We have continued to see a retraction in the 5 year bond which is now 15 bps (basis points) lower than a week ago. Bank spreads (profit margin) over bond have increased to 2% yet there has been little to no movement in the 5 year rate.
Why is that ?
With the number of mortgage deals closing today and tomorrow, it is unlikely that rates will change before Thursday - if at all. If a bank changed their rate downwards today, they would open themselves up to having to reduce rates on all deals closing today and tomorrow which would effect service levels (this is the busiest time of the year for mortgage closings) by requiring a flood of emails & phone calls requesting changes to documentation and also effect profits (lower rates on all those deals means less income for the lender).
Remember that the banks will be closed Wednesday for the Canada Day
Holiday.
Showing posts with label mortgage. Show all posts
Showing posts with label mortgage. Show all posts
Monday, June 29, 2009
Monday, January 26, 2009
Inflation hits 2 year low
Your Mortgage Matters wants to start your week off with some good news ! Check with your mortgage professional for some great news today on low interest rates.
Just when you need to hear it most - in the middle of a cold snap with economic woes and uncertainty ... you heard it right: Inflation hits a 2 year low.
In fact if not for a spike in the price of some food items the rate would actually be zero! Falling gas and energy prices were countered by rising foodstuffs (fresh vegetables, bakery and cereals all up substanitally) in the December 2008 stats.
Our island neighbours in P.E.I. actually rang up a zero with New Brunswick and Nova Scotia recording decreases of 0.6 and 0.2 per cent respectively. Statistics Canada confirms that the annual rate decreased to 1.2% for the end of 2008 which is a low not experienced since the beginning of 2007.
Month over month November '08 to December '08 prices were 0.7 per cent lower.
Even with these amazing figures, Canada's inflation rate comes in at about 1% above that of the U.S.A. but our weaker dollar and good wage gains by those keeping their jobs makes deflation less of a risk.
The Bank of Canada recently forecast inflation will likely drop below zero in the 2nd quarter once food prices react to the drops in energy and commodity prices. The Bank's "core inflation rate" which excludes energy and many food products due to their volatility remained at 2.4% last month.
Just when you need to hear it most - in the middle of a cold snap with economic woes and uncertainty ... you heard it right: Inflation hits a 2 year low.
In fact if not for a spike in the price of some food items the rate would actually be zero! Falling gas and energy prices were countered by rising foodstuffs (fresh vegetables, bakery and cereals all up substanitally) in the December 2008 stats.
Our island neighbours in P.E.I. actually rang up a zero with New Brunswick and Nova Scotia recording decreases of 0.6 and 0.2 per cent respectively. Statistics Canada confirms that the annual rate decreased to 1.2% for the end of 2008 which is a low not experienced since the beginning of 2007.
Month over month November '08 to December '08 prices were 0.7 per cent lower.
Even with these amazing figures, Canada's inflation rate comes in at about 1% above that of the U.S.A. but our weaker dollar and good wage gains by those keeping their jobs makes deflation less of a risk.
The Bank of Canada recently forecast inflation will likely drop below zero in the 2nd quarter once food prices react to the drops in energy and commodity prices. The Bank's "core inflation rate" which excludes energy and many food products due to their volatility remained at 2.4% last month.
Wednesday, January 21, 2009
Realtors call on federal government to stimulate housing mrket
Published January 15, 2009 CREA
The Canadian Real Estate Association is calling on the federal government to include several housing initiatives in the upcoming budget. The association believes the proposals are even more important in today's recessionary times, based on the impact housing has on the overall economy and the reported results of MLS residential sales in 2008.
"Bay Street needs to take a back seat to Main Street in the next federal budget," says the President of The Canadian Real Estate Association, Calvin Lindberg. "The government has already moved to help credit markets and our chartered banks, now it's time to take direct and immediate action to help ordinary Canadians."
Statistics released today by the CREA show that the residential housing market sales volume withdrew in 2008 to levels not seen since 2002. More importantly, the most recent statistics from December 2008 show that sales activity reached its lowest level for the month of December since 2000. Some 434,477 homes traded hands via the MLS systems of real estate boards in Canada in 2008, down 17.1 per cent from the record 523,855 properties sold in 2007.
"We are pleased the Minister of Finance and the government have recognized the need for action by ranking housing as one of the top six issues in its pre-budget consultations," Mr. Lindberg added.
CREA has met with senior government officials and proposed several measures to help stimulate the housing market, both for residential and commercial investors.
For residential homebuyers, CREA proposes the government increase the limit of the Home Buyers Plan (HBP). Introduced in 1992 by a Conservative government and made permanent by a Liberal government in 1994, the HBP has broad political and consumer support.
The HBP allows first time homebuyers to withdraw up to $20,000 from their RRSP to help purchase a residential property, which must be repaid over a period of 15 years.
Unfortunately, the HBP has not kept pace with inflation or home prices. As a result, the HBP does not have the same impact and relevance it did 16 years ago, when $20,000 represented 13.3 per cent of the average house price, versus about 6.5 per cent today.
"The government should immediately raise the HBP limit from $20,000 to $25,000 and it should keep pace with annual inflation. Additionally, it should be available to all home buyers, not just first time buyers," the CREA President added.
To address issues facing the commercial and investment property markets, CREA is seeking amendments to the Income Tax Act to promote increased reinvestment in real property. The CREA proposal calls for the deferral of capital gains taxes and the capital cost allowance recovery for all real property investments when an investment property is sold and the proceeds are re-invested in another real property within the subsequent year.
"Our proposal has benefits across the board for the economy, for rental housing and for the small investor, as well as some significant environmental benefits as old buildings are renovated and made more energy efficient. The budget is the perfect time for this sort of stimulus," Calvin Lindberg added.
Studies show that more than 29 jobs are created for every $1 million invested in property renovation. A study prepared by Altus Clayton for CREA also shows that each residential MLS transaction generated an additional $32,200 in consumer spending. Commercial and investment property transactions can generate even higher levels of economic spinoffs.
Canada Mortgage and Housing Corporation (CMHC) reported that rental construction is not growing fast enough to offset demand. At the same time, the Ontario Housing Supply Working Group has found that tax changes, such as the proposed rollover, "will not only lower the rent threshold at which a new project will be viable...new supply will help reduce demand pressures and...increase the supply of vacant units in existing stock."
CREA's proposed deferral and reinvestment will help the small investor disproportionately. Research based on the 2006 tax year indicates that 58 per cent of those reporting real property gains had net incomes of $50,000 or lower.
CREA's detailed proposal for the Home Buyers Plan is available on www.crea.ca.
CREA's capital gains proposal is also posted on www.crea.ca.
A podcast with CREA President Calvin Lindberg is also available on
www.crea.ca.
The Canadian Real Estate Association is calling on the federal government to include several housing initiatives in the upcoming budget. The association believes the proposals are even more important in today's recessionary times, based on the impact housing has on the overall economy and the reported results of MLS residential sales in 2008.
"Bay Street needs to take a back seat to Main Street in the next federal budget," says the President of The Canadian Real Estate Association, Calvin Lindberg. "The government has already moved to help credit markets and our chartered banks, now it's time to take direct and immediate action to help ordinary Canadians."
Statistics released today by the CREA show that the residential housing market sales volume withdrew in 2008 to levels not seen since 2002. More importantly, the most recent statistics from December 2008 show that sales activity reached its lowest level for the month of December since 2000. Some 434,477 homes traded hands via the MLS systems of real estate boards in Canada in 2008, down 17.1 per cent from the record 523,855 properties sold in 2007.
"We are pleased the Minister of Finance and the government have recognized the need for action by ranking housing as one of the top six issues in its pre-budget consultations," Mr. Lindberg added.
CREA has met with senior government officials and proposed several measures to help stimulate the housing market, both for residential and commercial investors.
For residential homebuyers, CREA proposes the government increase the limit of the Home Buyers Plan (HBP). Introduced in 1992 by a Conservative government and made permanent by a Liberal government in 1994, the HBP has broad political and consumer support.
The HBP allows first time homebuyers to withdraw up to $20,000 from their RRSP to help purchase a residential property, which must be repaid over a period of 15 years.
Unfortunately, the HBP has not kept pace with inflation or home prices. As a result, the HBP does not have the same impact and relevance it did 16 years ago, when $20,000 represented 13.3 per cent of the average house price, versus about 6.5 per cent today.
"The government should immediately raise the HBP limit from $20,000 to $25,000 and it should keep pace with annual inflation. Additionally, it should be available to all home buyers, not just first time buyers," the CREA President added.
To address issues facing the commercial and investment property markets, CREA is seeking amendments to the Income Tax Act to promote increased reinvestment in real property. The CREA proposal calls for the deferral of capital gains taxes and the capital cost allowance recovery for all real property investments when an investment property is sold and the proceeds are re-invested in another real property within the subsequent year.
"Our proposal has benefits across the board for the economy, for rental housing and for the small investor, as well as some significant environmental benefits as old buildings are renovated and made more energy efficient. The budget is the perfect time for this sort of stimulus," Calvin Lindberg added.
Studies show that more than 29 jobs are created for every $1 million invested in property renovation. A study prepared by Altus Clayton for CREA also shows that each residential MLS transaction generated an additional $32,200 in consumer spending. Commercial and investment property transactions can generate even higher levels of economic spinoffs.
Canada Mortgage and Housing Corporation (CMHC) reported that rental construction is not growing fast enough to offset demand. At the same time, the Ontario Housing Supply Working Group has found that tax changes, such as the proposed rollover, "will not only lower the rent threshold at which a new project will be viable...new supply will help reduce demand pressures and...increase the supply of vacant units in existing stock."
CREA's proposed deferral and reinvestment will help the small investor disproportionately. Research based on the 2006 tax year indicates that 58 per cent of those reporting real property gains had net incomes of $50,000 or lower.
CREA's detailed proposal for the Home Buyers Plan is available on www.crea.ca.
CREA's capital gains proposal is also posted on www.crea.ca.
A podcast with CREA President Calvin Lindberg is also available on
www.crea.ca.
Tuesday, January 20, 2009
Bank of Canada Rate Drop
Here's some news from today's headlines ... good news for many however the lower rates also mean a dropping value in the loonie for those travelling south this winter. Don't forget to talk to your independent mortgage professional regarding interest rates and products best suited for your situation.
Bank's key rate cut to record low
OTTAWA - The Bank of Canada has chopped its key interest rate by another half percentage point to its lowest level ever, and warned that the Canadian economy will contract by 1.2 % this year.
The central bank's target for the overnight lending rate now stands at 1% - lower than in 1958, when the most-watched policy rate was 1.12 per cent.
"The outlook for the global economy has deteriorated since the bank's December interest rate announcement, with the intensifying financial crisis spilling over into real economic activity," the bank said in its gloomiest statement yet.
In separate announcements, Toronto-Dominion Bank and Bank of Montreal
responded by announcing they have cut their prime lending rates by 50 basis points to 3 per cent. BMO said it is cutting key mortgage rates by 30 to 50 basis points.
Last fall, the bank had counted on the Canadian economy growing by 0.6 % this year. But since then, it has recognized that Canada is in recession, and now says the economy will shrink by 1.2 per cent in 2009, as the country succumbs to sagging global demand, lower energy prices and a collapse of confidence around the world.
"Canadian exports are down sharply, and domestic demand is shrinking as a result of declines in real income, household wealth, and consumer and business confidence," the bank said.
Already down in overnight trading, the Canadian dollar fell further after the bank's announcement, and was down 0.84 cents U.S. to 78.90 cents just after 9 a.m. ET.
Since slack is building up in Canada's economy and housing prices are coming down modestly, inflationary pressure should also ease, the bank explained.
Total inflation will likely fall below zero for much of 2009 because of lower energy prices. And even core inflation, which excludes energy and other volatile items, will drop to about 1.1 per cent at the end of this year, the bank said.
But the central bank sees a remarkably strong recovery in 2010, with the Canadian economy growing 3.8 per cent next year and inflation edging back up to hit the bank's two per cent target in early 2011.
In order for the recovery to take hold, the global financial system has to stabilize, the bank said, but added that that process has begun, "There are signs that these extraordinary measures [by governments and central banks] are starting to gain traction, although it will take some time for financial conditions to normalize," the statement said.
Plus, the global economy should start to benefit from "considerable" monetary and fiscal stimulus, the bank said.
Canadian banks have come under criticism for failing to pass on to customers the full amount of recent previous rate cuts by the Bank of Canada.
Canada's recovery should also be bolstered by the past depreciation of the Canadian dollar, the statement added.
The bank did not promise any further interest rates to follow. Instead, the bank pointed out that it had already reduced its key rate by three and a half percentage points since December 2007, and added that it would keep an eye on how the economy and markets develop, and decide accordingly what it should do with rates.
"Guided by Canada's inflation-targeting framework, the bank will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required," it said.
Economists have warned that central banks need to be prepared to quickly reverse their aggressive interest rate cuts of the past year as soon as they see signs of recovery. Otherwise, there is so much monetary and fiscal stimulus floating around that today's disinflation could easily turn into an inflation problem when economies begin to grow again.
Economists have also been on the lookout for alternative forms of boosting the economy, aside from interest rates, with the U.S. Federal Reserve's key rate already hovering around zero, and the Bank of Canada at its lowest level too.
While Bank of Canada Governor Mark Carney has said previously that he is
examining his options, there was no suggestion in Tuesday's statement that any non-conventional measure is imminent.
Still, with the federal budget just a week away, the government is expected to introduce several easing mechanisms, as well as a huge stimulus program to help ease the bite of the recession.
The Bank of Canada will issue a more complete economic outlook on Thursday.
Bank's key rate cut to record low
OTTAWA - The Bank of Canada has chopped its key interest rate by another half percentage point to its lowest level ever, and warned that the Canadian economy will contract by 1.2 % this year.
The central bank's target for the overnight lending rate now stands at 1% - lower than in 1958, when the most-watched policy rate was 1.12 per cent.
"The outlook for the global economy has deteriorated since the bank's December interest rate announcement, with the intensifying financial crisis spilling over into real economic activity," the bank said in its gloomiest statement yet.
In separate announcements, Toronto-Dominion Bank and Bank of Montreal
responded by announcing they have cut their prime lending rates by 50 basis points to 3 per cent. BMO said it is cutting key mortgage rates by 30 to 50 basis points.
Last fall, the bank had counted on the Canadian economy growing by 0.6 % this year. But since then, it has recognized that Canada is in recession, and now says the economy will shrink by 1.2 per cent in 2009, as the country succumbs to sagging global demand, lower energy prices and a collapse of confidence around the world.
"Canadian exports are down sharply, and domestic demand is shrinking as a result of declines in real income, household wealth, and consumer and business confidence," the bank said.
Already down in overnight trading, the Canadian dollar fell further after the bank's announcement, and was down 0.84 cents U.S. to 78.90 cents just after 9 a.m. ET.
Since slack is building up in Canada's economy and housing prices are coming down modestly, inflationary pressure should also ease, the bank explained.
Total inflation will likely fall below zero for much of 2009 because of lower energy prices. And even core inflation, which excludes energy and other volatile items, will drop to about 1.1 per cent at the end of this year, the bank said.
But the central bank sees a remarkably strong recovery in 2010, with the Canadian economy growing 3.8 per cent next year and inflation edging back up to hit the bank's two per cent target in early 2011.
In order for the recovery to take hold, the global financial system has to stabilize, the bank said, but added that that process has begun, "There are signs that these extraordinary measures [by governments and central banks] are starting to gain traction, although it will take some time for financial conditions to normalize," the statement said.
Plus, the global economy should start to benefit from "considerable" monetary and fiscal stimulus, the bank said.
Canadian banks have come under criticism for failing to pass on to customers the full amount of recent previous rate cuts by the Bank of Canada.
Canada's recovery should also be bolstered by the past depreciation of the Canadian dollar, the statement added.
The bank did not promise any further interest rates to follow. Instead, the bank pointed out that it had already reduced its key rate by three and a half percentage points since December 2007, and added that it would keep an eye on how the economy and markets develop, and decide accordingly what it should do with rates.
"Guided by Canada's inflation-targeting framework, the bank will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required," it said.
Economists have warned that central banks need to be prepared to quickly reverse their aggressive interest rate cuts of the past year as soon as they see signs of recovery. Otherwise, there is so much monetary and fiscal stimulus floating around that today's disinflation could easily turn into an inflation problem when economies begin to grow again.
Economists have also been on the lookout for alternative forms of boosting the economy, aside from interest rates, with the U.S. Federal Reserve's key rate already hovering around zero, and the Bank of Canada at its lowest level too.
While Bank of Canada Governor Mark Carney has said previously that he is
examining his options, there was no suggestion in Tuesday's statement that any non-conventional measure is imminent.
Still, with the federal budget just a week away, the government is expected to introduce several easing mechanisms, as well as a huge stimulus program to help ease the bite of the recession.
The Bank of Canada will issue a more complete economic outlook on Thursday.
Sunday, October 21, 2007
The birth of the Mortgage Matters blog
Well hello and welcome to the Mortgage Matters blog - I'm your host Marshall Spencer, AMP and this is my initial post! I'll be using my 24 years of mortgage industry experience to help you navigate the world of mortgages here in Ontario and try to provide some useful tips and links to other resources too.
To introduce myself a little more, the AMP after my name stands for "Accredited Mortgage Professional" which is a designation earned through the Canadian Association of Accredited Mortgage Professionals (CAAMP) formerly known as the Canadian Institute of Mortgage Brokers and Lenders (CIMBL). Only by succesfully completing both mandatory and approved elective continuing education courses, meeting a requirement for experience in the industry and following a professional code of conduct and ethics is a member of CAAMP is eligible to use the AMP designation. It is something all consumers should ask about when dealing with a mortgage professional whether buying or refinancing.
CAAMP is a national organization which works to link together mortgage professionals across Canada - there are also several international members too!
In addition to being a CAAMP member for many years, I am also a member of the Independant Mortgage Brokers Association of Ontario (IMBA), a provincial body with much the same mandate as CAAMP and serve on their seminar committee. IMBA has also recently introduced a professional designation Certified Professional Mortgage Broker (CPMB) and Certified Professional Mortgage Agent (CPMA). When I'm not busy arranging mortgages, servicing the clients or mortgage agents I work with or blogging about mortgages, I hope to satisfy the requirements of the CPMB. I am strongly committed to professionalism and continuing education to keep serving the industry to the best of my ability.
I'm excited to bring my knowledge and experience into cyberspace and onto your monitor. Let's get ready to demystify mortgages, explain product benefits and compare their differences and how to get debt free faster. Look forward to the next time - bye for now. Don't forget ... your mortgage matters.
Marshall Spencer, AMP
Vice-President, Business Development
Real Mortgage Associates Inc.
http://www.rmabroker.ca/
To introduce myself a little more, the AMP after my name stands for "Accredited Mortgage Professional" which is a designation earned through the Canadian Association of Accredited Mortgage Professionals (CAAMP) formerly known as the Canadian Institute of Mortgage Brokers and Lenders (CIMBL). Only by succesfully completing both mandatory and approved elective continuing education courses, meeting a requirement for experience in the industry and following a professional code of conduct and ethics is a member of CAAMP is eligible to use the AMP designation. It is something all consumers should ask about when dealing with a mortgage professional whether buying or refinancing.
CAAMP is a national organization which works to link together mortgage professionals across Canada - there are also several international members too!
In addition to being a CAAMP member for many years, I am also a member of the Independant Mortgage Brokers Association of Ontario (IMBA), a provincial body with much the same mandate as CAAMP and serve on their seminar committee. IMBA has also recently introduced a professional designation Certified Professional Mortgage Broker (CPMB) and Certified Professional Mortgage Agent (CPMA). When I'm not busy arranging mortgages, servicing the clients or mortgage agents I work with or blogging about mortgages, I hope to satisfy the requirements of the CPMB. I am strongly committed to professionalism and continuing education to keep serving the industry to the best of my ability.
I'm excited to bring my knowledge and experience into cyberspace and onto your monitor. Let's get ready to demystify mortgages, explain product benefits and compare their differences and how to get debt free faster. Look forward to the next time - bye for now. Don't forget ... your mortgage matters.
Marshall Spencer, AMP
Vice-President, Business Development
Real Mortgage Associates Inc.
http://www.rmabroker.ca/
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