[Source - Bank of Canada - Press Release - January 20, 2009]
OTTAWA – The Bank of Canada today announced that it is lowering its target for the overnight rate by one-half of a percentage point to 1 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 1 1/4 per cent.
The outlook for the global economy has deteriorated since the Bank's December interest rate announcement, with the intensifying financial crisis spilling over into real economic activity. Heightened uncertainty is undermining business and household confidence worldwide and further eroding domestic demand. Major advanced economies, including Canada's, are now in recession and emerging-market economies are increasingly affected. Energy prices have fallen as a result of substantially weaker global demand.
Stabilization of the global financial system is a precondition for economic recovery. To that end, governments and central banks are taking bold and concerted policy actions. There are signs that these extraordinary measures are starting to gain traction, although it will take some time for financial conditions to normalize. In addition, considerable monetary and fiscal policy stimulus is being provided worldwide.
Canadian exports are down sharply, and domestic demand is shrinking as a result of declines in real income, household wealth, and consumer and business confidence. Canada's economy is projected to contract through mid-2009, with real GDP dropping by 1.2 per cent this year on an annual average basis. As policy actions begin to take hold in Canada and globally, and with support from the past depreciation of the Canadian dollar, real GDP is expected to rebound, growing by 3.8 per cent in 2010.
A wider output gap through 2009 and modest decreases in housing prices should cause core CPI inflation to ease, bottoming at 1.1 per cent in the fourth quarter. Total CPI inflation is expected to dip below zero for two quarters in 2009, reflecting year-on-year drops in energy prices. With inflation expectations well-anchored, total and core inflation should return to the 2 per cent target in the first half of 2011 as the economy returns to potential.
Against this background, the Bank today lowered its policy rate by 50 basis points, bringing the cumulative monetary policy easing to 350 basis points since December 2007. Guided by Canada's inflation-targeting framework, the Bank will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required to achieve the 2 per cent target over the medium term. Low, stable, and predictable inflation is the best contribution monetary policy can make to long-term economic growth and financial stability.
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BMO, TD, RBC, BNS, CIBC have all matched the 1/2 point lowering their prime to 3.0% which is welcome news to borrowers.
Their respective press releases can be found here: http://www.newswire.ca/en/
Tuesday, January 20, 2009
Monday, January 19, 2009
Renting vs Buying
At some point in their lives, most Canadians have probably asked themselves whether it is better to buy or rent a home. And purchasing a home is one of the biggest decisions most people ever make in their lives.
Ultimately, the decision is a personal choice, but it helps to look at the pros and cons of buying to determine whether home ownership is right for you.
Some advantages of buying a home
Owning a home is generally considered to be a sound, long-term investment that can provide satisfaction and security for you and your family.
Each month when you make your mortgage payment, you are building equity in your home.
Equity is the portion of the property that you actually build through your monthly payment versus the portion that you still owe the lender.
At the beginning of your mortgage, more of your payments go toward paying off the interest and less toward paying off the principal. But the longer you stay in your home and the more mortgage payments you make, the more principal you pay off and the more equity you accumulate.
Most mortgages also offer you the option of making additional monthly or annual payments to reduce your principal faster. Some prepayment privileges, for instance, enable you to pay up to 20% of the principal per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.
There is also a tax advantage. If your home is your principal residence, any profit you make when you sell it is tax-free. A home can appreciate – or increase in value – as time passes, building more equity. As you build up equity, it’s usually easier to upgrade to a more expensive home in the future thanks to the profit you’ll make when selling your current home.
As an owner, you can also decorate and improve your home any way you like. Ownership tends to give you a sense of pride and can offer you and your family stronger ties to the community.
If you do decide that home ownership is right for you, it’s important to choose a home you can afford. If you can’t afford to buy your dream home, purchasing a more modest home can be a great place to start building equity that one day may allow you to buy the home of your dreams.
Since we’re currently in a buyer’s real estate market and interest rates have been dropping, now may be an ideal time to enter into home ownership for the first time.
Some disadvantages of buying a home
Since it’s easy to get caught up in the excitement of buying a home, it’s important to remember that home ownership has some additional responsibilities as well.
For one thing, a home can be expensive. Chances are, your monthly payments will be more than what you are currently paying in rent when you factor in such things as your mortgage, property taxes, repairs and general maintenance.
Owning a home ties up some of your cash and is likely to reduce your flexibility to move to a new location or change jobs.
While your home might increase in value as time goes by, don’t expect to get a big return quickly. There are no guarantees that your home will increase in value, particularly during the first few years. In the beginning, you could actually lose money if you sell because your home may not have appreciated enough to cover the real estate fees, and moving, renovation and other selling costs.
Real estate is, however, usually considered a good investment over the long term.
When making the decision about whether to buy or rent, it’s important to carefully choose a home you can afford, and then weigh the pros and cons. Millions of people enjoy the rewards of home ownership but, ultimately, it’s a personal decision based on your own priorities.
As always if you would like to discuss your options with a Mortgage Expert, please contact Greg Barrow, Dominion Lending Centres Perfect Mortgages, at 416 807 7123 or by email, click here.
Have a great day!
Ultimately, the decision is a personal choice, but it helps to look at the pros and cons of buying to determine whether home ownership is right for you.
Some advantages of buying a home
Owning a home is generally considered to be a sound, long-term investment that can provide satisfaction and security for you and your family.
Each month when you make your mortgage payment, you are building equity in your home.
Equity is the portion of the property that you actually build through your monthly payment versus the portion that you still owe the lender.
At the beginning of your mortgage, more of your payments go toward paying off the interest and less toward paying off the principal. But the longer you stay in your home and the more mortgage payments you make, the more principal you pay off and the more equity you accumulate.
Most mortgages also offer you the option of making additional monthly or annual payments to reduce your principal faster. Some prepayment privileges, for instance, enable you to pay up to 20% of the principal per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.
There is also a tax advantage. If your home is your principal residence, any profit you make when you sell it is tax-free. A home can appreciate – or increase in value – as time passes, building more equity. As you build up equity, it’s usually easier to upgrade to a more expensive home in the future thanks to the profit you’ll make when selling your current home.
As an owner, you can also decorate and improve your home any way you like. Ownership tends to give you a sense of pride and can offer you and your family stronger ties to the community.
If you do decide that home ownership is right for you, it’s important to choose a home you can afford. If you can’t afford to buy your dream home, purchasing a more modest home can be a great place to start building equity that one day may allow you to buy the home of your dreams.
Since we’re currently in a buyer’s real estate market and interest rates have been dropping, now may be an ideal time to enter into home ownership for the first time.
Some disadvantages of buying a home
Since it’s easy to get caught up in the excitement of buying a home, it’s important to remember that home ownership has some additional responsibilities as well.
For one thing, a home can be expensive. Chances are, your monthly payments will be more than what you are currently paying in rent when you factor in such things as your mortgage, property taxes, repairs and general maintenance.
Owning a home ties up some of your cash and is likely to reduce your flexibility to move to a new location or change jobs.
While your home might increase in value as time goes by, don’t expect to get a big return quickly. There are no guarantees that your home will increase in value, particularly during the first few years. In the beginning, you could actually lose money if you sell because your home may not have appreciated enough to cover the real estate fees, and moving, renovation and other selling costs.
Real estate is, however, usually considered a good investment over the long term.
When making the decision about whether to buy or rent, it’s important to carefully choose a home you can afford, and then weigh the pros and cons. Millions of people enjoy the rewards of home ownership but, ultimately, it’s a personal decision based on your own priorities.
As always if you would like to discuss your options with a Mortgage Expert, please contact Greg Barrow, Dominion Lending Centres Perfect Mortgages, at 416 807 7123 or by email, click here.
Have a great day!
Saturday, January 17, 2009
Monday, January 12, 2009
Have you considered refinancing your mortgage?
If you’re trying to determine if now’s a good time to refinance your mortgage and free up some extra money, speak with a qualified mortgage expert. They will help you determine if refinancing is the right option for you and your family.
If you’re looking to reduce your costs and lower your monthly mortgage payment, then now may be a great time to do just that. Mortgage rates are currently low and 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 extra money you could acquire through a refinance.
If you’re able to lower your fixed-rate mortgage, or change from a fixed-rate to variable-rate mortgage, you could be putting more money in the bank each month. Make sure you speak with a mortgage broker about variable-rate mortgages, however, as this product adjusts with the bank rate and can fluctuate up or down.
With access to more money, you will be better able to manage your debt. Refinancing your first mortgage and taking some existing equity out could also help you pay off some of your high-interest rate credit card debts. You could also take some extra money out to invest, go on vacation, do some renovations or even invest in your children’s education. Refinancing your first mortgage is typically more cost effective than taking out a second mortgage.
Don’t forget that by refinancing you are extending the time to pay off your mortgage. That being said, there are many ways to pay down your mortgage sooner. Most mortgage products have prepayment privileges that allow you to pay up to 20% of the principal per calendar year. You may not be able to use any extra money you have now to take advantage of these extra payments but, once you are in a position to do so, it is highly recommended to try and make some additional payments to reduce your principal (the true value of your mortgage minus the interest payments) and the amortization period (length of your mortgage).
If homeowners fail to take the time to thoroughly research their options and simply sign the renewal offers they receive from their bank, credit union or other lender, they could end up paying thousands of dollars more per year in interest.
In the current credit-crunched lending environment, now more than ever it’s important to take the time to contact a mortgage agent to find out your options.
By refinancing now and paying off some debt, you can put yourself and your family in a better financial position. It’s very important to not rack up your credit cards after refinancing, however, so set your goals and budgets, and stick to them!
[Source-Dominion Lending Centres]
If you’re looking to reduce your costs and lower your monthly mortgage payment, then now may be a great time to do just that. Mortgage rates are currently low and 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 extra money you could acquire through a refinance.
If you’re able to lower your fixed-rate mortgage, or change from a fixed-rate to variable-rate mortgage, you could be putting more money in the bank each month. Make sure you speak with a mortgage broker about variable-rate mortgages, however, as this product adjusts with the bank rate and can fluctuate up or down.
With access to more money, you will be better able to manage your debt. Refinancing your first mortgage and taking some existing equity out could also help you pay off some of your high-interest rate credit card debts. You could also take some extra money out to invest, go on vacation, do some renovations or even invest in your children’s education. Refinancing your first mortgage is typically more cost effective than taking out a second mortgage.
Don’t forget that by refinancing you are extending the time to pay off your mortgage. That being said, there are many ways to pay down your mortgage sooner. Most mortgage products have prepayment privileges that allow you to pay up to 20% of the principal per calendar year. You may not be able to use any extra money you have now to take advantage of these extra payments but, once you are in a position to do so, it is highly recommended to try and make some additional payments to reduce your principal (the true value of your mortgage minus the interest payments) and the amortization period (length of your mortgage).
If homeowners fail to take the time to thoroughly research their options and simply sign the renewal offers they receive from their bank, credit union or other lender, they could end up paying thousands of dollars more per year in interest.
In the current credit-crunched lending environment, now more than ever it’s important to take the time to contact a mortgage agent to find out your options.
By refinancing now and paying off some debt, you can put yourself and your family in a better financial position. It’s very important to not rack up your credit cards after refinancing, however, so set your goals and budgets, and stick to them!
[Source-Dominion Lending Centres]
Friday, January 9, 2009
Mortgage brokers offer choice
The next time you’re looking for a mortgage for that new house or you’re up for renewal on your existing mortgage, think about using a mortgage broker – their services are free and they offer you an abundance of choices the banks simply can’t compete with.
Mortgage brokers have access to a vast array of lenders – up to 90+ institutions, including some of the big banks – which enables these professionals to negotiate the best possible mortgage products and rates on your behalf. In comparison, if you approach your bank with a mortgage request, they can only offer you a narrow choice – namely, their own products.
Mortgage brokers do their homework on available mortgage products and keep themselves abreast of any new products, or changes to existing products, to ensure they find the best mortgage to fit your specific needs.
Unlike the banks, mortgage brokers can also cater to self-employed borrowers as well as those who have suffered credit blemishes due to life experiences such as divorce or illness. Brokers will listen to your story, whereas the banks have a very narrow view of what fits into their financing box – and this is nonnegotiable.
Top Reasons for Using a Broker:
1. Choice – access to multiple financial institutions
2. Costs – using a broker is free and they can negotiate lower rates for you
3. Knowledge – brokers stay up-to-date on available products and services
4. Flexibility – mortgage products are even available for the self-employed or those who have credit blemishes
Please call (416.807.7123) or email me any time.
[Source-Dominion Lending Centres]
Monday, January 5, 2009
Pay attention when renewing mortgage
[Source - JOEY FITZPATRICK, The Chronicle Herald - January 5, 2009]
For most of us, a mortgage is the largest single financial responsibility we will ever take on.
While the mortgage market outlook is more positive in Canada than in the U.S., a recent survey suggests Canadians should pay closer attention when it comes time to renew a mortgage. It indicated that homeowners renewing in the past year obtained, on average, fewer than two quotes (1.85) before signing on the dotted line.
"Lenders don’t always offer the same incentives to renewal clients as they do for new business clients," says Peter Veselinovich, vice-president of banking and mortgage operations with Investors Group. "So you really need to be aware of what’s available in the marketplace."
Read Full Article Here
For most of us, a mortgage is the largest single financial responsibility we will ever take on.
While the mortgage market outlook is more positive in Canada than in the U.S., a recent survey suggests Canadians should pay closer attention when it comes time to renew a mortgage. It indicated that homeowners renewing in the past year obtained, on average, fewer than two quotes (1.85) before signing on the dotted line.
"Lenders don’t always offer the same incentives to renewal clients as they do for new business clients," says Peter Veselinovich, vice-president of banking and mortgage operations with Investors Group. "So you really need to be aware of what’s available in the marketplace."
Read Full Article Here
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