Mortgage Industry in the Media

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.

Public 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]

The following article appeared in the Toronto Star yesterday with some good points and interesting idea to help out with our economic recovery.



By: Angelo Persichilli - Toronto Star

Excerpt from Article
"Banks asked for help and got it from governments all over the world, including Canada. Unfortunately, instead of passing that help on to the people, they used the money to replenish revenues depleted by their irresponsible policies. Ottawa pumped in billions of dollars by uploading mortgages through CMHC and the Bank of Canada, and it has dramatically cut interest rates to encourage people to borrow money. Banks have kept part of the cuts for themselves and now they want more – a corporate tax cut. We need tax relief not for the banks, but for the tens of thousands of small companies that risk losing their business because of the credit crunch the banks created."
Read Full Article Here

Flaherty Says He’ll Pressure Canada Banks on Lending

By Theophilos Argitis
Dec. 18 (Bloomberg) -- Canadian Finance Minister Jim Flaherty said he’ll pressure the country’s banks to increase lending to consumers and businesses, in a bid to help reverse the country’s worst downturn in 18 years. Flaherty said today he’ll meet bank executives early next month with Bank of Canada Governor Mark Carney to convey the need for financial institutions to offer credit.

“I expect them to make it evident to us that they are taking steps to make credit more available in Canada,” Flaherty told reporters today in Saskatoon, Saskatchewan.

The government is providing guarantees on more than C$200 billion ($167 billion) of bank debt and has pledged to buy as much as C$75 billion in mortgages from banks to free up cash for loans to consumers and businesses. Bank of Canada policy makers also have put more than C$36 billion into the banking system this year to restore normal terms for loans of up to three months and expanded the types of collateral they accept.

The government “has been assisting banks by ensuring adequate cash,” Flaherty said. “We expect the banks to reciprocate. We expect the banks to provide adequate credit.”

Read Full Article Here

Response to Globe's"High Risk" mortgage article

There has a been a great deal of resonse to The Globe & Mails December 14th Article: Special investigation: How high-risk mortgages crept north . There is already close to 1000 comments on their website.

Brain Hurley, from Genworth Financial replied with this statement published in the Globe and Mail on December 16th:

"It was the easing of traditional underwriting standards in the U.S. - not extended amortizations - that put so many subprime borrowers in loans they could not afford. Here in Canada, the overwhelming majority of 40-year mortgages are prime loans held by customers with solid credit - and who would have qualified for mortgages with 25-year amortizations. Arrears here are near all-time lows.

Genworth supported Ottawa's decision to limit its government guarantee to mortgages with a maximum 35-year amortization. Healthy competition between CMHC and Genworth has provided an important second set of eyes that act as a check against unwise lending."

And from Mike Storeshaw, director of communications to Finance Minister Jim Flaherty published in the Globe and Mail on December 17th:

"Your article implies the government exposed the Canadian housing market to undue risk (How High-Risk Mortgages Crept North - front, Dec. 13). The fact is our housing market has not witnessed a proliferation of products and marketing practices that led to problems in the U.S.

This is made clear in the recent Financial System Review report from the Bank of Canada. The bank's report states, "The housing and mortgage market excesses seen in the United States and in several European countries do not have a counterpart in Canada."

It adds: "Lending practices in Canada have been much more conservative than in the United States and some European countries, and the resulting imbalances far less acute. The subprime mortgage market in Canada accounts for less than 5 per cent of the residential mortgage market, compared with 14 per cent in the United States, and it is characterized by more stringent lending standards than those that have been applied in the United States."

Canada continues to have one of the lowest rates of mortgage delinquency in the world."

Globe & Mail - "High-Risk" Mortgages Article

There was a very interesting story that appeared in the Globe and Mail this weekend. While reading the article I couldn't help but thinking there are definitely some things the authors dont quite understand with respect to how the mortgage industry works in Canada, nor how some of the programs eg. 100% financing, 40 year amotizations are underwritten.

www.canadianmortgagetrends.com has done and excellent job at presenting the objections/points that anyone in the mortgage industry would have with the story presented by the Globe and Mail.

For a better understanding of these issues and a clear explanation of the difference between subprime and high risk, pelase read the points made by Canadian Mortgage Trends - click here

Real estate still the single best investment

You can find many articles in papers and online why real estate is still a good investment, even with all the negative press we receive regarding the state of the economy. Here are some good perspectives from an article that appeared on parrysound.com

Real estate still the single best investment
by Carli Whitwell - parrysound.com

Excerpt from Article:
"Steiner said while the Toronto Stock Exchange has fallen 47 per cent, real estate, across the country, is only down on average nine per cent.
“Real estate is still the single best investment. It is tax-free, if it is your primary residence,” he said, adding, if it is bought wisely if will go up in value over time."
Read Full Article

Toronto Land Transfer Tax

Two recent articles discussing Toronto Land Transfer Tax.


The city has done what it can, time for the feds to move in
City Views By DAVID NICKLE

Excerpt from Article:
"Because ultimately, that's what will have to happen if anyone is going to save anything. As much of a booster as Toronto wants to be, there's only so much a city can do. To survive financially, Toronto council has had to do some things that are opposite to stimuli - a poster child for those being the lucrative land transfer tax, which both critics and proponents agree has had at least a short-term cooling effect on Toronto's already chilled real estate market.

Repealing the land transfer tax, as the Toronto Real Estate Board urged this week, wouldn't help - the city would then be in a bona fide financial crisis, and create even more economic turmoil raising property taxes on every home."
Read Full Article

Toronto's land transfer tax hurting real estate market: C.D. Howe report
CBC NEWS

Excerpt from Article:
"The institute says the impact of the tax on real estate transactions and prices in Toronto has translated into a drop in the number of homes sold and the price sellers are able to get.

Since the city introduced the tax last February, home sales have fallen 16 per cent and the average sale price of a Toronto home has dropped 1.5 per cent."
Read Full Article

Mortgage rate cut won't be passed on

Mortgage rate cut won't be passed on
Kristine Owram - THE CANADIAN PRESS
Although mortgage rates are coming down as lenders respond to the Bank of Canada latest rate cut, the full benefit of the reduction won't be passed on fully to home owners and buyers.
Full Article

Banks only reduce prime rate by 1/2

After the Bank of Canada cut its key rate by three-quarters of a percentage point yesterday, Canada's six largest banks only passed on 50 basis point reduction to their clients lowering prime to 3.5%.

Several other non-bank lenders have also already reduced their prime rate to 3.5% and certainly all will follow.

This is good news for customers who have variable rate products, although we can all agree that receiving the full 3/4 would be even better news.

Banks argue that given the current economic turmoil and higher costs of borrowing funds, makes it harder for them to pass on the full rate cut.

With home prices reduced and low interest rates this is certainly a great time to buy real estate in most markets in Ontario. First Time Home Buyers who have been waiting to see what happens should seriously start looking and be ready to make a decent offer on a new home before the prices start to go rise again.

If you have not been pre-approved yet, please contact me to discuss your options.
gbarrow@dominionlending.ca

Have a great Day!

Bank of Canada lowers overnight rate target by 3/4 percentage point to 1 1/2 per cent

[Source - Bank of Canada]
OTTAWA – The Bank of Canada today announced that it is lowering its target for the overnight rate by three-quarters of a percentage point to 1 1/2 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 1 3/4 per cent.

Read Full Article Here - http://www.bank-banque-canada.ca/en/fixed-dates/2008/rate_091208.html

It will be interesting to see if the banks will match the 3/4 rate drop.

Toronto Real Estate BoardNovember Market Watch

[Source - http://www.torontorealestateboard.com]
December 4, 2008 -- TREB Members recorded 3,640 sales in November 2008 from the 7,313 sales recorded during the same period last year in the GTA, TREB President Maureen O’Neill announced today.

The average GTA price in November 2008 was $368,582. During the same period last year, the TorontoMLS system recorded an average of $393,747, and in November of 2006 overall GTA prices averaged $355,727.

The 2008 year-to-date sales for the GTA was recorded at 72,086 from last year’s 88,695. The year-to-date GTA average price was $379,489 from last year’s $375,445

Within the 416 area (City of Toronto) there were 1,523 sales during November 2008. During the same month last year, 3,426 sales were recorded. The average price in the 416 area was $390,225 compared to $433,859 in November 2007 and $381,188 in 2006.

In the City of Toronto, 28,806 sales have been recorded year-to-date for 2008 from last year’s 36,804 during the same time period. The year-to-date 2008 average price in the 416 area is $411,155 from last year’s $411,640.

The 905 Region recorded 2,117 sales last month, compared to the 3,887 sales transacted during November of 2007. The average price in the 905 Region was $353,012 last month from $358,391 in November of 2007 and $335,522 in November 2006.


Year-to-date sales in the 905 Region for 2008 were 43,280 from the 51,891 recorded during the same period in 2007. The year-to-date average price in the 905 Region for 2008 was $359,245 from $349,774 in 2007.

Breaking down the total, 1,453 sales were reported in TREB’s 28 West districts and averaged $350,199; 629 sales were reported in the 14 Central districts and averaged $473,346; 651 sales were reported in the 23 North districts and averaged $410,253; and 907 sales were reported in TREB’s 21 East districts and averaged $295,470.

Median Price

The Median Price for November 2008 was $312,250, compared to $325,000 in November of 2007 and $298,000 in 2006. The YTD Median for the first 11 months of 2008 was $325,000, compared to $318,000 during the same time-frame in 2007, and $300,000 in 2006.

Five Ways to Boost your Credit Score

Leading up to the holidays is the perfect time to think about things like improving your credit score and consolidating debt. After all, the holidays are a joyous time that should not be overshadowed by financial woes. And even if your credit score is good, these tips may make it even better. After all, the better your credit score, the fewer hurdles you’ll have to overcome when looking to renew or refinance your existing mortgage, or obtain a new one.

Following are five steps to a speedy credit score boost:

1) Pay down your credit cards. The number one way to increase your score is to pay down your cards to 30% of their limits. Revolving credit like credit cards seems to have a more significant impact on your score than car loans, lines of credit, and so on.
By paying down your cards to 30%, you are leaving a big gap between what your limit is and what you owe – a move that is very favourable to increasing your credit score.

2) Limit the use of your cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there is a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you paid it all off the next month. By being more accountable of your spending on a daily or weekly basis through the use of a budget, you can keep those cards below the magic 30% mark.

3) Check your limits. If your lender is slow to report your monthly transactions, this can have a big impact on how another lender may view your file. Make sure everything is up to date. Old bills that have been paid can come back to haunt you.

Some financial institutions don’t even report your maximum limits. As such, the credit bureau is left to only use the balance that’s on hand. The problem is, if you consistently charge the same amount each month – say $1,000 to $1,500 – it may appear to the credit-scoring formula that you’re regularly maxing out that card.

You could go on a wild spending spree to raise the limit, but a more sensible solution would simply be to pay your balance down or off before your statement period closes.

When making payments online, do so about a week before the period closing date printed on your latest statement to ensure the payment is received on time – it can take up to five business days for a payment to be received. This won’t raise your reported limit, but it will widen the gap between your limit and your closing balance, which should boost your score.

4) Keep your old cards. Older credit is better credit. If you stop using those older credit cards, the issuers may stop updating your accounts. As such, they will lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the card for a long time. Use these cards periodically and then pay them off.

5) Don’t let mistakes build up. Dispute any mistakes or situations that may harm your score. If, for instance, your cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation.

As always, if you want to talk about your credit score or consolidating debt, I’m here to help. Please call me at 416 807 7123 or email me at gbarrow@dominionlending.ca

If you want to know your current credit score you can order it from Equifax online at Get Your Equifax Credit Report Now!

Variables Falling to Prime + .60%

[Source - Canadian Mortgage Trends.com]

Prime + .60% is becoming the new norm for closed variable-rate mortgages. Prior to last week, prime + 1.00% was the average.

RBC was the first to cut last week to prime + .60%, and now other lenders are following suit. Non-bank lenders are also moving to prime + .60%, which is nice to see. (Given the recent credit crisis, smaller non-bank lenders have had the hardest time finding low-cost sources of lending capital.)

A decent variable-rate mortgage can therefore be found for about 4.60% today OAC. This rate will likely drop further following the Bank of Canada's December 9 interest rate announcement.
Keep in mind, however, that all-in-one-style HELOCs can be had for just 4.00% (with a lot more perks). The qualification criteria are more stringent though, you need 20% down, and the rate is not technically locked to prime like a regular variable-rate mortgage. [Other differences apply as well so talk to a mortgage professional for a complete comparison]

Variable rates have been easing down primarily because funding costs are improving. 30-day bankers' acceptance yields (which are usually correlated with variable-rate funding costs) have fallen from roughly 2.60% at the end of October to 2.15% yesterday.

More Canadians Opting for Variable Rate Mortgages

[Source - CEP News]
Ottawa - Canadians are increasingly opting for variable rate mortgages when it comes time to buy or refinance a home, according to survey results released by the Canadian Association of Accredited Mortgage Professionals (CAAMP).

The market share of variable and adjustable rate mortgages has almost doubled, to 40% this fall from 21% of those who negotiated their mortgages a year or more ago, CAAMP reports. The association says the switch likely indicates that consumers believe interest rates are more likely to fall than to rise.

There was evidence of a declining mortgage rate trend beginning on Wednesday afternoon as at least two major Canadian financial institutions announced rate reductions.

The lower rates are welcome news, said CAAMP CEO Jim Murphy, although he said the cost of borrowing is only one of three key factors affecting the housing market. Affordability and job security are equally important, he said. "You can't pay a mortgage if you don't have a job.

"Variable rate mortgages are more popular among middle aged and older buyers than among Canadians aged 18-34, the CAAMP study showed. Only 19% of buyers 34 and under opted for variable rate loans compared with 30% of buyers aged 35-54 and 27% of those aged 55 and older.

Read Full Article Here: http://www.economicnews.ca/cepnews/wire/article/single/173905/

Lower Mortgage Rates

As expected other banks have now lowered their rates, those lowering rates included Royal Bank of Canada, Bank of Montreal, Desjardins Group, Bank of Nova Scotia, Toronto-Dominion Bank and Laurentian Bank of Canada. Others are sure to follow.

These moves should help restore some consumer confidence.

This latest rate reduction is a reaction to the drop in borrowing costs in the bond market.

Is there any way to make the mortgage debt on a home more tax-efficient?

I recently sat down with Troy Matty of Absolute Financial Group to discuss investments, life insurance and mortgage debt. Troy is a financial expert and has a wealth of information on many investment strategies.

Highlights from the interview:

OMI: Is there any way to make the mortgage debt on a home more tax-efficient?

TM: That is a great question because the total accumulated interest charges on a mortgage debt, on average, is roughly equal to the original starting balance of a mortgage! This is a large sum of money we’re talking about! The answer is yes, you can make a mortgage debt more tax-efficient, but it is strongly recommended you work with an advisor who understands this type of strategy, and also an accountant that does as well. This strategy was specifically designed to make a mortgage debt more tax-efficient, pay off the mortgage debt sooner, and also create an additional pension along the way.

OMI: With the markets in turmoil, and investment portfolios decreasing, what advice can you offer investors?

TM: When it comes to investments, the biggest considerations are the risk tolerance and objectives of the individual, as well as the time horizon that they have. Although one person may see the markets as catastrophic, another may see them as an opportunity. Because investments are sold in units, in a “bull” market the purchasing power of your dollar is minimized, whereas in a “bear” market, your dollar can go a much longer way... and that’s exactly where we are today. It is strongly recommended before you purchase any investments, that they are in line with your risk tolerance and also your investment objectives. Conversely, it is equally recommended that before you sell any of your investments, you are aware of the possible repercussions of doing so. If time is on your side and you don’t need to draw off any of your investments, surrendering them or cashing out may be the worst thing you could do. Consult with an advisor and/or get a second opinion, always!

For expert financial advice please contact Troy Matty, he can be reached at:
Troy Matty
Absolute Financial Group
416.717.5629
tmatty@absolutefinancial.ca

For expert mortgage advice please contact Greg Barrow:
416.807.7123
gbarrow@dominionlending.ca

Take an interest in bonds to understand mortgage rates

[Source - Fred Langan, Financial Post]

Mortgages are the biggest loan in just about everyone's life. And they can be the hardest to understand.

Why do mortgage rates move the way they do? Why don't the rates march in lock step with other interest rates?

When the Bank of Canada lowers interest rates the big banks usually play chicken for several hours waiting to see who will drop rates first. At the last cut, the TD Bank was the first to lower prime. The others followed within the hour.

If you had a variable rate mortgage tied to prime, then your mortgage rate moved lower. But all other mortgage rates stayed put.

Why? One pat answer is mortgage rates don't move with prime because mortgages are financed in the bond market.

Not true. Interest rates in the bond market influence mortgage rates, but that isn't where the money for mortgages comes from.

Banks get their mortgage money the same way they get other money: they take in deposits from bank accounts, GICs, etc., and then loan out the money at a higher rate. The difference, or the spread, is how commercial banks make most of their money.

Read Full Article Here: http://www.financialpost.com/money/story.html?id=983179

RBC lowers mortgage rates

RBC Royal Bank today announced that it is decreasing its residential mortgage rates effective November 26, 2008 and is introducing three new mortgage rate offers.
The rate has decreased a 1/4 point from 7.20% to 6.95%. It is expected the other major banks will also lower there rates. This is great news for people shopping for new homes.

[http://www.newswire.ca/en/releases/archive/November2008/26/c4332.html]

Realtor.ca

How many times have you visited http://www.mls.ca/?

When was the last time you visited?

It is now www.realtor.ca and after its initial relaunch a few weeks ago they have received over 16,000 emails from unhappy house hunters trying to figure out the new system.

A recent article in the Toronto Star explains:

[Source - Murray Whyte Toronto Star]

Messing with our real estate crack
When wildly popular property site MLS.ca was relaunched last month, no one could have anticipated the furious response. Some of the protesters are even looking for a house.

Her name is Briana, and she's an addict, a point she freely admits – promotes, even – online. Her addiction, though, isn't one likely to cause the typical ills associated with junkiedom – the dissolution of relationships, loss of career, or even physical harm (though her mouse-click finger gets a little stiff sometimes).

Online, Briana (her last name is Tomkinson) sporadically maintains a blog called MLS Addict, broadcasting her affliction: a devotion beyond reason to MLS.ca, the web site maintained by the Canadian Real Estate Association which lists properties for sale nationwide (MLS stands for Multiple Listing Service).

According to Comscore, which tracks web traffic, MLS.ca garners 3 million unique hits every month. When the site relaunched last month with a confusing array of new features, the response revealed what Tomkinson always knew: Her kind are legion.

Read Full Article Here: http://www.thestar.com/News/article/537393

Think your borrowing costs are cast in stone? Maybe it's time to ask

The following article in yesterdays Globe and Mail is a great article on the recent changes to the Manulife All-in-One product which has most of their clients seeing red. This product which is sold through financial advisers (not available through mortgage brokers) was sold by the financial advisers as a "prime rate" product and that the rate would never change. This selling feature written in the content of product details on the Manulife website has since been removed from the Manulife website.

[Source - ROB CARRICK - globeandmail.com 18/11/08]

When you deal with companies in the financial sector, you run the risk that their pain will turn out to be your pain.

This is what's happened recently to clients of Manulife Financial, Canada's biggest insurance company, and Envision Financial, a large credit union in British Columbia. Affected in various ways by the global financial crisis, both have made changes that resulted in higher borrowing costs for some clients.

In the past few years or so, virtually all financial institutions have bumped up the cost of mortgages and lines of credit. But Manulife and Envision differ in that it's not just new clients who will pay more. Existing clients who may have thought they had a particular arrangement in place are now paying more as well.

Before the financial crisis, you could get away with signing up for a mortgage or line of credit without asking about your lender's ability to change the rules determining your interest rate. Now, it's clear that you have to ask, or risk a surprise increase later on.

Read Full Article Here: http://www.theglobeandmail.com/servlet/story/LAC.20081118.RCARRICK18/TPStory/Business

Similar All-in-One products are offered by mortgage brokers through other lenders. Be sure to speak with a professional mortgage agent and get all the details on these types of products before going into them.

Canada's mortgage consumers 'remarkably positive'

[Source - Eric Beauchesne, Canwest News Service]

Canadians are still in a mood to mortgage.

Nearly four in 10 still think that now is a good time to buy a house, even though the proportion who expect home prices to fall has soared and the proportion expecting higher housing prices has plunged, according to survey results published yesterday.

"Residential mortgage consumers remain remarkably positive as they weather the financial storm," the Canadian Association of Accredited Mortgage Professionals said in releasing the results of a mid-October survey.

Attitudes toward area conditions have shifted only slightly, with 38 per cent of Canadians believing now is a good time to purchase a house, compared to 32 per cent who believe it is a bad time.

Read Full Article: http://www.househunting.ca/buying-homes/story.html?id=a282684c-a28f-48ec-9a0a-747882181c2c

Recent Mortgage Industry News

Effective November 6th, 2008 TD Canada Trust will no longer be offering the Open VRM as part of their product line up.

CitiFinancial has halted the origination of new mortgages through Canadian brokers. They have also exited the US mortgage market. Citi was best known among mortgage professionals for their 100% loan-to-value second mortgages. Citi will honour all commitments that close on or before December 3rd. Get your documents in quickly if you have a mortgage pending with them.

AGF Trust will be closing its Montreal office this week to consolidate operations with its Toronto office. AGF says the move is designed to streamline operations. They will also be making changes to their product offering that will restrict lending to select urban locations. AGF Trust is a balance sheet lender (i.e. it funds its mortgages itself versus securitizing them) and is based in Toronto. The company specializes in "near-prime" mortgages.

HSBC is closing its Markham, Ontario mortgage underwriting office effective December 31, 2008 and will be moving all mortgage underwriting operations for Canada to its Burnaby, BC office.

Merix has temporarily suspended their HELOC offering on new deals. Existing commitments will be honored.

[Source - Dominion Lending Centres - Head Office - Bulletin]

Pre-approvals should always come in writing

An article in today's Metro paper explains why having a pre-approval in writing is very important prior to submitting an offer. I believe the first step anyone should take when considering a home purchase, whether you are a first time home buyer or not is to get a pre-approval. If you are in that process now and would like to discuss your options, please feel free to give a call or send me an email.

A pre-approval should also come in writing. It should be a commitment from a lender who is offering you a product at a set rate for a specific period of time. For example you may be pre-approved for $375,000 at a fixed rate of 5.34% for a 3 year term and this rate will be held for 120 days while you look for a home. You can then let your realtor know how much you have been pre-approved for and you can start your search knowing what price range you can shop for.

I also advise that you include the financing clause in your offer even with your pre-approval because many things can change in 120 days and it is better to be safe than sorry.

To read the article from the Metro - click here.

Call me today to get your pre-approval!

GTA Resale Housing Market Continues to Reflect Economic Times

The Greater Toronto Area resale housing market reported 5,155 sales in October, Toronto Real Estate Board President Maureen O’Neill announced today.

This represents a 35 per cent decline from the 7,915 sales reported in October 2007 and a 25 per cent decrease from the 6,876 transactions that took place during the same period two years ago.

In the City of Toronto, there were 2,136 sales, with sales activity down 38 per cent from the 3,455 transactions recorded last October.

In the 905 Region 3,019 sales were recorded, with sales activity down 32 per cent from a year ago when 4,460 homes changed hands.

With 68,570 transactions to date this year, sales are within 16 per cent of the 81,563 transactions noted a year ago. The 2007 market referred to was a record breaking year with each month breaking records for the entire year. Putting into perspective 2008 figures are indicative of a return to a more balanced market.

Read Full Article Here

[Source - www.TorontoRealEstateBoard.com]

Yes They Did

Wow! What an historical night, they actually did it.

Congratulations to President Obama and the United States of America.

I hope this means a sooner than expected turnaround for their economy, which of course will certainly benefit our economy here in Ontario. I believe this is an exciting time and the USA will be able to repair its image around the globe which in turn will hopefully lead to more peaceful times ahead.

Realtors urge feds to defer home-sale tax

[Source - Dave Cooper, edmontonjournal.com]

Ottawa could help Canadians cut carbon dioxide emissions and stimulate the economy by adopting a tax deferral plan that would allow investors to sell properties without facing an immediate tax hit if they reinvested in real estate, says the Canadian Real Estate Association.

The proposal would defer both the capital gains and capital cost allowance recovery when an investment property is sold and the proceeds are invested in another property within the year. This would stimulate investment and help regenerate aging urban communities, but could cost the federal government about $425 million in immediate tax revenue.

Read Full Article

Don't balk, a case can be made for variable-rate mortgages

[Source - ROB CARRICK - globeandmail.com - 4/11/08]

Once the darling of savvy homeowners, the variable-rate mortgage has become a nasty piece of business lately.Rates for these mortgages are vastly more expensive than they used to be, and some lenders are charging a fair bit more than others. It's probably best to avoid variable-rate mortgages altogether for the time being, right?

Not so fast. There's a case to be made for variable-rate mortgages right now, even if homeowners are shunning them.

Before the global financial crisis gummed up bank lending, you could get a variable-rate mortgage at the prime lending rate at major financial institutions minus a discount of up to 0.9 of a point or so. Today, variable-rate mortgages are going for prime plus a full percentage point in many cases.

Read Full Article

If you are in the process of purchasing a new home or you mortgage is coming up for a renewal, and you would like to discuss your options, please call or email Greg Barrow at Dominion Lending Centres at 416 807 7123.

Independent Mortgage Brokers Association (IMBA):

The Independent Mortgage Brokers Association of Ontario (IMBA) is an organization of mortgage financing professionals. IMBA exists to advance the mortgage brokerage industry on behalf of its Members through public advocacy; to participate in consultative processes with regulators and other industry participants; and to generally assist its Members with their businesses. Members of the Association are required to meet professional standards as a condition of membership.

IMBA counts approximately 1,600 Members, which represent more than 300 companies throughout Ontario. The Association’s membership is comprised of representatives from various mortgage-related industries, including mortgage brokers and agents, lenders, title insurers, appraisers, lawyers and real estate professionals.
Members are continuously kept informed about the latest industry advancements, products, trends, regulatory matters, and related services. Members receive information either through communication pieces, professional development conferences, seminars, or other events. Consumers can comfortably rely upon IMBA’s Members to provide them with superior levels of knowledge and experience when arranging mortgage financing.

I am a proud member of IMBA.

Visit their website: www.imba.com

Rate Your Mortgage Broker consumer survey

[Source - Canadian Mortgage Professional - October 2008]

In the first annual Canadian Real Estate magazine (CRE) Rate Your Mortgage Broker consumer survey, an astounding 94% of respondents said they'd use a mortgage broker again. Cindy Freiman talks to consumers to unveil the ins and outs of their recent mortgage experiences.

What brokers did well
Of the consumers polled, 38% revealed that they were happy with the overall experience offered by their broker and could not come up with suggestions on how to improve the relationship moving forward.

When it came to product knowledge, an astonishing 90% of consumers said they strongly agreed or agreed that their broker had a strong grasp on the available products to meet their clients' needs.

Brokers also received a favourable grade on product choice, with 73% of respondents saying the broker offered a wide variety of mortgage products from which to choose.

Where specific needs were concerned, 84% of participants felt their broker quickly understood their particular needs.

When asked the ever-popular rate-driven question of whether the broker found them a better-than-expected deal on a mortgage (regardless of whether they took the brokers up on these mortgages), 70% of consumers said they strongly agreed or agreed.

Read Full Article

Happy Halloween - Safety Tips

Trick-or-Treaters
Carry a flashlight
Walk, don't run.
Stay on Sidewalks
Obey traffic signals
Stay in familiar neighborhoods
Don't cut across yards or driveways.
Wear a watch you can read in the dark.
Make sure costumes don't drag on the ground.
Shoes should fit (even if they don't go with your costume)
Avoid wearing masks while walking from house to house.
Carry only flexible knives, swords or other props.
(If no sidewalk) walk on the left side of the road facing traffic
Wear clothing with reflective markings or tape.
Approach only houses that are lit.
Stay away from and don't pet animals you don't know.


Parents
Make your child eat dinner before setting out.
Children should carry quarters so they can call home.
Ideally, young children of any age should be accompanied by an adult.
If your children go on their own, be sure they wear a watch, preferably one that can be read in the dark.
If you buy a costume, look for one made of flame-retardant material.
Older children should know where to reach you and when to be home.
You should know where they're going.
Although tampering is rare, tell children to bring the candy home to be inspected before consuming anything.
Look at the wrapping carefully and toss out anything that looks suspect.


Homeowners
Make sure your yard is clear of such things as ladders, hoses, dog leashes and flower pots that can trip the young ones.
Pets get frightened on Halloween. Put them up to protect them from cars or inadvertently bitting a trick-or-treater.
Battery powered jack o'lantern candles are preferable to a real flame.
If you do use candles, place the pumpkin well away from where trick-or-treaters will be walking or standing.
Make sure paper or cloth yard decorations won't be blown into a flaming candle.
Healthy food alternatives for trick-or-treaters include packages of low-fat crackers with cheese or peanut butter filling, single-serve boxes of cereal, packaged fruit rolls, mini boxes of raisins and single-serve packets of low-fat popcorn that can be microwaved later.
Non-food treats: plastic rings, pencils, stickers, erasers, coins.

Canadian Association of Accredited Mortgage Professionals (CAAMP)

Established in 1994, the Canadian Association of Accredited Mortgage Professionals (CAAMP), formerly the Canadian Institute of Mortgage Brokers and Lenders, is Canada’s national mortgage industry association. CAAMP has assumed a leadership role in the industry it serves and has set the standard for best practices for Canada’s mortgage practitioners. In 2004, CAAMP created the Accredited Mortgage Professional (AMP) designation as part of an ongoing commitment to increasing the level of professionalism in Canada’s mortgage industry.

As a membership-based organization, CAAMP strives to develop its network of professionals and to represent the interests of these individuals to government, media and consumers. CAAMP has attracted over 11,000 members and 1,100 companies from across Canada – representing over 90% of Canada’s mortgage activity. CAAMP members make up the largest and most respected network of mortgage professionals in the country. CAAMP's membership base consists of mortgage lenders, brokers, insurers and other industry participants.

CAAMP’s other primary role is that of consumer advocate. On an ongoing basis CAAMP aims to educate and inform the public about the mortgage industry. Through its extensive membership database, CAAMP provides consumers with access to a cross-country network of the industry’s most respected and ethical professionals.
In September/October 2007, Maritz Research conducted a 21-question telephone survey with 2,000 Canadian consumers. A sample of 2,000 Canadians ensures an accuracy of + 2.2%, 19 times out of 20.

A copy of the survey is available at www.caamp.org

I am a member of CAAMP and am working towards my AMP designation.

Financial crisis: How to deal

[Source - CanadianBusiness.com - Calvin Leung]

This is a great article from Mr. Leung which discusses and compares our current economic situation with historical economic situations and the ways they were handled in different countries. There is also some advice on what to do in these times including the following:

"Diane McCurdy, a Vancouver-based financial adviser and author of How Much is Enough, shares the sentiment that timing the markets is hard. She has recommended to her clients to stick to their investment plan, which includes maximizing an RRSP and putting the refund toward a mortgage. McCurdy also says dollar-cost-average investing can help you buy cheap now."

and

"Investors too scared to put money in the market might want to consider real estate. “The bad financial news on the TV is forcing people to hunker down and not buy homes, and you can get some pretty darn good deals,” says Don Campbell, author of Real Estate Investing in Canada. Resale house prices in 25 major markets fell an average of 6.2% in September. Campbell, however, cautions against trying to flip a property. Instead, he says, find a rental property whose monthly cash flow covers all expenses including mortgage payments, and look in cities whose population is growing and jobs increasing.Areas that he says look particularly attractive include Kitchener-Waterloo, Cambridge, Barrie and Orillia, in Ontario."


Read Complete Article Here

Toronto Real Estate Board Hosts Resale Housing Market Panel Discussion

TORONTO, ONTARIO--(Marketwire) - All media representatives are invited to see top executives from some of Canada's largest real estate companies gather at the Toronto Real Estate Board's 88th Annual General Meeting October 27th to discuss the state of the current resale housing market and the future of real estate.

Greater Toronto REALTORS® are passionate about their work. They adhere to a strict Code of Ethics and share a state-of-the-art Multiple Listing Service. Serving over 28,000 Members in the Greater Toronto Area, the Toronto Real Estate Board is Canada's largest real estate board. Greater Toronto Area open house listings are now available on www.TorontoRealEstateBoard.com

We will post the highlights of this discussion when they are made available.

Don't lay global housing bubble on U.S. doorstep

With all the news we receive each day and night regarding the current global economic crisis, most of the blame is aimed at the US, its housing market and its sub prime mortgages. Neil Reynolds of the Globe and Mail has written an interesting article on why there is more blame to go around and specifically in Europe.

His findings are sourced from the International Monetary Funds research and publications. From the IMFs world economic outlook it appears Canada is not so bad off with respect to the house price gap nor inflated property values.

Read his article here:
http://www.theglobeandmail.com/servlet/story/LAC.20081024.RREYNOLDS24/TPStory/Business

If you are interested in reading the World Economic Outlook Report, published in October 2008 or the Global Financial Stability Report, published this month; visit International Monetary Funds Website here: http://www.imf.org/external/index.htm

Canadian Mortgage Trends interviews Gary Mauris of DLC

Canadian Mortgage Trends is one the best blogs on the Canadian mortgage industry online and I read it daily. Recently they interviewed the President of the company I work for - Dominion Lending Centres.

Dominion Lending Centres is one of the fastest growing mortgage brokerages in Canada. It opened its doors in January 2006 and flew under the radar for about 18 months before exploding onto the scene. Dominion is now on track to close a very respectable $7 billion in mortgage volume in 2008, and has its sights on the #1 broker volume ranking in 2009.

The interview yielded some rather interesting observations about Dominion Lending, as well as market-wide developments.

Some of the key points of the interview include: why customers should use mortgage agents versus the bank; why dealing with Dominion Lending Centres brokers and agents also has its advantages; using the Internet for mortgage services; and recent changes in the mortgage industry.

Read the whole interview here: http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2008/10/dominion-lending-a-chat-with-gary-mauris.html

Big 6 Banks drop prime rate following Bank of Canada

Variable rate mortgage holders will be happy as the major banks reduced prime rate to 4.00% after the Bank of Canada reduced the key lending rate by another 1/4 point yesteraday.

Other lender's who have reduced their prime rates to 4.00% include: Laurentian Bank, Street Capital, Caisse Centrale Desjardins, Dominion Lending White Label, ATB Financial, Merix Financial, and Scotia Express.

If you are interested in purchasing a home soon, or your current mortgage is coming up for renewal and you would like to speak to a professional regarding fixed vs. variable rates, please contact Greg Barrow at gbarrow@dominionlending.ca. You can also try calling 416 807 7123. I would be happy to answer any of your questions.

Bank of Canada lowers overnight rate target by 1/4 percentage point to 2 1/4 per cent

The Bank of Canada lowered its key lending rate 0.25% today. This was an expected cut by most people, although lower than expected.

From the Bank of Canada Statement issued today the cuts were a result of:

"Three major interrelated developments are having a profound impact on the Canadian economy. First, the intensification of the global financial crisis has led to severe strains in financial markets. The associated need for the global banking sector to continue to reduce leverage will restrain growth for some time. Second, the global economy appears to be heading into a mild recession, led by a U.S. economy already in recession. Third, there have been sharp declines in many commodity prices. The outlook for growth and inflation in Canada is now more uncertain than usual."

We are now waiting to see how much of the rate decrease will be passed on to consumers by the major banks.

The Bank of Canada's next scheduled date for announcing the overnight rate target is 9 December 2008.

Read the Bank of Canada Statement Here

Canadian Mortgage Industry Changes

Last week October 15th came and went and with it some very good changes to our mortgage industry. Specifically the end of 100% financing, and 40 year amortizations. The minimum beacon to qualify is now 620, and the TDS ratio is now at 45.

I have always felt it is better to put some money down when buying a home and now the minimum required is 5% down.

Traditionally mortgages were amortized for a maximum of 25 years. Over the past couple of years the options were increased to 30, 35 and even 40 years. This made it easier to qualify, however left little room for homeowners to make the adjustment to increased payments if the rates were to go up. The maximum amortization period for mortgages has been reduced from 40 years to 35 years.

The minimum credit score requirement is now 620. If you are close to that score either above or below and considering purchasing a new home soon there are a few things you can do to help keep your score above or bring your score above 620:
1) Do not have too many inquiries on your credit
2) Make all your payments on time
3) Keep your balances within their limits
4) If you do happen to have a collection, pay it off at once and fax your final release letter to Equifax and TransUnion.

If you do not know your score you can order it from Equifax online at Get Your Equifax Credit Report Now!

Under the new rules, the TDS is set at a maximum of 45 percent. TDS is the Total Debt Service Ratio which is your principle and interest payment plus property taxes and heat plus you debt payments divided by your income.


For more information on any of the recent changes please contact Gregory Barrow by phone at 416 807 7123 or by email at gbarrow@dominionlending.ca

The local market still looks sound

Many people are wondering whether the housing crisis in the U.S will be the same here in Canada, and specifically Ontario. There are many reasons why it will not, and that is good news. There was a great article in Friday's Globe in Mail that puts into perspective and spoke about the key indicators to consider.

The local market still looks sound
[Source - DEREK RAYMAKER, From Friday's Globe and Mail October 17, 2008]

There's an old saying that goes: when the water-hole dries up, that's when all the animals start to look at each other funny.

The last two weeks have seen a spectacular crash of global equity markets and a virtual paralysis in capital flow. The headlines are frightening, but digging behind them even slightly is enough to make your blood run cold.

This is especially true if you are close to retirement and have just watched your investments go for a swan dive off the tallest peak of Bay Street, ripping one-third or more of their value on the way down. But the scariest part of a good old-fashioned economic meltdown is waiting for the other shoe to drop. That's when the terror sets in — not having a clue what comes next.

As last week's stock market collapse showed, psychology can drive events to a crisis point as much as real economic happenings such as job losses, trade slowdowns, property foreclosures and bank failures. So how do home buyers and sellers keep their heads on straight in these troubled times?

Read entire article here

Title Insurance: Fraud can turn dream home purchases into disaster

Whether purchasing your first home or refinancing your existing home you should always, always have Title Insurance. Title insurance offers peace of mind and protects your investment. Although it is not required, most lawyers, real estate and mortgage professionals will highly recomend purchasing it. The decision on whether or not you should purchase title insurance should be discussed with your lawyer.

For detailed information on the benefits of Title Insurance, you can download FSCO Title Insurance Brochure here.

Here is a recent article on Title Insurance from The Canadian Press
[By Eric Shackleton, THE CANADIAN PRESS - 2008-10-16]

Fraud can turn dream home purchases into disaster

TORONTO - The purchase of a dream home is probably the greatest investment in many people's lives, but beware - even with such a major purchase, fraud could be lurking just around the corner, say experts in the real estate industry.

This joy killer comes in many forms - lawyer negligence, title defects, title liens such as unpaid utility bills, property encroachments, title fraud such as forged documents and land survey errors.

"Nobody is protected from fraud," says Ray Leclair, vice-president of TitlePLUS, a division of LawPRO, the liability insurer for lawyers.

"Unfortunately, fraud is on the increase," not just in urban areas but even in small communities, he said in a recent interview.

"It's like a lottery. There's very little chance of it happening to you. But if it does happen, it has a huge impact."

To help protect themselves, prospective homeowners should make sure they have title insurance and also get their own credit report.

People can gain a lot of "peace of mind" for as little as a premium of $200 for title insurance, said Leclair.

Read entire article here

Title Insurance Companies:
First Canadian Title
TitlePlus
Stewart Title Guaranty Company

Mortgage borrowers pushed to lock in

[Source - Garry Marr, Financial Post Published: Wednesday, October 15, 2008]

Canadian banks are trying to convince consumers to lock in their mortgage rates because more than 20% of the home loans they have negotiated have become unprofitable, according to industry sources.

[Source-Andrew Barr, National Post]

The push has come after the banks cut the discount they offered to consumers with variable-rate products tied to the prime lending rate. Two weeks ago a consumer could get a variable rate product at 0.60 percentage points below prime; today it is one percentage point above prime.

"Banks are scaring people and those people are calling us asking whether they should lock in," said Vince Gaetano, a vice-president with Monster Mortgage, a mortgage brokerage firm.

His advice is pretty emphatic. Anybody with a mortgage negotiated in the past two years would be out of their mind to lock in to, say, a five-year term, he said. They would be going from a rate as low as 3.35% to 5.79%. Lines of credit previously negotiated at a rate below prime are also still valid.

Read More: http://www.financialpost.com/story.html?id=880446

BMO, RBC, CIBC, Scotia all Reduce Prime Rates

All the remaining major banks including: Royal Bank, CIBC, Scotiabank and Bank of Montreal announced on Friday a decrease of one quarter of one per cent in its Canadian dollar prime lending rate. The new rate is 4.25 per cent, effective Tuesday, October 14, 2008.

"We are pleased to offer this reduction in interest rates to ourcustomers, which we believe will reinforce confidence in the Canadian economy," said Chris Hodgson, Executive Vice-President and Head of Domestic Personal Banking (Scotiabank). "At a challenging time in world financial markets, this reduction in interest rates reflects actions initiated by the Bank of Canada and the federal government."

TD Canada Trust lowers prime lending rate

[Source - CNW Group]

TORONTO, Oct. 10 /CNW/ - TD Canada Trust today announced that it haslowered its prime lending rate by 15 basis points to 4.35 per cent, effective,Tuesday, October 14, 2008. This morning the government announced that it will buy $25-billion ininsured mortgage pools to address Canadian banks' increased cost of borrowing. "We believe that this initiative will be put into effect in a way thatwill reduce our overall cost of funds and, as a result we are dropping ourrate today. As we've been saying, a number of factors go into decisions aboutrate changes. Financial markets are very turbulent, and funding costs arestill high. However, we anticipate that our cost of funds will decrease withthe implementation of this program, and therefore wanted to take action thatwill benefit our customers directly," said Tim Hockey, President and CEO, TDCanada Trust.

Mortgage rates, car loans hit by credit crunch

[Source - By Philip Demont, CBC News]

As the global financial crisis continues, many companies and consumer face an apparent economic paradox.

While central banks in many industrialized countries chop short-term interest rates to boost economic growth, what it costs to borrow money to buy a house or a car will likely rise in the coming months.

On Wednesday, five central banks — the U.S. Federal Reserve Board, the Bank of Canada, the Bank of England, the European Central Bank and Sweden's Riksbank — all cut their near-term borrowing rates by half of a percentage point.

Car loan rates likely to rise as cost of cash jumps (David Zalubowski/Associated Press)

That followed Tuesday's breathtaking reduction of one full percentage point by the Reserve Bank of Australia.

The government banks are trying to reduce borrowing costs for other financial institutions and repair the increasingly illiquid capital markets around the globe.

"Interbank lending is essentially frozen," federal Finance Minister Jim Flaherty said Thursday in Ottawa.

Canada's central bank rate has set its target for overnight lending at 2.5 per cent while the U.S. Federal Reserve's fed funds rate now is pegged at 1.5 per cent.

At almost the same time, however, the TD Bank hiked what it charges on variable-rate mortgages, a move many analysts expect to be mimicked by other banks.

Read the whole story here: http://www.cbc.ca/money/story/2008/10/08/f-interestrates.html

Mortgages, capital and that darn TED spread

[Source - ReportonBusiness.com]

The Report on Business takes questions on the financial crisis.

Who owns Canada Mortgage and Housing Corp. and can it go under?

CMHC was set up by the federal government just after the Second World War to help deal with a housing shortage exacerbated by the huge number of soldiers returning home. It helped finance home construction and provided funds for low-income housing. In the 1950s, when banks got into mortgage lending, CMHC started insuring "high-ratio" mortgages where home buyers initially made only a small down payment. This summer CMHC stopped insuring mortgages with zero down payment or 40 year amortizations.

CMHC also subsidizes aboriginal housing, provides loans and grants for certain kinds of renovations, and gathers statistics on the housing market. It also buys mortgages from financial institutions, and repackages them as mortgage-backed securities, which it sells to investors.

Because CMHC is a Crown corporation - unlike Fannie Mae and Freddie Mac which were private companies - it is backed by Ottawa and could not really "go under."

Read the whole story here: http://www.theglobeandmail.com/servlet/story/LAC.20081010.RBANKSEXPLAINER10/TPStory/Business

Flaherty unveils $25-billion mortgage plan

[Source - Paul Vieira and Jamie Sturgeon, Financial Post]

The federal government said Friday it would inject up to another $25-billion of liquidity into the financial system through the purchase of insured mortgage pools.

In a speech delivered in Ottawa, Jim Flaherty, the Minister of Finance, said the move is aimed at maintaining the availability of long-term credit, which is under severe strain at present as banks are unwilling to lend to each other.

"It is becoming increasingly clear that the continuing disruption of global credit markets, which has been severe and protracted, is making it difficult for our financial institutions to raise long-term funding. This is beginning to affect the availability of mortgage loans and other types of credit in Canada," Mr. Flaherty said.

Read the whole story here: http://www.nationalpost.com/news/canada/story.html?id=873182

Canada banks go for smaller cuts to prime rates

[Source - Reuters - By Lynne Olver]

Canadian banks will pass along only part of a central bank rate cut to borrowers, with Toronto-Dominion Bank (TD.TO: Quote, Profile, Research, Stock Buzz) being the first to announce on Wednesday it will lower its prime lending rate by 25 basis points to 4.50 percent.

That is only half of the 50 point cut in administered rates made by the Bank of Canada earlier on Wednesday, when it acted with other central banks to lower key lending rates in an attempt to shore up investor confidence and ease the effects of the global credit crunch.

The Bank of Canada dropped its overnight rate target to 2.5 percent.

Canadian Imperial Bank of Commerce (CM.TO: Quote, Profile, Research, Stock Buzz), Royal Bank of Canada (RY.TO: Quote, Profile, Research, Stock Buzz) and Bank of Nova Scotia (BNS.TO: Quote, Profile, Research, Stock Buzz) said they would make the same reductions as Toronto-Dominion, bringing their prime rates to 4.50 percent from 4.75 percent, effective Thursday. Other banks were likely to follow suit, based on past patterns.

The prime rate influences borrowing rates on other consumer and business loans.

"There's certainly no rule that states that they have to cut their rates in lockstep with the Bank of Canada," said Steve Foerster, a finance professor at the University of Western Ontario's Ivey School of Business.

Click Here to Read More on Reuters.com

Central Banks Announce Coordinated Interest Rate Reductions

Throughout the current financial crisis, central banks have engaged in continuous close consultation and have cooperated in unprecedented joint actions such as the provision of liquidity to reduce strains in financial markets.

Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices. Inflation expectations are diminishing and remain anchored to price stability. The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability.

Some easing of global monetary conditions is therefore warranted. Accordingly, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank and the Swiss National Bank are today announcing reductions in policy interest rates. The Bank of Japan expresses its strong support of these policy actions.

Bank of Canada lowers overnight rate target by 1/2 percentage point to 2 1/2 per cent

The Bank of Canada today announced that it is lowering its target for the overnight rate by 1/2 percentage point to 2 1/2 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 2 3/4 per cent.

Click here to read more from Bank of Canada Website

TD to raise rates on mortgages, home equity loans

The latest victims of the growing financial crisis could be the standard discount available to consumers on variable mortgages, and home equity loans at prime.

In a move expected to be followed by other banks, all of which have been stung by higher funding costs, TD Canada Trust is raising rates on both types of loans, effective Oct. 7.

Rates on these products will rise to 5.75 per cent, a percentage point above the prime rate. Only last week, TD eliminated the discount on its variable rate mortgages, offering them at the prime rate of 4.75 per cent. During the housing boom of the past several years, consumers could often get their bank to drop the rate by half or even up to a full percentage point.

“While TD Canada Trust has endeavoured to not pass on the increases in rates to its consumers, this change reflects steadily increasing costs of funds in the current economic environment,” the bank said in a statement.

The percentage point increase raises the term interest cost on a $250,000 variable rate mortgage by $12,247.22 over five years, according to Royal Bank of Canada's online mortgage calculator. The difference is based on a 25-year amortization, a variable rate mortgage with a five-year term and bi-weekly payments. On that basis, the bi-weekly payment amount rises to $725.90 from $657.83.

The credit crisis and economic uncertainty have caused banks to stockpile their cash. That's driving up their short-term cost of borrowing from one another, and means margins on variable rate mortgage products are shrinking.

Rates on fixed-term mortgages went up last week too, as banks have passed on fewer of their savings from falling bond yields to consumers to consumers.

“The deterioration of global credit markets is beginning to squeeze the ability of even the strongest of financial institutions to raise longer-term funds, which could limit the provision of longer-term credit in Canada to businesses and households,” federal Finance Minister Jim Flaherty said in a statement Monday.

“Hopefully this isn't a permanent shift, but a short-term reaction to conditions the likes of which we really haven't seen before,” said Gary Siegle, regional manager at mortgage broker Invis.
With a discount, some customers can still get five-year, fixed-rate mortgages at 5.55 per cent, meaning a bi-weekly payment of $707.66 on a $250,000 mortgage amortized over 25 years. This means those looking for peace of mind in the current market turmoil aren't paying a premium to lock in, Mr. Siegle said.

[Source - LORI MCLEOD // Globe and Mail Update // October 6, 2008 at 8:46 PM EDT]

What's the best strategy as mortgage rates rise?

Source ROB CARRICK - Globe and Mail Update
September 30, 2008 at 6:19 PM EDT

The credit crunch has hit home with yet another move by the big banks to jack up the cost of mortgages.

Mortgage brokers report that the big banks and other lenders have stopped offering variable-rate mortgages with a discount off the prime rate.

It was common in the first half of 2007 to get a variable-rate mortgage at prime minus a full percentage point, said Jim Tourloukis of Advent Mortgages in Markham, Ont. Since then, the discount had gradually fallen to 0.4 of a percentage point as of last week.

“As of yesterday, virtually everybody was offering variable-rate mortgages at prime,” Mr. Tourloukis said. “In other words, no more discounting.”

Forced to pay more to raise the money they lend out to customers, the banks have set fixed mortgage rates far higher than they would be under normal circumstances. Now, variable-rate mortgages have been affected as well. What's the right strategy for borrowers?

Your choices: a variable-rate mortgage at 4.75 per cent, which is the current prime rate at all major lenders, or a discounted five-year mortgage at rates in the low 5-per-cent range.

The lower variable rate means you'll save money in the near term, but it also opens you up to the risk that rising interest rates will boost your borrowing costs somewhere down the line.

“If I'm the average Joe, I would be taking the five-year rate right now because I don't know what's going on out there and I don't want to risk my house,” Mr. Tourloukis said. “I don't think rates are going to go up, but I don't want to worry about it.”

Mr. Tourloukis said about 90 per cent of his clients were going with variable-rate mortgages prior to this week, and he expects the same big majority to swing over to fixed-rate mortgages going forward.

The problem with fixed-rate mortgages – almost everyone picks the five-year term – is that you'll have to work hard to get a good deal. Posted five-year rates at major lenders are around 7.2 per cent, and some banks are posting “special” discounted rates of 6.14 per cent on their websites.

However, Mr. Tourloukis said he was able to get five-year mortgages as low as 4.99 per cent. Alternative banks and credit unions have been offering rates as low as 4.99 to 5.45 per cent.
Brian Matthey, a mortgage broker in Kingston, Ont., said five-year mortgages would be going for about 4.35 per cent today under normal circumstances in financial markets. He stressed the importance of shopping around for a mortgage right now and not settling for whatever discount your bank is willing to dole out.

“The banks are going to freewheel as they need to in terms of what they offer their clients,” Mr. Matthey said.

If you have any questions regarding this article or on variable or fixed rates, please call Greg Barrow, DLC Perfect Mortgages at 416 807 7123 or email gbarrow@dominionlending.ca

Fall House Maintenance

Timing of the seasons varies not only from one area of Canada to another, but also from year to year in a given area. For this reason, we have not identified the months for each season. The maintenance schedule presented here, instead, is a general guide for you to follow.The actual timing is left for you to decide, and you may want to further divide the list of items for each season into months.


Have furnace or heating system serviced by a qualified service company every two years for a gas furnace, and every year for an oil furnace.

Open furnace humidifier damper on units with central air conditioning and clean humidifier.

Lubricate circulating pump on hot water heating system.

Bleed air from hot water radiators.

Examine the forced air furnace fan belt for wear, looseness or noise; clean fan blades of any dirt buildup (after disconnecting the electricity to the motor first).

Turn ON gas furnace pilot light.

Check and clean or replace furnace air filters each month during the heating season.Ventilation system, such as heat recovery ventilator, filters should be checked every two months.

Vacuum electric baseboard heaters to remove dust.

Remove the grilles on forced air systems and vacuum inside the ducts.

If the heat recovery ventilator has been shut off for the summer, clean the filters and the core, and pour water down the condensate drain to test it.

Clean portable humidifier, if one is used.

Have well water tested for quality. It is recommended that you test for bacteria every six months.

Check sump pump and line to ensure proper operation, and to ascertain that there are no line obstructions or visible leaks.

Replace window screens with storm windows.

Remove screens from the inside of casement windows to allow air from the heating system to keep condensation off window glass.

Ensure all doors to the outside shut tightly, and check other doors for ease of use. Renew door weatherstripping if required.

If there is a door between your house and the garage, check the adjustment of the self-closing device to ensure it closes the door completely.

Ensure windows and skylights close tightly.

Cover outside of air conditioning units.

Ensure that the ground around your home slopes away from the foundation wall, so that water does not drain into your basement.

Clean leaves from eavestroughs and roof, and test downspouts to ensure proper drainage from the roof.

Check chimneys for obstructions such as nests.

Drain and store outdoor hoses. Close valve to outdoor hose connection and drain the hose bib (exterior faucet), unless your house has frost proof hose bibs.

If you have a septic tank, measure the sludge and scum to determine if the tank needs to be emptied before the spring.Tanks should be pumped out at least once every three years.

Winterize landscaping, for example, store outdoor furniture, prepare gardens and, if necessary, protect young trees or bushes for winter.

[Source: CMHC - http://www.cmhc.ca/en/co/maho/gemare/gemare_003.cfm]

Mortgage Insurance Guarantee Parameters

On Friday, September 19, 2008 the Department of Finance issued its final mortgage insurance guarantee parameters and accompanying explanatory notes. The final guidelines follow the initial announcement on the financial guarantee for mortgage insurance providers issued July 9, 2008 by the Department of Finance.

There are two noteworthy changes from the draft parameters:

1. Elimination of reference to a Total Debt Servicing (TDS) number, replaced by a principles based approach;
2. Reduction in minimum credit score to 600 from 620. Three percent “basket” for flexibility remains;

These modifications follow discussions with stakeholders, including CAAMP. CAAMP through its submission focused its comments on the minimum credit score and welcomes the decision by the Department of Finance to adjust the credit score.

Protect yourself against Identity Theft

With technology today, it's more important than ever to keep your private information safe.
Identity theft occurs when someone uses your personally identifying information (like your name, Social Insurance Number, credit card number, etc.) without your permission to commit fraud or other crimes. It has become a serious problem for many Canadians and has been discussed at length on numerous television broadcasts across the country.

Identity theft is serious. While some identity theft victims can resolve their problems quickly, others spend thousands of dollars and weeks of time repairing damage to their good name and credit record. Some consumers victimized by identity theft may lose out on job opportunities or even be denied loans for mortgages, HELOCs (Line of Credits), education, or cars because of negative information on their credit reports. In rare cases, they may even be arrested for crimes they did not commit.

Here are some tips on how to reduce your risk of becoming a victim of identity theft:

• Carefully check over your bank and credit card statements every month. Immediately report any discrepancies in your monthly statements to your financial institution.
• If you suspect theft, obtain your credit report through such organizations as Equifax and TransUnion and verify all information.
• If you are a victim of identity theft, follow-up every six months to ensure that someone has not tried to use your identity again.
• If you lose your credit cards or they are stolen, file a police report and contact all your creditors to advise them of the fraud and to halt all transactions immediately.
• Protect your Social Insurance Number. Do not give it out, except when it is absolutely necessary, such as when starting at a new job or when dealing with federal government departments.
• Do not carry your SIN card in your wallet. In today's world, there are likely to be very few instances where you will need to know your SIN number. If you do use it more often than most, memorize the number and leave the card in a safe place at home.
• Speaking of leaving things behind, don't carry your birth certificate around with you unless absolutely necessary, especially if you already have a driver's licence.
• Be wary of pre-approved credit card applications and shred unwanted ones. Thieves can often obtain the cards under your name. If you do get a new credit card, sign it as soon as you receive it and cancel credit cards that you no longer use.
• Shred or rip up bank statements, receipts, or other documents containing account numbers and personal information. Do not recycle the paper.
• If you move, ensure your mail is forwarded or re-routed so that it can only end up in your hands.
• Never provide personal information such as SIN, credit card numbers, or a PIN over the telephone unless you initiate the call.
• In the modern world of passwords-for-everything, we often have a difficult time remembering the passwords for all of our access levels. However, it is important that you avoid keeping a written record of your bank PIN number and computer passwords, as it allows a thief to easily access all of your information by stealing a single document. And, of course, never keep this information in your wallet.
• Put passwords on your credit card, bank and phone accounts but avoid using easily available information like your birth date, your phone number, or your mother's maiden name. Don't give out your passwords to friends or co-workers - especially if you use a generic password for all accounts.

[source: CAA eLetter September 2008]

Cash Back Mortgages Examined

After the federal government prompted the end of $0-down insured mortgages in July, speculation immediately started about how people will get around this new restriction. Cash back mortgages quickly took centre stage.

Cash back mortgages have been around for a while. They effectively let people finance beyond the 95% loan-to-value limit and were a precursor to 100% financing.
Now there's a chance cash-back mortgages will also be on the chopping block.

The Department of Finance knows full well how cash-back mortgages can simulate 100% financing, and they'll likely provide public comment on them at some point. (We've asked and are awaiting response.)

In the meantime, Canada's biggest bank, RBC, says it "will not offer cash back as a financing alternative to the 5% down payment."

In addition, TD--which last month sent an email to brokers confirming its cash back products--said in the Globe & Mail that it will be "revisiting" whether to keep certain cash back products in the market. TD said, "once they have clarified things" they may "pull" one or more of their cash back products.

As of today, however, TD still had ads on its site for the CashBack Down Payment Mortgage. The product's tagline says: "Not having a down payment doesn't need to keep you from buying a home."

One thing's for sure, cash back mortgages are worse than the 100% financing they'll replace.
We don't want to pick on TD, but for illustration we'll use their CashBack product as an example. TD sends 5% of the purchase price to the borrower's lawyer on closing. All one has to come up with is 1.5% for closing costs. It's a nice little dance around the new 95% loan-to-value rules.
The cost of this generosity is at least a 1.35% higher interest rate. That's because TD charges 6.85% for this product (as of today) and one can go elsewhere and get 5.50% or better on a non-cash-back mortgage.

So let's assume you buy the average Canadian house for $302,298. You put down 5% of your own money and get a mortgage with a 25-year amortization at 5.50%. This will cost you $74,124 in interest over five years.
If, however, you use TD's money for the down payment (i.e. TD's CashBack Down Payment Mortgage), you'll pay an extra $18,755 in interest--according to our calculations.
If you put up that $15,114 for the down payment yourself, you'd save all of this interest. It would be like earning 124% on your down payment money in five years--or 17.5% a year after taxes!

Rob Carrick of the Globe & Mail also warns that banks charge big bucks if you break a cash-back mortgage early. The additional interest penalty can be thousands of dollars. You'll also have to pay back a pro-rated amount of the cash back if you exit before maturity.
We had a client who got $25,000 cash back but then wanted to refinance a year into his 7-year cash-back mortgage. He had to pay back over $9000 in penalties plus repay $21,400 of his cash back.

Another big downside to cash-backs is that they're generally unavailable with variable rates. Most of our readers know that, statistically speaking, variable-rate mortgages entail less interest over the long-run.

Don't let us be the only detractors, though. Here's a small sampling of what others have to say about cash-back mortgages:

"The math is not beneficial to clients. They always will lose." - Vince Gaetano, Monster Mortgage
It's "a horrible product" - Jim Tourloukis, Advent Mortgage Services.

"Banks never offer their best rates on a Cash-Back mortgage." - True North Mortgage
Million Dollar Journey has an excellent discussion going on the topic if anyone is hungry for more information.

(All above figures are as of September 2, 2008)

[source - http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2008/09/cash-back-contr.html]

Condo hunting: 5 advantages of resale

5 advantages of resale: no surprises, if you do your homework

Yesterday we reviewed the advantages of buying a new condo, here are the advantages to buying resale. Up for sale by the current owner, resale condos are usually available in older buildings and have already been occupied.
"What you see is what you get with resale condos," says our expert. "You can see exactly what you're paying for — the unit, common elements, amenities, location and neighbours." That can be a big comfort to some buyers. Other benefits:

1) Established neighbourhood. "You already know what to expect from a neighbourhood and who your neighbours will be," informs Mr. Hill. New condo buildings, on the other hand, may be in an up-and-coming neighbourhood that may change substantially in the next few years. "Speak with condo board members and owners in the building," he also advises, to get the feel of the condo community.

2) Books to review. "You can also review the condo reserve fund and other documents to get a sense of whether or not the condo has sufficient funds to see to repairs and replacements," adds Mr. Hill. "That will help ensure that you don't get hit with an unexpected charge for repairs to common elements such as elevators, balconies, parking garages and roofing, for example."

3) A firm moving date. Your closing agreement firmly determines when the place will be yours, unlike new developments, where move-in dates can be rescheduled.

4) More predictable costs. You don't have to pay GST on a resale condo (unless the unit has been substantially renovated). You'll also have a firmer grasp of maintenance fees, current utility bills and property taxes.

5) Spacious floor plans. In many cities, new condos are getting smaller and smaller. Older condominiums may offer larger units.

For more information on buying a new or older condo, download the CMHC's Condominium Buyers' Guide.

Source: The Smart Life - August 2008 - TD Bank]

If you have any questions on obtaining financing for a condominium, please call Greg at DLC Perfect Mortgages.

Have a great day and happy condo hunting!

Condo Hunting: 5 advantages of buying new

Enticed by those ads for a new condo development? Or looking for a resale condo in an existing building? If you're on a serious house hunt, it can be worth weighing the advantages of both new and resale condos, suggests Duncan Hill, manager of Sustainable Housing Policy and Research for the Canada Mortgage and Housing Corporation (CMHC). "If new and resale condos are available where you choose to live, look at both in order to choose a condo that best fits your needs and lifestyle."

New condominiums, whether under construction or newly built, give you a fresh slate with respect to design and amenities. "You have the advantage of new appliances and modern fixtures in your unit and new common elements, such as elevators, pool or gym," says Duncan Hill. The upside doesn't stop there, however:

1) New building condition. "New buildings can have less wear and tear than older buildings," he says. "And the condo unit and common elements should be in good condition for years to come, meaning there may be less risk of expensive and disruptive repairs and renovations."

2) Choice of units. "If you buy early, you have more choice of units in the building." You may even be able to choose what floor and direction your unit faces.

3) Customized finishes. In addition to choosing finishes for countertops, cabinetry and even flooring, you can usually pay for upgrades on appliances or other fixtures.

4) More efficient construction. New developments may be built to higher standards of energy efficiency, and also include recycling facilities. New construction is also subject to the most recent building codes
Expert tip: Ask about special measures taken to protect your comfort levels. "Are there any special provisions to limit noise transmission between units? How are the units heated, cooled and ventilated? How are odours controlled?" All of these are factors to ask about so that you are better informed.

5) New home warranty protection. To ensure that new dwellings are properly constructed, "many provinces have new home warranty programs," explains Mr.Hill. If anything covered goes wrong during the warranty period, the homeowner is protected
Expert tip: If you do buy a new condo, take advantage of the GST Housing Rebate that allows you to recover some of the GST or federal portion of the HST you pay. Note that some developers include GST/HST in the listing price and others don't.

[Source: The Smart Life - August 2008 - TD Bank]


Tomorrow we will review the 5 advantages to buying resale

If you have any questions on obtaining financing for a condo you have just purchased, please call Greg at DLC Perfect Mortgages.