Wednesday, December 9, 2009

The problem with "alternate" mortgages

Greg McArthur and Jacquie McNish

Globe and Mail Update Published on Sunday, Dec. 06, 2009 8:06PM EST Last
updated on Monday, Dec. 07, 2009 7:29PM EST

For the past three years, Lisa Matthews has never missed a mortgage payment
- handing over $292, like clockwork, every week.

But if nothing changes, a bailiff, acting at the request of her mortgage
lender, will ring her doorbell and tell Ms. Matthews, her two daughters and her boyfriend to vacate the two-storey house for good.

"This was a pure slap in the face," said Ms. Matthews, a 36-year-old clerk
with the City of Hamilton, who was recently told that, despite her perfect payment record, her mortgage will not be renewed at the end of its three-year term.

Ms. Matthews is one of many Canadians being abandoned by a breed of alternative lenders that have stopped lending to customers, who, because of poor credit scores, lower-paying jobs, or minimal home equity, couldn't obtain financing from a traditional lender, such as a bank.

Everyone from the chief executive officer of Ms. Matthews' lender, Xceed Mortgage Corp., to senior officials in Ottawa, agree that borrowers such as Ms. Matthews, who have dutifully paid their mortgage bills, are being unfairly stranded. What they can't agree on is how many Lisa Matthews are out there.

Records obtained under the Access to Information Act show that a lobby group
representing these lenders has warned the federal government that, unless
taxpayers offer help, they will be forced to foreclose on as many as 30,000
homeowners over the next three years.

These "orphaned mortgages," as the industry is calling them, are held by customers who have impeccable payment histories.

But they can't be renewed because the credit crunch has shut off the funding
pipeline of non-bank lenders, the lobby says.

This wave of forced sales and evictions will hit its crest this coming year when nearly half of these mortgages - most of which were issued during the real estate boom of 2007 - will not be renewed, the mortgage companies say.

Executives with alternative mortgage companies say they cannot renew the stranded mortgages because the once-thriving securitization market that attracted investors to these risky - and lucrative - mortgages collapsed in the wake of the U.S. subprime mortgage crisis. To replace the lost pool of capital, lenders are asking the federal government to back a special billion-dollar fund that would renew the healthy mortgages of borrowers who do not qualify for loans from traditional lenders.

Finance Department officials, however, have responded to the lobby group's
alarm bells with caution and questioned their estimates, according to sources close to the negotiations. These sources say Ottawa is frustrated that some of the companies in this small segment of the Canadian mortgage market have been unwilling to hand over data so the problem can be fully assessed, one source said.

"The government thinks this group is asking for help for itself," said the official close to the talks, which bogged down this summer. "Had they been willing to co-operate with the government and provide that information, some sort of program could have been designed. But you can't design a program on anecdotes."

The roots of the problem can be traced back to the housing and lending heyday of half a decade ago, when an assortment of "non-conforming," or subprime mortgage lenders launched operations. Some, such as Xceed and Mississauga-based N-Brook Mortgage Group Inc. had roots in Canada, and others, such as San Diego-based Accredited Home Lenders, migrated from the saturated subprime market in the United States.

Many of these mortgage companies aren't federally regulated so, unlike a bank, they aren't required to insure mortgages when the down payment is equal to less than 20 per cent of the value of the home. And unlike banks, they could - and often did - give loans to people who couldn't afford a down payment. After extra fees were piled on, some of these mortgages added up to as much as 104 per cent of the value of the house being purchased. Interest rates hovered as high as 11 per cent.

Within a few years, this sort of lending started to explode and the new players quickly took hold of 5 per cent of the Canadian market.

But when the financial crisis struck last year, and "subprime" became a dirty word, the pension funds and investment banks that these companies relied upon to fund their mortgages, spurned them. Investors that previously had a ravenous appetite for securities backed by high-risk mortgages were now demanding their money back from companies like Xceed. These investment windows are closing at a time when thousands of mortgages, like Ms. Matthews' loan, are coming due.

Few of the low-income borrowers who were targeted by alternative lenders gave much thought to where their mortgage money was coming from.

"The way we understood it, as long as our mortgage was paid, they would just
renew it. The joke was on me," said Joyce Marentette, a cook in Chatham,
Ont., who was also told last year by Xceed that she would have to find other
financing, when her three-year term came up.

The problem is more acute in depressed areas such as Southwestern Ontario and parts of Alberta, where there are fewer private financiers and property values have sagged, industry insiders say.

Mortgage brokers in Ontario cities such as Windsor, Chatham and St. Thomas say they regularly receive frantic phone calls from homeowners who are shocked to receive a letter explaining that their mortgage won't be renewed.

"We're not talking about a scoundrel that brought it upon himself. These are people that didn't do anything wrong," said Joel Katz, a Windsor mortgage broker. Mr. Katz said he believes the issue isn't on the government's radar because this type of lending accounted for such a small segment of the market compared with the United States. "The problem wasn't as big here, and there are people who are getting stepped on and overlooked."

But exactly how many people are being "stepped on?" Public records in Canada
are so scarce, it's impossible - even for lawmakers - to know for sure.

Ottawa relies on Canada Mortgage and Housing Corp. for data, but because
none of these subprime players insured their mortgages through CMHC, the public agency knows very little about their state of their books. One source close to the Finance Department said officials at the Crown corporation figure that stranded borrowers account for only "a tiny sliver" of the country's homeowners.

Paul McGill, president of mortgage provider N-Brook and spokesman for the
mortgage lenders lobby, argues Ottawa is understating the problem. He said he has supplied federal officials with data showing that $1.7-billion of healthy mortgages could be stranded and that these borrowers lack high enough credit scores to qualify for loans from more conservative lenders.

Mr. McGill said federal officials responded by asking mortgage lenders to supply extensive borrower details such as marital status and garage dimensions. Mr. McGill said the requests would have cost too much time and money to fulfill. Lenders have scaled back their proposal to call for a $1-billion Ottawa-backed fund that could renew stranded mortgages. He said Ottawa has not been supportive.

In response to questions, the Finance Department issued a statement saying: "The government is monitoring housing and mortgage markets in order to ensure they remain stable, strong and competitive."

Far away from the push and pull in Ottawa, Ms. Matthews has put her house up
for sale. A handful of prospective buyers has wandered through, but she has
received no offers. A few weeks ago, she received a letter from Xceed's lawyers, explaining that she owes the company nearly $128,000. This means that, despite paying Xceed about $40,000 over the past three years, she now owes $1,000 more than she originally borrowed.

When she opted to buy her first home, she had to get over the hurdle of her low credit score. An unpaid student loan had caught up with her. She had no down payment, and paid a 9.15-per-cent interest rate with Xceed.

"I just thought they were my foot in the door," she said.

Ivan Wahl, Xceed's CEO, said his company has identified 1,100 borrowers that his company will maroon over the next three years. For those people "it is an absolute disaster," he said. Despite his sympathy, he says he is contractually obligated to pay Xceed's investors, which means demanding full payment at renewal time. "The government certainly should step up to the plate to provide some facilities for people who got caught in the crunch."

Ms. Matthews said she doesn't expect the government to do anything for her, and is reserving her frustration for Xceed. She said the companies involved should be giving their customers more warning about their inability to renew. She received a warning letter 31/2 months before her mortgage matured.

"If I knew it was going to end like this, I never would have done it."

Tuesday, December 8, 2009

Economic recovery is "solidly entrenched": Bank of Canada

Paul Vieira, Financial Post

OTTAWA -- After months of uncertainty, the economic recovery now appears to be "solidly entrenched," the Bank of Canada said Tuesday, indicating its forecast for growth should unfold as envisaged.

Still, in its latest interest rate announcement, the central bank reiterated, as expected, its conditional commitment to keep its key policy rate at a record low 0.25% until June 2010 as inflation is still not expected to hit its preferred 2% target until the second half of 2011.

Recent data - from retail sales to a stunningly strong jobs report for November -- have painted a mostly cheer picture of the Canadian economy, analysts say, even though third-quarter GDP growth of 0.4% annualized came in well below the central bank's 2% expectation.

Since the central bank's latest economic forecast in October, "global economic developments have been slightly more positive and the global outlook has improved modestly," the bank's governing council said in its statement, adding though that "significant fragilities" remain.

The central bank said the composition of economic growth is unfolding as expected, highlighted by a shift toward stronger domestic demand and less reliance on exports.

"The main drivers and the profile of the projected recovery in Canada remain consistent with the bank's [outlook]," it added. "The bank continues to expect economic growth to become more solidly entrenched over the projection period and inflation to return to the 2% target in the second half of 2011."

According to the central bank's outlook, Canada is expected to grow 3.3% this quarter, followed by expansion of 3% next year and 3.3% in 2011. Predictions for strong growth gained steam late last week when data indicated the Canadian economy added 79,000 jobs in November.

Further, the central bank on Tuesday played down the impact of the stronger dollar, even though it acknowledged it remained a key risk to its forecast, and "could act as a significant further drag" on growth and inflation. The stronger loonie, which has advanced as much as 25% this year against its U.S. counterpart, led to a surge in imports in the third quarter - resulting in net exports acting as a drag on the economy of roughly 5.3 percentage points.

Since the last rate announcement, however, the dollar has on average traded a couple of cents below the central bank's working assumption of a US96¢ loonie.

Most analysts were looking for any change in nuance in the bank's statement - in particular a hint or two that it might move before its conditional pledge to keep rates at a record low until June 2010 given the surge in domestic consumption as households take advantage of record low borrowing costs.

Instead, the central bank reiterated that its target rate of 0.25% "can be expected" to remain intact until the end of the second quarter of next year. The pledge is conditional on inflation hitting the 2% target in the third quarter of 2011, as the bank expects.

The last time the bank raised its key policy rate, to 4.5%, was in July of 2007 - and shortly afterward the first signs of the credit crisis emerged.

Some economists, such as Ryan Brecht of Action Economics, expect the central bank to begin hiking its policy rate, and aggressively, starting in the second half of next year.

In a note released Tuesday morning, Mr. Brecht, the firm's senior North American economist, said he envisaged the Bank of Canada raising its target rate by 175 basis points before December of 2010, for a policy rate of 2%, or "more normal levels." Still, that would be below the 3% level in September of 2008, when Lehman Bros. collapsed, or the 4.5% peak hit more than two years ago.

Housing Starts Rise in November

Tavia Grant Tuesday, Dec. 08, 2009 8:17AM EST

Housing starts hit their highest level this year in November, more proof that Canada's real-estate market has clawed out of recession.

Starts rose slightly to 158,500 units, on a seasonally adjusted basis, up from 157,400 in October as single-home construction outweighed a drop in multiple home activity, Canada Mortgage and Housing Corp. said Tuesday.

"The improvement in housing starts continued in November," said Bob Dugan, CMHC's chief economist.

The results were slightly less than the 165,000 starts economists had expected. Still, they're running at a much stronger level than in April, when they sunk to the 118,500 mark.

Record low interest rates are fuelling a rebound in Canada's real-estate market, spurring rising prices and a flurry of buying activity. The Bank of Canada will provide its current view of lending rates and the economy today at 9 a.m. Eastern time.

More builders have plans in the works, a report showed yesterday. Building permits jumped 18 per cent in October to the highest value in 13 months, Statistics Canada
said yesterday.

Multiple starts eased in November, CMHC said, to 71,300 units from 72,500 units a month earlier. Single starts rose 3.4 per cent to 69,800 units.

The annual rate of urban starts has risen the most in Quebec, at 10 per cent, followed by Atlantic Canada.

Monday, December 7, 2009

Next Bank of Canada Meeting

The Bank of Canada is set to meet tomorrow to have their last meeting of 2009 regarding interest rates.

It is widely held that there will be no movement from the current overnight rate of 0.25% and therefore that the prime rate will also stay at 2.25%.

Stay tuned to The Your Mortgage Matters Blog for all the details tomorrow morning. For a full report on current interest rates, make sure you check with a licensed mortgage broker.

Thursday, December 3, 2009

Canadian Homeowners Feeling Bigger Pinch

Garry Marr, Financial Post Published: Wednesday, November 25, 2009

Bidding wars and higher interest costs have lead to the inevitable - a drop in housing affordability for the first time in five quarters, according to a new index produced by the Royal Bank of Canada.

The bank says home ownership costs are up, something that has not happened since the spring of 2008. Despite the increase, costs are still off the peak reached for this housing cycle.

Royal Bank says 45.8% of pre-tax household income was needed to service the cost of owning a standard detached home in the third quarter of this year. That was up 1.2 percentage points from a quarter ago but well off the high of 52.3% hit in the 2008. The all-time high was 57.1%, reached in the second quarter of 1990.

"Home affordability has deteriorated in all provinces and major markets in Canada due to a slight rise in key mortgage rates and appreciation in property values," said Robert Hogue, senior economist with Royal Bank.

Further proof that house prices are on the rise came Wednesday from the Teranet-National Bank National Composite House Price Index which showed September house prices were up 1.3% from the month before, the fifth straight month that prices have risen.

"The vigor is consistent with an improvement in market conditions over 2009 to date - more homes have been selling and fewer have been coming on the market," said Marc Pinsonneault, senior economist with National Bank Financial Group.

Data released this month from the Canadian Real Estate Association, which represents 100 boards across the country, shows the trend of escalating prices is not slowing down. The Ottawa-based group said existing home prices were up 20.7% last month from October, 2008, the largest year over year increase in 20 years.

Those price increases have come as interest rates have also started to rise. Mr. Hogue said the 5.4% posted rate for a five-year closed mortgage, reached in the second quarter, is the lowest since Royal Bank started doing the study in 1985. Rates climbed to 5.73% in the third quarter for a five-year closed mortgage. The posted rate is generally at least one percentage point higher than what consumers can get on a discounted basis.

Prices have also been impacted by a supply shortages across the country. New listings last month in the country's 25 largest markets were off 16% from a year ago. New home construction is on the rise but has not been able to respond fast enough to meet the rising demand.

Phil Soper, chief executive of Royal LePage Real Estate Services,
expects the supply side problem to improve in the spring, a traditional time when families consider selling to coincide with the end of the school year.

"It's a much more common time for people to list their homes than this time of year," said Mr. Soper. "I suspect the supply side of this problem will ease considerably."

He's also not that concerned with rising mortgage rates. "That's what I hoped would happen," said the chief executive. "I know policy makers are hoping they can ease their stimulative approach to monetary policy at the same time as consumer confidence and the economy overall start to improve and not cause a sharp negative downturn in housing activity. So far, this is unfolding in not a bad fashion."

Tuesday, December 1, 2009

Abode Mortgage Holdings Corp Announces Closure

Abode Mortgage Holdings Corp. Announces the Closure of the Company's
Mortgage Origination Business
11/30/2009 10:25:02 AM - Market Wire

VANCOUVER, BRITISH COLUMBIA, Nov 30, 2009 (Marketwire via COMTEX News Network)

Abode Mortgage Holdings Corp (TSX VENTURE:ABD) (the "Company" ) today
announces that the sale of its wholly-owned subsidiary, Abode Mortgage
Corporation (AMC), as described in the Company's November 27, 2009 press
release is no longer proceeding. Further, the interim funding and mortgage
loan purchase arrangements referred to in the release have terminated.
Without an established funding and whole loan purchase arrangement, AMC
cannot properly carry on its business and the Directors of the Company have
decided to cease operations.

In commenting on these developments, the Company's CEO, Mike Linehan, stated: "Management and the staff of AMC are devastated by the decision to cease operations. However, without a committed mortgage funding and whole loan sale partner, the business of AMC is not viable. We wish to thank our loyal industry partners and deeply regret our inability to carry on in business."

About Abode Mortgage Holdings Corp.

Abode Mortgage Holdings Corp. is a public company trading on the TSX Venture
Exchange under the symbol ABD.

SOURCE: Abode Mortgage Holdings Corp.

Abode Mortgage Holdings Corp. Mike Linehan CEO

Copyright (C) 2009 Marketwire. All rights reserved.

Monday, November 30, 2009

Lenders panel plays it safe at CAAMP

Tuesday, 24 November 2009

A panel of lenders at CAAMP's annual conference said they believe
mortgage brokers' share of the market will continue to grow, but also emphasized the need for greater efficiency and speculated that volume bonuses could be scaled back over time.

"There is increasing penetration of the mortgage broker channel because
it takes all the grief of getting a mortgage off a person's shoulders," said Stephen Smith of First National, adding the under 40 generation has created a culture of using mortgage brokers as opposed to their parents' generation who turn to banks.

Among the positive outlook there was also critique. Ivan Wahl of Xceed
Mortgage Corporation talked about his company's goal to do 80 per cent of volume with 20 per cent of brokers and speculated there are only a small number of brokers who "do what they say they're going to do." John Webster of Scotia Mortgage Authority said he didn't think lenders needed to be "all things to all people" in response to one of Smith's comments about catering to all brokers, not just the ones who send in lots of deals.

On the topic of lender exclusivity, Boris Bozic of Merix Financial said
it appeared lenders were after "the same 750 brokers across the country even though there are 14,000", stating brokers can have trouble gaining direct access to a lender. He also stated volume bonuses have a "shelf life expiry" and warned the industry to prepare for changes.

The panel agreed on a trend toward more screening of brokers (such as
Scotia Mortgage Authority's mortgage scorecard) focusing on efficiency ratios, number of delinquencies and deal quality. And although the panel agreed the economic recovery is underway, their optimism was cautious.

"The last half of 2009 was much better than anyone expected," said
Webster. "But there is still a lot of uncertainty."

Friday, November 27, 2009

Experts expect mortgage rate rise to be quick

November 24, 2009 5:40 a.m.

Interest rates aren't going up any time soon, but when they do the rise
will be rapid, mortgage industry experts say.

Because of this, mortgage lenders and brokers have a responsibility to
help homebuyers assess their capacity to make higher monthly payments, and to constantly evaluate their chances for default.

"There should be some prudence and there should be counselling by
mortgage brokers to ensure people do leave a little wiggle room," Ivan Wahl, chairman and CEO of Xceed Mortgage Corp., said at an industry conference yesterday.

Wahl praised Canadian regulators for preventing the housing meltdown that has decimated the American economy, but said mortgage lenders have a responsibility to self-regulate.

The Canadian and American housing markets fared very differently during
the recession. While the financial crisis in the U.S. was caused in large part by subprime mortgages, strict regulations helped the Canadian economy avoid a similar meltdown.

However, even mortgage lenders weren't expecting the Canadian housing market to fare as well as it has.

"The last half of '09 is better than anybody expected," said John Webster, president and CEO of Scotia Mortgage Corp.

"We were looking at a nuclear winter ... ( for new mortgages), a 30 to 35 per cent drop, and that hasn't happened," agreed Stephen Smith, chairman and president of First National Financial.

Thursday, November 26, 2009

When to give out your S.I.N.

Follow the link to this great article on when to give our your social insurance number and why.

Tuesday, November 24, 2009

Experts agree mortgage rates to rise in 2010

Here's a link to a great article you might want to consider as we head into 2010.

As always, we recommend you check with a licensed mortgage broker to take the stress and hassle out of mortgage negotiations.

Wednesday, November 18, 2009

Rapid rebound Fuels Fears of Housing Bubble

Garry Marr, Financial Post

Canadian existing home prices are now rising at a pace not seen in 20 years, fueling talk that a bubble may be forming in the market.

The average price of a home sold last month was $341,079, a 20.7% increase from a year ago, the Ottawa-based Canadian Real Estate Association said Monday. Sales also continued to climb with 42,288 units trading hands, a 41% jump from October, 2008.

At the same time that demand continues to surge and interest rates remain at historic lows, supply remains critically low. New listings last month in the country's 25 largest market were off 16% from a year ago.

"I don't think it's a bubble yet," said Doug Porter, an economist with Bank of Montreal. "The rapid-fire rebound in Canadian housing is showing no sign of letting up. While that may be causing some sweaty palms among bubble-phobes, the quick turn is a vivid illustration that monetary policy still works in this country."

Mr. Porter says large markets are skewing average prices, creating a national picture that might seem more buoyant than it is in reality. Toronto, the largest market in the country, saw a 20% increase in price last month from year ago. In Vancouver, the most expensive market in the country, sales were up 170.8% from a year ago.

"There is a little bit of magic in the way they put these numbers together," said Mr. Porter.

Derek Holt, senior vice-president of economics at Scotia Capital, called what's happening in the marketplace today a once in a lifetime situation. He says record low interest rates, tight supply, a favourable lending environment and government stimulus program have all helped stir the housing pot.

"It's more the medium term, two three years, where we could get into headaches potentially," said Mr. Holt. questioning whether consumers buying today are ready for interest rates that could be three to four percentage points higher by 2011.

Real estate author Garth Turner said the latest figures prove his thesis that Canada is now in a real estate bubble. "We got this type of growth in sales and prices in the middle of a recession. The latest GDP numbers show the economy actually contracted," says Mr. Turner.

A new study from the Canadian Association of Accredited Mortgage Professionals released yesterday shows Canadians are benefitting from the lower interest rates. The average mortgage rate negotiated in the past year was 4.55%, a decline from 5.41% a year ago.

"Clearly people are thinking the worst is behind us and that comes as we have record low rates," said Jim Murphy, president of CAAMP. "If rates were to spike dramatically, there could be some concern but we just don't see that."

Gregory Klump, chief economist with CREA said while the latest numbers appear dramatic they have to be kept in context. "Activity in the early part of 2009 had fallen to a decade low. With improvement in consumer confidence and interest rates, sales activity was expected to respond.," he said.

Mr. Klump suggested prices will ease up as seller's start to take advantage of higher prices. However, CREA is now predicting prices will rise 4.2% this year after suggesting they would only increase by 1.5%.

Michael Polzler, executive vice president of Re/Max Ontario-Atlantic Canada Inc., said he's been expecting these type of price increases. "Last year at this time, everything just stopped. They were very realistic example of where everything was it," he said. "Now we are just back to kind of normal. You are going to see these type of numbers continues into the spring because we are comparing them to last year."

Sunday, November 1, 2009

Turn Back Time

Welcome to November ... a reminder to set your clocks back one hour today and change the batteries in your smoke detectors and other gas detectors around the house.

Saturday, October 31, 2009

Happy Halowe'en

Just a quick note to say Happy Hallowe'en everyone ... hope you have a safe & happy evening shelling out to the ghosts and goblins.

Wednesday, October 28, 2009

The recession may be officially over, but recovery is fragile and job losses still mounting

The Canadian Press, 2009

WASHINGTON - It is about to become official: The U.S. recession is over - but not the pain.

The government will release figures this week expected to show that the economy has awakened from its deepest slump since the 1930s and is in the early stages of a recovery. But the following week, the government will issue another set of figures expected to show unemployment continuing to rise toward and possibly above a clearly recessionary 10 per cent.

How can both be possible?

The government releases third-quarter Gross Domestic Product figures on Thursday. Many forecasters say they will show GDP growing at an annual rate of about 3 per cent, validating a widely held belief among economists that the recession ended in June or July.

But try telling that to the more than 15 million still unemployed, the small businesses and individuals who can't get loans and the people whose homes are worth less than their mortgages.

Assertions by government and private economists that the recession is over - issued amid graphic examples of continuing wide distress - are raising fresh questions about economic scorekeeping.

The national recession may be technically over, but the state of the economy remains in the eyes of the beholder.

Or, as Ronald Reagan liked to say, a recession is when your neighbour loses his or her job. Depression is when you lose yours.

A survey of economic forecasters prepared by Blue Chip Economic Indicators, a research organization, predicted GDP growth to remain positive in each quarter through the end of 2010. In a survey by the National Association of Business Economics, 34 of 43 economists polled said the recession is over.

"From a technical perspective, the recession is very likely over," said Federal Reserve Chairman Ben Bernanke.

"A recession that showed no signs of ending last January appears to be firmly entering the recovery phase," said Christina Romer, the chair of the White House Council of Economic Advisers.

But nobody is sugar coating the statistics, especially in the administration, which agrees with private surveys suggesting that unemployment will hover near 10 per cent through most of next year.

"Even when you've turned the corner, you have so much work to do," Romer told Congress' Joint Economics Committee.

And while she credited much of the turnabout to government stimulus measures and moves by the Fed, she said "by mid-2010, fiscal stimulus will be contributing little to further growth."

Even ahead of the report expected to show an increase in economic growth, The Conference Board, a private Chicago-based research group, reported Tuesday that consumers' confidence about the U.S. economy fell unexpectedly in October as job prospects remained bleak.

That fueled speculation that an already gloomy holiday shopping forecast could worsen. Consumer spending accounts for more than two-thirds of the entire economy.

The economy has lost 7.2 million jobs since the recession began in December 2007, 3.4 million of them since President Barack Obama took office in January.

James K. Galbraith, an economist at the University of Texas at Austin, suggests too much attention is given to when recessions technically begin and not enough to other measures of the economy.

"It's just a word. A recession technically lasts during negative quarters. But that doesn't mean you're back to prosperity once you have positive growth. You're back to prosperity when the unemployment rate is back around 4 per cent," Galbraith said. And that, he said, could take years.

A recession is popularly defined as two or more consecutive quarters of negative economic growth, or declining output.

But a more refined determination is made by the National Bureau of Economic Research, a private group of leading economists charged with dating the start and end of economic downturns. It not only looks at GDP but at employment levels, real personal income, industrial production and wholesale
and retail sales.

It put the start date at December 2007 and has not yet called an end.

There have been 11 recessions since World War II. In the two most recent ones, job growth lagged long after the recessions were deemed over. In the most recent two - July 1990-March 1991 and March-November 2001 - the unemployment rate did not fall to prerecession levels for several years.

After the eight-month 2001 recession, the unemployment rate went from a prerecession 4 per cent in 2000 to 4.8 per cent in 2001. Then it kept climbing even higher - to 5.8 per cent in 2002 to 6 per cent in 2003. It didn't return to under 5 per cent until 2006, when it fell to 4.6 per cent.

While there are clear signs of recovery, it is uneven.

Stocks have surged about 50 per cent since their March lows. And a year after Washington rescued the financial industry, some large banks and Wall Street firms have roared back to profitability.

But smaller banks and other businesses are struggling, and many have failed or are failing.

That disconnect sparked anger among the public and led to sweeping government action last week to limit executive compensation at financial firms that accepted federal bailout money.

"While credit may be more available for large businesses, too many small business owners are still struggling to get the credit they need," Obama said in his weekly radio and Internet address. "These are the very taxpayers who stood by America's banks in a crisis - and now it's time for our banks
to stand by creditworthy small businesses, and make the loans they need to open their doors, grow their operations and create new jobs."

There have been modest improvements in manufacturing and other parts of the nonfinancial business sector, yet lingering signs of weakness in commercial real estate and retail spending.

Economists suggest some of the expected increase in economic growth is a bounce off the bottom. They attribute it to government stimulus spending, including the now-expired Cash for Clunkers program; accommodative Fed monetary policies and widespread cost-cutting by companies.

Many companies let inventories run down so much that when they ran out, orders picked up. Home resales ticked up as buyers scrambled to complete their purchases before a tax credit for first-time owners expires. And U.S. exporters have benefited from a relentless decline of the dollar that has
made U.S. goods cheaper and more competitive overseas.

But none of this adds up to a sustainable upswing.

"Absent robust job growth, it is not a true economic recovery," said White House economic adviser Jared Bernstein.

Monday, October 26, 2009

Study Says Variable Rate Mortgages Better Deal for Borrowers Most Times

The Canadian Press

TORONTO - Fixed mortgage rates may help you feel secure in your budgeting, but the Bank of Montreal (TSX:BMO) says the more volatile variable rate mortgages will save you money in the long run.

The bank put out a report Friday showing that, over the past 30 years, variable-rate mortgages have been more cost-effective about 82 per cent of the time.

That may come as a surprise to some after studies have shown many Canadians prefer a fixed-rate mortgage.

A fixed rate locks the borrower into a set interest rate for a certain period of time.

That gives many borrowers peace of mind knowing how much money to set aside each month for their mortgage payment.

Variable rates change along with interest-rate moves.

BMO said the Bank of Canada's overnight lending rate is at its lowest possible point now, which could mean there are fewer benefits to a variable rate in the foreseeable future.

BMO highlighted two historical periods when fixed rates were considered beneficial - in the late 1970s and late 1980s - and both were just before interest rates started rising again.

The bank added that the current interest environment is similar to both of these periods.

"Short-term rates are at extreme lows and pressure is likely to build for higher rates in the year ahead," said deputy chief economist Doug Porter in the report.

"The question of whether to lock in to a longer-term fixed mortgage rate or stay in a variable rate has become an increasingly complex and important issue."

Canada has been in a long-term declining rate environment since the early 1980s, the bank suggested.

As a result, the spread between five-year fixed mortgages and variable mortgages has been pushed wider in recent years, and is now near an all-time high.

Editor's note: For all your mortgage options explained in plain english, we suggest you contact a licensed mortgage broker.

Thursday, October 22, 2009

Is CMHC and the Government's low rate policy a recipe for disaster or just under appreciated?

An interesting opinion piece today in the National Post. Please click the link and have a read.

It seems you could take this news one of two different ways. Either that we are headed down the road to ruin due to poorly thought out policy decisions or that there's no better time to buy a home since it seems you'll be guaranteed an approval by the insurance agency.

You make the call. We look forward to your comments.

Here's the link:

Tuesday, October 20, 2009

No Change in Bank of Canada Key Rate

As we anticipated, Bank of Canada Governor Carney announced he is leaving the Bank's overnight lending rate unchanged at 0.25% and therefore no changes are expected in the bank prime rate from the current 2.25%.

With inflationary pressures at bay, the Bank is managing to keep their conditional promise to hold rates where they are until the end of the 2nd quarter of 2010.

The high flying Canadian Dollar is expected to dampen positive economic gains experienced since July of this year and the Bank Of Canada now expects that it will reach its inflation target of 2% in the 3rd quarter of 2011 which is one quarter later than earlier forecast.

Canadian bond rates fell after the announcement as traders began backing off from earlier rate hike anticipation and the Canadian dollar was backing off as well in trading earlier today.

Tuesday, October 13, 2009

Fixed interest rates on the rise

Mortgage rates are on the rise today at most lenders ... the balance will no doubt follow suit in a day or so.

The discounted rates under 4.00% for all terms are still available (O.A.C.) for a limited period of time so get in touch with a licensed mortgage broker and protect yourself from rising rates for the next 120 days.

120 day rate protection covers you from now until mid February 2010 so anyone with a mortgage maturing between now and then should be getting off the fence and acting now. Any purchase transaction with a closing date between now and then should make sure that the financing has been arranged. There is no model to suggest where rates will go over the next while but if you can get a 3.79% 5 year closed mortgage rate today, why take the chance and wait til tomorrow to make your application through a licensed mortgage broker?

Time to find an organizing solution?

Organizing Solutions understands that your home is an important part of your
life and that how you live and feel in it has a huge impact on your day to
day activities.

If you are living with too much "stuff" and are overwhelmed
with what to do and where to start, Organizing Solutions can help.

Professional Organizer and Owner Jenny McKee can offer ideas or give you
hands on help to set up systems in your home and make things more efficient
and easier to manage. Clear out the clutter that is weighing you down and
take back the space lost from disorganization.

Give her a call, all you have to lose is the clutter! (905)697-7006

Saturday, October 10, 2009

Happy Thanksgiving !

Its not often we take a step away from the main theme of this blog but there are certain special times of the year when we like to do so. We have much to be thankful for here at the Your Mortgage Matters blog even though it has been a hard year in the industry and economy in general. As some of you also know, we have had some serious health issues to deal with in a close family member this year too and your good wishes and prayers have been more appreciated than you can imagine.

So let's take a moment to enjoy some down time from the world ... it has already been a very tough year for some and continues to be for many others.

Enjoy the company of family & friends this weekend and really sit back for a minute and think of all you have to be thankful for. The things we take for granted on a daily basis ... clean water, a good education system for our children, safe streets & stores full of everything from the basics to the luxury items. Good health & freedom to say what is on our minds without the fear of persecution for our thoughts or beliefs.

Happy Thanksgiving everyone and thank you for your support.

Wednesday, October 7, 2009

Australian bank raises interest rate

The rate hike heard round the world

Paul Vieira, Financial Post

The Reserve Bank of Australia has become the first major central
bank to raise interest rates since the financial crisis, citing rising home and stock prices along with the traditional focus on growth and inflation - factors other central bankers are expected to make more prominent as they seek to prevent a repeat of debilitating asset bubbles.

The surprise move by Australian central banker Glenn Stevens was greeted with enthusiasm by markets, as it was interpreted as a sign a global economic recovery was on track. Equities, commodity prices and the Canadian dollar surged on the move, although giving up some gains in later trading.

The Australian rate increase now puts the spotlight on other central banks, such as Canada's, which has been steadfast in setting rates to ensure a 2% inflation target. But inflation in Canada is expected to remain benign until 2011, forecasters say, due to excess manufacturing capacity in the economy and a strong Canadian dollar that will keep a lid on import prices.

The loonie reached a one-year high Tuesday of US 94.82¢, before closing at US 94.38¢, up 0.93¢ from Monday's close.

"Inflation is not going to be a problem. Consumer spending, and the consumer
response to cheap money, however, may be a problem," said Stewart Hall,
economist with HSBC Securities Canada.

The consumer response is what might push the Bank of Canada, just like its
Australian counterpart. In its decision, Australia's central bank cited solid gains in housing prices and a "significant" recovery in equity markets for raising its benchmark rate 25 basis points, to 3.25%.

"I do get the sense asset prices are going to be play a greater role in the
formation of monetary policy," said Michael Gregory, senior economist at BMO
Capital Markets. "Because the amount of stimulus is unprecedented, and at
emergency levels, removing it won't follow the same rules of thumb."

As a result, he said, central bankers might be looking at new measures to
determine when to raise rates. As opposed to looking strictly at inflation and growth, Mr. Gregory said central banks might be forced to pay as much attention to asset prices and credit spreads.

In Australia, the central bank has always paid close attention to housing prices - which are a national obsession and have been on a tear over the past decade - and view them as a guage of the overall strength of the economy.

One of the main debates in the aftermath of the financial crisis is the role central banks should play in averting future meltdowns, and what powers they should be granted to execute this task. By taking on a beefed-up role as overseeing the financial system, central banks would be expected to identify asset bubbles and pop them before they burst. The collapse of the U.S. real estate market, fuelled by low lending rates that attracted less-creditworthy buyers, sparked a credit crisis and global recession.

"The general view before the calamity was that monetary policy was not an effective tool in dealing with asset bubbles," said Craig Alexander, deputy chief economist at Toronto-Dominion Bank.

"But given how much damage was caused by the U.S. housing bubble, the view
now is that cleaning up the mess afterward can be far too costly and that monetary policy may need to be responsive to asset prices."

Mr. Alexander was a co-author of a TD report released Tuesday, suggesting the Bank of Canada might be forced to raise rates before it expected should Canada's housing market continue its stellar performance.

Mr. Hall said the Bank of Canada has put itself in a "tiny bit" of a box by indicating it was prepared to keep its key interest rate at 0.25% until June 2010, on the condition that inflation would hit the 2% target in early 2011.

But Mr. Hall said the central bank "would do what it wants to do" should circumstances arise. "It won't get trapped by anything."

The Bank of Canada is set to deliver its next interest-rate on Oct. 20, followed by an updated economic outlook two days later. Analysts will be eyeing the documents closely for any change in tone regarding rates. In the meantime, the Bank of Canada's senior deputy governor, Paul Jenkins, is scheduled to speak in Vancouver Thursday regarding the future "challenges" facing central banking.

Friday, August 14, 2009

What do they mean by that ?

Here's our next entry: What do they mean by "acceleration" ?

According to our mortgage broker reference Marshall Spencer AMP, Mortgage Broker License # M08000817, acceleration is an expression usually used when a person has chosen to repay their mortgage payment on a weekly or biweekly basis although it can apply to any repayment program. All mortgages are drawn up showing a requirement that payments are made on a monthly basis. Most lenders nowadays will allow the borrower to divide their monthly payment in half for biweekly payments or in quarters for weekly payments which means that in stead of paying 12 monthly payments in a 52 week year, a borrower is actually paying 26 biweekly payments or 52 weekly payments in that same period. This means paying the equivalent of 13 monthly instalments in the time period where you would have only paid 12 under normal circumstances.

Since you are paying an extra payment - without penalty - you will save money by paying the mortgage down faster.

You can also accelerate your mortgage repayment but leave you payments on a monthly basis. By taking advantage of privileges normally written in to the contract to allow you to pay an extra 15% or 20% or increase your normal monthly payment amount by 15% or 20% you can also accelerate the replayment of your debt and save interest in the long run.

Tuesday, August 11, 2009

Great news for Variable Rate Mortgages

If you are looking for even better value in a variable rate mortgage, our licensed mortgage broker tells us of one lender's innovative product offering.

Variable rate product available at prime + .15% (2.40%)

On approved credit, select a maturity date between March 19th, 2012 and May 31, 2012 and close within 60 days of commitment and you can provide your clients with this outstanding variable rate value. Please note that this offer is not available on a Stated Income Program, Secondary Home Program or Small Rental Program. Subject to lender approval and of course the offer may be revoked at anytime by the lender.

A five year variable rate mortgage is also available at prime plus .40% (2.65%).
Contact a licensed mortgage broker for full details.

Sunday, August 9, 2009

Get Organized for Back to School Time

At back to school time, it is just as important for parents to organize their own responsibilities as it is for them to get their children ready.

Here are some tips to help you minimize headaches at this busy time of year.

Starting at the beginning of August:

1) Schedule any doctor’s appointments your child needs.
2) Determine any before or after-school care you may need & make the proper arrangements.
3) Designate a “school information area” in your house where you can keep announcements, trip slips and correspondence. This is also a great place to post a family calendar so all family members know what to expect in the upcoming days.
4) Transfer all information from your child’s school calendar onto the family calendar so everything is in one place. You’ll avoid double–booking appointments & activities. Try using one colour for each child.
5) Find a location where your children can do their homework without being sidetracked.
6) Designate a “drop area” where each family member can store backpacks, coats, lunch boxes, laptops, shoes etc. Use hooks, cubbies, tables or a chest of drawers to organize items in this area. Whether this area is near the doorway or in a mudroom, it will prevent kids from throwing everything in a pile when they walk in the door.
7) Shop for back to school clothes.
8) Help your children’s bodies adjust to their new schedule by setting & following bedtime & wake-up routines two or three weeks before school begins. Good sleep habits ensure your children will be properly rested from the very beginning of the school year.
9) Practice the morning school routine with younger children before the first day of school. Have a set schedule and consequences for being late.
10) Set up a three-ring binder to hold all the important school papers that you may need to refer to in the future. Use colour-coded dividers for each child.
11) Purchase back to school supplies. Be sure to include any supplies needed for extracurricular activities.

Quick Tip

Organizing with Kids

Here is a simple, effective system for getting your kids organized:
Plan with a goal in mind, Sort through the clutter, Organize what is left and Maintain your space each day.

It is important to give kids control so they don’t see tidying as a chore. Keep it simple: the more gadgets you use, the less likely they are to follow the plan. Keep categories straightforward & age-appropriate. Make sure containers can be opened easily by your child.

Make the storage accessible so they can reach it safely. Use colour: let them pick favourite colours that have meaning for them.

Most important, have fun organizing with your kids. Before you know it, they will be keeping their space clean themselves!

Janet Marks is a professional organizer operating in the GTA. Her services help home owners and small business organize themselves, leading to less stress, increased efficiency & more energy.

Thursday, July 30, 2009

Sad news for another mortgage lender in the "alternate/bad credit" market

A press release received in our office moments ago ...

Wells Fargo Financial Corporation Canada discontinues residential real estate lending

Effective July 30th, 2009, Wells Fargo Financial Corporation Canada will no longer be accepting residential mortgage loan applications through its consumer branch and indirect broker network channels.

Please treat this writing as notification of immediate cancellation of any Mortgage Broker Origination Agreement or other real estate lending agreements you may have with Wells Fargo Financial Corporation Canada or Wells Fargo Financial Corporation Canada HomePlan Mortgage.

To the extent Wells Fargo Financial Corporation Canada HomePlan Mortgage has issued a valid fully executed mortgage commitment, provided the applicant or applicants fulfill all of the terms and conditions of the mortgage commitment (including any time specified for closing or expiration of the mortgage commitment), we will honour those commitments.

Current customers and/or brokers with questions about a Wells Fargo Financial mortgage can contact our Corporate Customer Relations team at 1-800-461-8794.

We thank all of our broker partners, vendors and customers for their business and support over the years.


Rick Valade
Wells Fargo Financial Corporation Canada

Editor's note: Contact a licensed mortgage broker to discuss your options at renewal if you are an existing Wells Fargo Financial Corporation Canada borrower.

Tuesday, July 21, 2009


No changes to the prime interest rate are expected due to the Bank of Canada's announcement today.

The Bank also reminded us that its commitment to maintain the overnight rate at 0.25% is "conditional" and further remarked on signs of an emerging recovery and signs that core inflation has held up.

Turning its attention to the state of the Canadian Dollar, the Bank says that the strong loonie is "significantly moderating the pace of overall growth" but has not indicated it would be taking any action in this regard.

So in other words, continued good news for variable rate mortgage holders with no change in sight at this time. Check back with us again in another 6 weeks time for the results of the next meeting.

Monday, July 20, 2009

The return of the no frills mortgage

5 year mortgage funds available at 4.19% (on approved credit) on a no frills basis. Most other discounted rate offerings are in the 4.39% range. Why pay for a feature that statistics show you probably won't use?

Contact a
licensed mortgage broker to find out more.

Friday, July 17, 2009

Minor rate drops ... still waiting on all to follow suit

Good morning All

Only a few minor changes to report as far as mortgage interest rates go. A couple of lenders have reduced their discounted 5 year rate by 10 BPS to 4.39%. We are aware of a lender offering a special (on approved credit and subject to conditions) of 4.24%. Contact a licensed mortgage broker for more information.

The balance of terms haven't moved in some time now although a variable rate is available at prime (which remains unchanged at 2.25%) + .35% (2.60%) vs the best variable a short while ago which was prime + .40%.

The bond has had a few ups and downs the last few days but retreated 6 bps yesterday to 2.51% maintaining a 1.98% spread with the majority of the lenders.

With these spreads close to where they were approximately 6 weeks ago immediately prior to lenders pulling the pin and jacking up rates (from well below 4.0%) by approximately .75%, many are asking the question "Why haven't they reduced rates back to where they were previously?" to which many are replying "Profit taking".

We end by saying that rumour has it that the "no frills" mortgage may be making a comeback ... stay tuned for more on that.

Thursday, July 16, 2009

Consider a one year tem instead of a variable rate? Here's why ...

This article courtesy of Canadian Mortgage Trends

If you want a variable-rate mortgage (and are suited to one), take a peek at a one-year instead.

A lender contact of mine recently sent me their nine good reasons why:

1) Although they’ve been improving, today’s variable-rate mortgages still have abnormally high interest rate premiums (lowest is currently prime plus 0.35%, vs prime minus 0.75% or more a year ago).

2) A 1-year mortgage doesn’t lock you into a rate for 3-5 years. That means you can renew/refinance in 12 months when (hopefully) discounts to prime might be back.

3) The rates are comparable. Variable and 1-year mortgages are both based on short-term interest rates, so they move together over time. A discounted 1 year rate for a mortgage closing within 45 days can be had today for 2.75% OAC while a variable rate can be obtained for (prime + .05 ... 2.25% + .35% =) 2.60% OAC.

4) In certain cases, rates on 1-year mortgages are better than today’s best variable rates (see above).

5) The most flexible 1-year mortgages are convertible into a fixed OR variable rate at any time, and at no cost.

6) A 1 year term gives your licensed mortgage broker an opportunity to negotiate with lenders on your behalf again in 12 months.

7) If rates go up in the next 12 months, you’re protected for the remainder of the term in a fixed-rate mortgage where there is no such protection with a variable rate.

8) If rates steadily climb over the course of five years, 1-year terms could help you come out further ahead. That’s because 1-year rates reset slower than variable rates—which is helpful when rates are rising.

9) 1-year payments are fixed for a longer period of time than variable payments. That helps you budget a little easier. (The exceptions are the minority of variable-rate products with fixed payments).

Besides a good 1-year fixed, consider a 2-year term as well (currently available OAC with closing within 45 days for 2.95%). The rates are not that far behind. For an extra 0.20%, you’ll get one additional year of rate protection.

Disclaimer: One-year terms are not suitable for everyone. The above reflects opinions and not a recommendation. Consult a licensed mortgage broker for details.

Wednesday, July 15, 2009

Housing sales soar in Ontario's biggest cities

Courtesy of Financial Post

TORONTO - Despite all the talk of a housing downturn and economic crisis in
Ontario, the province's two biggest cities both saw record housing resales
last month for the month of June.

The Toronto Real Estate Board said Monday there were 10,955 sales in the
Greater Toronto Area in June, a 27% increase from the 8,600 homes sold a
year ago. It was the best June for sales since the board started tracking
the numbers in the mid 1960s.

In Ottawa, housing sales jumped 12.5% in June to 1,895, also a new record
for the month.

The average sale price in the GTA last month $403,972, up 2% from a year
earlier. In Ottawa, the average sale price rose 3% annually to $306,925.

"I think the next stage" might be price pressure, said Doug Porter, deputy
chief economist at BMO Capital Markets. "The moderation we have seen in
prices may not last long if this kind of sales and listing balance remains
in place."

Porter said the mad scramble to buy a house is playing out across the
country, as consumers wade back into the market tempted by interest rates
the lowest they've been in 50 years. Five-year fixed rate mortgages were as
low as 3.75% last month, though they've nudged back up to about 4.5% since.(editor's note, using a mortgage broker gives you access to 5 year rates of 4.24% OAC)

"Vancouver sales were up about 76% from a year ago, the second best June
ever for them. Calgary sales were up 27%, and Edmonton sales were up 38%,"
said the economist. "A lot of people emerged from their foxholes over the
winter and have been brought in by low mortgage rates or a belief the
economy is going to improve.

"There was some pent-up demand; things almost froze over solid over the

What do they mean by that ?

Well we're almost half way through July already ... can you believe it ?

I think its about time we dedicated a few posts to answering some common questions we get here at the Your Mortgage Matters Blog. Late spring and summer are the busiest times of the year for mortgages going on the books whether people are buying or renewing/refinancing.

With that busy time come a lot more questions so its time to review our mortgage jargon and explain it in layman's terms.

We'll sprinkle in some definitions between our usual posts on other matters affecting homeowners so we hope you'll enjoy them as we pass through the lazy, hazy days of summer.

Here's out first entry: What do they mean by "acceleration" ?

According to our mortgage broker reference Marshall Spencer AMP, Mortgage Broker License # M08000817, acceleration is an expression usually used when a person has chosen to repay their mortgage payment on a weekly or biweekly basis although it can apply to any repayment program. All mortgages are drawn up showing a requirement that payments are made on a monthly basis. Most lenders nowadays will allow the borrower to divide their monthly payment in half for biweekly payments or in quarters for weekly payments which means that in stead of paying 12 monthly payments in a 52 week year, a borrower is actually paying 26 biweekly payments or 52 weekly payments in that same period. This means paying the equivalent of 13 monthly instalments in the time period where you would have only paid 12 under normal circumstances.

Since you are paying an extra payment - without penalty - you will save money by paying the mortgage down faster.

you can also accelerate your mortgage repayment but leave you payments on a monthly basis. By taking advantage of privileges normally written in to the contract to allow you to pay an extra 15% or 20% or increase your normal monthly payment amount by 15% or 20% you can also accelerate the replayment of your debt and save interest in the long run.

By contacting a licensed mortgage broker, you're taking the first step to finding the right mortgage solution for you. They are invaluable resources due to their unbiased approach and experience in the industry.

Look for another jargon-busting post coming soon - have a great day.

Monday, July 13, 2009

The basics on Mold from a Home Inspector

The key to mold control is moisture control.

If mold is a problem in your home, you should clean up the mold promptly and fix the water problem. It is important to dry water-damaged areas and items within 24-48 hours to prevent mold growth.

Why is mold growing in my home?

Molds are part of the natural environment. Outdoors, molds play a part in nature by breaking down dead organic matter such as fallen leaves and dead trees, but indoors, mold growth should be avoided. Molds reproduce by means of tiny spores; the spores are invisible to the naked eye and float through outdoor and indoor air. Mold may begin growing indoors when mold spores land on surfaces that are wet. There are many types of mold, and none of them will grow without water or moisture.

Can mold cause health problems?

Molds are usually not a problem indoors, unless mold spores land on a wet or damp spot and begin growing. Molds have the potential to cause health problems. Molds produce allergens (substances that can cause allergic reactions), irritants, and in some cases, potentially toxic substances (mycotoxins). Inhaling or touching mold or mold spores may cause allergic reactions in sensitive individuals. Allergic responses include hay fever-type symptoms, such as sneezing, runny nose, red eyes, and skin rash (dermatitis). Allergic reactions to mold are common. They can be immediate or delayed. Molds can also cause asthma attacks in people with asthma who are allergic to mold. In addition, mold exposure can irritate the eyes, skin, nose, throat, and lungs of both mold-allergic and non-allergic people. Symptoms other than the allergic and irritant types are not commonly reported as a result of inhaling mold. Research on mold and health effects is ongoing. This brochure provides a brief overview; it does not describe all potential health effects related to mold exposure. For more detailed information consult a health professional. You may also wish to consult your state or local health department.

How do I get rid of mold?

It is impossible to get rid of all mold and mold spores indoors, some mold spores will be found floating through the air and in house dust. The mold spores will not grow if moisture is not present. Indoor mold growth can and should be prevented or controlled by controlling moisture indoors. If there is mold growth in your home, you must clean up the mold and fix the water problem. If you clean up the mold, but don't fix the water problem, then, most likely, the mold problem will come back

Ten Things You Should Know About Mold

1. Potential health effects and symptoms associated with mold exposures include allergic reactions, asthma, and other respiratory complaints. 

2. There is no practical way to eliminate all mold and mold spores in the indoor environment; the way to control indoor mold growth is to control moisture. 

3. If mold is a problem in your home or school, you must clean up the mold and eliminate sources of moisture. 

4. Fix the source of the water problem or leak to prevent mold growth.
5. Reduce indoor humidity (to 30-60%) to decrease mold growth by:
a. venting bathrooms, dryers, and other moisture-generating sources to the outside;
b. using air conditioners and de-humidifiers;
c. increasing ventilation;
d. and using exhaust fans whenever cooking, dishwashing, and cleaning
6. Clean and dry any damp or wet building materials and furnishings within 24-48 hours to prevent mold growth.
7. Clean mold off hard surfaces with water and detergent, and dry completely. Absorbent materials such as ceiling tiles, that are moldy, may need to be replaced.
8. Prevent condensation: Reduce the potential for condensation on cold surfaces (i.e., windows, piping, exterior walls, roof, or floors) by adding insulation.
9. In areas where there is a perpetual moisture problem, do not install carpeting (i.e., by drinking fountains, by classroom sinks, or on concrete floors with leaks or frequent condensation).
10. Molds can be found almost anywhere; they can grow on virtually any substance, providing moisture is present. There are molds that can grow on wood, paper, carpet, and foods.

Courtesy of Garry D. Heard of Greater Durham Home Inspections who can be reached by phone at 905-831-4887 or on the web