Wednesday, November 25, 2009

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.

Friday, November 20, 2009

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

Monday, November 16, 2009

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.

Wednesday, November 4, 2009

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 31st, 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.

Tuesday, November 3, 2009

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.

Monday, November 2, 2009

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