Your Mortgage Matters

HAPPY CANADA DAY !

2010-07-01T07:16:00.000-04:00

The Your Mortgage Matters Blog wishes all our readers a healthy and safe Canada Day enjoying a holiday with friends and family.

The problem with "alternate" mortgages

2009-12-09T08:00:00.000-05:00

Greg McArthur and Jacquie McNish

Globe and Mail Update Published on Sunday, Dec. 06, 2009 8:06PM EST Last updated on Monday, Dec. 07, 2009 7:29PM EST

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

But exactly how many people are being "stepped on?" Public records in Canada
are so scarce, it's impossible - even for lawmakers - to know for sure.

Ottawa relies on Canada Mortgage and Housing Corp. for data, but because none of these subprime players insured their mortgages through CMHC, the public agency knows very little about their state of their books. One source close to the Finance Department said officials at the Crown corporation figure that stranded borrowers account for only "a tiny sliver" of the country's homeowners.

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

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

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

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

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

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

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

Ms. Matthews said she doesn't expect the government to do anything for her, and is reserving her frustration for Xceed. She said the companies involved should be giving their customers more warning about their inability to renew. She received a warning letter 31/2 months before her mortgage matured.

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

Economic recovery is "solidly entrenched": Bank of Canada

2009-12-08T10:52:00.001-05:00

Paul Vieira, Financial Post

OTTAWA -- After months of uncertainty, the economic recovery now appears to be "solidly entrenched," the Bank of Canada said Tuesday, indicating its forecast for growth should unfold as envisaged.

Still, in its latest interest rate announcement, the central bank reiterated, as expected, its conditional commitment to keep its key policy rate at a record low 0.25% until June 2010 as inflation is still not expected to hit its preferred 2% target until the second half of 2011.

Recent data - from retail sales to a stunningly strong jobs report for November -- have painted a mostly cheer picture of the Canadian economy, analysts say, even though third-quarter GDP growth of 0.4% annualized came in well below the central bank's 2% expectation.

Since the central bank's latest economic forecast in October, "global economic developments have been slightly more positive and the global outlook has improved modestly," the bank's governing council said in its statement, adding though that "significant fragilities" remain.

The central bank said the composition of economic growth is unfolding as expected, highlighted by a shift toward stronger domestic demand and less reliance on exports.

"The main drivers and the profile of the projected recovery in Canada remain consistent with the bank's [outlook]," it added. "The bank continues to expect economic growth to become more solidly entrenched over the projection period and inflation to return to the 2% target in the second half of 2011."

According to the central bank's outlook, Canada is expected to grow 3.3% this quarter, followed by expansion of 3% next year and 3.3% in 2011. Predictions for strong growth gained steam late last week when data indicated the Canadian economy added 79,000 jobs in November.

Further, the central bank on Tuesday played down the impact of the stronger dollar, even though it acknowledged it remained a key risk to its forecast, and "could act as a significant further drag" on growth and inflation. The stronger loonie, which has advanced as much as 25% this year against its U.S. counterpart, led to a surge in imports in the third quarter - resulting in net exports acting as a drag on the economy of roughly 5.3 percentage points.

Since the last rate announcement, however, the dollar has on average traded a couple of cents below the central bank's working assumption of a US96¢ loonie.

Most analysts were looking for any change in nuance in the bank's statement - in particular a hint or two that it might move before its conditional pledge to keep rates at a record low until June 2010 given the surge in domestic consumption as households take advantage of record low borrowing costs.

Instead, the central bank reiterated that its target rate of 0.25% "can be expected" to remain intact until the end of the second quarter of next year. The pledge is conditional on inflation hitting the 2% target in the third quarter of 2011, as the bank expects.

The last time the bank raised its key policy rate, to 4.5%, was in July of 2007 - and shortly afterward the first signs of the credit crisis emerged.

Some economists, such as Ryan Brecht of Action Economics, expect the central bank to begin hiking its policy rate, and aggressively, starting in the second half of next year.

In a note released Tuesday morning, Mr. Brecht, the firm's senior North American economist, said he envisaged the Bank of Canada raising its target rate by 175 basis points before December of 2010, for a policy rate of 2%, or "more normal levels." Still, that would be below the 3% level in September of 2008, when Lehman Bros. collapsed, or the 4.5% peak hit more than two years ago.

Housing Starts Rise in November

2009-12-08T08:58:00.002-05:00

Tavia Grant Tuesday, Dec. 08, 2009 8:17AM 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.

Next Bank of Canada Meeting

2009-12-07T07:42:00.002-05:00

The Bank of Canada is set to meet tomorrow to have their last meeting of 2009 regarding interest rates.

It is widely held that there will be no movement from the current overnight rate of 0.25% and therefore that the prime rate will also stay at 2.25%.

Stay tuned to The Your Mortgage Matters Blog for all the details tomorrow morning. For a full report on current interest rates, make sure you check with a licensed mortgage broker.

Canadian Homeowners Feeling Bigger Pinch

2009-12-03T07:59:00.001-05:00

Garry Marr, Financial Post Published: Wednesday, November 25, 2009

Bidding wars and higher interest costs have lead to the inevitable - a drop in housing affordability for the first time in five quarters, according to a new index produced by the Royal Bank of Canada.

The bank says home ownership costs are up, something that has not happened since the spring of 2008. Despite the increase, costs are still off the peak reached for this housing cycle.

Royal Bank says 45.8% of pre-tax household income was needed to service the cost of owning a standard detached home in the third quarter of this year. That was up 1.2 percentage points from a quarter ago but well off the high of 52.3% hit in the 2008. The all-time high was 57.1%, reached in the second quarter of 1990.

"Home affordability has deteriorated in all provinces and major markets in Canada due to a slight rise in key mortgage rates and appreciation in property values," said Robert Hogue, senior economist with Royal Bank.

Further proof that house prices are on the rise came Wednesday from the Teranet-National Bank National Composite House Price Index which showed September house prices were up 1.3% from the month before, the fifth straight month that prices have risen.

"The vigor is consistent with an improvement in market conditions over 2009 to date - more homes have been selling and fewer have been coming on the market," said Marc Pinsonneault, senior economist with National Bank Financial Group.

Data released this month from the Canadian Real Estate Association, which represents 100 boards across the country, shows the trend of escalating prices is not slowing down. The Ottawa-based group said existing home prices were up 20.7% last month from October, 2008, the largest year over year increase in 20 years.

Those price increases have come as interest rates have also started to rise. Mr. Hogue said the 5.4% posted rate for a five-year closed mortgage, reached in the second quarter, is the lowest since Royal Bank started doing the study in 1985. Rates climbed to 5.73% in the third quarter for a five-year closed mortgage. The posted rate is generally at least one percentage point higher than what consumers can get on a discounted basis.

Prices have also been impacted by a supply shortages across the country. New listings last month in the country's 25 largest markets were off 16% from a year ago. New home construction is on the rise but has not been able to respond fast enough to meet the rising demand.

Phil Soper, chief executive of Royal LePage Real Estate Services, expects the supply side problem to improve in the spring, a traditional time when families consider selling to coincide with the end of the school year.

"It's a much more common time for people to list their homes than this time of year," said Mr. Soper. "I suspect the supply side of this problem will ease considerably."

He's also not that concerned with rising mortgage rates. "That's what I hoped would happen," said the chief executive. "I know policy makers are hoping they can ease their stimulative approach to monetary policy at the same time as consumer confidence and the economy overall start to improve and not cause a sharp negative downturn in housing activity. So far, this is unfolding in not a bad fashion."

gmarr@nationalpost.com

Abode Mortgage Holdings Corp Announces Closure

2009-12-01T08:23:00.002-05:00

Abode Mortgage Holdings Corp. Announces the Closure of the Company's
Mortgage Origination Business
11/30/2009 10:25:02 AM - Market Wire

VANCOUVER, BRITISH COLUMBIA, Nov 30, 2009 (Marketwire via COMTEX News Network)

Abode Mortgage Holdings Corp (TSX VENTURE:ABD) (the "Company" ) today
announces that the sale of its wholly-owned subsidiary, Abode Mortgage
Corporation (AMC), as described in the Company's November 27, 2009 press
release is no longer proceeding. Further, the interim funding and mortgage
loan purchase arrangements referred to in the release have terminated.
Without an established funding and whole loan purchase arrangement, AMC
cannot properly carry on its business and the Directors of the Company have
decided to cease operations.

In commenting on these developments, the Company's CEO, Mike Linehan, stated: "Management and the staff of AMC are devastated by the decision to cease operations. However, without a committed mortgage funding and whole loan sale partner, the business of AMC is not viable. We wish to thank our loyal industry partners and deeply regret our inability to carry on in business."

About Abode Mortgage Holdings Corp.

Abode Mortgage Holdings Corp. is a public company trading on the TSX Venture
Exchange under the symbol ABD.

SOURCE: Abode Mortgage Holdings Corp.

Abode Mortgage Holdings Corp. Mike Linehan CEO ir@abodecorp.com www.abodecorp.com

Copyright (C) 2009 Marketwire. All rights reserved.

Lenders panel plays it safe at CAAMP

2009-11-30T08:30:00.000-05:00

Tuesday, 24 November 2009

A panel of lenders at CAAMP's annual conference said they believe mortgage brokers' share of the market will continue to grow, but also emphasized the need for greater efficiency and speculated that volume bonuses could be scaled back over time.

"There is increasing penetration of the mortgage broker channel because it takes all the grief of getting a mortgage off a person's shoulders," said Stephen Smith of First National, adding the under 40 generation has created a culture of using mortgage brokers as opposed to their parents' generation who turn to banks.

Among the positive outlook there was also critique. Ivan Wahl of Xceed Mortgage Corporation talked about his company's goal to do 80 per cent of volume with 20 per cent of brokers and speculated there are only a small number of brokers who "do what they say they're going to do." John Webster of Scotia Mortgage Authority said he didn't think lenders needed to be "all things to all people" in response to one of Smith's comments about catering to all brokers, not just the ones who send in lots of deals.

On the topic of lender exclusivity, Boris Bozic of Merix Financial said it appeared lenders were after "the same 750 brokers across the country even though there are 14,000", stating brokers can have trouble gaining direct access to a lender. He also stated volume bonuses have a "shelf life expiry" and warned the industry to prepare for changes.

The panel agreed on a trend toward more screening of brokers (such as Scotia Mortgage Authority's mortgage scorecard) focusing on efficiency ratios, number of delinquencies and deal quality. And although the panel agreed the economic recovery is underway, their optimism was cautious.

"The last half of 2009 was much better than anyone expected," said Webster. "But there is still a lot of uncertainty."

Experts expect mortgage rate rise to be quick

2009-11-27T09:53:00.001-05:00

November 24, 2009 5:40 a.m.

Interest rates aren't going up any time soon, but when they do the rise will be rapid, mortgage industry experts say.

Because of this, mortgage lenders and brokers have a responsibility to help homebuyers assess their capacity to make higher monthly payments, and to constantly evaluate their chances for default.

"There should be some prudence and there should be counselling by mortgage brokers to ensure people do leave a little wiggle room," Ivan Wahl, chairman and CEO of Xceed Mortgage Corp., said at an industry conference yesterday.

Wahl praised Canadian regulators for preventing the housing meltdown that has decimated the American economy, but said mortgage lenders have a responsibility to self-regulate.

The Canadian and American housing markets fared very differently during the recession. While the financial crisis in the U.S. was caused in large part by subprime mortgages, strict regulations helped the Canadian economy avoid a similar meltdown.

However, even mortgage lenders weren't expecting the Canadian housing market to fare as well as it has.

"The last half of '09 is better than anybody expected," said John Webster, president and CEO of Scotia Mortgage Corp.

"We were looking at a nuclear winter ... ( for new mortgages), a 30 to 35 per cent drop, and that hasn't happened," agreed Stephen Smith, chairman and president of First National Financial.

When to give out your S.I.N.

2009-11-26T08:06:00.002-05:00

Follow the link to this great article on when to give our your social insurance number and why.

Experts agree mortgage rates to rise in 2010

2009-11-24T11:56:00.000-05:00

Here's a link to a great article you might want to consider as we head into 2010.

As always, we recommend you check with a licensed mortgage broker to take the stress and hassle out of mortgage negotiations.

Rapid rebound Fuels Fears of Housing Bubble

2009-11-18T11:53:00.003-05:00

Garry Marr, Financial Post

Canadian existing home prices are now rising at a pace not seen in 20 years, fueling talk that a bubble may be forming in the market.

The average price of a home sold last month was $341,079, a 20.7% increase from a year ago, the Ottawa-based Canadian Real Estate Association said Monday. Sales also continued to climb with 42,288 units trading hands, a 41% jump from October, 2008.

At the same time that demand continues to surge and interest rates remain at historic lows, supply remains critically low. New listings last month in the country's 25 largest market were off 16% from a year ago.

"I don't think it's a bubble yet," said Doug Porter, an economist with Bank of Montreal. "The rapid-fire rebound in Canadian housing is showing no sign of letting up. While that may be causing some sweaty palms among bubble-phobes, the quick turn is a vivid illustration that monetary policy still works in this country."

Mr. Porter says large markets are skewing average prices, creating a national picture that might seem more buoyant than it is in reality. Toronto, the largest market in the country, saw a 20% increase in price last month from year ago. In Vancouver, the most expensive market in the country, sales were up 170.8% from a year ago.

"There is a little bit of magic in the way they put these numbers together," said Mr. Porter.

Derek Holt, senior vice-president of economics at Scotia Capital, called what's happening in the marketplace today a once in a lifetime situation. He says record low interest rates, tight supply, a favourable lending environment and government stimulus program have all helped stir the housing pot.

"It's more the medium term, two three years, where we could get into headaches potentially," said Mr. Holt. questioning whether consumers buying today are ready for interest rates that could be three to four percentage points higher by 2011.

Real estate author Garth Turner said the latest figures prove his thesis that Canada is now in a real estate bubble. "We got this type of growth in sales and prices in the middle of a recession. The latest GDP numbers show the economy actually contracted," says Mr. Turner.

A new study from the Canadian Association of Accredited Mortgage Professionals released yesterday shows Canadians are benefitting from the lower interest rates. The average mortgage rate negotiated in the past year was 4.55%, a decline from 5.41% a year ago.

"Clearly people are thinking the worst is behind us and that comes as we have record low rates," said Jim Murphy, president of CAAMP. "If rates were to spike dramatically, there could be some concern but we just don't see that."

Gregory Klump, chief economist with CREA said while the latest numbers appear dramatic they have to be kept in context. "Activity in the early part of 2009 had fallen to a decade low. With improvement in consumer confidence and interest rates, sales activity was expected to respond.," he said.

Mr. Klump suggested prices will ease up as seller's start to take advantage of higher prices. However, CREA is now predicting prices will rise 4.2% this year after suggesting they would only increase by 1.5%.

Michael Polzler, executive vice president of Re/Max Ontario-Atlantic Canada Inc., said he's been expecting these type of price increases. "Last year at this time, everything just stopped. They were very realistic example of where everything was it," he said. "Now we are just back to kind of normal. You are going to see these type of numbers continues into the spring because we are comparing them to last year."

Turn Back Time

2009-11-01T08:38:00.001-05:00

Welcome to November ... a reminder to set your clocks back one hour today and change the batteries in your smoke detectors and other gas detectors around the house.

Happy Halowe'en

2009-10-31T08:37:00.002-04:00

Just a quick note to say Happy Hallowe'en everyone ... hope you have a safe & happy evening shelling out to the ghosts and goblins.

The recession may be officially over, but recovery is fragile and job losses still mounting

2009-10-28T09:58:00.002-04:00

Tom Raum, THE ASSOCIATED PRESS
The Canadian Press, 2009

WASHINGTON - It is about to become official: The U.S. recession is over - but not the pain.

The government will release figures this week expected to show that the economy has awakened from its deepest slump since the 1930s and is in the early stages of a recovery. But the following week, the government will issue another set of figures expected to show unemployment continuing to rise toward and possibly above a clearly recessionary 10 per cent.

How can both be possible?

The government releases third-quarter Gross Domestic Product figures on Thursday. Many forecasters say they will show GDP growing at an annual rate of about 3 per cent, validating a widely held belief among economists that the recession ended in June or July.

But try telling that to the more than 15 million still unemployed, the small businesses and individuals who can't get loans and the people whose homes are worth less than their mortgages.

Assertions by government and private economists that the recession is over - issued amid graphic examples of continuing wide distress - are raising fresh questions about economic scorekeeping.

The national recession may be technically over, but the state of the economy remains in the eyes of the beholder.

Or, as Ronald Reagan liked to say, a recession is when your neighbour loses his or her job. Depression is when you lose yours.

A survey of economic forecasters prepared by Blue Chip Economic Indicators, a research organization, predicted GDP growth to remain positive in each quarter through the end of 2010. In a survey by the National Association of Business Economics, 34 of 43 economists polled said the recession is over.

"From a technical perspective, the recession is very likely over," said Federal Reserve Chairman Ben Bernanke.

"A recession that showed no signs of ending last January appears to be firmly entering the recovery phase," said Christina Romer, the chair of the White House Council of Economic Advisers.

But nobody is sugar coating the statistics, especially in the administration, which agrees with private surveys suggesting that unemployment will hover near 10 per cent through most of next year.

"Even when you've turned the corner, you have so much work to do," Romer told Congress' Joint Economics Committee.

And while she credited much of the turnabout to government stimulus measures and moves by the Fed, she said "by mid-2010, fiscal stimulus will be contributing little to further growth."

Even ahead of the report expected to show an increase in economic growth, The Conference Board, a private Chicago-based research group, reported Tuesday that consumers' confidence about the U.S. economy fell unexpectedly in October as job prospects remained bleak.

That fueled speculation that an already gloomy holiday shopping forecast could worsen. Consumer spending accounts for more than two-thirds of the entire economy.

The economy has lost 7.2 million jobs since the recession began in December 2007, 3.4 million of them since President Barack Obama took office in January.

James K. Galbraith, an economist at the University of Texas at Austin, suggests too much attention is given to when recessions technically begin and not enough to other measures of the economy.

"It's just a word. A recession technically lasts during negative quarters. But that doesn't mean you're back to prosperity once you have positive growth. You're back to prosperity when the unemployment rate is back around 4 per cent," Galbraith said. And that, he said, could take years.

A recession is popularly defined as two or more consecutive quarters of negative economic growth, or declining output.

But a more refined determination is made by the National Bureau of Economic Research, a private group of leading economists charged with dating the start and end of economic downturns. It not only looks at GDP but at employment levels, real personal income, industrial production and wholesale
and retail sales.

It put the start date at December 2007 and has not yet called an end.

There have been 11 recessions since World War II. In the two most recent ones, job growth lagged long after the recessions were deemed over. In the most recent two - July 1990-March 1991 and March-November 2001 - the unemployment rate did not fall to prerecession levels for several years.

After the eight-month 2001 recession, the unemployment rate went from a prerecession 4 per cent in 2000 to 4.8 per cent in 2001. Then it kept climbing even higher - to 5.8 per cent in 2002 to 6 per cent in 2003. It didn't return to under 5 per cent until 2006, when it fell to 4.6 per cent.

While there are clear signs of recovery, it is uneven.

Stocks have surged about 50 per cent since their March lows. And a year after Washington rescued the financial industry, some large banks and Wall Street firms have roared back to profitability.

But smaller banks and other businesses are struggling, and many have failed or are failing.

That disconnect sparked anger among the public and led to sweeping government action last week to limit executive compensation at financial firms that accepted federal bailout money.

"While credit may be more available for large businesses, too many small business owners are still struggling to get the credit they need," Obama said in his weekly radio and Internet address. "These are the very taxpayers who stood by America's banks in a crisis - and now it's time for our banks
to stand by creditworthy small businesses, and make the loans they need to open their doors, grow their operations and create new jobs."

There have been modest improvements in manufacturing and other parts of the nonfinancial business sector, yet lingering signs of weakness in commercial real estate and retail spending.

Economists suggest some of the expected increase in economic growth is a bounce off the bottom. They attribute it to government stimulus spending, including the now-expired Cash for Clunkers program; accommodative Fed monetary policies and widespread cost-cutting by companies.

Many companies let inventories run down so much that when they ran out, orders picked up. Home resales ticked up as buyers scrambled to complete their purchases before a tax credit for first-time owners expires. And U.S. exporters have benefited from a relentless decline of the dollar that has
made U.S. goods cheaper and more competitive overseas.

But none of this adds up to a sustainable upswing.

"Absent robust job growth, it is not a true economic recovery," said White House economic adviser Jared Bernstein.

Study Says Variable Rate Mortgages Better Deal for Borrowers Most Times

2009-10-26T08:23:00.002-04:00

The Canadian Press

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

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

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

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

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

Variable rates change along with interest-rate moves.

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

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

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

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

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

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

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

Editor's note: For all your mortgage options explained in plain english, we suggest you contact a licensed mortgage broker.

Is CMHC and the Government's low rate policy a recipe for disaster or just under appreciated?

2009-10-22T16:38:00.003-04:00

An interesting opinion piece today in the National Post. Please click the link and have a read.

It seems you could take this news one of two different ways. Either that we are headed down the road to ruin due to poorly thought out policy decisions or that there's no better time to buy a home since it seems you'll be guaranteed an approval by the insurance agency.
You make the call. We look forward to your comments.

Here's the link: http://www.financialpost.com/opinion/story.html?id=734ff73e-1f8c-4bfd-b3de-5e468913e8be

No Change in Bank of Canada Key Rate

2009-10-20T19:05:00.002-04:00

As we anticipated, Bank of Canada Governor Carney announced he is leaving the Bank's overnight lending rate unchanged at 0.25% and therefore no changes are expected in the bank prime rate from the current 2.25%.

With inflationary pressures at bay, the Bank is managing to keep their conditional promise to hold rates where they are until the end of the 2nd quarter of 2010.

The high flying Canadian Dollar is expected to dampen positive economic gains experienced since July of this year and the Bank Of Canada now expects that it will reach its inflation target of 2% in the 3rd quarter of 2011 which is one quarter later than earlier forecast.

Canadian bond rates fell after the announcement as traders began backing off from earlier rate hike anticipation and the Canadian dollar was backing off as well in trading earlier today.

Fixed interest rates on the rise

2009-10-13T12:47:00.002-04:00

Mortgage rates are on the rise today at most lenders ... the balance will no doubt follow suit in a day or so.

The discounted rates under 4.00% for all terms are still available (O.A.C.) for a limited period of time so get in touch with a licensed mortgage broker and protect yourself from rising rates for the next 120 days.

120 day rate protection covers you from now until mid February 2010 so anyone with a mortgage maturing between now and then should be getting off the fence and acting now. Any purchase transaction with a closing date between now and then should make sure that the financing has been arranged. There is no model to suggest where rates will go over the next while but if you can get a 3.79% 5 year closed mortgage rate today, why take the chance and wait til tomorrow to make your application through a licensed mortgage broker?

Time to find an organizing solution?

2009-10-13T08:33:00.000-04:00

Organizing Solutions understands that your home is an important part of your
life and that how you live and feel in it has a huge impact on your day to
day activities.

If you are living with too much "stuff" and are overwhelmed
with what to do and where to start, Organizing Solutions can help.

Professional Organizer and Owner Jenny McKee can offer ideas or give you
hands on help to set up systems in your home and make things more efficient
and easier to manage. Clear out the clutter that is weighing you down and
take back the space lost from disorganization.

Give her a call, all you have to lose is the clutter! (905)697-7006

Happy Thanksgiving !

2009-10-10T09:15:00.003-04:00

Its not often we take a step away from the main theme of this blog but there are certain special times of the year when we like to do so. We have much to be thankful for here at the Your Mortgage Matters blog even though it has been a hard year in the industry and economy in general. As some of you also know, we have had some serious health issues to deal with in a close family member this year too and your good wishes and prayers have been more appreciated than you can imagine.

So let's take a moment to enjoy some down time from the world ... it has already been a very tough year for some and continues to be for many others.

Enjoy the company of family & friends this weekend and really sit back for a minute and think of all you have to be thankful for. The things we take for granted on a daily basis ... clean water, a good education system for our children, safe streets & stores full of everything from the basics to the luxury items. Good health & freedom to say what is on our minds without the fear of persecution for our thoughts or beliefs.

Happy Thanksgiving everyone and thank you for your support.

Australian bank raises interest rate

2009-10-07T08:01:00.002-04:00

The rate hike heard round the world

Paul Vieira, Financial Post

The Reserve Bank of Australia has become the first major central bank to raise interest rates since the financial crisis, citing rising home and stock prices along with the traditional focus on growth and inflation - factors other central bankers are expected to make more prominent as they seek to prevent a repeat of debilitating asset bubbles.

The surprise move by Australian central banker Glenn Stevens was greeted with enthusiasm by markets, as it was interpreted as a sign a global economic recovery was on track. Equities, commodity prices and the Canadian dollar surged on the move, although giving up some gains in later trading.

The Australian rate increase now puts the spotlight on other central banks, such as Canada's, which has been steadfast in setting rates to ensure a 2% inflation target. But inflation in Canada is expected to remain benign until 2011, forecasters say, due to excess manufacturing capacity in the economy and a strong Canadian dollar that will keep a lid on import prices.

The loonie reached a one-year high Tuesday of US 94.82¢, before closing at US 94.38¢, up 0.93¢ from Monday's close.

"Inflation is not going to be a problem. Consumer spending, and the consumer
response to cheap money, however, may be a problem," said Stewart Hall,
economist with HSBC Securities Canada.

The consumer response is what might push the Bank of Canada, just like its
Australian counterpart. In its decision, Australia's central bank cited solid gains in housing prices and a "significant" recovery in equity markets for raising its benchmark rate 25 basis points, to 3.25%.

"I do get the sense asset prices are going to be play a greater role in the
formation of monetary policy," said Michael Gregory, senior economist at BMO
Capital Markets. "Because the amount of stimulus is unprecedented, and at
emergency levels, removing it won't follow the same rules of thumb."

As a result, he said, central bankers might be looking at new measures to
determine when to raise rates. As opposed to looking strictly at inflation and growth, Mr. Gregory said central banks might be forced to pay as much attention to asset prices and credit spreads.

In Australia, the central bank has always paid close attention to housing prices - which are a national obsession and have been on a tear over the past decade - and view them as a guage of the overall strength of the economy.

One of the main debates in the aftermath of the financial crisis is the role central banks should play in averting future meltdowns, and what powers they should be granted to execute this task. By taking on a beefed-up role as overseeing the financial system, central banks would be expected to identify asset bubbles and pop them before they burst. The collapse of the U.S. real estate market, fuelled by low lending rates that attracted less-creditworthy buyers, sparked a credit crisis and global recession.

"The general view before the calamity was that monetary policy was not an effective tool in dealing with asset bubbles," said Craig Alexander, deputy chief economist at Toronto-Dominion Bank.

"But given how much damage was caused by the U.S. housing bubble, the view
now is that cleaning up the mess afterward can be far too costly and that monetary policy may need to be responsive to asset prices."

Mr. Alexander was a co-author of a TD report released Tuesday, suggesting the Bank of Canada might be forced to raise rates before it expected should Canada's housing market continue its stellar performance.

Mr. Hall said the Bank of Canada has put itself in a "tiny bit" of a box by indicating it was prepared to keep its key interest rate at 0.25% until June 2010, on the condition that inflation would hit the 2% target in early 2011.

But Mr. Hall said the central bank "would do what it wants to do" should circumstances arise. "It won't get trapped by anything."

The Bank of Canada is set to deliver its next interest-rate on Oct. 20, followed by an updated economic outlook two days later. Analysts will be eyeing the documents closely for any change in tone regarding rates. In the meantime, the Bank of Canada's senior deputy governor, Paul Jenkins, is scheduled to speak in Vancouver Thursday regarding the future "challenges" facing central banking.

What do they mean by that ?

2009-08-14T10:05:00.000-04:00

Here's our next entry: What do they mean by "acceleration" ?

According to our mortgage broker reference Marshall Spencer AMP, Mortgage Broker License # M08000817, acceleration is an expression usually used when a person has chosen to repay their mortgage payment on a weekly or biweekly basis although it can apply to any repayment program. All mortgages are drawn up showing a requirement that payments are made on a monthly basis. Most lenders nowadays will allow the borrower to divide their monthly payment in half for biweekly payments or in quarters for weekly payments which means that in stead of paying 12 monthly payments in a 52 week year, a borrower is actually paying 26 biweekly payments or 52 weekly payments in that same period. This means paying the equivalent of 13 monthly instalments in the time period where you would have only paid 12 under normal circumstances.

Since you are paying an extra payment - without penalty - you will save money by paying the mortgage down faster.

You can also accelerate your mortgage repayment but leave you payments on a monthly basis. By taking advantage of privileges normally written in to the contract to allow you to pay an extra 15% or 20% or increase your normal monthly payment amount by 15% or 20% you can also accelerate the replayment of your debt and save interest in the long run.

Great news for Variable Rate Mortgages

2009-08-11T11:58:00.001-04:00

If you are looking for even better value in a variable rate mortgage, our licensed mortgage broker tells us of one lender's innovative product offering.

Variable rate product available at prime + .15% (2.40%)

On approved credit, select a maturity date between March 19th, 2012 and May 31, 2012 and close within 60 days of commitment and you can provide your clients with this outstanding variable rate value. Please note that this offer is not available on a Stated Income Program, Secondary Home Program or Small Rental Program. Subject to lender approval and of course the offer may be revoked at anytime by the lender.

A five year variable rate mortgage is also available at prime plus .40% (2.65%). Contact a licensed mortgage broker for full details.

Get Organized for Back to School Time

2009-08-09T18:19:00.002-04:00

At back to school time, it is just as important for parents to organize their own responsibilities as it is for them to get their children ready.

Here are some tips to help you minimize headaches at this busy time of year.

Starting at the beginning of August:

1) Schedule any doctor’s appointments your child needs.
2) Determine any before or after-school care you may need & make the proper arrangements.
3) Designate a “school information area” in your house where you can keep announcements, trip slips and correspondence. This is also a great place to post a family calendar so all family members know what to expect in the upcoming days.
4) Transfer all information from your child’s school calendar onto the family calendar so everything is in one place. You’ll avoid double–booking appointments & activities. Try using one colour for each child.
5) Find a location where your children can do their homework without being sidetracked.
6) Designate a “drop area” where each family member can store backpacks, coats, lunch boxes, laptops, shoes etc. Use hooks, cubbies, tables or a chest of drawers to organize items in this area. Whether this area is near the doorway or in a mudroom, it will prevent kids from throwing everything in a pile when they walk in the door.
7) Shop for back to school clothes.
8) Help your children’s bodies adjust to their new schedule by setting & following bedtime & wake-up routines two or three weeks before school begins. Good sleep habits ensure your children will be properly rested from the very beginning of the school year.
9) Practice the morning school routine with younger children before the first day of school. Have a set schedule and consequences for being late.
10) Set up a three-ring binder to hold all the important school papers that you may need to refer to in the future. Use colour-coded dividers for each child.
11) Purchase back to school supplies. Be sure to include any supplies needed for extracurricular activities.

Quick Tip

Organizing with Kids

Here is a simple, effective system for getting your kids organized:
Plan with a goal in mind, Sort through the clutter, Organize what is left and Maintain your space each day.

It is important to give kids control so they don’t see tidying as a chore. Keep it simple: the more gadgets you use, the less likely they are to follow the plan. Keep categories straightforward & age-appropriate. Make sure containers can be opened easily by your child.

Make the storage accessible so they can reach it safely. Use colour: let them pick favourite colours that have meaning for them.

Most important, have fun organizing with your kids. Before you know it, they will be keeping their space clean themselves!

Janet Marks is a professional organizer operating in the GTA. Her services help home owners and small business organize themselves, leading to less stress, increased efficiency & more energy.

Sad news for another mortgage lender in the "alternate/bad credit" market

2009-07-30T16:28:00.002-04:00

A press release received in our office moments ago ...

Wells Fargo Financial Corporation Canada discontinues residential real estate lending

Effective July 30th, 2009, Wells Fargo Financial Corporation Canada will no longer be accepting residential mortgage loan applications through its consumer branch and indirect broker network channels.

Please treat this writing as notification of immediate cancellation of any Mortgage Broker Origination Agreement or other real estate lending agreements you may have with Wells Fargo Financial Corporation Canada or Wells Fargo Financial Corporation Canada HomePlan Mortgage.

To the extent Wells Fargo Financial Corporation Canada HomePlan Mortgage has issued a valid fully executed mortgage commitment, provided the applicant or applicants fulfill all of the terms and conditions of the mortgage commitment (including any time specified for closing or expiration of the mortgage commitment), we will honour those commitments.

Current customers and/or brokers with questions about a Wells Fargo Financial mortgage can contact our Corporate Customer Relations team at 1-800-461-8794.

We thank all of our broker partners, vendors and customers for their business and support over the years.

Sincerely,

Rick Valade
President
Wells Fargo Financial Corporation Canada

Editor's note: Contact a licensed mortgage broker to discuss your options at renewal if you are an existing Wells Fargo Financial Corporation Canada borrower.

BANK OF CANADA HOLDS OVERNIGHT TARGET AT 0.25%

2009-07-21T13:22:00.003-04:00

No changes to the prime interest rate are expected due to the Bank of Canada's announcement today.

The Bank also reminded us that its commitment to maintain the overnight rate at 0.25% is "conditional" and further remarked on signs of an emerging recovery and signs that core inflation has held up.

Turning its attention to the state of the Canadian Dollar, the Bank says that the strong loonie is "significantly moderating the pace of overall growth" but has not indicated it would be taking any action in this regard.

So in other words, continued good news for variable rate mortgage holders with no change in sight at this time. Check back with us again in another 6 weeks time for the results of the next meeting.

The return of the no frills mortgage

2009-07-20T09:34:00.002-04:00

5 year mortgage funds available at 4.19% (on approved credit) on a no frills basis. Most other discounted rate offerings are in the 4.39% range. Why pay for a feature that statistics show you probably won't use?

Contact a licensed mortgage broker to find out more.

Minor rate drops ... still waiting on all to follow suit

2009-07-17T08:30:00.003-04:00

Good morning All

Only a few minor changes to report as far as mortgage interest rates go. A couple of lenders have reduced their discounted 5 year rate by 10 BPS to 4.39%. We are aware of a lender offering a special (on approved credit and subject to conditions) of 4.24%. Contact a licensed mortgage broker for more information.

The balance of terms haven't moved in some time now although a variable rate is available at prime (which remains unchanged at 2.25%) + .35% (2.60%) vs the best variable a short while ago which was prime + .40%.

The bond has had a few ups and downs the last few days but retreated 6 bps yesterday to 2.51% maintaining a 1.98% spread with the majority of the lenders.

With these spreads close to where they were approximately 6 weeks ago immediately prior to lenders pulling the pin and jacking up rates (from well below 4.0%) by approximately .75%, many are asking the question "Why haven't they reduced rates back to where they were previously?" to which many are replying "Profit taking".

We end by saying that rumour has it that the "no frills" mortgage may be making a comeback ... stay tuned for more on that.

Consider a one year tem instead of a variable rate? Here's why ...

2009-07-16T08:32:00.001-04:00

This article courtesy of Canadian Mortgage Trends

If you want a variable-rate mortgage (and are suited to one), take a peek at a one-year instead.

A lender contact of mine recently sent me their nine good reasons why:

1) Although they’ve been improving, today’s variable-rate mortgages still have abnormally high interest rate premiums (lowest is currently prime plus 0.35%, vs prime minus 0.75% or more a year ago).

2) A 1-year mortgage doesn’t lock you into a rate for 3-5 years. That means you can renew/refinance in 12 months when (hopefully) discounts to prime might be back.

3) The rates are comparable. Variable and 1-year mortgages are both based on short-term interest rates, so they move together over time. A discounted 1 year rate for a mortgage closing within 45 days can be had today for 2.75% OAC while a variable rate can be obtained for (prime + .05 ... 2.25% + .35% =) 2.60% OAC.

4) In certain cases, rates on 1-year mortgages are better than today’s best variable rates (see above).

5) The most flexible 1-year mortgages are convertible into a fixed OR variable rate at any time, and at no cost.

6) A 1 year term gives your licensed mortgage broker an opportunity to negotiate with lenders on your behalf again in 12 months.

7) If rates go up in the next 12 months, you’re protected for the remainder of the term in a fixed-rate mortgage where there is no such protection with a variable rate.

8) If rates steadily climb over the course of five years, 1-year terms could help you come out further ahead. That’s because 1-year rates reset slower than variable rates—which is helpful when rates are rising.

9) 1-year payments are fixed for a longer period of time than variable payments. That helps you budget a little easier. (The exceptions are the minority of variable-rate products with fixed payments).

Besides a good 1-year fixed, consider a 2-year term as well (currently available OAC with closing within 45 days for 2.95%). The rates are not that far behind. For an extra 0.20%, you’ll get one additional year of rate protection.

Disclaimer: One-year terms are not suitable for everyone. The above reflects opinions and not a recommendation. Consult a licensed mortgage broker for details.

Housing sales soar in Ontario's biggest cities

2009-07-15T11:39:00.000-04:00

Courtesy of Financial Post

TORONTO - Despite all the talk of a housing downturn and economic crisis in
Ontario, the province's two biggest cities both saw record housing resales
last month for the month of June.

The Toronto Real Estate Board said Monday there were 10,955 sales in the
Greater Toronto Area in June, a 27% increase from the 8,600 homes sold a
year ago. It was the best June for sales since the board started tracking
the numbers in the mid 1960s.

In Ottawa, housing sales jumped 12.5% in June to 1,895, also a new record
for the month.

The average sale price in the GTA last month $403,972, up 2% from a year
earlier. In Ottawa, the average sale price rose 3% annually to $306,925.

"I think the next stage" might be price pressure, said Doug Porter, deputy
chief economist at BMO Capital Markets. "The moderation we have seen in
prices may not last long if this kind of sales and listing balance remains
in place."

Porter said the mad scramble to buy a house is playing out across the
country, as consumers wade back into the market tempted by interest rates
the lowest they've been in 50 years. Five-year fixed rate mortgages were as
low as 3.75% last month, though they've nudged back up to about 4.5% since.(editor's note, using a mortgage broker gives you access to 5 year rates of 4.24% OAC)

"Vancouver sales were up about 76% from a year ago, the second best June
ever for them. Calgary sales were up 27%, and Edmonton sales were up 38%,"
said the economist. "A lot of people emerged from their foxholes over the
winter and have been brought in by low mortgage rates or a belief the
economy is going to improve.

"There was some pent-up demand; things almost froze over solid over the
winter."

What do they mean by that ?

2009-07-15T07:11:00.000-04:00

Well we're almost half way through July already ... can you believe it ?

I think its about time we dedicated a few posts to answering some common questions we get here at the Your Mortgage Matters Blog. Late spring and summer are the busiest times of the year for mortgages going on the books whether people are buying or renewing/refinancing.

With that busy time come a lot more questions so its time to review our mortgage jargon and explain it in layman's terms.

We'll sprinkle in some definitions between our usual posts on other matters affecting homeowners so we hope you'll enjoy them as we pass through the lazy, hazy days of summer.

Here's out first entry: What do they mean by "acceleration" ?

According to our mortgage broker reference Marshall Spencer AMP, Mortgage Broker License # M08000817, acceleration is an expression usually used when a person has chosen to repay their mortgage payment on a weekly or biweekly basis although it can apply to any repayment program. All mortgages are drawn up showing a requirement that payments are made on a monthly basis. Most lenders nowadays will allow the borrower to divide their monthly payment in half for biweekly payments or in quarters for weekly payments which means that in stead of paying 12 monthly payments in a 52 week year, a borrower is actually paying 26 biweekly payments or 52 weekly payments in that same period. This means paying the equivalent of 13 monthly instalments in the time period where you would have only paid 12 under normal circumstances.

Since you are paying an extra payment - without penalty - you will save money by paying the mortgage down faster.

you can also accelerate your mortgage repayment but leave you payments on a monthly basis. By taking advantage of privileges normally written in to the contract to allow you to pay an extra 15% or 20% or increase your normal monthly payment amount by 15% or 20% you can also accelerate the replayment of your debt and save interest in the long run.

By contacting a licensed mortgage broker, you're taking the first step to finding the right mortgage solution for you. They are invaluable resources due to their unbiased approach and experience in the industry.

Look for another jargon-busting post coming soon - have a great day.

The basics on Mold from a Home Inspector

2009-07-13T09:18:00.000-04:00

The key to mold control is moisture control.

If mold is a problem in your home, you should clean up the mold promptly and fix the water problem. It is important to dry water-damaged areas and items within 24-48 hours to prevent mold growth.

Why is mold growing in my home?

Molds are part of the natural environment. Outdoors, molds play a part in nature by breaking down dead organic matter such as fallen leaves and dead trees, but indoors, mold growth should be avoided. Molds reproduce by means of tiny spores; the spores are invisible to the naked eye and float through outdoor and indoor air. Mold may begin growing indoors when mold spores land on surfaces that are wet. There are many types of mold, and none of them will grow without water or moisture.

Can mold cause health problems?

Molds are usually not a problem indoors, unless mold spores land on a wet or damp spot and begin growing. Molds have the potential to cause health problems. Molds produce allergens (substances that can cause allergic reactions), irritants, and in some cases, potentially toxic substances (mycotoxins). Inhaling or touching mold or mold spores may cause allergic reactions in sensitive individuals. Allergic responses include hay fever-type symptoms, such as sneezing, runny nose, red eyes, and skin rash (dermatitis). Allergic reactions to mold are common. They can be immediate or delayed. Molds can also cause asthma attacks in people with asthma who are allergic to mold. In addition, mold exposure can irritate the eyes, skin, nose, throat, and lungs of both mold-allergic and non-allergic people. Symptoms other than the allergic and irritant types are not commonly reported as a result of inhaling mold. Research on mold and health effects is ongoing. This brochure provides a brief overview; it does not describe all potential health effects related to mold exposure. For more detailed information consult a health professional. You may also wish to consult your state or local health department.

How do I get rid of mold?

It is impossible to get rid of all mold and mold spores indoors, some mold spores will be found floating through the air and in house dust. The mold spores will not grow if moisture is not present. Indoor mold growth can and should be prevented or controlled by controlling moisture indoors. If there is mold growth in your home, you must clean up the mold and fix the water problem. If you clean up the mold, but don't fix the water problem, then, most likely, the mold problem will come back

Ten Things You Should Know About Mold

1. Potential health effects and symptoms associated with mold exposures include allergic reactions, asthma, and other respiratory complaints.  
2. There is no practical way to eliminate all mold and mold spores in the indoor environment; the way to control indoor mold growth is to control moisture.  
3. If mold is a problem in your home or school, you must clean up the mold and eliminate sources of moisture.  
4. Fix the source of the water problem or leak to prevent mold growth.
5. Reduce indoor humidity (to 30-60%) to decrease mold growth by:
a. venting bathrooms, dryers, and other moisture-generating sources to the outside;
b. using air conditioners and de-humidifiers;
c. increasing ventilation;
d. and using exhaust fans whenever cooking, dishwashing, and cleaning
6. Clean and dry any damp or wet building materials and furnishings within 24-48 hours to prevent mold growth.
7. Clean mold off hard surfaces with water and detergent, and dry completely. Absorbent materials such as ceiling tiles, that are moldy, may need to be replaced.
8. Prevent condensation: Reduce the potential for condensation on cold surfaces (i.e., windows, piping, exterior walls, roof, or floors) by adding insulation.
9. In areas where there is a perpetual moisture problem, do not install carpeting (i.e., by drinking fountains, by classroom sinks, or on concrete floors with leaks or frequent condensation).
10. Molds can be found almost anywhere; they can grow on virtually any substance, providing moisture is present. There are molds that can grow on wood, paper, carpet, and foods.

Courtesy of Garry D. Heard of Greater Durham Home Inspections who can be reached by phone at 905-831-4887 or on the web

Ever thought of getting a home sauna ?

2009-07-08T09:35:00.001-04:00

Courtesy of Montreal Sauna

Cleanse your body with ease

It is well known that our skin is our largest organ; its most important role is to control the temperature of our body. By doing so it also will eliminate undesirable toxins in the process. We could actually say that it serves as a third kidney. Because of the deep penetration effect that our Montreal infrared saunas play in allowing the removal of the toxins stored in the fat cells, you will feel much better after just one sauna therapy session. Detoxifying in a Montreal Sauna will help you get rid of potentials carcinogenic heavy metals such as mercury and lead, as well as alcohol, nicotine, sodium, sulfuric acid and cholesterol.

A Home Inspector's notes on Asbestos

2009-07-06T09:14:00.001-04:00

What Is Asbestos?

Asbestos is a mineral fiber. It can be positively identified only with a special type of microscope. There are several types of asbestos fibers. In the past, asbestos was added to a variety of products to strengthen them and to provide heat insulation and fire resistance.

Where Asbestos Hazards May Be Found In The Home
Some roofing and siding shingles are made of asbestos cement.
Houses built between 1930 and 1950 may have asbestos as insulation.
Asbestos may be present in textured paint and in patching compounds used on wall and ceiling joints. Their use was banned in 1977.
Artificial ashes and embers sold for use in gas-fired fireplaces may contain asbestos.
Older products such as stove-top pads may have some asbestos compounds.
Walls and floors around woodburning stoves may be protected with asbestos paper, millboard, or cement sheets.
Asbestos is found in some vinyl floor tiles and the backing on vinyl sheet flooring and adhesives.
Hot water and steam pipes in older houses may be coated with an asbestos material or covered with an asbestos blanket or tape.
Oil and coal furnaces and door gaskets may have asbestos insulation.

What Should Be Done About Asbestos In The Home?
If you think asbestos may be in your home, don't panic, usually the best thing is to leave asbestos material that is in good condition alone. Generally, material in good condition will not release asbestos fibers. There is no danger unless fibers are released and inhaled into the lungs. Check material regularly if you suspect it may contain asbestos. Don't touch it, but look for signs of wear or damage such as tears, abrasions, or water damage. Damaged material may release asbestos fibers. This is particularly true if you often disturb it by hitting, rubbing, or handling it, or if it is exposed to extreme vibration or air flow. Sometimes, the best way to deal with slightly damaged material is to limit access to the area and not touch or disturb it. Discard damaged or worn asbestos gloves, stove-top pads, or ironing board covers. Check with local health, environmental, or other appropriate officials to find out proper handling and disposal procedures. If asbestos material is more than slightly damaged, or if you are going to make changes in your home that might disturb it, repair or removal by a professional is needed. Before you have your house remodeled, find out whether asbestos materials are present.

Courtesy of Garry D. Heard of Greater Durham Home Inspections who can be reached by phone at 905-831-4887 or on the web

Why aren't interest rates moving back down ?

2009-06-29T10:45:00.001-04:00

We have continued to see a retraction in the 5 year bond which is now 15 bps (basis points) lower than a week ago. Bank spreads (profit margin) over bond have increased to 2% yet there has been little to no movement in the 5 year rate.

Why is that ?

With the number of mortgage deals closing today and tomorrow, it is unlikely that rates will change before Thursday - if at all. If a bank changed their rate downwards today, they would open themselves up to having to reduce rates on all deals closing today and tomorrow which would effect service levels (this is the busiest time of the year for mortgage closings) by requiring a flood of emails & phone calls requesting changes to documentation and also effect profits (lower rates on all those deals means less income for the lender).

Remember that the banks will be closed Wednesday for the Canada Day
Holiday.

Why have a home inspection ?

2009-06-29T09:07:00.001-04:00

Why?
A home inspection is one of the most important steps in the home purchase process. Hiring a certified home inspector is essential to ensure the inspection is conducted to a recognized standard, providing the buyer with valuable information about the condition of the home. The goal of the inspection is to identify any MAJOR problems that are apparent on a visual inspection of the property. A listing of minor building flaws or minor repairs and maintenance items may be provided as a courtesy, at the inspector’s discretion.

Selecting your Home Inspector
Your home inspector should have proper training and experience. Today several companies offer home inspection training. When selecting your home inspector ask if they as a member of a professional home inspection organization such as; American Society of Home Inspectors (ASHI), NACHI (National Association of Certified Home Inspectors), National Association of Home Inspectors (NAHI), Canadian Association of Home and Property Inspectors (CAHPI) as well as having E&O (error & omission) and liability insurance. An inspector that has worked in the building trades and has thorough know of home construction may provided added value to the inspection.

The cheapest isn't always the best
Every home inspection may have different problems. The more certifications/qualifications your home inspector has the more likely he will be able to address the issue during the initial inspection. These added services may increase the home inspection costs slightly however in the long run it will save the home buyer thousands in undetected deficiencies not found.

Certifications
As a minimum your inspector should be:

* Certified/Register Home Inspector - member of professional home inspection organization
* Certified mold inspector - inspection and testing tools. There are over 270 species of mold identified as living in Canadian homes. When mold is permitted to grow and multiply indoors, health problems can occur and building materials, goods and furnishings may be damaged.
* Infrared thermal imaging (Thermographer) - infrared camera Thermal imaging serve as an additional method of verifying defects suspected or found by other means, thus better proving the existence of the defect. (water intrusion and insulation voids) When an home inspector is also a certified mold inspector and infrared thermographer he greatly reduces the home buyer’s risk of water infiltration which cannot be seen or detected in a typical home inspection.

Additional Inspector services include; radon & asbestos testing, WETT and Septic.

Courtesy of Garry D. Heard Greater Durham home Inspections who can be reached by phone at 905-831-4887 or on the web

A note from a home inspector

2009-06-22T08:53:00.002-04:00

What makes molds grow?

 Molds will grow if we provide them with moisture and nutrients. If we keep things dry, molds do not grow
● Moisture ● Nutrients ● Suitable place to grow
High moisture levels can be the result of water coming in from the outside, through the floor, walls or roof; plumbing leaks moisture produced by the people living in the home, through daily activities like bathing, washing clothes or cooking. Water enters the building when there is a weakness or failure in the structure. Moisture accumulates within the home when there is not enough ventilation to expel that moisture.
Molds are undesirable when they grow where we don’t want them, such as in homes. Over 270 species of mold have been identified as living in Canadian homes. Molds that grow inside may be different from the ones found outdoors.

Vermiculite
Prior to its close in 1990, much of the world’s supply of vermiculite came from a mine near Libby, Montana. This mine had a natural deposit of asbestos which resulted in the vermiculite being contaminated with asbestos. Attic insulation produced using vermiculite ore, particularly ore that originated from the Libby mine, may contain asbestos fibers. Today, vermiculite is mined at three US Facilities and in other countries which have low levels of contamination in the finished material.
Home inspectors should recognize vermiculite attic insulation (especially in homes build before 1991), assume it contains asbestos, not disturb it during the inspection, note its presence in the inspection report, and note its presence as a restriction to the inspection.

What Is Asbestos?
Asbestos is a mineral fiber. It can be positively identified only with a special type of microscope. There are several types of asbestos fibers. In the past, asbestos was added to a variety of products to strengthen them and to provide heat insulation and fire resistance.

What Should Be Done About Asbestos In The Home?
If you think asbestos may be in your home, don't panic, usually the best thing is to leave asbestos material that is in good condition alone. Generally, material in good condition will not release asbestos fibers. There is no danger unless fibers are released and inhaled into the lungs. Check material regularly if you suspect it may contain asbestos. Don't touch it, but look for signs of wear or damage such as tears, abrasions, or water damage. Damaged material may release asbestos fibers. This is particularly true if you often disturb it by hitting, rubbing, or handling it, or if it is exposed to extreme vibration or air flow. Sometimes, the best way to deal with slightly damaged material is to limit access to the area and not touch or disturb it.

What is Radon?
Radon is a gas produced by the radioactive decay of the element radium. Radioactive decay is a natural, spontaneous process in which an atom of one element decays or breaks down to form another element by losing atomic particles (protons, neutrons or electrons). When solid radium decays to form radon gas, it loses two protons and two neutrons. These two protons and two neutrons are called an alpha particle, which is a type of radiation. The elements that produce radiation are referred to as radioactive. Radon itself is radioactive because it also decays, losing an alpha particle and forming the element polonium.

We thank Garry D. Heard of Greater Durham Home Inspectors who can be reached at 905-831-4887 or on the web

More pressure on interest rates ?

2009-06-16T08:17:00.002-04:00

Recently we noted that the favourite 5 year fixed term interest rates had jumped from historic lows - close to 3.5% - back up over the 4% mark. As you may know, fixed rate mortgages are priced from the bond market.

Here's a little more potentially unsettling news for you ...

The bond crept up 1 basis point and the Bankers Acceptance (BA) was up 2 basis points. It makes us wonder if the Bank od Canada will be able stay its course until next summer as was indicated.

Also, the spread between the 5 year bond and the average 5 year rate is much better than it has been. I hope that we will see some rate specials - like 30 day quick closing deals - over the next week or so.

Have a great day !

Interest rate increases got you down ?

2009-06-15T22:05:00.001-04:00

I recently saw a chart showing the average interest rate for the month of June each year since 1951.

The average of all these rates is 9.08% up to 2008. The low rates we recently experienced were not the norm and I think that some people who sat on the fence have learned that inaction can be worse than the wrong action.

So if you are balking at the recent rate increases (3.54% turned into 4.24% pretty quickly didn't it?), this is great information to remember:

1) Gather your team of professionals and listen to their advice. Friends and family members are great for giving advice but they all have day jobs which have absolutely nothing to do with mortgages, real estate etc.

2) Low interest rates are not a birthright, nor do they happen on a regular basis. Since getting into this industry 28 years ago, I and everyone I know has never seen anything like this and may never again.

3) The best time to get preapproved for a mortgage is TODAY.

4) The best way to get preapproved for a mortgage is to use the services of a licensed mortgage broker who will shop the market for you, saving you time, energy and money.

Canada's Economy one of the first to recover according to OECD

2009-06-14T16:55:00.000-04:00

Courtesy, HEATHER SCOFFIELD, GLOBE & MAIL

But it's too early to say whether a turning point has been identified in global economies, economic group's report says

Canada's economy is in good shape, and it should be one of the first in the world to come out of recession, says the head of the Organization for Economic Co-operation and Development.

"Effectively, Canada will be one of the first to come out of the recession," secretary-general Angel Gurria told business leaders and policy makers Monday at the Conférence de Montréal. His comments follow a report by the organization, one of the world's leading economic groups, signalling a possible "trough" in Canada's recession

Mr. Gurria's assessment backs up a claim of Prime Minister Stephen Harper - that Canada was one of the last countries to fall into recession, and will be one of the first to recover.

The OECD said tentative signs of a trough are also evident in other economies after months of a brutal downturn that has gripped the world.

The OECD report was the second bit of positive news, coming just before Canada Mortgage and Housing Corp. reported that housing starts rose more than 9% last month.

The group said it is still too soon to determine whether a turning point it has identified in several countries is temporary or sustainable, but that its composite leading indicators for April "point to a reduced pace of deterioration in most of the OECD economies."

The organization cited "stronger signals of a possible trough" in Canada, France, Italy and Britain.

"The signals remain tentative but they are present in the majority of the [composite leading indicators] series for these countries," the OECD said.

"Compared to last month, positive signals are also emerging in Germany, Japan and the United States," it said. "However, major non-OECD economies still face deteriorating conditions, with the exception of China and India, where tentative signs of a trough have also emerged."

In Canada, the group said, the indicator rose by 0.4 of a point in April, although was still 7.6 points below where it was a year earlier.

Also in Montreal Monday, Finance Minister Jim Flaherty expressed "cautious optimism that a global economic recovery may not be far behind" the signs already emerging that the credit crunch is easing.

Construction is on the rise

2009-06-12T16:51:00.002-04:00

Courtesy, GLOBE & MAIL

Housing starts are 'first sign that a bottom might be forming in Canadian home building activity,' economist says, although conditions still harsh in B.C.

Residential construction in Canada increased in May, yet another positive development for the housing market.

Housing starts across the country rose more than 9% in May to 128,400, seasonally adjusted and at an annual rate, from 117,600 in April, Canada Mortgage and Housing Corporation said Monday.

"This morning's housing starts data for May from CMHC provided us with the first sign that a bottom might be forming in Canadian home building activity," said Toronto-Dominion Bank economist Pascal Gauthier.

The increase was broad-based, including both single homes and multiple units such as condominiums, and was better than economists had projected.

Housing starts surged in Ontario and the Prairies, and rose more modestly elsewhere, although construction declined in British Columbia, New Brunswick and Newfoundland and Labrador.

BMO Nesbitt Burns economist Robert Kavcic pointed out that in British Columbia, housing starts on an annualized basis are near the record lows seen in the early 1980s and early 1990s, meaning the province has "the distinction of having arguably the nastiest residential construction recession this cycle."

In urban areas across Canada, construction rose 11.1%.

The broad-based nature of the rebound was an encouraging sign, TD Securities said in a research note, although it cautioned the market would remain soft.

"Indeed, after plunging precipitously since late 2007, and appearing to be in freefall in recent months, this rebound may be an indication that the sector is perhaps stabilizing," said economics strategist Millan Mulraine. "Nevertheless, with the Canadian labour market continuing to weaken and the overall economy remaining quite soft, we expect residential building activity to remain the current depressed range for some time."

Mr. Kavcic also suggested that the slump in residential construction might be finding its bottom.

"However, the weak activity has only begun to chip away at the overbuilding seen during the latest boom, and the recovery in starts will therefore likely be tepid," he said.

How about a Spring business clean-up ?

2009-06-10T21:46:00.002-04:00

Spring’s here! The birds are chirping, the frogs are croaking, the garden is sprouting and we, as business owners are - doing our thing, as usual! Are we missing an opportunity to shake things up and put a bit of spring fever into our work? Housework phobics everywhere look at the spring season as a time to clean our homes, swooshing out the dust and staleness of the long winter season. Even those grimy windows get a shine – so why don’t we apply this to our business? We could use the spring as a time to Regroup, Recycle, Renew and Remodel our business.

We can Regroup by deciding what is important to our business and what we can do without. If we look at areas such as marketing and networking, we can decide what works and change what doesn’t. There are hundreds of networking groups out there and not all are going to work for your business. Some will be long term and will evolve with you and others may be useful for a little while and then no longer. Be ruthless – if it isn’t working change it! Review your marketing plan in the spring, looking at last year as a comparison. For new business owners, at first you may have to work on instinct, advice and other peoples’ experiences. Don’t be afraid to ask advice – most business owners are happy to share what works for them. We’ve all been newbies!

Recycling is a big green issue and you can apply this to your business by repeating what works for your business. We know that if we are diligent in our accounting, consistently go over the odds with our customer service and regularly return messages, our business will probably continue to prosper and grow. Look for other areas where you can improve and then maintain that improvement.

We all deserve a little pampering and can use this to Renew. It may be something as simple as coffee with a friend during the working day or a pedicure on Friday afternoon. Whatever works for you, if it helps you to relax and take some quality time off, it will Renew your energy and commitment to your business. At the end of the working week try sitting down in a quiet place with a notepad and recording what you accomplished that week and what your plans are for the next week. Sir Richard Branson, Chairman of the Virgin Group, does this with his key staff every week and if it works for him – well, he seems to be doing okay!

Remodeling is an ongoing thing. A business is an evolving organism and change is a constant, but change without focus and a clear route is not necessarily a good thing. Planning, organization and clear goals are needed to make sure that we stay on the right track

So how about it? Is it time for a clean up?

Submitted by Christine Raynor, President of Home or Away Property Services, taking care of empty residential properties. Christine can be contacted at 905-448-0808, craynor@homeoraway.ca

Fixed rate mortgage pricing on the rise

2009-05-30T12:09:00.003-04:00

Rising bond prices are forcing many lenders to increase pricing on 5 year fixed mortgage rates.

Some lenders raised rates Thursday midnight and others joined through the day Friday with one or two holding out but probably joining the rest at some point on Monday or perhaps Sunday night.

Contact a licensed mortgage broker to review your options and make sure you get the best product for your circumstances. Believe it or not, rate is not the only thing you should consider ... ask a mortgage broker why.

5 year "Value Mortgage" pricing increases

2009-05-29T08:17:00.003-04:00

A popular "value mortgage" product had a price increase last night due to pressure on rates from shrinking margins in the bond market.

The product offers no lump sum prepayment option and was priced at 3.54% for a five year term. With the majority of Canadian mortgage holders unable to or not taking advantage of prepayments, it was becoming a popular choice. Giving up an unused feature to get a lower price is not something new in the big picture however it is seldom seen in the mortgage world.

At midnight, the rate increased to 3.79% which is the same as other discounted mortgage rates available to mortgage brokers for a five year term product WITH a prepayment feature.

Some lenders have increased their 5 year offerings to 3.84% or higher in reaction to thinner spreads due to bond market pressure this week.

This news comes at a time when the variance over prime of the "adjustable rate" or "variable rate" mortgage pricing has come down to prime plus .4% (OAC). Although pricing for this product is all over the map with some lenders offering as much as prime plus 1.0% or artificially increasing their prime to 2.50% (the majority of banks are at 2.25%) while offering prime plus .8%, by consulting a licensed mortgage broker you'll avoid worrying whether you're getting access to the best rate available.

Variable rate complaints

2009-05-14T06:19:00.000-04:00

Courtesy of Julie Sanderson, AMP

I thought I would share with you something that has been bugging me for a while. I don't mean to offend anyone, but I am starting to get annoyed by all the people bemoaning the fact that, with current market conditions, lenders are no longer offering Adjustable Rate Mortgages at "prime minus x.xx%".

I don't know about you, but I hear this complaint a lot. I hear it in coffee shops; I hear it in the grocery store while waiting in line. I hear it from inexperienced mortgage professionals. I did a little research on the Adjustable Rate Mortgage over the past while and here is what I found:

November, 2006, you could get an Adjustable Rate Mortgage at prime minus .85% (some places even had better discounting)

April, 2007, you could still get prime minus .85%

Great deal, right?

The bank prime lending rate in November, 2006 was 6%

The bank prime lending rate in April, 2007 was 6%

This means the great deal you were getting at that time with prime minus .85% was 5.15%

Now, compare with today's situation:

Bank prime is currently 2.25% and Adjustable Rate Mortgages are priced at prime plus .75%

The rate you get today is therefore 3.00%

Huh?

Anyone think Prime is going up next week? Next Month? Maybe ... next quarter? Maybe ... in 2 quarters? Maybe ... in 3 or 4 quarters? Well the Bank of Canada is signaling that it wants to hold the line on its prime until the end of the 2nd quarter of 2010 according to economists in case you're keeping score.

It's weird how so many people were so excited about the prime minus .85% product when prime was 6%, yet they are indifferent to a prime plus mortgage when prime is 2.25%. The difference is more than 2.0% in rate!

The opinions expressed are those of the author ... as always you should consult a licensed mortgage broker and discuss your own situation prior to making any decisions.

Think you are enviromentally friendly ?

2009-05-12T15:04:00.003-04:00

What is your Walk Score ?

A handy little tool of interest to you, Walk Score is a neat little site that maps a location and points of interest around it then assigns a score (I am car dependent according to my score of 35 out of 100).

And yes, it works in Canada. No personal information to fill out, instant results at the click of a mouse.

Visit Walk Score and check it out.

Why so much fuss over the 5 year term mortgage ?

2009-05-06T11:35:00.002-04:00

According to a recent Canada Mortgage and Housing Corporation (CMHC ) consumer survey, a whopping 71% of Canadian homeowners refinance their mortgage before the maturity date.

So this begs the question ... why all the fuss over taking out a mortgage for 5 years if 7 out of 10 times you won't see the maturity date and end up paying a penalty or settling for a blended rate instead ?

Another statistic to consider is from a real estate salesperson we know ... the vast majority of homeowners either consider selling or making a renovation after 3 years. If you think about it, it seems pretty reasonable. You scrape and save to move into a home and start making a list of projects ... some big and some small. When your budget is back under control from those moving costs maybe you'll start into a project and prioritize the others. Or maybe you'll start them all and finance them via lines of credit, "don't pay a cent event" or credit cards. When your cash-flow becomes a problem, you consider refinancing.

If you decide to sell and buy up/down into the right home for you either because of a job opportunity in another location, retirement, change in family size or simply because you hate the thought of a renovation project then why make it difficult and more expensive for yourself by shackling yourself to that 5 year term everyone is so in love with (but doesn't really know why) ?

So there you have it ... consider a 3 or 4 year term on your next mortgage. Odds are that you'll be thinking of if not actually doing a refinance around that time anyways. You may obtain a lower interest rate while retaining the option of early renewal but saving yourself from having to settle for a blended rate to avoid penalty or save the penalty altogether if the timing is right.

For more common sense tips on your mortgage financing options, contact a licensed mortgage broker who will work with you in an unbiased way to get you the best deal by asking about your priorities and shopping the market on your behalf.

Mortgage rates drop again

2009-04-25T17:55:00.003-04:00

Contact your mortgage broker to latch onto a great low 5 year fixed mortgage rate. At just 3.59%, its not looking like rates can drop any further than this! Last spring, discounted mortgage rates were available at approximately 5.75% ... that's a drop of over 2% in less than a year's time.

Most Canadians never take advantage of their lump sum prepayment feature ... and let's face it, who has extra money to plunk down as a lump sum ? Why do we mention this ? Read on ...

This new "Value Mortgage" offering is specifically designed with this fact in mind. Mortgage lenders take into account the cost of offering a prepayment feature into their normal pricing and the resultant interest rates. By removing this extra cost, they pass the savings on to you.

First-time homebuyers are prime candidates for this type of feature and can reap huge benefits in the savings and spend that money on furnishing their home, RSP contributions, renovations etc.

This new offering will be available Monday, April 27/09 through licensed mortgage brokers.

Over the five year term, this makes for interest-cost savings of roughly $1,200 on a $100,000 mortgage with 25-year amortization period.

For all the details on the product make sure you get in touch with your mortgage broker as soon as possible .. you never know when these historically low rates will disappear again.

What does the Bank of Canada announcement mean to you ?

2009-04-22T13:48:00.002-04:00

Garry Marr, Financial Post Published: Tuesday, April 21, 2009

The latest rate cut means consumers buying a house can borrow for as little as 3% interest on their loan if they are willing to buy into the Bank of Canada's statement Tuesday that it won't be changing rates until June, 2010.

If you don't believe the bank will hold steady on its promise, you can lock into five-year, fixed-rate mortgages for as low as 3.85% on a discounted basis (editor's note: actually, 3.69% by using a mortgage broker) -- the lowest rate in Canadian history.

But all of that may amount to nothing when it comes to soothing a Canadian housing market in which new construction has fallen below 200,000 on an annualized basis for the first time in seven years. March existing-home sales were off 13.7% from a year ago.

"What is 25 basis points among friends? It's really nothing," said Benjamin Tal, senior economist with CIBC World Markets. "This is not something that is going to change the course of the market. It only helps at the margin."

Mr. Tal did say mortgage refinancings have risen dramatically in the past few months as Canadians who might have borrowed at 5.75% just over two years ago are ready to eat any interest rate penalty because a five-year rate mortgage is now so low.

The penalty to break an existing mortgage is the greater of three months interest or what is called the interest rate differential. The interest rate differential is the lost interest between your current rate and market rates.

Mr. Tal says while there is not much lower for variable-rate mortgages to go, the gap between short-term money and long-term money is still significant enough that the temptation is not to lock in.

"You might do better the first two years [of a five-year mortgage] but not the remaining three. I'm convinced long-term interest rates will rise. I can see [long-term] rising 200 basis points. These are emergency rates and at some point this emergency will end," says the economist.

John Turner, the director of mortgages at the Bank of Montreal says he's never seen anything like what is going on in today's market.

"There is a possibility of another drop," says Mr. Turner. "But does your tummy feel good about something that has a higher possibility of going up than going down any further."

He is convinced these lower rates will boost the housing market. The 13.7% decline in home sales in March was the smallest year over year decline in six months. "I think there is a segment of the market that couldn't afford a home before," said Mr. Turner.

Don Lawby, chief executive of Century 21 Canada, said while rates are declining, banks are getting tighter with how they hand out credit.

"If you are self-employed, the banks are demanding more documentation. Appraisals are getting harder too. It's not what you bought the house for but what it's appraised for," said Mr. Lawby, who also heads up a mortgage broker business. "There is not a lot of subprime out there for people with any credit problems in their history."

Bank of Canada Rate Drop Announcement

2009-04-21T10:27:00.001-04:00

Bank of Canada cuts target rate by 25 bps to 0.25%; provides "conditional
commitment" to hold policy rate at 0.25% until end of 2010

The Bank of Canada cut the target for the overnight rate by 25 basis points to 0.25% citing a deeper-than-expected recession in Canada and the fact that "measures to stabilize the global financial system have taken longer than expected to enact". Markets were evenly split on whether the Bank would cut by 25bps or leave the target for the overnight rate at 50bps. In a twist to its usual policy, the Bank indicated that it did not lower the deposit rate paid on deposits by financial institutions at the BOC. Under normal circumstances, the deposit rate would also be cut by 25 basis points however to avoid distortions in short-term money markets, the Bank left the deposit rate unchanged. The Bank rate was cut to 0.50%.

The Bank also committed to keeping this rate structure until the end of the second quarter of 2010 in an effort to ensure that the inflation rate gravitates back to the 2% target over the medium term. While no mention of quantitative or credit easing was made in today's statement, the Bank stated that it "retains considerable flexibility in the conduct of monetary policy at low interest rates" and a framework will be outlined in Thursday's Monetary Policy Report.

The statement provided the broad strokes of the Bank's economic forecast update with details to follow in Thursday's Monetary Policy Report. On the back of recent reports, the Bank downgraded its forecast and now looks for the economy to continue to contract in the third quarter of the year. The 2009 forecast for real GDP growth was revised down to show a 3.0% decline compared to January's forecast of a 1.2% slip. The longer and deeper recession in 2009 will also put strains on the economy in 2010 and the Bank lowered its growth forecast to 2.5% from 3.8%. The Bank provided a forecast for 2011 real GDP of 4.7%. Against the weaker growth backdrop, the Bank now looks for the inflation rate to return to its target in the third quarter of 2011 rather than the second quarter and said that risks to the
projection are "tilted slightly to the downside."

Today's announcement was different in many ways relative to past statements and importantly provided a "conditional commitment" to holding both the target and deposit rate at one-quarter of a percent for a specific time frame (until the end of the second quarter of 2010). While the Bank did not produce or commit to using any other tools to implement additional easing in monetary policy, the details of their program on be released on Thursday will provide the means by which next steps can be taken if the economy disappoints the Bank's already-weak economic assumptions. The Bank also provided the detailed framework which it will use to conduct policy during this new regime. By providing removing some of the uncertainty about the direction of interest rates over the next year, the Bank is working hard to boost the confidence of Canadian households and businesses with the goal of putting the economy on a firmer growth path.

2009-04-19T21:33:00.002-04:00

The signs are everywhere ... here in the GTA and in several U.S. markets. Buyers are well, buying again!

Now that the cost of home ownership (lower home prices plus falling mortgage rates) get low enough, people realize the value of owning compared to renting.

In the U.S., February sales were up 5% compared to one year ago ... and in the U.S. Northeast, sales were up 16% and condominium sales overall were up 11.4%.
Mortgage rates south of the border are at six-decade lows right now. But they're nowhere near the low rates we're seeing here in Canada.

Although foreclosures take up almost 50% of the sales each month in some markets, agents are seeing multiple offers on some of them due to the low prices. These prices can often be below the cost of construction for 1-5 year old houses.

The Miami Herald newspaper was quoted recently saying "Buyers are starting to
think that prices are where they should be and that the market is near a bottom".

The stock market experts are starting to talk about an economic recovery from the 'Great Recession' by the end of 2009 to early 2010. Although jobless numbers are still high, the psychological effects of the G20 meeting recently in London are definitely positive.

The Toronto real estate market is really blessed. Out of almost 23,000 Toronto Real Estate Board MLS listings available for sale, a microscopic 0.80% are Power Of Sale have-to-sell homes (properties being sold by lenders - our equivalent of foreclosure in the U.S. or western Canada).

As a result, we have not been faced with the severe downward pressure on prices that many US markets have encountered.

Let's talk about the ratio of sales-to-listings in the Toronto real estate market for a minute. By the way, a "neutral" market is 24-28%. Above that is a "seller's" market and below 24% is a "buyer's" market.

Looking at the sales-to-listings for the period from January 2008 to March 2009, you'd see that we hit a low of around 13% during the months November, December and January and then the ratio started to climb again. That was big time buyer's market territory according to those ratios mentioned above. By the month of March the ratio was back up and in high neutral-market territory at 26.8%.

It's impossible to know where the bottom is until after the fact. Maybe we're still on the way down and just hit a speed-bump, at the bottom or the bottom has already passed. The point is, nobody knows so don't listen to someone who says they do.

Currently, mortgage brokers have interest rates for a 5-year fixed term ranging from 4.05% down to 3.69% - historic lows to say the very least. In January 2009 this same mortgage was 4.99% making for savings on a $300,000 mortgage payment to be about $175 monthly - that drop in just 90 days. Combine this with Toronto home price declines of about 10-15% since last September and it's no wonder the market is moving faster now!

Recently we heard of a realtor's client coordinator booking buyer showing appointments. 30 or so listings were contacted but 16 of them were already sold or had multiple offers on them after just a few days on the market.

So what should YOU do? Stay on the fence? Test the waters? Maybe attend a home buyer's seminar? There are several available in different locations across the GTA offered by many different resources.

Here's a better idea. For those who don't want to run around and add to an already hectic life, why not contact a mortgage broker and have them do it for you? Unbiased advice and access to all lenders at the same time sure do make it easy for you to save time and money.

There's an old stock market adage about trying to catch a falling knife. If applies well here in the real estate and mortgage market. Get pre-approved, be ready to pounce on the property, take advantage of these historic low rates and take advantage of this once in a lifetime situation.

Bunny prints ?

2009-04-12T08:33:00.002-04:00

Happy Easter everyone ... my little girl is running around on a chocolate high ever since we told her we saw bunny prints in the lawn.

Enjoy the day and celebrate the renewal of spring.

Is it time to lock in your mortgage ?

2009-04-09T07:09:00.002-04:00

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

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

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

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

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

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

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

Currently, the Bank of Canada's trend-setting overnight rate is at 0.5%, and Canadian banks' prime rate is at 2.5%. Most major financial institutions are now charging good customers roughly 3.5% for a one-year closed rate and closer to 4.5% for a five-year term. (Editor's note: a licensed mortgage broker can get you 3.85% OAC)

On the variable side, you're looking at prime plus 0.8 percentage points (Editor's note: a licensed mortgage broker can get you prime plus .75%), which today translates into 3.3% for a five-year term. (Editor's note: a licensed mortgage broker can get you 3.25% OAC)

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

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

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

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

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

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

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

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

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

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

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

Looking ahead, the odds seem to favour the latter.

Home Construction numbers up

2009-04-08T09:15:00.002-04:00

The pace of new home construction picked up last month in spite of some who expected the slide to continue according to sources at Canada Mortgage and Housing Corporation today.

Further good news for Ontario residents in that most of the increase stemmed from a large increase in condominiums in Ontario and Quebec. These urban multiple housing starts rose
by 28.3 % and construction of new single homes also increased by 1.3 % in March. This news comes as economists had expected home building to pull back again in March.

Ontario's Durham Region Home Sales Improve from January to February 2009

2009-04-05T11:06:00.002-04:00

Although still showing a steep decline from same month sales in 2008, sales figures are up from January this year to February.

According to the Durham Region Association of Realtors, 507 homes sold in February 2009 - that's nearly 20 a day! Considering that January 2009 only 350 sales took place it looks like what we've been saying here for months now is finally showing up in the media. Sales are increasing - by no means is the trouble over and done with - and consumers are showing optimism.

Couple those increases with the fact that the average selling price of a home also increased and you'll see why industry insiders have something to smile about. Of course the average sale price is still down from same month in 2008 however let's look at the numbers: January 2009 $257,095 and February 2009 $263,899. That increase is about 2.4%.

With all the pessimism and worry about Oshawa and its auto industry woes that the media continues to feast on, its no wonder that people missed the fact that the Canadian Real Estate Association figures show Oshawa ranking #7 out of the top 10 Canadian cities where average house prices were up from the national and major market selling prices that had declined over the year.

With mortgage interest rates at historic lows ... a five year insured mortgage available through a licensed mortgage broker is now just 3.85% ... moderate gains sould continue as we head into the spring and summer market.

NORTH AMERICAN & INTERNATIONAL ECONOMIC HIGHLIGHTS

2009-03-30T10:46:00.002-04:00

Here are some thoughts courtesy of the Senior Economist at CIBC, Benjamin Tal. Highlighted at the end of the posting are uplifting comments for Canadians ... as always we recommend that when you want information regarding the current low rate environment and whether its in your best interest to refinance, contact a licensed mortgage broker.

The main focus in the market is currently on the Geithner Plan. To summarize it in very simple terms the plan is a trillion-dollar operation by which the US acts as the world's largest hedge fund investor. The money will be committed to funds to buy up risky and distressed assets. However, it is possible that at the moment those
assets are fundamentally undervalued. So it is probable that if the funds hold the assets to maturity or until markets recover so that risk premiums are back to normal, they can sell them off at a profit.

It is a good move—not a sufficient condition for a recovery but clearly, a necessary one. Without some stability in the US financial system, we will not be able to see a sustainable recovery. And this move is undoubtedly an important one towards achieving this goal.

Another important development is that the Fed is now using quantitative easing to buy long term government bonds. And it is working. Long-term yield fell to around 2.7%—generating another wave of refinancing in the US mortgage market.

There are a few more signs of stabilization in selected pockets of the US economy. One that we follow very closely is US-based cargo volumes, which had been falling steeply for several months, are beginning to show signs of stabilizing. While too early to call this a recovery, measures of seaport, rail, trucking and airport activity
are encouraging given the recent run of gloomy economic news.

As well, credit spreads for emerging market issuers have narrowed following the US government's latest plan to purchase toxic assets from banks. Since last week, the global dollar-denominated emerging market spread — the difference between rates offered by emerging market corporate and sovereign bonds and US Treasuries,
narrowed by almost 30 basis points. And at close to 940 basis points, they are now well below the 1,300 basis points we have seen in late 2008, but are still significantly above the pre-crisis level of 400 basis points.

In Canada, despite recessionary conditions, household credit growth is still relatively healthy. Overall mortgage outstanding are rising by close to 10% on a year-over-year basis, but on a month over month basis things are clearly slowing. The extremely low mortgage rate is now generating a refinancing wave we have not seen in many years and, in fact, activity in the resale market is showing some signs of life.

We are also seeing a relatively healthy growth in lines of credit—currently rising by 15% on a year-over-year basis. This increase reflects a notable increase in credit limits in the past few years, and with borrowers not reducing their utilization rate, overall credit outstanding is rising.

Earth Hour - tonight!

2009-03-28T10:22:00.002-04:00

Time to get up and get involved in Earth Hour 2009.

Turn off your lights and take part in the movement that circles the globe.

8:30pm E.S.T.

CMHC Launches Campaign to Help Homeowners

2009-03-26T12:39:00.004-04:00

OTTAWA, March 26, 2009 - Today, the Canada Mortgage and Housing Corporation (CMHC) launched a consumer outreach campaign to help borrowers understand the importance of working with lenders to find manageable solutions if they are facing financial difficulties in repaying their mortgage loans.

"CMHC has a long tradition of offering mortgage default management tools to lenders to help them assist homeowners whose financial circumstances have changed. We want to remind people that the best course of action is to speak to their lenders at the first sign of financial difficulty. With early intervention, cooperation and a well executed plan, you can work together with your lender to find a solution." stated Mark McInnis, CMHC Vice-President of Insurance Underwriting, Servicing and Policy.

The campaign includes consumer information on the options available to homeowners who may be having difficulty meeting their mortgage payments.

This information is also being provided to government partners and credit counseling organizations.

CMHC advises homeowners to:

1. Talk to your lender at the first sign of financial difficulty

2. Clarify your financial picture, both for yourself and your lender

3. Stay informed about what options and resources might be available to you

For Approved Lenders with CMHC-insured mortgages, CMHC provides tools and the flexibility to make timely decisions when working with homeowners to find a solution to an individual's unique financial situation. These tools include:

* Offering a temporary short-term payment deferral. Lenders may be prepared to offer greater payment flexibilities especially if previous lump sum prepayments have been made, or if an accelerated payment schedule has been previously chosen.

* Extending the original repayment period (amortization) in order to lower the monthly mortgage payments.

* Adding any missed payments (arrears) to the mortgage balance and spreading them over the remaining mortgage repayment period.

* Offering a special payment arrangement unique to an individual's particular financial situation.

More information and resources are available at CMHC's website search keywords "mortgage payment difficulties", or at 1-800-668-2642.

CMHC is Canada's national housing agency. For more than 60 years CMHC has shared a wealth of knowledge and housing expertise to help create an informed and reassured homeownership experience for Canadians.

For more information: Kristen Scheel, CMHC Media Relations, 613-748-2799

Happy March Break !

2009-03-16T09:24:00.002-04:00

Well if your kids are off school this week like mine is ... good luck !!

Hey, just kidding. What a great time to decompress a bit. Bad news stories still abound, winter still hanging around and you've probably seen that nasty flu bug more than once in the last several weeks.

Time for a break !

Go to the zoo, museum, do an overnight trip to visit out of town family & then return the favour or even book a hotel out of town. Shake up your routine and spend some quality time with the most important people in your life.

Enjoy yourselves ... remember its not as bad out there as the media would have us believe. Take a break, look around you and remember what is really important.

See you with some great new articels after the march Break vacatio is over ... I'm off to the zoo with my wife and 3 year old!

Your Mortgage Matters on Rogers TV today !

2009-03-06T07:47:00.002-05:00

Hello Durham viewers of Rogers Cable 10 ... Marshall Spencer, Accredited Mortgage Professional and licensed mortgage broker (license # M08000817)at RMA-Spencer Group Mortgages (license #10655) is appearing today on First Local Midday on local Rogers stations to talk about the mortgage market. We may not reach the Toronto or other large markets but if you're in Durham Region (Pickering, Ajax, Whitby, Oshawa, Bowmanville, Courtice etc) then he's there for you.

Tune in for an informative talk segment and learn a thing or two: misconceptions about using a mortgage broker, what do the recent rate drops mean to me, how can I get myself ready to be approved for my mortgage ... and many others.

Have a great Friday and see you at noon !

Bank of Canada Rate Drops by half a percent

2009-03-03T14:58:00.003-05:00

Take this opportunity to contact your licensed mortgage professional and compare your existing mortgage with what is available today. You may be surprised at how much you can save. Check back with us soon to see how today's announcement affects the fixed rate mortgages.

OTTAWA - The Bank of Canada today announced that it is lowering its target for the overnight rate by one-half of a percentage point to 1/2 per cent.

The outlook for the global economy has continued to deteriorate since the Bank's January Monetary Policy Report Update, with weaker-than-expected activity in major economies. The nature of the U.S. recession, with very weak auto and housing sectors, is particularly challenging for Canada.

Stabilization of the global financial system remains a precondition for the global and Canadian economic recoveries. The timely implementation of ambitious plans in some major countries to address toxic assets and recapitalize financial institutions will be critical in this regard.

National accounts data for the fourth quarter of 2008 and other indicators of aggregate demand point to a sharper decline in Canadian economic activity and a larger output gap through the first half of 2009 than projected in January. Potential delays in stabilizing the global financial system, along with larger-than-anticipated confidence and wealth effects on domestic demand, could mean that the output gap will not begin to close until early 2010. These factors imply a slightly lower profile for core inflation than was projected in the January MPRU.

The effects of the recent aggressive monetary and fiscal policy actions in Canada and other major economies will begin to be felt in the second half of this year and will build through 2010. Once the global financial system stabilizes and global growth recovers, the underlying strength of the Canadian economy and financial sector should ensure a more rapid recovery in Canada than in most other industrialized economies.

The Bank's decision to lower its policy rate by 50 basis points today brings the cumulative monetary policy easing to 400 basis points since December 2007. Consistent with returning total CPI inflation to 2 per cent, the target for the overnight rate can be expected to remain at this level or lower at least until there are clear signs that excess supply in the economy is being taken up.

Given the low level of the target for the overnight rate, the Bank is refining the approach it would take to provide additional monetary stimulus, if required, through credit and quantitative easing. In its April Monetary Policy Report, the Bank will outline a framework for the possible use of such measures.

The Bank will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required to achieve its 2 per cent inflation target over the medium term.

Is the Bank of Canada running out of bullets ?

2009-03-02T08:34:00.005-05:00

People are noticing that interest rates are at 65 year lows ... contact a mortgage professional to compare your existing mortgage with a new deal at today's fantastic rates. It costs nothing for the call and you may find out you'll save in the long run and lock in today's rates for another few years to come. Here's an article which should provide more good news for those in variable rate mortgages.

JULIAN BELTRAME Globe and Mail Report on Business The Canadian Press

OTTAWA - Just about now, Bank of Canada governor Mark Carney should be experiencing that sinking, helpless feeling about the economy.

It's not for want of trying to shock the economy back to life.

On Tuesday, the telegenic former Goldman Sachs executive is widely expected to cut short-term interest rates another half-point to bring the central bank's overnight rate to a barely-noticeable 0.5 per cent. For all practical purposes, zero.

That would make it the seventh time Mr. Carney has eased a notch, sometimes several notches, on interest rates since taking charge of the central bank last February. In that time he has also injected $40-billion in cash into the economy through asset swaps with banks, and last week took the unusual step of agreeing to accept corporate bonds as collateral to try and free up credit.

None of it has worked and the economy continues to decline.

One problem Mr. Carney faces is that in the current global credit crunch, financial market interest rates are volatile so there's no assurance Canadian banks will pass along the full Bank of Canada rate cuts by reducing their prime lending rate by the same amount.

The prime is the base used by banks to set rates on consumer and corporate loans, lines of credit and some mortgages. While the prime has dropped in most cases by the same amount as the Bank of Canada rate in the last year or so, other interest rates in the market have been rising and loans have been harder to get as the banks avoid riskier lending during a recession.

A recent survey shows a majority of manufacturers say access to credit is still the major obstacle they face.

"There is clear evidence that very low interest rates are not working to expand economic activity," former Conservative cabinet minister Doug Peters, once also a TD Bank chief economist, wrote in a paper for the Canadian Centre for Policy Alternatives.

"In the current recessionary environment, banks are obviously worried about lending to each other, and of course, are worried about lending to consumers and firms. Interest rates that count, such as inter-bank lending rates, mortgage lending rates, bank commercial lending rates, are all unusually high, especially considering that inflation is also very close to zero."

Even before Mr. Carney's Tuesday move, a new report Monday from Statistics Canada is expected to reveal that the Canadian economy, in Finance Minister Jim Flaherty's blunt words, "fell off the table" in the fourth quarter of 2008.

Private sector economists are predicting a sharp three-to-four per cent contraction in economic activity - severe recessionary territory - but remarkably it could be worse. In fact, Mr. Carney is predicting worse for the first three months of this year with a 4.8-per-cent economic contraction.

In his last public speech in January, Mr. Carney insisted that monetary action taken so far "will work," noting the lengthy lag time between action and impact, often cited as 12 to 18 months.

Since the bank started cutting 15 months ago, Canada should be just beginning to feel the effects.

Of course, Mr. Carney has invested a lot of credibility in the assertion it will work. He has stuck out his neck by predicting the economy will bounce back like an Indian rubber ball to 3.8 per cent growth next year, a forecast that has a few supporters and many detractors.

Although he doesn't believe the rebound will be as dramatic, Bank of Montreal economist Douglas Porter says there are good reasons to buy into Mr. Carney's rosy assessment, which would make the current slump milder than the recessions of the early 1980s and 1990s.

First, interest rates are much lower now than during the previous downturns. Second, aggressive stimulus policy is kicking in. And lastly, corporate balance sheets were in better shape heading into the current recession as compared to the previous two.

These act as shock absorbers for the economy's hard landing. However, they will be of little use if the world financial system is not fixed.

That's because until global banks have the confidence and wherewithal to start lending again, the U.S. and global economies will continue to struggle. And that will keep prices for commodities that Canada exports low, sap demand for Canadian manufactured goods, and in turn stifle Canadian job creation and incomes.

And that's where Mr. Carney's frustration comes in. He is largely a spectator in a game played outside his borders, able to influence the outcome only at the margins.

Mr. Carney has received some heat for some of his decisions, most notably keeping interest rates unchanged for a full five months from May to October last year in the mistaken belief that financial markets were stabilizing. But given that he's made up for lost time since then, most economists conceded the period of inaction wasn't critical.

"There are some quibbles I might have over what the Bank of Canada or Ottawa have done, but those are just specks of sand on the beach compared to what's hit us from outside this country," says Mr. Porter.

"There are things policy makers here can do to cushion the blow, but the tools at their disposal are only so big and they can only do so much to offset this deep global downturn."

In his January speech, Mr. Carney talked about other measures at his disposal besides rate cuts, no doubt foreshadowing last week's action on corporate bonds. The bank could also follow the Fed example by implementing so-called "quantitative easing" facilities to pump funds into the private sector, or follow Japan's lead by directly buying corporate bonds, or still more exotic intrusions in the money markets.

But Mr. Holt cautions non-traditional initiatives, even if Mr. Carney judged taking on the added risk necessary, would likely not be game-changing in isolation.

The next big round of central bank action should be left to the Fed and perhaps the Bank of England, he said. This could involve printing mounds of money to buy up government treasury bills in order to free up more cash for the private sector economy.

"You can cut rates to near zero, you can stimulate the domestic economy through fiscal policy, but you still need a rebound in the U.S. and European economies," he explains.

"The smart position (for Carney) is to cut rates Tuesday and wait and see what global central banks do elsewhere."

Store More !

2009-02-18T08:41:00.002-05:00

Whether you're trying to settle your belongings into a new home, accommodate all the stuff you've collected throughout the years or show off your square footage to potential buyers, storage is almost always an issue. Want to maximize storage space in your home ? Here's how:

PURGE ... If you've recently moved you may have already pared down your belongings; if you're about to move, the less you need to pack, the better. Gather together those items you no longer want or don't need. A good rule of thumb is if it's not been used in the last year, it goes.

SELL ... or donate your rejects, or invite friends and family to help themselves. The less stuff you have to accommodate, the further your storage space will go.

Your closets are typically the first place you turn to for storage. If you prefer to store things where they;ll be out of site, make the most of them. Space solutions for closet are dizzying in variety, ranging from simple: additional shelving above the standard closet self, a second rod for more hanging space, a back-of-the-door hanging organizer; to the elaborate, like custom whole closet systems installed by professionals.

IF you need storage space above and beyond your closets (and let's face it, who doesn't?) you need to create it. One clever way to do this is by buying multifunctional furniture. As square footage has become more expensive, furniture has gotten smarter, doing double duty as storage space, Ottomans and coffee tables featuring lids that lift up, revealing useful space, have become very popular , and there are also chairs whose seat cushions sit atop storage space, and beds with shelves build in the head boards or build-in drawers below, and many other solutions.

You can also create more storage space by taking advantage of space that usually goes wasted. Put the floor space under your bed to work with some flat containers you can roll or pull out, a great idea for heavier items like books. Install floating shelves over windows and doorways or even suspend them from ceilings; its best to use these storing infrequently used or lightweight items like linens. Hallways have great potential that often goes ignored Line one wall, or both, with floating shelves, provided the hallway is wide enough to comfortable do so. Not only will this provide added storage space, it'll add interest to an otherwise boring area.

Storage solutions have evolved such that they needn't be hidden from view any longer Thanks to the wide variety of colours, patterns and sizes of storage boxes and baskets now available, it's easy to create additional space that looks right at home in any room. Plus, they offer the added advantage of being an especially inexpensive and portable means of hiding your stuff in plain sight.

(Why not get great articles like this sent directly to your in-box ? Visit RMA-Spencer Group Mortgages and subscribe to their e-newsletter to make sure you never miss a post again. This article was recently sent out in the newsletter "Mortgage Matters")

Friday the 13th

2009-02-13T07:56:00.004-05:00

NO - not a plug for a movie of the same name just a little look at folklore about bad things. Walking under ladders, black cats crossing your path, Friday the 13th, refinancing your mortgage etc.

In ancient times, people used to spend fortunes buying charms and amulets to ward off bad luck and attract good.

Luck is pretty impersonal, but good luck definitely favors the prepared mind ... so why not apply the same principal to your finances ?

If there's one huge difference I see between successful people and everyone else it's this ... successful people take the time to prepare their minds by feeding their brains something good every once in a while.

How does that apply to my finances you ask ?

If you wonder why the Jones's next door always seem to be taking advantage of opportunities (winter holiday, stress-free living etc) then they probably did something you haven't. They fed their financial "brains" some good advice from a licensed mortgage broker and refinanced their mortgage at what some analyst are describing as the lowest rates in 65 years.

The Jones Family took the bull by the horns and said "No more waiting ... we are done with high interest rates and a river of cash flowing out the door every month. We want to be prepared if there is a layoff, illness or emergency."

They called their mortgage broker and got a free, no obligation review of their options and went ahead by consolidating all their debt into one payment at a fantastic rate. They still owe the same amount of money ... but they took a smart approach and lumped it all together under one single payment.

Their extra cash ? Topping up RSP and RESP were first on their minds ... then a week down south to refresh and relax. A return trip home and they're now plowing the extra cash savings into pre-payments on their mortgage and setting up a little savings account for 3-6 months of living expenses as an emergency fund. No more stress about whether the plant is going to cut a shift and what they'll be forced to do to pay all those bills. One payment, one bill, no stress.

Call us. We're here to help. A licensed, Ontario mortgage brokerage ... RMA-Spencer Group Mortgages.

We're back at it here at the Your Mortgage Matters blog after a little bout with the flu, bronchitis and a sore throat for good measure. Now that that is over with its business as usual.

Groundhog Day !

2009-02-02T09:50:00.002-05:00

Well just for fun on a cold, mid-winter Monday morning let's recap the shadow-forecasters:

Wiarton Willie - saw his shadow

Punxsutawney Phil - saw his shadow

Shubenacadie Sam - saw his shadow

Looks like we're in for another (at least) 6 weeks of winter!

Now go warm up the snowblower and put on the hot chocolate !

A Primer for dealing with your bank

2009-01-29T12:17:00.000-05:00

This one hits close to home because this happened to us here at Your Mortgage Matters this month. Just more reason to use an unbiased professional advisor - whether it is for your mortgage, investments or what-have-you.

Problem:

Banks and other financial companies are introducing new fees and raising interest rates.

Cause:

Banks say they're paying more to raise the funds they lend out, and they're worried about loan losses in the recession.

Example:

Toronto-Dominion Bank has introduced a $35 inactivity fee for people who don't use their unsecured lines of credit over a year.

Bank of Montreal drops their mortgage rates but raises unsecured line of credit rate by 1% on a customer who carries a balance (earning the bank profit) and pays on time for years.

Response:

New fees and charges mean new reasons to look at other big banks, alternative and online banks and credit unions.

Reminder:

You're not married to your bank. It's okay to play the field. Use an independent advisor - don't just go running to your bank because they only have their own best interests in mind.

Canada's Mortgage Industry Welciomes Federal Budget Announcements

2009-01-28T07:07:00.003-05:00

Yesterday, federal Finance Minister Jim Flaherty tabled the federal budget. Several measures affect Canada's housing and mortgage industry.

Temporary home renovations tax credit of up to $1,350 for eligible home renovations and alterations

Increase in the home buyers RSP plan, withdrawal limit increased to $25,000 from the current $20,000

A new first time home buyers tax credit that will provide up to $750 in tax relief for closing costs

Broad based personal tax reductions including an increase in the personal exemption and increases to the limits for the two lowest tax brackets

Make sure you stay tuned to the Your Mortgage Matters Blog for up to date information on these and other important topics in the coming days.

Why hire a professional Renovator/Contractor ?

2009-01-27T05:49:00.000-05:00

Your Mortgage Matters is proud to have another guest post-er today. Gary Round from Gary's Home Improvements has some excellent reasons why you should hire a professional contractor when it comes to renovations.

Why should you hire a professional renovator? For piece of mind to start with. Also the job will be done once and done right!

A contractor or any renovator should give you some sort of a signed contract so that if a problem does occur he or she would return to fix the problem. There continue to be many large, do-it-yourself box stores (and you know who they are) opening in all areas. They are big on “buy are products and we can show you how to do it” . Well, that may be correct for some of the little easy to do things but for a lot of them you really need a professional’s experience and knowledge.

Beware of certain “slogans” ... there are some examples listed below:

“We happened to be in your neighbourhood.”

Be wary of anyone who comes knocking at your door looking for work! Driveway paving and roofing companies may solicit business this way, but make sure you check the company out thoroughly before agreeing to have any work done. Never hire anyone who says the offer is only good if you sign up right now, or who can’t provide references. Homeowners and reputable contractors agree: the best way to hire someone is by word of mouth.

“We require payment in full before we start work.”

Any pressure tactics to make the full payment or a larger than normal deposit before work begins should set off alarms, even if the contractor claims they need the money to buy materials. A reputable contractor won’t need to pay for materials in advance because he’ll have an account with his regular suppliers. The Canadian Home Builders’ Association (CHBA) recommends a prepayment of 10 to 20 percent of the total price.

“We can offer a special deal if you pay cash and we skip the paperwork.”

While it can be tempting to save money on your renovation by paying cash, always get an agreement in writing. The contract protects you from certain liabilities, and proves what you and the contractor have agreed to in terms of the scope of the work, the work schedule, warranty and the price and payment schedule. You should also steer clear of any contractor who can’t justify why his quote is much higher or much lower than the others. A very low price may leave you liable for accidents, injuries or damages caused on the job.

"Custom made" or "custom size.”

While sometimes you will do a custom job—to create the kitchen of your dreams or a built-in cabinet in an oddly shaped nook—the word “custom” usually means dollar signs.

Here are a couple of other warning signs to watch out for:

Lies about business records and insurance. Before you meet them, check your potential contractors out with the Better Business Bureau and your local Home Builders’ Association to see if anyone has lodged a complaint against them. If they aren’t registered with at least one of these, cancel the meeting. During the meeting, be sure to ask about their record, as well as proof of Worker’s Compensation coverage and Contractor Liability insurance.

Not asking any questions at all. A good contractor should listen to what you want, but also tell you what you need and ask about things you may not have considered. He should bring to the table expertise about how best to do the job, where you might be able to cost-share, and what you need in terms of permits or permission from the neighbours.

Actions speak louder than words. Your prospective contractor may be a fly-by-night operation if the quote he gives you is printed on plain paper instead of letterhead, if it doesn’t have an itemized breakdown of all costs involved in the project, or if he hasn’t bothered to spend the nominal fee to put the company name on his truck.

So to finalize, when asking yourself why you should hire a professional renovator ... keep your radar on and your ears open for anything that just doesn’t sound right. Be a smart, informed consumer and never let your lack of knowledge of the industry, deter you from investigating further or asking questions. A contractor might suggest you cut corners or try a temporary solution, but in the end, you’ll be the one left footing the bill to get the job (finally) done right.

Gary Round is a renovator/contractor and operates Gary's Home Improvements. He is the president of his local chanpter of CARAHS and a board-member of the Durham Home and Small Business Association You can reach him at 905-668-8898 or by email: garys.homeimprovements@yahoo.ca

Inflation hits 2 year low

2009-01-26T07:20:00.001-05:00

Your Mortgage Matters wants to start your week off with some good news ! Check with your mortgage professional for some great news today on low interest rates.

Just when you need to hear it most - in the middle of a cold snap with economic woes and uncertainty ... you heard it right: Inflation hits a 2 year low.

In fact if not for a spike in the price of some food items the rate would actually be zero! Falling gas and energy prices were countered by rising foodstuffs (fresh vegetables, bakery and cereals all up substanitally) in the December 2008 stats.

Our island neighbours in P.E.I. actually rang up a zero with New Brunswick and Nova Scotia recording decreases of 0.6 and 0.2 per cent respectively. Statistics Canada confirms that the annual rate decreased to 1.2% for the end of 2008 which is a low not experienced since the beginning of 2007.

Month over month November '08 to December '08 prices were 0.7 per cent lower.

Even with these amazing figures, Canada's inflation rate comes in at about 1% above that of the U.S.A. but our weaker dollar and good wage gains by those keeping their jobs makes deflation less of a risk.

The Bank of Canada recently forecast inflation will likely drop below zero in the 2nd quarter once food prices react to the drops in energy and commodity prices. The Bank's "core inflation rate" which excludes energy and many food products due to their volatility remained at 2.4% last month.

Low debt-load will help us weather recession

2009-01-25T19:23:00.000-05:00

It can't save us from recession, but it will certainly reduce the pain. Canada's low debt burden - among governments, businesses and households alike - gives the country a crucial advantage as it heads into what threatens to be a long haul.

Backed up by stability in the banking system that has become the envy of many countries, the Canadian advantage is solid enough that even the global recession and financial crisis can't destroy it.

"The advantage is fundamental. It's not cyclical," said Sherry Cooper, chief economist at BMO Nesbitt Burns. "Nobody can take away the fact that Canadians are far less burdened,".

At the heart of the global recession is the fact that the U.S. government, financial institutions, households and companies lived way beyond their means for a long time. The effects of too much debt are being felt everywhere.

But since Canada's governments, financial institutions, households and companies aren't facing the same high debt problems, the country doesn't have to fix those problems to muddle through.

"So much of what is happening in the United States is because of the credit freeze. There's no comparison here. Canada is in a far better condition," Ms. Cooper said.

Bike courier André Régimbald can feel it. He navigates Ottawa's icy downtown streets daily, even when it's -30, and embraces the challenge with a thick balaclava and a grin.

He's confident - even as local messenger firms duke it out for dwindling business and he doubts some of his newer colleagues will make it through the winter with their jobs intact - that his salary will continue to flow as usual.

"It's not really bothering me," said Mr. Régimbald, 47. He's pretty sure he won't lose his job, and if he does, he knows how to find another one.

Canada is in better economic shape to handle the global recession than most other countries, and compared with previous recessions. Like the courier smiling thinly, through a missing front tooth, the hardy Canadian economy is well prepared to tough it out, even as the harsh winter of the U.S. recession sets in.

The Canadian economy can't go so far as to claim it's not being "bothered" by the global recession. After all, it is contracting, too. The pain is mounting in many industries, and the ranks of the unemployed are growing. Recovery is a long way off.

But Canada's reduced exposure to the unseemly debt loads at the heart of the crisis will stand us in good stead, economists say.

The most obvious Canadian advantage is government debt load. After fighting down the deficit in the 1990s, the federal government has been able to pay off more than $100-billion in debt in the past decade, and most provinces have vastly improved their books as well.

Not so in the rest of the world. The U.S. deficit has ballooned and Japan's is enormous. While most European countries have kept their debts under control, Canada's total debt burden is still lower. As Ottawa and the provinces ready themselves to spend billions in an attempt to mitigate the recession, Canada can well afford to do so.

"The debt [burden] gives us lots of room to manoeuvre. This is the time to raise it," said Andrew Sharpe, executive director of the Ottawa-based Centre for the Study of Living Standards. "We've built up this big advantage, so let's use it. But wisely.

"The Canadian banking sector has also gained international recognition for its ingrained conservatism. While major banks around the world have toppled and have required government bailouts, Canadian banks remain somewhat profitable and well capitalized. Unlike their global competitors, they are still lending, and are able to raise money in financial markets, albeit at steep prices.

The corporate sector, as a whole, has been equally thrifty and conservative. Debt levels are low, and companies generally have high cash balances at the ready - useful for plugging holes due to sudden collapses in revenue that could well hit in the next few quarters.

As corporate income surged over the past few years, economists were worried that Canadian companies weren't putting their newfound bounty to good use, by leveraging it for further expansion. Now, the companies' tight fists seem to be paying off.

The lack of available credit in the United States is forcing debt-addicted companies to de-leverage, pummelling stocks and causing massive layoffs. In Canada, companies aren't as needy of credit. While stocks are plunging here and layoffs have begun, the carnage is not as deep or widespread.

Canadian consumers have shown a similar conservative attitude toward debt. While U.S. homeowners were using their houses as ABMs, and buying homes with spurious loans, Canada also experienced a housing boom and embraced the U.S. practice of borrowing against our houses to finance consumption.

But mortgages here were not nearly as high risk. Housing prices are now falling, but not to the extent as in the United States or Britain."We are leveraged, but they are more leveraged," said Benjamin Tal, senior economist at CIBC World Markets. "If you want to feel good about yourself, just look south of the border.

"There, falling home prices and the rising cost of credit mean many homeowners' mortgages are now bigger than the value of their homes. That hasn't happened in Canada. Plus, Canadians are generally not as exposed to the stock market as in other industrialized countries, so the negative wealth effect that many Americans are experiencing right now is not as severe in Canada.

But there's a serious crack in the tough Canadian outer shell. The savings that Canadians have used in the past as protection against hard times are no longer there. With the savings rate hovering near zero over the past few years, that buffer is gone, Mr. Tal says.

Since consumer debt levels have risen, savings have dwindled, and credit is harder to get, "we are clearly as vulnerable, in terms of the position of the economy, as we were in [the last recession in] 1991.

"Plus, the safety net for those vulnerable people is not nearly as strong as it used to be.

Bike courier Mr. Régimbald is a case in point. He has no savings. And while he's certain he won't spend any time being unemployed, if he's wrong, he's not covered by employment insurance.

"The changes to employment insurance over the years have just been Draconian," said Ken Battle, president of the Ottawa-based Caledon Institute for Social Policy. "It's been reduced to rubble."

Only 43 per cent of unemployed people were covered by EI in 2007, compared with about 80 per cent in the 1990s, he said. Regional variations are striking, with only 32 per cent of Ontario's unemployed people receiving coverage. Women are less likely to be covered than men.

And the backup plan for people with little income - provincial welfare programs - is notoriously meagre and archaic, Mr. Battle added.

Still, the federal government has been made aware of the shortcomings of the EI program, and is poised to make changes in next week's budget.

G7 debt to GDP ratios

Canada has a much lower government debt per capita than other G7 countries

DEBT VIEWED AS A PERCENTAGE OF GDP, 2008

Canada: 22%
Britain: 33%
France: 36%
Germany: 43%
U.S.: 46%
Italy: 87%
Japan: 88%

THE GLOBE AND MAIL
SOURCE: BANK OF CANADA

Realtors call on federal government to stimulate housing mrket

2009-01-21T07:18:00.001-05:00

Published January 15, 2009 CREA

The Canadian Real Estate Association is calling on the federal government to include several housing initiatives in the upcoming budget. The association believes the proposals are even more important in today's recessionary times, based on the impact housing has on the overall economy and the reported results of MLS residential sales in 2008.

"Bay Street needs to take a back seat to Main Street in the next federal budget," says the President of The Canadian Real Estate Association, Calvin Lindberg. "The government has already moved to help credit markets and our chartered banks, now it's time to take direct and immediate action to help ordinary Canadians."

Statistics released today by the CREA show that the residential housing market sales volume withdrew in 2008 to levels not seen since 2002. More importantly, the most recent statistics from December 2008 show that sales activity reached its lowest level for the month of December since 2000. Some 434,477 homes traded hands via the MLS systems of real estate boards in Canada in 2008, down 17.1 per cent from the record 523,855 properties sold in 2007.

"We are pleased the Minister of Finance and the government have recognized the need for action by ranking housing as one of the top six issues in its pre-budget consultations," Mr. Lindberg added.

CREA has met with senior government officials and proposed several measures to help stimulate the housing market, both for residential and commercial investors.

For residential homebuyers, CREA proposes the government increase the limit of the Home Buyers Plan (HBP). Introduced in 1992 by a Conservative government and made permanent by a Liberal government in 1994, the HBP has broad political and consumer support.

The HBP allows first time homebuyers to withdraw up to $20,000 from their RRSP to help purchase a residential property, which must be repaid over a period of 15 years.

Unfortunately, the HBP has not kept pace with inflation or home prices. As a result, the HBP does not have the same impact and relevance it did 16 years ago, when $20,000 represented 13.3 per cent of the average house price, versus about 6.5 per cent today.

"The government should immediately raise the HBP limit from $20,000 to $25,000 and it should keep pace with annual inflation. Additionally, it should be available to all home buyers, not just first time buyers," the CREA President added.

To address issues facing the commercial and investment property markets, CREA is seeking amendments to the Income Tax Act to promote increased reinvestment in real property. The CREA proposal calls for the deferral of capital gains taxes and the capital cost allowance recovery for all real property investments when an investment property is sold and the proceeds are re-invested in another real property within the subsequent year.

"Our proposal has benefits across the board for the economy, for rental housing and for the small investor, as well as some significant environmental benefits as old buildings are renovated and made more energy efficient. The budget is the perfect time for this sort of stimulus," Calvin Lindberg added.

Studies show that more than 29 jobs are created for every $1 million invested in property renovation. A study prepared by Altus Clayton for CREA also shows that each residential MLS transaction generated an additional $32,200 in consumer spending. Commercial and investment property transactions can generate even higher levels of economic spinoffs.

Canada Mortgage and Housing Corporation (CMHC) reported that rental construction is not growing fast enough to offset demand. At the same time, the Ontario Housing Supply Working Group has found that tax changes, such as the proposed rollover, "will not only lower the rent threshold at which a new project will be viable...new supply will help reduce demand pressures and...increase the supply of vacant units in existing stock."

CREA's proposed deferral and reinvestment will help the small investor disproportionately. Research based on the 2006 tax year indicates that 58 per cent of those reporting real property gains had net incomes of $50,000 or lower.

CREA's detailed proposal for the Home Buyers Plan is available on www.crea.ca.

CREA's capital gains proposal is also posted on www.crea.ca.

A podcast with CREA President Calvin Lindberg is also available on
www.crea.ca.

Bank of Canada Rate Drop

2009-01-20T11:06:00.003-05:00

Here's some news from today's headlines ... good news for many however the lower rates also mean a dropping value in the loonie for those travelling south this winter. Don't forget to talk to your independent mortgage professional regarding interest rates and products best suited for your situation.

Bank's key rate cut to record low

OTTAWA - The Bank of Canada has chopped its key interest rate by another half percentage point to its lowest level ever, and warned that the Canadian economy will contract by 1.2 % this year.

The central bank's target for the overnight lending rate now stands at 1% - lower than in 1958, when the most-watched policy rate was 1.12 per cent.

"The outlook for the global economy has deteriorated since the bank's December interest rate announcement, with the intensifying financial crisis spilling over into real economic activity," the bank said in its gloomiest statement yet.

In separate announcements, Toronto-Dominion Bank and Bank of Montreal
responded by announcing they have cut their prime lending rates by 50 basis points to 3 per cent. BMO said it is cutting key mortgage rates by 30 to 50 basis points.

Last fall, the bank had counted on the Canadian economy growing by 0.6 % this year. But since then, it has recognized that Canada is in recession, and now says the economy will shrink by 1.2 per cent in 2009, as the country succumbs to sagging global demand, lower energy prices and a collapse of confidence around the world.

"Canadian exports are down sharply, and domestic demand is shrinking as a result of declines in real income, household wealth, and consumer and business confidence," the bank said.

Already down in overnight trading, the Canadian dollar fell further after the bank's announcement, and was down 0.84 cents U.S. to 78.90 cents just after 9 a.m. ET.

Since slack is building up in Canada's economy and housing prices are coming down modestly, inflationary pressure should also ease, the bank explained.

Total inflation will likely fall below zero for much of 2009 because of lower energy prices. And even core inflation, which excludes energy and other volatile items, will drop to about 1.1 per cent at the end of this year, the bank said.

But the central bank sees a remarkably strong recovery in 2010, with the Canadian economy growing 3.8 per cent next year and inflation edging back up to hit the bank's two per cent target in early 2011.

In order for the recovery to take hold, the global financial system has to stabilize, the bank said, but added that that process has begun, "There are signs that these extraordinary measures [by governments and central banks] are starting to gain traction, although it will take some time for financial conditions to normalize," the statement said.

Plus, the global economy should start to benefit from "considerable" monetary and fiscal stimulus, the bank said.

Canadian banks have come under criticism for failing to pass on to customers the full amount of recent previous rate cuts by the Bank of Canada.

Canada's recovery should also be bolstered by the past depreciation of the Canadian dollar, the statement added.

The bank did not promise any further interest rates to follow. Instead, the bank pointed out that it had already reduced its key rate by three and a half percentage points since December 2007, and added that it would keep an eye on how the economy and markets develop, and decide accordingly what it should do with rates.

"Guided by Canada's inflation-targeting framework, the bank will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required," it said.

Economists have warned that central banks need to be prepared to quickly reverse their aggressive interest rate cuts of the past year as soon as they see signs of recovery. Otherwise, there is so much monetary and fiscal stimulus floating around that today's disinflation could easily turn into an inflation problem when economies begin to grow again.

Economists have also been on the lookout for alternative forms of boosting the economy, aside from interest rates, with the U.S. Federal Reserve's key rate already hovering around zero, and the Bank of Canada at its lowest level too.

While Bank of Canada Governor Mark Carney has said previously that he is
examining his options, there was no suggestion in Tuesday's statement that any non-conventional measure is imminent.

Still, with the federal budget just a week away, the government is expected to introduce several easing mechanisms, as well as a huge stimulus program to help ease the bite of the recession.

The Bank of Canada will issue a more complete economic outlook on Thursday.

Real Estate industry seeks jump-start

2009-01-19T07:50:00.000-05:00

LORI MCLEOD
From Friday's Globe and Mail
January 15, 2009 at 8:30 PM EST

The real estate industry wants the federal government to bolster the housing market, as it bids goodbye to a bleak 2008 and braces for an even tougher year ahead.

The Canadian Real Estate Association (CREA), a trade organization representing real estate agents, is asking the government to broaden the Home Buyer's Plan, which allows some home buyers to withdraw RRSP funds for their purchases.

"The government has already moved to help credit markets and our chartered banks, now it's time to take direct and immediate action to help ordinary Canadians," said CREA president Calvin Lindberg in a statement.

CREA is asking Ottawa to raise the limit on RRSP withdrawals by first-time home buyers by $5,000, to $25,000, and extend the program to anyone buying a home. In addition to first-time buyers, the withdrawals are now permitted to those buying or building homes for related people with disabilities.

Economists declared the housing boom dead last year, as weakness that started the year before in Alberta spread across the country.

Existing home sales were at the lowest level in six years in 2008, according to CREA statistics released Thursday. The average home price declined slightly year-over-year to $303,594, and is expected to further erode in a trend that also began in mid-2008. The picture got darker toward the end of the year, with prices falling by 10 per cent year-over-year last month, and sales to their lowest level for a December in eight years.

"With job losses accelerating late last year, sales activity will likely remain under pressure, while the imbalance of listings relative to sales should keep prices in correction mode. All told, 2009 is shaping up to be another difficult year in the Canadian housing market," said Robert Kavcic, economic analyst at BMO Nesbitt Burns Inc.

In a recent report, the Conference Board of Canada said it expects home prices to slide by 10 per cent in 2009, a forecast that was in line with economists' estimates. In context, the average value of a resale home surged nearly 80 per cent in the six-year period ending in 2007.

The market for new homes has also been weakening, and both price growth and new building intentions are slowing. For 2009, the CMHC's outlook is for 177,975 starts, with construction expected to fall dramatically before staging a mild recovery in 2010.

In a measure of how the market is getting tougher, one Vancouver developer has decided to slash prices on inventory that has been selling at a sluggish pace.

The Onni Group said Thursday that it will cut prices by up to 40 % on 375 unsold units at seven completed condo developments in the Vancouver area, in a one-day "liquidation" sale that will take place on March 7.

The company decided the financial benefits of selling at reduced prices outweighed holding the units over the longer term, said Chris Evans, executive vice-president at Onni. The developer wants to free up funds to take advantage of opportunities when the market picks up, Mr. Evans added.

Looking for ways to stimulate the economy during the downturn and offset job losses in construction, which totalled 44,000 in December alone, the Harper government has been floating the idea of a tax credit for home renovations in the Jan. 27 budget.

The CREA initiative may face a tough time winning over policy makers. In fact, the Canadian housing market probably doesn't need the help, said Benjamin Tal, economist at CIBC World Markets Inc.

"Because this is a measured correction rather than a U.S.-style meltdown in the housing market, there is no urgent need to fix it. In an economic recession, we need to allow the housing market to balance itself in order to emerge on a more solid foundation."

Plan offers tax credit for home renovations

2009-01-17T12:10:00.002-05:00

STEVEN CHASE AND BRIAN LAGHI
From Thursday's Globe and Mail
January 15, 2009 at 4:00 AM EST

OTTAWA - The Harper government has been floating the idea of a tax credit for home renovations - an idea that could deliver significant stimulus for Canada's residential construction industry in the Jan. 27 budget.

Deliberations continue as Canada's premiers meet today in Ottawa to put the final touches on a budget request for Prime Minister Stephen Harper - one that sources say will include more cash for employment training, more benefits for the jobless and extra funding for infrastructure.

Finance Minister Jim Flaherty, meanwhile, has been conducting his own consultation on the looming budget, expected to deliver up to $30-billion in stimulus to soften an economic downturn.

During a closed-door session in Montreal last week, Mr. Flaherty asked participants' opinion on a partly refundable tax credit for renovations.

Some economists among the more than 20 attendees criticized the proposal while representatives of the building-trades sector lauded it. Tax credits can be used to reduce the amount of taxes a person owes to the government, but refundable tax credits can benefit filers even if they have no taxes to be paid; in that case, they could get a refund based on the credit.

The federal Finance Department looks favourably on stimulus spending that helps builders, in part because so many of their materials are made in Canada. This ensures more benefits of stimulus spending remain in this country than if the money goes to taxpayers in the form of rebates to spur consumption. There's a good chance that consumer spending would leak the benefits of stimulus to foreigners: 50 % of durable goods bought in Canada are imported.

"(By) contrast, only 20 % of investment in residential and non-residential buildings is imported through such inputs as building materials," the Finance Department said in its recent paper on stimulus.

One important decision Mr. Flaherty will have to make should the Tories proceed with this idea is whether to offer a tax credit for home renovation in general, or merely for retrofits and upgrades that increase energy efficiency.

Toronto Dominion Bank chief economist Don Drummond said stimulus for home renovations would be helpful because there's a limit to how many public works projects Ottawa can kick start soon.

"There's only so much of the big infrastructure stuff you can get going in 2009 and 2010," Mr. Drummond said.

"We are past the peak of employment in the construction industry, and those people are going to be getting laid off."

One drawback of programs such as subsidies for retrofitting and house refurbishment is that they are typically difficult to administer, hard to monitor and susceptible to fraud.

In Ottawa, the premiers plan to ask Mr. Harper when they meet with him tonight and tomorrow for more infrastructure money and increased flexibility in spending it.

The Harper government has committed itself to $33-billion over seven years, and is pledging to accelerate that spending. But premiers want the government to add to the overall global total.

Governments also appear close to an agreement to streamline environmental requirements for infrastructure projects. Ontario is particularly concerned for Ottawa to find a way to increase benefits for the unemployed and not just money for worker training. Toronto wants more workers to be able to access benefits.

Premiers will not put a price tag on their requests. "Most premiers are not looking to jam up the feds and put an astronomical number they can't meet," the source said.

Canada's municipal governments yesterday released a list of more than 1,000 infrastructure projects that they say could start this spring if federal funds become available.

Combined, the projects would create more than 150,000 jobs, the Federation of Canadian Municipalities said in a release.

Steps to buying a home ... part 1

2009-01-15T07:36:00.000-05:00

In what can be a confusing process, its good to have a little resource like this in your pocket. Over the next few posts in this series, we'll try to demystify the process and answer a few questions along the way. Get in touch if there are specifics for your own situation, we'd be happy to help with more information or direct you to the right resource wherever possible.

Step 1 - Pre-arrange your mortgage financing

Consulting a knowledgeable, independent mortgage broker is your best first step in this process. A mortgage broker works on your behalf and is not on the payroll of any bank or lender therefore they offer unbiased advice on the full range of products from a variety of different mortgage lenders so that you can compare and contrast the products available and select the mortgage personalized mortgage solution that works best for you (not what the bank thinks works best for you).

Your mortgage rate can be guaranteed for up to 120 days so you're able to shop for your home with the comfort of knowing that a sudden increase in rates won't affect you as long since you have those 4 months of protection. And of course if rates drop, your mortgage broker makes sure you get the benefit of the drop. (Do you really think your banker would do this for you ? They get paid to make the bank money, not save you money!)

Check back soon for our next post on downpayment options.

Housing Markets Stable to Rising in Eastern Canada

2009-01-13T10:01:00.001-05:00

Jamie Sturgeon, Financial Post Published: Monday, January 12, 2009

New home prices fell in November for the second consecutive month-to-month decrease, Statistics Canada said Monday. The average price on a new house declined 0.3%, the federal agency said, as demand continued to cool across the national real estate market in the fall. The dip continues the first reverse in home prices in more than a decade, following the 0.4% decline experienced in October. Yet the results varied from region to region, with some markets still witnessing considerable price increases.

St. John's recorded the largest annualized gain, with the value of a new home up more than 25% from 2007, a clip that narrowly outpaced Regina. The monthly increase in St. John's was 3.4%.

In a sign that Saskatchewan is beginning to feel the bite of a recession it has largely avoided so far, home prices were flat in Regina in November while in Saskatoon prices continued to come down. New home prices were down 0.5% in Saskatoon "confirming a trend of deceleration in this city," Statscan said. "Builders continued to report difficult market conditions."

The drops continued further west.

New home prices in Edmonton recorded a 12-month plunge of 7.9% - largest monthly decline since May 1985. Prices dipped 2.5% in Calgary. On a monthly basis, prices fell 0.3% in Edmonton and 1.1% in Calgary between October and November. On the West Coast, builders cut new home prices in Vancouver by 1.7% in November, a trend continued in Victoria, Statscan said.

Markets in Eastern Canada, which have shown more stable supply-demand conditions, continued to rise, Statscan said. Compared with November 2007, contractors' selling prices were 4.3% higher in Ottawa and 2.0% higher in Toronto. In Québec, the 12-month growth rate was 5.4%, while in Montréal, prices increased 4.6%, the agency said. No market east of Saskatchewan experienced a month-to-month decline in new home prices.

Your 2009 Horoscope

2009-01-12T07:38:00.000-05:00

Hey it isn't all seriousness around here all the time ... a friend passed this along and I thought I'd do the same. Have fun with it !

ARIES MARCH 21 - APRIL 20

Your intrepid nature gives you a head start over lesser mortals when it comes to facing up to life's challenges. But you will have to learn to curb your impatience this year, especially on the financial front. Your competitive streak will keep you a step ahead of the opposition, but with your responsibilities under pressure you must be prepared to streamline your workload and, possibly, even your work force. You also need to be more flexible to compensate for any lack of help owing to financial constraints. By early May you should be able to see what needs to be done to increase your financial stability, but it will still be some weeks before you are in a position to do it.

TAURUS APRIL 21 - MAY 21

Because success planet Jupiter enters the career area of your chart in January and forms a series of alliances with artistic Neptune, your creative talents will be much in demand this year. A new direction beckons, one that will mean working with different people on different kinds of projects, and you will discover skills you never knew you possessed. Something that happens around the time of July's eclipses
will remind you that there is more to life than worry and work. Your role on life's stage will alter in the coming months, and employers and other important people will have a growing influence on your fortunes. The kind of influence depends as much on you as on them.

GEMINI MAY 22 - JUNE 21

The economic forecast may not be promising, but why should you care? With your chart pointing to 2009 as being the year when you discover where you truly belong, your personal outlook is exciting and inviting. The winds of change will start making you restless around the time of the solar eclipse at the end of January, and by mid-February you will have a better idea of where you are heading. A change of priorities, and possibly scenery, will remind you that the world has more to offer in
terms of experiences and environments than you have encountered so far. With three of the year's six eclipses focusing on your finances, your attitude to money will alter and Plan B will become an attractive alternative.

CANCER JUNE 22 - JULY 23

The world is changing at an alarming rate, and if you cling to outdated ideas you will soon be left behind. Potent lunar activity in your birth sign denotes a major turning point, a point where things and people you took for granted can no longer be relied upon. Autonomy will give you strength, and even if you are one of those Cancerians who believe that this is but one of many lives, you should act as if it is the only life you are going to get. There must be a sense of urgency about what you do: Tenacity is the key to success. With Jupiter, planet of growth but also of extravagance, influencing your finances, you can make money big time, but lose big time, too.

LEO JULY 24 - AUG. 23

New people will enter your life this year, and some of the things you believe in today won't mean a thing to you tomorrow. The eclipses in early 2009 will mark a crossroads in an important relationship, and with a series of life-changing Jupiter-Neptune conjunctions also affecting your relationships, you will have more on your mind than money. That said, the fact that the disruptive Saturn-Uranus oppositions cut across the financial axis of your chart warns of changes ahead, and some brave decisions will be necessary. It will force you to start thinking along
different, more flexible lines - something you should have done long ago. Never forget that your life has a purpose that has nothing to do with the contents of your bank account.

VIRGO AUG. 24 - SEPT. 23

Don't plan on taking things easy this year. Cosmic activity highlighting your responsibilities means that your workload will increase and your main task will be to ensure that you are adequately rewarded for your efforts. Your time is precious, so don't waste it on people who don't have your best interests at heart - especially during the Saturn-Uranus oppositions in February and September. Someone you meet casually in early July will light a spark that will burn brightly for several weeks
- fun while it lasts, but it won't go on forever. External influences will have an increasing effect on your life as the year progresses, and although 2009 will not be the most comfortable year, it will turn out to be a rewarding one. Eventually.

LIBRA SEPT. 24 - OCT. 23

Your astrological forecast for 2009 is a mixture of sunshine and showers. On the downside, the Saturn-Uranus oppositions indicate a bumpy ride when it comes to your work and responsibilities. On the upside, expansive Jupiter in Aquarius means that your imagination will work overtime and you must find ways to make your creative talents pay. Powerful lunar activity in the career angle of your chart indicates opportunities on the work front - especially in June and July - but they
may not be the sort you are hoping for. Don't discard them out of hand, as they could lead to other things. Your keywords for survival this year are endurance and persistence, and as you have plenty of both you can turn the challenges into positive experiences.

SCORPIO OCT. 24 - NOV. 22

This will be a pivotal year and it is unlikely you will be in full control of what happens. What is likely is that your social circle will alter, and new friends and associates will have a significant influence on your fortunes. On the domestic front, you will move house, extend your family or change your living arrangements. February's lunar eclipse will force a difficult choice, although it may not happen until early August. Inevitably, whichever side you favour, the other side will feel
betrayed. But that is better than allowing a harmful situation to continue. There will be no shortage of challenges as the year progresses, but since your whole life is one long challenge, you will be well equipped to deal with them.

SAGITTARIUS NOV. 23 - DEC. 21

The whole tenor of your life will shift this year, forcing fundamental changes to the way you live and work. It will mean finding a way to please both employers and loved ones: If you favour one, you will lose the other's support - and that could be costly, financially or emotionally. However, your enlightened ruler Jupiter in Aquarius indicates that what you earn in 2009 matters less than what you learn,
and that depends on how open you are to new ideas. Much of what you believe in today won't mean a thing to you tomorrow - the world moves on and you must move with it. The next stage of your personal voyage of discovery will bring its own - very different - rewards.

CAPRICORN DEC. 22 - JAN. 20

The values you have now will not be the values you have at the end of 2009, so be ready to change your outlook and approach life from a less traditional viewpoint. Jupiter's transit of Aquarius will affect not only your finances, but your belief system, too. Distance lends enchantment, and the planets suggest that you will want to spend more time alone this year. The question is: Are you travelling in the right direction? With the Saturn-Uranus opposition cutting across the knowledge and enlightenment axis of your chart, there will be days when you have serious doubts. Ask yourself what you would like to be doing if family and financial problems did not exist. Then do it anyway.

AQUARIUS JAN. 21 - FEB. 19

You are in tune with the spirit of the times and, with enlightened Jupiter in your sign, never more so than this year. Changes to the way you live, think and earn your living may be unsettling at first, but you will come to appreciate just how fortunate you are. Some hard decisions will have to be made, but they will serve you well in the long term. The experiences of 2009 will have a profound effect on your attitudes, your beliefs and the way you live your life. Your roller coaster of a year will get off to a flying start around the time of the Aquarius solar eclipse at the end of January. Hang on tight: You may even enjoy the ride.

PISCES Feb. 20 - March 20

You will learn as much about yourself as you will about the world around you this year, according to your solar chart. And since the search for self-awareness matters to you more than most, it will be an enlightening period. On a more material level, you need to keep a close eye on your finances in early April, as some of the people you deal with, although not dishonest, may be careless. Most importantly, plan everything you do with the utmost caution. Two new moons in sympathetic Cancer will bring out your creative side and could lead to a money-spinning opportunity. This will be a memorable year for you, but whether it is for the right reasons lies in your hands.

Safer Alternatives to Hazardous Cleaning Products

2009-01-09T17:06:00.002-05:00

I have a 3 and a half year old at home and recently we were watching "The Care Bears" on a kids tv station when an episode came on about dangerous items in the kitchen drawers and cupboards etc so, this article comes from the heart.

There are so many dangerous chemicals found in the average kitchen or bathroom cabinets that it would make you shudder if you had little ones or pets at home.

In fact, look in any storage cabinet in your home and you may see such products as paint thinner, spot remover, oven cleaner, furniture polish, drain opener, pool chemicals and hair spray for just a few examples. These products are hazardous because they contain chemicals that are corrosive, explosive, flammable or toxic.

Here are a few suggestions on safer alternatives to some hazardous products out there.

Tub and Sink Cleaner:

Sprinkle baking soda on the porcelain fixtures and rub with a wet rag. Add a little of the liquid Murphy's soap to the rag for more cleaning power. Rinse well to avoid leaving a hazy film.

Window and Mirror Cleaner:

Put 1/4 cup of white vinegar in a spray bottle and fill to the top with water. Spray on the surface. Rub with a lint-free rag. For outdoor windows, use a sponge and wash with warm water with a few drops of liquid Murphy's or Castile soap in it. Rinse well and squeegee dry.

Toilet Bowl Cleaner:

Sprinkle baking soda inside the bowl as you would any scouring powder. Add a couple drops of soap also. Scrub with a toilet bowl brush and finish outside surfaces with a rag sprinkled with baking soda.

All Purpose Cleaner for spots on woodwork, tile and linoleum:

Add a few drops of Murphy's liquid soap to a wet washcloth and rub surface briskly.

Oven Cleaner:

Mix 1 cup of baking soda with enough water to make a paste. Apply to oven surfaces and let stand a little while. Use a scouring pad for scrubbing most surfaces. A spatula or a bread knife is effective in getting under large food deposits. This recipe will require more scrubbing effort but it is not toxic to you or your child. Commercial oven cleaners are severe irritants. Do not use this cleaner recipe on self cleaning ovens.

Drain Cleaner:

This recipe will free minor clogs and helps to prevent future clogs. Pour a half cup of baking soda down the drain first, ten a half cup of vinegar. Let it fizz for a few minutes. Then pour down a tea-kettle full of boiling water. Repeat if necessary. If the clog is stubborn, use a plunger. If very stubborn use a mechanical snake.

Other Recommendations:

In future, buy wisely and consider the environment as well as your family's health. Read labels carefully. Look for "non-toxic" on the label and compare products before you buy. Many times a general household cleaner is just as effective as a specialized product.

Buy only what you need (and in quantities that you will use quickly) and this will limit the need to store unused products in the home and reduce the need for disposal. Look for child proof packaging and when possible choose non-aerosol products. Aerosol produce a fine mist which when inhaled can settle deep in the lungs and pass into the bloodstream.

To learn more about safe disposal of Household Hazardous Wastes, visit Durham Region who kindly provided this information.

Canadian Housing Market in for a Correction, Not a Crash

2009-01-08T07:44:00.000-05:00

Some predictions for 2009

We are going out on a limb and predict that average Canadian house prices should only fall by a further 3% this year (2009). This shows indications of a "correction" rather than the "crash" that is being trumpeted by the press and has seriously affected the U.S. housing market.

On a national basis, this translates to average house prices falling to $295,000 for 2009 versus the estimated $304,000 from 2008. According to figures available for 2007, the average was approximately $307,265 meaning a drop '07 to '08 of about 1.1%. This data tells us that the market actually peaked in 2007 and the correction has been going on for a longer period than previously considered. Since the national press has enthusiastically jumped on the bandwagon of bad news in real estate and mortgages it seems to many observers that this is a new crisis which started only in 2008.

Information supported by research done by a major real estate firm indicates a projected drop in the number of sales in the coming year of 3.5% (to about 416,000 units) with some insiders expecting price and sales activity increase in some key markets.

Unfortunately we also predict that more Canadians may lose their homes due to power of sale or foreclosures this year versus last however we highlight the fact that since it takes several months for a typical repossession action to reach this stage, this is not to be viewed as an indicator of new or increased difficulties in the housing arena. Again, this is the cycle which started last year or even previous where job loss or other economic issue is only now just working its way through the system.

There's no doubt we are still in the midst of a lengthy adjustment period but we remind readers that there are fundamental differences between mortgage lending in Canada versus other parts of the world (especially the U.S.). Things like credit granting in Canada being better monitored, mortgage interest not being a deductible debt and other factors have insured we will not slide as far or as fast as those south of the border.

Canadian homebuilders deny market headed for meltdown

2009-01-07T07:53:00.000-05:00

No parallels with U.S.
Eric Beauchesne, Canwest News Service

OTTAWA - The Canadian housing market is cooling but is not facing a U.S. style meltdown, builders here say.

"A few commentators have drawn a parallel between the Canadian housing
situation and the extreme difficulties in the housing market in the United States," the Canadian Homebuilders say in a report Monday that dismisses such comparisons.

"There is absolutely no merit in drawing such a parallel," it said in a report that contends the pace of housing construction in Canada is merely returning to a level that is consistent with underlying housing requirements following the boom of recent years.

"The housing situation in Canada is totally different from that of the U.S.," it said. "There will be some price moderation in some markets, but there is nothing to suggest that housing markets in Canada are vulnerable to the oversupplies and plunging prices that characterize many markets in the U.S.

"We did not experience the same housing boom conditions that occurred in the U.S., and there is no reason to expect that we are in for the serious pain they are currently suffering," it said.

The moderation of house prices will improve affordability and create opportunities for first-time home buyers, it said. Meanwhile, existing homeowners have little to fear.

"For those selling a home and buying another, the moderation of housing prices should be relative - there should be no significant gain or loss from the easing of house prices," it said.

"For those who have owned a home for some period, their equity will be substantial, given the rising prices of the past few years," it said. "For those who purchased their home recently, there should be few worries about a modest temporary reduction in value."

To support its argument that the Canadian housing market is not going the way of the U.S. market, it cited a variety of differences:

* Unlike in the U.S., underwriting standards for qualifying mortgage borrowers in Canada have been maintained at prudent levels resulting in mortgage borrowers here being much more creditworthy;

* Canadian mortgage lenders never offered low initial 'teaser' rate mortgages that led to most of the difficulties for mortgage borrowers in the U.S.;

* Most mortgages in Canada are held by their original lender, not packaged and sold to third parties as is typical in the U.S., and consequently, Canadian mortgage lenders have a vested interest in ensuring that their mortgage borrowers are creditworthy and not likely to default;

* Only 0.3% of Canadian mortgages are in arrears versus 4.5% in the U.S. and what even before the start of the U.S. housing meltdown two years ago was 2%;

* Canadians tend to pay down their mortgage faster than in the U.S. where mortgage interest is deductible from taxes, which encourages U.S. homeowners to take equity out of their homes to finance other spending, a difference that is reflected in the fact that in Canada mortgage debt accounts for just over 30% of the value of homes, compared with 55% in the U.S.

In Canada, home prices are down 9.8% from a year earlier, compared with an 18% drop in the U.S. from what were already deeply depressed prices a year ago, the latest real estate industry figures show.

Most analysts here agree that Canada should avoid a U.S. style housing market meltdown.

Michael Gregory, senior economist with BMO Capital Markets, said recently that "we won't even come close" to what is happening in the U.S. thanks to stronger employment and income growth here as well as banking system that "continues to make mortgages" available to Canadian consumers.

But he cautioned that if unemployment rises in Canada, there will be a larger fallout for the domestic housing market.

"Anyway you slice it, if you don't have a job, you can't get a mortgage and you can't buy a house," Mr. Gregory said.

New construction homes

2009-01-06T07:30:00.003-05:00

Here's an article you may have missed in the Toronto Star on Saturday this past weekend. For those considering buying a new construction home, this article offers some good tips to remember. And remember, you should always discuss your plans with a qualified, licensed mortgage professional.

Inspections: If these walls could talk

Jan 03, 2009 Tracy Hanes Toronto Star

After almost a year of living in their new townhouse in Uxbridge, Libby McCready and her husband figured there was little wrong with their home. But Libby's parents, who had bought several new houses over the years, urged them to take the time to fill out the Tarion new home warranty program's one-year report listing any issues.

As neither Libby nor her husband had much knowledge or experience with home building or repairs, they hired home inspector Brian Daley to have a look.

"We wanted to make sure we caught everything but we're not handy," says McCready. "Brian found a number of things we never would have noticed. The stuff he found came as a surprise."

The most significant defect Daley found was that the clothes dryer hadn't been vented properly, thus was not blowing outdoors but into insulation, which could have eventually caused a moisture and mould issue. He also noted that the plumbing to a toilet in a seldom-used second bathroom wasn't on the right angle for flushing, that a promised rough-in for an electrical fan for the fireplace was not completed and that attic insulation had been flattened in places.

Armed with Daley's report and digital photos, the McCreadys filled out the Tarion Warranty Corp. forms by the one-year deadline and as a result, those issues are covered. If they hadn't submitted the report in time, their builder would not have been obligated to repair the defects.

"Although everything turned out fine, I'd never move in to a brand-new house again without having a home inspection done right away," says McCready. "I would have rather had a comprehensive list of the problems from the start, as we'd lived here for almost a year and some of the issues could have caused problems. The inspection was totally worthwhile."

Unfortunately, most new homebuyers mistakenly "believe their new house is perfect," says Daley, when that's seldom the case. That's why Daley and Charters Kenny, both registered home inspectors (RHI), have launched New Home Inspections , a company that specializes exclusively in new home warranty inspections in the GTA and beyond.

Other home inspectors, such as Milton RHI and engineering technologist Martin Sweeney of A Home Inspection Company Inc. have also started offering warranty inspections in addition to their regular inspections of resale homes. Sweeney began doing new home inspections and preparing Tarion documents for homeowners as new development boomed in Halton Region.

New homes in Ontario are covered by the Tarion warranty for deposit insurance, protection against defects in work and materials, against unauthorized substitutions and against delayed closings and occupancies without proper notice. The most common claims relate to defects in work and materials, which require homeowners to submit a list of deficiencies at 30-day and one-year deadlines.

While builders provide a pre-delivery inspection (PDI) for buyers to note defects, Daley and Sweeney say these are more geared to cosmetic issues, such as nicks in drywall and whether the right flooring, cabinetry, etc. are provided. Those inspections usually don't include checks of the attic, of heating and cooling systems or an in-depth exploration of the house's structure and systems. And while independent third-party inspections take about three hours, PDI inspections are usually far briefer.

Daley says outside a new home, his company checks drainage and grading, looks for foundation defects, checks installation of siding and brickwork, roof installation and venting. Inside, they inspect walls, windows, floors, ceilings and doors for structural issues, check that stairs are properly supported, plumbing fixtures and fittings properly installed, that insulation in attics, basements, etc. is sufficient and will see if the heating system is distributing air properly.

"I often find insulation is insufficient or missing in attics," says Sweeney. "Sometimes, vapour barrier hasn't been installed, and on the roof I might find that nail heads haven't been caulked and sealed, which will eventually cause moisture to seep in."

He says it's difficult for the average homeowner to have knowledge of the systems and techniques used to build a house. For example, the new tankless hot water heaters and heat recovery ventilators are "really sophisticated pieces of equipment." He often finds HRV units haven't been correctly installed.

Daley says his company finds an average of 30 defect items during a warranty inspection and Sweeney says his list usually includes 20 to 30. J.D. Power and Associates' 2008 survey of GTA new home buyers found that the proportion of homes delivered "defect-free" in the GTA market was 12 per cent in 2008 (which means 88 per cent had defects). The total number of construction problems noted by buyers was down to 21 per home in 2008 from 23 per home in the previous year, according to the J.D. Power study, which includes only large volume GTA builders.

"It's not because most builders aren't doing a good job or are taking shortcuts," says Daley, but because homebuilding involves numerous complex systems.

Most large builders rely on sub-trades and as many as 30 different trades can be involved in the building of a home, says Daley - and it's unlikely all were supervised during the building process. Because they are piece workers, saving time and money is their No. 1 goal, says Daley, which may compromise quality.

Municipal building inspectors are responsible for checking every aspect of a house as it is being built, but it's virtually impossible to do this effectively in a subdivision, says Daley.

"What generally happens is they check a small percentage of homes in hopes the builders will follow their requirements for the rest of the homes."

While a builder may offer to provide one of his own reps for a warranty inspection, "it is not in the builders' interest to find fault in their own work." Daley says some builders have the best intentions, but it's more likely that their inspector will find fewer defects than a third-party professional.

Daley's company charges $375 per inspection and Sweeney charges $340 to $400, depending on the size of the house. Inspectors from both companies can help fill out Tarion warranty forms.

Anyone considering hiring a home inspector should call at least three different companies before making a decision, Daley suggests. Those with RHI designation have extensive training and are insured. A good place to start a search for a home inspector is with the Ontario Association of Home Inspectors.

Become "Mortgage-Free" Sooner

2009-01-05T07:29:00.002-05:00

Paying off your mortgage the traditional way could take anywhere from 25 to 40 years and would end up costing around twice the amount you paid to buy it in the first place. That doesn't sound like a great deal does it ? (still better than paying rent though !)

Here are some effective ways to pay off your mortgage sooner, build equity faster and save thousands of dollars in interest:

1) Change Your Payment Frequency

By simply increasing your payment frequency from monthly to biweekly or weekly can save thousands of dollars alone over the course of your mortgage. The best thing about this option is that it costs nothing to do - no service charges or administrative cots (and if it does, then you got the wrong mortgage advice). If you can afford to pay a little extra in the year then this would be the perfect way to do so without any penalty.

The way this works is by dividing your monthly payment in two or four and paying faster. There are 12 monthly payments in the year BUT there are 26 biweekly or 52 weekly periods so ... you pay the equivalent of one extra monthly payment per year without a penalty.

2) Take Advantage of Prepayments

I know, I know ... where are you going to find any extra money nowadays ? Well, it doesn't have to be a lump sum of thousands of dollars at once in order to take advantage of this feature.

Most mortgage lenders allow prepayments as low as $100.00 and will automatically deduct it from your preauthorized bank account. You may have to give them something in writing to do so - they'll need your written OK for their files -
but that's the extent of the hassle. If you did this once a month instead of trying to save up a bigger amount then you'd be surprised how easy it fits into your budget and how fast you see the difference.

Remember: Your mortgage is a very long term contract so reducing it visibly in a month or two is not realistic and shouldn't get you down. As a matter of fact, even if you only make one single $100.00 extra payment then you'll be miles ahead of most Canadians! Most people don't bother making any prepayments at all even though tey fight for the priviledge of doing so.

3) The "All-In-One" Type of Mortgage

Caution: this mortgage type takes a lot of restraint and is not for everyone. Make sure you check with a mortgage professional before entering into this type of mortgage.

Instead of making weekly or biweekly payments or lump sum instalments of any size, you may consider switching to a relatively new type of mortgage sometimes referred to as an "all-in-one" mortgage.

Basically this turns your mortgage into an account where you deposit your pay or other income (this takes care of the minimum required payment) and then pay your bills, do your shopping etc from the very same account. The idea being that you earn more than you spend - that's why we urge caution - and by having every dollar you earn reduce your mortgage amount before you make your purchases , you reduce your mortgage faster. Think of it like a line of credit.

Some financial institutions offer this type of product however we can't stress enough that there are differences that must be considered and explained carefully before you get into this product even though the savings can be substantial.

Happy New Year !

2009-01-01T10:28:00.002-05:00

Welcome to 2009 and a very Happy and Prosperous New Year wish to all the readers of the Your Mortgage Matters Blog.

We saw our share of bad news and trouble in 2008 (for some it started in 2007) so lets do our best to put that behind us and look forwards instead of backwards as we meet the new challenges and opportunities that 2009 will bring.

Our New Year's Resolutions:

1) Continue to present the bright side of the story even when the national media refuses to do so. Maintain a common sense approach to show an even representation of both good news and bad news on whatever the topic may be.

2) Offer a variety of home owner and mortgage related information in an unbiased presentation.

3) Connect you with industry professionals offering discounted services and information to help you in your decision making process ... whether its a mortgage financing question or advice on making your home a little more green by reducing your carbon footprint, that's what we're on the lookout for in the new year.

4) USE THE TREADMILL ! OK, well that's a personal one I had to throw in there.

All the very best to you and your loved ones. Don't forget to visit our family of links listed on the right hand side of the blog page and see what they have to offer. Convenience, savings and choices are there for the taking ... why not take advantage of it ?

Canadian Mortgage Industry in the Media

2008-12-29T07:53:00.003-05:00

In recent weeks, there have been numerous articles in the national media on the state of the Canadian mortgage industry. Issues regarding the impact of longer amortizations and a perceived failure to anticipate the effects of various mortgage products have been at the forefront.

YOU Should Be Aware Of The Following Important Facts

Arrears and default rates remain low in Canada particularly when compared to the U.S. Canadian mortgage holders have on average over 50% equity in their properties. For all home owners, (those with and those without a mortgage), the equity ratio exceeds 70%;

Longer amortization periods and 100% LTV mortgages do not equate to subprime or alternative mortgages which are based on a borrower's credit worthiness. Relatively few outstanding mortgages in Canada have 40 year amortization periods – only six percent or just over 300,000 mortgage holders out of 5.25 million;

Mortgage products in Canada are transparent. Mortgagors with a variable rate product know their rate and most have the option to convert to a fixed rate product. In the past year, 40% of mortgage holders took out a variable rate mortgage with the expectation that declining rates will continue to drop. This is in stark contrast to the U.S. where the resetting of option ARM mortgages means millions of mortgage holders have been and will continue to face higher rates;

A rise in default rates in Canada is not apparent. It's a fact that the economy is slowing; however if borrowers find themselves with financial difficulties, it will most likely be a result of their employment situation rather than their mortgage product;

Differences between the Canadian and U.S. markets remain. The option ARMs that have and continue to be reset to higher rates are not common in Canada. Those who hold variable and even fixed rate products in Canada are now doing so in a declining interest rate environment. A greater percentage of mortgages in Canada are funded by balance sheet lenders than in the U.S. Subprime or alternative lending products were never as common in Canada;

Canada has a rich history of mortgage insurance. Nearly half of all mortgages obtained in any given year are insured with a second approval process for mortgage applications. Underwriting principles and guidelines in Canada, while not perfect, are more thorough than in the U.S.;

Regulation for Canadian mortgage brokers and agents is more stringent than in the U.S. Several provinces have recently updated or are in the process of updating their origination legislation including Ontario, Quebec, Saskatchewan, Manitoba and Nova Scotia. There are now license requirements and in most provinces education and disclosure requirements. This will ultimately lead to enhanced professionalism in our industry and added security for Canadian borrowers.

Statistics Source: CAAMP's Annual State of the Residential Mortgage Market in Canada, by CAAMP Chief Economist Will Dunning.

Merry Christmas to all

2008-12-25T00:01:00.000-05:00

Since its Christmas Day we want to wish everyone a Merry Christmas full of good times and laughter with your loved ones.

Life is too short to be worried about the economy, finances and jobs. There will be time enough to think about these things AFTER you take a break to enjoy the spirit of the season.

Take advantage of the professionals around you ... mortgage brokers, realtors, investment advisors etc ... they are there to help and take away the stress over doing it yourself and wondering if you made the right choice.

Make it a day for enjoyment ... it only comes once a year !

Signs point to a lighter mood among financial players

2008-12-22T07:15:00.000-05:00

A funny thing happened to some of the world's most powerful investors as they stared into the market abyss. They stepped back. And maybe that's a sign that the rest of us can soon step up.

Recently, Merrill Lynch released its monthly survey of global money managers, strategists and economists, and found that their mood about the world's markets and economy remains sour. However - and this shouldn't be understated - it has improved. The implication is that some key individuals, whose opinions drive the investment decisions of the institutional investors that collectively own about three-quarters of global equities, may be about to stop pulling money off the table and start putting some back on.

On almost every front, the survey improved. Views on the global economy, risk aversion, corporate profits and equity valuations all brightened.

Granted, the improvements are from very depressed levels, but hey, you've got to start somewhere - and this is how turnarounds start.

"After the extreme pessimism of the past two months, there is evidence of investors pulling back from the brink," Merrill's global equity strategy team said.

"We have been struck by tentative signs that the pace of deterioration may be slowing."

Notably, the net percentage of respondents expecting further deterioration in the global economy over the next 12 months sank to 36 per cent, from 45 per cent in November and a miserable 60 per cent in October. And only a net 29 per cent of survey respondents still think central bank interest rates are too high, down from 65 per cent in November. (And this was before the U.S. Federal Reserve's stunning cut to a near-zero federal funds rate this week.)

Taken together, the message is exactly what central bankers have been wanting to hear: Key players in the financial markets believe the aggressive monetary easing is starting to work. And that may finally be putting a bottom under equities.

This isn't the only recent evidence to suggest that the downward spiral may be ending, particularly in the U.S. economy. This week, the Empire State manufacturing index and National Association of Home Builders' Housing Market Index both held essentially steady after months of sliding, a sign that two key components of the U.S. slump - housing and manufacturing - may be starting to stabilize.

If, indeed, institutional money managers are starting to see light at the end of the tunnel, they have in their hands vital fuel for a turnaround in equities. The Merrill survey shows that fund managers are still massively overweight cash and bonds - and they consider bonds grossly overvalued, much more so than a month ago - while they are deeply underweight equities, which they consider severely undervalued.

With their risk views easing and outlook improving, the arguments against returning some of that money to the market are less convincing.

Still, risk assessment remains historically high, and Merrill said fund managers remain fearful that the low valuations of equities may be a "value trap." But at least their views are no longer deteriorating, and that's a critical prerequisite for the market to stabilize before reversing course.

Yes, it's a long walk back out of the wilderness. But the money is there, and, perhaps, the baby steps have begun.

CMHC at fault ?

2008-12-20T07:15:00.000-05:00

Warnings about risky mortgages ignored - Federal officials told CMHC it could overburden borrowers

JACQUIE MCNISH AND GREG MCARTHUR
December 18, 2008 at 2:00 AM EST

Canada Mortgage and Housing Corp. officials ignored warnings from senior
Finance Department and Bank of Canada officials during the past two years that its active business in high-risk mortgage insurance could overburden consumers.

According to sources familiar with the discussions, CMHC executives did not heed the warnings and continued to underwrite larger volumes of insurance policies for risky home loans with 40-year amortizations and minimal down payments.

The sources said the federal agency's executives disagreed about the potential risks and defended the creditworthiness of borrowers who were granted insurance for the riskier mortgage products.

One senior Ottawa official said CMHC was such a significant underwriter of 40-year mortgage insurance polices that it currently accounts for two-thirds of the nearly $56-billion of 40-year mortgages that were approved by banks, trust companies, credit unions and other lenders during the first six months of 2008.

Unlike the United States, Canada does not publicly release data about different classes of mortgage debt. CMHC does track mortgage data, but its officials have declined requests by The Globe and Mail for information about the volume of 40-year and low-down-payment mortgages.

In a statement issued last night, CMHC said it discussed mortgage risks with central bank officials in 2006 after former bank governor David Dodge raised concerns about the new breed of long-term home loans.

"CMHC officials took the governor and senior bank officials through the materials and discussed how the product was administered. The Bank of Canada was reassured by the fact that CMHC's product includes no change in mortgage qualification criteria and as such would not be of significant concern to the Bank.

"We know of no other concerns that the Bank of Canada or the Department of Finance had with our activities that in their view would threaten financial stability," the statement said.

The agency said only a "relatively small" proportion of the $334-billion in mortgages it insures are either 40-year or zero-down-payment mortgages. A spokeswoman declined to put a figure to "relatively small."

Finance Minister Jim Flaherty announced in July that the federal government was cancelling its policy of guaranteeing 40-year mortgages as of Oct. 15 in order to shield Canada from the kind of housing crash that has devastated the U.S. economy. However, according to sources, bank executives had been warning Mr. Flaherty and central bank officials since the beginning of 2008 about a dramatic and unexpected increase in demand from consumers for 40-year mortgages with small down payments.

Lenders, insurers and government officials interviewed by The Globe characterized the first half of 2008 as a period of apparent paralysis by federal decision makers. These sources said bank and insurance executives and finance officials disagreed over how to pull the plug on popular and risky mortgage products. One of the few things they did agree about, according to sources, was that there was insufficient
monitoring of CMHC, which accounts for about 70 per cent of the total value of mortgage insurance underwritten in Canada.

"There is an accountability issue at CMHC," said one senior Ottawa official, who declined to be identified.

CMHC is a federal agency that has been supplying mortgage insurance since 1954, and is currently overseen by Human Resources and Social Development Canada.

In response to a question about its accountability, CMHC said in its statement: "The lines of accountability are very clear, like all Crown corporations CMHC is accountable to Parliament through its minister."

When The Globe contacted Human Resources Minister Diane Finley, her spokeswoman replied: "We will have to decline and allow CMHC to respond to the questions applicable."

According to people familiar with CMHC, the agency imported U.S.-style mortgage products to protect its dominant market position from large U.S. insurers who were allowed into the Canadian market in 2006. Canadian laws require borrowers with less than a 20-per-cent down payment to obtain insurance for their mortgages.

"They felt they were pushed into to this because of the new competition," said a person familiar with CMHC.

Underlying these concerns, sources said, was a federal internal study launched by the new Conservative government in 2006 to review the possible privatization of a number of agencies, including CMHC. The prospect of privatization, one source said, fuelled concerns that the agency needed to be seen as an effective competitor.

CMHC said in its statement that its decision to insure longer-term and lower-down-payment loans in 2006 "reflected the market trends for the period." Until 2006, the agency and its only rival, Genworth Financial Inc., did not insure mortgages that were amortized beyond 25 years. In February of 2006, several months before four U.S. insurance giants were allowed into Canada, CMHC introduced the country's first 30-year mortgage insurance product. What followed was a ferocious battle for market share between CMHC, Genworth and American International Group, the first of the new insurance entrants.