21 Jul

BOC anticipates a downward drift to oil & commodity prices threat…..


Posted by: Nisha Lalwani

The Bank of Canada is adding the downward drift in prices for oil and other commodities to its catalogue of threats to economic growth.


In a one-page statement on his latest interest-rate decision Tuesday, Governor Mark Carney mentioned oil or commodity prices four times. To many economists and analysts, this was a clear hint of growing concern as oil prices, while still historically high, inch downward to $80 (US) a barrel – considered an unofficial breaking point at which investment in energy projects could stall, putting jobs at risk.


Carney, who left his main interest rate at 1% Tuesday, noted that the “sizable reduction” in commodity prices owing to slower global growth is keeping inflation in check and could mean cheaper gasoline well into next year. But he also cut his 2012 and 2013 projections for the economy, in part because the consumption and business investment he’s counting on to drive growth will be held back by “the effects of lower commodity prices on Canadian incomes and wealth.”


Oil still costs close to $90 a barrel on global markets – a far cry from a low of $35 reached during the thick of the 2008-2009 financial crisis. Still, prices are down 10% from the start of 2012, as demand from big emerging markets like China cools off, and as anxiety linked to the European debt crisis pushes investors away from commodities and toward relatively risk-free securities such as the US dollar.


Click here to read more from the Globe and Mail.


When the government cut maximum amortizations in 2008 and 2011, most big lenders reduced amortizations on all of their mortgages.


They didn’t need to apply the changes to uninsured mortgages, but many did anyway.


Not this time.


When the Department of Finance trimmed the insured amortization limit to 25 years on July 9th, most lenders left their conventional mortgage amortizations at 30-35 years. Even the major banks have left 30-year amortizations in place, which surprised many of us in the business.


Click here for more from CanadianMortgageTrends.com.


Forget the residential market, maybe it’s time we started focusing on how strong Canada’s commercial real estate market has been, says Sonya Gulati, an Economist with TD Canada Trust.


“The commercial side of the market has recorded quite a comeback from the troughs posted in the early part of the recovery,” said Gulati in a report.


The economist notes $21 billion in commercial real estate assets sold last year, up from $10 billion in 2009. She says the short supply of projects coupled with demand has caused most regional markets to tighten over the past 12-18 months.


“The tighter conditions would lend itself to a new round of projects. We are already seeing development intentions materialize – there are renovation plans in major shopping mall centres across the country and there are an elevated number of new office towers being built,” says Gulati.


Click here for full details in the Financial Post.


The speed at which mortgage brokers have adopted a networked, online lifestyle has been impressive. I would say 95% of the deals I do are processed via email or Skype.


What’s more, we receive electronic correspondence from brokers virtually 24/7 – an indication that business hours are changing.


Unfortunately, being networked is not without risks. Back in May, I attended an industry trade show in Vancouver and witnessed something disturbing. The Fisgard team had wrapped up Day 1 of the trade show at 11pm on May 7th. When I returned to my hotel room, I started up my laptop and was dismayed by what I saw.


There were no less than 20 personal computers on the hotel WiFi network, available for me to access. I am talking about shared hard drives.


Click here for the full article from CanadianMortgageTrends.com.


30 Jun

Finance Minister tightens Mortgage Lending…..


Posted by: Nisha Lalwani

Three months ago, Finance Minister Jim Flaherty told banks to tighten lending on their own. Now he’s doing it for them.


The Department of Finance (DoF), in concert with OSFI, released a buffet of mortgage rules Thursday. By CanadianMortgageTrends.com’s count, there are eight salient changes that, when combined, will have a measurable impact on housing. (See: New Mortgage Rules and OSFI Guidelines [B-20] for rule summaries.)


The motivation for these moves is captured in Flaherty’s press briefing comment: “I have been listening to the market, and quite frankly I don’t like what I hear.” Loose translation: The debt and housing train is in danger of running off the rails.


The DoF’s solutions to this problem will influence our market for years to come.


Click here to read 20 musings on the new mortgage rules, sprinkled with a few tips and predictions from CanadianMortgageTrends.com.



Will house prices drop and sales decline? Rob Carrick takes a look at what Canadians can expect in the short- and long-term.


Click here for the Globe and Mail video called: Living in a fool’s paradise of low interest rates.



Amid waves of troubling global economic news, there’s a sleeper story that’s gone largely overlooked, particularly in financial markets.


The US housing market is doing much better. And it’s now on the cusp of what could be a dramatic turnaround.


That’s the conclusion of a new report by Vancouver-based independent housing Economist Doug Smyth, who argues, among other good things, that millions of newly created jobs will eventually power another boom in demand for softwood lumber.


Smyth’s prediction is based on a much more impressive recovery in the US jobs market than is generally recognized. That’s driving mortgage foreclosures down, and household formations and consumer spending up.


Click here for more from the Globe and Mail.

29 May

New proposed underwriting rules could result to people loosing their homes…..


Posted by: Nisha Lalwani

Canada’s mortgage brokers are warning the banking regulator that its proposed mortgage underwriting rules could result in people losing their homes.


The brokers are concerned about a number of the potential rules, but the one that worries them most outlines what banks would have to do when a consumer wants to renew or refinance their mortgage.


The proposed rules suggest that banks recheck areas such as employment status, current income and the current value of the home for renewals and refinancing.


“This would be a significant, significant change,” says Jim Murphy, the head of the Canadian Association of Accredited Mortgage Professionals (CAAMP).


Click here for complete details in the Globe and Mail.


An influential international body is urging Canada’s central bank to raise interest rates in the fall, and continue doing so through 2013 to cool housing prices and contain inflation.


The Paris-based Organization for Economic Co-operation and Development’s prescription for monetary policy will stoke the already hot debate about whether the Bank of Canada’s interest rate stance is inflating a housing bubble.


Governor Mark Carney and other officials say the days of ultra-cheap money are coming to an end, although they so far have declined to be more specific. The OECD, a high-powered economic research group backed by contributions from its 34 rich country members, offers a scenario: An increase in the benchmark rate of a quarter of a percentage point in the autumn, and similar increases each quarter through to the end of next year, leaving the benchmark overnight target at 2.25%.


That still would be low by historical standards, yet, according to the OECD, likely a big enough increase to cause prospective homeowners to think twice before buying at current inflated prices. But the OECD’s recommendation comes with a risk.


Click here for more in the Globe and Mail.


Fortunately, most folks don’t need a souped-up mortgage. They just need the right combination of options at a low rate.


In the quest for cost savings, things like refinance flexibility and prepayment privileges are often sacrificed for a cheaper rate. This is especially common when people can’t quantify how much a mortgage feature could save them.


But mathematically speaking, it is possible to estimate the benefit of mortgage flexibility. You can then decide if it’s worth paying for. It just takes some reasonable assumptions and a bit of light math.


In that spirit, the Globe and Mail offers some general estimates of what different mortgage features are “worth” – how much extra a “typical” borrower should be willing to pay for a feature, in the form of a higher interest rate.


Click here for the full Globe and Mail article.


By any measure – health, education, housing or income – Canadians are far better off than residents of the developing world.


But they’re also better off than many of the planet’s richest countries, according to the Organization for Economic Co-operation and Development’s latest quality-of-life assessment, released yesterday.


In a comparison of 11 wellbeing indicators in 36 countries, Canada placed sixth, behind top-ranking Australia and third-place US. Norway, Sweden and Denmark also finished ahead of Canada. (The country ranked second in 2011, but the OECD’s Better Life Index has changed slightly since its inaugural year.)


The OECD’s thinking on wellbeing has been evolving. Better known for its emphasis on countries’ gross domestic product, income and employment rates, the Paris-based organization began nearly a decade ago creating a quality-of-life barometer that would take a broader look at what makes people healthy and happy. It quickly found out that money isn’t everything, noted Anthony Gooch, the organization’s Director of Public Affairs and Communication.


Click here for the full Globe and Mail article.


19 Apr

Are Interest rates going up soon?


Posted by: Nisha Lalwani

The Bank of Canada left its main interest rate untouched at 1% Tuesday, while painting a brighter economic outlook and hinting for the first time since last summer that it’s beginning to look for an opportunity to raise borrowing costs.


The decision to stand pat for a 13th consecutive meeting was expected. But after weeks of sunnier rhetoric from Governor Mark Carney amid a strengthening domestic recovery, Bay Street analysts had been debating how far he would go in trying to reshape expectations that he may be on hold until late next year.


The statement on Tuesday’s decision was vague about timing, saying only that it may become necessary to increase rates, but that this would depend on “domestic and global economic developments.” But, just by saying so, Carney is clearly starting to lay the groundwork for rate hikes if the Canadian economy and the global backdrop continue to improve. Significantly, he boosted his 2012 growth forecast for Canada by four tenths of a percentage point, to 2.4%. And though he cut his 2013 forecast by the same amount, to 2.4%, the slack in the economy is now projected to be chewed up in the first half of 2013 instead of in the third quarter of next year, so possibly six months earlier.


“The external headwinds facing Canada have abated somewhat, with the US recovery more resilient and financial conditions more supportive than previously anticipated,” Carney and his rate-setting panel said, adding that the confidence of households and businesses is improving more quickly as a result, and both are driving the recovery. “In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.”


Click here for the full Globe and Mail article.


Never ask anyone who lends money if you can afford a house.


Lenders care about their own money. Not yours. So while you’re thinking about how you’ll manage the cost of a mortgage and all your other living expenses, lenders seek the answer to one single question: How much risk is there that this person will not repay our money on time?


Not that lenders are oppressively picky. The more they lend, the more they make in interest. So there are no high hurdles in deciding who gets a mortgage. Partly, that’s because lenders know they have human nature working for them. If a family is having trouble paying its bills, you can be sure the mortgage will come first.


There are plenty of mortgage affordability calculators online, but they use the lender’s criteria for the most part. So let’s see what we can do to develop some simple rules that will help you understand how well you can manage the cost of owning a home.


Click here for more details from the Globe and Mail.


It’s a title Vancouver is more than happy to relinquish.


Canada’s hottest real estate market is finally cooling off, new sales figures show, much to the relief of those who have grown weary of talk of a West Coast property bubble.


At more than $761,000, the average cost of a Vancouver home is still higher than anywhere, but was 3.1% lower in March than in the same month last year. Sales activity is slower, too, down 22.3% through the first three months of 2012.


But the data from the Canadian Real Estate Association indicates that Toronto’s sizzling market is still gaining momentum, with average prices in the country’s largest city soaring more than 10% last month, to about $504,000.


Click here to read more from the Globe and Mail.


14 Apr

New restrictions on HELOCs – most likely within the year……


Posted by: Nisha Lalwani

There’s a good chance we could see new restrictions on HELOCs – possibly within the year.


Last week, Canada’s top banking regulator Julie Dickson explained why to BNN: “We started to see [HELOCs] being used as a substitute for a mortgage. Instead of having a mortgage on a house, you had a HELOC only, and that is not what these HELOCs were designed for originally. That’s why we suggested in the guideline strongly that there be a loan-to-value ratio of a maximum of 65%.”


“We want the (underwriting) practices at the banks buttoned down,” Dickson added, saying that some financial institutions were not following underwriting policies “to a T.”


As with OSFI’s other pending mortgage guidelines, the new 65% LTV HELOC change is up for public comment until May 1st.


Click here for the full CanadianMortgageTrends.com article.


Mark Carney has a dilemma: He views record high household debt the number one domestic risk to the economy, but believes he would hurt the recovery if he raised interest rates to slow borrowing.


But the Bank of Canada governor said in an interview with The Canadian Press that he would be prepared to intervene if things got out of hand.


“In exceptional circumstances, if there are issues that threaten financial stability, such as household debt… the bank could use monetary policy for that purpose,” he said. “That factors into our decision-making without question.”


By Carney’s telling, the situation is not that far from reaching the point of exceptional circumstances. He’s encouraged by the recent slowdown in the housing market. Household debt as a proportion of disposable income was close to 151% at the end of last year. The Bank of Canada’s own analysis expects the ratio to approach the 160% level reached in the US just prior to the 2008 financial crisis.


Click here for more from CTV News.

Canadian Finance Minister Jim Flaherty said on Tuesday he expected Canada to post moderate growth this year, noting that the country’s recovery remained fragile and Europe’s sovereign debt crisis continued to pose risks to the global economy.


Flaherty also reiterated he had no plans to take further steps to rein in Canada’s housing market, which some analysts say is overheating.


“I have no present plans to intervene in the housing market in Canada,” Flaherty told reporters in New York. “There has been some moderation in the market of late. I would prefer the market itself to correct to the extent a correction is necessary.”


The government and central bank have been cautioning Canadians of the risks of taking on too much debt, particularly through mortgages, with interest rates low and home prices high.


Click here for the full Financial Post article.


Is it time to break your mortgage?


Click here for five tips homeowners should consider before chasing after low interest rates from MoneySense.


It’s almost a chicken-and-egg argument, deciding whether the government comes first in the crackdown on consumer borrowing or if the banks should be responsible for reining in Canadian debt.


This month, Finance Minister Jim Flaherty sounded like he’d had enough of banks posturing for the federal government to get tougher on borrowers and called on financial institutions to clamp down on their own customers.


“I’ve tightened up the mortgage insurance market three times… I really don’t want to do it again,” he told reporters while commenting on the condominium sector.


While some bank chief executives have put it on themselves to tighten their own lending rules, others continue to look to Ottawa to take the lead.


In the interim, all you have to do is walk into a branch, grab some pamphlets and you’ll see an array of offers that could get you into even more debt trouble.


Click here for the full Financial Post article.


More Canadians acknowledge they may be reaching the upper limits on borrowing, even though they believe they’re in the safe zone now, a new survey shows.


The annual survey, released by accounting firm PwC and conducted by Leger Marketing, found that almost two-thirds of respondents believed their current debt levels were about right.


But a similar number, 63%, said they wanted to decrease their debt levels over the next year – up 4.5% from a year earlier – and many indicated they were ready to cut back on discretionary spending to do it.


“This comfort is likely due to our high real estate values and low interest rates, which make the debt seem minor in relation to the value of the property and easy to carry month to month,” PwC said in a release.


Click here for details in the Globe and Mail.


It’s every family’s dilemma: What to pay first – the mortgage, the kids’ education or putting something away for retirement? Plan it right and a life free of many financial worries follows. Get it wrong and the kids may not get the education you want and your retirement could be threadbare. You may even be forced to sell your home if interest rates soar before you’ve paid down the mortgage a lot.


“Pay for the home first,” suggests Benoit Poliquin, lead portfolio manager at ExPonent Investment Management Inc in Ottawa. The reason: Buying your home quickly has financial advantages so powerful and so immediate that it would be foolish to ignore it.


“Look what the homeowner gets,” Poliquin says. “There is the return on equity. That is what the home gains in owner equity every month as the debt declines. The more you pay and the sooner you pay, the faster you gain equity through the mortgage.”


There is the possibility of capital gains that, in Canada, are not taxed as long as the home is a primary residence. Moreover, in many cities, price gains more than pay for interest costs, says Graeme Egan, a financial planner and portfolio manager at KCM Wealth Management Inc in Vancouver.


Click here for the full Vancouver Sun article.

30 Mar

Fixed mortgage trump Variable mortgage in todays economy….


Posted by: Nisha Lalwani

As the federal government warned it may again tighten mortgage rules, a Bank of Montreal Economist says fixed mortgages “clearly trump” variable mortgages in today’s economy.


There are two reasons for the change of heart by Douglas Porter, Deputy Chief Economist at BMO: the intense competition among lenders and the economic recovery in the US.


“While we have in the past supported going variable, and even though short-term rates are likely to remain low this year, current offers on long-term mortgage rates and the recent shift in bond market sentiment tilt the balance heavily in favour of locking in at this stage,” wrote Porter in a report, Time to Say Goodbye to Variable.


Click here for the full Vancouver Sun article.
With policymakers warning about rising household debt levels, a new survey shows that Canadians are both worried about what they owe, and in denial about how their debt compares to those around them.


The seemingly contradictory conclusion was reported on Monday by the Toronto-based online mortgage comparison service RateSupermarket.ca, which polled nearly 3,000 Canadians across the country about their feelings on household debt.


Despite the fact that 60.1% of respondents said they were not comfortable with their current debt levels, the majority – 50.3% – also believed their debt levels were below average.


A similar pattern emerged on credit cards. Plastic was by far the leading cause of debt concern among respondents, at 38.8%, with more than a quarter indicating that they owed more than $5,000 and nearly 10% owing more than $10,000 on their cards.


Click here to read more from HuffingtonPost.ca.


When I logged on to check my bank balance the other day, I noticed a message from the bank saying that I have ‘earned’ a one month mortgage payment vacation.


The reason for this break is that I have been paying off my mortgage faster by making increased contributions each month. My goal is to pay off our mortgage in less than 15 years, rather than the usual 25 or 30. If you do this, most banks will give you the option to skip a mortgage payment once your extra contributions add up to a full months’ mortgage payment.


Taking a break from paying your mortgage can give you some breathing room if you lose your job or decide to stay home with a new baby. But if you’ve been making extra contributions to your mortgage with the goal of paying it off sooner, skipping a mortgage payment will put you right back where you started.


Click here for the full article in The Star.


A monthly measure of Canadian home prices showed that year-to-year gains continued in January, albeit at a slower pace than in December.


The Teranet-National Bank house price index was up 6.5% from a year earlier. That was down from 6.8% in December.


While the index showed some slowdown in the rise of prices, it was still “surprisingly large,” said National Bank Senior Economist Marc Pinsonneault.


“If such increases were repeated over the next months, the federal government might react with stricter mortgage rules,” a possibility that has already been suggested prior to Thursday’s budget release, he said in a research note.


Click here to read the article from Canada.com.


Realtors are pushing for air quality standards to fill a regulatory vacuum involving former marijuana grow-ops put up for sale.


How to protect the health – and the investment – of homebuyers is just one of the issues delegates from the real estate industry, civic authorities and law enforcement, will discuss at a three-day conference that opened in Banff, Alberta Tuesday.


“There’s no way on Earth we’ll be able to manage the scope of this problem without the involvement and cooperation of the private sector,” said Staff Sgt Tom Hanson of Alberta Law Enforcement Response Teams (ALERT), a provincial umbrella organization of 400 investigators that targets serious and organized crime.


In 2010, ALERT seized 100,615 marijuana plants and 655 kilograms of harvested bud – much of it grown in operations concealed in homes.


Click here for full details in the National Post.


23 Mar

Canada’s Banking regulators clamping down on banks mortgage underwriting practices…


Posted by: Nisha Lalwani

OSFI, Canada’s banking regulator, is leaning on banks and other federally regulated lenders to clamp down on underwriting practices. It released these draft recommendations this week. 


After reading through 18 pages of changes, in detail, our immediate reaction was concern.


That’s not because the guidelines are greatly imprudent. Some are unnecessarily rigid, but most are sound policy. It’s because OSFI risks tightening too much, too fast. 


If the government also decrees new insured mortgage regulations (like these), and/or rates rise significantly, and/or unemployment unexpectedly spikes, it could form the proverbial perfect storm that blows over housing valuations. 


Click here for the full CanadianMortgageTrends.com article. 


For debtors, today’s historically low interest rates have constituted somewhat of a fool’s paradise. Central banks around the world, including Canada’s, have kept interest rates as close to zero as possible.


But if we thought we could keep our boat forever afloat on this sea of low rates, there are many lining up to convince us the time has come to get on dryer land.


Whenever they get a chance, Bank of Canada governor Mark Carney and Finance Minister Jim Flaherty warn Canadians to get their fiscal houses in order. It’s not a matter of IF interest rates start rising, just a matter of WHEN.


And on Friday, TD Canada Trust Chief Economist Craig Alexander joined in, with a stern warning that debt levels have risen to “unsustainable” levels. He said without new mortgage regulations to temper borrowing, a correction in housing prices or a hike in interest rates would be “disastrous for the economy.”


Click here to read the Financial Post article.


Some 45% of Ontario brokers/agents are procrastinating on re-licensing.


It has come down to the wire for nearly half of Ontario’s 12,000 mortgage professionals – who, with only a month left on the clock, had yet to complete that do-or-die re-licensing course.


“What can I say? That’s the industry,” Joe Rosati, IMBA Executive Director, told MortgageBrokerNews.ca. “FSCO told us that as of February 29th, only 55% of mortgage brokers and agents in the province had successfully completed the required relicensing course.”


That slim majority means as many as 5,000 mortgage professionals, nonetheless, have waited until the last month to take the course.


For IMBA and the three other course providers, that procrastination now translates into a flurry of activity in the last two weeks before the March 31st deadline.


Missing that drop-dead date has major consequences. Not only does the broker’s licence expire, but if he or she attempts to re-apply as a new agent or broker, they’ll be required to admit “non-compliance” and take the re-licensing education by June 30th, 2012. They’ll also have to dig deeper in their pockets and pay the $800 fee for a new agent or broker licence rather than the $700 fee to renew.


Click here for the full MortgageBrokerNews.ca story.


Fixed-rate mortgages are at historic lows but if you’re locked into a contract with your bank, those benefits may be yet elusive.


First you have to do the math to see if breaking your contract is worth the penalties you may face.


“There is no grey area,” says Cindy David, a certified financial planner at Dupuis Langen Financial Management Ltd in Vancouver. “It’s either worth it or it’s not.”


“We’re even seeing 10-year fixed-rate mortgages at 3.99%,” says David. “Think about that: Interest and principal at 3.99% for 10 years. From a financial planning perspective if any client approached me and said, ‘Should I look into breaking my mortgage?’ my answer would be yes.”


Click here for more from the Financial Post.


The financial crisis that began in 2007 with the breakdown of the US residential mortgage market still persists for millions of Americans who have lost their houses, their jobs and all hope of a secure retirement.


As a result, residential real estate prices in the hardest-hit areas such as California, Arizona, Nevada and Florida are well below replacement value (ie, the land is valued at zero), leading many analysts to conclude that prices must be near, if not already at, the bottom.


At the same time, the Canadian dollar remains very strong against the US dollar. Any investment in US assets is likely to provide a decent return over time based on foreign exchange gains alone.
Taken together, these facts seem to suggest that Canadians have a once-in-a-lifetime opportunity: To buy US real estate in desirable locations at historically low prices using cheap US dollars.


Seems like a slam dunk, right? Maybe. But there are a number of factors to consider before pulling out your cheque book and booking a flight.


Click here for more details from the Financial Post.


CMHC’s latest survey of Canada’s rental markets yields some surprising finds and some long-term winners.


Rental housing is a hot topic across Canada as house prices rise above what many people can afford, prompting first-time homebuyers to defer a purchase. Add in economic uncertainties, and both tenants and landlords want a property that makes the best use of their money.


For landlords, however, cash flow remains king. Some perennially tight markets, like Vancouver, have been in vogue with foreign investors who see good long-term potential in a market where new apartment blocks aren’t being built.


Many other markets in Canada are also seeing the purpose-built rental stock shrinking. (The total number of purpose-built rental units in Canada actually increased by 5,648 units last year, however.)


Click here to see Canada’s Top 50 Rental Markets from Canadian Real Estate Wealth.



16 Mar

RBC takes on BMO banks 2.99% offer…


Posted by: Nisha Lalwani

Brokers may ultimately have to thank RBC for shooting holes in BMO’s 2.99% – the biggest of Canada’s big banks running ads critical of the no-frills mortgage.


“What good is a low rate mortgage without the frills?” asks an RBC full-pager running in a national daily. “Switch to RBC Royal Bank and get a 2.99% fixed-rate mortgage with all the frills.”


Aside from that last bit – the plug for RBC’s four-year fixed – the message amplifies the one mortgage brokers have struggled to get out to consumers.


They’ve used it to retain clients looking for BMO’s same rock-bottom rate, but unaware of the even lower prepayment privileges and the restrictive 25-year amortization.



The Bank of Canada kept its benchmark interest rate at a record low last Thursday, but surprised with slightly cheerier commentary that has economists wondering whether the central bank has brightened up enough to entertain a rate hike sooner rather than later.


Mark Carney, Governor of the Bank of Canada, highlighted an improving near-term outlook in pretty much every category of concern in his January rate decision, including the European credit crisis, the US economic recovery, global financial markets and the health of the Canadian economy.


“The heightened uncertainty around the global economic outlook has decreased in the weeks since the Bank released its January monetary policy report (MPR),” the bank said in a release explaining its rate decision. “Recent developments suggest that the outlook for the Canadian economy is marginally improved from the January MPR.”


Carney said the economy will likely grow faster than forecast in the first quarter due to temporary factors, but underlying momentum still points to an expected year of middling growth.


Click here for full details from the Financial Post.


The coming 2012 federal budget won’t include any “draconian” measures because Canada is in a better fiscal position than many other nations, Finance Minister Jim Flaherty said.


Flaherty was speaking to reporters in Ottawa after meeting with economists to solicit their opinions on a number of economic issues ahead of the budget.


He gave scant details about the 2012 federal budget, due to be released on March 29th.


“The government of Canada is in a relatively good fiscal situation, so we don’t need to be draconian. We’re not the government of the United Kingdom, we’re not in a situation thank goodness like Greece and Portugal and some other countries,” Flaherty said.


Click here for the CTV News article.
There’s one piece of good news about mortgage prepayment penalties: The cost of the penalty can be used as a tax deduction if you’re breaking your mortgage to move 40 km or more to be closer to work.


The Canada Revenue Agency has a provision that allows you to deduct the costs of moving if you’re doing so for a job or for full-time study at a university, college or other type of course at a post-secondary level.


You can claim other costs associated with selling your old residence as well: advertising, notary or legal fees, real estate commission as well as that dratted mortgage penalty “when the mortgage is paid off before maturity.”


Keep the receipts and fill out form T1-M Moving Expenses Deduction. For tax purposes, the mortgage penalties get lumped under “other selling costs, specify” on Line 16 of the T1-M form.


Click here to read more from The Star.


10 Mar

Three annoying things that banks do to customers……


Posted by: Nisha Lalwani

Three annoying things that banks do to customers are about to become history.


Following up on commitments made in the past two budgets, the federal government has announced measures that will stop banks from mailing unsolicited credit card convenience cheques to customers, and that will reduce the holding period on newly deposited cheques. The banks will also have to stop being so secretive about the penalties clients must pay when they want to get out of a mortgage early.


These measures represent some good work by a government that has been under pressure lately as a result of the robo-call affair. Strangely, the measures were announced on a Sunday and, therefore, didn’t get the initial attention they deserve.


The sharp decline we’ve seen in mortgage rates over the past few years has prompted many people to think about breaking their mortgages in order to lock in lower borrowing costs. A mortgage penalty must generally be paid in this situation, but it’s exceedingly difficult to find out how much it is and how it’s calculated.


Click here for the full Globe and Mail article.


Click here for mortgage prepayment bank requirement details from Ottawa.


Despite ongoing concerns about household debt, home ownership is becoming more affordable in Canada, not less, says new research by RBC.


RBC’s latest report says home affordability actually improved in the final months of 2011 for the second consecutive quarter, thanks to softening house prices and income gains.


Owning a home in Canada now takes up as much of pre-tax income as it did a year ago, even though household indebtedness has continued to rise and is now at a record high 153% of disposable income.


Ownership even became more affordable in the ultra-expensive Vancouver market, although it remains the dearest place in Canada to own a home.


Click here to read more in The Star.


Sluggish domestic growth and uncertainty about the global economy will likely keep the Bank of Canada from raising rates until the second quarter of 2013, according to a Reuters survey.


The Reuters poll of 42 economists and strategists released last week showed the median forecast for the next interest rate hike was pushed back by three months from the first quarter of 2013 projected in a January poll.


The results were similar to a February 17th poll of Canadian primary dealers, which forecast the next rate hike would happen in the third quarter of 2013.


The Bank of Canada’s target for the overnight rate has been at 1% since 2010.


Click here to read more from Reuters.


A BC real estate agent was fined $258,000 when he unilaterally cancelled a contract to sell a home and resold it to a second buyer for a higher amount.


Hwang Soo Lee of Surrey, BC, ended up having to compensate his first buyer for behaviour described by a judge as “high-handed and outrageous.” The lesson is that sellers who think they can change their mind and get out of a deal, should a better offer arise, must beware of the consequences.


In mid-January 2009, Lee signed a deal to sell his home in Surrey for $740,000. He needed to sell the house in a hurry, so the price was $26,000 less than he owed on the mortgage and the commission payable to the buyer’s agent.


But before that deal closed, Lee sold the home to a second buyer for $779,000, which would have covered all his costs. In an effort to get out of the first deal, he refused to let the buyers, Kundan and Puja Khullar, into the home to do a home inspection. Then he tried to change the terms of the deal by increasing the price, without any right to do so.


Click here for more in The Star.


Greece saw investors’ participation in a massive debt relief deal rise today, bringing the country closer to avoiding a default that would plunge it into financial chaos and re-ignite the European debt crisis.


About 24 hours before the deadline for acceptances, investors owning around half of Greece’s privately held debt had committed publicly to the bond swap, in which they will accept losses to avoid facing even bigger ones in the event of an outright default by Athens.


For the deal to work – and for Greece to secure a related €130 billion ($171 billion US) bailout – Greece needs 90% of investors to sign up. But a voluntary participation rate of around 70% could be enough to force most holdouts to go along.


Greece’s financial troubles are the centre of Europe’s two-year crisis, so successfully lightening its debt load is crucial to the overall plan of keeping the 17-nation euro currency afloat. The euro and stock markets rose today as confidence over the bond swap grew.


Click here for full details in the Globe and Mail.
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.