Ontario Mortgage Information

Bank of Canada maintains overnight rate target at 1 per cent

noreply@blogger.com (Greg Barrow) — Tue, 31 May 2011 15:37:00 +0000

Ottawa -May 31, 2011
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economic recovery is proceeding broadly as expected in the Bank’s April Monetary Policy Report (MPR). The U.S. economy continues to grow at a modest pace, limited by the consolidation of household balance sheets. Growth in Europe is maintaining momentum, although the risks related to peripheral economies have increased. The disasters that struck Japan in March are severely affecting its economic activity and causing temporary supply chain disruptions in advanced economies. Commodity prices have declined recently but are expected to remain at elevated levels, supported by tight global supply and very strong demand from emerging markets. These high prices, combined with persistent excess demand conditions in major emerging-market economies, are contributing to broader global inflationary pressures. Despite the challenges that weigh on the global outlook, financial conditions remain very stimulative.

In Canada, the economic expansion is proceeding largely as expected in the April MPR. The economy grew at an annual rate of 3.9 per cent in the first quarter, reflecting continued strong business investment, smaller contributions from household and government spending, and a modest drag from net exports. Although temporary supply chain disruptions are expected to restrain growth sharply in the current quarter, this is expected to be unwound in subsequent quarters.

While underlying inflation is relatively subdued, the Bank expects that high energy prices and changes in provincial indirect taxes will keep total CPI inflation above 3 per cent in the short term. Total CPI inflation is expected to converge with core inflation at 2 per cent by the middle of 2012 as excess supply in the economy is gradually absorbed, labour compensation growth stays modest, productivity recovers and inflation expectations remain well-anchored.

The possibility of greater momentum in household borrowing and spending in Canada represents an upside risk to inflation. On the other hand, the persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy, putting additional downward pressure on inflation through weaker-than-expected net exports and larger declines in import prices.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be eventually withdrawn, consistent with achieving the 2 per cent inflation target. Such reduction would need to be carefully considered.

Information note:

The next scheduled date for announcing the overnight rate target is 19 July 2011.
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 20 July 2011.

Bank of Canada maintains overnight rate target at 1 per cent

noreply@blogger.com (Greg Barrow) — Tue, 12 Apr 2011 14:37:00 +0000

OTTAWA –The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
As anticipated in the January Monetary Policy Report (MPR), the global economic recovery is becoming more firmly entrenched and is expected to continue at a steady pace. In the United States, growth is solidifying, although consolidation of household and ultimately government balance sheets will limit the pace of the expansion. European growth has strengthened, despite ongoing sovereign debt and banking challenges in the periphery. The disasters that struck Japan in March will severely affect its economic activity in the first half of this year and create short-term disruptions to supply chains in advanced economies. Robust demand from emerging-market economies is driving the underlying strength in commodity prices, which is being further reinforced by supply shocks arising from recent geopolitical events. These price increases, combined with persistent excess demand conditions in major emerging-market economies, are contributing to the emergence of broader global inflationary pressures. Despite the significant challenges that weigh on the global outlook, global financial conditions remain very stimulative and investors have become noticeably less risk averse.

Although recent economic activity in Canada has been stronger than the Bank had anticipated, the profile is largely consistent with the underlying dynamics outlined in the January MPR. Aggregate demand is rebalancing toward business investment and net exports, and away from government and household expenditures. As in January, the Bank expects business investment to continue to rise rapidly and the growth of consumer spending to evolve broadly in line with that of personal disposable income, although higher terms of trade and wealth are likely to support a slightly stronger profile for household expenditures than previously projected. In contrast, the improvement in net exports is expected to be further restrained by ongoing competitiveness challenges, which have been reinforced by the recent strength of the Canadian dollar.

Overall, the Bank projects that the economy will expand by 2.9 per cent in 2011 and 2.6 per cent in 2012. Growth in 2013 is expected to equal that of potential output, at 2.1 per cent. The Bank expects that the economy will return to capacity in the middle of 2012, two quarters earlier than had been projected in the January MPR.

While underlying inflation is subdued, a number of temporary factors will boost total CPI inflation to around 3 per cent in the second quarter of 2011 before total CPI inflation converges to the 2 per cent target by the middle of 2012. This short-term volatility reflects the impact of recent sharp increases in energy prices and the ongoing boost from changes in provincial indirect taxes. Core inflation has fallen further in recent months, in part due to temporary factors. It is expected to rise gradually to 2 per cent by the middle of 2012 as excess supply in the economy is slowly absorbed, labour compensation growth stays modest, productivity recovers and inflation expectations remain well-anchored.

The persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy, putting additional downward pressure on inflation through weaker-than-expected net exports and larger declines in import prices.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of material excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.

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 13 April 2011. The next scheduled date for announcing the overnight rate target is 31 May 2011.

How to get a better Interest Rate on your mortgage

noreply@blogger.com (Greg Barrow) — Wed, 06 Apr 2011 13:25:00 +0000

Have you ever wondered why banks have posted mortgage rates, yet they’re willing to offer mortgages below these interest rates to some borrowers?

The Bank of Canada (BoC) wanted to find out how consumers can get the very best mortgage rate, which led to the undertaking of an extensive study on mortgage discounting.

According to their research, Canadians who get the best mortgage rates are those who:

1. Bargain

Research proves that bank profits “are significantly higher in haggle environments.” As a result, banks prefer not to put all of their cards on the table.
This leads to “price discrimination”, whereby banks give better deals to skilled negotiators and well-informed borrowers.

2. Have larger mortgages

“Since few negotiate the renewal of their mortgage… (this) provides lenders with an incentive to attract consumers with larger loans who have large outstanding balances at the time of renewal.”

3. Use a mortgage broker

The report states that brokers lower the “search costs” of getting multiple quotes. Multiple quotes (lower search costs) are strongly correlated with lower rates.
“Over the full sample, the average impact of a mortgage broker is to reduce rates by 17.5 basis points.” That’s ~$1,670 of interest savings on a typical $200,000 mortgage over five years.
Bank “mortgage specialists offer convenience to consumers, although they do not reduce search costs. This is because they work for one lender only.”

Click here to read the working paper on the BoC study.

It’s important to understand that mortgage brokers can offer lower rates because of the large volume of mortgages we successfully fund with lenders each year. This enables mortgage brokers to offer our clients wholesale versus retail pricing.

And while mortgage brokers have access to hundreds of products available through dozens of lenders, when you approach a lender directly for a mortgage, that lender can only offer one line of mortgage products – their own.

As always, if you have questions about finding the right mortgage product and rate to suit your specific needs, I’m here to help!

Properly converting an owner-occupied home into a rental property

noreply@blogger.com (Greg Barrow) — Tue, 22 Feb 2011 14:48:00 +0000

By Leslie Penney Published in Leslie's Blog (Propertywire)

While reading a vast amount of information on finance, mortgage, the economy, taxation, etc, I have recently come across a great blog post by Million Dollar Journey on the tax implications of converting a principal residence into a rental property (http://www.milliondollarjourney.com/ - if you haven’t already, you should really check this guy out).

It’s actually a guest article by Kerry who is an accountant and currently articling with Meyers Norris Penny LLP in British Columbia.

As we all know, real estate is an investment whether for financial gains or for personal and family reasons, it’s still an investment. For some, the goal is to accumulate more than one property to earn an income from rental and to build a nest egg for retirement.

For those looking to purchase more than one property there are certain tax implications you need to be aware of.

The example given by Kerry is a client who has purchased a home in the past and has been able to pay off the mortgage well in advance, and the house value has sky-rocketed since. With this being said, the client is interesting in obtaining a newer, bigger house. However, the home has great sentimental value and the client wishes to hold on to it and rent it out.

Since the client has loads of equity in the old house, they head off to their mortgage broker to take out a mortgage on it to purchase the newer home. The client believes that the mortgage interest is now tax deductible because it’s on the rental property – a common thought for most.

When tax time rolls around, the clients accountant uncovers the big mistake that many make. The client is left with taxable rental income but non-deductible mortgage interest – a double whammy for the client.

Many question why the mortgage interest is non-deductible, but through the jigs and reels of it all, the proceeds from the refinance wasn’t used on the rental property, rather it is used to purchase the new, owner-occupied home.

Kerry provided the following information in the post. To simplify the subject, interest paid is generally deductible for tax purposes under the following two conditions:

1)    The interest was paid or payable in the year in accordance with a legal obligation, and
2)    The borrowed funds were used for the purpose of earning income from a business or property – the term “property” referring to interest income, dividends, rents and royalties but not capital gains.

The first point is rarely a problem because mortgages are set-up that way, but point number two is usually where the problem lies.

The CRA has a bulletin (IT-533 Interest Deductibility and Related Issues) which explains the interpretations of the deductibility of interest expense under various provisions of the Income Tax Act and provides several court examples to demonstrate a number of examples.

Basically, the main point the bulletin is getting at is that the “test to be applied is the direct use of the borrowed money”. However, there may be some exceptions to the indirect use.

The tax payer is responsible for determining what the funds were used for and reporting it correctly when completing your annual income taxes.

In the example given above, it’s clear that the client’s funds were to purchase a new owner-occupied, not to earn investment income. And as we all know, this interest isn’t tax deductible. Even though the rental property is the security, the use of the funds was not to earn an investment income.

How should an investor approach a situation such as this? Let’s take a look at client number two, we’ll call him Jack. He was in the same boat – current home mortgage free and lots of equity. But this is how he approached it:

1)    On day one, Jack sold his current home (the “old home”) to his parents for fair market value. Jack’s parents paid for the purchase by issuing a promissory note to him. Always concerned about property transfer tax and other matters, Jack discussed this series of transactions with his lawyer who ensures all steps are properly documented;
2)    On day two, Jack reacquired the “old home” from his parents by borrowing from the bank on the security of a mortgage. Jack plans to use the “old home” as a rental property;
3)    Jack’s parents use the funds received to repay the promissory note they issued to him on day one, and
4)    Jack then uses the funds received from his parents to purchase the new home.

Using the tracing principle applied by the CRA, it’s clear that the money borrowed from the lender was to purchase a rental property and therefore his interest is tax deductible.

The key takeaway point here is that when client are looking to purchase rental properties and they have a great deal of equity build up or reserve funds, it’s wise to speak with a professional before they make any move. The flow and use of the money is key when looking for tax deductibility and interest write-offs.

Again, many thanks to Million dollar Journey and Kerry for the insightful article.

*I am in no way, shape, or form a tax accountant. The intention of the article above is to bring to your attention the fact that there are tax implications related to purchasing, renting, and selling income-generating properties. Before you make any decisions it is strongly suggested that you talk to your tax accountant to ensure you have the appropriate plan in place.

More Canadians are Turning to Mortgage Brokers

noreply@blogger.com (Greg Barrow) — Sat, 22 Jan 2011 17:18:00 +0000

When it comes to mortgage financing, more and more Canadians are choosing to work with a professional mortgage broker. According to a recent study by the Canada Mortgage and Housing Corporation (CMHC), 23 per cent of mortgages written were arranged through a broker.

Canadians are just catching up with their American neighbors, who are far less likely to simply walk into their home bank for a mortgage. In 2000, almost 70 per cent of all U.S. mortgages were arranged through mortgage brokers.

If we follow the U.S. model – and it seems that we are — then we’re in for a sea of change in the way Canadians manage their most significant personal asset. It makes sense. After all, investment returns aren’t as lucrative as they were five years ago, and investors are seeking out ways to make financial gains through avenues they may have overlooked.

There are some significant benefits to working with an independent mortgage broker. Firstly, let’s compare mortgage expertise: Most banks have one or more representatives who are specifically assigned to assist with mortgages. Their role is to develop mortgage business for the banks. A ontario mortgage broker, on the other hand, is a trained mortgage professional who has met standards for education. The comprehensive training of an independent mortgage broker may exceed the training of their counterparts at the bank. More importantly, the mortgage broker is independent. He or she is not an employee of a lending institution, but has access to rate and option information for a full spectrum of chartered banks and other lending institutions. Their role is to find the best possible mortgage rates and options for you.

Let’s also look at choice: A mortgage broker offers you access to many competitive lenders, each with a range of mortgage options. It would take weeks of research, telephoning and personal visits to recreate the range of features and options that a mortgage broker has at his or her fingertips. Rate information, mortgage options and payment schedules are up-to-the-moment, so you and your broker can make valid comparisons of the options available. The result of all this choice is a mortgage which is customized to meet your needs and to save you money.

Also consider accessibility. Your mortgage broker will be available to you before and after your mortgage closes, which will be good news for those who have spent long hours on hold or in a telephone voice answering loop.

Above all, clients have turned to mortgage brokers for better rates. Access to a broad range of lending institutions is a critical advantage for mortgage shoppers. A quarter-point difference on your mortgage rate can add up to thousands of dollars over the life of your mortgage. Many mortgage brokers work inside a brokerage organization with sufficient mortgage volumes that they can negotiate the best possible rates for your situation. Canadian homeowners who have experienced the benefits of a mortgage broker are unlikely to ever return to a world in which they simply accept the best posted rate at their local bank.

We are commited to providing quality information to help people make informed decisions about their mortgage financing needs.

See the latest Ontario Mortgage Rates.

[Source - Dominion Lending Centres]

Bank of Canada maintains overnight rate target at 1 per cent

noreply@blogger.com (Greg Barrow) — Tue, 18 Jan 2011 16:33:00 +0000

FOR IMMEDIATE RELEASE
18 January 2011

CONTACT: Jeremy Harrison
613 782-8782

Bank of Canada maintains overnight rate target at 1 per cent

OTTAWA –The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economic recovery is proceeding at a somewhat faster pace than the Bank had anticipated, although risks remain elevated. Private domestic demand in the United States has picked up and will be reinforced by recently announced monetary and fiscal stimulus. European growth has also been slightly stronger than anticipated. Ongoing challenges associated with sovereign and bank balance sheets will limit the pace of the European recovery and are a significant source of uncertainty to the global outlook. In response to overheating, some emerging markets have begun to implement more restrictive policy measures. Their effectiveness will influence the path of commodity prices, which have increased significantly since the October Monetary Policy Report (MPR), largely reflecting stronger global growth.

The recovery in Canada is proceeding broadly as anticipated, with a period of more modest growth and the beginning of the expected rebalancing of demand. The contribution of government spending is expected to wind down this year, consistent with announced fiscal plans. Stretched household balance sheets are expected to restrain the pace of consumption growth and residential investment. In contrast, business investment will likely continue to rebound strongly, owing to stimulative financial conditions and competitive imperatives. Net exports are projected to contribute more to growth going forward, supported by stronger U.S. activity and global demand for commodities. However, the cumulative effects of the persistent strength in the Canadian dollar and Canada’s poor relative productivity performance are restraining this recovery in net exports and contributing to a widening of Canada’s current account deficit to a 20-year high.

Overall, the Bank projects the economy will expand by 2.4 per cent in 2011 and 2.8 per cent in 2012 – a slightly firmer profile than had been anticipated in the October MPR. With a little more excess supply in the near term, the Bank continues to expect that the economy will return to full capacity by the end of 2012.
Underlying pressures affecting prices remain subdued, reflecting the considerable slack in the Canadian economy. Core inflation is projected to edge gradually up to 2 per cent by the end of 2012, as excess supply in the economy is slowly absorbed. Inflation expectations remain well-anchored. Total CPI inflation is being boosted temporarily by the effects of provincial indirect taxes, but is expected to converge to the 2 per cent target by the end of 2012.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.

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 19 January 2011. The next scheduled date for announcing the overnight rate target is 1 March 2011.

Flaherty unveils new rules aimed at curbing soaring household debt

noreply@blogger.com (Greg Barrow) — Mon, 17 Jan 2011 15:53:00 +0000

OTTAWA - Finance Minister Jim Flaherty has announced new mortgage regulations aimed at reducing Canadians' soaring household debt.

Flaherty has unveiled three new rules:

1) Mortgage amortization periods will be reduced to 30 years from 35 years.

2) The maximum amount Canadians can borrow to refinance their mortgages will be lowered to 85 per cent from 90 per cent.

3) The government will withdraw its insurance backing on lines of credit secured on homes, such as home equity lines of credit.

The rules are aimed at encouraging responsible lending and borrowing and encouraging people to increase their home equity.

"Our measures will help improve the financial situation of households in Canada," Flaherty said.
"While interest rates are currently low by historical standards, eventually they will rise. Canadians should — and for the most part do — understand this when taking on significant debt such as the purchase of a new home."
The minister said the measures are aimed at protecting "the stability of the economy by ensuring lenders' practices are sustainable." He said that will increase the security and stability of home ownership.

"This will also increase the savings of Canadian families — savings of tens of thousands of dollars over the life of a mortgage, savings that go back in the pockets of hardworking families, where they belong."
The new rules come on the heels of a Bank of Canada announcement that Canadians' domestic debt burdens have hit record levels. The ratio of household debt to disposable income has reached 147 per cent and household debt has reached $1.4 trillion. The International Monetary Fund has called household debt the No. 1 risk to the Canadian economy.

[Source - The Canadian Press]

If you have any questions on how these rules may affect you, please feel free to call or email me.

I think these rules are good and although they may prevent some from buying a home now, they will force these people to save more money to facilitate a purchase in the future which will make them better off in the long run.

What are your thoughts on the new rules?

About Dominion Lending Centres - Richmond Hill Mortgages

noreply@blogger.com (Greg Barrow) — Fri, 07 Jan 2011 14:22:00 +0000

We are Canada’s premier online mortgage company, and one of the fastest growing mortgage brokerages nationwide!
We have more than 1,700 Mortgage Professionals from more than 250 locations across the country!
Our Mortgage Professionals are Experts in their field and many are ranked among the best nationally.
We work for you, not the lenders, so your best interests will always be our number one priority.
We have more than 100 mortgage programs, making it easy to choose the best fit for your unique situation.
We close loans in all 10 provinces and 3 territories.
We can process your mortgage in as few as 7 days.
We are the preferred mortgage lender for several of Canada’s top companies.

Dominion Lending Centres’ Mortgage Professionals are available anytime, anywhere, evenings and weekends – and we’ll even come to you!

Please contact me if you have any questions!

Have a great day.

Hybrid mortgages – also known as 50/50 mortgage products

noreply@blogger.com (Greg Barrow) — Wed, 05 Jan 2011 15:04:00 +0000

Hybrid mortgages – also known as 50/50 mortgage products – include an equal mix of fixed-rate and variable-rate components within your single mortgage. This means you get the best of both worlds – the security of fixed repayments with the flexibility of a variable rate.

Although there was a time in recent years when mortgage experts considered a variable rate mortgage as the obvious choice to save mortgage consumers money over the long term, with fixed rates remaining near historic lows, a 50/50 mortgage may be a great alternative for you.

In essence, since it’s extremely difficult to accurately predict rates over the long term, a 50/50 mortgage offers interest rate diversification, which can help reduce your level of risk.

If you opt for the Dominion Lending Centres 50/50 Balanced Mortgage, half of your mortgage is locked into a five-year fixed rate and half is at a five-year variable rate. You can lock in your variable-rate portion at any time without paying a penalty. As well, each portion of the 50/50 mortgage operates independently – like two separate mortgages – yet the product is registered as only one collateral charge.

The 50/50 mortgage product is well-suited to a variety of borrowers, including those who:

Would normally go fully variable but are afraid prime rate is at its bottom
Aren’t comfortable being locked into a fully fixed rate
Can’t decide between a fixed or variable mortgage

Some features of the 50/50 mortgage include:

20% annual lump-sum pre-payment privileges
20% annual payment increase ability
Portability (the option to transfer your existing loan amount to a new property without penalty)

As always, if you have questions about the 50/50 mortgage product and whether it’s right for you, or other mortgage-related questions, I’m here to help! Please contact me

Happy New Year

noreply@blogger.com (Greg Barrow) — Fri, 31 Dec 2010 14:21:00 +0000

Happy New Year to Everyone and I wish you all a very prosperous 2011

Canadian Mortgage Broker News - Harper hints at tighter mortgage rules in 2011

noreply@blogger.com (Greg Barrow) — Fri, 31 Dec 2010 14:18:00 +0000

Prime Minister Stephen Harper hinted the government may adjust mortgage rules in 2011 to help Canadians avoid going deeper into debt.

“We’ve tightened mortgage rules before,” Harper told CTV during a year-end interview that aired on Christmas Day. “If we have to do that again, we will.”

Harper also committed to eliminating the federal deficit but will not use “slash and burn” cuts, particularly in the critical areas of health and education.

Canadian Mortgage Broker News - Harper hints at tighter mortgage rules in 2011

Personal debt not as bad as it looks

noreply@blogger.com (Greg Barrow) — Mon, 20 Dec 2010 15:14:00 +0000

By MICHAEL BABAD
Globe and Mail Blog 14/12/2010

BMO study finds consumers getting into better shape

Monday was D-Day. Statistics Canada reported on it. Bay Street's economists pontificated on it. And Mark Carney, in his own way, declared war on it.

"D" stands for debt, and Canada yesterday reached a high-water mark: For the first time, household debt hit 148 per cent of disposable income and, for the first time since the late 1990s, topped the U.S. equivalent.
Mr. Carney, the Bank of Canada governor, warned of the rising debt burden among Canadian families, and the risks they face when interest rates rates inevitably rise.

"Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks," he said in a speech in Toronto. "Low rates today do not necessarily mean low rates tomorrow. Risk reversals when they happen can be fierce: The greater the complacency, the more brutal the reckoning."

Economists quickly noted the central bank's growing anxiety over the vulnerability of Canadians who may not be able to juggle their debt payments when that day of reckoning comes. "An erosion in home affordability is expected to slow the pace of mortgage debt accumulation over the next couple of years," said senior economist Pascal Gauthier of Toronto-Dominion Bank. "If it does not, an increasing and potentially worrisome proportion of Canadian households would become vulnerable to higher interest rates."
Not to play down those significant risks, BMO Nesbitt Burns questions whether the state of family finances are as bad as they would appear.

"While debt has risen to record heights, so too have financial assets, due to a rebound in equities and an underlying rise in savings," said deputy chief economist Douglas Porter. "Taking these factors into account, as well as the recovery in Canadian full-time employment, leads to the conclusion that household finances are not nearly as weakened as the dire headlines would suggest."

In his study, Mr. Porter noted that the savings rate in Canada has averaged 4 per cent in the last year, or about double the record low of 2005. And that, he said, does not paint the full picture of Canadian savings because it "narrowly" examines money saved from current income, while ignoring unrealized capital gains and returns from tax-sheltered vehicles.

A better measure, according to Mr. Porter, is the change in net financial assets as a share of disposible income, which has been extremely volatile. Smoothed over a five-year period, though, it has averaged about double the reported savings rate.

"In other words, take all cash, deposits, bonds, stocks, life insurance and pension assets and subtract household debt to derive net financial assets. These net assets have recovered from last year's lows to $2.7-trillion by the end of [the third quarter] ... For reference, that works out to $80,000 per Canadian, or 167 per cent of GDP."

Stock market gains since the depths of the meltdown have pumped up net worth, Mr. Porter said, as he cited the debt-to-asset ratio that Mr. Carney put at its highest in more than two decades. Much of the deterioration there, according to Mr. Porter, came as equities plunged and home prices dipped.

But on the flip side, the "absolute" level of net worth has been rising, stitting now at 6.1 times disposable income. His point is that though household debt has climbed faster than assets in percentage terms, some of that is accounted for in the "skewering" of assets late in 2008. In absolute terms, assets are now rising faster than debt again.

"Amid the cacophony of warnings, balance sheet repair is in fact quietly under way among Canadian households thanks to a slight rise in savings and firmer equity markets, while debt growth is poised to slow more meaningfully amid the clear cooling in the housing market," Mr. Porter added.

"... The singular focus on debt portrays an overly negative picture of Canadian household finances, which have proven incredibly resilient this cycle and likely still have enough cushion to provide a soft landing for spending in the year ahead."

Bank of Canada maintains overnight rate target at 1 per cent

noreply@blogger.com (Greg Barrow) — Tue, 07 Dec 2010 20:49:00 +0000

OTTAWA (07/12/2010) – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economic recovery is proceeding largely as expected, although risks have increased. As anticipated, private domestic demand in the United States is picking up slowly, while growth in emerging-market economies has begun to ease to a more sustainable, but still robust, pace. In Europe, recent data have been consistent with a modest recovery. At the same time, there is an increased risk that sovereign debt concerns in several countries could trigger renewed strains in global financial markets.

The recovery in Canada is proceeding at a moderate pace, although economic activity in the second half of 2010 appears slightly weaker than the Bank projected in its October Monetary Policy Report. In the third quarter, household spending was stronger than the Bank had anticipated and growth in business investment was robust. However, net exports were weaker than projected and continued to exert a significant drag on growth. This underlines a previously-identified risk that a combination of disappointing productivity performance and persistent strength in the Canadian dollar could dampen the expected recovery of net exports.

Inflation dynamics in Canada have been broadly in line with the Bank's expectations and the underlying pressures affecting prices remain largely unchanged.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.

Information note:
The next scheduled date for announcing the overnight rate target is 18 January 2011. A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the Monetary Policy Report on 19 January 2011.
----------------------------------------------------------------------------------------------------------------
To discuss best mortgage rates, or if you are are looking for Richmond Hill mortgages, please feel free to contact me.

Canadians’ borrowing costs getting pushed up - Fixed Rates Rise

noreply@blogger.com (Greg Barrow) — Thu, 18 Nov 2010 01:15:00 +0000

If worries about the sickly U.S. economy and Ireland’s rocky financial situation seemed remote a few days ago, they shouldn’t anymore.
Those global concerns are pushing up Canadians’ borrowing costs when it comes to buying a home.

TD Canada Trust and the Royal Bank of Canada said separately that they are increasing some of their fixed-term mortgage rates by as much as one-quarter of a percentage point, effective Wednesday.
At both banks, five-year mortgages, one of the most popular among Canadian homeowners, will rise by 0.25 of a percentage point to 5.44 per cent.

Rates on three- and four-year mortgages are also increasing by a quarter of a percentage point, while one-and two-year rates will go up by 0.15 of a percentage point.
Rates for mortgages that have six, seven, and 10 year terms will be unchanged.

Five-year mortgages rates in particular are closely tied to yields (rate of return) in the bond market, which have recently rebounded, following about three months of declines.

That means Canadian banks have been paying a higher rate to borrow in the bond market in order to lend to customers. “In the past month, the five-year bond yield has risen quite substantially, given that rates are so low,” said Francis Fong, economist at TD Economics

While Canada’s economy remains relatively strong and the Bank of Canada has been hiking interest rates, concerns over the U.S. recovery continue to simmer.

The U.S. Federal Reserve hinted in late August that it planned to take additional measures to jolt the moribund U.S. economy back to life. Its preferred approach, quantitative easing, amounts to pumping more money into the economy.

The market began pricing in the Fed’s anticipated intervention, though it would take another two months to get all the details - a further $600 billion (U.S.) purchase of Treasury securities.

Since then, yields have rebounded. “The market was likely waiting a bit for the details to see what the price of bonds should really be,” Fong said, adding that the process is similar to the anticipation of a company’s stock price prior to an earnings announcement.

Anxiety in Europe also continues to play a role in the bond market as nervous investors demand higher yields in exchange for higher risk.

Irish bonds fell Tuesday as the prime minister expressed doubts that an agreement to resolve his country’s fiscal crisis could be reached at a meeting of European finance ministers.

Investors are also nervously watching as Greece and Portugal make attempts to manage their own massive fiscal crises.

Meanwhile, North American stocks fell broadly, in part due to concerns about Europe's debt problems, which may have helped demand for U.S. Treasury debt.

With files from the Star’s wire services - Source: By Madhavi Acharya-Tom Yew | Tue Nov 16 2010

Don Cherry & Dominion Lending Centres - Check it Out!

noreply@blogger.com (Greg Barrow) — Fri, 05 Nov 2010 13:25:00 +0000

Refinance my mortgage

noreply@blogger.com (Greg Barrow) — Wed, 03 Nov 2010 14:00:00 +0000

Planning ahead really can save you money down the road. And with the high-cost holiday gift-buying and entertaining season quickly approaching, this may be the perfect time to refinance your mortgage and free up some money instead of relying on high-interest credit cards.

You may find that taking equity out of your home will help bring joy back into your holiday season – and start the New Year off on a debt-free note, as you may also be able to use some of the equity in your home to pay off high-interest debt such as your credit card balances. This will enable you to put more money in your bank account each month.

And since interest rates are hovering near historic lows – you can currently get a five-year mortgage for under 3.5% – switching to a lower rate may save you a lot of money, possibly thousands of dollars per year.

There are penalties for paying your mortgage loan out prior to renewal, but these could be offset by the lower rates and extra money you could acquire through a refinance. I can sit down with you and work through all of the equations to ensure this is the right move for you.

With access to more money, you will be better able to manage both your holiday spending and existing debt. Refinancing your mortgage and taking some existing equity out could also enable you to do many things you’ve been longing to accomplish – such as purchasing an investment property, taking that well-deserved vacation, renovating your home or even investing in your children’s education.

Paying your mortgage down faster
By refinancing, you may extend the time it will take to pay off your mortgage, but there are many ways to pay down your mortgage sooner to save you thousands of dollars in interest payments. Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year.

This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.

You can also increase the frequency of your mortgage payments by opting for accelerated bi-weekly payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it’s guaranteed to save you a significant amount of money over the term of your mortgage.

If, for instance, you have a $100,000 mortgage, an interest rate of 5% and an amortization period of 25 years, your monthly mortgage payment would be $581.60 and your total payments for a year would be $6,979.20 ($581.60 x 12).

To understand the savings accelerated bi-weekly mortgage payments can make, take the monthly mortgage payment of $581.60 and divide it by two ($581.60 ÷ 2 = $290.80). Next, take that payment and multiply it by 26 to arrive at your total payments for the year ($290.80 x 26 = $7,560.80).

As you can see, by using the monthly mortgage payment plan, you’ve made payments totalling $6,979.20 for the year, while using the accelerated bi-weekly mortgage plan you’ve made payments totalling $7,560.80 – a difference of $581.60.

By opting for accelerated bi-weekly mortgage payments, you’re making one additional monthly payment per year.

Using this example, you would reduce the amortization on your $100,000 mortgage from 25 years to just over 21 years and your total savings on interest over the life of the mortgage would be just over $12,000.

By refinancing now – before the holiday season is in full swing – and planning ahead, you can put yourself and your family in a better financial position.

As always, if you have any questions about refinancing, reducing debt or paying down your mortgage quicker, I’m here to help!

Ottawa ponders further tightening of mortgage rules

noreply@blogger.com (Greg Barrow) — Wed, 06 Oct 2010 03:00:00 +0000

Garry Marr and Paul Vieira, Financial Post · Sunday, Oct. 3, 2010

TORONTO/OTTAWA • The federal government is once again looking at tightening rules in the Canadian mortgage market, according to a source close to the situation.

Finance officials are set to meet in Ottawa on Monday with some of the country’s leading economists for pre-budget discussions and the subject of whether to tighten housing regulations may come up.

Much of the discussion about changing the mortgage rules seems to stem from comments made by the Bank of Canada governor who last week warned that consumer borrowing could not continue at its present clip.

“Canadian household balance sheets are becoming increasingly stretched,” said Mark Carney, who issued a warning to legislators about taking steps to contain the growth of personal debt. “Historically low policy rates, even if appropriate to achieve the inflation target, create their own risks.”

15 Key Points Every Customer Should Know on Why They Should Use a Mortgage Broker

noreply@blogger.com (Greg Barrow) — Fri, 01 Oct 2010 16:06:00 +0000

1) Mortgage Brokers in Ontario shop the best rates and products from 90 different Banks, Credit Unions and Trust Companies including: CIBC (First line), Toronto Dominion, Scotia, Bank of Montreal, Royal (Merix), and most of the Canadian Credit Unions, ING, etc.

2) Our services are free as the bank pays us a finder’s fee. The Industry is changing and banks now have to compete for business, so they value our referrals. Keep in mind, they spend millions of dollars operating their many branches, plus internal staffing and layers of management, so they can afford to offer deep discounts for the business we bring to them.

3) Isn’t it time the Banks compete for your mortgage business? You wouldn’t get just one opinion from one doctor if your physical condition were in question…why get just one opinion when your financial condition is going through the most significant transaction of its life?

4) Your bank very rarely gives you the best rates and products. Most homeowners renew their mortgage every four or five years automatically, so they rarely receive the best rates and programs. Since our Brokerage sends lenders millions of dollars of new business each month, they always offer us the deepest discounts which the mortgage agent will pass on to you - whether you are purchasing, refinancing or renewing.

5) Our application process is simple and quick. We just take a little info and send it electronically to the lenders that we feel are the best fit for your situation; A mortgage broker should have some feedback later that day or the next!

6) One of our best benefits is that we are available on your terms! Isn’t it frustrating when a bank takes several days to get back to you, and then you have to make your way through their endless voice mail boxes?

7) We take one credit bureau only and forward it to all the lenders! Many people inadvertently disqualify themselves from getting the best rate when they are shopping for a mortgage. When multiple banks pull a credit bureau, your Beacon score drops every time, sometimes eliminating the chance for the best mortgage or a mortgage at all!

8) There’s a mortgage product available for almost everyone now. When a person’s situation isn’t ideal, there’s usually a story about why; maybe they changed jobs, maybe they went through a divorce or another life-altering event and their credit was affected. It is our job to tell your story to the lender that will qualify you.

9) I appreciate your business. I sincerely appreciate your business and want to do a good job for you because I want all your family and friends business in the future! (Has any bank employee ever told you that?)

10) We are a certified Experts. Most bank employees are not certified and only know about their own bank’s products and do not know and cannot advise you to go to another lender where you can get qualified. You wouldn’t go to your G.P. if you needed a specialist. Deal with a mortgage expert specializing in mortgages from all lenders.

11) We work for you, not the banks. We don’t get paid unless we fund your mortgage with a lender that is giving you the product you need and we have no interest in getting the lender more interest on your mortgage, as the higher the interest, the lower the amount we can qualify you for; clearly we work in your best interests, not the lender’s.

12) Rate Protection. If the rates drop before you close you automatically get the lower rate and if rates go up you have the lower rate locked in. The last time you got pre-approved for a mortgage at a bank, did you get a commitment letter? Did they offer you a rate protection like the one we can secure for you?

13) Commitment Letter Every-time. We provide a commitment letter every time so you can relax and be confident your mortgage financing is in place!

14) 85% of all people in the USA use a mortgage broker and we are catching up quickly here in Canada.

15) A mortgage broker is no longer the “lender of last resort”! Actually we are becoming the first choice of the educated borrower.

Home prices are still 6.4% above their pre-recession peak, the Teranet-National Bank House Price Index shows.

noreply@blogger.com (Greg Barrow) — Thu, 30 Sep 2010 01:50:00 +0000

Prices climbed 0.5% in July from a month earlier, marking the 15th consecutive increase, National Bank said, though for the first time in four months not all regions shared in the gain. Prices in Vancouver dipped, the bank noted.

Over last year, the index was up 12.4%, compared to 13.6% a month earlier. “July’s rise is the weakest in four months, but it nevertheless continues the best string of consecutive monthly price increases since October 2006,” Senior Economist Marc Pinsonneault said in a research note.

Click here to see the full story in The Globe and Mail.

Bank of Canada increases overnight rate target to 1 per cent

noreply@blogger.com (Greg Barrow) — Thu, 09 Sep 2010 17:40:00 +0000

From Bank of Canada website:

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 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economic recovery is proceeding but remains uneven, balancing strong activity in emerging market economies with weak growth in some advanced economies. In the United States, the recovery in private demand is being held back by high unemployment and recent indicators suggest a more muted recovery in the near term.

Economic activity in Canada was slightly softer in the second quarter than the Bank had expected, although consumption and investment have evolved largely as anticipated. Going forward, consumption growth is expected to remain solid and business investment to rise strongly. Both are being supported by accommodative credit conditions, which have eased in recent weeks mainly owing to sharp declines in global bond yields.

The Bank now expects the economic recovery in Canada to be slightly more gradual than it had projected in its July Monetary Policy Report (MPR), largely reflecting a weaker profile for U.S. activity. Inflation in Canada has been broadly in line with the Bank's expectations and its dynamics are essentially unchanged.

Against this backdrop, the Bank decided to increase its target for the overnight rate to 1 per cent. As a result of monetary policy measures taken since April, financial conditions in Canada have tightened modestly but remain exceptionally stimulative. This is consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada.

Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook.

Information note:

The next scheduled date for announcing the overnight rate target is 19 October 2010. 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 20 October 2010.

Selecting the right mortgage term

noreply@blogger.com (Greg Barrow) — Mon, 30 Aug 2010 18:50:00 +0000

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 – either in the financial markets or in your own life – that you will also have to take into consideration when selecting the length of your mortgage term.

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 – depending, of course, on your overall plan. This will allow you to know that the mortgage payments on the property will be steady for a long time and enable you to more accurately project your future income from the property.

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.

Choosing the right mortgage term is a unique decision for each individual. By understanding your personal financial situation and your tolerance for risk, I can assist you in choosing the mortgage term that will work best for your situation.

As always, if you have any questions about mortgage terms or your mortgage in general, I’m here to help!

Canada Mortgage Interest Rates

noreply@blogger.com (Greg Barrow) — Fri, 20 Aug 2010 20:02:00 +0000

Recently, the real estate industry has dominated the headlines.

Mark Carney, Governor of the Bank of Canada, raised warning flags about the impact of higher interest rates on those Canadians who are already stretching to carry their mortgages.

There’s been coverage of the dispute between the Competition Bureau and the real estate industry over proposals that would allow greater price competition among real estate agents.

And there have been suggestions from within the industry that there needs to be increased professionalism among real estate agents.

For many Canadians, none of these is the central issue when it comes to real estate. Rather, the key question comes down to the appreciation they can expect on the investment in their home. After all, the past decade has been a great period for homeowners. Expecting this to continue, some Canadians have stretched to buy larger houses now, before prices get away from them. Research firm Investor Economics points out that residential mortgages are at a record level, approaching $1 trillion.

Click here for the full Globe and Mail article.

Dominion Lending Centres Wins Big at CMP Canadian Mortgage Awards

noreply@blogger.com (Greg Barrow) — Wed, 18 Aug 2010 14:56:00 +0000

Dominion Lending Centres dominated the CMP Canadian Mortgage Awards on Friday, April 23rd at Toronto's Liberty Grand – walking away with five prestigious national awards!

Dominion Lending Centres took home top prizes for Mortgage Brokerage of the Year, Best Branding and Best Advertising. Meanwhile, one of our veteran broker/owners, Gary Meger, Neighbourhood Dominion Lending Centres in Barrie, ON, won Mortgage Broker of the Year. Finally, the Business Development Manager for our extensive white label Dominion Mortgage line of products, Cynthia Kramer, won Lender BDM of the Year!

“We are absolutely honoured that our industry peers and partners, as well as an esteemed panel of judges recognized Dominion Lending Centres with these incredible awards,” says Gary Mauris, President of Dominion Lending Centres.

“We will continue to provide our more than 1,700 brokers and agents across the country with value-added tools and services to ensure we remain on top, and are the company of choice for Canadian mortgage consumers,” Mauris adds.

This is the second consecutive year Dominion Lending Centres has captured the Best Branding award. Dominion Lending Centres is the only mortgage brokerage in Canada that has an advertising fund to ensure we gain access to households across the country via advertising – our main advertising vehicle being Television.

If you haven't yet noticed an upsurge in Dominion Lending Centres TV commercials, you soon will! This month and next, we have an increased presence across the country on News and Sports programming, culminating in an astounding 12.2 Million additional viewer impressions in the key demographic of consumers between the ages of 25 and 54! This is on top of the more than 240 Million viewer impressions we will make this year.

Earlier this month, six new Dominion Lending Centres commercials began airing across Canada. The key message follows a theme that interest rates are still near historic lows, and encourages viewers to contact a Dominion Lending Centres mortgage professional through our main website – www.DominionLending.ca – when purchasing a new home, or renewing or refinancing an existing mortgage.

Canada's major banks reduce mortgage rates again

noreply@blogger.com (Greg Barrow) — Tue, 17 Aug 2010 15:28:00 +0000

Interest rates have been reduced again by 1/10th of a percentage point by each of Canada's big five banks. The new lower interest rates took effect yesterday.

The posted five-year closed mortgage rate is now 5.49 per cent annually with Royal Bank of Canada leading the way and followed by Bank of Montreal, Scotiabank, CIBC and TD Bank.

This is the second time major banks have lowered their rates this month, and follows the report from the Canadian Real Estate Association that home sales were down 6.8 per cent in July from the previous month.

To keep informed of the latest interest rates, you can sign up for my Rate Minder email - click here - or you can also visit my website - Richmond Hill Mortgages - to check the latest mortgages rates and use the mortgage calculators.

Bank of Canada Raises Benchmark Rate

noreply@blogger.com (Greg Barrow) — Wed, 02 Jun 2010 17:54:00 +0000

After more than a year at a record low level, Bank of Canada Governor Mark Carney raised the benchmark interest rate for the first time since 2007 by one-quarter percentage point to 0.5 per cent. This is the first time since 2007 that that rate has increased and the Bank of Canada is the first in the Group of Seven to do so since the financial crisis and recession began in 2008.

In a statement Carney emphasized that the increase should not be interpreted as just the first of more to come.

"This decision still 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,'' the central bank said. ``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.''
[Source - mortgagebrokernews]

Watch a discussion on the rate increase from CBC News - Click Here.

TD led the way raising Prime to 2.5% with CIBC and RBC shortly afterwards. Many other banks and mortgage lenders have also followed with a .25% increase in the prime rate.