MyMortgageBC.com

Mortgage Quick Tip

2009-11-05T10:15:00.000-08:00

For example, paying an extra $3,000 once every year toward the principle on a $250,000 mortgage can result in interest savings of $42,443 over the life of the mortgage, assuming a 25-year amortization and a fixed rate of 4.19 per cent.

Fixed or a Variable Rate Mortgage?

2009-10-23T12:20:00.000-07:00

Vancouver BC, Oct. 23, 2009 (Canada NewsWire) - MyMortgageBC.com

Every homebuyer faces the age-old question of whether to choose a fixed or variable rate mortgage. A new report released today by BMO's Economics Department provides valuable insights to help consumers make the right choice.

"The question of whether to lock in to a longer-term fixed mortgage rate or stay in a variable rate has become an increasingly complex and important issue," said Doug Porter, Deputy Chief Economist, BMO Capital Markets. "Short-term rates are at extreme lows and pressure is likely to build for higher rates in the year ahead."

According to the report, over the past 30 years it has been more cost-effective for borrowers to have a variable rate mortgage 82 per cent of the time. However, under the current environment, Porter points out there are a number of factors to consider before assuming the variable rate is the hands-down winner:

-   Canada has been in a long-term declining rate environment since the
       early 1980s.
   -   The Bank of Canada's overnight rate is now as low as it can go, so
       there is no further downside for variable rates. The surprises can
       only be to the high side from here.
   -   Fixed rates were advantageous during only two recent periods -
       through the late 1970s and in the late 1980s; in both cases ahead of
       a period of rising interest rates, as is the case now.

The Case for Staying Fixed A conventional fixed rate mortgage can mitigate a number of risks. Although inflation hasn't been a problem since 1991, there is a risk of an inflation flare-up as global central banks keep the pedal to the policy metal, and amid record government deficits. The Bank of Canada could be forced to raise interest rates aggressively, driving variable mortgage rates higher, but leaving Canadians with fixed rates unscathed. Plus, fixed rates are currently attractive given that short-term rates are already as low as they can go. The Case for Going Variable

The advantage to a variable rate mortgage is that it has been consistently less costly over time. As well, the current outlook for inflation remains benign, which will likely keep price pressures at bay well into 2011. The soaring Canadian dollar is putting additional downward pressure on prices, reducing the near-term need for the Bank of Canada to raise rates. There is also some risk to locking in as fixed rates could fall if the economy performs worse than anticipated. Even as rates start to rise, Canadians can always lock into a fixed rate at a later date.

The Verdict The decision depends on the individual. For those who don't have a lot of financial flexibility - such as first-time home buyers and those who would run into difficulty from an upswing in interest rates - the moderate extra cost of peace of mind you can get from a fixed rate may be a price worth paying. There is also a reasonable scenario where fixed rates may actually prove to be a cheaper alternative at this point. However, BMO Economics' core view is that the most likely economic and interest rate outlook will ultimately again slightly favour the variable rate option. That's particularly the case given the variable rates being offered, such as BMO's current rate of 2.25 per cent for a five-year variable mortgage.

"The most important thing a current or first time homeowner can do is talk to a knowledgeable mortgage expert about their situation and make decisions based on their stage in life and their particular circumstances," said Jane Yuen, Senior Manager, Mortgages, BMO Bank of Montreal. "So come in to a branch or contact a mortgage expert to decide on the type of mortgage that is best for you at this point in your life."

Brent Irving
Mortgage Expert

Your friend in the mortgage business
Tel: 604-764-6336
Fax: 604-541-6323
Toll Free: 1-888-665-1344
Email: birving@dominionlending.ca

www.MortgageEdgeBC.com

www.BrentIrving.ca

Interest Rate Forecast

2009-09-16T17:20:00.000-07:00

When the Bank of Canada does start raising its key policy interest rate in either late 2010 or early 2011, Canadians should brace for “aggressive” increases of up to a percentage point at a time, says a report from the Chief Economist at Laurentian Bank Securities.

The call, from Carlos Leitao, adds a new wrinkle to the debate as to whether the central bank will be able to keep its pledge to leave its key policy rate at 0.25%, or the lowest level possible, until June 2010 in an effort to stimulate the economy. This analysis kicks off a debate in terms of how aggressively the central bank needs to act once it believes rate increases are in order.

The Montreal-based economist said he believes Mark Carney, the Bank of Canada Governor, will be able to keep his June 2010 promise, based on the amount of spare capacity in the economy and continuing job losses that are likely to peak early next year. The Bank of Canada is likely to begin hiking rates after unemployment peaks (in early 2010) and before inflation hits the preferred 2% target (sometime in mid-2011). Once that period comes, Canadians should prepare for steep rate hikes.

“An aggressive tightening – rather than a gradual one – will be necessary because rates are extremely low,” Leitao said in LBS’s weekly note to clients last week. “A ‘measured pace’ would not be appropriate to ‘normalize’ rates when the starting point is virtually zero.” – Financial Post

The Bank of Canada indicated Thursday it has become more confident about the economic recovery in this country and abroad, adding growth in Canada in the second half of this year could exceed previous expectations.

But the central bank warned “persistent strength” in the Canadian dollar remained a risk to growth, and it retained “considerable flexibility” through monetary policy to deal with a high-flying currency if necessary.

The upwardly revised outlook was delivered in the Bank of Canada’s latest interest-rate statement, in which it, as widely expected, left its benchmark rate unchanged at 0.25% and said the rate is expected to remain at that level until June 2010, pending the outlook on inflation.

In its last statement in July, the central bank said a number of factors, from aggressive monetary and fiscal policies to improved financial conditions, were spurring an uptick in domestic demand, but added that a recovery was “nascent”. – Financial Post

Buying a Home Versus Renting a Home

2009-08-10T10:45:00.000-07:00

Buying a Home Versus Renting a Home

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.

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. You should always consult a mortgage broker when considering getting a mortgage.

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 flow 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.

If you’re thinking of buying your first home, as a mortgage professionals I can answer all of your mortgage-related questions.

Brent Irving
Mortgage Expert

Your friend in the mortgage business
Tel: 604-764-6336
Fax: 604-541-6323
Toll Free: 1-888-665-1344
Email: birving@dominionlending.ca

www.MyMortgageBC.com

www.BrentIrving.ca

Update on Mortgage Rates

2009-07-14T15:37:00.000-07:00

This edition of Weekly Rate Minder has the latest, best rates for
Canadian mortgages. At Dominion Lending Centres, we work on your
behalf to find the mortgage that suits your needs. Best of all our service
is "free".* It's the selected lender that pays us and YOU
get the best rate. *(O.A.C., E.&O.E.)
>
Our Best Rates
Explore Mortgage Scenarios with Helpful Calculators on
http://www.BrentIrving.ca

TERMS BANK RATES OUR RATES
> 6 Month 4.60% 3.95%
> 1 YEAR 3.75% 2.75%
> 2 YEARS 4.05% 3.05%
> 3 YEARS 4.65% 3.59%
> 4 YEARS 5.14% 4.89%
> 5 YEARS 5.85% 4.19%
> 7 YEARS 6.80% 5.35%
> 10 YEARS 6.90% 5.25%
Rates are subject to change without notice. *OAC E&OE

PRIME RATE IS 2.25%
VARIABLE RATE MORTGAGES FROM AS LOW AS PRIME + .30%

Please note that rates shown above are subject to change without
notice. The rates shown are posted rates and the actual rate you
receive may be different, depending upon your personal financial
situation. Check with your Dominion Lending Centres Mortgage
Professional for full details and to determine what rate will be
available for you.

*O.A.C., E.& O.E.

Brent Irving
Mortgage Expert

Your friend in the mortgage business
Tel: 604-764-6336
Fax: 604-541-6323
Toll Free: 1-888-665-1344
Email: birving@dominionlending.ca

* We are Canada's premier online mortgage lender, and one of the
fastest growing mortgage companies nationwide!
* Our Brokers are Experts in their field and many are ranked amongst
the best nationally.
* We close loans in all 10 provinces and 3 territories.
* We can process your mortgage in as few as 7 days.
* We have more than 100 mortgage programs making it easy to choose
the best fit for your situation.
* We are the preferred mortgage lender for several of Canada's top
companies.
* Dominion Lending Centres' Mortgage Experts are available anytime,
anywhere, evenings and weekends; we'll even come to you!

Mortgage Rate Prediction Update

2009-07-08T14:49:00.000-07:00

BC Real Estate Association’s latest Mortgage Update issued in mid-June

“You just might find the answer to: Where do we go after hitting bottom? BCREA anticipates rock-bottom mortgage rates should move up in the quarters ahead—particularly for longer fixed term mortgages. BCREA is predicting a cumulative rate increase of 75 basis-points by the end of 2010 as economic prospects improve and global interest rates rise from record lows. The report indicates that inflation in Canada, although expected to remain relatively low, will start to rise resulting in a modest increase in medium term interest rates.”

As a mortgage broker in Vancouver BC I don't feel that the BCREA's prediction that fixed mortgage rates will rise in the upcoming quarters is very bold. We're regressing back to the mean from all time low mortgage rates.

Brent Irving
Mortgage Expert

Your friend in the mortgage business
Tel: 604-764-6336
Fax: 604-541-6323
Toll Free: 1-888-665-1344
Email: birving@dominionlending.ca

Web: www.BrentIrving.ca

Web: MyMortgageBC.com

Mortgage brokers do the work for you

2009-07-07T14:38:00.000-07:00

Mortgage brokers do the work for you

How does a mortgage broker do it and how they charge for their services

Why should I use a mortgage broker? It's a question I hear often. It's a fair question and hopefully I'll help shed some light on the benefits.

In Canada, about 30% - 35% per cent of all mortgages are done through mortgage brokers. In the US and Europe the figure is closer to 75%.

Unfortunately, in Canada, most people go about getting their mortgage by walking into their local bank and filling out the paperwork and often think they've just received the best deal.

Often that best deal is for the bank, and not you. When you go to your local bank, you'll be shown the mortgages products only offered by your bank. With the large number of lenders and vast array of mortgage options available today, just walking into your bank is a strategy that just doesn't make sense anymore. If you don't work with a qualified mortgage broker you'll never know what other mortgage options are available. As a mortgage broker, I with the major banks and also lenders that specialize in mortgage lending which also offer different types of mortgage products. With all these options available to you utilizing a mortgage broker's resources, you can be assured that you'll receive the best rates and mortgage products to match your individual credit and financial situation. In days gone by, it was thought only those who had poor credit ratings sought the help of a mortgage broker to obtain a home loan which is no longer the case. Today's mortgage borrower realizes that using the services of a mortgage broker will not only save them time and aggravation, but in most cases will save them a substantial amount of money throughout the term of their mortgage. Mortgage brokers can work with borrowers of all credit types and specialize in finding a mortgage of any size and type on any given day. A service I also offer to my clients as a mortgage broker is that I'll work with my clients on credit issues to improve their ability to obtain financing. They connect you to a lender and help you navigate through the steps the lender requires of you as well. You are better off going through a mortgage broker and letting them do the legwork to find you the best deal available. We're an advocate on your side during the mortgage borrowing process.

One of the great things about dealing with a mortgage broker (like myself) is that we will be happy to take whatever time is necessary for you to understand all the options and requirements for mortgages and the home buying process. The mortgage broker's experience will be able to identify the positives and negatives associated with all the mortgage options available to you. The mortgage broker is a negotiator and will make your case to the appropriate lenders if your situation should contain some financial or credit challenges. In most cases, the mortgage broker's negotiations will result in better terms or rates for those in situations that leave them not up to bank quality. In most cases a mortgage broker does not cost you money and is paid by the lender. In some cases where he/she has to go to a private lender, or a lender who does not provide compensation for the mortgage broker's service, payment is made by clients and taken out of the mortgage's proceeds. If the mortgage broker ever charges a fee it should be disclosed early in the process so there are no surprises.

Mortgage brokers build their business on referrals, providing personalized service and education to their clients, which larger banks are simply unable to provide. Because of this, you can rest assured that your mortgage broker has your best interests in mind with everything they do. Most mortgage brokers will work with you and your schedule. We know how busy you are without the added inconvenience of a 9 a.m. to 5 p.m. window to get mortgage advice. If you can't come to the mortgage broker, the mortgage broker will come to you.

By providing you with "one-stop shopping," a mortgage broker can get you a good deal and educate you along the way. If you are looking for a mortgage, discuss your needs with a mortgage broker and see what kind of deal they can offer you -- you might be pleasantly surprised at the results.

So let's recap. Who should use the services of a mortgage broker? Everyone from the investor looking to use the equity in their home for further investments, to the self entrepreneur who needs someone to understand what running a business is all about and the financial challenges that go with it. The first-time homebuyer will find a wealth of information and mortgage products through a mortgage broker. Such buyers will find options like purchasing with no down payment, cashback mortgages -- and even debt consolidation programs which will enable a purchase in the near future.

Contact me anytime and see why more and more people have discovered that using a mortgage broker just makes sense.

Brent Irving
Mortgage Expert

Your friend in the mortgage business
Tel: 604-764-6336
Fax: 604-541-6323
Toll Free: 1-888-665-1344
Email: birving@dominionlending.ca

Web: www.BrentIrving.ca

Web: MyMortgageBC.com

Merix Financial's 50/50 Wise Mortgage

2009-06-16T11:41:00.000-07:00

There's a new mortgage product on the market.

Merix Financial has launched a new mortgage product in Canada called the 50/50 “Wise” Mortgage, which enables borrowers to lock in half of their mortgage at a five-year fixed rate and the remaining half at a five-year variable rate. This is an excellent way to diversify your mortgage debt the same way you would diversify your investments such as your RSP. It's an excellent way to get the best of both a variable rate and a fixed rate mortgage.

The product is suited to a variety of borrowers including:

Clients who would normally go fully variable but are afraid prime rate is at its bottom.

Those who aren’t comfortable being locked into a fully fixed rate.

Clients who can’t decide between a fixed or variable mortgage.

Each portion of Merix’s 50/50 Mortgage operates independently – like two separate mortgages – yet the product is registered as only one charge.

Benefits include:

20% annual lump-sum pre-payment privileges

20% annual payment increase ability

Portability

The option to lock in the variable-rate portion at any time

A 120-day rate hold on purchases (60 days on refinances)

Up to a 35-year amortization (the minimum is 20 years)

No switches or transfers are permitted and there are no pre-approvals. Other conditions apply as well so be sure to call.

Brent Irving
Mortgage Expert

Your friend in the mortgage business
Tel: 604-764-6336
Fax: 604-541-6323
Toll Free: 1-888-665-1344
Email: birving@dominionlending.ca

Web: www.BrentIrving.ca

Web: MyMortgageBC.com

Tips To Keep In Mind Between Mortgage Approval and Mortgage Funding

2009-05-22T19:33:00.000-07:00

In light of the current market and tightening of credit underwriting standards by both lenders and mortgage default insurers as of late, keep in mind that now – more than ever – it’s important to be careful what you do between the time your mortgage is approved and when it funds. A few mortgage lenders and insurers have been doing something lately that they have not done in a long time, and that is pull new credit bureaus prior to funding, especially if there is a long period between the time of your approval and when the mortgage actually funds.

Following are eight tips to keep in mind between your mortgage approval and funding dates:

Don’t buy a new car or trade-up to a more expensive lease.
Don’t quit your job or change jobs. Even if it’s a better-paying job, you still are likely to be on a probationary period. If in doubt, give me a call and I can let you know if this may jeopardize your approval.
Don’t change industries, decide to become self-employed or accept a contract position even if it is within the same industry. Delay the start of your new job, self-employment or contract status until after the funding date of your mortgage.
Don’t transfer large sums of money around between bank accounts. Lenders get especially skittish about this one because it looks like you’re borrowing money. Be ready to document cash transactions or money movements.
Don’t forget to pay your bills, even ones that you are disputing. This can be a real deal-breaker. If the lender pulls your credit bureau prior to closing and sees a collection or a delinquent account, the best you can hope for is that they make you pay off the account before they will fund. You don’t want to have to scramble to pay off a debt at the last minute!
Don’t open new credit cards. Again, just wait until after your funding date.
Don’t accept a cash gift without properly documenting with me – even if this is from proceeds of a wedding. If you have a bunch of cash to deposit before your funding date, give me a call before you deposit it.
Don’t buy furniture on the “Do not pay for XX years plan” until after funding. Even though you don’t have to pay now, it will still be reported on your credit bureau, and will become an issue – especially if your approval was tight to begin with.

While you may not risk losing your mortgage approval because you have broken one of these rules, it’s always best to talk to me before doing any of the above just to make sure!

Brent Irving
Mortgage Expert

Your friend in the mortgage business
Tel: 604-764-6336
Fax: 604-541-6323
Toll Free: 1-888-665-1344
Email: birving@dominionlending.ca
Web: www.BrentIrving.ca

Web: MyMortgageBC.com

What is an Interest Rate Differential Penalty or IRD

2009-04-25T10:11:00.001-07:00

With interest rates at all time lows many homeowners are wondering if it may be a good idea to refinance their mortgage and are surprised at the size of the penalty they have to pay. These large penalties charged by your bank are because of mortgage penalty calculation call IRD. Most mortgage lenders charge a penalty which is either 3 months interest or an Interest Rate Differential whichever is greater.

What Does Interest Rate Differential - IRD Mean?
A differential measuring the gap in interest rates between two similar interest-bearing assets. Traders in the foreign exchange market use interest rate differentials (IRD) when pricing forward exchange rates. Based on the interest rate parity, a trader can create an expectation of the future exchange rate between two currencies and set the premium (or discount) on the current market exchange rate futures contracts.

Investopedia explains Interest Rate Differential - IRD
The IRD is a key component of the carry trade. For example, say an investor borrows US$1,000 and converts the funds into British pounds, allowing the investor to purchase a British bond. If the purchased bond yields 7% while the equivalent U.S. bond yields 3%, then the IRD equals 4% (7-3%). The IRD is the amount the investor can expect to profit using a carry trade. This profit is ensured only if the exchange rate between dollars and pounds remains constant.

WHAT DOES THIS MEAN FOR ME AND MY MORTGAGE?

This usually means the difference between the interest rate on your mortgage contract compared to the rate at which the lending institution can re-lend the money.

For example:

-If your mortgage has a balance of $125,000 at 9.25%,

you have 2 years left to go and the current 2 year mortgage rate is 6.25%.

-Then the lending institution will probably charge you -

$125,000 X 24 months X 3% (9.25 - 6.25) = $7,266.21

However, just to further confuse the issue, the penalty above has not been present valued. This is when a lender charges a lower penalty because you are paying all of the ‘extra’ interest (in the example 3%) now, not over the remaining term. Some lenders present value, other lenders do not.

Home Buyer Plan RRSP Withdrawal Limit Increase!

2009-03-22T14:08:00.000-07:00

SUMMARY

The 2009 Federal Budget introduced the following changes affecting Retirement Savings Plans (RSP):

The Home Buyers’ Plan (HBP) maximum withdrawal limit has been increased to $25,000 from $20,000 for withdrawals made after January 27, 2009.

ADDITIONAL INFORMATION

How much can I withdraw from my RRSP under the HBP?

For withdrawals made after January 27, 2009, the maximum amount that you can withdraw from your RRSP to purchase or build a qualifying home without having to pay tax on the withdrawal is $25,000.

If I withdrew $20,000 from my RRSP under the HBP after December 31, 2008, but on or before January 27, 2009, can I withdraw an additional $5,000 from my RRSP?

Yes, you can withdraw additional funds, as long as the total of all your withdrawals does not exceed the new maximum amount of $25,000. However, under existing requirements, neither you nor your spouse or common-law partner can own the qualifying home for more than 30 days before making the final withdrawal.

Scotiabank offers a 10 year Fixed Rate Mortgage Special

2009-03-09T14:00:00.000-07:00

Scotiabank offers a 10 year Fixed Rate Mortgage Special

Vancouver, Mar 6, 2009 (My Mortgage BC) -- -- Scotiabank today announced a reduction to 5.25 per cent from 7.15 per cent in the interest rate for the Bank's 10-year fixed rate, closed term mortgage. The pricing change - effective today - gives homeowners an opportunity to benefit from historically low interest rates.

"This is the perfect solution for customers who are looking for long-term interest rate comfort," said Charles Lambert, Managing Director, Mortgages, Scotiabank. "Prudent customers can now complement their borrowing strategies with plans to be mortgage free within 10 years."

Scotiabank, which offers a full suite of competitive mortgage products, including the popular Scotia Total Equity Plan (STEP), also announced a rate reduction to 3.25 per cent from 5.25 per cent for the Bank's Save Now, Save Later product, a one-year fixed rate, closed term mortgage.

Scotiabank's new 10-year offer reflects the Canada Mortgage and Housing Corporation's (CMHC's) recent expansion of the Canada Mortgage Bonds Program. CMHC introduced the Canada Mortgage Bonds (CMB) program in 2001. It was expanded to include 10-year CMBs in July 2008. The program's objective is to benefit homebuyers and the housing industry by improving access to lower-cost mortgages.

If you are interested in obtaining more information on Scotiabanks 10 year fixed rate mortgage special please don't hesitate to contact me. If you would like to learn more about me and my services please visit Dominion Lending Centres

Proposed Changes for First Time Home Buyers

2009-02-18T14:22:00.000-08:00

Home Buyers Plan: Starting January 28, 2009, first time Home buyers can withdraw up to $25,000 from a Registered Retirement Savings Plan (RRSP) to purchase or build a home with out incurring the tax. This limit has been increased from $20,000. For the purpose of the Home Buyers Plan, an individual is considered a first time home buyer if neither the individual or his/her spouse owned and lived in another home in the calendar year of the withdrawal or in any of the four preceding calendar years.

First Time Home Buyers Credit: A tax credit of $5000 has been introduced for first time home buyers that purchase a home after January 27, 2009. The credit for the taxation year will be calculated by reference of the lowest personal tax rate for the year the claim is made. A first time home buyer for the purpose of this credit is an individual that has neither owned or lived or his/her spouse has owned and lived in another home in the calendar year of the claim or in any of the four preceding calendar year.

If you would like to pre-approved to purchase your first house please don't hesitate to contact me at 604-764-6336. I'm a long term mortgage broker working with Dominion Lending Centres.

15th annual free seminar for first-time home buyers

2009-02-18T14:19:00.000-08:00

15th annual free seminar for first-time home buyers

Vancouver-area young people are eager to purchase their first homes, but many need help to de-mystify the process. They have lots of questions. How can I be safe purchasing a condo before construction starts? What location is best? What type of home is best matched to my needs and financial resources? What are the mortgage options? What are the legal considerations? How do I benefit from builder licensing and mandatory home warranties?

These and other key questions will be answered by a panel of housing experts at the 14th Annual Seminar for First-time Home Buyers, presented by the Greater Vancouver Home Builders' Association (GVHBA) on Tuesday, March 24 from 7 p.m. to 9 p.m. in the Guildford Sheraton Hotel Ballroom, 15269 104 Avenue, Surrey.

Admission to the popular seminar is free thanks to sponsorships.

Speakers will be determined soon and GVHBA Chief Executive Officer Peter Simpson will be the seminar moderator.

"Our experts will help first-time buyers complete their homework by investigating all available options and issues before they take that crucial first step onto the property ladder,” said Simpson.

"More than 800 people attended last year’s seminar and, because real estate is still a hot topic, including the pre-construction buying process for condominiums, we expect a similar attendance this year. Doors open at 6 p.m., allowing attendees ample time to view displays of new homes, financial choices, warranties and other housing-related products and services," said Simpson.

Pre-registration is required. Call 604-588-5036 from 8:30 a.m. to 5 p.m. Monday to Friday. Registrations will also be taken by answering machine at the same phone number on weekends.

At MyMortgageBC.com we are experts in helping first time home buyers obtain low rate mortgages at no charge. Please contact us at 604-764-6336 for any questions you have about obtaining a low rate mortgage.

Homeowners in line for 15% rebate on renos

2009-01-28T16:41:00.000-08:00

Homeowners in line for 15% rebate on renos

Vancouver BC -- Canadians who want to sod their lawns or renovate their bathrooms will get a tax break worth up to $1,350 as a key plank of the government's effort to inspire spending.

For a certain sector of consumers, 2009 could become the year of the reno, following the announcement Tuesday of a Home Renovation Tax Credit Tax Credit that lets taxpayers claim 15% of their fixups until Feb. 1, 2010.

"The HRTC will provide a temporary incentive for Canadians to undertake new renovation projects or accelerate planned future projects," the budget documents said, "thus providing timely stimulus to the Canadian economy while boosting energy efficiency and the value of Canada's housing stock."

The government said the incentive is expected to provide about $3-billion in tax relief to some 4.6 million families.

The credit, which is available for homes and cottages effective immediately, is designed to boost construction, forestry and other industries.

Taxpayers can claim renovations on their 2009 tax returns on costs over $1,000, but not exceeding $10,000.

The home renovation program would appear to involve considerably less red tape than some existing initiatives that encourage investment in the home. Programs that involve rebates for investment in the energy efficiency of a house, for example, require a government auditor to approve the changes made to a home to ensure energy efficiencies have been realized.

The HRTC, however, simply requires homeowners to apply for the tax credit, directly on their income-tax returns. The only demand is that the taxpayer save the appropriate receipts in case of a future audit by Revenue Canada.

It also, though, means contractors will have to produce invoices for jobs such as backyard landscaping or basement refinishing -- work that Finance officials yesterday noted is often conducted on a cash basis, with no paperwork produced.

The list of eligible expenses includes renovating kitchens, bathrooms or basements; new carpeting or flooring; building additions, decks, or retaining walls; installing furnaces or water heaters; interior and exterior painting; or driveway resurfacing.

Routine maintenance does not qualify. Such things as new furniture, appliances, tools, carpet cleaning and snow removal are excluded.

Also on the home front, the government will put an extra $300-million over two years into energy retrofits, raise to $25,000 the amount first-time homebuyers can borrow from RRSPs, and provide up to $750 in tax relief to help with their purchases.

I'm a mortgage broker located in the Vancouver area of British Columbia. I have over 20 years in the Financial industry and work for Dominion Lending Centres. Please don't hesitate to contact me at birving@dominionlending.ca or give me a call for all of your mortgage needs.

Current Mortgage Rates

2009-01-13T15:32:00.000-08:00

Thanks to all of the visitors to my blog.

Canadian Mortgage Rate Update
Bank of Canada meets on January 22 and it will be interesting to see what happens to the Prime Rate. Everything I've indicates to a lower Prime Rate.

The Bank Prime Rate is currently 3.50%.

Best Fixed Mortgage Rates:

1 Year Fixed 3.89%
2 Year Fixed 4.59%
3 Year Fixed 4.85%
4 Year Fixed 4.89%
5 Year Fixed 5.79%**
7 Year Fixed 6.20%
10 Year Fixed 6.25%

5 Year Rate Special 5.79% .

Best variable rate is Prime +.60%

*rates are always subject to change without notice. I'll always do my best to get you the mortgage rate available.

MyMortgageBC.com is a mortgage broker located in Vancouver, BC. If you would like the best mortgage rate, or have any questions regarding the mortgage process you should give us a call at 604-764-6336. I work with Dominion Lending Centres which is one of Canada's largest mortgage broker companies.

Is Your Property Value Poised To Go Up?

2009-01-06T19:21:00.000-08:00

Property markets are not national – they are regional, local and can even vary widely from neighbourhood to neighbourhood in the same city. That being said, there will always be hot real estate markets.

The following 12 questions will help you decide if your area and personal property values are poised to go up. The more “Yes” answers you get, the better the market will perform.

12 Key Questions:

Is your area’s average income increasing faster than the provincial average?
Is your area’s population growing faster than the provincial average?
Is your area creating jobs faster than the provincial average?
Does your area have more than one major employer?
Is real estate booming in the surrounding region more than where you’re looking?
Will the property values benefit from a major new development nearby?
Has the local and provincial political leadership created a growth atmosphere?
Is the region’s economic development office helpful and proactive?
Is the neighbourhood located in an area of renewal or gentrification?
Is there a major transportation improvement occurring nearby?
Is the area attractive to Baby Boomers?
Is there a short-term perceived problem (such as negative stories or short-term layoffs) that will disappear?

Overall, the Canadian economy and real estate are relatively well-positioned to withstand the economic storms that are battering property values in many other countries.

Save Thousands on Your Existing Mortgage

2008-12-15T20:02:00.000-08:00

Save Thousands on Your Existing Mortgage

A family was recently referred to me because they wanted to reduce the interest they were paying on thier mortgage. When they took out his mortgage a couple of years ago his rate was reasonably competitive but with the recent drop in rates he thought he may be able to do a little better. In this particular circumstance my clients weren't concerned about lowering the monthly payment but reducing his total interest paid over the next 5 years. On my clients $240,000 mortgage if they kept the monthly payment the same but took the new lower mortgage rate they saved over $8,000 and as an added bonus reduced the mortgage amortization. The difference between the existing mortgage rate and the new rate was only .75% (3/4 of a percent) and it SAVED them $8000. This was all done no charge to my clients and as always, I was happy to walk the clients through the entire process to make it as painless as possible. If you would like, contact me and I would be happy to do a mortgage analysis to see if I can save you thousands as well.

I'm a fully qualified mortgage broker with Dominion Lending Centres. I spend 100% of my time giving you world class service...guaranteed! I will give you such extraordinary service that you would gladly refer your friends, family neighbors and coworkers to me for their home loan needs. With your help I am able to build strong, lifelong relationships, one person at a time. My goal is to be your mortgage lender for life! Please contact me with any comments or to see how much you can save.

Making sense of today’s housing market

2008-12-05T17:08:00.000-08:00

Making sense of today’s housing market

In recent months, economists have had the unenviable task of trying to calculate the direction the housing market is likely to take, factoring in things like unemployment rates, population and immigration figures, economic growth, mortgage rates, and that most nebulous of criteria: consumer confidence.

They agree that the decrease in housing sales and prices bears little relation to the economic indicators in BC. What has changed is public perception of our financial security, triggered by the troubled global financial markets.

As realtors, people are asking us to help make sense of the housing market.

Sellers are asking if the market value of their home is decreasing. Buyers want to know if they should wait for further price reductions. Homeowners not in the market to buy or sell want to understand the impact on their equity, which may affect decisions like plans for renovations.

Investors are asking about short-term impact – is it a good time to buy, renovate, and re-sell for a profit? And long-term impact – is quality real estate now available at lower prices?

First-time buyers want to know how much they need for a down-payment, whether they can afford the monthly mortgage payment, and if they can get financing in these uncertain times.

There are no easy answers. Around the Lower Mainland’s kitchen tables, realtors are helping people assess their individual situations.

Circumstances cause each of us to make decisions despite uncertainties related to global economies and politics. Someone gets a job in another city. A family must consider estate planning for a parent. A young couple wants to start investing in their own home, rather than renting.

Our MLS® statistics and Housing Price Index (HPI) tell us that, since May, residential home sales and prices have been decreasing. After five years of unprecedented growth in home values in the Lower Mainland, that’s not particularly surprising or necessarily unwelcome.

Between 2003 and 2008, the HPI benchmark price of a detached home in Greater Vancouver increased nearly 70 per cent to $761,000 from $449,000. Condominiums over the same period increased 82 per cent to $387,000 from $213,000. Left unchecked at this rate, by 2013 the benchmark price of a detached home would top $1.2 million and condos more than $700,000.

Current trends offer moderation to a market where affordability, for much of this decade, was eroding, making home ownership unattainable to an expanding segment of our community.

Since May, residential home prices have declined 12.8 per cent, resulting in an 8.3 per cent year-to-date price reduction for detached, attached and apartment properties across Greater Vancouver.

These moderating home prices should not be confused with the U.S. housing downturn. Since 2005, prices in the U.S. have been edging downward due in large part to imprudent ‘sub-prime’ lending practices. Mortgages in Canada are tightly regulated and underpinned by a solid banking structure. The World Economic Forum recently identified Canada as having the world's “soundest” banking system.

The local real estate market is not immune to global economic challenges; however, Canada’s disciplined lending structure has kept the mortgage landscape steady in these uncertain times.

While the current rate of foreclosures in the U.S. is nearly five per cent, only 0.28 per cent of mortgages in Canada are in arrears, a proportion that is not only low but steady, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP).

Low prices are not the concern as much as the view that prices are falling. Buyers are waiting to see of the real estate market has hit bottom.

Identifying the “bottom” of a market is difficult, given that certain variables must remain constant to attain real savings. For example, interest rates must remain low and that perfect house must remain available at an acceptable price.

Most of us sell a home and buy a home within the same market; while we may be selling at a lower price, we’re also buying within that lower-priced market.

Deciding to buy or sell a home should be a milestone moment based on your financial and personal circumstances, and the market conditions within your neighbourhood of choice. For those whose finances allow it, there are excellent opportunities in today’s housing market. This is a good market for long-term investors.

The Real Estate Board of Greater Vancouver has existed for nearly 90 years and witnessed numerous market cycles. Sales increase and decrease. Prices go up and down. Historically, the values at the peak of the next cycle inevitably surpass the ones before.

(Dave Watt, president of the Real Estate Board of Greater Vancouver)

I hope you found the above article informative. I'm a mortgage broker located in Vancouver BC working with one of Canada's largest brokerage houses Dominion Lending Centres.

5 Key Ways to Help Improve Your Credit Score

2008-12-02T10:57:00.000-08:00

5 Key Ways to Help Improve Your Credit Score

Leading up to the holidays is the perfect time to think about things like improving your credit score and consolidating debt. After all, the holidays are a joyous time that should not be overshadowed by financial woes. And even if your credit score is good, these tips may make it even better. After all, the better your credit score, the fewer hurdles you’ll have to overcome when looking to renew or refinance your existing mortgage, or obtain a new one. Nowadays having good credit is as important as ever. Very few lenders are interested in making exceptions for people that have had credit challenges.

Following are five steps to a speedy credit score boost:

1) Pay down your credit cards. The number one way to increase your score is to pay down your cards to 30% of their limits. Revolving credit like credit cards seems to have a more significant impact on your score than car loans, lines of credit, and so on. Lenders will often use the term credit utilization.

By paying down your cards to 30%, you are leaving a big gap between what your limit is and what you owe – a move that is very favourable to increasing your credit score.

2) Limit the use of your cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there is a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you paid it all off the next month.

By being more accountable of your spending on a daily or weekly basis through the use of a budget, you can keep those cards below the magic 30% mark.

3) Check your limits. If your lender is slow to report your monthly transactions, this can have a big impact on how another lender may view your file. Make sure everything is up to date. Old bills that have been paid can come back to haunt you.

Some financial institutions don’t even report your maximum limits. As such, the credit bureau is left to only use the balance that’s on hand. The problem is, if you consistently charge the same amount each month – say $1,000 to $1,500 – it may appear to the credit-scoring formula that you’re regularly maxing out that card.

You could go on a wild spending spree to raise the limit, but a more sensible solution would simply be to pay your balance down or off before your statement period closes.

When making payments online, do so about a week before the period closing date printed on your latest statement to ensure the payment is received on time – it can take up to five business days for a payment to be received. This won’t raise your reported limit, but it will widen the gap between your limit and your closing balance, which should boost your score.

4) Keep your old cards. Older credit is better credit. If you stop using those older credit cards, the issuers may stop updating your accounts. As such, they will lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the card for a long time. Use these cards periodically and then pay them off.

5) Don’t let mistakes build up. Dispute any mistakes or situations that may harm your score. If, for instance, your cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation.

As always, if you want to talk about your credit score or consolidating debt, I’m here to help. I'm a mortgage broker located in Vancouver BC working for Dominion Lending Centres.

3 Tips to Compare Adjustable Rate Mortgages for the Best Deal Possible

2008-12-01T12:45:00.000-08:00

3 Tips to Compare Adjustable Rate
Mortgages for the Best Deal Possible

In the last couple of years, adjustable (or variable) rate mortgages have become more popular in Canada, as well as with our neighbors down south in the United States. An adjustable rate mortgage can be a wonderful money-saving option. However, comparing multiple loans to each other can be a bit complicated to do.

While a traditional fixed-rate mortgage can easily be compared to another fixed-rate mortgage, the process becomes a bit trickier when you are dealing with multiple adjustable rate mortgages. Adjustable rate mortgages (ARMs) came in many forms and with many different options. The choice you have to make between ARM mortgage options can make for a very large difference in the quality, and cost, of the loan which you ultimately accept. So, it is important to be able to compare them to each other to make the best decision you possibly can. .

Most people have two basic issues when they try to compare two ARMs; the math to calculate the effective prime discount is not simple, and understanding what all of the various different options mean. No matter which lenders you are working with, there are three things you should first understand and keep in mind throughout the process. They are:

Understand Low Introductory “Teaser” Rates and Mortgage Costs.

The first thing you need to understand is how much a particular loan will cost you between the time you sign on the dotted line, and the time when the mortgage becomes open or renews.

To easily determine the cost of a mortgage until it becomes open or renews, you can multiply the introductory rate of the loan by the number or months it will be effective. Then multiply the interest rate of the loan after the introductory period by the number of months until the mortgage opens or renews. Add these two numbers together and divide by the total number of months the mortgage will be in effect before it opens or renews. This gives you a weighted average calculation and allows you to easily compare one ARM to another.

Understand Rate Discounts and Conversion Options.

Many people go into an adjustable rate mortgage assuming that they can easily convert to a closed term mortgage without any penalty, whenever they choose to. However, it is vitally important that you know exactly what the rate discount will be if you choose to convert. You may find that it costs you more than three month’s worth of interest to switch lenders and forces you to stay with the lender you currently have. If this is the case, then you will not be able to change lenders until your mortgage becomes open or renews without significant cost.

Understand How Interest Rate Changes Will Affect Your Payments.

There are currently two popular options with ARMs. The first type of ARM has payments which adjust as the prime interest rate moves up and down. This means that your amount due each month is constantly changing with the prime rate. This can be a good deal if rates drop and you can stomach the constant change. However, if you need stability in your payments from month-to-month, then this is probably not the best option for you to choose.

The second type of ARM keeps the payments the same each month but changes the amount applied to principle and interest based on the prime rate. For example, when the prime rate goes up then your payment applies more to interest than to principle. This means it could ultimately take longer to pay off your mortgage because you are paying less on principle each month if the prime rate is high.

Adjustable rate mortgages can be great alternatives to traditional closed-term mortgages. However, when you are evaluating your choices in an adjustable rate mortgages it makes a lot of sense to take the time to learn about, and understand, introductory teaser rates, discounts and conversion rates, and how the prime rate will affect your mortgage payments and ultimate payoff time. Once you fully understand what ARMs are all about, and which options best suit your situation.

As a mortgage broker I can help you get the best adjustable rate available. I work with one of Canada's largest mortgage brokerage firms Dominion Lending Centres Leading Edge.

The Best Asking Price for your Home

2008-11-21T13:56:00.000-08:00

The Best Asking Price for your Home

In market like we're in now the most important thing when selling your house within a reasonable time frame is starting at the right price. Setting a realistic price for your home that reflects current market values will help sell your home quickly and for top dollar. When you price your home properly, you increase the chances that the offer you receive will nearly match your asking price, and that there will be competing offers (although, not very common in this market)—which may net you even more in the long run.

Your property has the best chance of selling within its first seven weeks on the market. And, studies indicate that the longer a property stays on the market, the less it will ultimately sell for. A property priced 10 % more than its market value is significantly less likely to sell within this window than a property priced close to its actual market value. About three-quarters of homes on the market today are 5-10 % overpriced. Sellers will usually over-price their homes by this margin if, either, they firmly believe the home is worth more than what the market indicates, or if they want to leave room for negotiation. Either way, if you choose to over-price your home by this amount, you run the risk of increasing the amount of time your home spends on the market, and decreasing the amount of money you’ll ultimately receive. At the other end of the selling spectrum are houses that are priced below a fair market value. Under-pricing often occurs when the owner is interested in a quick sell. You can bargain on these homes attracting multiple offers and ultimately selling quickly at—or above—the asking price.

The knowledge and skills of an experienced Realtor will be invaluable when determining an appropriate asking price. It is the job of your Realtor to know the current market and market trends inside and out, to be closely connected to the real estate market at large, and to be aware of other properties currently for sale in your particular area. Based on this range of connections and knowledge, your Realtor should counsel you on how to price your home properly in order to attract the highest price possible, in the shortest period of time. Before approaching this process, you should first do some homework yourself. You’ll need to know the workings of the current market before you even begin to think about setting an asking price. The market will always influence a property’s value, regardless of the state of a home, or its desirability.

Here are the types of market conditions and how they may affect you:

Seller’s Market: A Seller’s market is considered a “hot” market. This type of market is created when demand is greater than supply—that is, when the number of Buyers exceeds the number of homes on the market. As a result, these homes usually sell very quickly, and there are often multiple offers. Many homes will sell above the asking price.

Buyer’s Market: A Buyer’s market is a slower market. This type of market occurs when supply is greater than demand, the number of homes exceeding the number of Buyers. Properties are more likely to stay on the market for a longer period of time. Fewer offers will come in, and with less frequency. Prices may even decline during this period. Buyers will have more selection and flexibility in terms of negotiating toward a lower price. Even if your initial offered price is too low, Sellers will be more likely to come back with a counter-offer.

Balanced Market: In a balanced market, supply equals demand, the number of homes on the market roughly equal to the number of Buyers. When a market is balanced there aren’t any concrete rules guiding whether a Buyer should make an offer at the higher end of his/her range, or the lower end. Prices will be stable, and homes will sell within a reasonable period of time. Buyers will have a decent number of homes to choose from, so Sellers may encounter some competition for offers on their home, or none at all. Remember, a Realtor is trained to provide clients with this information about the market, helping you make the most informed decision possible.

The right Realtor will guide you through the ups and downs of the market and keep you up-to-date with the types of changes you might expect. Evaluate your house in the other main areas that affect market value:

Location: The proximity of your home to amenities, such as schools, parks, public transportation, and stores will affect its status on the market. Also, the quality of neighbourhood planning, and future plans for development and zoning will influence a home’s current market value, as well as the ways in which this value might change.

Property: The age, size, layout, style, and quality of construction of your house will all affect the property’s market value, as well as the size, shape, seclusion and landscaping of the yard. Condition of the Home: This includes the general condition of your home’s main systems, such as the furnace, central air, electrical system, etc., as well as the appearance and condition of the fixtures, the floor plan of the house, and its first appearances.

Comparable Properties: Ask your Realtor to prepare you a general market analysis of your neighbourhood, so you can determine a range of value for your property. A market analysis will provide you with a market overview and give you a glimpse at what other similar properties have been selling for in the area.

Market Conditions/ Economy: The market value of your home is additionally affected by the number of homes currently on the market, the number of people looking to buy property, current mortgage rates, and the condition of the national and local economy.

We are Mortgage Brokers located in Vancouver British Columbia and are happy to answer any questions you may have regarding the home buying and selling process.

Is 100% Financing Still Available?

2008-11-18T09:57:00.000-08:00

In an article dated November 11, 2008 in the Vancouver Sun they point out 3 ways that you can avoid having to meet the Federal Governments minimum requirement of a 5% down payment on a property purchase.

The 3 basic ways in the Vancouver Sun article in which you can avoid the 5% down payment are in the are as follows;

Wells Fargo still offers 100% financing because they self insure their mortgages. Wells Fargo 100% financing mortgages are available through mortgage brokers such as myself.

Borrow the 5% from credit cards or lines of credits. There is more to it than simply borrowing from a line of credit or existing credit card. You need to make sure you get proper advice before simply borrowing for the down payment and are aware of the specific rules set out by mortgage insurers before considering this mortgage option.

Borrow the 5% from a friend or family member and then take a cashback mortgage and pay them back. There are significant costs to a cashback mortgage that you should be fully aware of before being tempted by this type of mortgage arrangement. Although despite the cost it can make sense in certain scenarios.

Below is the link to the Vancouver Sun article:

Want a mortgage at 0%?All you need to do is skirt a few rules

I think it's important to point out that all 3 options carry a cost to the borrower with the second option most likely being the cheapest.

I also feel it's important to note that any time your skirting around rules you could open yourself up to potential problems unless you are fully aware of all of the issues.

Don't hesitate to contact me if you have any questions on the Vancouver Sun mortgage article.

You can also visit my website for tips on mortgages in Vancouver at MyMortgageBC.com.

Why the Canadian Housing Market is Not Set to Melt Down

2008-10-03T18:15:00.000-07:00

This article provides a much different perspective on the Canadian housing market. All I've been hearing is gloom and doom so this is somewhat refreshing. Please feel free to leave your comments.

Why the Canadian Housing Market is not set to Melt Down.

While the "best days" for Canada's real estate markets may be over, comparing the Canadian outlook to the U.S. housing meltdown is off base, two Bank of Nova Scotia economists say in a new report.

Earlier this week, Merrill Lynch Canada economists warned Canada's housing market could be vulnerable to a U.S.-style crash, drawing a response from Prime Minister Stephen Harper rejecting that.

Derek Holt, vice-president of Scotiabank's economics department, and his colleague Karen Cordes, cite several reasons why the Canadian mortgage market is healthier than that of the United States. They do not mention the Merrill study.

"We do believe that the best days for Canadian housing markets are behind us, and that lower volumes of new home construction and resales lie ahead alongside further fairly modest erosion of house prices," they write. "Calgary and Edmonton are the most exposed in this regard. But, arguing that consequences to the overall Canadian economy and to debt markets particularly in terms of mortgage-backed securities are as severe as they are in the U.S. is way off base."

Here are the findings of Scotiabank's Mr. Holt and Ms. Cordes, as printed in their report:

Debt growth over the full cycle

Much is being made of the fact that Canadian debt growth relative to incomes over recent years has been on par with the U.S. experience.

Ergo, one is led to conclude, Canada must face similar stresses to its own housing and mortgage markets.

Nonsense. One must look at the full cycle and use the right measures. Recent Canadian debt growth reflects the unleashing of pent-up demand from the 1990s. Canada's recession in the early 1990s was more severe, and the effects were longer lasting by way of how long it took housing markets and the consumer sector to get back on their feet. The U.S. recession of the early 1990s was comparatively mild, and the economy rebounded faster such that U.S. debt growth over the long-haul has exceeded debt growth in Canada.

Leverage - night and day comparisons

Canada's ratio of household debt-to-income is much lower than the U.S. Despite its popularity, however, this is the worst way to look at leverage since it compares total debt amortized over decades to a single year's after-tax income, which is a stock-to-flow comparison that most economists avoid. One doesn't take out a mortgage on Jan. 1 with the expectation of having to pay it all back out of the current year's income by Dec. 31, so why make the comparison?

The best way to judge the full cycle's influences upon debt growth in Canada versus the U.S. is to look at where the two countries stand today on leverage on the household balance sheet (i.e., debt as a share of assets). This must be done by making adjustments to ensure comparability of Canadian and U.S. household sector balance sheet data. In Canada, total debt as a percentage of total assets sat at 20 per cent as at the end of 2007. The U.S. ratio is about 26 per cent. By corollary, Americans have used nearly 30 per cent more debt to purchase assets than Canadians. Clearly, Americans and Canadians have different debt tolerances.

Canadian mortgage markets are fundamentally healthier than the U.S.

Canada's subprime market is small (5-6 per cent of outstanding mortgages) whereas the U.S. share peaked at about three times that. As a share of originations, 20-25 per cent of new mortgages in the U.S. were subprime over the 2004-06 period. So Canada isn't anywhere near as exposed to the products that caused most of the damage in U.S. housing markets.

Not only is Canada's subprime market much smaller, but it isn't even really subprime per se. Canada's subprime market is more like the U.S. near-prime market, whereas the U.S. subprime market often lent to borrowers with extremely impaired quality.

Adjustable rate mortgage (ARMs) resets also caused many of the problems stateside, but those resets occur much more suddenly in the U.S. By contrast, the closest Canadian product parallel is the variable rate mortgage, but they get constantly repriced so that people aren't caught offguard years later. Furthermore, in Canada, some variable rate products adjust the principal, not the payment. On balance, the shock effect from payment resets in Canada is nowhere close to what has caused much of the problem in the U.S.

Canada's mortgage equity withdrawal market isn't like the U.S. We've seen secured home equity lines of credit (Helocs) grow in Canada as a way of withdrawing equity, but nothing like the U.S. withdrawals picture. U.S. homeowners' equity has been in free-fall with mortgage debt growth outpacing housing assets since the early 1990s. Canada, by contrast, retains much higher homeowner equity, and while it may have reached a plateau, the figure has risen in recent years while the U.S. position has deteriorated.

Mortgage interest is deductible against taxes in the U.S. It generally is not in Canada. That creates vastly different incentives to leverage oneself in the two markets.

The nature of the products has been very different in Canada versus the U.S. Examples of Canadian innovation like long amortization mortgage products are absolutely nothing like "Ninja" mortgages. Mortgage innovation was needed in Canada, but has been relatively more conservative.

Further to this latter point, long-amortization mortgage products actually extend the Canadian credit quality cycle. Long amortization periods of over 25 years have been dominant as a share of new mortgage originations since the 40-year mortgage was introduced almost two years ago. However, there is still an overwhelming majority of Canadians who face the option of extending from the previously standard 25-year product into longer amortization products in a manner that lowers their payments in the face of shocks. Even though insured 40-year mortgages are now banned in principle, 35-year mortgages still provide this flexibility.

Investor mortgages were among the first products to default in the U.S. ,where they account for about 9 per cent of all outstanding mortgages, similar to the U.K. (9.5 per cent) and Australia (10 per cent). In Canada, however, they are about 2-3 per cent of all outstanding mortgages. There are problems in the investor segment the world over, but the magnitude of the exposure in Canada is far less significant.

If there is an imminent problem brewing, then it's not showing up in terms of industry-wide mortgage delinquency patterns. Mortgages 90+ days in arrears in Canada remain at 27 basis points, which is the range around which they've been floating since mid-2004. By contrast, even when the country had double digit variable mortgage rates and double digit unemployment rates in the early 1990s, the peak rate of delinquency was about 65 basis points. We're of the opinion that delinquencies will deteriorate going forward, but will be nowhere close to the U.S. experience.

The extent of runaway house price inflation was much more muted in Canada than in many other countries. Canada's priciest market is Vancouver, and prices have gone up by about 80 per cent since the mid-1990s start of the global housing cycle. London, England, by contrast, went up by about 270 per cent over this time period. Canada's house price appreciation was, on average, significantly below the U.S. experience since then, and much below the experience of many European countries.

Canadian mortgages are funded, underwritten, and enforced in a totally different manner

Canada's funding model is completely different from the U.S. The majority of mortgages are held on balance sheet in Canada, with only 24 per cent having been securitized. Thus, much more of Canada's mortgage book is funded by on-book retail deposits than is the case in the U.S. That also makes the banks more conservative about the products they are originating since they are mostly stuck on balance sheet.

Further, the majority of the securitized totals have been done through the CMHC - a Crown corporation with explicit government backing - thus avoiding the problems in the U.S. caused by the ambiguity of GSE liabilities. Other insured securitizations have been done through private insurers that also receive explicit government backing for the underlying assets through the Canada Mortgage Bond program.

Furthermore, Canadian financial institutions are not as reliant upon short-term lines extended by other financial institutions. The degree of reliance upon such funding in the U.S. is what caused excessive exposure to short-term swings in market sentiments, not to mention adverse incentive effects.

Mortgage-Backed Securities (MBSs) were not placed in off-balance-sheet SIV and CDO structures as in the U.S. So, Canada MBS investors do not face the same heavily leveraged investor risks. This is perhaps the most important point, since origination mistakes in the U.S. were bad enough, but what really caused the problems were dollops of leveraging that occurred after the mortgages were originated.

Unlike many U.S. banks, Canadian banks continue to apply prudent underwriting standards. In other words, they have always checked, and continue to check, incomes, verify job status, ask for sales contracts, etc., such that all those questions your banker asks in Canada have a purpose that somehow got lost on many American bankers. The no-income-no-job-no-asset ("Ninja") style, here-are-the-keys-to-your-brand-new-home lending just didn't take hold in Canada.

Appraisal standards are generally higher in Canada, where appraisals are more likely to low-ball estimates of property value before making the final decision on how much to lend.

Finally, enforcement of Canadian mortgages is not as tilted in the borrowers' favour as it is in the United States. In the U.S., lenders have little recourse - they can take the keys and settle relatively quickly, or sue and go through great expense for a potentially lengthy period. Alberta is similar to the U.S. treatment in this regard. But the rest of Canada provides greater recourse to lenders than in the U.S.

Globe & Mail

I'm a mortgage broker in British Columbia.

Vancouver Home & Interior Design Show

2008-09-23T11:03:00.000-07:00

For those Homeowners in the Vancouver Lower Mainland area you may be interested in the upcoming Vancouver Home and Interior Design Show. This is THE event for anyone just looking for a few ideas and the basics or for someone that wants re-do their entire home. They'll have many exhibits and demonstrations throughout the event. Event runs from Oct 16th to the 19th at BC Place.

Show Dates & Hours

Thursday, October 16 4 pm - 10:00 pm
Friday, October 17 Noon - 10:00 pm
Saturday, October 18 10:00 am - 10:00 pm
Sunday, October 19 10:00 am - 6:00 pm

What does it cost?

Adult (online):	$12.00
Adult (at door):	$14.00
Seniors (55+):	$10.00

Children 7 - 17:	$5.00
Childre ages 6 & under:	FREE

Tickets available at the door – cash only.

Visit here learn more about the Vancouver Home and Interior Design show.

Although I'm not an interior designer I can help finance that big renovation or home update as a Mortgage Broker located in the Vancouver area. I'm always available to answer any questions you might have. Enjoy the show.