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Terms can be more important then the mortgage rate.

2010-08-03 | 10:56:29

Selecting the mortgage term that is right for you can be a challenging proposition for even the savviest of homebuyers, as terms typically range from six months up to 10 years.

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

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

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.

House prices now 4.2% over peak: How cities are faring

2010-07-29 | 12:33:22

Globe and Mail Update Published on Wednesday, Jul. 28, 2010 4:44PM EDT Last updated on Wednesday, Jul. 28, 2010 4:51PM

House prices still strong
Canadian house prices rose 1.3 per cent in May from a month earlier, and now stand 4.2 per cent above their pre-recession peak, according to a Teranet-National Bank composite house price index. It marked the 13th straight month of increases and the second that prices rose in each of the six regions it covers. National Bank economist Marc Pinsonneault contrasted that to the real estate market in the United States, where prices are down almost 30 per cent from their peak. In Canada, year over year, the index is up 13.6 per cent. The index differs from the measure used by the Canadian Real Estate Association.

"But we do not believe that acceleration in the Teranet-National Bank index will be sustained," he said in a research note. "... The number of existing homes sold has declined in each of the three months ending last June, and it did so to a much larger extent than the number of new listings. This heralds a deceleration in home price inflation, especially since a harmonized sales tax (HST) was introduced on July 1 in Ontario and B.C."

Among the gains:

• Ottawa, 2.3 per cent month over month, 11.4 per cent year over year
• Montreal, 1.8 per cent and 8.5 per cent
• Vancouver, 1.2 per cent and 17.1 per cent
• Calgary, 1.2 per cent and 7.8 per cent
• Toronto, 1.1 per cent and 16 per cent
• Halifax, 0.7 per cent and 5.6 per cen

Surrey votes to allow secondary suites city-wide

2010-07-27 | 08:58:17

METRO VANCOUVER - After decades of debate, Surrey has decided to permit homeowners to have one secondary suite in all single-family homes in the city, following an Ipsos Reid telephone poll in which 63 per cent of those surveyed supported the idea.

The move, which received unanimous approval at city council Monday night, brings Surrey’s secondary suite policy into line with that of most municipalities in Metro Vancouver. Delta is expected to go ahead with a similar policy.

Up until now, Surrey has allowed secondary suites only in predetermined zones in the city, mostly in Newton. Yet the city has its share of illegal suites, which are estimated to number as high as 19,000.

Surrey Coun. Judy Villeneuve, who chairs the city’s social planning committee, said the illegal suites have provided affordable housing in the city, as well as mortgage help for new homeowners.

Legalizing the suites, she said, will allow homeowners to offer accommodation to extended families or renters, while ensuring they provide parking spaces and pay their fair share for utilities and taxes.

Homes with secondary suites result in added costs to the city’s water, sewer, and garbage services.

“Hardly any rental housing has been built in Surrey in the past 15 years,” Villeneuve said. “Our goal is to is to provide lots of [different] housing so everyone can live … and have a roof over their heads.”

According to the Ipsos Reid poll, 63 per cent of 1,200 people polled in a random telephone survey said they would support the move, mainly because it would provide more rental housing, make home ownership more affordable and increase density in neighbourhoods without changing the area’s character.

But support varied according to location, with 65 per cent in favour in the Newton/Fleetwood area compared with just 57 per cent in south Surrey.

The main reasons for opposing the move are related to parking issues, general congestion/crowding, traffic congestion and concerns about equitable payment of property taxes and utility charges.

City staff recommended that council endorse the policy subject to conditions, which included prohibiting multiple suites in a house, requiring the registered owner of a home with a secondary suite to live on the premises and requiring homes to provide parking and pay appropriate utility fees to offset the added costs of city services.

The random telephone survey, conducted between June 28 and July 6, has a margin of error of 2.8 percentage points. A web-based survey, which polled more than 1,500 people on the city’s website from June 28 to July 1, found levels of support were lower, with 55 per cent in favour.

ksinoski@vancouversun.com

Read more: http://www.vancouversun.com/Surrey+votes+allow+secondary+suites+city+wide/3325280/story.html#ixzz0ut38F3da

BOC raises rates .25%

2010-07-20 | 06:48:48

The Bank of Canada as suspected has raised its overnight rate by 25 basis points to .75 and the banks will most likley follow by raising prime to 2.75%

This means if you have a 400,000.00 mortgage your payment will increase by as much $60/monthly

With every 25 basis point increase you can expect $12-$15 dollars per 100,000.00 in mortgage amount. The press release from this mornings announcement is below.

I will be discussing the Mortgage Market today on The Bill Good Show on CKNW AM980 live in studio at 10am-10:30am, we welcome you to join us by tuning in.

Questions on your mortgage? Call 604-802-3983 or introduce us over an email at acalla@dominionlending.ca to someone that you truly care about to see how we can help you today!

Bank of Canada increases overnight rate target to 3/4 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 3/4 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1/2 per cent.

The global economic recovery is proceeding but is not yet self-sustaining. Greater emphasis on balance sheet repair by households, banks, and governments in a number of advanced economies is expected to temper the pace of global growth relative to the Bank's outlook in its April Monetary Policy Report (MPR). While the policy response to the European sovereign debt crisis has reduced the risk of an adverse outcome and increased the prospect of sustainable long term growth, it is expected to slow the global recovery over the projection horizon. In the United States, private demand is picking up but remains uneven.

Economic activity in Canada is unfolding largely as expected, led by government and consumer spending. Housing activity is declining markedly from high levels, consistent with the Bank's view that policy stimulus resulted in household expenditures being brought forward into late 2009 and early 2010. While employment growth has resumed, business investment appears to be held back by global uncertainties and has yet to recover from its sharp contraction during the recession.

The Bank expects the economic recovery in Canada to be more gradual than it had projected in its April MPR, with growth of 3.5 per cent in 2010, 2.9 per cent in 2011, and 2.2 per cent in 2012. This revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada. The Bank anticipates that business investment and net exports will make a relatively larger contribution to growth.

Inflation in Canada has been broadly in line with the Bank's April projection. While the Bank now expects the economy to return to full capacity at the end of 2011, two quarters later than had been anticipated in April, the underlying dynamics for inflation are little changed. Both total CPI and core inflation are expected to remain near 2 per cent throughout the projection period. The Bank will look through the transitory effects on inflation of changes to provincial indirect taxes.

Reflecting all of these factors, the Bank has decided to raise the target for the overnight rate to 3/4 per cent. This decision 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.

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.

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 MPR on 22 July 2010. The next scheduled date for announcing the overnight rate target is 8 September 2010.

 Enjoy your week

Week Ahead: Rate hike in the cards

2010-07-19 | 11:28:18

Kim Covert, Financial Post · Friday, Jul. 16, 2010

Read more: http://www.financialpost.com/news/Week+Ahead+Rate+hike+cards/3288001/story.html#ixzz0u7teJzQu

OTTAWA -- Two major announcements bookending the coming week’s economic news will provide a clearer snapshot of the state of the Canadian recovery.

The Bank of Canada will be first up when it makes its monthly interest rate announcement on Tuesday. But that will come before Friday’s critical report from Statistics Canada on the country’s consumer price index for June.

The central bank raised its benchmark index rate in June by 25 basis points, and at the time expectations were that the rate would increase steadily. But in the weeks since that announcement concerns about a double-dip recession have been growing, increasing speculation that the bank would hold the course. Consensus expectation is for a 25 basis-point increase on Tuesday, bringing the rate to 0.75%, though analysts disagree on what will happen as the year unfolds.

“While both domestic and global conditions have deteriorated modestly since June, the underlying momentum in the Canadian economy warrants the continued normalization of policy in the near term,” wrote strategist David Tulk of TD Securities in a note to investors. “When we look further into the future, the impact of financial market turmoil and decelerating economic growth is more difficult to quantify. In recognition of this uncertainty, we have scaled back our forecast for rate increases, and now look for a year-end overnight rate of 1.25% and a rate of 2.50% by the end of 2011.”

Economist Michael Gregory of BMO Economics, who also calls for a another 25 basis point increase, said he expects the bank to make one more increase of that size in September then hold the line for the remainder of the year. CIBC is calling for the rate to reach 1.25% in October, followed by a pause lasting at least two quarters.

The Bank of Canada’s rate announcement will come ahead of the key June inflation report on Friday. The consensus expectation is for 0.1% month-over-month drop in the consumer price index on lower gasoline prices, while the core year-over-year inflation rate will be unchanged at 1.8%, below the Bank of Canada’s target of two%.

CIBC economist Krishen Rangasamy said that while the rate announcement will precede the CPI, he doesn’t expect the “milder” June prices will have any effect on the rate. He said July’s prices should get a bounce from the harmonized sales tax introduced on July 1 in Ontario in British Columbia.

The bank will also release its Monetary Policy Report on Thursday. Mr. Rangasamy doesn’t expect the bank to make material changes to its April forecast of 3.5% growth for the second half.

“The only thing will be perhaps in the tone of the report. We think that they might adopt a more cautious tone on the external environment, particularly what’s happening in Europe and elsewhere, with slower Chinese growth, so they might adopt a little bit more cautious tone as opposed to their upbeat tone in April.”

Statistics Canada reports in the coming week include securities transactions on Monday, travel data on Tuesday, wholesale trade on Wednesday, as well as employment insurance and retail trade data on Thursday.

On the corporate front, some major Canadian companies will be reporting earnings on Thursday, including Canadian National Railway, Shoppers Drug Mart and Loblaw Cos.

Read more: http://www.financialpost.com/news/Week+Ahead+Rate+hike+cards/3288001/story.html#ixzz0u7tLcQoZ

Upbeat survey may pave way for interest rate hike July 20 2010

2010-07-13 | 16:11:00

By Julian Beltrame

OTTAWA — Canadian firms are giving the recovery a vote of confidence in a key quarterly survey, paving the way for the Bank of Canada’s expected interest rate hike next week.

The central bank’s quarterly survey, released Monday, showed firms were concerned about the fallout from the European sovereign debt mess, but still generally upbeat about the coming year.

“Overall, (business executives) are positive about the outlook for business activity over the next 12 months,” the bank wrote.

“For the first time in two years, firms, on balance, reported an improvement in their past sales activity.”

The bank’s governing council next interest rate announcement is next Tuesday.

Following a strong jobs report last week, the survey likely represents the last piece of evidence governor Mark Carney was looking for to confirm a predisposition to continue raising rates.

“I’d say there’s a 75 or 80 per cent probability they will hike next week by 25 basis points,” said Derek Holt, vice-president of economics with Scotia Capital.

“I think they’d want to avoid the perception that they just came out with a whole new round of bullish forecasts and then got wobbly knees after just one quarter-point hike (in June).”

What could stay Carney’s hand, economists say is the unknown factor of what will happen to the global economy as governments move from spending to restraint later this year and next.

Canada’s domestic economy appears well grounded. Statistics Canada reported on Friday that an additional 93,000 jobs were added in June, bringing total re-hiring since the recession’s end to over 400,000.

And the business outlook survey showed that 50 per cent of firms surveyed said they planned to add workers over the next 12 months, as opposed to only 10 per cent that planned to cut their workforce.

TD Bank economist Diana Petramala viewed that finding as the strongest in the report, although she said it might indicate some hiring that’s already taken place.

While an increase in the bank’s policy rate to 0.75 per cent will raise short-term interest rates for consumers, most economists say it is unlikely to have much of an impact on longer-term, fixed mortgage rates. Many see a hike at this time as not applying the brakes to growth, since the rate would remain near the historic low, but as a judgment by the bank that the recovery is taking hold.

Not all agree, however. A bearish minority argue that Canada still faces considerable headwinds from the European situation and ongoing U.S. weakness, and that Carney should refrain from adding a further impediment to growth.

But failing a climb down from its forecast of 3.7 per cent growth this year, and 3.1 per cent next year, the bank appears on track to take interest rates a little higher next week, analysts say.

“With price pressures expected to rise in the production line, excess economic slack continuing to melt away, and credit and lending conditions continuing to ease, the survey results weigh on the tightening side,” noted economist Michael Gregory of BMO Capital Markets.

The summer poll, and a separate survey of loan officers also released Monday, found sentiments positive, if not deliriously so, across a range of topics.

The bank said credit conditions appear to be easing, especially for larger corporations, a critical prerequisite for expansion.

The balance of opinion was also positive on questions of sales volume prospects for the coming year, and future investment intentions.

Not all doubts have vanished, however.

Business executives expressed concerns about “recent global economic and financial uncertainties and possible spillover effects in Canada.”

And although on the plus side of the ledger, expectations on future sales and investment intentions were softer than three months ago. That’s partly because of the way the Bank of Canada couches its questions, contrasting expectations to what they were in the earlier survey.

The bank noted the responses suggest that firms that have already experienced strong sales growth from recession lows now believe that the growth rate will slow to more sustainable levels, but remain positive.

And many firms that do not expect to increase spending on new machinery have already made those investments, particularly firms in the services sector.

On other elements of business activity, executives said they expect the cost of their inputs to increase at a greater rate during the next 12 months, and plan to pass on these cost increases to their customers.

But the inflationary expectations over the next two years were modest, within the central bank’s one-to-three per cent range.

The Canadian Press http://news.therecord.com/Business/article/744317