18 Feb

Canada’s housing market has two good years ahead of it yet…..


Posted by: Nisha Lalwani

Canada’s housing market has two good years ahead of it yet, CMHC said Monday, with low interest rates and a “moderately” expanding economy keeping price corrections at bay.


The Crown corporation – which insures Canadian mortgages – has had a consistently rosier view of the market than many private sector forecasters.


Canadian banks have recently issued reports probing the consequences of cheap money, and trying to predict whether there is a bubble in prices that will eventually pop and cause prices to crash. They are particularly concerned about Vancouver and Toronto, where some have predicted price corrections of up to 10% because of overbuilding in the condo market.


But CMHC said Monday Canadian markets would “remain steady in 2012 and 2013.”


Click here for more in the Globe and Mail.


Mortgage brokers are once again undercutting the banks and some are willing to buy down your rate – eating part of their commission in the process – to gain customers.


Steep mortgage discounts from the major banks have all but disappeared from the market, leading mortgage brokers to make sacrifices for market share amid new rumours that another major Canadian bank is going to bring its business completely in-house.


“There are so many options out there besides the banks. [These latest rate hikes] have given brokers an edge because bank pricing is notably higher,” said Rob McLister, editor of CanadianMortgageTrends.com.


McLister reported on his blog that CIBC is rumoured to be putting its broker arm, FirstLine Mortgages, up for sale.


Click here to read the Financial Post article.


Give people enough line of credit and they’ll hang themselves with debt.


The bad boy of borrowing products – that’s the line of credit. Recently, the federal government asked the banks to stop blithely handing out home-equity credit lines to people. In his new book The Wealthy Barber Returns, David Chilton writes that credit lines can be an excellent financial tool for disciplined people. “The other 71.9% of Canadians, however, should be careful. Very careful.”


Debt is never more comfortable than it is with the line of credit because money is instantly accessible and the rules for paying it back are slack. You can’t ignore a credit line, but you can stretch repayment out indefinitely. And then there’s the rising interest rate risk. Lines of credit are floating rate debt, and that means you’ll pay more every time rates edge higher.


Click here for some tips on managing a line of credit from the Globe and Mail.


The biggest mistake my husband and I are making when it comes to our finances is not having a joint budget.


If we had one, we would probably do a better job of coordinating our savings to reach our goals and pay down debt faster.


I realized this after listening to financial author, speaker and money management guru Gail Vaz Oxlade, who delivered an early Valentine’s Day talk for couples. She spoke at ING Direct’s café in downtown Toronto.


Vaz Oxlade discussed the six biggest money mistakes that couples make: 1) Hiding or lying about purchases; 2) Not having a budget; 3) Giving one person control over all the finances; 4) Denying the debt; 5) Sweating the small stuff; and 6) Not having an emergency fund.


Click here for full details from The Star.


3 Feb

Industry News…..


Posted by: Nisha Lalwani

A new survey suggests Canadian bankers may be less concerned about mortgage credit risk than they were two years ago or, indeed, the government is now, given speculation it will again tinker with the country’s mortgage rules.


While credit risk topped the list of concerns for Canadian bankers participating in the 2010 Banking Banana Skins survey – produced by the Centre for the Study of Financial Innovation in association with PwC – it fell to fifth place in this year’s polling.


More pressing concerns for Canadian respondents were macro-economic risk, liquidity and regulation, with the availability of capital also moving up ahead of any risk associated with their mortgage and consumer loan portfolios.


The survey results lend support to brokers and others who continue to challenge the need for additional tightening of mortgage rules.



Canada will likely avoid a crash or serious correction in its “somewhat pricey” housing market, with the possible exception of Vancouver, says a new paper from Bank of Montreal.


The analysis by BMO economists suggests alarms about Canada’s housing market by international observers, from the International Monetary Fund to The Economist magazine, are exaggerated or simplistic.


“The main takeaway is that the national housing market appears somewhat pricey, but is far removed from a bubble,” said Economists Sherry Cooper and Sal Guatieri in the report released Monday.


“In our view, the [market] is more like a balloon than a bubble. While bubbles always burst, a balloon often deflates slowly in the absence of a ‘pin’.”


Click here for the full Globe and Mail article.


Many have now seen this Financial Post article – CMHC Backing Fewer Loans.


The gist of it: CMHC is approaching its $600 billion government-imposed limit on issuing mortgage default insurance. That’s happening largely because of lenders’ enormous appetite for something called portfolio insurance (aka, “bulk insurance”).


No one fully grasps the repercussions yet, but our sense is that the news is not great (at least in the short-to-medium term) for mortgage consumers, smaller lenders and brokers.


On the other hand, it may be healthy long-term for the housing market. Click here to find out why from CanadianMortgageTrends.com.


Despite promises of stellar long-term growth and the dangling carrot of big, fat refunds, people are finally figuring out that the only beneficiary of an RRSP loan is the lender, unless…


1. You’re in the highest tax bracket AND
2. You can pay off the loan within one year AND
3. You’ll still be able to make the current’s year RRSP contribution
    from your cash flow


Click here to read more from MoneySense.