Monday, March 30, 2009


Here are some thoughts courtesy of the Senior Economist at CIBC, Benjamin Tal. Highlighted at the end of the posting are uplifting comments for Canadians ... as always we recommend that when you want information regarding the current low rate environment and whether its in your best interest to refinance, contact a licensed mortgage broker.

The main focus in the market is currently on the Geithner Plan. To summarize it in very simple terms the plan is
a trillion-dollar operation by which the US acts as the world's largest hedge fund investor. The money will be committed to funds to buy up risky and distressed assets. However, it is possible that at the moment those
assets are fundamentally undervalued. So it is probable that if the funds hold the assets to maturity or until markets recover so that risk premiums are back to normal, they can sell them off at a profit.

It is a good move—not a sufficient condition for a recovery but clearly, a necessary one. Without some stability in the US financial system, we will not be able to see a sustainable recovery. And this move is undoubtedly an important one towards achieving this goal.

Another important development is that the Fed is now using quantitative easing to buy long term government bonds. And it is working. Long-term yield fell to around 2.7%—generating another wave of refinancing in the US mortgage market.

There are a few more signs of stabilization in selected pockets of the US economy. One that we follow very closely is US-based cargo volumes, which had been falling steeply for several months, are beginning to show signs of stabilizing. While too early to call this a recovery, measures of seaport, rail, trucking and airport activity
are encouraging given the recent run of gloomy economic news.

As well, credit spreads for emerging market issuers have narrowed following the US government's latest plan to purchase toxic assets from banks. Since last week, the global dollar-denominated emerging market spread — the difference between rates offered by emerging market corporate and sovereign bonds and US Treasuries,
narrowed by almost 30 basis points. And at close to 940 basis points, they are now well below the 1,300 basis points we have seen in late 2008, but are still significantly above the pre-crisis level of 400 basis points.

In Canada, despite recessionary conditions, household credit growth is still relatively healthy. Overall mortgage outstanding are rising by close to 10% on a year-over-year basis, but on a month over month basis things are clearly slowing. The extremely low mortgage rate is now generating a refinancing wave we have not seen in many years and, in fact, activity in the resale market is showing some signs of life.

We are also seeing a relatively healthy growth in lines of credit—currently rising by 15% on a year-over-year basis. This increase reflects a notable increase in credit limits in the past few years, and with borrowers not reducing their utilization rate, overall credit outstanding is rising.

Saturday, March 28, 2009

Earth Hour - tonight!

Time to get up and get involved in Earth Hour 2009.

Turn off your lights and take part in the movement that circles the globe.

8:30pm E.S.T.

Thursday, March 26, 2009

CMHC Launches Campaign to Help Homeowners

OTTAWA, March 26, 2009 - Today, the Canada Mortgage and Housing Corporation (CMHC) launched a consumer outreach campaign to help borrowers understand the importance of working with lenders to find manageable solutions if they are facing financial difficulties in repaying their mortgage loans.

"CMHC has a long tradition of offering mortgage default management tools to lenders to help them assist homeowners whose financial circumstances have changed. We want to remind people that the best course of action is to speak to their lenders at the first sign of financial difficulty. With early intervention, cooperation and a well executed plan, you can work together with your lender to find a solution." stated Mark McInnis, CMHC Vice-President of Insurance Underwriting, Servicing and Policy.

The campaign includes consumer information on the options available to homeowners who may be having difficulty meeting their mortgage payments.

This information is also being provided to government partners and credit counseling organizations.

CMHC advises homeowners to:

1. Talk to your lender at the first sign of financial difficulty

2. Clarify your financial picture, both for yourself and your lender

3. Stay informed about what options and resources might be available to you

For Approved Lenders with CMHC-insured mortgages, CMHC provides tools and the flexibility to make timely decisions when working with homeowners to find a solution to an individual's unique financial situation. These tools include:

* Offering a temporary short-term payment deferral. Lenders may be prepared to offer greater payment flexibilities especially if previous lump sum prepayments have been made, or if an accelerated payment schedule has been previously chosen.

* Extending the original repayment period (amortization) in order to lower the monthly mortgage payments.

* Adding any missed payments (arrears) to the mortgage balance and spreading them over the remaining mortgage repayment period.

* Offering a special payment arrangement unique to an individual's particular financial situation.

More information and resources are available at CMHC's website search keywords "mortgage payment difficulties", or at 1-800-668-2642.

CMHC is Canada's national housing agency. For more than 60 years CMHC has shared a wealth of knowledge and housing expertise to help create an informed and reassured homeownership experience for Canadians.

For more information: Kristen Scheel, CMHC Media Relations, 613-748-2799

Monday, March 16, 2009

Happy March Break !

Well if your kids are off school this week like mine is ... good luck !!

Hey, just kidding. What a great time to decompress a bit. Bad news stories still abound, winter still hanging around and you've probably seen that nasty flu bug more than once in the last several weeks.

Time for a break !

Go to the zoo, museum, do an overnight trip to visit out of town family & then return the favour or even book a hotel out of town. Shake up your routine and spend some quality time with the most important people in your life.

Enjoy yourselves ... remember its not as bad out there as the media would have us believe. Take a break, look around you and remember what is really important.

See you with some great new articels after the march Break vacatio is over ... I'm off to the zoo with my wife and 3 year old!

Friday, March 6, 2009

Your Mortgage Matters on Rogers TV today !

Hello Durham viewers of Rogers Cable 10 ... Marshall Spencer, Accredited Mortgage Professional and licensed mortgage broker (license # M08000817)at RMA-Spencer Group Mortgages (license #10655) is appearing today on First Local Midday on local Rogers stations to talk about the mortgage market. We may not reach the Toronto or other large markets but if you're in Durham Region (Pickering, Ajax, Whitby, Oshawa, Bowmanville, Courtice etc) then he's there for you.

Tune in for an informative talk segment and learn a thing or two: misconceptions about using a mortgage broker, what do the recent rate drops mean to me, how can I get myself ready to be approved for my mortgage ... and many others.

Have a great Friday and see you at noon !

Tuesday, March 3, 2009

Bank of Canada Rate Drops by half a percent

Take this opportunity to contact your licensed mortgage professional and compare your existing mortgage with what is available today. You may be surprised at how much you can save. Check back with us soon to see how today's announcement affects the fixed rate mortgages.

OTTAWA - The Bank of Canada today announced that it is lowering its
target for the overnight rate by one-half of a percentage point to 1/2 per cent.

The outlook for the global economy has continued to deteriorate since the Bank's January Monetary Policy Report Update, with weaker-than-expected activity in major economies. The nature of the U.S. recession, with very weak auto and housing sectors, is particularly challenging for Canada.

Stabilization of the global financial system remains a precondition for the global and Canadian economic recoveries. The timely implementation of ambitious plans in some major countries to address toxic assets and recapitalize financial institutions will be critical in this regard.

National accounts data for the fourth quarter of 2008 and other indicators of aggregate demand point to a sharper decline in Canadian economic activity and a larger output gap through the first half of 2009 than projected in January. Potential delays in stabilizing the global financial system, along with larger-than-anticipated confidence and wealth effects on domestic demand, could mean that the output gap will not begin to close until early 2010. These factors imply a slightly lower profile for core inflation than was projected in the January MPRU.

The effects of the recent aggressive monetary and fiscal policy actions in Canada and other major economies will begin to be felt in the second half of this year and will build through 2010. Once the global financial system stabilizes and global growth recovers, the underlying strength of the Canadian economy and financial sector should ensure a more rapid recovery in Canada than in most other industrialized economies.

The Bank's decision to lower its policy rate by 50 basis points today brings the cumulative monetary policy easing to 400 basis points since December 2007. Consistent with returning total CPI inflation to 2 per cent, the target for the overnight rate can be expected to remain at this level or lower at least until there are clear signs that excess supply in the economy is being taken up.

Given the low level of the target for the overnight rate, the Bank is refining the approach it would take to provide additional monetary stimulus, if required, through credit and quantitative easing. In its April Monetary Policy Report, the Bank will outline a framework for the possible use of such measures.

The Bank will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required to achieve its 2 per cent inflation target over the medium term.

Monday, March 2, 2009

Is the Bank of Canada running out of bullets ?

People are noticing that interest rates are at 65 year lows ... contact a mortgage professional to compare your existing mortgage with a new deal at today's fantastic rates. It costs nothing for the call and you may find out you'll save in the long run and lock in today's rates for another few years to come. Here's an article which should provide more good news for those in variable rate mortgages.

JULIAN BELTRAME Globe and Mail Report on Business The Canadian Press

OTTAWA - Just about now, Bank of Canada governor Mark Carney should be experiencing that sinking, helpless feeling about the economy.

It's not for want of trying to shock the economy back to life.

On Tuesday, the telegenic former Goldman Sachs executive is widely expected to cut short-term interest rates another half-point to bring the central bank's overnight rate to a barely-noticeable 0.5 per cent. For all practical purposes, zero.

That would make it the seventh time Mr. Carney has eased a notch, sometimes several notches, on interest rates since taking charge of the central bank last February. In that time he has also injected $40-billion in cash into the economy through asset swaps with banks, and last week took the unusual step of agreeing to accept corporate bonds as collateral to try and free up credit.

None of it has worked and the economy continues to decline.

One problem Mr. Carney faces is that in the current global credit crunch, financial market interest rates are volatile so there's no assurance Canadian banks will pass along the full Bank of Canada rate cuts by reducing their prime lending rate by the same amount.

The prime is the base used by banks to set rates on consumer and corporate loans, lines of credit and some mortgages. While the prime has dropped in most cases by the same amount as the Bank of Canada rate in the last year or so, other interest rates in the market have been rising and loans have been harder to get as the banks avoid riskier lending during a recession.

A recent survey shows a majority of manufacturers say access to credit is still the major obstacle they face.

"There is clear evidence that very low interest rates are not working to expand economic activity," former Conservative cabinet minister Doug Peters, once also a TD Bank chief economist, wrote in a paper for the Canadian Centre for Policy Alternatives.

"In the current recessionary environment, banks are obviously worried about lending to each other, and of course, are worried about lending to consumers and firms. Interest rates that count, such as inter-bank lending rates, mortgage lending rates, bank commercial lending rates, are all unusually high, especially considering that inflation is also very close to zero."

Even before Mr. Carney's Tuesday move, a new report Monday from Statistics Canada is expected to reveal that the Canadian economy, in Finance Minister Jim Flaherty's blunt words, "fell off the table" in the fourth quarter of 2008.

Private sector economists are predicting a sharp three-to-four per cent contraction in economic activity - severe recessionary territory - but remarkably it could be worse. In fact, Mr. Carney is predicting worse for the first three months of this year with a 4.8-per-cent economic contraction.

In his last public speech in January, Mr. Carney insisted that monetary action taken so far "will work," noting the lengthy lag time between action and impact, often cited as 12 to 18 months.

Since the bank started cutting 15 months ago, Canada should be just beginning to feel the effects.

Of course, Mr. Carney has invested a lot of credibility in the assertion
it will work. He has stuck out his neck by predicting the economy will bounce back like an Indian rubber ball to 3.8 per cent growth next year, a forecast that has a few supporters and many detractors.

Although he doesn't believe the rebound will be as dramatic, Bank of Montreal economist Douglas Porter says there are good reasons to buy into Mr. Carney's rosy assessment, which would make the current slump milder than the recessions of the early 1980s and 1990s.

First, interest rates are much lower now than during the previous downturns. Second, aggressive stimulus policy is kicking in. And lastly, corporate balance sheets were in better shape heading into the current recession as compared to the previous two.

These act as shock absorbers for the economy's hard landing. However, they will be of little use if the world financial system is not fixed.

That's because until global banks have the confidence and wherewithal to start lending again, the U.S. and global economies will continue to struggle. And that will keep prices for commodities that Canada exports low, sap demand for Canadian manufactured goods, and in turn stifle Canadian job creation and incomes.

And that's where Mr. Carney's frustration comes in. He is largely a spectator in a game played outside his borders, able to influence the outcome only at the margins.

Mr. Carney has received some heat for some of his decisions, most notably keeping interest rates unchanged for a full five months from May to October last year in the mistaken belief that financial markets were stabilizing. But given that he's made up for lost time since then, most economists conceded the period of inaction wasn't critical.

"There are some quibbles I might have over what the Bank of Canada or Ottawa have done, but those are just specks of sand on the beach compared to what's hit us from outside this country," says Mr. Porter.

"There are things policy makers here can do to cushion the blow, but the tools at their disposal are only so big and they can only do so much to offset this deep global downturn."

In his January speech, Mr. Carney talked about other measures at his disposal besides rate cuts, no doubt foreshadowing last week's action on corporate bonds. The bank could also follow the Fed example by implementing so-called "quantitative easing" facilities to pump funds into the private sector, or follow Japan's lead by directly buying corporate bonds, or still more exotic intrusions in the money markets.

But Mr. Holt cautions non-traditional initiatives, even if Mr. Carney judged taking on the added risk necessary, would likely not be game-changing in isolation.

The next big round of central bank action should be left to the Fed and perhaps the Bank of England, he said. This could involve printing mounds of money to buy up government treasury bills in order to free up more cash for the private sector economy.

"You can cut rates to near zero, you can stimulate the domestic economy through fiscal policy, but you still need a rebound in the U.S. and European economies," he explains.

"The smart position (for Carney) is to cut rates Tuesday and wait and see what global central banks do elsewhere."