Friday, December 31, 2010
Canadian Mortgage Broker News - Harper hints at tighter mortgage rules in 2011
Prime Minister Stephen Harper hinted the government may adjust mortgage rules in 2011 to help Canadians avoid going deeper into debt.
“We’ve tightened mortgage rules before,” Harper told CTV during a year-end interview that aired on Christmas Day. “If we have to do that again, we will.”
Harper also committed to eliminating the federal deficit but will not use “slash and burn” cuts, particularly in the critical areas of health and education.
Monday, December 20, 2010
Personal debt not as bad as it looks
By MICHAEL BABAD
Globe and Mail Blog 14/12/2010
Globe and Mail Blog 14/12/2010
BMO study finds consumers getting into better shape
Monday was D-Day. Statistics Canada reported on it. Bay Street's economists pontificated on it. And Mark Carney, in his own way, declared war on it."D" stands for debt, and Canada yesterday reached a high-water mark: For the first time, household debt hit 148 per cent of disposable income and, for the first time since the late 1990s, topped the U.S. equivalent.
Mr. Carney, the Bank of Canada governor, warned of the rising debt burden among Canadian families, and the risks they face when interest rates rates inevitably rise.
"Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks," he said in a speech in Toronto. "Low rates today do not necessarily mean low rates tomorrow. Risk reversals when they happen can be fierce: The greater the complacency, the more brutal the reckoning."
Economists quickly noted the central bank's growing anxiety over the vulnerability of Canadians who may not be able to juggle their debt payments when that day of reckoning comes. "An erosion in home affordability is expected to slow the pace of mortgage debt accumulation over the next couple of years," said senior economist Pascal Gauthier of Toronto-Dominion Bank. "If it does not, an increasing and potentially worrisome proportion of Canadian households would become vulnerable to higher interest rates."
Not to play down those significant risks, BMO Nesbitt Burns questions whether the state of family finances are as bad as they would appear.
"While debt has risen to record heights, so too have financial assets, due to a rebound in equities and an underlying rise in savings," said deputy chief economist Douglas Porter. "Taking these factors into account, as well as the recovery in Canadian full-time employment, leads to the conclusion that household finances are not nearly as weakened as the dire headlines would suggest."
In his study, Mr. Porter noted that the savings rate in Canada has averaged 4 per cent in the last year, or about double the record low of 2005. And that, he said, does not paint the full picture of Canadian savings because it "narrowly" examines money saved from current income, while ignoring unrealized capital gains and returns from tax-sheltered vehicles.
A better measure, according to Mr. Porter, is the change in net financial assets as a share of disposible income, which has been extremely volatile. Smoothed over a five-year period, though, it has averaged about double the reported savings rate.
"In other words, take all cash, deposits, bonds, stocks, life insurance and pension assets and subtract household debt to derive net financial assets. These net assets have recovered from last year's lows to $2.7-trillion by the end of [the third quarter] ... For reference, that works out to $80,000 per Canadian, or 167 per cent of GDP."
Stock market gains since the depths of the meltdown have pumped up net worth, Mr. Porter said, as he cited the debt-to-asset ratio that Mr. Carney put at its highest in more than two decades. Much of the deterioration there, according to Mr. Porter, came as equities plunged and home prices dipped.
But on the flip side, the "absolute" level of net worth has been rising, stitting now at 6.1 times disposable income. His point is that though household debt has climbed faster than assets in percentage terms, some of that is accounted for in the "skewering" of assets late in 2008. In absolute terms, assets are now rising faster than debt again.
"Amid the cacophony of warnings, balance sheet repair is in fact quietly under way among Canadian households thanks to a slight rise in savings and firmer equity markets, while debt growth is poised to slow more meaningfully amid the clear cooling in the housing market," Mr. Porter added.
"... The singular focus on debt portrays an overly negative picture of Canadian household finances, which have proven incredibly resilient this cycle and likely still have enough cushion to provide a soft landing for spending in the year ahead."
Tuesday, December 7, 2010
Bank of Canada maintains overnight rate target at 1 per cent
The global economic recovery is proceeding largely as expected, although risks have increased. As anticipated, private domestic demand in the United States is picking up slowly, while growth in emerging-market economies has begun to ease to a more sustainable, but still robust, pace. In Europe, recent data have been consistent with a modest recovery. At the same time, there is an increased risk that sovereign debt concerns in several countries could trigger renewed strains in global financial markets.
The recovery in Canada is proceeding at a moderate pace, although economic activity in the second half of 2010 appears slightly weaker than the Bank projected in its October Monetary Policy Report. In the third quarter, household spending was stronger than the Bank had anticipated and growth in business investment was robust. However, net exports were weaker than projected and continued to exert a significant drag on growth. This underlines a previously-identified risk that a combination of disappointing productivity performance and persistent strength in the Canadian dollar could dampen the expected recovery of net exports.
Inflation dynamics in Canada have been broadly in line with the Bank's expectations and the underlying pressures affecting prices remain largely unchanged.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.
Information note:
The next scheduled date for announcing the overnight rate target is 18 January 2011. A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the Monetary Policy Report on 19 January 2011.
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To discuss best mortgage rates, or if you are are looking for Richmond Hill mortgages, please feel free to contact me.
Wednesday, November 17, 2010
Canadians’ borrowing costs getting pushed up - Fixed Rates Rise
Those global concerns are pushing up Canadians’ borrowing costs when it comes to buying a home.
TD Canada Trust and the Royal Bank of Canada said separately that they are increasing some of their fixed-term mortgage rates by as much as one-quarter of a percentage point, effective Wednesday.
At both banks, five-year mortgages, one of the most popular among Canadian homeowners, will rise by 0.25 of a percentage point to 5.44 per cent.
Rates on three- and four-year mortgages are also increasing by a quarter of a percentage point, while one-and two-year rates will go up by 0.15 of a percentage point.
Rates for mortgages that have six, seven, and 10 year terms will be unchanged.
Five-year mortgages rates in particular are closely tied to yields (rate of return) in the bond market, which have recently rebounded, following about three months of declines.
That means Canadian banks have been paying a higher rate to borrow in the bond market in order to lend to customers. “In the past month, the five-year bond yield has risen quite substantially, given that rates are so low,” said Francis Fong, economist at TD Economics
While Canada’s economy remains relatively strong and the Bank of Canada has been hiking interest rates, concerns over the U.S. recovery continue to simmer.
The U.S. Federal Reserve hinted in late August that it planned to take additional measures to jolt the moribund U.S. economy back to life. Its preferred approach, quantitative easing, amounts to pumping more money into the economy.
The market began pricing in the Fed’s anticipated intervention, though it would take another two months to get all the details - a further $600 billion (U.S.) purchase of Treasury securities.
Since then, yields have rebounded. “The market was likely waiting a bit for the details to see what the price of bonds should really be,” Fong said, adding that the process is similar to the anticipation of a company’s stock price prior to an earnings announcement.
Anxiety in Europe also continues to play a role in the bond market as nervous investors demand higher yields in exchange for higher risk.
Irish bonds fell Tuesday as the prime minister expressed doubts that an agreement to resolve his country’s fiscal crisis could be reached at a meeting of European finance ministers.
Investors are also nervously watching as Greece and Portugal make attempts to manage their own massive fiscal crises.
Meanwhile, North American stocks fell broadly, in part due to concerns about Europe's debt problems, which may have helped demand for U.S. Treasury debt.
With files from the Star’s wire services - Source: By Madhavi Acharya-Tom Yew | Tue Nov 16 2010
Friday, November 5, 2010
Wednesday, November 3, 2010
Refinance my mortgage
You may find that taking equity out of your home will help bring joy back into your holiday season – and start the New Year off on a debt-free note, as you may also be able to use some of the equity in your home to pay off high-interest debt such as your credit card balances. This will enable you to put more money in your bank account each month.
And since interest rates are hovering near historic lows – you can currently get a five-year mortgage for under 3.5% – switching to a lower rate may save you a lot of money, possibly thousands of dollars per year.
There are penalties for paying your mortgage loan out prior to renewal, but these could be offset by the lower rates and extra money you could acquire through a refinance. I can sit down with you and work through all of the equations to ensure this is the right move for you.
With access to more money, you will be better able to manage both your holiday spending and existing debt. Refinancing your mortgage and taking some existing equity out could also enable you to do many things you’ve been longing to accomplish – such as purchasing an investment property, taking that well-deserved vacation, renovating your home or even investing in your children’s education.
By refinancing, you may extend the time it will take to pay off your mortgage, but there are many ways to pay down your mortgage sooner to save you thousands of dollars in interest payments. Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year.
This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.
You can also increase the frequency of your mortgage payments by opting for accelerated bi-weekly payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it’s guaranteed to save you a significant amount of money over the term of your mortgage.
If, for instance, you have a $100,000 mortgage, an interest rate of 5% and an amortization period of 25 years, your monthly mortgage payment would be $581.60 and your total payments for a year would be $6,979.20 ($581.60 x 12).
To understand the savings accelerated bi-weekly mortgage payments can make, take the monthly mortgage payment of $581.60 and divide it by two ($581.60 ÷ 2 = $290.80). Next, take that payment and multiply it by 26 to arrive at your total payments for the year ($290.80 x 26 = $7,560.80).
As you can see, by using the monthly mortgage payment plan, you’ve made payments totalling $6,979.20 for the year, while using the accelerated bi-weekly mortgage plan you’ve made payments totalling $7,560.80 – a difference of $581.60.
By opting for accelerated bi-weekly mortgage payments, you’re making one additional monthly payment per year.
Using this example, you would reduce the amortization on your $100,000 mortgage from 25 years to just over 21 years and your total savings on interest over the life of the mortgage would be just over $12,000.
By refinancing now – before the holiday season is in full swing – and planning ahead, you can put yourself and your family in a better financial position.
Tuesday, October 5, 2010
Friday, October 1, 2010
15 Key Points Every Customer Should Know on Why They Should Use a Mortgage Broker
2) Our services are free as the bank pays us a finder’s fee. The Industry is changing and banks now have to compete for business, so they value our referrals. Keep in mind, they spend millions of dollars operating their many branches, plus internal staffing and layers of management, so they can afford to offer deep discounts for the business we bring to them.
3) Isn’t it time the Banks compete for your mortgage business? You wouldn’t get just one opinion from one doctor if your physical condition were in question…why get just one opinion when your financial condition is going through the most significant transaction of its life?
4) Your bank very rarely gives you the best rates and products. Most homeowners renew their mortgage every four or five years automatically, so they rarely receive the best rates and programs. Since our Brokerage sends lenders millions of dollars of new business each month, they always offer us the deepest discounts which the mortgage agent will pass on to you - whether you are purchasing, refinancing or renewing.
5) Our application process is simple and quick. We just take a little info and send it electronically to the lenders that we feel are the best fit for your situation; A mortgage broker should have some feedback later that day or the next!
6) One of our best benefits is that we are available on your terms! Isn’t it frustrating when a bank takes several days to get back to you, and then you have to make your way through their endless voice mail boxes?
7) We take one credit bureau only and forward it to all the lenders! Many people inadvertently disqualify themselves from getting the best rate when they are shopping for a mortgage. When multiple banks pull a credit bureau, your Beacon score drops every time, sometimes eliminating the chance for the best mortgage or a mortgage at all!
8) There’s a mortgage product available for almost everyone now. When a person’s situation isn’t ideal, there’s usually a story about why; maybe they changed jobs, maybe they went through a divorce or another life-altering event and their credit was affected. It is our job to tell your story to the lender that will qualify you.
9) I appreciate your business. I sincerely appreciate your business and want to do a good job for you because I want all your family and friends business in the future! (Has any bank employee ever told you that?)
10) We are a certified Experts. Most bank employees are not certified and only know about their own bank’s products and do not know and cannot advise you to go to another lender where you can get qualified. You wouldn’t go to your G.P. if you needed a specialist. Deal with a mortgage expert specializing in mortgages from all lenders.
11) We work for you, not the banks. We don’t get paid unless we fund your mortgage with a lender that is giving you the product you need and we have no interest in getting the lender more interest on your mortgage, as the higher the interest, the lower the amount we can qualify you for; clearly we work in your best interests, not the lender’s.
12) Rate Protection. If the rates drop before you close you automatically get the lower rate and if rates go up you have the lower rate locked in. The last time you got pre-approved for a mortgage at a bank, did you get a commitment letter? Did they offer you a rate protection like the one we can secure for you?
13) Commitment Letter Every-time. We provide a commitment letter every time so you can relax and be confident your mortgage financing is in place!
14) 85% of all people in the USA use a mortgage broker and we are catching up quickly here in Canada.
15) A mortgage broker is no longer the “lender of last resort”! Actually we are becoming the first choice of the educated borrower.
Wednesday, September 29, 2010
Home prices are still 6.4% above their pre-recession peak, the Teranet-National Bank House Price Index shows.
Prices climbed 0.5% in July from a month earlier, marking the 15th consecutive increase, National Bank said, though for the first time in four months not all regions shared in the gain. Prices in Vancouver dipped, the bank noted. Over last year, the index was up 12.4%, compared to 13.6% a month earlier. “July’s rise is the weakest in four months, but it nevertheless continues the best string of consecutive monthly price increases since October 2006,” Senior Economist Marc Pinsonneault said in a research note.
Click here to see the full story in The Globe and Mail.
Thursday, September 9, 2010
Bank of Canada increases overnight rate target to 1 per cent
OTTAWA –The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
The global economic recovery is proceeding but remains uneven, balancing strong activity in emerging market economies with weak growth in some advanced economies. In the United States, the recovery in private demand is being held back by high unemployment and recent indicators suggest a more muted recovery in the near term.
Economic activity in Canada was slightly softer in the second quarter than the Bank had expected, although consumption and investment have evolved largely as anticipated. Going forward, consumption growth is expected to remain solid and business investment to rise strongly. Both are being supported by accommodative credit conditions, which have eased in recent weeks mainly owing to sharp declines in global bond yields.
The Bank now expects the economic recovery in Canada to be slightly more gradual than it had projected in its July Monetary Policy Report (MPR), largely reflecting a weaker profile for U.S. activity. Inflation in Canada has been broadly in line with the Bank's expectations and its dynamics are essentially unchanged.
Against this backdrop, the Bank decided to increase its target for the overnight rate to 1 per cent. As a result of monetary policy measures taken since April, financial conditions in Canada have tightened modestly but remain exceptionally stimulative. This is consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada.
Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook.
Information note:
The next scheduled date for announcing the overnight rate target is 19 October 2010. A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 20 October 2010.
Monday, August 30, 2010
Selecting the right mortgage term
By understanding mortgage terms and what they mean in dollars and sense, you can save the most money and choose the term that is best suited to your specific needs.
The first consideration when comparing various mortgage terms is to understand that a longer term generally means a higher corresponding interest rate. And, a shorter term generally means a lower corresponding interest rate. While this generalization may lead you to believe that a shorter term is always the preferred option, this is not always the case. Sometimes there are other factors – either in the financial markets or in your own life – that you will also have to take into consideration when selecting the length of your mortgage term.
If paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer mortgage term, such as five or 10 years, so that you can ensure that you will be able to afford your mortgage payments should interest rates increase.
By the end of a five- or 10-year mortgage term, most buyers are in a better financial situation, have a lower outstanding principal balance and, should interest rates have risen throughout the course of their term, will be able to afford higher mortgage payments.
If you are shopping for a mortgage for an investment property, you will likely want to consider choosing a longer mortgage term – depending, of course, on your overall plan. This will allow you to know that the mortgage payments on the property will be steady for a long time and enable you to more accurately project your future income from the property.
As well, if you know you will not be staying in the same home for the next five or 10 years, opting for a shorter term can save you significant fees when it comes to early payout penalties.
Choosing the right mortgage term is a unique decision for each individual. By understanding your personal financial situation and your tolerance for risk, I can assist you in choosing the mortgage term that will work best for your situation.
As always, if you have any questions about mortgage terms or your mortgage in general, I’m here to help!
Friday, August 20, 2010
Canada Mortgage Interest Rates
Recently, the real estate industry has dominated the headlines. Mark Carney, Governor of the Bank of Canada, raised warning flags about the impact of higher interest rates on those Canadians who are already stretching to carry their mortgages.
There’s been coverage of the dispute between the Competition Bureau and the real estate industry over proposals that would allow greater price competition among real estate agents.
And there have been suggestions from within the industry that there needs to be increased professionalism among real estate agents.
For many Canadians, none of these is the central issue when it comes to real estate. Rather, the key question comes down to the appreciation they can expect on the investment in their home. After all, the past decade has been a great period for homeowners. Expecting this to continue, some Canadians have stretched to buy larger houses now, before prices get away from them. Research firm Investor Economics points out that residential mortgages are at a record level, approaching $1 trillion.
Click here for the full Globe and Mail article.
Wednesday, August 18, 2010
Dominion Lending Centres Wins Big at CMP Canadian Mortgage Awards
Dominion Lending Centres took home top prizes for Mortgage Brokerage of the Year, Best Branding and Best Advertising. Meanwhile, one of our veteran broker/owners, Gary Meger, Neighbourhood Dominion Lending Centres in Barrie, ON, won Mortgage Broker of the Year. Finally, the Business Development Manager for our extensive white label Dominion Mortgage line of products, Cynthia Kramer, won Lender BDM of the Year!
“We are absolutely honoured that our industry peers and partners, as well as an esteemed panel of judges recognized Dominion Lending Centres with these incredible awards,” says Gary Mauris, President of Dominion Lending Centres.
“We will continue to provide our more than 1,700 brokers and agents across the country with value-added tools and services to ensure we remain on top, and are the company of choice for Canadian mortgage consumers,” Mauris adds.
This is the second consecutive year Dominion Lending Centres has captured the Best Branding award. Dominion Lending Centres is the only mortgage brokerage in Canada that has an advertising fund to ensure we gain access to households across the country via advertising – our main advertising vehicle being Television.
If you haven't yet noticed an upsurge in Dominion Lending Centres TV commercials, you soon will! This month and next, we have an increased presence across the country on News and Sports programming, culminating in an astounding 12.2 Million additional viewer impressions in the key demographic of consumers between the ages of 25 and 54! This is on top of the more than 240 Million viewer impressions we will make this year.
Earlier this month, six new Dominion Lending Centres commercials began airing across Canada. The key message follows a theme that interest rates are still near historic lows, and encourages viewers to contact a Dominion Lending Centres mortgage professional through our main website – www.DominionLending.ca – when purchasing a new home, or renewing or refinancing an existing mortgage.
Tuesday, August 17, 2010
Canada's major banks reduce mortgage rates again
Interest rates have been reduced again by 1/10th of a percentage point by each of Canada's big five banks. The new lower interest rates took effect yesterday. The posted five-year closed mortgage rate is now 5.49 per cent annually with Royal Bank of Canada leading the way and followed by Bank of Montreal, Scotiabank, CIBC and TD Bank.
This is the second time major banks have lowered their rates this month, and follows the report from the Canadian Real Estate Association that home sales were down 6.8 per cent in July from the previous month.
To keep informed of the latest interest rates, you can sign up for my Rate Minder email - click here - or you can also visit my website - Richmond Hill Mortgages - to check the latest mortgages rates and use the mortgage calculators.
Wednesday, June 2, 2010
Bank of Canada Raises Benchmark Rate
In a statement Carney emphasized that the increase should not be interpreted as just the first of more to come.
"This decision still leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in light of the significant excess supply in Canada, the strength of domestic spending and the uneven global recovery,'' the central bank said. ``Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.''
[Source - mortgagebrokernews]
Watch a discussion on the rate increase from CBC News - Click Here.
TD led the way raising Prime to 2.5% with CIBC and RBC shortly afterwards. Many other banks and mortgage lenders have also followed with a .25% increase in the prime rate.
Monday, May 31, 2010
New report indicating that home prices will stabilize
The Canadian Real Estate Association (CREA) released a new report indicating that home prices will stabilize, and remain stable for some time.
This means that Canadian homeowners are unlikely to experience a US-style decline in the value of their homes.“The relationship between average price and income has recently been cited as portending a US-style correction in Canadian home prices,” said Gregory Klump, Chief Economist, CREA. “However, such warnings ignore the longer-term relationship between prices and income, and disregard typical Canadian housing market cycle dynamics.”
Click here to read the CREA report.
Home prices in Canada are overvalued by 14%
Home prices in Canada are overvalued by 14%, while affordability is eroding dramatically in some parts of the country, say two new reports on the state of the housing market.
“When it comes to prices, by almost any measure, Canadian home prices are overshooting their fair value,” CIBC Senior Economist Benjamin Tal said in a report Tuesday. “The pace of appreciation has been quicker than justified by housing market fundamentals.”The bank says the average price of a home has risen by almost 23% since the cyclical low of January 2009, and about 7% above recession levels.
As a result, at least 1.5 million homes across Canada are overvalued, particularly in Western Canada, and a price drop of 5% to 10% over the next 12 months would not be unlikely, said Tal.
Click here to read the full article in The Star.
Wednesday, May 19, 2010
Fixed or float? Combination mortgages increasing in popularity: RBC poll
In fact, 40% of Canadians who are likely to purchase a home within the next two years plan to take out a combination mortgage, compared to 32% in 2009.
The surging popularity of combination mortgages indicates that Canadians are trying to maximize low interest rates while at the same time retaining the security of a fixed mortgage. The poll also revealed a marked gender split with more women (46%) than men (35%) preferring a combination mortgage.
“Although interest rates are expected to rise, our study shows that not all Canadians intend to automatically opt for a fixed mortgage with a longer term,” said Marcia Moffat, Head, Home Equity Financing, RBC Royal Bank. “As consumers begin to learn about the benefits of mortgage diversification, we’re seeing more homebuyers gain a better comfort level with adding floating-rate mortgage options.”
While combination mortgages are gaining in popularity, fixed-rate mortgages continue to be the most common choice for potential buyers and are preferred by 44% of Canadians likely to buy a home within the next two years. Atlantic Canadians are most likely (54%) to opt for a fixed rate, with Ontarians (41%) least likely to do so.
Click here for more details on the RBC study.
Wednesday, May 12, 2010
86% of real estate professionals said they worry.
Realtors polled in a recent cross-Canada survey indicated that the country’s real estate market is both highly competitive and provides the necessary safeguards to protect consumers.
Eighty-six percent of real estate professionals said they worry that severe deregulation in the real estate industry would erode standards of customer service for Canadians who are buying or selling a home.
According to the online poll of 1,726 realtors by Royal LePage Real Estate Services, the proposed changes to the Multiple Listing Service (MLS) will do little to improve an already competitive industry.
Eighty-six percent of agents surveyed said they are “concerned that the push to foster increased competition in the industry will result in lower customer service standards.” When asked about the state of the current marketplace, 76% of respondents said the industry is “highly competitive.”
Click here to read more from the Royal LePage survey.
Neither recession, global uncertainty nor growing joblessness appears to have stayed Canadians’ appetite for spending money they don’t have.
A new report by the Certified General Accountants Association of Canada shows that household debt in the country kept rising through the recession and peaked in December at $1.41 trillion.
That’s $41,740 on average per Canadian, or debt to income ratio of 144%, which is the worst among 20 advanced countries in the Organization for Economic Co-operation and Development.
“This report is another indication of Canadians’ readiness to consume today and pay later,” said association President Anthony Ariganello. “The concern is do they understand the full cost of paying later?”
The Bank of Canada has also voiced similar concerns, with Governor Mark Carney having repeatedly advised Canadians to ensure they will be able to meet their mortgage commitments once rates increase. Ottawa has put that cautionary principle into effect by stiffening the means test chartered banks must apply when issuing open-ended mortgages.
Most Canadians don’t yet share that concern. The accountants’ survey found that almost 60% of Canadians whose debt had increased still felt they could manage it or take on more obligations.
Click here to read more from CBC.
Friday, May 7, 2010
Islamic mortgages now in Canada
Source [cbc.ca - May 7, 2010]
A Manitoba credit union has become the first major financial institution in Canada to offer mortgages geared towards the needs of devout Muslims
On Wednesday, Winnipeg-based Assiniboine Credit Union (ACU) announced it was launching an Islamic Mortgage Program.
Currently, the majority of the Winnipeg's roughly 13,000 Muslims rent or don't own the homes they live in, the credit union said.
For-profit loans are problematic for people of the faith because the Qur'an forbids the payment of interest.
Under the program, the credit union and the homebuyer enter into what ACU calls a "declining partnership agreement." Both parties co-own the home and its title.
"During this time, the family has exclusive rights to live in the home and in exchange they agree to pay ACU a profit. At the end of the contract the Muslim family is the sole owner of the home," the credit union said in a press release.
The would-be homeowner must contribute a minimum of 20 per cent of the home's price at the start of the agreement, ACU said.
The plan was developed with the help of Islamic religious scholars in Canada and the U.S., the credit union added.
A Manitoba credit union has become the first major financial institution in Canada to offer mortgages geared towards the needs of devout Muslims
On Wednesday, Winnipeg-based Assiniboine Credit Union (ACU) announced it was launching an Islamic Mortgage Program.
Currently, the majority of the Winnipeg's roughly 13,000 Muslims rent or don't own the homes they live in, the credit union said.
For-profit loans are problematic for people of the faith because the Qur'an forbids the payment of interest.
Under the program, the credit union and the homebuyer enter into what ACU calls a "declining partnership agreement." Both parties co-own the home and its title.
"During this time, the family has exclusive rights to live in the home and in exchange they agree to pay ACU a profit. At the end of the contract the Muslim family is the sole owner of the home," the credit union said in a press release.
The would-be homeowner must contribute a minimum of 20 per cent of the home's price at the start of the agreement, ACU said.
The plan was developed with the help of Islamic religious scholars in Canada and the U.S., the credit union added.
Thursday, May 6, 2010
What’s Taxable Under the HST and What’s Not?
Here are examples of common products and services and how they will be affected by the HST.
Click the link above to open a PDF document.
Click the link above to open a PDF document.
Friday, April 23, 2010
Bank of Canada gives notice on rate hikes, no date
OTTAWA (Reuters) - The Bank of Canada laid the groundwork on Thursday to raise interest rates from current record lows, saying it was time to start withdrawing some of the stimulus that helped pull Canada out of recession.
Reinforcing a message it delivered earlier this week, the central bank said it was no longer promising to keep its key rate at 0.25 percent until the end of this quarter.
It forecast growth of 3.7 percent this year, and said core inflation, which strips out one-off factors, was set to stay close to its 2 percent target.
"With recent improvements in the economic outlook...it is appropriate to begin to lessen the degree of monetary stimulus," it said in a low-key Monetary Policy Report that paves the way for Canada to become the first big industrialized nation to raise rates since the recession started.
"The extent and timing of any additional withdrawal of monetary stimulus will depend on the outlook for economic activity and inflation, and will be consistent with achieving the 2 percent inflation target," it added.
The report added details to a statement the bank made on Tuesday in which it left rates unchanged but made clear that higher rates were coming.
Before that statement few had forecast the bank would raise rates at its next rate-setting date on June 1. But a Reuters poll conducted on Tuesday showed 11 of Canada's 12 primary dealers now expect a June rate hike of 25 basis points.
Yields on overnight index swaps, which trade based on expectations for the Bank of Canada's key policy rate, edged lower after Thursday's report, showing the market saw rate hikes in 2010 as a touch less likely than it did before the report.
The Canadian dollar rose as high as C$0.9990 per U.S. dollar, or $1.0010, from C$1.0014 per U.S. dollar before the report.
Thursday's central bank forecasts assume an average exchange rate of 99 U.S. cents per Canadian dollar, matching the average of the last month. But a strong dollar is one of a raft of factors that could upset the bank's forecasts, by slowing growth or making Canadian firms less competitive.
"There are still a fair number of key things that they are worried about," said Sheryl King, chief economist at Banc of America-Merrill Lynch.
"The immediate implications for the Canadian dollar are neutral to slightly negative right now because the market has gotten slightly excited and probably a little bit over-anticipatory about very aggressive rate increases, and I don't think these headlines validate that."
TURNING POINT
The central bank said risks to its forecasts were roughly balanced. Stronger growth could boost demand for Canadian exports and add to inflation, while a higher Canadian dollar and poor productivity could slow growth and dampen inflation.
It said global imbalances could "pose significant risks to the outlook" and insisted that advanced economies like the United States need to rein in deficits, while other countries must boost demand and allow exchange rate adjustments.
Carney, who will attend top level international talks in Washington this weekend, said talks about a global tax on banks to cover the costs of any future financial crisis are a "distraction" from core issues such as bank capitalization and liquidity.
The bank expects the private sector to become the sole driver of domestic demand in Canada by 2011, making this year a "turning point" as monetary and fiscal stimulus, which kick-started the recovery, are withdrawn.
Finance Minister Jim Flaherty, already in Washington for the Group of 20 talks, said he was "relatively comfortable" with the Bank of Canada's projections, saying they show Canada is emerging from the recession stronger than any other G7 country.
The central bank said the housing sector, marked by fierce bidding wars in Toronto and Vancouver, had exceeded its expectations, but that activity in the sector should weaken later this year.
(Additional reporting by David Ljunggren, Claire Sibonney, Jennifer Kwan, Euan Rocha and Louise Egan; editing by Peter Galloway)
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