25 Feb

Bank of Canada Urged to Hike Rates After June

General

Posted by: Cory Kline

Bank of Canada Urged to Hike Rates After June

OTTAWA — The Bank of Canada should uphold its conditional pledge to keep its key policy rate at 0.25% until July but should then embark on sharp rate hikes of 50 basis points at every announcement date until mid-2011, says an analysis prepared for the C.D. Howe Institute.

The call for sharp rate increases after June emerged Tuesday, one week before the Bank of Canada releases its latest interest-rate statement. Further, recent data indicate the Canadian economy likely expanded in the final quarter of 2009 at a faster pace than the central bank expected (4% vs 3.3%), and inflation is now closer to the central bank’s 2% preferred target than it previously envisaged.

The report suggested the central bank, in response to the great recession, cut rates at a pace faster than the drop in inflation. As a result, the central bank should follow a similar pattern in increasing borrowing costs at a rate faster than inflation once the recovery takes hold, argued Michael Parkin, an economics professor at the University of Western Ontario.

Based on a number of assumptions, Mr. Parkin calculates that increases of 50 basis points from now until mid-2011 are appropriate, leading to a central bank benchmark rate of roughly 4.25% (assuming eight scheduled rate announcements from July to the middle of next year).

“While the bank might want to raise the overnight rate more slowly than 50 basis points at every announcement date, doing so would keep the real overnight rate negative through a period in which the economy is returning to normal and run a serious risk of leading to excess demand and rising inflation expectations in 2012 and 2013,” Mr. Parkin wrote.

The paper added the current rapid growth rates of the monetary base and monetary aggregates must be slowed, and this could only occur if the policy rate follows a sharply rising path.

Still, the Bank should keep its conditional commitment to leave the benchmark rate unchanged until July or risk damaging its credibility, Mr. Parkin said. Other conclusions from his analysis include:

The Bank should publish conditional statements about the future path of the policy rate to help shape market expectations and avoid surprises that disrupt financial markets, output, and employment.

• And measures aimed at easing credit conditions should be unwound but “with care,” he added, to ensure a gradual return to normalcy in credit markets.

 Read more: http://www.financialpost.com/news-sectors/economy/story.html?id=2602124#ixzz0gQ7q5KWR
The Financial Post is now on Facebook. Join our fan community today.


16 Feb

February Long Weekend…

General

Posted by: Cory Kline

I hope everyone had a fantastic long weekend.  We truly made the best of each day.  Friday we moved into our new downtown office.  It was such a relief when the furniture fit and looked just the way we wanted it too!!  Then off to Toronto our family went for a valentines celebration.  We stayed at the Double Tree Hotel and it was an excellent place for families.  An added bonus was the watersldies at the pool and many restaurants to choose from. Monday we joined our extended family at the Wye Marsh Wildlife Centre in Midland for family day.  Our daughters loved snow-shoeing for the first time and learning about owls.  There were a few neat family games set up and we tried all of them.  Long weekends can be so refreshing especially this time of year.

-Jen and Cory Kline

16 Feb

New Mortgage Rules

General

Posted by: Cory Kline

Finance Minister Jim Flaherty announced Tuesday tighter lending standards for mortgages, saying that while the housing market is “healthy” the moves are needed to “help prevent negative trends from developing.”

 Under the new rules, all borrowers will need to meet standards for 5-year fixed-rate mortgages regardless of whether they’re seeking a loan with a lower rate and shorter term.

Also, the government is lowering the maximum amount Canadians can withdraw when refinancing to 90 per cent of the value of their homes, from the current 95 per cent, and requiring a 20 per cent down payment for rental properties.
 

Ottawa — Globe and Mail Update Published on Tuesday, Feb. 16, 2010 8:17AM EST Last updated on Tuesday, Feb. 16, 2010 8:27AM EST

5 Feb

"No Need for Mortgage Market Structural Shift"-Article Summary

General

Posted by: Cory Kline

“No need for mortgage market structural shift”

The head of the Bank of Canada said on Thursday he does not see a housing bubble currently, nor does it see the need for structural change in the country’s mortgage market.

“The Canadian mortgage market has functioned I think exceptionally well during the course of the last decade … we’ve seen the strength of the system of mortgage insurance and it’s provided an important funding avenue for the banks as well. It’s allowed our housing market to weather the storm,” said Governor Mark Carney.

Canadian economy is looking up and should recover lost ground this year.” [ID:nN04183979]

“We had expected strength in the housing market given where monetary policy was. We’ve seen it. We are following it closely but we would not characterize the current state of the housing market in those terms.”

Carney said the central bank continues to be concerned about the pace of household borrowing, a point he has been driving home to Canadians to prepare them for eventual rate hikes.

“We want to caution people that rates are extraordinarily low right now, they’re low for a reason … but it’s a means to an end.”

The central bank pledged last April to keep interest rates at record lows until the end of June 2010, a pledge it has since reiterated with each successive interest rate decision and speech by bank officials. (Reporting by Rod Nickel, Randall Palmer and David Ljunggren; writing by Ka Yan Ng; editing by Jeffrey Hodgson)

5 Feb

Are Mortgage Rates Heading Lower in February 2010?

General

Posted by: Cory Kline

Are Mortgage Rates Heading Lower in February 2010?

RateSupermarket.ca’s panel of financial gurus believe we could possibly see lower fixed mortgage rates and bigger variable rate discounts to prime

TORONTO, Feb. 4 /CNW/ – RateSupermarket.ca, Canada’s rate comparison website for personal finance products such as mortgages and insurance, has announced the results of their Mortgage Rate Outlook Panel for February 2010.

The results of this month’s mortgage rate outlook tell a divided story. 43% of panel members expect fixed mortgage rates to slightly decrease this month, while the same percent believe that fixed rates will stay where they are. Variable mortgage rates are expected to remain unchanged for the month.

Fixed rates: Unchanged or slight decrease

The mortgage market has seen a strong start to 2010 as consumers scramble to secure low rates before an expected interest rate hike in the second half of the year. As lenders fight for market share fixed rates could drop a few basis points over the coming weeks – but it will be short lived, so keep your eyes peeled.

Panel members who believe fixed rates are likely to remain unchanged cite a weak US dollar and stronger than expected figures for recent economic growth; hence, the slight decrease in bond yields over the past month are unlikely to be passed on by lenders.

Variable rates: Unchanged

The majority of our panel members (80%) still believe that variable mortgage rates will remain unchanged in the short term. The Bank of Canada has been quite clear about maintaining the current overnight rate in the first half of 2010, subject to inflation. Also, interest rate changes prior to the federal budget on March 4th are extremely unlikely. Although no decrease to the interest rate is expected, a few of our industry experts believe that lenders will boost discounts on prime, resulting in lower variable rates.

5 Feb

First Time Home Buyer Seminar Barrie

General

Posted by: Cory Kline

First Time Home Buying Seminar:

When: March 2, 2010

Time: 7pm

Place:Prudential LeClair & Associates Realty, 128 Anne St. South, Barrie

Speakers: Cory Kline with Mortgage Advice

June and Rock Belanger with Real Estate Advice

Adam Scarati  with Real Estate Advice

All are welcome to this very informative seminar.

Please RSVP cory@ndlc.ca Thank-you