Canadian Mortgage Industry in the Media

In recent weeks, there have been numerous articles in the national media on the state of the Canadian mortgage industry. Issues regarding the impact of longer amortizations and a perceived failure to anticipate the effects of various mortgage products have been at the forefront.

YOU Should Be Aware Of The Following Important Facts

1. Arrears and default rates remain low in Canada particularly when compared to the U.S. Canadian mortgage holders have on average over 50% equity in their properties. For all home owners, (those with and those without a mortgage), the equity ratio exceeds 70%;
2. Longer amortization periods and 100% LTV mortgages do not equate to subprime or alternative mortgages which are based on a borrower's credit worthiness. Relatively few outstanding mortgages in Canada have 40 year amortization periods – only six percent or just over 300,000 mortgage holders out of 5.25 million;
3. Mortgage products in Canada are transparent. Mortgagors with a variable rate product know their rate and most have the option to convert to a fixed rate product. In the past year, 40% of mortgage holders took out a variable rate mortgage with the expectation that declining rates will continue to drop. This is in stark contrast to the U.S. where the resetting of option ARM mortgages means millions of mortgage holders have been and will continue to face higher rates;
4. A rise in default rates in Canada is not apparent. It's a fact that the economy is slowing; however if borrowers find themselves with financial difficulties, it will most likely be a result of their employment situation rather than their mortgage product;
5. Differences between the Canadian and U.S. markets remain. The option ARMs that have and continue to be reset to higher rates are not common in Canada. Those who hold variable and even fixed rate products in Canada are now doing so in a declining interest rate environment. A greater percentage of mortgages in Canada are funded by balance sheet lenders than in the U.S. Subprime or alternative lending products were never as common in Canada;
6. Canada has a rich history of mortgage insurance. Nearly half of all mortgages obtained in any given year are insured with a second approval process for mortgage applications. Underwriting principles and guidelines in Canada, while not perfect, are more thorough than in the U.S.;
7. Regulation for Canadian mortgage brokers and agents is more stringent than in the U.S. Several provinces have recently updated or are in the process of updating their origination legislation including Ontario, Quebec, Saskatchewan, Manitoba and Nova Scotia. There are now license requirements and in most provinces education and disclosure requirements. This will ultimately lead to enhanced professionalism in our industry and added security for Canadian borrowers.

Statistics Source: CAAMP's Annual State of the Residential Mortgage Market in Canada, by CAAMP Chief Economist Will Dunning.

Merry Christmas to all

Since its Christmas Day we want to wish everyone a Merry Christmas full of good times and laughter with your loved ones.

Life is too short to be worried about the economy, finances and jobs. There will be time enough to think about these things AFTER you take a break to enjoy the spirit of the season.

Take advantage of the professionals around you ... mortgage brokers, realtors, investment advisors etc ... they are there to help and take away the stress over doing it yourself and wondering if you made the right choice.

Make it a day for enjoyment ... it only comes once a year !

Signs point to a lighter mood among financial players

A funny thing happened to some of the world's most powerful investors as they stared into the market abyss. They stepped back. And maybe that's a sign that the rest of us can soon step up.

Recently, Merrill Lynch released its monthly survey of global money managers, strategists and economists, and found that their mood about the world's markets and economy remains sour. However - and this shouldn't be understated - it has improved. The implication is that some key individuals, whose opinions drive the investment decisions of the institutional investors that collectively own about three-quarters of global equities, may be about to stop pulling money off the table and start putting some back on.

On almost every front, the survey improved. Views on the global economy, risk aversion, corporate profits and equity valuations all brightened.

Granted, the improvements are from very depressed levels, but hey, you've got to start somewhere - and this is how turnarounds start.

"After the extreme pessimism of the past two months, there is evidence of investors pulling back from the brink," Merrill's global equity strategy team said.

"We have been struck by tentative signs that the pace of deterioration may be slowing."

Notably, the net percentage of respondents expecting further deterioration in the global economy over the next 12 months sank to 36 per cent, from 45 per cent in November and a miserable 60 per cent in October. And only a net 29 per cent of survey respondents still think central bank interest rates are too high, down from 65 per cent in November. (And this was before the U.S. Federal Reserve's stunning cut to a near-zero federal funds rate this week.)

Taken together, the message is exactly what central bankers have been wanting to hear: Key players in the financial markets believe the aggressive monetary easing is starting to work. And that may finally be putting a bottom under equities.

This isn't the only recent evidence to suggest that the downward spiral may be ending, particularly in the U.S. economy. This week, the Empire State manufacturing index and National Association of Home Builders' Housing Market Index both held essentially steady after months of sliding, a sign that two key components of the U.S. slump - housing and manufacturing - may be starting to stabilize.

If, indeed, institutional money managers are starting to see light at the end of the tunnel, they have in their hands vital fuel for a turnaround in equities. The Merrill survey shows that fund managers are still massively overweight cash and bonds - and they consider bonds grossly overvalued, much more so than a month ago - while they are deeply underweight equities, which they consider severely undervalued.

With their risk views easing and outlook improving, the arguments against returning some of that money to the market are less convincing.

Still, risk assessment remains historically high, and Merrill said fund managers remain fearful that the low valuations of equities may be a "value trap." But at least their views are no longer deteriorating, and that's a critical prerequisite for the market to stabilize before reversing course.

Yes, it's a long walk back out of the wilderness. But the money is there, and, perhaps, the baby steps have begun.

CMHC at fault ?

Warnings about risky mortgages ignored - Federal officials told CMHC it could overburden borrowers

JACQUIE MCNISH AND GREG MCARTHUR
December 18, 2008 at 2:00 AM EST

Canada Mortgage and Housing Corp. officials ignored warnings from senior
Finance Department and Bank of Canada officials during the past two years that its active business in high-risk mortgage insurance could overburden consumers.

According to sources familiar with the discussions, CMHC executives did not heed the warnings and continued to underwrite larger volumes of insurance policies for risky home loans with 40-year amortizations and minimal down payments.

The sources said the federal agency's executives disagreed about the potential risks and defended the creditworthiness of borrowers who were granted insurance for the riskier mortgage products.

One senior Ottawa official said CMHC was such a significant underwriter of 40-year mortgage insurance polices that it currently accounts for two-thirds of the nearly $56-billion of 40-year mortgages that were approved by banks, trust companies, credit unions and other lenders during the first six months of 2008.

Unlike the United States, Canada does not publicly release data about different classes of mortgage debt. CMHC does track mortgage data, but its officials have declined requests by The Globe and Mail for information about the volume of 40-year and low-down-payment mortgages.

In a statement issued last night, CMHC said it discussed mortgage risks with central bank officials in 2006 after former bank governor David Dodge raised concerns about the new breed of long-term home loans.

"CMHC officials took the governor and senior bank officials through the materials and discussed how the product was administered. The Bank of Canada was reassured by the fact that CMHC's product includes no change in mortgage qualification criteria and as such would not be of significant concern to the Bank.

"We know of no other concerns that the Bank of Canada or the Department of Finance had with our activities that in their view would threaten financial stability," the statement said.

The agency said only a "relatively small" proportion of the $334-billion in mortgages it insures are either 40-year or zero-down-payment mortgages. A spokeswoman declined to put a figure to "relatively small."

Finance Minister Jim Flaherty announced in July that the federal government was cancelling its policy of guaranteeing 40-year mortgages as of Oct. 15 in order to shield Canada from the kind of housing crash that has devastated the U.S. economy. However, according to sources, bank executives had been warning Mr. Flaherty and central bank officials since the beginning of 2008 about a dramatic and unexpected increase in demand from consumers for 40-year mortgages with small down payments.

Lenders, insurers and government officials interviewed by The Globe characterized the first half of 2008 as a period of apparent paralysis by federal decision makers. These sources said bank and insurance executives and finance officials disagreed over how to pull the plug on popular and risky mortgage products. One of the few things they did agree about, according to sources, was that there was insufficient
monitoring of CMHC, which accounts for about 70 per cent of the total value of mortgage insurance underwritten in Canada.

"There is an accountability issue at CMHC," said one senior Ottawa official, who declined to be identified.

CMHC is a federal agency that has been supplying mortgage insurance since 1954, and is currently overseen by Human Resources and Social Development Canada.

In response to a question about its accountability, CMHC said in its statement: "The lines of accountability are very clear, like all Crown corporations CMHC is accountable to Parliament through its minister."

When The Globe contacted Human Resources Minister Diane Finley, her spokeswoman replied: "We will have to decline and allow CMHC to respond to the questions applicable."

According to people familiar with CMHC, the agency imported U.S.-style mortgage products to protect its dominant market position from large U.S. insurers who were allowed into the Canadian market in 2006. Canadian laws require borrowers with less than a 20-per-cent down payment to obtain insurance for their mortgages.

"They felt they were pushed into to this because of the new competition," said a person familiar with CMHC.

Underlying these concerns, sources said, was a federal internal study launched by the new Conservative government in 2006 to review the possible privatization of a number of agencies, including CMHC. The prospect of privatization, one source said, fuelled concerns that the agency needed to be seen as an effective competitor.

CMHC said in its statement that its decision to insure longer-term and lower-down-payment loans in 2006 "reflected the market trends for the period." Until 2006, the agency and its only rival, Genworth Financial Inc., did not insure mortgages that were amortized beyond 25 years. In February of 2006, several months before four U.S. insurance giants were allowed into Canada, CMHC introduced the country's first 30-year mortgage insurance product. What followed was a ferocious battle for market share between CMHC, Genworth and American International Group, the first of the new insurance entrants.

Carney to banks: Lend , don't hoard

An interesting read ... still think the big banks are your friend ? Maybe you'll see that they're really only interested in their bottom line and will consider using a mortgage broker for your next mortgage for the only unbiased assistance you'll find when it comes to your mortgage financing.

Bank of Canada Governor implores big five to help lift economy out of recession by freeing up money for business instead of building cushions to guard against losses

TORONTO - Mark Carney is pointing a finger at the country's big banks for hoarding capital against a rainy day instead of doling out more loans, a choice the Governor of the Bank of Canada says is damaging the economy.

The public admonishment is an unusual move for a central bank governor, but Mr. Carney has recently decided to advocate more publicly for certain government policies and bank behaviours.

While he has a direct line of communication with the chief executives of the big banks, his message hasn't been embraced. The banks have been racing to bolster their capital cushion, increasing the amount of money they hold to protect against potential loan losses.

"It is not clear to me that they need additional capital buffers," he said of the banks during a meeting with the editorial board of The Globe and Mail. "What is clear to me is that there is unfilled demand for credit for worthy investments, and I'm sure that our banks will see
these opportunities in the fullness of time."

Federal Finance Minister Jim Flaherty says he and his provincial and territorial counterparts agree infrastructure projects must happen quickly to boost the economy.

The banks are tightening up just as many businesses are having trouble securing loans. The crimped corporate-credit environment could spur layoffs or closures and exacerbate pain in the economy precisely as the country is dragged into its first recession in nearly two decades.

Worries about companies' struggles to get loans emerged as one of the biggest risks to the economy at a meeting between Finance Minister Jim Flaherty and his provincial counterparts yesterday in Saskatoon.

"There was a feeling they could do more to get credit to business," Gregory Selinger, Manitoba's Finance Minister, said of the banks.

Ontario Premier Dalton McGuinty also criticized Canada's big banks for not doing more to help cash-starved businesses. "One of the ways they can help is to make sure there is not an undue constraint on access to credit," he said. "Businesses need to continue to operate lines of
credit."

Banks refused to respond to Mr. Carney's remarks yesterday, and the Canadian Bankers Association declined comment.

Banks are required to hold capital, or funds, to protect their depositors in the event that they lose money on bad loans. Canada's banking regulator requires banks to keep the ratio of their most solid capital, known as Tier 1 capital, to their loans and investments above 7 per cent. Global rules require only 4 per cent. The riskier a bank's lending, the more capital it has to hold.

In the wake of the September collapse of Lehman Brothers Holdings Inc., investors, analysts and regulators placed greater emphasis on the importance of capital cushions, which help to protect banks from financial hits such as soured loans and writedowns. Market pressure has
created what some analysts have deemed to be the new minimum acceptable ratio of 9 per cent in Canada, and the big banks all now have ratios ranging from 9.1 per cent to 10.5 per cent.

Three of the big five have taken the extraordinary step of issuing common shares in recent weeks. Earlier this week, Bank of Montreal CEO Bill Downe referred to his bank's move as "prudent." At least one bank chief has acknowledged some doubts about opting to raise capital. When Toronto-Dominion Bank CEO Ed Clark decided to raise capital late last month, he felt it was not in his bank's best interest. But he also felt pressure to bow to the market's whim, he said in an interview at the time.

What Mr. Carney advocates is almost a Keynesian approach to banking, in which a buildup of capital in good times is used to fund lending in bad times. The argument is that it's similar to the government practice of using deficit spending to prime the pump in a recession.

In a speech to a business audience in Toronto, Mr. Carney warned about the "paradox of thrift," which economist John Maynard Keynes coined to refer to destructive behaviour of individuals during a recession. At an individual level, people want to save more and invest less in a
recession. But collectively, this makes things worse. Banks may decide to stop lending because they fear losses, but their behaviour exacerbates the downturn.

"Of all places, Canada should be able to avoid this ... paradox of thrift," Mr. Carney told The Globe, because Canada's well-capitalized banking system does not need to hoard capital to cover eventual losses.

The Canadian banks are well positioned to heed critics such as Mr. Carney, since they all have capital levels well above the minimum requirements and access to relatively inexpensive government funding.

Even Canada's banking regulator, Julie Dickson, who has been prodding banks to conserve capital, now says it's "not the time to raise capital requirements across the board."

Former Bank of Canada governor David Dodge recently called on the bank, regulators and the Finance Department to band together and "lean against the wind" by combatting policies that could exacerbate the economic downturn.

As the financial crisis has gathered steam, officials around the world have identified policies that threaten to make the situation worse, ranging from accounting rules that cause the banks to take writedowns quarterly, to the regulations that cause employment insurance premiums
to rise when job losses loom.

In the future, banks should be required to build up capital buffers when the economy is good, Mr. Carney said.

With reports from Boyd Erman and Karen Howlett in Toronto, Heather
Scoffield in Ottawa and Kevin Carmichael in Saskatoon

Holiday Home Decorating

Here's a great contribution from one of our trusted professionals and business partners ... hope you enjoy it! Whether you're listing your home for sale at this time of year or just want to make it shine over the holidays for family gatherings, this is great advice. Get in touch with Janet if you have more questions or would like to get her opinion and advice. Oh and don't forget to mention that you read about her on the Your Mortgage Matters Blog ! Best, Marshall

At this time of year with the Holidays approaching I am asked by clients and Realtors what you would recommend for Holiday Decorating.

First, let’s start with the outside.

I like to see lights outside but kept to specific areas that will make your house shine.

· A spot light on a beautiful door with a LARGE wreath is stunning.
· Showcase any trees you may have with lights. You can either hang lights from low branches and/or Spot Light those tall Evergreens.
· Use lights in the same color as not to “clutter” the visual affect. White lights are gorgeous, but will the perspective buyer notice another White Holiday lit home?
· All Red or All Blue or Green lights possibly. They need to flatter the selling features and compliment the homes color and style.

Warm & Inviting is always my desire for the exterior of a home for sale. The idea is to have the Buyer WANT to be there to EXPERIENCE the Holidays. WOW them with a bold statement done simply.

Second, now the Interiors it can be difficult. Really understanding who it is you are Marketing too is crucial.

· I ask my clients to minimize all religious icons.
· I recommend that my clients really discipline themselves to only display a small portion of their decorations.
· Keeping the product warm & inviting, cheerful and uncluttered should be the goal.
· This is the perfect time to have a Dining Room set for a party. This would have the buyer dreaming of perhaps them entertaining their friends and family in that room.

Do not leave decorations up after the New Year. It conveys that you are not “on top of things”. An exterior door wreath can be replaced with any other shaped decoration for winter such as a basket with cascading greens or a Pear shape. The circle wreath will look like a Holiday Wreath.

Please decorate your home even while it is in the market. Life is short and you need to enjoy your home during the selling process and holidays!

Happy Holidays,
Janet Marks, Certified CSP
HOW Solutions

Ontario Resale Market Summary

In a recent post we mentioned information from an economist at CMHC ... here are a few more observations made in his presentation:

• Slower job market, rising prices and weaker consumer sentiment will cool demand in the resale market
• The level of existing (already constructed) home sales will decrease but remain high by historical standards
• Most markets in Ontario are currently classified as "balanced" rather than a "buyer's market" or a "seller's market"
• High supply pressures are currently out-pacing demand (there are more houses available than normal demand for product)
  
• As a result, the rate of house price increase will slow
• The drops in the Vancouver, Calgary, Edmonton and Toronto markets have brought down the rest of the country on average even though 7 of 10 provinces experienced increases in the same period
• 30% of mortgages arranged in Canada are done through mortgage brokers
  

Here is one final observation of our own ... there is concern in the mortgage and housing market in Canada however consider that there is a 40% chance a marriage will end in divorce but people still do it ... so don't be afraid to own a house or get a mortgage!

For more information on mortgage financing, please seek the experience of a mortgage professional.

Home Maintenance Schedule

Regular maintenance and inspection of your home is the best way to protect your investment. Whether you do it all yourself or hire a handy-man it is important to get into the habit of looking after the little things while they remain little. If you're ever in doubt after your own review then you can consult an expert for further advice or a professional eye on the problem.

Although most maintenance can be seasonal in nature, there are some things you should do frequently through the year such as:

• Make sure air vents indoors and outdoors (intake, exhaust and forced air) are not blocked by snow or debris.
• Check and clean range hood filters on a monthly basis.
• Test ground fault circuit interrupters monthly by pushing the test button, which should then cause the reset button to pop-up.
• If there are young children in the house, make sure electrical outlets are equipped with safety plugs.
• Regularly check the house for safety hazards such as a loose handrail, lifting or buckling carpet etc.

Contact RMA-Spencer Group Mortgages for a free copy of a handy Home Maintenance Schedule. Check back here for seasonal updates as we progress through the year. "Winter" update coming up approximately December 20,2008,

Bank of Canada Rate Drop

Continuing good news for those in the mortgage market ... especially variable rate mortgages ... the Bank of Canada announces a drop in their overnight rate by .75%.

As we've said here before in the Your Mortgage Matters Blog, the overnight rate is the key indicator for the other lenders in the marketplace to set their prime rate as well as fixed mortgage rates.

Usually, except for once recently when many felt that some of the banks were trying to cheat their customers, a drop in the Bank of Canada prime rate signals an equivalent drop in the prime lending rate of the other lenders. Currently, the consumer prime rate is at 4.00% so we would hope that by this time tomorrow that the market lenders pass on that .75% reduction to their customers and drop their own prime rate to 3.25%.

We remind you to also pay attention to the fixed rates as well since the cost for those funds will drop slightly which may translate into savings for those with mortgages coming up for renewal in the next while.

Don't forget to take advantage of the services of a licensed mortgage broker who can lock in these lower rates for up to 120 days ... that means purchases taking place between Dec 9, 2008 out as far as approximately April 9, 2009 PLUS those with mortgages renewing during that time period should get their mortgage professionals working for them today.

Ontario Land Transfer Tax

Here's a little information on one of those two inevitable parts of life (death and taxes). For your jurisdiction, make sure you check the appropriate references. This information is specific to transactions in Ontario, Canada.


If you buy land or an interest in land you must pay the Ontario Land Transfer Tax (OLTT). You should check that link for more specific information but we've included some answers to the more frequently asked questions in this post to get you by until you check with a professional such as a real estate lawyer to confirm how and whether the tax applies in your specific situation. There are certain exemptions available and again we always suggest you check with a qualified professional before making any moves.

The amount of the OLTT can be significant and is calculated using a progressive scale based on the purchase price of the property:

• 0.5% on amounts up to and including $55,000
• + 1.0% on amounts exceeding $55,000 up to and including $250,000
• + 1.5% on amounts exceeding $250,000 up to and including $400,000
• + 2.0% of the amount in excess of $400,000 (residential only)

So as you can see, the amount of tax payable is a key consideration to be included when budgeting for the purchase of a home. This is even more important if that home happens to be in the City of Toronto because there is also a Municipal Land Transfer Tax which applies on all purchases of homes within the city.

In general we note that the scale of rates and exemptions are similar between the two tiers. Our best advice is to seek the opinion of an expert BEFORE signing on the dotted line so that you are sure of your budget requirements and aren't in for any surprises.

If you are interested in contacting a real estate lawyer we suggest you contact the Law Society of Upper Canada which operates a referral service for a small charge or use a service such as CanLaw.

Subprime crisis in USA not affecting Canada to the same extent

Here's a little information of note ... makes you feel better that the other shoe isn't about to drop here in Canada when thinking about the subprime mess south of the border.

Information provided by an economist from Canada Mortgage and Housing Corporation told a gathering of mortgage professionals in Belleville, Ontario recently that approximately 20% of all mortgage loans in the United States are classified as "subprime" but at the same time, only 5% of the loans in Canada were in this category.

To put a number on the problem, in 2006 there were 800,000 of these subprime mortgages in default in the USA. In 2007, that number rose to 1.5 million and again in 2008 estimates are that another 1.5 million of these loans are in default. Numbers in Canada are nowhere near there so our banking system is quite a lot safer than that of our neighbours to the south and the risk of banks defaulting due to their clients not paying their debts is quite low.

A final note on defaults in the USA ... according to Lou Dobbs (CNN Dec 4/08) there are currently 2,250,000 foreclosures in the USA (yes that's OVER 2 million).

Other problems affecting the US mortgage market are the so called "ninja" loans that were made in the hey-day of the market run-up ...

No Income, No Job or Assets.

A person could get a mortgage without a job, without having to prove they had any income or assets such as downpayment to obtain financing. I recall seeing commercials on the television for 120% advances - you own a house worth $100,000 and get a $120,000 mortgage. Not a bad deal but who didn't see that eventually there would be a problem ? The same scenario in Canada at the time required at least 10% equity in the property so the maximum loan was $90,000. It had people complaining that it was "so hard" to get that equity, and "unfair" but now we see that the lenders were correct after all in requiring that a homeowner had some of their own skin in the game.

Additionally, there were mortgage products created which encouraged consumers to refinance rather than ever pay off their debts and some loans had limited or in some cases no ability to prepay - here we have a standard 20/20 prepayment where without penalty, a homeowner can pay off up to 20% of the amount borrowed with no penalty to do so and/or increase their instalment payment by 20% ... doing either/both measures can significantly cut down on interest costs and of course paydown the mortgage faster.

With the deductibility feature of a portion of mortgage interest, its not a wonder that Americans are unlikely to payoff their mortgage debt and are encouraged to get into the spiral of taking out equity to pay off other debts or buy goods. Of course here in Canada we can not deduct our mortgage interest payments from our income when it comes to tax time - although there are certain circumstances which allows this on rental properties or where the mortgage funds were used for investment - so again we were safe from this dangerous behavior.

Are we completely out of the woods ? That's not what we're saying here ... just that it isn't as bad as it could be and we are suffering a lot less of the downside than our neighbours south of the 49th are.

10 great reasons to use a mortgage broker ... #10

10) Ongoing support and consultation.



Even once your mortgage is signed and paperwork is complete, we are here if you need and advice on closing details or even future referral needs. We are happy to be of assistance when you need it.



Well that concludes our series of the 10 great reasons to use a mortgage broker. We hope you enjoyed it and put a mortgage broker on your team the next time you're thinking about purchasing or refinacing.



And wouldn't it be a great gift for you to give this knowledge to someone you care about this holiday season ? With all the uncertainty in the stock market and financial sector these days and stories coming to light about how companies and bankers really are just looking after themselves, isn't it about time to put a trained, unbiased professional in your corner ?



We look forward to the opportunity to help you or someone you care about with what most likely is the biggest decision of your life.

10 great reasons to use a mortgage broker ... #9

9) No cost to you.



There's absolutely no charge for our services on typical residential mortgage transactions.



How can we afford to do that ?



Like many other professional services such as insurance, mortgage brokers are paid a finder's fee when we introduce trustworthy, dependable customers to a financial institution. These fees are quite standard and nearly industry-wide so that the focus remains on you, the customer.



Hey, we told you you'd be glad you checked in for reaon #9 - didn't we? So don't miss #10 in a couple more days. See you soon.

World Aids Day

The team at the Your Mortgage Matters Blog takes a moment today to remember all those touched by this terrible disease and the ones who work so hard towards a cure.

A brief history of World AIDS Day from Wikipedia:

World AIDS Day, observed December 1 each year, is dedicated to raising awareness of the AIDS pandemic caused by the spread of HIV infection.

AIDS has killed more than 20 million people, with an estimated 38.6 million people living with HIV, making it one of the most destructive epidemics in recorded history. Despite recent, improved access to antiretroviral treatment and care in many regions of the world, the AIDS epidemic claimed an estimated 3.1 million (between 2.8 and 3.6 million) lives in 2005, of which more than half a million (570,000) were children.

The concept of a World AIDS Day originated at the 1988 World Summit of Ministers of Health on Programmes for AIDS Prevention. Since then, it has been taken up by governments, international organizations and charities around the world.From its inception until 2004, UNAIDS spearheaded the World AIDS Day campaign, choosing annual themes in consultation with other global health organizations.

In 2005 this responsibility was turned over to World AIDS Campaign (WAC), who chose Stop AIDS: Keep the Promise as the main theme for World AIDS Day observances through 2010, with more specific sub-taglines chosen annually. This theme is not specific to World AIDS Day, but is used year-round in WAC's efforts to highlight HIV/AIDS awareness within the context of other major global events including the G8 Summit. World AIDS Campaign also conducts “in-country” campaigns throughout the world, like the Student Stop AIDS Campaign, an infection-awareness campaign targeting young people throughout the UK.

It is common to hold memorials to honor persons who have died from HIV/AIDS on this day. Government and health officials also observe, often with speeches or forums on the AIDS topics.

Since 1995 the President of the United States has made an official proclamation on World AIDS Day. Governments of other nations have followed suit and issued similar announcements.

World AIDS Day Themes 1988 - present
1988 Communication
1989 Youth
1990 Women and AIDS
1991 Sharing the Challenge
1992 Community Commitment
1993 Act
1994 AIDS and the Family
1995 Shared Rights, Shared Responsibilities
1996 One World. One Hope
1997 Children Living in a World with AIDS
1998 Force for Change: World AIDS Campaign With Young People
1999 Listen, Learn, Live: World AIDS Campaign with Children & Young People
2000 AIDS: Men Make a Difference
2001 I care. Do you?
2002 Stigma and Discrimination
2003 Stigma and Discrimination
2004 Women, Girls, HIV and AIDS
2005 Stop AIDS. Keep the Promise
2006 Stop AIDS. Keep the Promise - Accountability
2007 Stop AIDS. Keep the Promise - Leadership
2008 Stop AIDS. Keep the Promise - Leadership

10 great reasons to use a mortgage broker ... #8

8) Get expert advice.



When it comes to mortgages, rates and the housing market, we'll speak to you in plain language. We can explain the various mortgage terms and conditions so you can choose confidently.



Reason #9 to use a mortgage broker is coming up soon so please visit again ... you'll be glad you did!

10 great reasons to use a mortgage broker ... #7

7) Things move quickly!



Our job isn't done until your closing date goes smoothly.



We'll help ensure your mortgage transaction takes place on time and to your satisfaction.



Come back in a couple of days to see reason #8 to use a mortgage broker.

Happy Thanksgiving !

Just a quick hello to our American friends today as they celebrate the Thanksgiving holiday.

We wish you all the best that a family holiday can bring.

Best wishes to all our readers no matter where they may be.

10 great reasons to use a mortgage broker ... #6

6) Get access to special deals and add-ons.



Many financial institutions would love to have you as a client, which is why they often offer incentives to attract credit-worthy customers. These can include retail points programs, discounts on appliances, shopping clubs and more. We do the math on which offers might be worth your attention when it comes to financing or mortgage insurance - so you get the perks you deserve.



Reason #7 to use a mortgage broker is coming out in a couple of days ... look forward to seeing you again.

10 great reasons to use a mortgage broker ... #5

5) Ensure that you're getting the best rates and terms.

Even if you've already been pre-approved for a mortgage by your bank or another financial institution, you're not obliged to stop shopping!

Let us investigate to see if there is an alternative to better suit your needs.

Please visit again in a couple of days to find out the 6th great reason to use a mortgage broker.

10 great reasons to use a mortgage broker ... #4

4) More choice means more competitive rates.

We have access to a network of major lenders in Canada, so your options are extensive. In addition to traditional lenders, we also know what's being offered by credit unions, trust companies and other sources. And we can help you take care of other requirements before your closing date, such as sourcing mortgage default insurance if your downpayment is less than 20% of the purchase price.

Check back again in a couple of days for reason #5 to use a mortgage broker.

10 great reasons to use a mortgage broker ... #3

3) We negotiate on your behalf.

Many people are uncertain or uncomfortable negotiating mortgages directly with their bank. Brokers negotiate mortgages each and every day on behalf of Canadian home buyers.

You can count on our market knowledge to secure competitive rates and terms that benefit you.

Check back in a couple of days to see reason #4.

10 great reasons to use a mortgage broker ... #2

2) Save time with one-stop shopping.

It could take weeks for you to organize appointments with competing mortgage lenders - and we know you'd probably rather spend your time house hunting! We work directly with dozens of lenders, and can narrow down a list of those that suit you best.

Also, you make only one application and only one inquiry is done to your credit bureau file when using a mortgage broker. This preserves your existing credit score since multiple inquiries can have a negative effect on your score which can mean the difference between approval and decline in some cases.

It makes comparison-shopping fast, easy and convenient.

Check back in a couple of days for reason #3

10 great reasons to use a mortgage broker ... #1

1) Get independent advice on your financial options

As an independent mortgage broker or agent, we are not tied to any one lender or range of products. Our goal is to help you successfully finance your home or property.

We'll start by getting to know you and your homeownership goals. We'll make a recommendation, drawing from available mortgage products that match your needs, and we will decide together on what's right for you.

Check back in a couple of days to see reason number 2 ...

Not so bad as the media would have you believe

House prices in Canada are falling. Pick up any newspaper, turn on any t.v. station and you hear the chorus of "Chicken Little" reports. But is it really all that bad?

Simply looking at the headline numbers can be very misleading. I can't really fault them for not taking a step back to see the big picture and analyzing the information.

I want to look at 2 things. Firstly, it was (up til recently) a common saying that the real estate market is "in the 12th year of a 7 year cycle". Nothing could go wrong. Remember those days? They weren't that long ago.

So if year after year, prices were pretty well guaranteed to go up AND this went on for longer than the usual cycle then any drop is cause for concern since it has been ages since the last drop and we have very short memories.

Further, a drop off of a record year (preceeded by a record year which preceeded a record year which ... well, you get it right ?) is a little unfair to compare to the end of days. Prices have dropped significantly in many markets. But, when the drop is from a record high then the bottom stability point should still be higher than where the cycle began. Sounds like the common wisdom about the stock market, doesn't it?

Secondly, and I won't get into heavy math (don't worry, I wouldn't do that to you) ... the "headline" numbers so often referred to reflect a current weighting for each city. This makes for a huge bias to the overall average price. So its not difficult to see that a drastic change in the sales volume in certain cities - Vancouver or Toronto for example - can significantly influence the average price on a national basis.

Let's look at Vancouver. The year over year drop is almost 45% when talking about the number of homes sold in the city. Ooh that's terrible! Now let's start qualifying that for a minute and add in that Vancouver prices are much higher than the national average. By combining these 2 facts, it looks like national home prices fell just as sharply when in reality, the driving factor was that fewer expensive homes were being sold in Vancouver. It may seem like a big market out there but really they are just a fraction of the marketplace on the whole.

So what do we get from all this? Nationally, the numbers are down by about 6% year over year for October but by using proper weighting, home prices really fell by closer to 1%.

So while we agree that in general prices are falling and are expected to continue trending downwards, the headlines are exaggerating the real weakness in the housing market by not taking all factors into account and explaining the weighting certain markets have on the whole picture.

MP Jim Flaherty offers tips from "boring" Canada

The financial crisis that began 14 months ago in the U.S. has intensified and spread around the world, threatening to roll back economic progress that has been made over the past two decades. Governments have been responding in a co-ordinated fashion and will continue this work in the lead-up to the summit of the Group of 20 leading economies.

Few countries are as dependent on trade or as integrated into the global financial system as Canada. Yet our financial sector continues to weather the turbulence better than many other countries. This did not happen by chance. Canadians by nature are prudent and our financial system has been characterized as unexciting. Canada's regulatory regime ensures that stability and efficiency are balanced. As a result, Canadian taxpayers have not had their money put at risk in response to this crisis. If Canada's financial system is boring, perhaps the world needs to be more like Canada.

Before we examine grand designs for global regulatory regimes, we need to recognize that good regulation begins at home. Effective national regulatory regimes could have prevented this crisis and must be our first line of defence against any future one. We all need to draw lessons from those systems that worked well and apply them to our national regulatory regimes.

First, we need to regulate all pools of capital that rely on leverage. The crisis has demonstrated the devastating impact that unregulated entities can have. Transparency requirements must be the price of admission to global markets. Different financial services may have different regulatory requirements, but we need to bring them all under a regulatory umbrella.

Second, capital and liquidity buffers need to be large enough to handle big shocks. Moreover, regulators must restrain overall use of leverage. Some have criticised high Canadian capital requirements for banks as being too conservative. But the strong balance sheets of Canada's banks through this period speak for themselves.

Third, it is not enough for regulation to look at individual institutions. It needs to look at the system as a whole. Risks that may appear sensible in isolation can be unsustainable from a systemic perspective. This systemic vantage point must be used to mitigate any tendency to underestimate risk when times are good. This requires co-ordination across the government, central bank and regulatory agencies.

Fourth, we need to make market infrastructure more transparent and resilient. Non-transparent over-the-counter trades and naked short-selling reduced the stability of the system.

This crisis has demonstrated that even countries with strong financial systems can feel the effects of inadequate regulatory regimes elsewhere.

Countries may hesitate to impose new requirements on their own institutions if these measures will create a competitive disadvantage. This points to the importance of the fifth step: strengthening international co-ordination, review and surveillance to create a better second line of defence. Canada was a pioneer of the joint International Monetary Fund-World Bank financial sector assessment program. This independent review of domestic financial systems should be mandatory and public. We need to strengthen the role of international colleges of supervisors to ensure better understanding of systemic risks and to co-ordinate national actions. We need IMF surveillance with teeth. Countries must live up to their responsibilities to support global financial stability and growth. Nowhere is this more important than incorrecting global imbalances through appropriate exchange rate and macroeconomic policies to support growth.

The process of how we make decisions is equally important. In two decades of unprecedented growth, we have seen the emergence of dynamic new economic players that must be full participants at the global table. Canada took one of the largest share cuts of any country in the recent IMF reform exercise to ensure that emerging economies are better represented. This broader range of voices must be heard in other venues such as the Financial Stability Forum.

Together, these reforms must ensure that incentives are aligned to support stability and that resilience is built into the financial system.

The open market system did not fail in this crisis. However, some forgot Adam Smith's maxim that the invisible hand needs to be supported by an appropriate legal and regulatory framework. We need to work together to strengthen those frameworks, and that work must begin at home.

This is a guest column by Finance Minister Jim Flaherty inThursday's Financial Times, posted on the Department of Finance's website and titled 'Boring' Canada's financial tips for the world

Good news for Canadians seeking credit

Ottawa pushes to get credit markets working

RICHARD BLACKWELL AND HEATHER SCOFFIELD AND JOHN PARTRIDGE
Globe and Mail November 12, 2008 at 4:11 PM EST TORONTO

Ottawa has announced three aggressive measures to get Canada's credit markets back in working order.

Finance Minister Jim Flaherty said Wednesday the government would add $50-billion to its mortgage purchase program. He has also agreed to slash the price the government is charging to Canadian banks to insure their wholesale lending. At the same time, the Bank of Canada is injecting another $8-billion into money markets over the next few weeks,in one-month money, through a new Canadian-dollar term lending facility it is setting up.

Mr. Flaherty said the government has already made significant moves to support the financial sector, and credit markets have recently improved, but "we have to expect an extended period of stress in global credit markets.

"This could limit the availability of credit to households and businesses in the months ahead, he said in Toronto.

The credit crisis gripped global markets 15 months ago, and credit essentially froze around the world in September. Since then, frequent aggressive interventions by key central banks have brought a bit of a thaw.

But the global economy has deteriorated sharply in recent weeks, prompting fears that financial institutions, already struggling to stay afloat, would succumb.

Canada's credit markets have not been as severely hit as elsewhere, but spreads have been far wider than normal and have not narrowed much recently. At the same time, economic prospects have slid along with troubles in the auto sector and plunging commodity prices. Wednesday's moves are meant to bolster confidence among banks to get them lending freely again, despite the weakening economy.

Mr. Flaherty said he met Wednesday morning with the chief executive officers of the major banks, and his message to them was that "we each have an important role to play. It is up to private sector lenders to keep on doing their job, making loans to credit-worthy people and enterprises of all sizes. It is up to governments to step in when markets are profoundly disrupted, so that private sector lenders can maintain access to the funds they need to keep lending and supporting economic growth.

"The move to buy up more mortgage pools should make consumer and mortgage loans "more affordable and more available," Mr. Flaherty said. "At a time when GDP growth is slowing down, it will help companies to invest in the new productive technologies we need to move our economy forward.

"Gordon Nixon, chief executive officer of Royal Bank of Canada, the country's largest lender, welcomed Wednesday's changes.

"Mr. Flaherty's announcement was a constructive step in improving the functioning of the financial markets," he said, through a spokeswoman."It helps ensure consumers and businesses have access to credit and Canadian banks continue to operate from a position of strength.

"Toronto Dominion Bank chief economist Don Drummond said the changes Mr.Flaherty made are exactly what the banks wanted.

The banks wanted the mortgage bond program extended, the loan insurance scheme to be cheaper, a term facility such as the one launched by the Bank of Canada, and changes to capital rules such as those announced by the bank regulator on Tuesday.

"We asked for four things, and we got all four of them," Mr. Drummond said.

Mr. Flaherty's announcement means the government will now buy up to $75-billion of insured mortgage pools from the major banks, up from $25-billion. The extended mortgage purchase program will earn a "modest" rate of return for the government, but there will be no additional risk for taxpayers, Mr. Flaherty added.

The change in the fees on bank lending insurance will ensure that Canadian banks "are not put at a competitive disadvantage by policy actions in other countries," said Mr. Flaherty. When he looked at pricing of similar programs in other countries, it became apparent the Canadian program had to be changed to be more competitive, he said.

The two changes in pricing will effectively cut the fees for the lending insurance by half a percentage point. The lowest rate will now be 1.10 per cent of the loan value.

Commercial banks have complained loudly that the loan guarantee program designed by Ottawa a few weeks ago was too expensive to be of much use.

While other countries' banks could buy what amounts to insurance at a low price, Canadian banks were paying higher rates. The program was only useful for banks in dire trouble, and was putting the Canadian financial institutions at a competitive disadvantage globally.

Canadian Bankers Association CEO Nancy Hughes Anthony welcomed the measures announced by Mr. Flaherty, calling them very helpful.

"I think from the beginning, the CMHC auction was ... fully subscribed and there was a strong feeling that more might be needed in that area," she said in a telephone interview. "So we're very pleased to see that has been increased.

"And obviously, too, when the Lenders Assurance Facility was announced.. .there was a lot of commentary that ... the pricing just wasn't internationally competitive."

Bank of Nova Scotia spokesman Frank Switzer also welcomed the news from the finance minister, saying the changes were in line with what the industry has been asking for. "It puts Canada in the same ballpark as other countries that have initiated similar supports," he said.

In Ottawa, the Bank of Canada said it will put the additional $8-billion into one-month money markets, spread out in four auctions over the next few weeks, through a newly created Canadian-dollar term loan facility.

The Bank of Canada has hinted heavily in recent weeks that it had further measures in store, to make sure financial institutions have cash on hand to finance their transactions.

Financial institutions can post almost any kind of loan on their books as collateral, in order to take part in the auctions, the bank said.

"By providing greater flexibility for liquidity provision with respect to eligible collateral, the [new facility] will facilitate further improvement in money and credit markets.

"Canadian banks have been pressuring Ottawa to boost their help for the sector, and all countries have been urged, in a series of international meetings, to do much more in order to get the global economy back on track.

While lending spreads in some markets have edged down gradually in the past few weeks, Canada's key spreads have not moved much for a month, suggesting a lingering risk aversion among banks in Canada.

Mr. Flaherty indicated last weekend that he understood the banks' complaints, and would consider acting. But Bank of Canada Governor MarkCarney said in an interview that Ottawa had carefully designed the program, and suggested Canadian banks weren't at a global disadvantage because they are in far better shape than other banks around the world.

Mr. Flaherty told reporters Wednesday that the government is still on track to report a small budget surplus for the current fiscal year, "and I emphasize small."

The fall economic update coming in the next few weeks will provide the numbers, he said.

He also said Ottawa is "monitoring" the automotive industry, but it has not yet decided what action can be taken to support that sector. He said Industry Minister Tony Clement is talking to the auto companies "and we'll see what we're able to formulate for the industry."

Ottawa has increased the borrowing room of the Business Development Bank of Canada to $11.5-billion from $9.7-billion. The move is designed to give the bank "greater flexibility in meeting the credit demands of its small and medium-size business clients," Mr. Clement said in a statement.

Bank of Canada spokesman Jeremy Harrison said the new term loan facility announced Wednesday will have the same "economic impact" as the so-called term purchase and resale agreements (PRAs) the central bank is already offering to help lenders with liquidity.

The "nuance" is that in a PRA, the central bank buys a marketable security from a commercial bank with an agreement to sell it back later. However, the new program is designed to cover commercial banks' non-mortgage loan portfolios which are not marketable securities, Mr.Harrison said, because there is no secondary market for them, unlike bonds and corporate paper.

As a result, liquidity provided against these portfolios cannot be structured as PRAs.

"What it ends up being is a collateralized loan," he said, with the commercial banks pledging the portfolios as collateral for cash from the central bank.

Lest we Forget

The Your Mortgage Matters Blog takes a few minutes today to remember and be thankful for all those who sacrificed their youth, freedom and lives for us to enjoy what we sometimes take for granted today.

Going away ? Are you covered ?

Here's a great contribution from one of our trusted professionals and business partners ... hope you enjoy it! With all the snowbirds getting ready to go south - or even when you are getting away at any time of year - this is great advice. Get in touch with Christine if you have more questions or would like to get her looking after your place while you enjoy a getaway. Oh and don't forget to mention that you read about her on the Your Mortgage Matters Blog ! Best, Marshall

Did you know that if you leave your home empty, for more than a few days, you risk your home insurance coverage being affected? Many people ask their neighbour’s son to keep an eye on things or have a family member stop by once a week during a vacation or business trip. The same also applies to empty homes in the process of being sold, probate properties, relocations and properties of contract workers. Unfortunately this may no longer be enough should you be unfortunate enough to have a claim, such as a burst pipe, electrical fault or break-in, arising from the time of your absence. Under the terms of your home insurance policy proof of a visit every few days is needed to ensure full coverage with the protection it offers.

Last year a neighbour of mine, down in Florida for the winter, received a telephone call from her sister in law who was popping in once a week to check the house. She’d had a leak in the basement, which her sister in law only found when she noticed a strange smell four weeks after my neighbour’s departure. By this time it was too late and the small leak became a big insurance claim, involving not only repairs but replacement of carpets and furnishings. Unfortunately my neighbour was not aware of the conditions of her home insurance policy, which stipulated that someone had to inspect the property every 72 hours minimum during her absence.

The moral of that tale is check the small print and be aware of the conditions of your policy. Go away with total peace of mind knowing that you’ve covered all the bases and made formal arrangements for your home to be taken care of during your absence.

Christine Raynor.
Home Or Away Property Services
905-448-0808
www.homeoraway.ca

Canada may skirt recession: IMF

Julian Beltrame The Canadian Press

Evidence was mounting yesterday that Canada may be following the rest of the world on the path to recession, even as global policy-makers look to new measures to combat the economy-destroying financial crisis.
In its latest update, the International Monetary Fund sharply downgrades the economic outlook for Canada and the rest of the world from its previous projection a month ago.
The world organization, head quartered in Washington, said Canada's economy will avoid recession by the slightest of margins with 0.3 percent growth next year, while all other G7 leading industrial counties will see their economies actually contract, led by Germany and the U.S.
The IMF's latest forecast for Canada is well down from the relatively robust 1.2 per cent advance it had predicted only last month.
"Prospects for global growth have deteriorated over the past month,'' the body said, urging governments to act to stimulate their economies.
The darkening outlook shook markets around the world, with stocks plunging the Tokyo index more than six per cent, while shares fell 3.3 per cent in Toronto and 4.8 per cent in New York's main exchange.
Yesterday brought more indications that the economy in Canada is slowing sharply.
An official government report showed bankruptcies in Canada were climbing steeply even before the worst of the financial crisis hit, increasing by almost 19 per cent in September from the previous month and 28 per cent from a year ago.
And in an indication that Canada's housing slump is deepening, permits for new housing fell 4.9 per cent during September, the second straight monthly decrease and sixth during the year.
Overall, building permits rose 13.4 per cent in September largely on the strength of publicly financed non-residential construction.
Worse news is expected to come this morning with the new employment report from Statistics Canada.
Many economists believe the October jobs number will usher in an uncomfortable period of monthly job losses that will begin to track what is occurring in the U.S., which has already shed 760,000 jobs this year.
"The worst part for the economy is largely still ahead of us,'' said Derek Holt, vice-president of economics with Scotia Capital.
"The speed at which things are deteriorating is alarming.''

Canada's Banking System a model for others: Harper

TAVIA GRANT Globe and Mail Update November 6, 2008 at 3:38 PM EST

TORONTO - Canada's financial system, which is weathering the economic storm better than most countries, could serve as a model for other nations, Prime Minister Stephen Harper said Thursday.

"We certainly have not avoided all of the pitfalls that have occurred in other countries, but they've been much more limited," he said after a meeting in Toronto.

His remarks come ahead of a summit of G-20 leaders next week in Washington to discuss the financial crisis.

He attributed Canada's relative strength to "a broad and developed system of financial regulations" as well as fiscal and monetary policies. "We have entered this period from a good position," he said. "At the same time, we're in a position where we're important players - people will listen to us - but not so important that they're worried we have an alternative agenda."

Mr. Harper said he hopes to focus on "selective" improvements to the global regulatory system that will strengthen oversight, rather than a more radical overhaul suggested by several European leaders.

Mr. Harper is in Toronto to meet with economists and senior financial executives to discuss the slowing Canadian economy and the global financial crisis.

He met this morning with economists at the C.D. Howe Institute's monetary policy council.

Anyone unsure of the European central banks' reasoning needed only to look to Washington, where the International Monetary Fund cut its month-old forecast for global economic growth next year to 2.2 per cent from 3 per cent, adding that of the world's major industrialized countries, only Canada's economy will grow in 2009.

But their actions are loosening credit markets, suggesting the global economy will show signs of life by the later half of next year, said Stéfane Marion, economist at National Bank Financial.

"We are going into a global convergence of very low interest rates," Mr. Marion said from Montreal.

"They aren't done in continental Europe. They aren't done in the U.K."

With files from Bloomberg News

Another lender leaving the mortgage broker channel

Mortgage Brokers still offer Canadians the best in unbiased choice when it comes to your mortgage needs. Here is a brief announcement received late this afternoon from one of our lender partners. We're sorry to see them go and wish them the best in the future:

"CitiFinancial Canada, Inc. has taken the decision to exit its broker referral business. As such, we are hereby providing you written notice of termination of the aforementioned agreement (the “Agreement”), effective immediately.

Please be advised that we will honour any pending mortgage transactions in respect of which we have provided a signed commitment to your office, provided that we receive any outstanding documentation and are able to close the transaction on or before December 3, 2008.

We will be in contact with you or your designee to discuss and finalize the following:

(1) Return and/or destruction of information or materials that are confidential or proprietary to CitiFinancial Canada, Inc., if any is in your possession; and
(2) Return and/or destruction of information or materials that are confidential or proprietary to Broker, if any is in our possession.

Please note that any provision in the Agreement, which by its sense and context is meant to survive expiration or termination of the Agreement, including, but not limited to, covenants, and all confidentiality and indemnification provisions, shall survive this termination.

We thank you for your consideration herein; it has been a pleasure working with you."

22% of Canadians intend to purchase a home in the next 2 years

Here's some relatively positive news to contrast against that last posting ... 22% of Canadians intend to purchase a home in the next two years (flat year over year) and renovation intentions are slightly higher than last year at 70%

RBC survey finds homebuying intentions hold steady
Renovation intentions are also up slightly

TORONTO, Oct. 29
CNW

A new RBC study conducted during the market turmoil in October finds overall intentions to purchase a home in the next two years remain steady at 22% and have not changed since January 2008. As well, renovation intentions are slightly higher than last year - up four percentage points as 70% of respondents are planning to renovate or make home improvements in the next two years.

"Despite recent economic events, we've noted that Canadians still believe a home is a good investment and many are continuing with their home improvement plans," remarked Catherine Adams, RBC Royal Bank's vice-president, Home Equity Financing.

According to RBC's 5th Annual Renovation Survey, given the choice, most Canadian homeowners would opt for hammers and paint brushes, rather than packing tape and cardboard boxes. Seventy five per cent of Canadian homeowners say that, if their home needed major renovations, they would rather renovate,than sell and move.

While the majority of Canadians (55 per cent) would definitely continue to renovate even if housing prices were to drop, they appear to be a little more hesitant than they were in 2007 (66 per cent). Many Canadians seem to be choosing to renovate rather than relocate, noted Adams.

Renovation Budgets

Most Canadians planning renovations will spend less than$50,000 and indicate they plan to spend $10,801 on average - up about 10 per cent from $9,850 in 2007.

The RBC survey also showed that 63 per cent of homeowners have renovated in the past two years and more are establishing a realistic reno budget. Seven-in-ten had a budget and half (53%) stuck to it. Even those renovators that did go over budget have pulled back significantly. The average budget excess was 24% in 2008 compared to 74% overage in 2007 and 88 per cent in 2006.

To finance their reno expenditures, Canadians will be less likely to tap into cash or savings than they have in the past (47% in 2008, 51% in 2007 and 69% in 2004). Only 28% would consider using the equity in their home, down from 41% who said they would consider it in 2007. More men (32%) than women (24%)would consider borrowing against home equity for their renovation - the lowest cost of all the borrowing options.

"When people are looking for a mortgage they're usually very cost sensitive, and they seek advice about the best possible rate and product combination. We don't always see those same savvy cost comparisons for home renovations, even though many involve sizable expenses," added Adams.

When it comes to top mistakes or renovation disasters, Canadians who have completed a renovation in the past two years, blame going over budget (26 percent); using the wrong contractor or trades people (14 per cent); choosing the wrong products (12 per cent) and doing it myself (11 per cent).

Renovations by the Numbers - Intentions among Regions

Average Spend
BC 69% (down from 70%) $10,064
Alberta 74% (up from 69%) $12,422
Sask/Man 71% (down from 75%) $ 9,742
Ontario 71% (up from 66%) $12,305
Quebec 67% (up from 64%) $ 8,463
Atlantic 73% (up from 67%) $10,042

Renovate or Sell/Move

Region Renovate Sell
BC 75% 19%
Alberta 71% 23%
Sask/Man 75% 17%
Ontario 75% 19%
Quebec 74% 17%
Atlantic 78% 15%

By Age:

18 to 34 - 70% would renovate instead of sell (down from 75%)
35 to 54 - 78% would renovate, not sell (up from 75%)
55 + - 76% would opt for renovations (up from 58%)

These are some of the findings of two RBC polls conducted by Ipsos Reid. The online surveys are based on nationally balanced samples and were weighted according to 2006 Census Data.

The poll conducted between October 9 and 13 included 1,474 Canadians. A random, representative sample of this size would yield results considered accurate to within +/-2.6 percentage points, 19 times out of 20, of what they would have been had the entire adult Canadian population been polled.

The second poll conducted between August 13 and 18, 2008 dealing with renovation intentions included 3,733 Canadian homeowners. A random, representative sample of this size, would yield results considered accurate to within +/-1.6 percentage points, 19 times out of 20, of what they would have been had the entire adult Canadian population been polled.

For full tabular results, please see the Ipsos Reid website at http://www.ipsos.ca/.

Downloadable graphics also available at www.rbc.com/newsroom.

Real Estate Industry braces for downturn

LORI MCLEOD
Globe and Mail October 27, 2008

Tough times lie ahead for Canada's residential real estate market next year, with a brighter picture for 2010, industry officials predicted Monday.

A crowd of more than 1,000 real estate agents and brokers gathered at the Toronto Real Estate Board's (TREB) annual general meeting Monday for a pep talk aimed at worried salespeople, many of whom have yet to live through a downturn.

As things get rocky, agents will drop out, brokerages consolidate and cut costs, and everyone will have to make better use of technology, a panel of eight Canadian real estate company representatives said at the event.

Serious agents who stick out the downturn will have the opportunity to shine, they added, although their optimism appeared lost on some participants.

"They're basically saying that next year is a write-off," one audience member said to colleagues at her table.

The downturn may have a silver lining, causing the industry to "raise the bar" on customer service, said panelist Michael Polzler, regional director at Re/Max.

"There are far too many agents out there who don't specialize, who do just two or three deals a year. Would you use a part-time lawyer or a part-time dentist? We need to raise the bar," Mr. Polzler said.

The average number of housing units sold per agent each year in Canada is just 5.7, reflecting the number of part-timers in the industry, said Phil Soper, chief executive officer of Royal LePage Real Estate Services Inc.

There were 95,000 real estate agents in Canada last year, up from 77,000 in 1987, Mr. Soper said. During that time annual industry revenue rose from $30-billion to $160-billion, he added.

In a downturn, part-timers unwilling to pay fees to brokerages and industry associations are usually first to head for the exits, panelists said.

However, not all of them will be reflected in the numbers when it does happen, since many will "park" their licenses with a broker for a relatively small fee, then come back in a few years when things pick up, said Andrew Cimerman, chief executive officer of HomeLife RealtyServices Inc.

As the real estate pie shrinks over the next year, agents and brokers must listen to customers and become consultants rather than marketers,said panelists Gary Hockey, president of Coldwell Banker Canada, and Kimberly Fleming, regional director at Prudential Real Estate Affiliates.

The meeting came on the heels of a mid-month report from TREB showing sales for the first half of October in the greater Toronto area plummeting 21 per cent from a year ago, and the average resale homeprice dropping by 15 per cent.

Sales and prices in other markets across the country, including Vancouver and Calgary, have also slumped. Depending on the region, the downturns have been blamed on lack of affordability, the economy and taxes.

The negative effect of a land transfer tax, which came into effect in February, will be reflected in Toronto's sales numbers for October,which are due out next week, said TREB spokesman Von Palmer.

In Vancouver, agents with more experience are being asked to mentor those who haven't gone through a downturn before, said Dave Watt, president of the Real Estate Board of Greater Vancouver, in a telephone interview.

"We're also telling our members ... we're well funded. Our biggest concern is that for the 90 per cent of our members that will remain in the business ... all of our services and the products they rely on ....will not be pulled back," Mr. Watt said.

Some other words of advice from the panel included "not reading the papers or watching television," with media headlines being blamed for some of the fear hanging over the housing market.

"This is not the time to panic with the rest of the population," said Stephen Wong, chairman of Living Realty Inc.

Salespeople were also told to "flock to quality" in tough times, and to deal only with qualified buyers whose financing is in place and with sellers who are willing to list their properties appropriately.

In addition to preparing their clients for lower sale prices and longer listing times, real estate agents must also change their own views about how much money they will make next year, the panelists added.

Agents have to stop marketing themselves and become consultants armed with useful data for their clients, Ms. Fleming said.

The U.S. now has sales teams which includes specialists in areas including technology, contracts and client meetings, and Canada may soon follow suit, Ms. Fleming added.

The real estate industry has been slow to adopt new technologies, and use of social networking web sites such as Facebook could help agents appeal to first-time buyers, she added.

The industry is scrambling to adapt to a market that has changed more quickly in the past six weeks than he's ever seen before, said Howard Drukarsh, vice-president at Right at Home Realty Inc.

"It's almost like someone put the pause button on, and realtors and consumers are all asking 'What's next?,'" he said, before offering some encouraging words to the crowd.

"This is a great time to build market share because people will be dropping out," Mr. Drukarsh said.