18 May

Mortgage Rate Update…


Posted by: Cory Kline

I just want to provide a head up for anyone who may be in the market for an upcoming mortgage and who may not be watching the Bank of Canada announcements or long term rate predictions. If you haven’t been following them closely, they are still near the lowest in History however this will not last much longer!!

My office, Neighbourhood Dominion Lending Centres, looks at rates from 50 different lenders: Banks, Trust Companies and Credit Unions in Canada everyday, and we follow rates and trends very closely. One thing I can tell you for certain is that RATES WILL DEFINATELY BE GOING UP, and some industry professionals think substantially.

It may be worthwhile to have a quick look at your existing mortgage, to see if it makes sense to refinance or renew early.  We’re finding that even when there is a penalty for paying out your mortgage early, you can typically lower your payments and save thousands of dollars of interests over the term.

The other important thing work considering is refinancing your mortgage to pay off debt.  It seems like today EVERYBODY HAS THEIR SHARE OF DEBT, whether it is on credit cards, personal loans, or lines of credit.

Most consumer debt is at a much higher interest rate, so we can probably consolidate it all into a single payment, save you several hundred dollars per month on your payment, and SAVE you thousands of dollars in interest. Why make several different payments each month and throw away tons of money in unnecessary interest when rates are so good?

Please feel free to contact me for a second opinion on your mortgage and make certain you have the best rate and mortgage available.

-Cory Kline

cory@ndlc.ca or 705-720-1001 ext 226

18 May

Greek Crisis- Interesting Article


Posted by: Cory Kline


At this time it is important to put the Greek situation in perspective. Will we be talking about Greece 12 months from now? Clearly, no one can predict how the stock and bond markets will react in the coming weeks to developments in Europe. After all, as we all know, in this kind of situation the market is driven by emotions (panic?), not fundamentals.

It is not enough to say that the impact of the crisis will be limited due to the fact that Greece is an insignificant player in the global economic arena. After all, Thailand which originated the Asian debt crisis of 1997 is not exactly an economic giant. The more important focus should be on the shape of the global economy at the eve of the crisis. And in this context note that the crisis is occurring in an environment of a recovering global economy while the EU’s bailout of Greece implicitly guaranteeing the debt of larger economies such as Spain and Italy. The drivers of global growth now include China and India, which are less vulnerable to Europe’s downturns. At the same time, Latin America and Southeast Asia enjoy much stronger government finances and more moderate exchange rate. These factors reduce their sensitivity to economic shocks. Furthermore, Greece, Portugal and Ireland don’t have the trade or capital market gravity of their larger European neighbors.

The Greek crisis will end up being an important event in the history of sovereign debt, but its impact on the global economy will be minimal. More important focus should be on the fact that the crisis is an exaggerated preview of what we should expect to see down the road from other countries. After all, Greece is not the only country that is facing a mountain of debt. Yes, the magnitude is different but the direction is the same. In Greece, they call it austerity measures, in North America it will be called reduced spending and higher taxes. The point is that fiscal policy will work as a clear negative for overall economic growth. In Canada, for example, a government that was responsible for no less than 40% of overall economic growth during the past decade will start acting as a negative for economic growth in the second half of 2010 and beyond. The fiscal drag in the US will be much more significant.

Accordingly, while the Bank of Canada will probably proceed with its plans to raise rates come June or July, theupcoming fiscal challenge suggests a very gradual approach. As for the stock market, any significant sell-off in the coming weeks should be seen as a buying opportunity.

Benjamin Tal

Senior Economist