iLive in Mount Pleasant

Reading Tea Leaves: Bank of Canada Rate Biases

2013-06-01T09:13:00.003-07:00

Bank of Canada Rate Biases

When the Bank of Canadatalks rates, analysts hang off of every word. They pay special attention to biases in the Bank’s wording (i.e., which way the Bank is leaning on interest rates).

The media loves to pump commentators for predictions on whether the BoC will keep its rate “bias,” not keep its bias, do something unexpected with its rate bias, and on and on. It’s quite the drama over what is usually a 1-3 sentence statement in a BoC press release.

On Wednesday, the Bank of Canada left Canada’s key rate alone. It also chose to leave its 13-month-long rate hike bias intact, saying:

“…the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required.”

The question some may be wondering is, should this sort of statement mean anything to the average mortgage consumer?

In short the answer is “usually not.” And here’s why.

The Problem With Biases

Deciphering the Bank of Canada’s forward-looking rate guidance generally reveals few clues that can help with a mortgage strategy.

For one thing, the Bank’s statements have to be interpreted correctly. Most of the time, they’re so vague that they offer minimal predictive value (the quote above is case in point).

Then, there’s the small matter of accuracy. The BoC sets its key rate based on where it sees inflation 18-24 months down the road. But most of the time (especially these days) there is virtually no data that gives the Bank of Canada clarity on inflation two years ahead.

Indeed, despite employing the best data/technology and some of the top analysts in the country, the BoC (like most economists) has tended to be over-optimistic with longer-term forecasts.

And then there’s the question of how long a rate cycle will last. It’s great to know that the BoC may hike rates next quarter, for example, but how long will rates stay elevated? When will they revert lower again?

In most cases, these factors make it hard to read too much into the BoC’s rate guidance—especially since its biases can change without notice (due to unforeseen events or crises).

B of C Rate Announcement: Overnight Rate Maintained

2013-05-31T10:18:00.000-07:00

Bank of Canada Rate Announcement

Bank of Canada Interest Rate Announcement - May 29, 2013

At 10:00 am EST, Wednesday May 29th, 2013 the Bank of Canada again did what we expected them to do… they maintained their overnight rate. What this means to you if you have a floating / variable rate mortgage, line of credit or student loan is that your rate will not change and remains based on prime rate at 3.00%. This is great news as you still have a great low rate and so continue to make the most of the low payments you will still have. Don’t forget as always we recommend you chat with a financial adviser about a Tax Free Savings Account or some RRSP contributions to trigger a potential income tax refund next year as your payments continue to remain low! If you don’t have a financial adviser, let us know and we’d be happy to recommend one to you.

Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision:

“In the United States, the economic expansion is progressing at a modest pace, with continued strengthening in private demand partly offset by fiscal consolidation. Japan’s economy is beginning to respond to significant policy stimulus. Europe, in contrast, remains in recession. Growth in China has continued to ease from very strong rates, weighing somewhat on global commodity prices.”

Based on this news and the continued slack in the Canadian economy and the muted outlook for inflation, the Bank does not expect to increase their rate in the foreseeable future with any change most likely to occur possibly as late as Fall 2013 to early 2014! Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so you won’t see a large significant increase all at once.

Fixed rates haven’t changed much at all since the last announcement, at around 2.89% for a five year fixed term.

If you currently have a variable rate mortgage, we’d recommend that you either stay with your current variable rate product as your interest rate is likely lower than a fixed term rate right now, or consider locking into a low rate fixed to take advantage of the security and peace of mind. If having a fixed payment is important to you, call us so we can calculate what your new payment would look like and also if it is suitable for you. If you have a fixed rate mortgage and you would like to lower your monthly payment, reduce your amortization, switch lenders etc, we are here to help you.

Please call us and ask for your “free mortgage review”. Sometimes there are simple changes that can be made with no cost to you that will improve your financial situation. The next announcement on any change to the prime rate is July 17, 2013 at which time we’ll be in touch again.

We would hope you and your family have a great summer, and we look forward to speaking with you again soon.
Warm regards,

Chana Fay Charach, AMP
President
VERICO Synergy Mortgage Inc.
Office Tel: 604.269.9419

chana@synergymortgage.ca
www.SynergyMortgage.ca

PS: We would like to ask you a favor – rates are still low right now and so it is a great time for refinancing, first time homebuyers or buying an investment property especially as we can hold rates for up to six months, if you know someone that is looking for advice on their mortgage options, with no obligation, would you mind passing our contact information on to them – Your referrals are the biggest compliment we can receive and are much appreciated. We also have some very attractive “Quick Close Rate Specials”.

E. & O.E. © Copyright 2013 VERICO Synergy Mortgage Inc.

Golden Handshake and a Kiss Goodbye

2013-05-31T09:06:00.001-07:00

Top Banking regulator stepping.. OSFI’s Julie Dickson leaving in 2014

May 31, 2013 — Steve Garganis

Julie Dickson, the head of OSFI (Office of the Superintendent of Financial Institutions) will not be back when her term expires in July 2014. She’s decided to not to stick around after making more lending rule changes in 2012, than I have ever seen, during my entire 23 year career working in financial services. OSFI is a regulatory bodythat provides regulation and supervision to 152 Banks, Trust companies and other Lenders. In short, they are auditors. Here’s a link to the major changes made just last year including putting CMHC under OSFI control.. more on that later..

Some say her claim to fame is that she was in charge during the worst banking and mortgage crises in history. And that Canada came out of this global financial collapse way better than any other country. It’s true, we did come out of this very well compared with the rest of the world… But what does Ms. Dickson and OSFI have to do with it? For me, this had more to do with luck, govt intervention and Canadians being our normal conservative selves. We were a little slower to adapt to U.S. style lending policies… Ask any financial expert and they will tell you we were just a few years behind the U.S. with regards to their wild mortgage lending guidelines…

Did you know that our Federal govt approved and promoted $0 money down mortgages, with interest only payments?? and not just for owner occupied properties but for rental properties, too? Think about that… $0 money down with interest only payments on a rental property!!! Wow! Or how about the 35 and 40 year mortgage amortizations? 95% loan to value refinances? We also had 107% mortgage financing in Canada… (not supported by govt of Cda but it was here)… Remember, all these programs started to get introduced in 2006.. just 2 years before the October 2008 U.S. sub-prime mortgage crisis.

And now Ms. Dickson and Mr. Flaherty (federal minister of finance) have turned back the clock to 1993 with a knee jerk like reaction with their Bill B-20… This Bill affects anyone that borrows money.. yes.. ALL of US… Many of the newer lending rules are just like they were 20 years ago… Only it isn’t 1993 anymore… and times have changed.. Our needs have changed… We don’t have 8.00% and 9.00% mortgage rates… We need a govt for 2013, not 1993. more here

Home Sales Improve ... Balanced Market

2013-05-16T10:45:00.000-07:00

Has The Spring Housing Market Sprung?

2013-05-15T10:48:00.002-07:00

Housing Market Conditions Improve on the South Coast

Vancouver, BC – May 15, 2013.

The British Columbia Real Estate Association (BCREA) reports that a total of 6,904 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC during April, up 1.9 per cent from March on a seasonally adjusted basis, but down 2.2 per cent compared to April 2012. Total sales dollar volume declined 3 per cent to $3.65 billion. The average MLS® residential price in the province was $528,507, down 0.8 per cent from a year ago.

"BC home sales trended higher again in April, with seasonally adjusted unit sales now 8 per cent higher since the beginning of the year," said Cameron Muir, BCREA Chief Economist. "Market conditions were at or near balanced conditions in Victoria, Vancouver, the Fraser Valley and the North last month, leading to a firming up of home prices." The MLS® Home Price Index edged up 0.7 per cent over the past month in the Lower Mainland, and 1.5 per cent over the past three months.

Year-to-date, BC residential sales dollar volume was down 16.6 per cent to $10.8 billion, compared to the same period last year. Residential unit sales dipped 13.9 per cent to 20,476 units, while the average MLS® residential price was down 3.1 per cent at $529,785.

For the complete news release, including detailed statistics, click here.

For immediate release

Death Sentence for Extended Amortizations?

2013-05-11T09:41:00.000-07:00

Canadian Mortgage Trends

Housing commentator Garth Turner cites insider info that long-termamortizations are about to go extinct, at least where the federal government has jurisdiction.

In a blog post today, he writes:

“Last week the CEOs of the monster banks were given a clear message that 30-year mortgages need to be wiped away. Completely. In fact, they’ll be banned. That letter will go out next week, the result of a decision made jointly by the Department of Finance, OSFI (the bank regulator) and the Bank of Canada.”

This applies to mortgages that: (a) are from lenders subject to federal regulation, and (b) have 20% or more equity. Amortizations on prime mortgages with less than 20% equity are already capped at 25 years.

If true (with emphasis on the word "if"), this news could:

Increase monthly payments on new conventional mortgages by about $53 per $100,000 of mortgage, other things being equal.*
Potentially impact even smaller non-bank lenders (e.g., First National, Street Capital,MCAP,…). That’s because, as Turner adds:

“Regulated financial institutions will also be prevented from buying any securities which are made up [of mortgages] with 30-year ams.”

Virtually all non-deposit-taking lenders rely onsecuritization and/or selling mortgages directly to banks.
Make provincially-regulated credit unions the only game in town for amortizations over 25 years. That would provide credit unions who keep long-amortization mortgages on their balance sheets with another advantage versus the banks. CUs already sidestep federal mortgage rules by offering HELOCsabove the federal 65% loan-to-value (LTV) maximum, higher LTV stated incomemortgages and mortgages with lowerqualification rates.

As noted, none of the above has been confirmed. So the above should be considered speculation until it is. We’ll do more digging and report back.

April Housing Market Update from REBGV

2013-05-09T12:03:00.000-07:00

Genworth Forecast: Mortgage Pulse? ... Flat Line!!!

2013-05-09T09:40:00.000-07:00

The Market Pulse from Genworth

Last year’s mortgage regulations shrank the overall high-ratio mortgage insurance market by about 15%, according to recent estimates from GenworthCanada.

Those rule changes also eliminated high-ratio refinances and contributed to a 15% drop in housing sales last quarter versus Q1 2012.

Genworth CEO Brian Hurley spoke today on BNN about the pulse of the market. Here are some of his insights of note (our comments in italics):

As an insurer, "We make money by getting the risk right." That means "We've got to get the properties right," he told BNN.
(If one is to read into this, and if history is a guide, we can expect more scrutiny on appraisals and property types as the market slows. This is especially true in richly valued markets like the Greater Toronto Area and Vancouver.)
"Our two factors that drive our business performance are delinquencies, driven by unemployment (a very high correlation), and the size of our claims…(as) driven by home price declines."
(As a result, Hurley hinted that Genworth is now focusing more on employment quality in its underwriting.)
Genworth has been extra careful about insuring condos with a large investment component—typically those with small unit sizes.
For the next few years "the mortgage market is going to be flat," he predicted. It will be "a couple of years until we see [the mortgage market] back to the 5-6% growth rate.”
Genworth is seeing 24-25% average gross debt ratios (GDS) for first-time buyers
(That may seem surprisingly low and well below the normal maximum of 32-39%. ButCAAMP found that the average GDS of an insured fixed-rate borrower was 22.5% in 2010—the latest marketwide GDS data we know of.)

More Here (Canadian Mortgage Trends)

Transition Year Expected for BC Housing Market

2013-05-09T08:40:00.001-07:00

BCREA 2013 Second Quarter Housing Forecast

Vancouver, BC – May 9, 2013. The British Columbia Real Estate Association (BCREA) released its 2013 Second Quarter Housing Forecast today.
BC Multiple Listing Service® (MLS®) residential sales are forecast to edge up 1.9 per cent to 68,900 units this year, before increasing a further 6.5 per cent to 73,400 units in 2014. The five-year average is 74,600 unit sales, while the ten-year average is 86,800 unit sales. A record 106,300 MLS® residential sales were recorded in 2005.
"Stricter mortgage credit regulation combined with slower economic growth has kept BC home sales at a cyclical low over the past three quarters," said Cameron Muir, BCREA Chief Economist. "However, a faster growing economy is expected during the second half of the year and through 2014 which will support a growth trend in provincial housing demand."
"The BC average home price forecast is revised upward for 2013, from a decline of 1 per cent to remaining unchanged, as a result of stronger than expected market conditions in Vancouver," added Muir. The average MLS® residential price in BC is forecast at $515,800 this year, before rising 1.7 per cent to $524,500 in 2014.

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To view the full BCREA Housing Forecast, click here.

... Axe The Property Purchase Tax!

2013-05-01T10:45:00.000-07:00

News Release

Majority of British Columbians believe Property Transfer Tax needs adjustment

VANCOUVER, BC – May 1, 2013 – In a recent Ipsos Reid opinion poll, 58 per cent of respondents agreed that the Property Transfer Tax (PTT) places an unfair tax burden on home buyers relative to other segments of the population. Twenty nine per cent disagreed, and 13 per cent had no opinion on the issue.

The poll also found that 51 per cent of respondents believe the provincial government should adjust the way the PTT is calculated to reflect price changes in the housing market over time. Of the 854 respondents, 26 per cent did not believe the PTT should be adjusted to reflect inflationary trends in the housing market and 23 per cent had no opinion.

Ipsos Reid conducted the poll on behalf of the Real Estate Board of Greater Vancouver (REBGV). It was conducted online with 854 adult British Columbians responding between April 19 and 24, 2013.

“While the PTT is not top of mind in most people’s daily lives, when the time comes to purchase a home this tax becomes a significant burden for home buyers in BC to shoulder,” says Sandra Wyant, REBGV president.

The province introduced the tax 26 years ago. It was structured to add 1 per cent on the first $200,000 of the purchase price, and 2 per cent on the balance. The government of the day touted the PTT as a wealth tax, as just 5 per cent of homes in Greater Vancouver in 1987 sold for $200,000 or more. Today, the reverse holds true, with 96 per cent of homes in Greater Vancouver selling for more than $200,000. However, the tax’s structure hasn’t changed in nearly three decades.

“The PTT is structured to reflect home prices in the 1980s, not the prices home buyers pay today,” Wyant says. “The fact that it hasn’t been adjusted in 26 years is simply not fair to home buyers and the candidates in this year’s election should address this issue,” Wyant said.

The REBGV has launched a campaign to increase voter awareness of the need for government to reduce the PTT. To support this campaign, people can “like” our Facebook page at facebook.com/helpreducetheptt.

The REBGV is asking candidates if they would support increasing the one per cent threshold to $525,000 from $200,000. This would mean that on a $600,000 home, the PTT would be $6,750, instead of $10,000, saving home buyers $3,250.

The PTT generated $780 million for the provincial government in 2012. This money goes into general revenue to fund public services. It’s paid each time a property changes hands in the development process. When a developer buys raw land, the developer pays the PTT. When a builder buys lots from the developer, the builder pays the PTT. When a home buyer buys a home from the builder, the home buyer pays the PTT. Each time that home is sold, the buyer pays PTT.

To learn more about the PTT and its implications on BC home buyers, visit helpreducetheptt.ca.

Editor’s Note:

Ipsos is a global independent market research company. Click here to view the full survey results.

These are the findings of an online Ipsos Reid poll of 854 adult British Columbians conducted for the Real Estate Board of Greater Vancouver using Ipsos Reid’s national online household panel between April 19 and 24, 2013. These data were statistically weighted to ensure the sample's regional and age/sex composition reflects that of the actual BC population according to 2011 Census data. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within +/- 3.8 percentage points had all British Columbia adults been surveyed. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

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The Real Estate Board of Greater Vancouver is a non-partisan association representing 11,000 REALTORS® in Greater Vancouver. For more information about the REBGV visit www.rebgv.org.

Authorized by the British Columbia Real Estate Association, registered under the Election Act, 604.683.7702.

BCREA News Flash: It's a Buyer's Market!

2013-04-16T14:15:00.000-07:00

No Smoking Please ... It Ruins My Investment Portfolio!

2013-04-16T09:31:00.000-07:00

You Give Up That Disgusting Habit ... and ... w'ell get at least an extra 29% for our house!

Homeowners risk coughing up big bucks if they’re also smokers, according a survey of Ontario real estate agents and brokers.

The survey found that smoking in the home can reduce the value of the property on resale by up to 29 per cent.

National Real Estate Sales: ... Smallest Gain in 2 Years!

2013-04-15T09:36:00.000-07:00

CREA
Canadian home sales rise in March
Mon, 04/15/2013 - 09:00

Ottawa, ON, April 15, 2013 - According to statistics released today by The Canadian Real Estate Association (CREA), national home sales edged upward on a month-over-month basis in March 2013 but stayed well below levels recorded one year ago.

Highlights:

National home sales rose 2.4% from February to March.
Actual (not seasonally adjusted) activity came in 15.3% below levels in March 2012.
The number of newly listed homes was up 3.2% from February to March.
The Canadian housing market remains firmly in balanced territory.
The national average sale price rose 2.5% on a year-over-year basis in March.
The MLS® HPI rose 2.2% in March, its smallest gain in more than two years.

Mortgage Broker News
Home sales were up slightly nationwide for the month of March, but remain well below levels recorded from a year ago, according to statistics released today by the Canadian Real Estate Association (CREA).

More importantly, the Home Price Index for March rose only 2.2 per cent – its smallest gain in more than two years.

“National sales have been holding fairly stable since last summer,” says CREA President Laura Leyser. “We’ll be watching closely as the spring market picks up to see whether the March sales increase marks the beginning of an improving trend.”

Home sales rose 2.4 per cent from February to March of this year, but actual activity for March compared to the same month a year ago were 15.3 per cent below the 2012 levels.

New listings were up 3.2 per from February to March, with average sale prices up 2.5 per cent from compared to March 2012.

CREA attributes the sluggish March sales numbers to the Easter holiday and the loss bank days due to an extra full weekend at the end of the month – known as the “trading day effect.”

“Easter and trading day factors combined effectively to cut March sales short,” says Gregory Klump, CREA’s chief economist. “Activity in the months ahead will reveal whether the monthly improvement in seasonally adjusted March sales reflects technical seasonal adjustment factors or a fundamental improvement in demand.”

CBC News

Young Flaher - Stein

2013-04-15T08:16:00.003-07:00

There's A Pulse ... It's ALIVE!!! ... It's ALIVE!!!!

The Mad Scientist Who Plays God
... a Horrific Scene From "Young Flaher -(ty)-Stein"

BC Home Sales Tick Higher in March

Details Here

Vancouver, BC – April 15, 2013. The British Columbia Real Estate Association (BCREA) reports that a total of 5,661 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC during March, up 6.6 per cent from February on a seasonally adjusted basis, but down 17.7 per cent compared to March 2012. Total sales dollar volume was down 18.5 per cent to $3.06 billion. The average MLS® residential price in the province was $540,662, up 2 per cent from February, but down 1 per cent from a year ago.

"BC home sales in March posted the largest seasonally adjusted month-to-month increase since January 2011,” said Cameron Muir, BCREA Chief Economist. “However, homes sale per capita continue to remain near a cyclical low, suggesting that pent-up demand may be beginning to grow in the housing market."

Year-to-date, BC residential sales dollar volume declined 22.1 per cent to $7.2 billion, compared to the same period last year. Residential unit sales dipped 18.8 per cent to 13,572 units, while the average MLS® residential price was down 4.0 per cent at $530,435.

Affordable Housing in Vancouver????

2013-04-12T13:27:00.000-07:00

The Issue of Affordability in Vancouver. ... Can the answer be found in Controls over Lending Policy or on Speculation? ... Hmmm?

Globe and Mail

Anyone who has walked around Coal Harbour at night already knows that empty, investor-owned condos are the antithesis of community.

If the data released during a panel discussion at Simon Fraser University two weeks ago revealed anything, it’s that empty condos point to a city of speculators and investors. And it doesn’t matter if those investors are from Mainland China, Iran or Ladner.

Royal Bank of Canada: ... I'm Sorry, ... So Sorry!

2013-04-11T11:41:00.000-07:00

... (I'm sorry) I'm sorry
(So sorry) So sorry
Please accept my apology
But love is blind
And I was too blind to see
Oh, oh, oh, oh
Uh-oh ... Oh, yes

Globe and Mail
Royal Bank of Canada chief executive officer Gord Nixon has issued an open letter apologizing to employees for a controversy involving the bank’s use of temporary foreign workers.

In a statement titled “An open letter to Canadians,” the bank’s CEO said the bank is in compliance with regulations involving temporary workers, but should have handled the situation better.

“I want to apologize to the employees affected by this outsourcing arrangement as we should have been more sensitive and helpful to them,” Mr. Nixon said in the letter.

CBC News ... 'You have my assurance I'm listening,' Gord Nixon tells Canadian workers.

... This Hit That Has the Potential to Go Straight to The Top!
... Sadly, ... It's the Kind of Musical "Syrup" that is Played by our Fiscal Musicians all too often and only God Knows How Many Times We've Had To Dance to the "Fiddler's Tune".
... So, ...
... please Feel Free to Jump Right In and Sing Along!

Mr. Flaherty ... Tear Down This Wall!

2013-04-11T09:29:00.003-07:00

Canadian Mortgage Trends

Waugh to Flaherty: Ease Off

It’s been a long search but finally one has emerged: A top banker who’s not afraid to hold Finance Minister Jim Flaherty publicly accountable for his anti-competitive rate actions.

Scotiabank CEO Rick Waugh said the following about Flaherty's persuasion of banks to raise their mortgage rates:

“As a minister of finance, he’s obviously concerned about the well-being of the country. However, to price products for businesses — whether it be banks or manufacturers — is not what I would have expected.”

“I understand why the finance minister is concerned about the Canadian economy, but I just philosophically don’t think government should be setting product pricing.”

“Despite the difficulties of central banks to use interest rates, the alternative of trying to manage specific products or prices, to me, is fraught with difficulty.”

“The government sets the framework, but you’ve got to let companies go out and use their business judgment rather than the government’s business judgment.”

Consumers will applaud Waugh for being one of the only banking executives to openly challenge Flaherty's efforts to deprive Canadians of lower competition-driven mortgage rates

The government has every right to set the general level of mortgage rates (via the Bank of Canada and securitization policy), but harassing individual banks and coercing them to reverse 10-20 basis point rate discounts is beyond its mandate.

RBC Mortgage Scandal: Outrageous ... and Viral Too!

2013-04-10T11:18:00.001-07:00

Canadian Mortgage Broker News

One broker is leaving nothing to chance amid the RBC public relations fiasco, creating a web page showing people how to switch their mortgage from the embattled bank to another lender.

“The response to the RBC story has been phenomenal,” says Scott Dawson, a Vancouver mortgage broker who yesterday told MortgageBrokerNews.ca that RBC’s public relations stumble in outsourcing its IT work to a company based in India was “gold” for mortgage brokers.

“I created a page on my website outlining what's required for an RBC client to switch their mortgage.” He says. “After sharing the link to clients and industry associates on various social media sites, it has already become the most visited page on my site.” ... link to Scott's Webpage

Through The Darkness ... I Perceive a Faint Glimmer, ... Perhaps a Source of Light ...

2013-04-09T11:18:00.001-07:00

Public Service Message from
The Minister of Finance:
The Light at the End of the Tunnel
has been turned off
until further notice!

For More Information on How You Can Cope With This Crisis ... CLICK HERE!

Home sale activity improves but remains below historical averages

2013-04-04T11:34:00.000-07:00

REBGV
Lower levels of both supply and demand in recent months are holding home prices in check in the Greater Vancouver housing market.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,347 on the Multiple Listing Service® (MLS®) in March 2013. This represents an 18.3 per cent decrease compared to the 2,874 sales recorded in March 2012, and a 30.6 per cent increase compared to the 1,797 sales in February 2013.

Last month’s sales were the second lowest March total in the region since 2001 and 30.2 per cent below the 10-year sales average for the month.

“While home sales were below what’s typical for March, we are seeing more balance between the number of sales and listings on the market in the last two months, which is having a stabilizing impact on home prices,” Sandra Wyant, REBGV president said.

The sales-to-active-listings ratio currently sits at 15.2 per cent in Greater Vancouver, a three per cent increase from last month. This is the first time this ratio has been above 15 per cent since May 2012.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,839 in March. This represents a 17.2 per cent decline compared to the 5,843 new listings reported in March 2012 and a 0.1 per cent increase from the 4,833 new listings in February of this year. Last month’s new listing count was 14.4 per cent below the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the MLS® in Greater Vancouver is 15,460, a 1.5 per cent increase compared to March 2012 and a 4.5 per cent increase compared to February 2013.

The MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver is currently $593,100. This represents a decline of 3.9 per cent compared to this time last year and an increase of 0.9 per cent compared to January 2013.

Sales of detached properties reached 933 in March 2013, a decrease of 21.1 per cent from the 1,183 detached sales recorded in March 2012, and a 48 per cent decrease from the 1,795 units sold in March 2011. The benchmark price for detached properties decreased 5 per cent from March 2012 to $906,900.

Sales of apartment properties reached 982 in March 2013, a decline of 17.5 per cent compared to the 1,191 sales in March 2012, and a decrease of 39.5 per cent compared to the 1,622 sales in March 2011. The benchmark price of an apartment property decreased 3.3 per cent from March 2012 to $362,100.

Attached property sales in March 2013 totalled 432, a decline of 13.6 per cent compared to the 500 sales in March 2012, and a 34.8 per cent decrease from the 663 attached properties sold in March 2011. The benchmark price of an attached unit decreased 2.5 per cent between March 2012 and 2013 to $454,300.

April 1 marked the return of the GST and PST tax structure in the province. From a real estate perspective, it’s important to remember that:
• sales tax on a new home is reduced to 5 per cent GST plus 2 per cent BC Transition Tax (total 7 per cent) from 12 per cent under the HST; and
• tax on real estate commissions has been reduced to 5 per cent from 12 per cent under the HST.

These reduced tax rates apply to transactions payable on or after April 1.

Download the complete stats package by clicking here.

Spring Has Sprung! ... Now Here's Your "Honey Do" List!

2013-04-04T10:39:00.000-07:00

From Pillar to Post

Spring is upon us and it seems that runny noses, watery eyes, coughs and headaches often abound. If your doctor has not found the cause of your suffering, it may be time to consider a third possibility: mold.
More than 100 types of household molds thrive in damp conditions, making after spring showers prime time for mold to appear in floors, walls and ceilings damaged by leaky pipes or foundation walls, soaked wood, plasterboard, or even newspapers.
Molds give off tiny spores that can get into respiratory tracts and cause allergic reactions. For most people, this results in an irritating but harmless problem. But in young children, it can be more serious.
Fortunately, you may be able to protect your family by taking these three steps:
1. Regularly check areas where mold thrives, including damp basements, bathrooms, air conditioners and anywhere that ceilings or walls may have suffered water damage. Peeling wallpaper often signals moist conditions, so check these spots carefully. Always quickly repair plumbing leaks.
2. Clean mold growth with a solution of one cup bleach to three cups water. Wear a mask and rubber gloves beforehand. If the area is larger than two square feet, hire a professional to get rid of the mold without spreading spores.
3. Prevent re-growth by using a dehumidifier in basements during wet weather. If you eliminate the moisture, then mold should never be too much of a recurring problem.
Consult your Pillar To Post® Inspector if you have concerns about mold.

Bathrooms are a good place to invest in for more enjoyment and to add future home value. Here are just a few expert “do or don’t” suggestions to help you renovate.

DO CHOOSE QUALITY, elegant fixtures in a classic style, as they will last longer and be more resistant to shifting trends.
DO SELECT DURABLE, water-resistant flooring such as ceramic, marble, or stone tile. For more warmth underfoot, consider installing subfloor heating coils or choose well-sealed hardwood flooring.
DO USE FOUND SPACE. Install a recessed storage cabinet at least three inches deep in the wall between the studs to maximize vertical storage while saving floor space.
DON’T OVERCROWD by adding too many accessories, or by installing overlarge fixtures. A 35-square-foot bathroom only has space for an average size tub/shower, toilet, and a single-sink vanity.
DON’T NEGLECT to vent. A 50-cfm fan is sufficient for venting a bathroom 50 square feet or less, but for spaces larger than 100 square feet, two fans - one for the shower and another near the toilet are better.

There are no perfect houses. Whether you have a new home or one that's a hundred years old, houses have cracks. Houses shift and settle into position after construction. Houses will have cracks in either the cosmetic finishes or structural components. Most of these cracks have no structural significance. Some are significant and Pillar To Post® inspectors use every technique to help their clients figure out the difference.
Shrinkage Cracks
A newly poured, concrete foundation may contain small cracks because concrete shrinks as it cures. Fortunately, a shrinkage crack in a foundation wall is not structurally significant. Here’s how to recognize a shrinkage crack in a poured, concrete foundation:

The crack will be small, less than 1/8th of an inch wide.
The crack will be vertical.
The crack will not extend up through the structure. The crack is in the foundation only.
Shrinkage cracks usually occur in the middle third of the length of the foundation wall. If the crack is located towards the end of the length of the foundation wall, it’s probably not a shrinkage crack.

Horizontal Cracks In a Basement Foundation Wall
This discussion relates to cracks in the concrete foundation wall in a house with a basement; this is not relevant to slabs on grade or to cracks in walls above grade level. A below-grade, horizontal crack in a foundation wall, which runs the length of the basement, is likely to be a sign that the foundation is failing under the weight of the surrounding soil. The soil outside the foundation walls exerts an enormous pressure on all the foundation walls. Foundation walls are designed to be strong enough to resist this load. Occasionally, unanticipated, additional loads exert pressure and the foundation begins to fail, resulting in a horizontal crack in the foundation wall.
Settlement Cracks
Foundation settlement cracks are vertical, extending up through the structure. For a brick home, you may see cracks following the mortar joints in the brick wall. In most cases, the settlement crack itself has no structural significance; the concern is that the house may continue to settle over time.
Settlement Crack Size
A larger settlement crack is more likely to be due to ongoing movement than a smaller settlement crack is. While there are no hard and fast rules, a settlement crack or series of settlement cracks that have a sum total opening of less than 1/4 inch are probably not because of ongoing settlement.
Direction of Movement
A typical settlement crack is vertical, starting from where the crack opens up. The bumps and crevices line up and fit together like the pieces of a puzzle. If the crack face has moved in any other direction, such as a shear crack, the quarter-inch rule described above does not apply. This can be a significant structural concern.
Repaired and Re-cracked
A settlement crack that has been repaired and has re-cracked (not just a hairline crack) could also indicate ongoing movement.
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Outrageous Mortgage Penalties ... Sentimental Hogwash!

2013-04-01T12:09:00.000-07:00

Mortgage Penalties exposed… an in-depth study, part 2…the update.

April 1, 2013 — Steve Garganis (Canada Mortgage News)

Two years ago I published, what would become, my most widely read article. Mortgage Penalties exposed…. an in-depth study reveals unjust penalties was written to show just how unfair penalties had become. The surprising results showed that the BIG SIX BANKS were the leaders when it came to charging the highest penalties in Canada. If you had a Fixed rate mortgage and thought your mortgage penalty could only be a 3 month interest charge, you were in for a huge shock.

Consumers were experiencing $10k, $15k, $20k and even $30k in prepayment penalties and more! Ridiculous amounts. Put another way, these penalties equaled 12, 16, 20 months worth of interest and sometimes more! But we also discovered some good news.. There are better alternatives to the BIG SIX BANKS.! There are several other Lenders that don’t use the same inflated and unfair prepayment penalty calculation as the BIG SIX BANKS. There are other Lenders with competitive, and often better, interest rates, and with much lower penalties. That original study opened the eyes of Canadian borrowers. (another eye-opening stat…the BIG SIX BANKS reported a record $30billion in combined profits for 2012.)

Two years later, with more consumers being forced into Fixed Rate products, we thought it was time to revisit Mortgage Penalties and see what changes had been made, if any…

QUICK HISTORY

In the late ’90s, CMHC insured mortgages had a 3 month interest penalty attached to them… but then CMHC removed this cap… And Banks decided to make some further changes to how your penalties were calculated. They decided you needed to pay for the original discount your received at the time of your mortgage…. It’s like buying a gym membership on sale… you got it for 30% off regular price… and you agreed to a 5 year term.. but after 1 year, you decided to cancel… but the gym wants you to pay for that 30% discount for the remaining 4 years … Does that make sense? Of course not… You would probably be happy to pay a reasonable penalty but that’s no longer your choice… And yet, the BIG SIX BANK penalty calculation works the same way…. They are charging you for the benefit of the discount… Where’s the logic in that?

WHY SHOULD YOU CARE ABOUT PENALTIES IF YOU DON’T PLAN ON PAYING YOUR MORTGAGE EARLY?

This is, perhaps, the most common question I get asked.. the answer is simple… We don’t plan on a lot of things happening in our lives… so what if there is a job transfer, a death in the family, a personal matter, a loss of job, a better opportunity to move, or a better mortgage rate or mortgage special is offered elsewhere… or some other reason that you need to open your mortgage up for negotiation or prepayment? Now you must deal with that penalty calculation… If the penalty is too high, your options are limited.. you might just have to stick with that Bank.. or not move or not change….These limitations have real consequences.

In other words, YOU LOSE YOUR LEVERAGE WHEN YOU HAVE TO DEAL WITH AN INFLATED PENALTY.

MOST RECENT GOVT INTERVENTION

As I was writing this update, our Federal govt was at it again…(you just can’t make this stuff up)…. This past week, we saw some unprecedented steps taken by our Federal Minister of Finance… In short, the govt doesn’t want you to pay the lowest interest rate as we’ve recently seen them ask Manulife Bank and BMO to stop advertising low rates… It’s true!!

And while BMO and Manulife may not have the best interest rates or products, at least they were trying to compete for your business… And we all know that competition is good for the consumer…but our Federal govt thinks we can’t control our spending and borrowing so it’s best if we pay higher interest rates… (does anyone else think this is a bunch of bull?)

MAKING IT HARDER TO QUALIFY FOR A MORTGAGE SEEMED MORE IMPORTANT TO OUR GOVT.

After the U.S. sub-prime mortgage crisis in October 2008, our Federal govt jumped in and decided to they had to make it harder to qualify for a mortgage….they had to make it MUCH more difficult… The govt introduced several new mortgage rule changes to make sure that happened.. 4 major changes in each of the last 4 years. But still no changes to these unfair penalty calculations. Still no changes to how our BIG SIX BANKS calculate their mortgage penalties. Most of us have forgotten the Federal Govt’s broken promise to standardize mortgage penalties. This is a topic that doesn’t seem to be covered very well by the major media outlets… and yet I get calls and emails almost daily from Canadian borrowers that have been hit with these enormous penalties… This is a real problem that I refuse to ignore.

FINALLY, MORTGAGE PENALTY CALCULATORS ARE ONLINE.

Perhaps the only good piece of govt legislation came in 2012. The govt announced that all Federally regulated Financial institutions must post an online mortgage penalty calculator. The calculator will allow you and I to calculate what your penalty could be….I’m sure the Bankers aren’t loving this. They must also post a toll-free # where a borrower can call to get their penalty quoted… Hey, it doesn’t change the unfair formula but at least we can get a straight answer.. and that’s a welcome surprise!

Before choosing your next mortgage, you should visit these sites and compare the penalties with the smaller, lesser known Lenders… At the risk of repeating myself, there are several other Lenders that use a much fairer penalty formula that results in a much lower penalty than our BIG SIX BANKS… This helps the consumer make a more informed choice…. Here’s a small list of Banks and their prepayment penalty calculators… (I’ve left out the preferred Lenders.. those Lenders with the ‘FAIR’ penalty formulas and great rates… after all, I am a mortgage broker and I want you to call me… not afraid to admit that… If you want to know which Lenders are on my preferred list, just give me a call or drop me a line…I’d be happy to share that info with you..).

CONCLUSION AND A LITTLE TEST

If I told you there were two mortgages available… mortgage A and mortgage B… you could get the same rate, same prepayment privileges, same payment frequency options, etc… everything was identical… BUT the penalty calculation would cost you $12,000 for mortgage A and $4,000 mortgage B, which mortgage would you choose?

Sure most of us probably said B…. But guess what? Most of aren’t choosing B… we’re still choosing A… That’s right… the majority of borrowers are still choosing their local Bank branch… that familiar branch on the corner.. or where your mom and dad banked all their lives… Hard to believe but it’s true… We are slow to change… But it’s also more than that… the BIG SIX have deep pockets when it comes to advertising… you can’t turn a corner without hearing or seeing a BIG SIX BANK ad. The smaller Lenders may have better products but they can’t afford to spend the same $$s in advertising… But hey, the past doesn’t have to equal the future… next time, think about your options… speak with a Mortgage Broker and get access to 50 Lenders… get professional unbiased advice.. It could save you $thousands.

Looking out for your best interest.

As always, feel free to contact me with your comments or questions.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

RBC Survey Spreads (OSFI) Sunshine ... NOT!

2013-03-28T10:12:00.000-07:00

A Disappointing Survey from RBC, in More Ways than One

The number of people planning to buy a home has plunged.

Only 15% of thosepolled by RBC said they are likely to buy a home in the next two years. That’s down from 27% in 2012.

It’s the largest drop in prospective home buyers ever in the 20-year history of RBC’s home ownership survey.

Some may find this gloomy news, but housing is cyclical and corrections must be expected. We were actually more disappointed by another issue in RBC’s survey (more on that below).

First off, there is the obvious question, which has some obvious answers:

Why are more people backing out of the real estate market?

The reasons include:

Stricter Mortgage Rules
Ottawa imposed a slew of mortgage rules last year, and the amortization reduction (from 30 to 25 years on high-ratio mortgages) had the biggest impact. Almost 4 in 10 prospective Canadian homebuyers said that the amortization change limits or delays their ability to purchase a home, according to RBC.
High Prices
Overall, payment affordability is reasonable on a national basis (and far below its peak of unaffordability in the 1990s). But the average home price of $368,895 is still well above many people’s means. For some, even the modest 5% minimum down payment doesn’t make home ownership any easier. RBC says that 38% cited the minimum down payment requirement as limiting or delaying their ability to purchase a home. Among first-time buyers, 46% cited unaffordability as a top reason for not buying.
Fear of Overpaying
Some people will naturally refuse to buy when they’re concerned that home prices may tumble. When media outlets like Macleans proclaim, “The housing bubble has burst, and few will emerge unscathed,” it absolutely affects market psychology.
Job Insecurity
In the survey, 28% said concerns about job security were one of the reasons they haven’t bought yet. That’s up from 20% in last year’s poll.

Real estate analysts and policy makers in Ottawa are anxiously watching to see if spring demand will turn housing around. Ifinventories keep building, and low rates don’t keep sales on pace, it could make for a bearish summer market, nationally speaking.

******

Now let’s shift gears a bit. Here’s something that seems to speak to the motives behind this survey.

In one of the poll questions, RBC asks people who they turn to for mortgage advice. Here are the top sources of mortgage advice, as reported by RBC:

A banker: 76%
Family: 27%
Real estate agent: 23%
Friends: 20%
Real estate websites: 11%
Mobile applications: 11%
Private sale websites: 8%
Social media sites: 7%

Notice any glaring omissions?

That’s right. RBC and Ipsos Reid left mortgage brokers completely out of the survey.

That’s despite the fact that 61% of Canadians polled byCAAMP consulted mortgage brokers when getting a new mortgage.

It may not surprise people that a bank doesn’t want to promote brokers—it’s competition. But from a research credibility standpoint, we were surprised.

RBC bills itself as “the country's number one source of financial advice on homeownership.” Shouldn’t that title require some degree of research professionalism and objectivity?

Why would a company with RBC’s good reputation omit (intentionally or not) data that provides a fair representation of the marketplace? This makes us wonder what else they left out.

If an organization is going to purport to make newsworthy contributions to the national housing dialog, it better realize that people are watching its every word. One-sided survey results are nothing more than marketing masquerading as news. This example taints RBC’s mortgage-related surveys going forward, for no good reason.

Rob McLister, CMT

Posted in Mortgage Industry Reports
Canadian Mortgage Trends

BMO Rate Fixing: "Smoke and Mirrors"

2013-03-27T10:15:00.000-07:00

BMO’s move to withdraw its 2.99 posted rate is no more than “smoke and mirrors,” says one Ottawa mortgage broker, suggesting the bank will continue to offer even lower rates at the branch level.

“I can still walk into a bank and get 2.89,” says Jeff Cody, with MCCMortgage Brokers City. “The move back to 3.09 is just a lot of smoke and mirrors.”

BMO has apparently bent to Jim Flaherty’s will and announced it is backing off its 2.99 per cent posted rate for that five-year no-friller mortgage, returning it to 3.09 per cent at the end of the week.

“Our advice to Canadians is simple: Protect yourself from rising rates by locking in for five years and become mortgage-free faster by choosing a maximum amortization of 25 years,” said Ernie Johannson, senior VP of Personal Banking Canada with BMO, in a statement issued to the press. “This mortgage is the responsible choice for the times.”

Although Cody doesn’t deal with BMO, he does do a lot of business with Manulife.

“Is BMO raising the rate to please Flaherty? Absolutely,” says Cody, who cited Manulife’s decision to go back on their own rate after a phone call from the finance minister’s office.

Last week Manulife Bank announced it was cutting its five-year fixed rate to 2.89 per cent, but changed course one day later – bringing it back up to 3.09 per cent – after receiving a call from an official in Mr. Flaherty’s office.

But for Cody, the best rate for the customer starts and finishes with the mortgage broker.

“Let us do the shopping for you; we’ll get you the best deal out there,” he told MortgageBrokerNews.ca.

Best Mortgage Rates with Matthew Chan

2013-03-26T14:34:00.000-07:00

DLC Weekly Rate Minder <!--

Matthew Chan, AMP, CA, MBA

Dominion Lending Centres Downtown Financial
Phone: (604) 773-2775
Cell:
Email: matt@mortgageplan.ca
http://www.mortgageplan.ca

This edition of the 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 National Rates
• Explore Mortgage Scenarios with Helpful Calculators on http://www.mortgageplan.ca

Terms	Bank Rates	Our Rates
6 Month	4.00%	3.95%
1 YEAR	3.00%	2.69%
2 YEARS	3.04%	2.49%
3 YEARS	3.65%	2.65%
4 YEARS	4.64%	2.85%
5 YEARS	5.24%	2.84%
7 YEARS	6.35%	3.59%
10 YEARS	6.75%	3.69%
Rates are subject to change without notice. *OAC E&OE

Prime Rate is 3.00%

Variable rate mortgages from as low as Prime minus .35%

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. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.” 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.

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