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Wednesday, December 30, 2009
Tuesday, December 22, 2009
Article: Ottawa Mulls Tighter Mortgage Rules
From CBC News Online:
Ottawa is considering new measures to tighten mortgage standards and prevent would-be homebuyers from taking on more debt than they can afford.
Finance Minister Jim Flaherty said in an interview with CTV he's worried about people piling up debt while interest rates are low and then getting into trouble when interest rates rise, as they inevitably must.
As a result, the Conservative government is considering increasing the minimum down payment from five per cent "to a higher figure," he said, and Ottawa may also reduce the amortization period from a maximum of 35 years "to something less."
Twenty-five-year mortgages used to be the norm, until lenders started making 30-, 35- and 40-year mortgages available to stimulate demand. In mid-2008, the Department of Finance moved to trim the maximum paydown period to 35 years and to require a minimum five per cent down payment for new federally insured mortgages.
Even so, 18 per cent of Canadian mortgages are for terms longer than 25 years, and 10 per cent are amortized over 35 or 40 years, a recent Scotiabank report estimated.
The average price of a resale home in Canada hit $337,231 in November, the Canadian Real Estate Association said last week. That's 19 per cent higher than the depressed levels of a year earlier.
Flaherty's comments echo Bank of Canada governor Mark Carney, who last week urged consumers to get their financial houses in order to prepare for when the central bank inevitably raises its key policy rate from its current emergency record low of 0.25 per cent.
Proceed with caution: CIBC
Word that Ottawa might step further into the red-hot real estate market had housing watchers buzzing Monday.
"You could basically shut down 25 per cent of the market," CIBC economist Benjamin Tal told CBC's The Lang and O'Leary Exchange. "It's going to be significant because we're talking about a lot of money that took advantage of those rates."
"What the Bank of Canada and Finance Department are saying is that people are abusing these rates, but they need to be careful not to risk this fragile recovery."
Though he admits more lending caution would be prudent, he advocates Ottawa be wary of anything as drastic as a hard cap of 30-year amortizations, or minimum 10 per cent down payments, for example.
"If you want to do it, do it in a gradual way that you do not kill housing [because] housing is the only thing ticking in this market," he said. "The timing is tricky."
Ottawa is considering new measures to tighten mortgage standards and prevent would-be homebuyers from taking on more debt than they can afford.
Finance Minister Jim Flaherty said in an interview with CTV he's worried about people piling up debt while interest rates are low and then getting into trouble when interest rates rise, as they inevitably must.
As a result, the Conservative government is considering increasing the minimum down payment from five per cent "to a higher figure," he said, and Ottawa may also reduce the amortization period from a maximum of 35 years "to something less."
Twenty-five-year mortgages used to be the norm, until lenders started making 30-, 35- and 40-year mortgages available to stimulate demand. In mid-2008, the Department of Finance moved to trim the maximum paydown period to 35 years and to require a minimum five per cent down payment for new federally insured mortgages.
Even so, 18 per cent of Canadian mortgages are for terms longer than 25 years, and 10 per cent are amortized over 35 or 40 years, a recent Scotiabank report estimated.
The average price of a resale home in Canada hit $337,231 in November, the Canadian Real Estate Association said last week. That's 19 per cent higher than the depressed levels of a year earlier.
Flaherty's comments echo Bank of Canada governor Mark Carney, who last week urged consumers to get their financial houses in order to prepare for when the central bank inevitably raises its key policy rate from its current emergency record low of 0.25 per cent.
Proceed with caution: CIBC
Word that Ottawa might step further into the red-hot real estate market had housing watchers buzzing Monday.
"You could basically shut down 25 per cent of the market," CIBC economist Benjamin Tal told CBC's The Lang and O'Leary Exchange. "It's going to be significant because we're talking about a lot of money that took advantage of those rates."
"What the Bank of Canada and Finance Department are saying is that people are abusing these rates, but they need to be careful not to risk this fragile recovery."
Though he admits more lending caution would be prudent, he advocates Ottawa be wary of anything as drastic as a hard cap of 30-year amortizations, or minimum 10 per cent down payments, for example.
"If you want to do it, do it in a gradual way that you do not kill housing [because] housing is the only thing ticking in this market," he said. "The timing is tricky."
Monday, November 30, 2009
Housing Market to Continue Upswing
Found this great article from Castanet in Kelowna: http://www.castanet.net/edition/news-story-50512-1-.htm#50512 on November 2, 2009.
The housing market's gradual upswing will continue throughout the fall and into the new year, says Kelowna's Paul Fabri of the Canada Mortgage and Housing Corporation.
“Strong price competition, a good selection of listings and favourable interest rates will help sustain growth in demand for existing homes next year,” says Fabri. “Expect existing home prices to edge back up as demand improves and the supply of listings is drawn down."
Fabri said the biggest improvement will come in the detached home sector, as the existing supply of new homes is sold and new homes will be built. Condo housing starts will be slower, as there is still a large number of new units on the market.
"At the end of September, there were approximately 250 new, built condo units on the market and that doesn't include the units that have yet to be built," says Fabri. "So for the first half of 2010 we won't see a lot of condo construction."
Fabri says new construction will also start in the rental apartment market, as rental prices have come up and land that was originally intended for condominiums may end up for multi-family rental housing instead.
The housing market's gradual upswing will continue throughout the fall and into the new year, says Kelowna's Paul Fabri of the Canada Mortgage and Housing Corporation.
“Strong price competition, a good selection of listings and favourable interest rates will help sustain growth in demand for existing homes next year,” says Fabri. “Expect existing home prices to edge back up as demand improves and the supply of listings is drawn down."
Fabri said the biggest improvement will come in the detached home sector, as the existing supply of new homes is sold and new homes will be built. Condo housing starts will be slower, as there is still a large number of new units on the market.
"At the end of September, there were approximately 250 new, built condo units on the market and that doesn't include the units that have yet to be built," says Fabri. "So for the first half of 2010 we won't see a lot of condo construction."
Fabri says new construction will also start in the rental apartment market, as rental prices have come up and land that was originally intended for condominiums may end up for multi-family rental housing instead.
Tuesday, September 29, 2009
Article "Canada's Remarkable Housing Recovery"
Here is an article I found on http://www.cbc.ca/ by Tom McFeat (http://www.cbc.ca/money/story/2009/09/17/f-housing-bubble.html):
The signs of economic recovery seem to be everywhere these days. Consumer confidence is up.
The governor of the Bank of Canada has all but declared the recession over, with the latest GDP figures suggest that the economy is growing again. The stock market has surged 50 per cent from its March low. Plenty of "green shoots" and all that.
A stunning recovery in the Canadian housing market also appears to be taking hold if anecdotal evidence and the statistics are to be believed. Sales are up by double digits in most major markets across the country (they've more than doubled in Vancouver). Average selling prices have rebounded from just the start of the year and are now at record levels in most provinces. Bidding wars have returned in Vancouver and Toronto.
That's a remarkable turnaround from the situation just eight months ago, when prices were down year-over-year in the more expensive markets and sales slumped more than a third from the previous year's levels. Many homeowners took their properties off the market to wait out the slump, which led to a dearth of listings and helped to stop the slide in prices.
Most economists see this quick bounce-back as surprising but healthy — further proof that Canada and the Canadian consumer weathered the global recession better than our American cousins. But a few observers remain wary of jumping on the housing bandwagon. They point to other statistics — like the country's rising deficit, rising unemployment, rising personal bankruptcy numbers, rising household debt levels, a hobbled manufacturing sector and mortgage rates that have nowhere to go but up.
They see all this as raw material for a looming drop in housing prices that could leave many recent homebuyers who've put five per cent down "under water" — in other words, owing more on their homes than the homes are worth. In some U.S. markets, more than half the homeowners who have mortgages have negative equity.
Former maverick MP, federal cabinet minister and personal finance author Garth Turner is one observer who's firmly in the "bubble" camp. His real estate blog — entitled "Greater Fool" — has been forecasting something approaching a housing meltdown for a while now.
Last winter, Turner predicted the real estate market would wither in the face of the recession. But it didn't — a fact he attributes to low interest rates that encouraged "massive borrowing by people I thought were already hideously indebted." He also blames the real estate industry for "irresponsibly telling people prices would rise forever and [that] they must buy now while rates were low."
To be sure, most analysts don't see the housing market as being in bubble territory. They argue that homes are much more affordable now than they were during the last major bubble in the late 1980s, when mortgage rates were above 10 per cent. But there's no denying that there's something of a frenzy in some markets these days.
Low rates + confidence = sales
There's widespread agreement that low mortgage rates are spurring the recent buying spree in housing. At the time of writing, a five-year fixed mortgage was available at most major financial institutions at a generational low of 4.19 per cent — even less at a few smaller lenders. That has prompted buyers who had headed to the sidelines late last year to flood back into the market.
Some times, that flood of buyers is directed at some of the same properties. "The max we've seen so far this year is 20 offers one evening on a semi-detached home," Toronto realtor Thomas Cook wrote in his blog in July.
Some observers also credit a couple of measures introduced in February's federal budget aimed at first-time buyers — a $750 tax credit and an extra $5,000 that buyers can take from their RRSPs for a down payment.
But low interest rates are still the biggest factor. Still, Gregory Klump, chief economist at the Canadian Real Estate Association, says mortgage rates alone weren't enough to push people from browsing to buying. People are now more confident their jobs are safe, he told CBC News. "Improved affordability combined with improved economic security — that's resulting in the drastic rebound in sales activity," he says.
The Bank of Canada has pledged to keep its key overnight lending rate at a rock-bottom 0.25 per cent until at least the middle of 2010, as long as inflation doesn't pick up. In the short term, there seems little likelihood of that.
Rate hikes to come eventually
But some economists are warning that the central bank may eventually be hiking rates big time. "The tightening will not likely begin before the third quarter of 2010," according to Sébastien Lavoie, an economist at Laurentian Bank Securities.
"That said, when the time does finally come, timid [quarter percentage point] increases will not be enough to 'normalize' rates," he wrote in early September. "The Bank [of Canada's] exceptionally low current policy rate implies that the tightening cycle will have to be quite aggressive." How aggressive? Lavoie forecasts "a succession of hike announcements" of a half, three-quarters and perhaps even a full percentage point at a time.
Increases that large could, of course, play havoc with the real estate market. Those who stretched to buy through a 35-year amortization could find themselves in big trouble when it comes time to renew if rates spike. Given that a recent survey from the Canadian Payroll Association found that 59 per cent of Canadians are living paycheque to paycheque, the prospect of a sharp jump in mortgage costs would hit some owners very hard.
"People need to be circumspect," CREA's Klump agrees. "They need to run through the scenarios. What if rates jump two per cent?"
Do the math
A quick look at the math shows what could happen if rates do jump substantially. Let's assume someone has bought a house for $320,000 — the average national MLS selling price in August. If they put five cent down, they'd face a mortgage of $304,000 plus mortgage loan insurance of $8,360 for a total financing requirement of $312,360.
With a five-year mortgage rate of 4.19 per cent amortized over 35 years, that yields monthly payments of $1,412 month. Jack the rate up to 8.0 per cent, and the monthly payment jumps more than $700 to $2,189.
Rising prices and rising mortgage rates will make it more difficult to carry that home purchase. "If prices continue to eclipse incomes [as they have for seven years], affordability could become an issue again for first-time buyers, especially when interest rates return to more normal levels beyond 2010," warns BMO economist Sal Guatieri.
A variable rate mortgage is now available for as little as prime plus 10 basis points (2.35 per cent) — a big improvement from the prime plus one per cent that was offered earlier this year. At MonsterMortgage.ca, vice-president Vince Gaetano tells CBC News the majority of clients at his firm are going variable, with about 35 per cent choosing a five-year fixed mortgage.
He notes that most bankers last year were predicting rates would jump — warnings that led many who had been enjoying variable rates as low as 1.45 per cent to lock in for five years at rates above five per cent. Needless to say, he doesn't think much of bank prognostications.
Will recovery stall?
While bidding wars have returned in a few markets, a better balance between supply and demand could be in store as more listings appear. Nationally, average selling prices in August were up 11.3 per cent from the previous year to $324,000. But realtors say that average is skewed upwards by more sales of expensive homes in the more expensive markets (for instance, Calgary saw one home sell for $10.3 million in August).
CREA says factoring out changes in sales activity results in a year-over-year weighted price increase of 7.1 per cent. The weighted August figure was actually down 0.8 per cent from July.
In the short term, most observers think the recovery in Canadian housing sales will continue as mortgage rates stay historically low and more listings appear. Longer term, there's more uncertainty. The real estate industry sees national sales rising 5.3 per cent in 2010 and average home prices rising modestly — up 2.1 per cent over 2009. CMHC predicts an average price increase of 1.6 per cent.
Others are more cautious. A recent survey by Royal LePage of more than 1,100 of its agents found only 61 per cent thought the housing market's current strength was sustainable. The biggest reason cited by the doubters was the expectation that mortgage rates will rise.
Real estate watchers are advising borrowers to be careful in the current low mortgage rate environment and add some wiggle room to their affordability calculations. Rates are bound to go up at some point — the only question is when and how fast.
The signs of economic recovery seem to be everywhere these days. Consumer confidence is up.
The governor of the Bank of Canada has all but declared the recession over, with the latest GDP figures suggest that the economy is growing again. The stock market has surged 50 per cent from its March low. Plenty of "green shoots" and all that.
A stunning recovery in the Canadian housing market also appears to be taking hold if anecdotal evidence and the statistics are to be believed. Sales are up by double digits in most major markets across the country (they've more than doubled in Vancouver). Average selling prices have rebounded from just the start of the year and are now at record levels in most provinces. Bidding wars have returned in Vancouver and Toronto.
That's a remarkable turnaround from the situation just eight months ago, when prices were down year-over-year in the more expensive markets and sales slumped more than a third from the previous year's levels. Many homeowners took their properties off the market to wait out the slump, which led to a dearth of listings and helped to stop the slide in prices.
Most economists see this quick bounce-back as surprising but healthy — further proof that Canada and the Canadian consumer weathered the global recession better than our American cousins. But a few observers remain wary of jumping on the housing bandwagon. They point to other statistics — like the country's rising deficit, rising unemployment, rising personal bankruptcy numbers, rising household debt levels, a hobbled manufacturing sector and mortgage rates that have nowhere to go but up.
They see all this as raw material for a looming drop in housing prices that could leave many recent homebuyers who've put five per cent down "under water" — in other words, owing more on their homes than the homes are worth. In some U.S. markets, more than half the homeowners who have mortgages have negative equity.
Former maverick MP, federal cabinet minister and personal finance author Garth Turner is one observer who's firmly in the "bubble" camp. His real estate blog — entitled "Greater Fool" — has been forecasting something approaching a housing meltdown for a while now.
Last winter, Turner predicted the real estate market would wither in the face of the recession. But it didn't — a fact he attributes to low interest rates that encouraged "massive borrowing by people I thought were already hideously indebted." He also blames the real estate industry for "irresponsibly telling people prices would rise forever and [that] they must buy now while rates were low."
To be sure, most analysts don't see the housing market as being in bubble territory. They argue that homes are much more affordable now than they were during the last major bubble in the late 1980s, when mortgage rates were above 10 per cent. But there's no denying that there's something of a frenzy in some markets these days.
Low rates + confidence = sales
There's widespread agreement that low mortgage rates are spurring the recent buying spree in housing. At the time of writing, a five-year fixed mortgage was available at most major financial institutions at a generational low of 4.19 per cent — even less at a few smaller lenders. That has prompted buyers who had headed to the sidelines late last year to flood back into the market.
Some times, that flood of buyers is directed at some of the same properties. "The max we've seen so far this year is 20 offers one evening on a semi-detached home," Toronto realtor Thomas Cook wrote in his blog in July.
Some observers also credit a couple of measures introduced in February's federal budget aimed at first-time buyers — a $750 tax credit and an extra $5,000 that buyers can take from their RRSPs for a down payment.
But low interest rates are still the biggest factor. Still, Gregory Klump, chief economist at the Canadian Real Estate Association, says mortgage rates alone weren't enough to push people from browsing to buying. People are now more confident their jobs are safe, he told CBC News. "Improved affordability combined with improved economic security — that's resulting in the drastic rebound in sales activity," he says.
The Bank of Canada has pledged to keep its key overnight lending rate at a rock-bottom 0.25 per cent until at least the middle of 2010, as long as inflation doesn't pick up. In the short term, there seems little likelihood of that.
Rate hikes to come eventually
But some economists are warning that the central bank may eventually be hiking rates big time. "The tightening will not likely begin before the third quarter of 2010," according to Sébastien Lavoie, an economist at Laurentian Bank Securities.
"That said, when the time does finally come, timid [quarter percentage point] increases will not be enough to 'normalize' rates," he wrote in early September. "The Bank [of Canada's] exceptionally low current policy rate implies that the tightening cycle will have to be quite aggressive." How aggressive? Lavoie forecasts "a succession of hike announcements" of a half, three-quarters and perhaps even a full percentage point at a time.
Increases that large could, of course, play havoc with the real estate market. Those who stretched to buy through a 35-year amortization could find themselves in big trouble when it comes time to renew if rates spike. Given that a recent survey from the Canadian Payroll Association found that 59 per cent of Canadians are living paycheque to paycheque, the prospect of a sharp jump in mortgage costs would hit some owners very hard.
"People need to be circumspect," CREA's Klump agrees. "They need to run through the scenarios. What if rates jump two per cent?"
Do the math
A quick look at the math shows what could happen if rates do jump substantially. Let's assume someone has bought a house for $320,000 — the average national MLS selling price in August. If they put five cent down, they'd face a mortgage of $304,000 plus mortgage loan insurance of $8,360 for a total financing requirement of $312,360.
With a five-year mortgage rate of 4.19 per cent amortized over 35 years, that yields monthly payments of $1,412 month. Jack the rate up to 8.0 per cent, and the monthly payment jumps more than $700 to $2,189.
Rising prices and rising mortgage rates will make it more difficult to carry that home purchase. "If prices continue to eclipse incomes [as they have for seven years], affordability could become an issue again for first-time buyers, especially when interest rates return to more normal levels beyond 2010," warns BMO economist Sal Guatieri.
A variable rate mortgage is now available for as little as prime plus 10 basis points (2.35 per cent) — a big improvement from the prime plus one per cent that was offered earlier this year. At MonsterMortgage.ca, vice-president Vince Gaetano tells CBC News the majority of clients at his firm are going variable, with about 35 per cent choosing a five-year fixed mortgage.
He notes that most bankers last year were predicting rates would jump — warnings that led many who had been enjoying variable rates as low as 1.45 per cent to lock in for five years at rates above five per cent. Needless to say, he doesn't think much of bank prognostications.
Will recovery stall?
While bidding wars have returned in a few markets, a better balance between supply and demand could be in store as more listings appear. Nationally, average selling prices in August were up 11.3 per cent from the previous year to $324,000. But realtors say that average is skewed upwards by more sales of expensive homes in the more expensive markets (for instance, Calgary saw one home sell for $10.3 million in August).
CREA says factoring out changes in sales activity results in a year-over-year weighted price increase of 7.1 per cent. The weighted August figure was actually down 0.8 per cent from July.
In the short term, most observers think the recovery in Canadian housing sales will continue as mortgage rates stay historically low and more listings appear. Longer term, there's more uncertainty. The real estate industry sees national sales rising 5.3 per cent in 2010 and average home prices rising modestly — up 2.1 per cent over 2009. CMHC predicts an average price increase of 1.6 per cent.
Others are more cautious. A recent survey by Royal LePage of more than 1,100 of its agents found only 61 per cent thought the housing market's current strength was sustainable. The biggest reason cited by the doubters was the expectation that mortgage rates will rise.
Real estate watchers are advising borrowers to be careful in the current low mortgage rate environment and add some wiggle room to their affordability calculations. Rates are bound to go up at some point — the only question is when and how fast.
Tuesday, September 8, 2009
Article Says "Worst of Housing Price Decline Behind Us"
Here is an interesting article I found online at The Financial Post website at http://www.financialpost.com/story.html?id=1931818 (article by John Morrissy):
The worst is over for North America's beleaguered housing markets, with a steady stream of data out of Canada and the U.S. indicating the recovery is at hand, economists say.
"A similar pattern in both countries is unmistakenly suggesting we've not only bottomed in housing, but we're on the way back up," said TD Bank chief economist Don Drummond.
Canada's already brightening picture was helped along Wednesday by a report showing housing prices in major markets across the country jumped 1.5 per cent in June, building on May's two per cent advance.
The rebound in prices was evident even in most of Canada's hardest hit urban markets, like Toronto and Vancouver, the Teranet-National Bank report showed.
For National Bank senior economist Marc Pinsonneault, that means "the worst of home-price deflation in Canada is behind us," he said Wednesday.
"The improvement is consistent with the huge improvement in market conditions in most of the major cities in Canada," which show sales resales rising sharply - up 18 per cent in July alone - and listings on the decline, Pinsonneault said.
The numbers out of the U.S. are also good, at least relative to bone-jarring declines that marked the subprime meltdown and drove housing prices 31 per cent below their peak in 2006, Drummond said.
On Tuesday, the S&P/Case-Shiller composite index showed home prices in the U.S. also bouncing higher, for the second straight month.
And on Wednesday, the U.S. Commerce Department announced new-homes sales surpassed expectations by increasing 9.6 per cent to 433,000 units in July, the biggest increase in more than four years and the highest level of activity in 10 months.
"The housing market has clearly turned the corner," BMO Capital Markets economist Jennifer Lee said in an interview.
"The items supporting a housing recovery have been working in tandem over the past while, and they are still going strong, like the Energizer bunny."
She credited rapidly declining inventories of unsold homes and the $8,000 U.S. first-time homebuyer tax credit, along with the same things that have helped the Canadian market, like low housing prices, improving consumer confidence and inexpensive mortgages, for the recovery.
Though residential real estate accounts for only five per cent of each country's economies, Drummond said rising home prices boost household wealth and spending power, and carry a psychological boost to a recession-weary consumers beyond their numbers.
Renewed strength in the Canadian market was evident in four of six major markets tracked by the Teranet-National Bank survey. Vancouver posted its first price gain after 11 months of declines, up 1.6 per cent; Montreal posted its fourth straight monthly increase, up 1.2 per cent; Ottawa gained 2.1 per cent; and Toronto recorded its second straight month of gains, up 2.3 per cent.
Halifax and Calgary were the only laggards, each slipping 0.2 per cent. For Calgary, it was the 12th consecutive losing month.
Economists were quick to point out that while the trend has shifted, markets on both sides of the border are way off previous peaks. In the U.S., for instance, about 600,000 new homes are being built annually, compared with the 2.3 million homes at the peak of the cycle.
Current conditions in Canada have created a seller's market, said Pinsonneault, although he expects greater balance to return as higher prices draw more properties onto the market.
Mortgage rates, meanwhile, won't rise over the next 12 month by more than 50 to 75 basis points from today's 5.85 per cent posted rate on fixed five-year mortgages, he said.
One uncertainty is whether the Bank of Canada can hold lending rates steady, as promised, until the middle of next year, economists say.
The worst is over for North America's beleaguered housing markets, with a steady stream of data out of Canada and the U.S. indicating the recovery is at hand, economists say.
"A similar pattern in both countries is unmistakenly suggesting we've not only bottomed in housing, but we're on the way back up," said TD Bank chief economist Don Drummond.
Canada's already brightening picture was helped along Wednesday by a report showing housing prices in major markets across the country jumped 1.5 per cent in June, building on May's two per cent advance.
The rebound in prices was evident even in most of Canada's hardest hit urban markets, like Toronto and Vancouver, the Teranet-National Bank report showed.
For National Bank senior economist Marc Pinsonneault, that means "the worst of home-price deflation in Canada is behind us," he said Wednesday.
"The improvement is consistent with the huge improvement in market conditions in most of the major cities in Canada," which show sales resales rising sharply - up 18 per cent in July alone - and listings on the decline, Pinsonneault said.
The numbers out of the U.S. are also good, at least relative to bone-jarring declines that marked the subprime meltdown and drove housing prices 31 per cent below their peak in 2006, Drummond said.
On Tuesday, the S&P/Case-Shiller composite index showed home prices in the U.S. also bouncing higher, for the second straight month.
And on Wednesday, the U.S. Commerce Department announced new-homes sales surpassed expectations by increasing 9.6 per cent to 433,000 units in July, the biggest increase in more than four years and the highest level of activity in 10 months.
"The housing market has clearly turned the corner," BMO Capital Markets economist Jennifer Lee said in an interview.
"The items supporting a housing recovery have been working in tandem over the past while, and they are still going strong, like the Energizer bunny."
She credited rapidly declining inventories of unsold homes and the $8,000 U.S. first-time homebuyer tax credit, along with the same things that have helped the Canadian market, like low housing prices, improving consumer confidence and inexpensive mortgages, for the recovery.
Though residential real estate accounts for only five per cent of each country's economies, Drummond said rising home prices boost household wealth and spending power, and carry a psychological boost to a recession-weary consumers beyond their numbers.
Renewed strength in the Canadian market was evident in four of six major markets tracked by the Teranet-National Bank survey. Vancouver posted its first price gain after 11 months of declines, up 1.6 per cent; Montreal posted its fourth straight monthly increase, up 1.2 per cent; Ottawa gained 2.1 per cent; and Toronto recorded its second straight month of gains, up 2.3 per cent.
Halifax and Calgary were the only laggards, each slipping 0.2 per cent. For Calgary, it was the 12th consecutive losing month.
Economists were quick to point out that while the trend has shifted, markets on both sides of the border are way off previous peaks. In the U.S., for instance, about 600,000 new homes are being built annually, compared with the 2.3 million homes at the peak of the cycle.
Current conditions in Canada have created a seller's market, said Pinsonneault, although he expects greater balance to return as higher prices draw more properties onto the market.
Mortgage rates, meanwhile, won't rise over the next 12 month by more than 50 to 75 basis points from today's 5.85 per cent posted rate on fixed five-year mortgages, he said.
One uncertainty is whether the Bank of Canada can hold lending rates steady, as promised, until the middle of next year, economists say.
Tuesday, September 1, 2009
Variable rate mortgage drops again!!!
One of our major lenders has just announced a rate reduction to their variable rate mortgage. The rate is now at Prime plus 0.20% which is 2.45% (current Prime lending rate is 2.25%). For those of you who are not wishing to lock in your mortgage just yet, take advantage of our best variable rate product in the financial marketplace.
Thursday, August 6, 2009
Some Interesting Statistics from CAAMP
In April 2009, CAAMP (Canadian Assoc.of Accredited Mortgage Professionals) reported from a recent survey the following:
"- First-time mortgages are most likely to be sourced through a mortgage broker (48%) (compared to Banks at 44%).
- The mortgage broker industry represented 46% of all new mortgages written in Canada last year (compared to 43% through Banks).
- The average mortgage holder has $145,000 in equity in their home.
- Last year, about 15% of mortgages involved an equity take-out (average amount of $42,500).
- Mortgage Brokers are most frequently used in Alberta (36% of mortgage activity), British Columbia (35%), Ontario (32%), and Manitoba (31%)."
If you would like to read the contents of this survey, please visit CAAMP's website at www.caamp.org. Click on "mortgage industry" and under Survey Reports click on "The Canadian Residential Mortgage Market During Challenging Times".
"- First-time mortgages are most likely to be sourced through a mortgage broker (48%) (compared to Banks at 44%).
- The mortgage broker industry represented 46% of all new mortgages written in Canada last year (compared to 43% through Banks).
- The average mortgage holder has $145,000 in equity in their home.
- Last year, about 15% of mortgages involved an equity take-out (average amount of $42,500).
- Mortgage Brokers are most frequently used in Alberta (36% of mortgage activity), British Columbia (35%), Ontario (32%), and Manitoba (31%)."
If you would like to read the contents of this survey, please visit CAAMP's website at www.caamp.org. Click on "mortgage industry" and under Survey Reports click on "The Canadian Residential Mortgage Market During Challenging Times".
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