Latest Mortgage Rates

This edition of Weekly Mortgage Rates Minder has the latest, best Ontario Mortgage Rates. At Dominion Lending Centres, we work on your behalf to find the mortgage that suits your needs. Best of all - our service is "free".* It's the selected lender that pays us and YOU get the best rate. *(O.A.C., E.&O.E.)

• Explore Mortgage Scenarios with Helpful Mortgage Calculators on gregbarrow.ca

Terms Posted Rates Our Rates 6 Months 4.60% 3.85% 1 YEAR 3.65% 2.35% 2 YEARS 3.95% 2.95% 3 YEARS 4.50% 3.25% 4 YEARS 5.19% 3.85% 5 YEARS 5.59% 3.79% 7 YEARS 6.60% 5.25% 10 YEARS 6.70% 5.35% Rates are subject to change without notice. *OAC E&OE Prime Rate is 2.25%.

Variable rate mortgages from as low as Prime -.15% Our Ontario Mortgage Rates are subject to change without notice. Fixed mortgage rates shown in table above and quoted variable mortgage rates are available nationally to qualified individuals. Some conditions may apply. Lower rates may be available in certain regions, or to those with higher credit scores or higher net worth – check with your Dominion Lending Centres Mortgage Expert for full details. *O.A.C., E.& O.E.

Dominion Lending Centres Mortgage Industry News Highlights

Dominion Lending Centres Mortgage Industry News Highlights - December 16th, 2009

National home sales increased by 73% in November from the trough seen a year ago, with Ontario and Quebec hitting new monthly records as buyers took advantage of record low interest rates to secure mortgages.

The national average price gained 19% compared to November 2008, at $337,231, CREA said. Since the beginning of the year, prices have gained 4.4% compared to the same time last year.

“The year-over-year increase in November continues to reflect the high degree to which the average was skewed downward last year by plummeting activity in Canada’s priciest markets, and then upward by rebounding activity,” the association said.

CREA tracked 36,383 deals on its Multiple Listing Service in November. Crediting the housing market for leading “the overall Canadian economy out of the recession,” association President Dale Ripplinger said the numbers were a sign of an entrenched recovery. “National home sales activity last month shows how strongly the housing market has rebounded since the beginning of the year.”

Click here to view the full CREA release.

Canada’s real estate market is finding its balance.
A surge in new listings in November helped ease a chronic supply shortage and temper prices from a month earlier, easing fears of a bubble in the making even though the rebound in the market continued unabated.

That’s what economists were looking for because a steady string of monthly price increases could inflate an asset bubble and lead to a severe correction when interest rates eventually rise.

For the past several months, prices have been rising month-over-month, with double-digit percentage increases posted year-over-year.

Listings in November increased by 5% compared with October, the largest one-month gain in two years, CREA said Tuesday. The increase is a sign of consumer confidence, and signals a return to normalcy in what has been an extremely volatile market.

More inventory ultimately means lower prices. The average national price in November declined by 1.1% from October to $337,231, although that was still up sharply from the depressed levels seen 12 months ago.

Prices for new homes in Canada rose 0.3% in October after a 0.5% increase the previous month, Statistics Canada said Friday.

It was the fourth straight monthly gain in the federal agency’s new-home price index, although the increase was slightly below the 0.4% many economists had expected.

The biggest price increase was in Quebec City, up 1.1%, followed by Vancouver, up 0.7%.

As the Canadian real estate market continues to rebound from a steep decline a year ago brought on by the recession, homebuyers remain nervous about the stability of the economy, according to a survey of 1,225 Royal LePage agents and brokers across Canada. But few buyers think home prices will decline again.

When asked to comment on the most common fears they are hearing from homebuyers over the past three months, 38% of Royal LePage agents and brokers cited economic stability and related factors such as job security. Some 23% said homebuyers fear they may not be able to sell their existing homes at the price they are hoping for, while 12% said buyers are hesitant because they believe prices have not yet hit the bottom of the cycle. Twenty percent of agents and brokers said they are not hearing any concerns from buyers.

The Royal LePage Advisor Survey, conducted online in November, also found that an increasing number of Canadians are purchasing homes as investment properties, and almost 50% of brokers and agents say the number of buyers intending to renovate their properties after purchase is increasing.

“Given the volatility in the real estate markets over the past 18 months, it is not surprising that the state of the economy continues to weigh on the minds of Canadians as they consider buying a home,” said Phil Soper, President and Chief Executive, Royal LePage. “Canadian real estate markets are enjoying a strong recovery as 2009 draws to a close and appear poised for healthy growth in 2010. Our survey shows that consumer confidence is edging towards normal levels. Canadians clearly believe that the worst of the recession is behind them and that the real estate market is on the path to sustainable recovery.”

Click here to view the full Royal LePage release.

A new report from Statistics Canada carries a sober message: collectively, Canadians are deeper in debt than ever before.

But economists say record-low interest rates mean that debt loads are still manageable and will likely improve as the economy begins to recover from the recession.

The StatsCan report, issued Monday, comes on the heels of a stern warning about rising debt issued last week by the Bank of Canada.

Surging stock markets pushed up Canadians’ net worth in the third quarter, StatsCan said. The S&P/TSX Composite Index rose 9.8% in the third quarter. That’s on top of a 19% gain in the previous three months.

Household net worth, the value of families’ assets such as cars, homes, savings accounts and investments, minus what they owe, reached $5.72 trillion at the end of September. That’s an increase of 2.3%, marking two quarters of gains after three consecutive drops.

But household debt, mainly mortgages and consumer credit, rose from July to September as Canadians rushed to take advantage of low interest rates. Personal sector liabilities rose to $1.41 trillion, up 1.6%.

Click here to read the full article in The Star.

Bond yields and mortgage rates could head higher before the Bank of Canada’s pledge to hold interest rates steady expires in July, the Chief Economist at Bank of Nova Scotia said last week.

“There’s a very good chance long-term rates will head up before then,” Warren Jestin said in Toronto at a briefing sponsored by the Investment Funds Institute of Canada.

He warned new homeowners with variable-rate mortgages not to be influenced by the central bank’s neutral statements on rates last Tuesday. The bank has pledged to hold rates at a historic low of 0.25% until the end of the second quarter of next year, inflation conditions permitting.

Read the “fine print” and he believes it’s likely three-year and five-year mortgage rates will be higher before July 2010.

Click here to read the full Financial Post article.

The Royal Bank says Canadians can expect to be hit by higher interest rates in the second half of next year and in 2011.

Royal Bank economists say the Bank of Canada will be among the next group of central banks to move off floor-low rates, with the Canadian bank’s overnight rate finishing 2010 at 1.25%. And RBC economists say they believe the trend-setting rate could rise to as much as 3.5% in 2011.

The bank rate has been at 0.25 for most of 2009, a rate that is encouraging borrowing but also raising concerns that Canadians may be overextending themselves.

The Royal Bank says Canada has not suffered as badly as other economies in the recession, and will be among the first, after Australia and Norway, to start raising rates.

Click here to read the full article in The Star.

Mark Carney is urging prudence among Canadians who are borrowing at super-cheap rates today but may not be able to afford higher payments tomorrow.

Household debt is now the biggest risk to the financial system, even if it is not expected to climb to levels that could cripple bank balance sheets, the central bank said last Thursday in its review of the financial system. It used a “stress test” to show that rising interest rates between mid-2010 and mid-2012 would saddle a growing number of Canadians with unmanageable debt loads.

Carney, the Bank of Canada’s Governor, who has guided monetary policy throughout the crisis, is relying on consumers to help drive a recovery juiced by his historically low interest rates. Yet he is also warning borrowers and lenders not to go overboard and to think about the consequences of hefty debt in an inevitable environment of rising rates.

The semi-annual report marked the first time the bank has analyzed the risks based on interest rates reaching specific levels.

Click here to read the full article in the Globe and Mail.

Your first-time buyer clients have a chance to win one of two gift cards from Sears worth $250 apiece by filling out the following survey by January 10th for Buying Your First Home magazine (a consumer publication owned by CMP parent company, KMI Publishing & Events Ltd): http://yourfirsthomecanada.ca

The survey targets readers of the publication, but the magazine is also interested in hearing from those who haven’t read it, but are planning to buy their first home.

Bank of Canada maintains overnight rate target at 1/4

True to his word Mark Carney and the Bank of Canada have not raised the overnight lending rate, and still maintain it will not increase until the middle if 2010.

Although consumers in Canada have been spending, propping up our economy, economists speculate that this will only last for a few quarters. What they would like to see is our trading partner's economies to get better so that Canadian exports increase, which would have a much more lasting and better effect on our overall economy.

One area consumers are spending is housing.

"Canadians are responding to the central bank's price signal and rushing to buy homes at what many see once-in-a-lifetime mortgage rates." Globe and Mail.

Bank Of Canada Press Release December 8, 2009

Ontario Mortgage Rates

This edition of Weekly Mortgage Rates Minder has the latest, best Ontario Mortgage Rates. At Dominion Lending Centres, we work on your behalf to find the mortgage that suits your needs. Best of all - our service is "free".* It's the selected lender that pays us and YOU get the best rate. *(O.A.C., E.&O.E.)

• Explore Mortgage Scenarios with Helpful Mortgage Calculators on gregbarrow.ca

Terms Posted Rates Our Rates 6 Months 4.60% 3.85% 1 YEAR 3.65% 2.35% 2 YEARS 3.95% 2.95% 3 YEARS 4.50% 3.49% 4 YEARS 5.19% 3.95% 5 YEARS 5.59% 3.89% 7 YEARS 6.60% 5.30% 10 YEARS 6.70% 5.35% Rates are subject to change without notice. *OAC E&OE Prime Rate is 2.25%.

Variable rate mortgages from as low as Prime -.15% Our Ontario Mortgage Rates are subject to change without notice. Fixed mortgage rates shown in table above and quoted variable mortgage rates are available nationally to qualified individuals. Some conditions may apply. Lower rates may be available in certain regions, or to those with higher credit scores or higher net worth – check with your Dominion Lending Centres Mortgage Expert for full details. *O.A.C., E.& O.E.

DLC Mortgage Industry News

Already the envy of the financial world, Canada’s banks are heading into their best period in at least 10 years, says Bill Downe, BMO’s CEO.

Over the next few years, the fundamentals of the banking business “are going to be as good as we’ve seen in a decade,” Downe said Tuesday as BMO kicked off the industry’s fourth-quarter earnings season by topping expectations.

Despite that optimistic talk, investors showed just how cautious they remain, pushing down BMO shares slightly on a day when most bank stocks also took minor dips.

Among the reasons for the decline: BMO’s results show that Canadians are continuing to struggle with their credit card debts – and they also suggest that the stellar trading profits domestic banks have posted in recent quarters are coming to an end.

Indeed, analysts questioned whether BMO’s target of 10% profit growth is too ambitious in the wake of the financial turmoil that has pounded financial institutions around the world and a recession that has hit consumers in their wallets.

But Downe said the exit of a number of non-bank competitors in the lending market means that the banks should be able to earn more on their loans. “I think that the prospects for good asset growth at better margins over the next couple of years are quite realistic,” he told analysts on a conference call, adding that the banking system is absorbing more than $1 trillion worth of short-term financing previously done by other lenders.

Click here to read the full Globe and Mail article.

Canadian home resale prices rose for a fifth straight month in September on gains in five of six major metropolitan markets surveyed, according to a report released today.

The Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes, showed overall prices were up 1.3% in September from August, the smallest rise in four months.

Vancouver, where prices were up 2.1%, had the biggest monthly rise, followed by Toronto, up 1.5%. Calgary posted a 0.9% gain, while Halifax rose 1.7%.

Montreal was the only metropolitan area that reported a decline in the month, down 0.2%, although the report said the fall was “not due to a deterioration of market conditions.” It said new listings in the city have slipped following a rise in home sales every month since May, citing statistics from the Greater Montreal Real Estate Board.

Click here to read the entire Financial Post article.

The cost of homeownership in Canada became more expensive for the first time since the spring of 2008 across all housing segments, according to the latest housing report released today by RBC Economics Research.

“Home affordability deteriorated in all provinces and major markets in Canada due to a slight rise in key mortgage rates and appreciation in property values,” said Robert Hogue, Senior Economist, RBC. “Despite this increase in homeownership costs, affordability measures have still shown improvement from a year ago.”

The RBC Housing Affordability measure captures the proportion of pre-tax household income needed to service the costs of owning a home. During the third quarter of 2009, the RBC Affordability measure at the national level rose across all housing types (the higher the measure, the more expensive it is to afford a home).

The benchmark detached bungalow moved up by 1% to 40.2%, the standard townhouse rose by 0.7% to 32.3%, the standard condo climbed by 0.5% to 27.6% and the standard two-storey home increased by 1.2% to 45.8%.

The RBC report found that demand in the housing market has outgrown supply since the rebound started last winter, leading to a much more competitive market and widespread increases in home values across many parts of the country.

Click here to read the full RBC report.

Results of the TD Canada Trust Generational Homeownership Survey released on Monday reveal the younger the owner, the older the home.

Almost half of Canadians (48%) aged 18-34 years old bought a first house that was at least 21 years old, according to the TD Canada Trust survey. On the other hand, those 55+ chose newer homes with only one-quarter (27%) of that group purchasing a property 21 years or older for their first home.

The survey was conducted to understand the differences in behaviours and attitudes of Canadians across the generations when purchasing their first home. “The TD Canada Trust Generational Homeownership Survey showed that one of the most significant differences in behaviour for first-time homebuyers across the generations is the age of the home they purchased,” says Chris Wisniewski, Group Product Manager, Real Estate Secured Lending, TD Canada Trust. “This behaviour suggests today’s first-time homebuyers are looking for cost-effective options, which in urban centres are often older homes.”

Possibly looking for a more affordable option, younger Canadians were the most willing to take on a fixer-upper (35%) as their first home compared to 24% of those now 55+ who did the same when they were first-time homebuyers.

Click here to read more about the TD Canada Trust survey results.

Canadian corporations earned $54.1 billion in operating profits in the third quarter, up 7.9% from the previous quarter after three straight quarterly declines, Statistics Canada said today.

Profits in the non-financial industries increased 10.4% from the second quarter to $41.7 billion. Profits in the financial industries were relatively flat as firms reported $12.4 billion in profits, up 0.3%.

Overall gains were widespread, as 18 of 22 industries reported higher profits in the third quarter.

Together, profits for oil and gas, and petroleum and coal increased 20.4% to $5.9 billion, marking their first increase in four quarters.

Manufacturers reported $9.4 billion in operating profits in the third quarter, up 28.6% from the second quarter. Motor vehicle and parts manufacturers reported an operating loss of $100 million – but this compares with an operating loss of $1 billion in the second quarter and a loss of $1.7 billion in the first quarter.

Transportation and warehousing earned $2.8 billion in profits in the third quarter, up 14.8%.

Bowing to pressure from home builders, the British Columbia government is promising to provide a bigger break on the new harmonized sales tax (HST) to new home buyers.

The province announced earlier this year that BC will move to the HST next July, combining the 5% GST with the province’s 7% sales tax.

But home builders argued the tax would stifle new home sales at a time when the market is still reeling from the recession.

Finance Minister Colin Hansen, who said early last week he could not follow Ontario’s lead in offering new breaks on the HST, said last Thursday in a statement: “We heard the concerns from consumers and industry about how the HST might affect home buyers.”

The threshold will rise to $525,000, instead of the $400,000 that was initially proposed. It means that, on average, purchasers of new homes up to $525,000 pay no more tax than they would under the current tax regime.

The shift to the HST in BC caused a political firestorm because the BC Liberal party stated during the spring election campaign it was not planning to adopt the tax. After the election, in the face of collapsing revenues, Hansen said he decided BC would benefit from the shift, which will bring $1.6 billion in transfers from the federal government. – Globe and Mail

Your first-time buyer clients have a chance to win one of two gift cards from Sears worth $250 apiece by filling out the following survey for Buying Your First Home magazine (a consumer publication owned by CMP parent company, KMI Publishing & Events Ltd): http://yourfirsthomecanada.ca

The survey targets readers of the publication, but the magazine is also interested in hearing from those who haven’t read it, but are planning to buy their first home.

Dominion Lending Centres University

WOW! I work for an amazing company.

Today I attended the inaugural Dominion Lending Centres (DLC) University one day event held for DLC mortgage agents and brokers in Toronto and the GTA. It was awesome!

I have always made a commitment to continuously educate myself on all the latest mortgage industry news and Canadian mortgage lender products. DLC makes this incredibly easy for its agents, as well as providing us with absolutely fantastic tools to succeed.

Here is some background on Dominion Lending Centres:
Dominion Lending Centres is a national mortgage brokerage and leasing company with more than 1,500 mortgage professionals across Canada.

Launched in January 2006, we were named Best Newcomer (Mortgage Brokerage Firm) at the prestigious CMP Canadian Mortgage Awards 2008 - the Oscars of the mortgage brokering industry.

Dominion Lending Centres also prides itself on being the only Canadian mortgage brokerage firm to also offer a leasing division headed up by leasing professionals - encompassing everything from financing for large industrial equipment to used vehicles to computer systems and beyond.

Our company will help fund $8 billion in mortgages this year. We’re the largest independent mortgage and leasing company in Canada. We have 200 storefronts, and we represent all the banks, trust companies and credit unions.

Dominion Lending Centres is a great company to work at and I am very happy I decided to join them in July 2008.

As always, if you have any questions regarding your current mortgage, or if you are a first time home buyer and are looking for someone to guide you through your first purchase, please contact me at gbarrow@dominionlending.ca or by phone at 416 807 7123.

Please visit my website to watch informational mortgage videos, get general information on purchases and refinancing, use my mortgage calculators and sign-up for my informative monthly mortgage newsletter: My DLC Website - Toronto Mortgage Agent

Also you can Follow me on Twitter - MyFirstMortgage here.

Thanks,
Greg

Homes sales to beat 2009 forecast: CREA

[Source - CBC News]
National MLS home sales will likely exceed forecasts for 2009 and 2010 after a monthly record was set in October, the Canadian Real Estate Association says.

National activity will reach 460,200 units in 2009, up 6.6 per cent from last year, CREA says, and it is expected to rise seven per cent to 492,300 units in 2010, according to a news release.

CREA, which owns the Multiple Listing Service, initially forecast in August that 2009 sales would be down slightly compared with 2008 levels, with 423,600 units changing hands.

It's the second time the agency has boosted its forecast. In May, it predicted sales would decline by 14.7 per cent.

"Significant weakness in activity and average prices seen in late 2008 and earlier this year is not expected to repeat in 2010, so 2010 will look a lot better by comparison," CREA chief economist Gregory Clump said in a news release.

The association has also upwardly revised its house price forecast, saying the average home price should climb 4.2 per cent in 2009. It originally forecast that prices would rise by just 1.5 per cent.

Alberta remains the only province where prices are forecast to decline. CREA predicts prices there will fall three per cent in 2009.

Average prices are forecast to rise in all other provinces, with gains ranging from a low of 1.5 per cent in British Columbia to 13.1 per cent in Newfoundland and Labrador.

Using Home Equity to Your Advantage

To speak to a mortgage professional contact Greg Barrow at Ontario Mortgages

DLC Industry News

[Sources (Various) - Dominion Lending Centres]

Housing starts have started to recover and are expected to continue to improve in the second half of 2009. Starts are expected to reach 141,900 for the year and will increase to 164,900 for 2010, according to CMHC’s fourth quarter Housing Market Outlook, Canada Edition report.

“We expect housing markets across Canada to strengthen leading into and over the course of 2010 as economic conditions improve,” said Bob Dugan, Chief Economist for CMHC. “Demand for existing homes has rebounded since the beginning of the year. In addition, lower inventory levels characterize both the new and existing home markets. As a result, stronger housing demand will be reflected in higher levels of housing starts in 2010.”

The strong pace of MLS sales seen in the second and third quarters of this year reflects, in part, activity that was delayed in the previous two quarters and is not likely to be sustained. The level of sales is expected to move back closer in line with anticipated economic conditions. As a result, existing home sales, as measured by the MLS, will reach 441,300 units in 2009 and increase to 445,150 units in 2010. The average MLS price is expected to be $312,950 in 2009 and $324,500 in 2010.

Luxury homes sales continue to accelerate as economic recovery takes hold in major markets in Ontario and Atlantic Canada, according to a report released yesterday by RE/MAX.

The RE/MAX Upper End Report found that momentum is building in St John’s, Saint John, Halifax-Dartmouth, Ottawa, Kingston, Greater Toronto, Hamilton-Burlington and London as purchasers realize that the best buying period in recent history is about to come to a close. Sales are already on par or ahead of last year’s levels in 50% of cities surveyed, while the remaining markets are set to reach 2008 figures by year-end.

“Twelve months of healthy home buying activity have clearly been crammed into five short months,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “It’s hard to believe that the transition in the market began in May. We’ve seen steady upward momentum since that time, with solid year-over-year gains posted each and every month.”

Pent-up demand and greater affordability have been the catalyst. Increased selection in all markets – except Greater Toronto – as well as record low interest rates have also helped fuel move-up activity from Ontario to Newfoundland.

To read more, click here.

Canadians in the housing market will pay less in realty commissions and fees if the federal Competition Bureau has its way.

In a landmark investigation, the bureau has concluded the Canadian Real Estate Association (CREA) has anti-competitive rules and must change its ways, according to documents obtained by the Toronto Star.

Details of a settlement have yet to be decided, but the bureau’s findings are expected to have a profound impact on the real estate industry – by permitting more innovative discount brokers into the market while allowing sellers to list their properties less expensively on the Multiple Listing Service.

“The Bureau is concerned that CREA’s rules have restricted consumer choice and limited the scope of alternative business models,” says an internal memo by CREA President Dale Ripplinger. “Unfortunately, the Bureau seems to believe that CREA’s rules... create restrictions and barriers.”

The bureau launched its investigation in 2007. Consumers have complained in the past about high realty fees and the need for more affordable services. The vendor of an average-priced $400,000 home in Toronto can pay a commission of as much as 5% or $20,000.

To view the full article, click here.

Australia’s central bank raised its key interest rate by a quarter percentage point for the second month in a row yesterday, declaring the global downturn over and warning that inflation was set to rise.

The decision to hike rates was widely expected by analysts and moves Australia further away from most economies, which have yet to respond to signs that the financial crisis has eased by raising lending rates.

The Reserve Bank of Australia board decided at its monthly meeting to raise the cash rate by 25 basis points to 3.5%. A month earlier, Australia became the first major economy to raise interest rates since the outbreak of the crisis when the bank hiked its key rate by a quarter point from a 50-year low.

Governor Glenn Stevens said in a statement explaining the decision that inflation “will probably not fall as far as earlier thought” and “will probably rise somewhat over the coming year.” – Globe and Mail

Kudos to the Ontario Government, which announced Monday that starting in September 2011, students from grade 4 to grade 12 will be learning about money management through an “integrated” approach to boosting financial literacy.

This announcement by Ontario Education Minister Kathleen Wynne said a working group co-chaired by Parliamentary Assistant Leeanna Pendergast will provide a report to the Ministry’s Curriculum Council by next summer.

One of the goals is to advise how to “seamlessly integrate” a list of financial literacy concepts and skills into the existing curriculum. Currently, personal finance is partially addressed in the existing grade 9 to grade 12 curriculum through courses in business studies, mathematics, guidance and career education, social sciences and the humanities. The ministry will work with the Investor Education Fund to develop resources for teachers.

Wynne’s goal is to “develop a made-in-Ontario solution that aims to be a leading example – globally – of how financial education can be integrated into schools.” Pendergast said students will require critical financial skills needed to “navigate an increasingly complex global financial and economic system.”

To read the full Financial Post article, click here.

Karen Kinsley, President and CEO of CMHC, recently voiced her “disappointment” at the Financial Post for suggesting that the mortgage insurer was “reckless” while at the same time comparing it to Freddie Mac and Fannie Mae in the US.

In a letter to the Post published on October 31^st, Kinsley points to some key differences between the Canadian and American economies, such as a “lack of subprime issues, strong economic fundamentals,” and low interest rates in Canada.

She then goes on to note that while CMHC is entitled to insure up to $600 billion in mortgages, it only insures $480 billion now, it maintains capital reserves for future losses that are twice the minimum requirement set by the Office of the Superintendant of Financial Institutions (OFSI), and it is “subject to stringent government oversight” that includes regular reporting to Parliament.

To read the full letter, click here.

Canadians on mortgage "binge"

[Source - MortgageBrokerNews]

Canadians are taking out mortgages nearly eight per cent faster than they did a year ago, according to a report in the Globe and Mail, sparking concern that highly leveraged borrowers will be in over their heads when interest rates rise.

"We know that cheap money in the past caused some problems. This is a time to be prudent," CIBC economist Benjamin Tal told the Globe, adding that household debt in Canada rose 3.4 per cent in the first half of the year and the debt-to-income ratio rose to 140 per cent. In the meantime, U.S. consumers have been steadily increasing their rate of savings.

The report warned that borrowers' decision to take on bigger mortgages is not consistent with larger paycheques and could be problematic if housing prices take a hit once the buying frenzy cools down. There are also concerns of a housing "bubble" due to the high number of sales and the pace of price increases.

"It's environments like these that breed bubbles," ING Direct Canada CEO Peter Aceto told the Globe. "There is what feels to be a little bit of irrational behaviour in the real estate market, and I do think it's in a large way fuelled by how low interest rates are."

Mark Carney downplayed the risk of a housing bubble in a recent speech, saying he expects the real estate market to cool down by 2011. He added he will take necessary measures if low interest rates continue to spur out-of-the-ordinary activity.

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If you have any questions or concerns regarding your current mortgage, please feel free to contact me for a free mortgage check-up.

If you are a first time home buyer and are getting ready to make your first purchase, have you done enough research and budget analysis? I would be more than happy to speak with you to make sure you are well-informed and are confident that you will be making educated and sound decisions with respect to your purchase.

Housing Activity to Strengthen in 2010

[Source - www.cmhc.ca]
OTTAWA, November 2, 2009 — Housing starts have started to recover and are expected to continue to improve in the second half of 2009. Starts are expected to reach 141,900 for the year and will increase to 164,900 for 2010, according to Canada Mortgage and Housing Corporation’s (CMHC) fourth quarter Housing Market Outlook, Canada Edition report.

“We expect housing markets across Canada to strengthen leading into and over the course of 2010 as economic conditions improve”, said Bob Dugan, Chief Economist for CMHC.

Read Full Story Here: http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2009/2009-11-02-0815.cfm

Canadian housing prices up for fourth straight month but still down from peak

[Source - Kim Covert, Financial Post Published: Thursday, October 29, 2009]

Canadian home prices are on the road to recovery, but still haven't rebounded to pre-recession levels, according to a survey that shows while prices rose in August they are still down 3.4% from their peak in August 2008. The Teranet-National Bank house price index, which measures resale prices in six urban markets across Canada, shows that housing prices nationally rose by 2% in August, the fourth straight month-over-month increase. It was also the second month in a row that prices were up in all of the six markets. "This turnaround is consistent with an improvement in market conditions in the first half of 2009 --more homes have been selling and fewer have been coming on the market," said Marc Pinsonneault, a senior economist with National Bank Financial Group. In Montreal, Halifax and Ottawa, resale prices are actually higher now than they were at their pre-recession peak a year ago.

Bank of Canada kills talk of early rate hike

Variable Rate holders will be happy with the Bank of Canada's decision today to stand by what they had previously said and indicated and not raise the overnight lending rate. Despite some people speculating that they would follow Australia's lead, the BoC did not raise the rate and this also helped to cool off the raising CAD dollar.

For a full story on today's decision - see Reuters News

[Source - Reuters]

OTTAWA (Reuters) - The Bank of Canada extinguished speculation on Tuesday that it would follow Australia in hiking interest rates quickly, warning that favorable economic developments were being undermined by the strength of the Canadian dollar.

The bank kept its key overnight interest rate at a very low 0.25 percent and reiterated its intention to keep it there through mid-2010.

Far from giving any suggestion of an early exit from its extended low-rate strategy, which is designed to stimulate the economy, the bank said return to economic normalcy would be delayed. Full Story Here

GTA Housing Market Rebound Continues in September

October 5, 2009 -- In September 2009, Greater Toronto REALTORS® reported 8,196 sales, up 28 per cent from September 2008. The average price for September transactions was $406,877 – up by 10 per cent compared to the same month last year. See details.

[Source: Toronto Real Estate Board]

September 2009 Toronto Real Estate Market Watch

How to inspect your home inspector

A home is one of the most expensive items you will ever buy, if not the most expensive purchase. Getting your home inspected is an essential step in the home buying process. No one wants to buy a money pit and once you have signed on the dotted line there is no going back.

Your realtor, mortgage agent or friends can recommend a home inspector for you and I strongly advise that you do use a home inspector that has come recommended.

Your home inspector will tell you almost everything you need to know about the home your going to purchase so that you can make an informed decision. Therefore you need to trust this person's advice.

Mike Holmes wrote a great article on "How to inspect your home inspector" that I read on www.canada.com yesterday. This is an excellent read for anyone who will be needing the services of a home inspector.

Mike published a few really good questions you should be asking your home inspector:

Questions to ask your home inspector:

1. Can I see your license/professional credentials and proof of insurance?
2. How many years’ experience as a home inspector do you have? The business card might say 25 years experience, but at what, exactly?
3. How many inspections have you personally done?
4. What qualifications do you have? What kind of training do you have? Are you a member of a professional organization? What’s your background?_Construction? Engineering? Plumbing?
5. What kind of report do you provide?
6. What kind of tools do you use in your inspection?
7. Can you give me an idea of what kind of repairs the house may need? And, they’d better not have “a friend” who can do it for you, cheap.
8. When do you do the inspection? Let’s hope they don’t have a day job, and can only do them at night when it’s too dark to see the roof.
9. How long do your inspections take?
10. Do you take pictures of the house and add them to your report?
11. Can I see some references? Make sure you ask for them, and check them

You can read the full article here: How to inspect your home inspector

One on one with BMO economist John Turner

[Source CMP via brokernews.ca]

Some economists are claiming the worst of the recession is behind us. BMO expert John Turner recently spoke with CMP's sister publication, CRE, about what this could mean for the real estate market and interest rates going forward.

There have been whispers that we may be nearing the end of the recession. Can you comment on this?

John Turner: According to BMO's Economics Department, the whispers are turning to shouts. Canadian consumer spending has turned upwards, while the housing market has seen an astonishingly fast recovery. Financial conditions are much improved and confidence is on the mend. BMO Economics estimates that Canada's recession ended in the third quarter, following three consecutive quarterly contractions. Aggressive monetary stimulus and hefty fiscal spending appear to have turned the economy around a little sooner than previously thought.

Do you think the Bank of Canada, by making the announcement on July 23, 2009 that the recession is over, is preparing Canadians for a rate increase (even though it said it wouldn't for 12 months)?

JT: BMO's economists think not. They think the Bank truly believes it won't need to raise rates until mid-2010. The recovery, at least initially, is expected to be soft due to weak U.S. demand. The unemployment rate is expected to climb moderately further, and inflation should remain below target for a couple of years until the slack is absorbed.

It was recently reported that home sales have jumped 40 per cent between January and May 2009. Aside from low interest rates, what other factors could have contributed to buyers getting off the fence and purchasing?

JT: There are a number of contributing factors, including pent-up demand accumulated during last year's downturn, the federal government's tax credit incentive for first-time home buyers, a growing sense that the worst of the global economic crisis is behind us and the government's insured mortgage purchase program which kept the credit taps flowing.

Of course, with interest rates being relatively low, this means lower mortgage payments for both first-time homebuyers as well as others. In some areas, prices have been holding steady and/or decreasing with recent market compression; this has led to better access to homeownership, which is a great investment. Everyone needs a place to live, and buying a home not only fulfils that need but also acts as an important component of a wealth accumulation strategy.

How might the forecasted increase in housing starts affect the real estate market from a buyer's perspective?

JT: BMO's economists expect housing starts to trend higher as the economy recovers, but remain soft for a while as a result of some overbuilding during the previous boom. The rising starts will help to keep the market balanced, since it now risks shifting back to a sellers' market if demand remains strong. The current four-month supply of resale listings is in line with, if somewhat below, historic norms.

The age old debate of fixed vs. variable is alive now more than ever. What should buyers take into consideration when deciding?

JT: It all depends on what the buyer is comfortable with and what they're looking for. Fixed rate mortgages are great for Canadians who are concerned about upward pressure on rates and who are looking for peace mind. With a fixed rate mortgage they get the peace of mind of knowing what their payments are going to be and how much of their mortgage they will have paid down at the end of their term.

On the other hand, variable rate mortgages - when taken over the long-term - have proven to be a winning strategy for Canadians over the last 25 years. Each buyer's circumstances are different and we invite Canadians to speak to a BMO Bank of Montreal mortgage specialist for the best individual advice.

For the rest of the interview, see October's issue of CRE, on newstands now.