More Canadian consumers turning to brokers for their next mortgage

[mortgagebrokernews.ca]

A growing number of Canadians are opting to use mortgage brokers instead of going to the bank branch, a recent study said.

According to Maritz Research, which conducted the study on behalf of CAAMP, the mortgage broker channel handled 23 per cent of all mortgage activity in 2008. This number was higher in Western Canada, (34 per cent in Alberta and 27 per cent in British Columbia), as well as amongst females (26 per cent), who were more likely than men (20 per cent) to deal with brokers.

"In the past, the first or only place a person would go when looking for a mortgage was to their local bank, however more and more Canadians are now seeking out the services of Mortgage Brokers to help them navigate the biggest purchase of their lives," said study author Rob Daniel, managing director, Maritz Research Canada, to the Financial Post.

Another strong demographic for mortgage brokers was with young Canadians. In the 18 to 34 demographic brokers represented a 28 per cent share. With 53 to 54 year olds this decreased to 24 per cent, and with the 55 and older crowd it was even lower, at just 17 per cent.

One oversight in the Financial Post article in which the results were published was the author's statement that "mortgage brokers will charge fees. In one case, a low risk $240,000 mortgage on a $320,000 home in Toronto brought $3,200 in fees."

Nowhere does it mention that brokers take their fees from lenders.

Bank of Canada maintains overnight rate target at 1/4 per cent

As expected BoC didn't touch overnight lending rate today, see below for press release from their website.

[Source - Bank of Canada]
Bank of Canada maintains overnight rate target at 1/4 per cent and reiterates conditional commitment to hold current policy rate until the end of the second quarter of 2010

OTTAWA — The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/4 per cent. The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.

The global economic recovery is under way, supported by continued improvements in financial conditions and stronger domestic demand growth in many emerging-market economies. While the outlook for global growth through 2010 and 2011 is somewhat stronger than the Bank had projected in its October Monetary Policy Report, the recovery continues to depend on exceptional monetary and fiscal stimulus, as well as extraordinary measures taken to support financial systems.

Economic growth in Canada resumed in the third quarter of 2009 and is expected to have picked up further in the fourth quarter. Total CPI inflation turned positive in the fourth quarter and the core rate of inflation has been slightly higher than expected in recent months. Nevertheless, considerable excess supply remains, and the Bank judges that the economy was operating about 3 ¼ per cent below its production capacity in the fourth quarter of 2009.

Canada's economic recovery is expected to evolve largely as anticipated in the October MPR, with the economy returning to full capacity and inflation to the 2 per cent target in the third quarter of 2011. The Bank projects that the economy will grow by 2.9 per cent in 2010 and 3.5 per cent in 2011, after contracting by 2.5 per cent in 2009.

The factors shaping the recovery are largely unchanged - policy support, increased confidence, improving financial conditions, global growth, and higher terms of trade. At the same time, the persistent strength of the Canadian dollar and the low absolute level of U.S. demand continue to act as significant drags on economic activity in Canada. On balance, these factors have shifted the composition of aggregate demand towards growth in domestic demand and away from net exports. The private sector should become the sole driver of domestic demand growth in 2011.

Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target. Consistent with this conditional commitment, the Bank will continue to conduct term Purchase and Resale Agreements based on existing terms and conditions and according to the accompanying schedule: http://www.bankofcanada.ca/en/notices_fmd/2010/notice_fad190110.pdf

In its conduct of monetary policy at low interest rates, the Bank retains considerable flexibility, consistent with the framework outlined in the April 2009 MPR.

The risks to the outlook for inflation continue to be those outlined in the October MPR. On the upside, the main risks are stronger-than-projected global and domestic demand. On the downside, the main risks are a more protracted global recovery and persistent strength of the Canadian dollar that could act as a significant further drag on growth and put additional downward pressure on inflation. While the underlying macroeconomic risks to the projection are roughly balanced, the Bank judges that, as a consequence of operating at the effective lower bound, the overall risks to its inflation projection are tilted slightly to the downside.

Information note:

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 21 January 2010. The next scheduled date for announcing the overnight rate target is 2 March 2010.

Bank of Canada Governor Mark Carney is entering a crucial phase for clinching the recovery.

[Source -Jeremy Torobin Ottawa — From Monday's Globe and Mail]

Having helped steer Canada's economy out of recession, Mr. Carney and policy makers across the globe are carefully watching for signs that their economies are healing and trying to determine the right moment, and the right pace, at which to start withdrawing the unprecedented stimulus that helped counter the effects of the financial data.

While few believe there's much chance Mr. Carney will abandon his “conditional” commitment to keep borrowing costs at a record-low 0.25 per cent through the middle of the year or longer, every piece of data over the next few months will be parsed for indications of how quickly rates might rise in the second half of the year and beyond.

Timing is particularly important because no central banker wants a repeat of 1937, when the U.S. Federal Reserve tightened prematurely, snuffing out a tentative recovery and thus prolonging and worsening the Great Depression.

No economist believes the central bank chief is going to adjust borrowing costs Tuesday, and few contend he should be rushing to so much as tweak the wording of the pledge to leave rates where they are unless the inflation outlook changes.

But six months before a July decision which could mark the first rate hike since the crisis, a quarterly economic and inflation forecast this Thursday may offer clues about whether Mr. Carney thinks the recent rebound is here to stay, and how quickly the economy might return to something resembling pre-recession form.

And data on consumer prices this week from Statistics Canada could suggest whether there's any possibility he will need to shorten or extend his holding pattern, the length of which depends on how soon he sees inflation returning to his 2-per-cent target.

Tara Rosen on Agent vs Agent

Southern Ontario Real Estate for First Time Buyers. Watch Tara Rosen vs. Daryl King on Agent vs. Agent Wednesday January 13th at 8:00 p.m. on HGTV Canada.

Anna and Kent are looking for a century home for themselves and their new baby. Sounds simple enough – except they’re looking for a place to call home for the next 20 years. With that kind of timeline, you can bet they’re expecting perfection. Daryl and Tara are eager to hit the ground running, but when they meet their competitor for the first time, they discover a shocking surprise that raises the stakes even higher.

Agent vs. Agent is the ultimate real estate challenge show, where two top notch real estate agents face-off to find desperate home buyers the house of their dreams. Each episode features two successful agents – they may have dramatically different styles but both share one thing in common: an intensely competitive streak. The series follows them as they go head-to-head to find the perfect home, make the sale and earn their commission. At the end of the episode, it all comes down to one thing… Who will be first to close a deal for the client and be crowned the winner?

Win or lose, real estate sales representative Tara Rosen’s steadfast determination and potential to go that extra mile for her clients have propelled her to a great many successes. She is a versatile individual, and although known for her vivacious personality, Tara Rosen is also both meticulous and forthright in her approach. Tara’s quite passionate of what she is doing and she hasn’t looked back, ever, since she embarked on this journey forging an exemplary and sometimes illustrious carrier for herself, spanning now almost 20 years in the industry, and being licensed since 2002.

Learn more about Tara Rosen, Realtor® with Coldwell Banker the Real Estate Centre, Brokerage, and how she can help you as she has helped hundreds of Canadian families before, realize their real estate dreams of home ownership in the Southern Ontario regions of Toronto (the GTA), York Region, and Durham Region.

Visit Tara’s website at http://www.tararosen.com today, and make sure to watch her on Agent vs. Agent Wednesday January 13th at 8:00 p.m. on HGTV Canada. - That is Tonight !!!!

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I have known Tara Rosen for many years, since grade school in fact, and she is one of the best Realtors you will ever meet. I highly recommended her and every client I refer to her only has amazing things to say about her service and skills.

Housing bubble talk premature: Bank Of Canada

Great article on current status of Canadian Housing Sector

[Source - THE CANADIAN PRESS]

The Bank of Canada appears to be cooling its rhetoric on the country’s housing boom, all but ruling out raising interest rates to dissuade prospective home buyers from taking on too much mortgage debt.

Bank official David Wolf said in a speech Monday that in the central bank’s view it is premature to be talking about a housing bubble in Canada.

And he said even if the bank judged that housing prices were getting out of hand, raising interest rates is too blunt an instrument since it would have the effect of cooling off the entire economy.

“We would, in essence, be dousing the entire Canadian economy with cold water, just as it emerges from recession,” he said in an Edmonton speech delivered on behalf of deputy governor Timothy Lane, who could not travel to the Alberta capital for personal reasons. Notes from the speech were posted on the bank’s website.

“As a result, it would take longer for economic growth to return to potential and for inflation to get back to target,” he added.

“This is why we say monetary policy is a blunt instrument for achieving financial stability.”

Wolf, a former chief economist with Merrill Lynch Canada who is currently adviser to governor Mark Carney, said there were other ways to dampen Canadians’ enthusiasm for homes without resorting to raising interest rates.

Finance Minister Jim Flaherty has also openly discussed policy measures to cool the housing market, including raising the minimum down payment requirement above 5%, or reducing the maximum length a house can be amortized from the current 35 years.

The bank has been highlighting for months the danger of Canadians getting in over their heads in purchasing homes, warning that buyers should ensure they don’t take on too much debt.

The bank’s worry is that homeowners with large mortgages that are manageable now with interest rates at record lows won’t be able to afford their monthly payments once interest rates start rising, as is expected later this year.

Read Full Article Here

Teachers buys AIG's Canada mortgage insurance unit

I read this article in the Financial Post yesterday and found it very interesting. AIG had a tough go in Canada last year with all the negative publicity from their American company. Some had thought they would exit the Canadian market, however they made it through the year and have now been bought by the OTPP.

By Karen Mazurkewich, Financial Post Published: Tuesday, January 05, 2010

Ontario Teacher's Pension Plan has started the new year with a new acquisition. The pension plan announced that it's the lead sponsor to buy American International Group Inc's (AIG) Canadian mortgage insurance business.

No price tag was given with the deal.

"We believe the mortgage insurance industry in Canada to be an attractive market, and that United Guaranty Canada is well positioned to grow its market position," said Erol Uzumeri, senior vice-president, Teachers' Private Capital, said in a statement. Mr. Uzumeri had signaled earlier this year that the pension plan was hoping to finalize an insurance deal.

"The company has a strong management team, and Teachers' is prepared to support the growth of the business," he added.

There are only two private mortgage insurance providers in Canada. United Guaranty Canada, headquartered in Toronto, is the second largest prwith assets of $274-million and total equity of $127-million as of Sept. 30, 2009.