Score Posted on November 23, 2009 by Kerry

If you're in the market for a mortgage, a car loan, or looking to rent an apartment, it may be time to check your credit score.

A credit score is an ever changing three-digit number between 300 and 900. The higher your number, the more likely you are to be approved for a loan or to negotiate a preferred interest rate. If your credit score is low, you may pay higher rates or be denied credit based on the lender's criteria.

Check out the 5 Minute Guide to Your Credit Report and Credit Score to learn how to find your score.

Your credit score is an important piece of financial information. It's used by lenders, insurers, and landlords to gauge your credit behaviour and determine if you're a good candidate for credit. If you've lost out on an apartment or been denied a loan recently, it may be your credit score that's holding you back.

But don't worry if your score is low, there are ways to improve it. Since your credit score is recalculated continuously to reflect your recent bill payments and debt levels, your score from a month ago is probably not the same score today. Here are seven ways to raise your credit score:

1. Check your credit score at BOTH credit reporting agencies.

Your credit score can vary between Canada's two major credit reporting agencies, Equifax and TransUnion. Each agency uses different credit data as well as a slightly different credit scoring model to tally your number. If you're being denied credit, it may be that one agency is reporting differently. Checking your credit report and score at both agencies can also help you detect any fraudulent activity or possible instances of identity theft.

2. Report and correct any inaccuracies.

Don't let your credit score suffer due to inaccurate information on your file. Be proactive and protect yourself by reviewing your credit files. If you find an inaccuracy, contact the creditor or the credit reporting agency to correct it immediately.

3. Pay all your bills on time.
Lenders look for patterns and love to see a solid history of paying every bill on time. Any late credit card payments, collections, or bankruptcies can significantly lower your credit score -- so be punctual with each bill payment to raise your score.

Check out these 5 Ways to Beat Your Credit Card Debt for some score raising tips!
4. Watch your debt.

Don't run your credit balances close to your limit! Staying below half your available credit limit can help to improve your score sooner. For example, if you have a credit card with a $5,000 limit, try to keep the balance owed below $2,500.

5. Avoid applying for credit.

When you apply for credit, a "hard query" may be made to your report by the lender to check your creditworthiness. Too many "hard queries" in a short period of time can lower your score, so stick to applying for credit only when you need it. Checking your own score won't lower your score since this is a "soft query". Applying for a lot of credit may be interpreted as a sign of financial difficulty, which can impact your score as well.

6. Give yourself some time.

Time can improve your credit score, especially if you can establish a long history of paying bills on time and being responsible with credit. Negative factors such as bankruptcies, collections, or foreclosures drop off your report after a number of years, depending on your home province or territory.

7. Don't close old accounts.

It may seem counterintuitive to us, but unused credit is a good thing in the eyes of a credit reporting agency and lowering the amount of money you can borrow relative to your debt can impact your score.

Mortgage Rate Article

2009-11-23T16:32:00.000-05:00

Consumers need to prepare for higher mortgage rates next year: advisers

Kristine Owram, THE CANADIAN PRESS
TORONTO - The Canadian housing market has seen a stronger and faster rebound from the recession than any other segment of the economy, due in large part to enticingly low mortgage rates.

But rates this low - 5.59 per cent for a five-year fixed-rate mortgage and 2.25 per cent for a five-year variable-rate mortgage at one bank - can't last forever, and experts are advising borrowers to prepare for higher rates within the next 12 months.

"We have to realize those are emergency interest rates," said CIBC economist Benjamin Tal.

"Interest rates will rise - it's just a question of time, it's not a question of if. And if that's the case, we have to make sure that when we borrow this money we can afford the same mortgage 200 or 300 basis points higher. That's the key responsibility now of borrowers and lenders, to make sure that what we do, we do it in a prudent way."

Depending on whether they are fixed or floating-rate, mortgages are tied to either the bond market or the Bank of Canada's key lending rate, which are closely related. The central bank's rate has been sitting at a record low of 0.25 per cent since the spring and it has said it will keep it steady until at least next June to help stimulate the ailing economy.

On Wednesday, three of Canada's biggest banks - Royal Bank (TSX:RY), Bank of Montreal (TSX:BMO) and TD Bank (TSX:TD) - announced that they will cut posted rates for fixed-rate mortgages by up to 0.25 percentage points. On Thursday, CIBC (TSX:CM), Laurentian Bank (TSX:LB) and Scotiabank (TSX:BNS) followed suit by cutting their five-year mortgages by 0.25 per cent to 5.59 per cent, in the case of CIBC and Scotiabank, and 5.6 per cent at Laurentian.

But mortgage lenders agree that rates are nearing the bottom and will begin to rise again in 2010.

"The only sort of assurance that you hear in the marketplace is the Bank of Canada's going to try to maintain that rate until June. But past that, there are already warnings that if there need to be adjustments, the adjustments could be a little more abrupt than we've been used to in the past," said Martin Beaudry, vice-president of retail lending at ING Direct.

CIBC's Tal said that with rates this low, "it's almost a crime not to take a mortgage out," but warned that consumers need to be prepared for higher interest rates later on and what this could mean for their personal finances.

For example, a $200,000 mortgage with a term of 25 years and an interest rate of 2.25 per cent has monthly payments of $876.26. For the same mortgage with an interest rate of five per cent, the monthly payments become $1,169.18.

And this doesn't only apply to variable-rate mortgages, but to fixed-rate mortgages that are coming up for renewal, Tal said.

"It's not just variable rates, because five years from now the rates will be much higher, so you don't want to find yourself in a situation five years from now where you can't afford the house," he said.

"It's important to be extremely prudent and not to be totally blinded by those rates."

Both John Turner, director of mortgages at BMO, and ING's Beaudry said they've seen an increase in the number of people opting for fixed-rate mortgages to ensure some certainty when interest rates begin to rise again.

"In the first six months (of 2009), we saw well over 60 per cent of our applications being for variable-rate mortgages, and in particular in our case five-year variable-rate mortgages," Beaudry said.

"Towards the latter part of the summer, until now, the trend has reversed to where we're seeing about 70 to 80 per cent of our applications going for five-year fixed-rate mortgages."

Turner agreed, saying 60 to 70 per cent of BMO's customers were opting for variable-rate mortgages in the past, but lately "there's been a slight shift to fixed."

The key is finding a monthly payment you feel comfortable with and then thinking ahead - if you have a variable-rate mortgage, or a fixed-rate mortgage that's coming up for renewal soon, will you be able to afford to continue to make your payments if interest rates go up?

Turner said now is the time to begin making more frequent payments, while interest rates are still low, if you can afford it. This will reduce your principal more quickly and will mean lower payments down the road when interest rates are higher.

"For example, if you have a $200,000 mortgage and you opt to pay biweekly (instead of monthly), you knock four years off your mortgage and save about $47,000 in interest just by doing that," he said.

As well, if you have a variable-rate mortgage, it's important to keep an eye on interest rates and lock in if you feel they're getting too high, said Jim Murphy, president and CEO of the Canadian Association of Accredited Mortgage Professionals, or CAAMP.

The association also recommends that homeowners renew their mortgages before the scheduled renewal dates given the current low level of interest rates.

However, Murphy predicted that when interest rates do start to go up it will be a gradual climb, and Canadians shouldn't worry about a sudden jump in the number of people who are forced to default on their mortgages.

"I think people are predicting that rates will start to increase in 2010 at some point in time, but it'll be more of a slow, measured increase as it goes up, and most Canadians who have variable products will have the ability to lock in," Murphy said.

CAAMP says the volumes of residential mortgage credit outstanding is forecast to grow by seven per cent between 2009 and 2011, and is predicted to pass $1 trillion in 2010. The average mortgage interest rate was 4.55 per cent as of October, down from 5.41 per cent a year ago.

Home Sale Hit Record High;Outlook upgraded

2009-11-17T16:57:00.001-05:00

Homes sales hit record high; outlook upgraded

John Morrissy, Financial Post

OTTAWA -- Home sales hit a new record high in October, leading the Canadian Real Estate Association to boost its outlook for 2009 and 2010.
Resale home activity was up 41.5% in the month, reaching a total of 42,288 units. On a seasonally adjusted basis, homes sold on the Multiple Listing Service totalled 45,818 units in October.

"Low interest rates and upbeat consumer confidence continue to release the pent-up demand that built late last year and earlier this year," said CREA president Dale Ripplinger. "The release of that pent-up demand has boosted national sales activity to new heights and is drawing down inventories."

Further, said Millan Mulraine, economics strategist at TDSecurities, "we expect the recent strong gains in the housing market to remain largely intact, though we suspect that the back-to-back double-digit advance in sales seen earlier this year may not be repeated."
As a result of the sector's strong performance, CREA increased its forecast for sales in 2009 by 6.6% to 460,200 units. For 2010, the national industry group said sales would rise 7% to 492,300 units.

The average home price also reached new highs in October, climbing to $341,079, up 20.7% from a year ago. A separate measure, which limits its focus to Canada's major markets, showed the average price rising 22.1% to $373,095.

At the same time, the sharp rise in housing demand has eaten into inventories. With 194,994 homes listed for sale in Canada at the end of October, the number of listings is 20.8% below the peak reached in October of last year.

It is the sixth month in a row in which inventories have fallen from year-ago levels, bringing supply to 4.1 months on a seasonally adjusted basis, the lowest level in more than two years.
CREA chief economist Gregory Klump said new listings are expected to rise in coming months in response to headline average price increases.

New monthly sales records were set in about one fifth of local markets in October, including Toronto, Montreal and Ottawa. On a provincial basis, new records were set in British Columbia, Ontario and Quebec, largely as a result of increased activity in those provinces' major markets.
Canwest News Service

Central bank forcasts 3% GDP growth in 2010

2009-10-23T09:48:00.001-04:00

Central bank forecasts 3% GDP growth in 2010

The Canadian economy is projected to grow by three per cent in 2010 and 3.3 per cent in 2011, the Bank of Canada said in its latest economic forecast Thursday.

The projections are slightly different from those the bank put out in its last update in July. Growth in the second half of this year looks strong, the bank said, with gains in economic output of two per cent and 3.3 per cent in the third and fourth quarters.

That's up from the July estimates of 1.3 per cent and three per cent respectively.
Overall, the Canadian economy is expected to shrink by 2.4 per cent in 2009. That's slightly worse than the 2.3 per cent forecast in July.

The projections for the medium term were downgraded slightly. The three per cent expectation for 2010 in unchanged, but the 3.3 per cent growth the bank now expects in 2011 is 0.2 percentage points off what was expected in July.

"Global economic and financial developments have been somewhat more favourable than expected at the time of the July Report, although significant fragilities remain," the bank said in its latest Monetary Policy Report.
The economy will not reach capacity, when supply and demand are in balance, until 2011, the bank now forecasts.

Despite the generally positive overall tone, the document notes the bank is deeply concerned by the effects of a soaring loonie. "Heightened volatility and persistent strength in the Canadian dollar are working to slow growth and subdue inflation pressures," the bank said.
"The current strength in the dollar is expected, over time, to more than fully offset the favourable developments since July."

The Canadian dollar remained relatively stable from July to early October, trading in a range of 90 to 94 cents US. More recently, however, it has appreciated sharply, averaging about 96 cents US over the past 10 days, much higher than the 87 cents US the bank had assumed at the time of its July report.

In the immediate aftermath of the news, the Canadian dollar fell, slipping a third of a cent to 95.24 cents US at midday. "The Canadian dollar is finished in my mind," currency trader Ian Cochrane at Calgary-based BNH Strategies told CBC News. "Forget about raising rates, they're going the other way. The Bank of Canada governor basically told us this in no uncertain terms."

On Tuesday, the bank maintained its policy rate at 0.25 per cent and reaffirmed its conditional commitment to hold its current policy rate steady until the end of the second quarter of 2010.
"People should manage their affairs prudently in anticipation that at some point rates will return to a more normal level," Bank of Canada governor Mark Carney said at a press conference following the release of the report on Thursday.

"Clearly there are going to need to be adjustments in exchange rate policies in many G20 countries." Carney also expressed some concerns over consumer debt levels, saying it is something the bank keeps a close eye on.

"Consumer borrowing cannot grow faster than the economy forever, to state the obvious," he cautioned. "But Canadian consumer balance sheets are starting from a much firmer starting point than U.S. ones," he noted.

From Sympatico finance page

Good habits we've gained from the recession

2009-10-19T12:22:00.001-04:00

Good habits we’ve gained from the recession

Posted on October 14, 2009 by Flyerland

Throughout the recent economic meltdown many people started cutting back on their spending and living on less. The Canadian economy is moving toward recovery, but it still pays to be frugal, especially when you’re saving for the things you really want. Maintaining your recession shopper savings strategies—even in good times—can help you keep more cash in your pocket.

Here are just a few of the valuable lessons learned through the recent financial crisis that we should keep in mind no matter how the economy is doing.

Review your spending habits. Do you know where your money is going each week? One tried and true trick is to track every purchase for a week or two. Write down everything from the grocery bill to the cost of your morning latte. You will likely see spending patterns emerge and places where you can cut back and save.
Use a shopping list. More people are using—and sticking to—lists to plan shopping trips. This helps to avoid over-spending or purchasing items you don’t need. And, why not try shopping for things like groceries online, where there might be less impulse buys if you can’t see and smell the goods.
Shop the sales. Who doesn’t like buying stuff on sale? Check out Flyerland.ca for the latest flyers—not only for deals on groceries but clothing, electronics, furniture, home improvement and much more!
Buy in bulk. When you find a great deal on the items you use every day—food staples and non-perishables, cleaning supplies, laundry detergent or dog food—stock up and save.
Try other stores. If you shop at the same supermarket you could be missing out on super savings. Flyerland.ca posts flyers for all the major stores, making it easy to compare prices.
Use points cards. When your favourite products are on sale or can earn you bonus points, buy a bunch. The points add up and can save you money on future purchases. Take a few minutes to register for the points program at your local stores. Shopping at Sobey’s, Loblaws, Metro and Shopper’s Drug Mart can earn you points, and that adds up to savings. The caveat is to make sure that you are buying things that you need or use often.
Invest your savings. People are budgeting smarter and planning better. And with all the money you’re saving there are ways to invest. Contribute to an RESP for your children, or open a Tax-free Savings Account and save up to $5,000 each year without paying tax on the interest. You can also use your savings to pay down your mortgage or up your RRSP contribution—your financial planner can recommend the strategy that’s best for you.

By Debbie Frye, General Manager, Flyerland.ca

Mortgage Rate On The Rise

2009-10-13T21:42:00.001-04:00

Mortgage rates on the rise...some lenders still offer current rates until midnight tonight

Several Canadian banks raise rates for closed, fixed rate mortgages

THE CANADIAN PRESS TORONTO -

Several Canadian banks (TSX:BNS, TSX:CM, TSX:BMO) raised their posted rates for closed, fixed rate mortgages by up to 0.35 percentage points effective Wednesday.
Scotiabank, CIBC and the Bank of Montreal all raised their five-year closed rate by 0.35 percentage points. Increases for other mortgages ranging from one year to 10 years ranged from no change to 0.35 percentage points.
The change follows a similar move by the Royal Bank to raise rates last week.

How to know if you qualify for the new Home Buyers' Tax Credit

2009-10-12T10:58:00.001-04:00

How to know if you qualify for the new Home Buyers' Tax Credit

www.newscanada.com

Find out if you meet the criteria to claim federal government money
Before you claim the proposed First-Time Home Buyers' Tax Credit, there are some things you should know about qualifying:

Neither you, your spouse or common-law partner lived in a house that either of you owned in the year of purchase or any of the four preceding years.

- If you are a person with a disability or are buying a house for a relative with a disability, you don't have to be a first-time home buyer. However, the home must be purchased to allow the person with a disability to live in a more accessible dwelling or in an environment better suited to the personal needs and care of that person.

- A qualifying home is a housing unit located in Canada that already exists or is being built.

- A share in a co-operative housing corporation that entitles you to possess, and that gives you an equity interest in a housing unit located in Canada, also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.

- The home must have been acquired after January 27, 2009.

The HBTC is part of the Government of Canada's $62 billion economic stimulus announced in the Economic Action Plan to give first-time home buyers up to $750 in tax relief.
For more information, visit www.cra-arc.gc.ca.

The Globe and Mail Journalism Dream Contest

2009-10-10T04:36:00.001-04:00

The Globe and Mail Journalism Dream Contest

Shared via AddThis

In the News

2009-10-07T11:03:00.002-04:00

Housing market recovering: Royal LePage

08/10/2009 8:49:49 AM

The Canadian housing market is on the road to recovery, a new report by real estate brokerage Royal LePage suggests.

The average price of a two-storey home in Canada in the third quarter of 2009 was comparable to a year ago, up 0.1 per cent to $409,335. Average bungalow values increased 0.06 per cent year-over-year to $341,146, while the price of an average condominium increased 0.09 per cent to $243,748, the company said.

After the recession caused a sales drought and declining prices in the fourth quarter of 2008 and first quarter of 2009, there's actually a "pronounced undersupply" of homes in Ontario and other parts of the country.

Bidding wars in some cities. A shortage in housing supply is leading to bidding wars in several cities, including Toronto, Richmond Hill, Ont., Markham, Ont., Montreal, St. John?s, Saint John, Moncton, Edmonton, Calgary, North and West Vancouver, and Victoria, the company said.
But the company stopped well short of predicting a boom to come. The data suggests a "normal market correction and not the beginning of another aggressive expansionary cycle," the company said.

"Once housing supply returns to normal levels, we believe the economy will support modest pricing growth into 2010,? Royal LePage president Phil Soper said in a statement.
Regionally, the Atlantic provinces saw a strong recovery in home prices with double-digit percentage increases year-over-year in some markets in the third quarter of 2009.
Western provinces, especially British Columbia and Alberta, have been slower to recover from the significant price corrections that occurred in 2008, the company said.
Ontario and Quebec saw home prices stabilize or gain slightly year-over-year with much of the recovery occurring throughout the strong third quarter.

The Royal LePage survey is the largest monitor of seven types of housing in more than 250 neighbourhoods across the country.

In the News

2009-10-07T11:03:00.001-04:00

Resale housing on rebound: TD

07/10/2009 4:57:10 PMCBC

News Markets for resale housing have rebounded sharply in nine Canadian cities, TD economists reported Wednesday.

Their report said the number of home resales, after dropping by nearly a third in the last six months of 2008, climbed back 61 per cent from January through August. The economists attribute the bounce back to pent-up demand, lower prices and low interest rates.
The report looked at markets in Vancouver, Calgary, Edmonton, Saskatoon, Winnipeg, Toronto, Ottawa, Montreal and Halifax.

"We estimate that between 45,000 and 53,000 sales that would normally have occurred in [the last three months of] 2008 did not, because of the fear and uncertainty created by the financial market turmoil," the report said.

After the dust settled and it became clearer that the economy was not tilting into deflation and depression, potential buyers had another look.

What they were looking at in most markets was an incredible window of opportunity: an environment in which price concessions had been made and where mortgage rates were at rock bottom low levels."

TD predicts that demand will level off by November and that more homes will come on the market and prices will rise only modestly the rest of 2009 and through 2010.
TD expects rising prices in 2011 will weaken demand but, as more houses will come on the market, the rate of price increases will ease.

How to use the Equity in Home to Take Advantage of the Home Renovation Tax Credit

2009-10-07T11:03:00.000-04:00

Have you been putting off some needed or wanted renovations? With the available Home Renovation Tax Credit offered by the government, now is a good time to get some renovations done.

The basics are spend $10, 000 on approved home renovations and receive up to a $1350 tax credit. *see blog post for infomation on government site for details

Did you know you can use your exisiting equity in your home to do those home renovations?

A couple of options are

1) Refinance plus improvement
2) Equity line of Credit
3) Equity Visa
4) Purchase plus improvement

These products combined with the great mortgage rate available make putting in a new kitchen or finishing your basement affordable.

Put Your Tax Dollars Back Into Your Home-The Home Renovation Tax Credit

2009-10-07T11:02:00.000-04:00

Put Your Tax Dollars Back Into Your Home
13 July 2009

Save up to $1,350 on home improvements purchased before February 1, 2010.
The Home Renovation Tax Credit applies to eligible expenses of more than $1,000, but not more than $10,000, resulting in a maximum non-refundable tax credit of $1,350 [($10,000 - $1000) x 15%].

The Home Renovation Tax Credit is subject to Parliamentary approval.
You can claim a non-refundable tax credit on your 2009 income tax return. This tax credit is based on eligible expenses incurred for work performed or goods acquired after January 27, 2009 and before February 1, 2010. Only agreements entered into after January 27, 2009 and related to a qualified dwelling are eligible.

Where can you get Home Renovation Tax Credit envelopes?
Home Renovation Tax Credit envelopes will be available by the beginning of September. [more...]

Can you claim the HRTC?
Eligibility, time limits, dwelling and eligible expenses [more...]

How to calculate your HRTC
Worksheet and examples of calculations [more...]

How to claim your HRTC
Acceptable supporting documentation, medical expense tax credit and other tax credits [more...]
For more information about the Home Renovation Tax Credit, please call 1-888-959-1-CRA or visit www.cra.gc.ca/hrtc

The Home Renovation Tax Credit is subject to Parliamentary approval.

Grandma Thompson's Prize-Winning Apple Pie

2009-10-05T20:51:00.000-04:00

Just in time for Thanksgiving!

Grandma Thompson's Prize-Winning Apple Pie

By Adell Shneer and The Canadian Living Test Kitchen (canadianliving.com)

Related Content- Maple Magic with Cheddar - Peach Blackberry Cobbler - Crispy Oven-Baked Chicken Fingers with Zesty Caesar Dip

Thanksgiving weekend last year and The Village at Blue Mountain, Ont., was filled with the fragrance of freshly baked apple pies. For the first-ever Quintessential Apple Pie contest, bakers from this apple-growing region that rings Georgian Bay carried their pies – double crust, single crust, lattice top, streusel, Cheddar crust, even a chocolate apple combo – to the judging tables. Collingwood baking enthusiast Brenda Hall took first prize with a classic double-crust pie – a family recipe that's not too sweet but full and juicy with freshly harvested local McIntosh apples.

Servings: 8

Ingredients: Double-Crust sour_cream Pastry 1 egg_yolk2 tbsp (25 mL) coarse_sugarFilling:8 apples (such as McIntosh or Northern Spy), about 3 lb (1.5 kg)3/4 cup (175 mL) granulated_sugar2 tbsp (25 mL) cornstarch1 tsp (5 mL) cinnamonPinch each ground nutmeg and salt2 tbsp (25 mL) butter, softened

Filling: Peel and core apples; cut into 1/4-inch (5 mm) thick slices and place in large bowl. In small bowl, toss together sugar, cornstarch, cinnamon, nutmeg and salt ; add to apples and toss to coat. On lightly floured surface, roll out half of the pastry to generous 1/8-inch (3 mm) thickness; fit into 9-inch (23 cm) pie plate. Trim to leave 3/4-inch (2 cm) overhang; fold under and flute edge. Scrape filling into pie shell; dot with butter.Roll out remaining pastry. Whisk egg yolk with 1 tbsp (15 mL) water; brush over pastry rim. Fit pastry over filling; trim to leave 3/4-inch (2 cm) overhang. Fold overhang under bottom pastry rim; seal and flute edge. Brush egg mixture over pastry. Cut steam vents in top; sprinkle with coarse sugar. Bake in bottom third of 450°F (230°C) oven for 10 minutes. Reduce heat to 350°F (180°C); bake for 65 minutes or until bottom is deep golden and filling is bubbling and thickened. Let cool on rack. (Make-ahead: Set aside for up to 24 hours.)

2009 E-Waste Events

2009-10-04T09:42:00.000-04:00

Keep electronics out of the landfill. Bring your unwanted and broken electronic and electrical equipment for FREE recycling at one of the local events. No appliances are excepted.

Satellite Systems
Computers, monitors, printers and accessories
Fax machines and photocopiers
Gaming systems
Televisions
Phones and PDAs
Calculators and electronic cash registers
Radios, amplifiers, turntables and stereos
VCR, DVD players and projectors
Cameras and recorders

Sat Oct 17 9am to 1pm
Municipality of Clarington
178 Darlington/Clarke
Townline Rd. Bowmanville

Sat Oct 24 9am to 1pm
Town of Whitby
Whitby Operations Centre
333 Mc Kinney Dr Whitby

Durham Region Works Department www.durhamregionwaste.ca

In the News

2009-10-03T10:03:00.000-04:00

With mortgage rates dropping, it's strategy time

ROB CARRICK

September 15, 2009

It was a little less than a year ago that the global financial crisis began to hit home, which is to say that mortgage rates spiked higher.
Now, the cost of mortgages is coming down. If you're buying a home or renewing a mortgage, it's time to review your options.

Fixed-rate mortgages declined a little last week, but the most dramatic changes can be seen in variable-rate mortgages. For the first time in almost a year, it's possible to get a variable-rate mortgage at the prime rate used by most major financial institutions, which is currently 2.25 per cent.

Pre-crisis, variable-rate mortgages came with discounts that ranged from 0.75 percentage points to as much as 0.9 points off prime. By late last fall, crisis conditions prompted lenders to start charging prime plus a full percentage point or more. Now, some lenders are starting to unwind their crisis-rate premiums.

"Variable-rate mortgages are all over the map right now," said Gary Siegle, regional manager with the mortgage brokerage firm Invis Inc. in Calgary. "We're seeing them right in the area of prime with some lenders."

An example of a variable-rate mortgage at prime: ResMor Trust, a small player that deals through mortgage brokers, is offering four-year variable-rate mortgages at prime in all provinces except Quebec. The catch: You have to have your mortgage approved by Sept. 30 and close the purchase within 45 days.

Can variable-rate mortgages fall back to their pre-crisis lows any time soon?
"Definitely, 100 per cent, no," said Robert McLister, a mortgage broker and author of the Canadian Mortgage Trends blog (canadianmortgagetrends.com). "Could they get a little below prime? Definitely."

Okay, it's strategy time. With prime at 2.25 per cent and fully discounted five-year fixed-rate mortgages going for something in the area of 3.9 to 4.1 per cent, you're got some thinking to do if you're buying a home or renewing a mortgage.

The variable rate looks tempting. Sure, the prime is going to rise in the medium term, but it's expected to stay put until next spring at least. Even when prime does move higher, it will have to increase by roughly 1.75 percentage points to get to where today's five-year mortgages are.
"The risk is obviously that rates go up a lot more," Mr. McLister warned. "Rates went down four percentage points from December, 2007, through April, 2009. They could easily go up four - why not?"

Variable-rate mortgages allow you to lock into a fixed-rate mortgage, so there's no reason why you have to ride interest rates all the way up. Still, you have to recognize that fixed-rate mortgages could be significantly more expensive by the time you decide to lock in.
An academic study of rates between 1950 and 2007 found variable-rate mortgages were the money-saving choice over five-year fixed-rate mortgages 89 per cent of the time. If you're willing to ride rates higher for a while in hopes of longer-term savings on interest costs, then consider a possible approach suggested by Mr. McLister.

Instead of arranging a variable-rate mortgage now, go for a one-year fixed-rate mortgage. Then, when you're renewing in one year's time, you'll move into a variable-rate mortgage that will ideally have a rate that is discounted below prime.
Fully discounted one-year closed mortgages today go for about 2.55 per cent, so you're not paying much of a penalty at all compared with what variable-rate mortgages are pegged at right now.

Another suggestion from Mr. McLister is to consider a three-year mortgage, which offers an attractive blend of low rates and security against interest rate surges. Three-year mortgage typically go for around 3.39 per cent on a fully discounted basis, but he knew of one small lender offering 2.9 per cent through the mortgage broker channel.

The case for going with a five-year fixed rate is that rates are very cheap by historical standards. Rates were a little bit lower last spring, but they're not as high as they were a month or two ago thanks to a pullback in bond yields that has trickled down to fixed-rate mortgages.
Mr. Siegle said over half of his firm's clients are locking into a fixed-rate mortgage right now. "You can't ever time the bottom of the market, but are these good rates that you can be comfortable with? A lot of people are saying, 'yeah, they are.' "

Bank of Canada expected to keep rates at record low

Paul Vieira, Financial Post Published: Tuesday, September 08, 2009

OTTAWA -- Analysts appear to be unanimous in believing the Bank of Canada will hold its record-low policy rate steady at its meeting Thursday, and maintain its commitment to keep the rate at 0.25% until June 2010.
The only item to look for in the pending rate statement, they indicate, is any change in nuance or tone, and possibly further concern about the rise of the Canadian dollar.

"The fact that the major economic data has largely evolved in line with the Bank of Canada's forecasts suggests (the central bank) is likely to reiterate its conditional statement to keep the overnight rate at 0.25% until the end of the second quarter of 2010," said Charmaine Buskas, senior economics strategist with TD Securities.

"And with no expected change to the overnight rate, all the focus will be on the nuances in the statement. It is likely to be very similar to the July 21 statement."
For the record, 21 economists in a Bloomberg News survey anticipate no change in the Bank of Canada rate, nor do the 11 members of the C.D. Howe Institute's monetary policy council.
The C.D. Howe said the Bank of Canada should stick to its mid-2010 commitment, adding that growth prospects remain uncertain as council members questioned how sustainable Canadian exports growth abroad will be, with "the dependence of U.S. and Chinese growth on government stimulus being a particular point of concern."

CMHC expects housing market to rebound strongly this year and next

Financial Post Published: Friday, September 04, 2009

Canada's housing market will rebound strongly in the second half of this year and into 2010, the federal housing agency said yesterday. Housing starts will reach 141,900 this year and increase to 150,300 for 2010, said Canada

Mortgage and Housing Corp. "Improving activity on the resale market and lower inventory levels in both the new and existing home markets are expected to prompt builders to increase residential construction," CMHC said.

Bob Dugan, CMHC's chief economist, said, "Economic uncertainty and lower levels of employment tempered new housing construction in the first half of this year. In the second half of 2009 and in 2010, we expect housing markets across Canada to strengthen."

Housing activity on brink of rebound, Canada Mortgage and Housing says

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

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

CMHC chief economist Bob Dugan said economic uncertainty and lower employment tempered new-housing construction in the first half of this year."In the second half of 2009 and in 2010, we expect housing markets across Canada to strengthen," he said in releasing the agency's third-quarter outlook.CMHC says improving activity on the resale market and lower inventory levels in both the new-and existing-home markets should prompt builders to increase residential construction.CMHC predicts overall starts to reach 150,300 in 2010.That compares to 211,056 housing starts recorded in 2008, of which 93,202 were single-family and 117,854 were multiple-housing units.Annual housing starts have surpassed the 200,000 mark every year since 2002.

However, CIBC World Markets economist Benjamin Tal believes the recovery in housing starts will be much slower."I think those number are a bit on the high side," he said, predicting a "not very weak, but not very strong" recovery of about 140,000 units in 2010.Tall also believes housing starts won't surpass 200,000 annually again for quite some time."We simply can't justify it. We don't have the demand," Tal said.The new normal will be about 170,000 to 180,000 starts annually, which we could hit by 2011, Tal said.Slower population growth and higher costs for new homes after provincial sales taxes are harmonized with the GST in provinces such as Ontario and B.C. next year will soften near-term growth in new home construction, Tal said.

Scotiabank economist Adrienne Warren also sees a slow recovery in new home building due to oversupply in some major markets, particularly in the condominium sector.But Warren said the CMHC forecast is yet another sign Canada's real estate market is on the rebound, and performing better than previously thought."It reaffirms that the market is far exceeding expectations across the board," Warren said.

CMHC also said Thursday it expects total sales on the Multiple Listing Service (MLS) to hit 420,700 in 2009 compared with 433,990 in 2008.That forecast is slightly higher than the Canadian Real Estate Association's recently revised 2009 resale forecast of 432,000 units.CREA boosted its outlook last week, saying it expects resale activity to drop by 0.4 per cent in 2009 versus 2008. That's better than its previous forecast of a 14.7 per cent drop year-over-year.
CHMC said the average price of a home across Canada last year was $303,607 and is expected to fall slightly to $301,400 in 2009, before climbing to $306,300 in 2010.

Warren predicts 2009 sales and prices will be on par with last year's levels."By and large we are looking at matching last year's levels, and holding steady on average, which is far from what anyone expected a few months ago," she said.She expects a "modest pickup" in sales in 2010."We will be looking at more of a balanced market."

Meantime, sales of existing homes rose in major centres across Canada in August compared to the month before.In the Greater Toronto Area, sales were up 27 per cent last month to 8,035 units compared to August 2008. The average price was $387,921, up by six per cent compared to the same month last year.Year-to-date sales in the Toronto area were 58,421 were up two per cent compared to the first eight months of 2008, the Toronto Real Estate Board reported this week. The average price of $385,978 was up by less than one-half of one per cent.
In Greater Vancouver, residential property sales increased 119.5 per cent in August to 3,441 compared to 1,568 in August 2008, according to the The Real Estate Board of Greater Vancouver.It said prices were down 1.1 per cent to $539,600 in August compared to the same month last year, but up 11.4 per cent from the start of the year.

Mortgage Rates as of Oct 2/09

2009-10-02T21:33:00.000-04:00

1 year Bank posted rate 3.70%...my rate 2.55%

2 years Bank posted rate 3.85%...my rate 2.85%

3 years Bank posted rate 4.35%...my rate 3.35%

4 years Bank posted rate 4.94%... my rate 3.64%

5 years Bank posted rate 5.49%...my rate 3.84%

7 years Bank posted rate 6.60%...my rate 4.35%

10 years Bank posted rate 6.75%..my rate 5.30%

Bank Prime 2.25%

Variable Bank posted rate2.45%..my rate 2.25%

* rates subject to change without notice
*quick close discounts available

Practical and Proven ideas for energy-efficiency

2009-10-02T21:02:00.004-04:00

Advice on Renovating Your Home

2009-10-02T21:02:00.003-04:00

Mortgage Calculator Provided by CMHC

2009-10-02T21:02:00.001-04:00

Advice on Buying Your Home

2009-10-02T21:01:00.001-04:00

Did You Know? Information Provided by CMHC

2009-10-02T20:59:00.000-04:00

The Mortgage Centre Oshawa Karen Kot

Bank of Canada maintains overnight rate target

New Mortgage Rules

Mortgage Monitor

Bank of Canada raises key interest rate a quarter point to one per cent

Uncertainty Surrounds Rate Announcement

Bank of Canada

JCI Durham Challenge

Many great mortgage rates and products available

Housing Prices News Article

Variable Rate Article

Home sales plummeted 30 per cent in July

Interest rates expected to edge up

Dinner with a CEO June 10,2010

Credit Score Secrets

Bank of Canada raises interest rate to 0.5 per cent

Ontario's housing market continues to sizzle:RBC

The Latest Read on Interest Rates

Mortgage Hunters Get Temporay Reprieve

Possible Rise In Mortgage Rates Pitting Couples Against One Another

Highlights of Benjamin Tal Weekly Market Insight

Mortgage Rates On the Rise Again

RBC raises mortgage rates Again

If you were thinking of getting pre approved beter do it now!

RBC raises mortgage rate

VAriable Rate Mortgages

Mortgage Changes in April

Royal, Td Raise Mortage Rates

Interest Rates maybe on the rise

Days of Rock Bottom Interest Rates are Numbered

Changes irk Real Estate Agents

Housing Boom to Continue

Home Sales Slow in Feb

Mortgage Insurance Rule Changes

MORTGAGE INSURANCE RULES ANNOUNCEMENTFederal Finance Minister Jim Flaherty announced prudent changes to mortgage insurance rules intended to come into force on April 19, 2010. The changes are as follows

There were no changes to down payment requirements or length of amortizations for owner-occupied residences.

Flaherty to toughen mortgage rules

Flaherty to toughen mortgage rules

Last Updated: Monday, February 15, 2010 | 9:45 PM ET Comments144Recommend65

CBC News

Finance Minister makeing changes to Mortgages

An interest rate hike this summer?

Bank Slightly lowers growth forecast for 2009-2010; interest rates unchanged

Home Buyers Opt for Fixed Rates

Home inspectors not finding grow-op clues:Marketplace

November Home Sales Rise 73%

Interst rates may rise despite BoC deadline

Housing Starts Hit their Highest Level This Year

Bank of Canada Forcast

7 Ways to Raise Your Creidt Score

Mortgage Rate Article

Home Sale Hit Record High;Outlook upgraded

Central bank forcasts 3% GDP growth in 2010

Good habits we've gained from the recession

Mortgage Rate On The Rise

How to know if you qualify for the new Home Buyers' Tax Credit

The Globe and Mail Journalism Dream Contest

In the News

In the News

How to use the Equity in Home to Take Advantage of the Home Renovation Tax Credit

Put Your Tax Dollars Back Into Your Home-The Home Renovation Tax Credit

Grandma Thompson's Prize-Winning Apple Pie

2009 E-Waste Events

In the News

Mortgage Rates as of Oct 2/09

Practical and Proven ideas for energy-efficiency

Advice on Renovating Your Home

Mortgage Calculator Provided by CMHC

Advice on Buying Your Home

Did You Know? Information Provided by CMHC

MORTGAGE INSURANCE RULES ANNOUNCEMENT

Federal Finance Minister Jim Flaherty announced prudent changes to mortgage insurance rules intended to come into force on April 19, 2010. The changes are as follows

Last Updated: Monday, February 15, 2010 | 9:45 PM ET Comments144 Recommend65