3 Dec

Minimum Downpayment Could Rise Under Liberal Plan

General

Posted by: Cory Kline

The Liberal government could be about to impose tougher restrictions on homebuyers by raising the minimum downpayment for a government-insured mortgage. Mortgage expert Robert McLister says that there could be a sliding scale of downpayment requirements depending on the price of the home. The Huffington Post reports that it could mean a 10 per cent minimum for those buying a home of $700,000 or more; which would particularly hit those in Toronto and Vancouver where average prices are already above that level. Those buying a home above $501,000 would have to find 7 per cent as a minimum. The Finance Department told HuffPost Canada that it does not comment on unconfirmed policy options but that it regularly reviews policies in consideration of the housing market and wider economy.

http://www.mortgagebrokernews.ca/market-update/minimum-downpayment-could-rise-under-liberal-plan-200321.aspx

Thank you Mortgage Broker News.ca for your insight. ‘Minimum downpayment could rise under Liberal plan’ by Steve Randall | 03 Dec 2015

 

3 Dec

No Surprises Here!

General

Posted by: Cory Kline

The Bank of Canada kept the key overnight interest rate unchanged at 0.5 percent as expected, as the Federal Reserve is poised to hike rates for the first time in nearly 10 years. The Bank’s decision did not, however, reflect complacency with the state of the Canadian economy, but rather a hand-off to the much ballyhooed fiscal stimulus in the coming year by the new Liberal government. With interest rates so close to the zero lower bound, it’s a good thing that firepower will be coming from another source. This is no time for misplaced fiscal austerity. If anything, the risk is that the government won’t do enough to reboot economic activity, paranoid about looming deficits and the erroneous assumption that tax hikes for the rich will somehow help the economy or address income inequality.

The Canadian economy, though improved from the first-half rout, is on very shaky ground. The third quarter GDP figures released this week showed a rebound to a 2.3 percent annual growth pace, largely the result of an improvement in exports–not surprising given the robust demand for autos in the U.S. and the weakness in the Canadian dollar. But the September data for GDP by industry was very troubling as real gross domestic product fell 0.5 percent following three consecutive monthly increases, primarily as a result of declines in mining, quarrying and oil and gas extraction and, to a lesser extent, manufacturing weakness. 

Another pocket of vulnerability in the recent data was in the finance and insurance sector, which has declined for two consecutive months. This is particularly troubling as the major Canadian banks have announced expected layoffs in their Canadian operations for this year and next. With interest rate-spread compression and a weak economy, all the banks are in cost-cutting mode in this country. Mortgage rates have clearly bottomed despite the Bank of Canada’s inaction.

Oil and other commodity prices have continued to fall, to the surprise of the Bank of Canada. This marked further deterioration in Canada’s terms of trade is depressing net exports and the damage done to our labour markets and cancelled investment projects–not to mention the Canadian stock market–is far from over. The negative backdrop in Alberta, Saskatchewan and Atlantic Canada is now quite evident in the slowdown in housing activity in those regions. Not only have home sales and house prices edged downward, but a telling leading indicator–rental vacancy rates–have risen sharply in some key resource centres (see chart below). 

 

 

 

Note that despite the strong pace of condo construction in both Toronto and Vancouver, rental vacancy rates remain extremely low in both cities.

The Bank of Canada expects GDP growth to moderate in the fourth quarter and to grow at a rate “above potential” in 2016. Given that the Bank’s estimate of potential GDP growth in Canada is just under 2 percent, this is hardly a positive outlook. I expect Q4 GDP growth of only about 1 percent, which will not be enough to prompt a rate cut, but will certainly weigh on the Canadian dollar as the U.S. moves to hike interest rates at the next Fed policy announcement on December 16. Canadian growth next year will likely be around 2 percent, compared to an estimated mere 1.1 percent this year.

Friday’s employment report for November in both the U.S. and Canada will be telling. Clearly, as the Bank said, “policy divergence is expected to remain a prominent theme.”  Easing by the European Central Bank tomorrow; tightening by the Fed in two weeks; and, the Bank of Canada on hold for the foreseeable future.

 

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
1 Dec

Purchase Plus Improvement Program

General

Posted by: Cory Kline

This one time advance will allow you to make the changes you need to make your home perfect!

Have you been trying to find that almost perfect home? All homes have their flaws and imperfections. Some consumers can deal with these deficiencies in a home, but for others this can be a deal breaker.

Maybe the kitchen needs an update, the bathroom is in desperate need of a makeover or maybe the home just needs a fresh coat of paint with the enhancement of hardwood floors, the quickest, cost effective and most powerful impact on a home!

The purchase plus improvement product is for consumers looking to purchase a home that has great potential but needs a little TLC. With the purchase plus improvement program you can make those needed improvements on your home immediately after taking possession and you can have these improvement costs rolled into your home loan for one easy payment. All of these projects can increase functionality, beauty and potentially add value to your dream home.

Written By: Josee Picco
Click HERE To Read More
29 Oct

Thinking about a NO Subject to Financing Offer? 3 points you NEED to consider

General

Posted by: Cory Kline

 

In hot real estate markets, it’s common for both buyers and agents to consider having no subjects to financing when making a purchase offer.

It’s important to realize, however, that no professional is in a position to legally advise you to enter into a real estate transaction with no subjects, especially no subject to financing.

This is a personal choice that you must carefully consider. Understanding the risks involved will help you make an informed decision.

Keep these three points in mind when making the choice with which you will be most comfortable:
Click HERE To Read More

Written by Angela Calla
7 Oct

Caution: Mortgage Penalties and Early Exit

General

Posted by: Cory Kline

Okay so you have a mortgage. Let’s face it, it’s a contract with terms, conditions, rights and obligations for both you and the lender. However, now for whatever reason you need or want to break the contract before the end of the term. Many mortgage lenders will allow this provided they are compensated. You have a rate of x.xx%, the best they can lend to someone else right now is 1% less so they want the difference, known as Interest Rate Differential or IRD. Seems fair right? Right. However, as is often the case, the devil is in the details. It is the method of calculating IRD that borrowers should be aware of as not all mortgages are created equal.

Let’s look at a couple of methods commonly used with what we Mortgage Brokers call “A” business. A or AAA business is where everything on the file makes sense, good credit, documented income and a normal residential type property. This is the vast majority of mortgage business on the books in Canada.

Click here to read the full article

30 Sep

Good News For Harper And The Canadian Economy

General

Posted by: Cory Kline

Real gross domestic product (GDP) for July was posted at an better-than-expected 0.3 percent, confirming that the economy rebounded in the third quarter from the contraction in the first half of the year. Although oil prices remain depressed and commodity prices in general have fallen, the economy has been bolstered by the fall in the Canadian dollar and its resulting boost to manufacturing and exports. Moreover, the Bank of Canada rate cuts in January and July have also contributed to strong housing activity and rising consumer spending on autos and other durable good. 

Even the hard hit mining, quarrying, and oil and gas extraction sectors expanded in June and July following seven consecutive monthly contractions. Some of this improvement was simply a rebound from maintenance shutdowns and wildfire-related production problems in April and May, as support activities for mining and oil and gas extraction continued to decline.

Manufacturing is growing again, particularly durable goods manufacturing. Transportation equipment has been a notable winner in recent months. The finance and insurance sectors also posted gains.

The Bank of Canada’s most recent forecast assumed a return to positive growth in the third quarter led by strengthening exports. Incoming data confirm this view, which is likely to preclude the Bank from cutting rates further this year. Last July, the Bank forecast a 1.5 percent gain in third quarter GDP. Given the strength in recent data, I expect growth in the 2.0-to-2.5 percent range, and possibly better.

In the meantime, Federal Reserve officials have taken to the airwaves in recent days to confirm they expect to begin to raise interest rates in 2015. Markets were actually disappointed by the Fed’s inaction at their September meeting on concern regarding market volatility and a slowdown in China. The key policymakers have been quick to suggest that a rate hike is coming soon. There are only two meetings left this year–in October and December.

This morning, an important indicator of U.S. private sector job creation in September, the ADP report, posted a 200,000 gain, a positive portent for Fed action. The closely watched nonfarm payroll report for September will be released this Friday.

Clearly, the divergence in monetary policy between Canada and the U.S. bodes poorly for the Canadian dollar.

The TSX and the loonie jumped immediately following the GDP report. The third quarter, which ends today, has been very tough on investors as stock markets around the world have posted significant losses. 

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

11 Sep

Market Commentary

General

Posted by: Cory Kline

As we head into the busy, autumn, real estate season Canada’s housing market is showing itself to be largely balanced and stable.

Of course Vancouver and Toronto continue to exert undue influence on the national averages. In Toronto the average price of a detached, single-family home topped one million dollars again.

In Vancouver, August sales surpassed year-ago numbers by more than 21% with 3,362 deals done. The MLS benchmark price is up 12% from 2014. The average for a detached property is now $1.16 million, up 17.5%.

The other market showing big swings is Calgary. August sales were off 27% compared to 2014, but prices remain relatively robust. The average and the benchmark are down 0.09% and 2% respectively year-over-year. But on a year-to-date basis the benchmark is actually up 2.4%.

Montreal remains the most active market in Quebec with 2,408 residential sales in August, up 8% from a year ago. The median price for a single-family home rose 2% to $290,000.

Low interest rates will likely continue to prop up home sales. All of the current economic indicators suggest the Bank of Canada will remain on the sidelines when it announces its latest rate setting on Wednesday.

Thank you First National for your insight.