Hike will be noticed immediately by those who have variable mortgages, lines of credit
By Fiona Anderson, Vancouver Sun September 9, 2010
The Bank of Canada raised its benchmark lending rate Wednesday, the third increase in just over three months.
The bump of 25 basis points brings the bank's target rate for overnight loans between financial institutions to one per cent. Canada's largest banks followed suit by raising their prime lending rate to three per cent.
The increase in prime lending rates will be noticed immediately by anyone with loans -- like variable mortgage rates or lines of credit -- that calculate interest according to the prime rate.
People with big lines of credit "are the people who are going to hurt," said Andrey Pavlov, associate professor of finance at Simon Fraser University.
But that's what the Bank of Canada was thinking when it raised the overnight rate, he said. The bank wants to slow consumption and it does that by hitting those who consume the most.
"Now they're not out there to hurt anyone in particular, but they do need to slow down the economy because if we grow too fast we're going to get inflation," Pavlov said.
But whether fixed mortgage rates will be affected is a different story. While the central bank has been raising its overnight rate since June, commercial banks have been lowering mortgage rates.
"So it doesn't necessarily mean that the fixed rate will go up," said Tsur Somerville, director of the centre for urban economics and real estate in the Sauder School of Business at the University of British Columbia.
"But it certainly means the variable-rate mortgages will go up [and] so by definition it has to dampen the housing market."
With the higher variable rate there will be some downward pressure on house prices, he said. But at the same time, the strengthening economy should have a positive effect on the market.
"And the strength of the economy is going to be a more important factor for the housing market," Somerville said.
Despite the rise in variable rates, and the uncertain effect on fixed-rate mortgages, Pavlov believes that variable-rate mortgages are still the way to go, especially since he believes this rate increase will be the last for some time to come.
"I wouldn't be surprised to see another year with no further increase," Pavlov said.
So although people who took out a variable-rate mortgage six months ago or a year ago now are paying a little bit more compared to a fixed-rate mortgage they could have taken out six months ago, they are still way ahead, he said.
"If [rates] do hold for another year you'll surely be ahead regardless of what happens afterwards because you're paying down your mortgage. You should be keeping your payments high; then even if interest rates go up they are going to be on a lower balance," Pavlov said.
But whether the Bank of Canada will hold rates steady or not is an open question. In its announcement, the central banker said economic activity in Canada had been softer than expected and that the economic recovery was now expected to be slightly more gradual than projected. But it also said "consumption growth is expected to remain solid and business investment to rise strongly."
As a result, "any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook," the bank said.
Douglas Porter, deputy chief economist at BMO Capital Markets, called the central bank's statement "a bit more hawkish than we expected."
"The Bank of Canada clearly retains its tightening bias, and seems generally unfazed by the recent cooling in the Canadian economy," Porter wrote in a note. "While we had been expecting the bank to now move to the sidelines for a spell, it appears that it will take a deeper slowdown in domestic spending ... than what we have seen so far to prompt them to stop raising rates."
Showing posts with label leon martin. Show all posts
Showing posts with label leon martin. Show all posts
Thursday, September 9, 2010
Monday, September 6, 2010
5 facts you should know about real estate transactions and your estate plan
By Maria Baler/Columnist
Wicked Local Dedham
Posted Sep 05, 2010 @ 07:00 AM
DEDHAM — Real estate transactions happen with increasing frequency these days, and while real estate can be easily transferred or mortgaged, it is important to seek advice from a qualified professional to adequately protect your property and maintain the integrity of your estate plan.
For example, transfers of real estate between family members and into or out of trusts are commonly done for estate and long-term care planning purposes. Further, the low interest-rate environment we are currently experiencing has made refinancing mortgages more attractive than ever. However, any time you undertake a transaction that involves your real estate, keep in mind the impact it may have on your estate plan and related matters.
Here are five facts to keep in mind when transferring or mortgaging real estate.
1. Homestead Protection can be disturbed by certain real estate transactions. A Declaration of Homestead is a document that is recorded at the Registry of Deeds to protect up to $500,000 of equity in your home from claims of creditors. A transfer of your home to a family member or a trust can disturb the homestead protection. Some attorneys interpret existing law to provide that refinancing a mortgage can terminate homestead protection if there is language in the mortgage document that waives the existing protection. If you have filed a Declaration of Homestead, make sure you seek the advice of your attorney before entering into any real estate transaction to ensure your homestead protection is maintained.
2. Changing property ownership can affect real estate tax exemptions. Some cities and towns in the commonwealth offer property tax exemptions for owner-occupants of property, for owners who meet certain financial criteria, or for veterans and their spouses. If ownership of property is transferred to a trust or to another family member, these exemptions may no longer be available. If you are eligible for a real estate tax exemption from your town, be sure to investigate this carefully before transferring title to your property so that you do not inadvertently lose a valuable benefit.
3. Title insurance policies can be voided by a change in ownership. Many people purchase owner’s title insurance when they purchase real estate. This coverage offers valuable protection against title defects. Because the decision to purchase title insurance is often made in the haste of purchasing property, many people do not remember they have title insurance. Be aware that transferring the ownership of your property to family members or to a trust can terminate your title insurance coverage. Check with your title insurance company on the steps necessary to continue your title insurance protection when you transfer your property to a trust or to a family member. Often an inexpensive rider is all that is required to continue this valuable protection.
4. Transferring property into or out of trusts should be handled with care. You may have established one or more trusts as a part of your estate plan. Real estate may be held in trust for a variety of reasons, including avoidance of probate, estate tax savings, asset protection, etc. In connection with refinancing your mortgage, your banker or real estate attorney may suggest or require that you remove the property from the trust in order to refinance the mortgage. This is not uncommon. However, it is vital that you make your estate planning attorney aware of the transaction so that she can properly advise you about transferring the property back into trust after your financing transaction is complete, and about any other effects such a transfer may have. Failure to do so may adversely affect the estate plan you so carefully created.
5. Transfers of mortgaged property must be done with awareness of the implications. If you have a mortgage on your property, a bank or other lender has agreed to lend money to you on the condition that you agree that your property will serve as security for that loan. Most mortgages prohibit any transfer of ownership without the bank’s consent; however, federal law permits transfers to certain trusts and family members under certain circumstances without violation of the terms of the mortgage. However, your mortgage, the applicable law, and the circumstances of the particular transaction should always be reviewed and legal advice obtained before undertaking a transfer of mortgaged property to determine if the consent of the bank is required.
No matter how simple a real estate transaction may seem, it is always worth taking the time to obtain good advice and ensure you understand all aspects of the transaction.
Attorney Maria Baler is an estate planning attorney and a partner with the Dedham firm Samuel, Sayward & Baler LLC. She is also a director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). For more information, visit www.ssbllc.com.
Copyright 2010 The Dedham Transcript.
Wicked Local Dedham
Posted Sep 05, 2010 @ 07:00 AM
DEDHAM — Real estate transactions happen with increasing frequency these days, and while real estate can be easily transferred or mortgaged, it is important to seek advice from a qualified professional to adequately protect your property and maintain the integrity of your estate plan.
For example, transfers of real estate between family members and into or out of trusts are commonly done for estate and long-term care planning purposes. Further, the low interest-rate environment we are currently experiencing has made refinancing mortgages more attractive than ever. However, any time you undertake a transaction that involves your real estate, keep in mind the impact it may have on your estate plan and related matters.
Here are five facts to keep in mind when transferring or mortgaging real estate.
1. Homestead Protection can be disturbed by certain real estate transactions. A Declaration of Homestead is a document that is recorded at the Registry of Deeds to protect up to $500,000 of equity in your home from claims of creditors. A transfer of your home to a family member or a trust can disturb the homestead protection. Some attorneys interpret existing law to provide that refinancing a mortgage can terminate homestead protection if there is language in the mortgage document that waives the existing protection. If you have filed a Declaration of Homestead, make sure you seek the advice of your attorney before entering into any real estate transaction to ensure your homestead protection is maintained.
2. Changing property ownership can affect real estate tax exemptions. Some cities and towns in the commonwealth offer property tax exemptions for owner-occupants of property, for owners who meet certain financial criteria, or for veterans and their spouses. If ownership of property is transferred to a trust or to another family member, these exemptions may no longer be available. If you are eligible for a real estate tax exemption from your town, be sure to investigate this carefully before transferring title to your property so that you do not inadvertently lose a valuable benefit.
3. Title insurance policies can be voided by a change in ownership. Many people purchase owner’s title insurance when they purchase real estate. This coverage offers valuable protection against title defects. Because the decision to purchase title insurance is often made in the haste of purchasing property, many people do not remember they have title insurance. Be aware that transferring the ownership of your property to family members or to a trust can terminate your title insurance coverage. Check with your title insurance company on the steps necessary to continue your title insurance protection when you transfer your property to a trust or to a family member. Often an inexpensive rider is all that is required to continue this valuable protection.
4. Transferring property into or out of trusts should be handled with care. You may have established one or more trusts as a part of your estate plan. Real estate may be held in trust for a variety of reasons, including avoidance of probate, estate tax savings, asset protection, etc. In connection with refinancing your mortgage, your banker or real estate attorney may suggest or require that you remove the property from the trust in order to refinance the mortgage. This is not uncommon. However, it is vital that you make your estate planning attorney aware of the transaction so that she can properly advise you about transferring the property back into trust after your financing transaction is complete, and about any other effects such a transfer may have. Failure to do so may adversely affect the estate plan you so carefully created.
5. Transfers of mortgaged property must be done with awareness of the implications. If you have a mortgage on your property, a bank or other lender has agreed to lend money to you on the condition that you agree that your property will serve as security for that loan. Most mortgages prohibit any transfer of ownership without the bank’s consent; however, federal law permits transfers to certain trusts and family members under certain circumstances without violation of the terms of the mortgage. However, your mortgage, the applicable law, and the circumstances of the particular transaction should always be reviewed and legal advice obtained before undertaking a transfer of mortgaged property to determine if the consent of the bank is required.
No matter how simple a real estate transaction may seem, it is always worth taking the time to obtain good advice and ensure you understand all aspects of the transaction.
Attorney Maria Baler is an estate planning attorney and a partner with the Dedham firm Samuel, Sayward & Baler LLC. She is also a director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA). For more information, visit www.ssbllc.com.
Copyright 2010 The Dedham Transcript.
Monday, August 30, 2010
Perspectives: Canada Sidesteps the Worst of the Financial Crisis
August 30, 2010 BestWire Services Email Print Free Newsletter
Financial institutions in developed nations worldwide reeled from the effects of the financial crisis that began in September 2008. But Canada and its life insurers escaped the worst of the crisis.
Canada's financial-services regulatory framework and positive relationships between regulators and companies all played a role in insulating life insurers from the adverse effects of the recession, according to Frank Swedlove, president of the Canadian Life and Health Insurance Association.
But the nature of the Canadian economy mattered, too.
"The Canadian economy itself has proven more stalwart through the financial crisis, in part because it entered the recession in better shape fiscally, with less debt-to-gross domestic product and smaller deficits," said Dean Connor, chief operating officer of Sun Life Financial.
A primary reason for the Canada's economic strength was that the housing bubble--the centerpiece of the United States' recession--was not as big an issue in Canada, Connor said. "We have shorter-term mortgages, and mortgage interest is not tax-deductible, so you didn't see the kind of leverage in the housing market here that we did in the U.S.," he said. "And although the economy in Canada slowed last year, it has rebounded faster and is in pretty good shape."
To judge the housing markets' impact on insurers' portfolios in Canada and the United States, one need look no further than Sun Life's Canadian and American businesses. Because of mortgage-backed securities in the portfolio of Sun Life's U.S. subsidiary, the parent company in Canada had to make capital contributions to it the past two years, reducing financial flexibility for the group, according to July's A.M. Best Credit Report for Sun Life Assurance Company of Canada (U.S.).
Connor said commercial and residential mortgage-backed securities have been common and important investments for U.S. life companies, including Sun Life. Canadian life companies were invested in real estate and mortgages to a lesser extent, so their credit experience was much better, he said.
Stephen Irwin, vice president in the life/health ratings division of A.M. Best, said that the subprime and Alt-A types of mortgage securities so prevalent in the United States did not exist to the same extent in Canada because of better mortgage underwriting standards. Meanwhile, mortgage underwriting in Canada remained disciplined, said Richard McMillan, managing senior financial analyst at A.M. Best. And a few years ago, in reaction to weakening conditions in the housing market, the Canadian government refused to provide government insurance on longer amortizing loans.
"You could say there was some restraint by the regulators that helped to keep the market more reasonable than it was in the U.S.," he said.
As a result, Canada for the most part avoided a run-up in property values that occurred in many parts of the United States, McMillan said.
Other factors were also at play. One is the role played by the Office of the Superintendent of Financial Institutions, Canada's primary regulator and supervisor of federally regulated deposit-taking institutions, insurance companies and federally regulated private pension plans. Connor said OSFI oversees the operations of Canadian life insurers wherever they do business.
Financial institutions in developed nations worldwide reeled from the effects of the financial crisis that began in September 2008. But Canada and its life insurers escaped the worst of the crisis.
Canada's financial-services regulatory framework and positive relationships between regulators and companies all played a role in insulating life insurers from the adverse effects of the recession, according to Frank Swedlove, president of the Canadian Life and Health Insurance Association.
But the nature of the Canadian economy mattered, too.
"The Canadian economy itself has proven more stalwart through the financial crisis, in part because it entered the recession in better shape fiscally, with less debt-to-gross domestic product and smaller deficits," said Dean Connor, chief operating officer of Sun Life Financial.
A primary reason for the Canada's economic strength was that the housing bubble--the centerpiece of the United States' recession--was not as big an issue in Canada, Connor said. "We have shorter-term mortgages, and mortgage interest is not tax-deductible, so you didn't see the kind of leverage in the housing market here that we did in the U.S.," he said. "And although the economy in Canada slowed last year, it has rebounded faster and is in pretty good shape."
To judge the housing markets' impact on insurers' portfolios in Canada and the United States, one need look no further than Sun Life's Canadian and American businesses. Because of mortgage-backed securities in the portfolio of Sun Life's U.S. subsidiary, the parent company in Canada had to make capital contributions to it the past two years, reducing financial flexibility for the group, according to July's A.M. Best Credit Report for Sun Life Assurance Company of Canada (U.S.).
Connor said commercial and residential mortgage-backed securities have been common and important investments for U.S. life companies, including Sun Life. Canadian life companies were invested in real estate and mortgages to a lesser extent, so their credit experience was much better, he said.
Stephen Irwin, vice president in the life/health ratings division of A.M. Best, said that the subprime and Alt-A types of mortgage securities so prevalent in the United States did not exist to the same extent in Canada because of better mortgage underwriting standards. Meanwhile, mortgage underwriting in Canada remained disciplined, said Richard McMillan, managing senior financial analyst at A.M. Best. And a few years ago, in reaction to weakening conditions in the housing market, the Canadian government refused to provide government insurance on longer amortizing loans.
"You could say there was some restraint by the regulators that helped to keep the market more reasonable than it was in the U.S.," he said.
As a result, Canada for the most part avoided a run-up in property values that occurred in many parts of the United States, McMillan said.
Other factors were also at play. One is the role played by the Office of the Superintendent of Financial Institutions, Canada's primary regulator and supervisor of federally regulated deposit-taking institutions, insurance companies and federally regulated private pension plans. Connor said OSFI oversees the operations of Canadian life insurers wherever they do business.
HST affects housing market
By Marty Hope, Calgary Herald August 28, 2010
The harmonized sales tax recently introduced into British Columbia and Ontario has had an impact, likely short-term, on the resale housing activity in those two provinces, according to an industry survey.
An online survey conducted at the end of July by Royal LePage Real Estate Services shows that residents have misconceptions about how the HST affects real estate transactions.
When respondents were asked to provide examples of comments heard from buyers and sellers regarding the tax and its effect on the housing market, almost half of the comments (46.7 per cent) indicated that confusion about it continues even more than one month after coming into effect.
Among the most common responses to the survey's open-ended questions were that many home buyers incorrectly believe the tax applies to the sale price of resale properties.
About 44 per cent of the 765 realtors polled in Ontario and B.C. said the HST that took effect in both provinces July 1 is having the greatest effect on the cooling residential real estate market, compared to just 28.4 per cent who cited rising interest rates as having the greatest effect.
In all, more than 86 per cent of respondents said the HST is affecting their business somewhat.
"While we predicted that the prospect of rising interest rates would put a damper on the housing market, our agents are finding that the HST is actually having the greater impact on buyer behaviour, at least in the short-term" says Phil Soper, president and chief executive officer of Royal LePage.
The HST applies to the purchase price of a newly-built home, and fees for services and commissions associated with any real estate transaction, but it does not apply to the purchase price of resale homes.
Resale homes comprise the bulk of transactions in the Canadian housing market, and the majority of agents surveyed by Royal LePage indicated that new home sales account for less than 10 per cent of their business.
"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," says Soper.
"According to our realtors in B.C. and Ontario, misconceptions about the HST are having an effect on the market in both provinces."
Nearly one quarter (24.1 per cent) of respondents in the Royal LePage survey say home buyers and sellers have a low level of awareness about how the HST applies to a home sale transaction, while 44 per cent say buyers and sellers are only somewhat aware.
"Realtors are there to help guide buyers and sellers through the often complex negotiation and closing process, so our take-away from this survey is that we need to do more as an industry to educate consumers about the HST," says Soper.
© Copyright (c) The Calgary Herald
The harmonized sales tax recently introduced into British Columbia and Ontario has had an impact, likely short-term, on the resale housing activity in those two provinces, according to an industry survey.
An online survey conducted at the end of July by Royal LePage Real Estate Services shows that residents have misconceptions about how the HST affects real estate transactions.
When respondents were asked to provide examples of comments heard from buyers and sellers regarding the tax and its effect on the housing market, almost half of the comments (46.7 per cent) indicated that confusion about it continues even more than one month after coming into effect.
Among the most common responses to the survey's open-ended questions were that many home buyers incorrectly believe the tax applies to the sale price of resale properties.
About 44 per cent of the 765 realtors polled in Ontario and B.C. said the HST that took effect in both provinces July 1 is having the greatest effect on the cooling residential real estate market, compared to just 28.4 per cent who cited rising interest rates as having the greatest effect.
In all, more than 86 per cent of respondents said the HST is affecting their business somewhat.
"While we predicted that the prospect of rising interest rates would put a damper on the housing market, our agents are finding that the HST is actually having the greater impact on buyer behaviour, at least in the short-term" says Phil Soper, president and chief executive officer of Royal LePage.
The HST applies to the purchase price of a newly-built home, and fees for services and commissions associated with any real estate transaction, but it does not apply to the purchase price of resale homes.
Resale homes comprise the bulk of transactions in the Canadian housing market, and the majority of agents surveyed by Royal LePage indicated that new home sales account for less than 10 per cent of their business.
"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," says Soper.
"According to our realtors in B.C. and Ontario, misconceptions about the HST are having an effect on the market in both provinces."
Nearly one quarter (24.1 per cent) of respondents in the Royal LePage survey say home buyers and sellers have a low level of awareness about how the HST applies to a home sale transaction, while 44 per cent say buyers and sellers are only somewhat aware.
"Realtors are there to help guide buyers and sellers through the often complex negotiation and closing process, so our take-away from this survey is that we need to do more as an industry to educate consumers about the HST," says Soper.
© Copyright (c) The Calgary Herald
Monday, August 9, 2010
Misconceptions about HST slowing home sales: poll
Realtors say the new tax -- which does not apply to the purchase price of resale homes -- is a bigger threat than rising interest rates
By Garry Marr, Postmedia News August 6, 2010
Royal LePage Real Estate Services says almost half of its agents believe the main reason for the cooling housing market is a public misconception about how the harmonized sales tax affects home sales.
The company conducted an online-only poll of its realtors at the end of July -- almost a month after the HST went into effect in British Columbia and Ontario -- and found that 43.9 per cent of the 769 respondents in those provinces blamed the new tax for the downturn. The HST was considered a bigger threat than rising interest rates despite two recent quarter-point hikes, Royal LePage said.
Even before the HST was introduced in B.C. and Ontario, sales in the second quarter of this year were down 13.3 per cent from the first quarter, on a seasonally adjusted basis, according to the Canadian Real Estate Association. June sales dropped 8.2 per cent from May.
CREA said the national average sales price rose just 4.9 per cent from a year ago to $342,662 in June.
"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," said Phil Soper, chief executive of Royal LePage. "According to our realtors who work in B.C. and Ontario communities every day, misconceptions about the HST are having an effect on the market in both provinces."
The HST applies to newly built homes with exemptions up to a certain amount in both provinces. But it does not apply to the purchase price of resale homes. It does apply to the fees for services and commissions associated with any real estate transaction. New homes represent less than 10 per cent of business, says Royal LePage.
Agents indicated consumers don't seem to understand how the tax works. When asked to provide examples of comments heard from buyers and sellers regarding the HST and its effect on the housing market, 46.7 per cent of agents indicated that confusion about HST remains more than one month after its introduction.
"Among the most common responses to the survey's open-ended questions were that many home buyers incorrectly believe HST applies to the sale price of resale properties," says LePage.
Interest rates were only cited by 28.4 per cent of agents as the biggest threat to the housing market. Overall, 86 per cent of agents reported the HST is affecting their business some way.
"While we predicted that the prospect of rising interest rates would put a damper on the housing market, our agents are finding that the HST is actually having the greater impact on buyer behaviour, at least in the short-term," said Soper. "Our take-away from this survey is that we need to do more as an industry to educate consumers about the HST."
The Vancouver Sun
By Garry Marr, Postmedia News August 6, 2010
Royal LePage Real Estate Services says almost half of its agents believe the main reason for the cooling housing market is a public misconception about how the harmonized sales tax affects home sales.
The company conducted an online-only poll of its realtors at the end of July -- almost a month after the HST went into effect in British Columbia and Ontario -- and found that 43.9 per cent of the 769 respondents in those provinces blamed the new tax for the downturn. The HST was considered a bigger threat than rising interest rates despite two recent quarter-point hikes, Royal LePage said.
Even before the HST was introduced in B.C. and Ontario, sales in the second quarter of this year were down 13.3 per cent from the first quarter, on a seasonally adjusted basis, according to the Canadian Real Estate Association. June sales dropped 8.2 per cent from May.
CREA said the national average sales price rose just 4.9 per cent from a year ago to $342,662 in June.
"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," said Phil Soper, chief executive of Royal LePage. "According to our realtors who work in B.C. and Ontario communities every day, misconceptions about the HST are having an effect on the market in both provinces."
The HST applies to newly built homes with exemptions up to a certain amount in both provinces. But it does not apply to the purchase price of resale homes. It does apply to the fees for services and commissions associated with any real estate transaction. New homes represent less than 10 per cent of business, says Royal LePage.
Agents indicated consumers don't seem to understand how the tax works. When asked to provide examples of comments heard from buyers and sellers regarding the HST and its effect on the housing market, 46.7 per cent of agents indicated that confusion about HST remains more than one month after its introduction.
"Among the most common responses to the survey's open-ended questions were that many home buyers incorrectly believe HST applies to the sale price of resale properties," says LePage.
Interest rates were only cited by 28.4 per cent of agents as the biggest threat to the housing market. Overall, 86 per cent of agents reported the HST is affecting their business some way.
"While we predicted that the prospect of rising interest rates would put a damper on the housing market, our agents are finding that the HST is actually having the greater impact on buyer behaviour, at least in the short-term," said Soper. "Our take-away from this survey is that we need to do more as an industry to educate consumers about the HST."
The Vancouver Sun
Thursday, August 5, 2010
More signs the Toronto housing market is cooling off
The Toronto Star
Published On Thu Aug 5 2010
By Tony Wong
Business Reporter Home sales in the Toronto market are cooling rapidly off in the second half of the year, with a 34 per cent drop in July compared to a year earlier.
This is the third consecutive month of falling sales, according to figures released by the Toronto Real Estate Board today.
In June, sales had dipped by 23 per cent. But this has been the steepest drop yet, with sales dipping to 6,564 in July compared with 9,967 a year earlier.
“The level of July sales remained below the expected long term trend. The market has become more balanced,” said TREB president Bill Johnston.
Total sales through the first seven months are still up by 12 per cent, thanks to record sales during the first half of the year.
The average price for July transactions was $420,482, representing a six per cent increase over last year.
Meanwhile, building permit figures for Toronto released by Statistics Canada today also show that developers are less bullish about the housing market moving forward.
Building permits in the Toronto area fell by 15.3 per cent in June over May thanks to a drop in residential building intentions in both the single detached and high rise segments. Non-residential buildings such as commercial and industrial projects showed an increase, but not enough to offset the drop in residential permits.
Published On Thu Aug 5 2010
By Tony Wong
Business Reporter Home sales in the Toronto market are cooling rapidly off in the second half of the year, with a 34 per cent drop in July compared to a year earlier.
This is the third consecutive month of falling sales, according to figures released by the Toronto Real Estate Board today.
In June, sales had dipped by 23 per cent. But this has been the steepest drop yet, with sales dipping to 6,564 in July compared with 9,967 a year earlier.
“The level of July sales remained below the expected long term trend. The market has become more balanced,” said TREB president Bill Johnston.
Total sales through the first seven months are still up by 12 per cent, thanks to record sales during the first half of the year.
The average price for July transactions was $420,482, representing a six per cent increase over last year.
Meanwhile, building permit figures for Toronto released by Statistics Canada today also show that developers are less bullish about the housing market moving forward.
Building permits in the Toronto area fell by 15.3 per cent in June over May thanks to a drop in residential building intentions in both the single detached and high rise segments. Non-residential buildings such as commercial and industrial projects showed an increase, but not enough to offset the drop in residential permits.
Monday, August 2, 2010
Why Canadians aren’t pumped about saving
Study finds a disconnect between our beliefs and behaviours when it comes to retirement planning
Dianne Nice
Globe and Mail
Published on Sunday, Aug. 01, 2010 12:00AM EDT
Dianne Nice
Globe and Mail
Published on Sunday, Aug. 01, 2010 12:00AM EDT
Saving for retirement can be a bit like trying to get in shape: You need to start slowly, work at it regularly and don’t expect to see immediate results.
But like those fad-diet articles that line the checkout aisles, with their countless tips for losing weight, retirement savings options can be overwhelming. And when your tummy’s rumbling, it’s tempting to just buy a chocolate bar today and put off the diet – or the saving – until tomorrow.
The same psychological barriers that prevent us from shaping up may also be keeping Canadians from bulking up their retirement savings, according to a new report by the BMO Retirement Institute. The report, based on a Strategic Counsel survey of 2,034 Canadians 35 years of age or older, suggests certain behavioural roadblocks, including “paralysis of choice” and “immediate gratification,” are creating a disconnect between what Canadians believe they should be doing to prepare for retirement and what they are actually doing.
Almost 90 per cent of Canadians believe retirement planning should begin before the age of 35, according to the poll. Yet 40 per cent of non-retirees admit they have done no retirement planning at all. The problem isn’t ignorance, says Tina Di Vito, head of BMO’s Retirement Institute. “We know what we need to do, we know when we should do it, we just don’t make it a priority.”
More than eight in 10 non-retirees who have not started saving said they are more concerned about current needs, such as their mortgages and other debts, than their retirement.
This is particularly true for those aged 35 to 44, who are more likely to say they overspend (53 per cent), have debt (88 per cent) and worry about it (25 per cent). Of that group, half said they felt they had fallen behind in their retirement planning, and 44 per cent said they were dissatisfied with the amount they had saved.
“Clearly, this age bracket represents a period when people are buying houses, paying mortgages and raising children, and the thought of diverting funds to retirement takes a back seat,” the report states. “Yet it is also a crucial period of wealth accumulation – a stage of life still far enough away from retirement to permit the magic of compound interest to play its role.”
More than 40 per cent of non-retirees admitted they spend more than they should, saying they wanted the “good things in life.” And more than a quarter said they felt they should “eat, drink and be merry” because they may not live to old age.
Lower-income respondents were more likely to report that they felt overwhelmed by too much information, yet they also said they find pension plans, RRSPs and other retirement savings accounts confusing.
“The idea of starting a regular retirement savings program can be overwhelming for many people,” Ms. Di Vito said.
As with exercising, however, no pain, no gain. Once you establish a routine, your healthy habit can become second nature.
“The psychology of doing something puts you in the right frame of mind and helps to establish discipline,” Ms. Di Vito said. “When you can, increase the amount you set aside. The chances are, if you start something, like contributing to an RRSP, you’re going to keep doing it.”
But like those fad-diet articles that line the checkout aisles, with their countless tips for losing weight, retirement savings options can be overwhelming. And when your tummy’s rumbling, it’s tempting to just buy a chocolate bar today and put off the diet – or the saving – until tomorrow.
The same psychological barriers that prevent us from shaping up may also be keeping Canadians from bulking up their retirement savings, according to a new report by the BMO Retirement Institute. The report, based on a Strategic Counsel survey of 2,034 Canadians 35 years of age or older, suggests certain behavioural roadblocks, including “paralysis of choice” and “immediate gratification,” are creating a disconnect between what Canadians believe they should be doing to prepare for retirement and what they are actually doing.
Almost 90 per cent of Canadians believe retirement planning should begin before the age of 35, according to the poll. Yet 40 per cent of non-retirees admit they have done no retirement planning at all. The problem isn’t ignorance, says Tina Di Vito, head of BMO’s Retirement Institute. “We know what we need to do, we know when we should do it, we just don’t make it a priority.”
More than eight in 10 non-retirees who have not started saving said they are more concerned about current needs, such as their mortgages and other debts, than their retirement.
This is particularly true for those aged 35 to 44, who are more likely to say they overspend (53 per cent), have debt (88 per cent) and worry about it (25 per cent). Of that group, half said they felt they had fallen behind in their retirement planning, and 44 per cent said they were dissatisfied with the amount they had saved.
“Clearly, this age bracket represents a period when people are buying houses, paying mortgages and raising children, and the thought of diverting funds to retirement takes a back seat,” the report states. “Yet it is also a crucial period of wealth accumulation – a stage of life still far enough away from retirement to permit the magic of compound interest to play its role.”
More than 40 per cent of non-retirees admitted they spend more than they should, saying they wanted the “good things in life.” And more than a quarter said they felt they should “eat, drink and be merry” because they may not live to old age.
Lower-income respondents were more likely to report that they felt overwhelmed by too much information, yet they also said they find pension plans, RRSPs and other retirement savings accounts confusing.
“The idea of starting a regular retirement savings program can be overwhelming for many people,” Ms. Di Vito said.
As with exercising, however, no pain, no gain. Once you establish a routine, your healthy habit can become second nature.
“The psychology of doing something puts you in the right frame of mind and helps to establish discipline,” Ms. Di Vito said. “When you can, increase the amount you set aside. The chances are, if you start something, like contributing to an RRSP, you’re going to keep doing it.”
Thursday, July 29, 2010
Canadian homeowners financially fit
Thursday, 22 July 2010
Canadian homeowners appear to be more financially fit than others in Canada, as 65 per cent pay off their credit balances each month compared to 48 per cent of non-homeowners.
A quarter of the homeowners with mortgages have also made a lump sum payment or accelerated their mortgage payments in the past year, according to a survey sponsored by Genworth Financial Canada.
Forty-four per cent of homeowners paid all their bills and saved money in the past year, suggesting a strong correlation between homeownership and financial fitness.
"Homeownership is an achievable goal for those who are prepared," said Peter Vukanovich, president and chief operating officer of Genworth. "Homeownership helps people focus on their financial situation and get their fiscal house in order."
The survey was conducted in partnership with the Canadian Association of Credit Counselling Services (CACCS).
"A mortgage is easier to manage when people have good personal finance skills," said Henrietta Ross, CEO of CACCS.
The survey also found:
- 49 per cent of homeowners made down payments of 20 per cent or more on their purchase
- 13 per cent of homeowners say they are in great financial shape
- 12 per cent of homeowners said they have requested a credit report in the past 12 months.
-Taken from mortgagebrokernews.ca
Canadian homeowners appear to be more financially fit than others in Canada, as 65 per cent pay off their credit balances each month compared to 48 per cent of non-homeowners.
A quarter of the homeowners with mortgages have also made a lump sum payment or accelerated their mortgage payments in the past year, according to a survey sponsored by Genworth Financial Canada.
Forty-four per cent of homeowners paid all their bills and saved money in the past year, suggesting a strong correlation between homeownership and financial fitness.
"Homeownership is an achievable goal for those who are prepared," said Peter Vukanovich, president and chief operating officer of Genworth. "Homeownership helps people focus on their financial situation and get their fiscal house in order."
The survey was conducted in partnership with the Canadian Association of Credit Counselling Services (CACCS).
"A mortgage is easier to manage when people have good personal finance skills," said Henrietta Ross, CEO of CACCS.
The survey also found:
- 49 per cent of homeowners made down payments of 20 per cent or more on their purchase
- 13 per cent of homeowners say they are in great financial shape
- 12 per cent of homeowners said they have requested a credit report in the past 12 months.
-Taken from mortgagebrokernews.ca
Toronto, Calgary lead drop in housing sales
Garry Marr, Financial Post · Thursday, Jul. 15, 2010
Existing home sales continued their rapid decline last month, with 70% of markets showing a drop in sales in June from May, the Canadian Real Estate Association says.
But at least one senior executive in the industry says market watchers need a little perspective about the real estate sector.
“The pace we had seen couldn’t be sustained. It’s important to have a word of caution when you talk about it slowing down,” said Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada.
“This is by no stretch a buyer’s market. At best it’s a balanced market in the majority of markets. People are not out there giving their houses away yet.”
Ottawa-based CREA, which represents 100 boards across the country, said sales were off 8.2% from a month ago on a seasonally adjusted basis. Toronto and Calgary led the decline.
CREA said tighter mortgage rules and rising rates were behind a 13.3% drop in sales over the past quarter.
“As expected, these two national factors contributed to a widespread decline in activity, with transactions down in all but a dozen or so smaller markets,” CREA said.
Sales activity was down 19.7% in June from a year ago, when there was a record number of sales for the month.
Actual second-quarter sales were down 2.8% from a year ago but for the year are still up 13.6%.
There was a slowdown in Canadians putting homes up for sale, which should be good for the market and prices. The number of new listings on the market in June dropped 6.8% from May.
But year-over-year price increases are starting to slow. CREA said the national average sales price rose just 4.9% from a year ago to $342,662.
CREA chief economist Gregory Klump said there could be help on the way for prices in the coming months. “While the pricing environment is becoming more challenging, a recovering economy and job market will provide support for housing activity and prices,” he said.
The number of months of inventory in the market, which represents the number of months it would take to sell current inventories at the current rate of sales activity, is also rising. It was 5.7 months across the country at the end of June, up from 4.2 months a year ago.
“The housing market is becoming more challenging for sellers,” said Georges Pahud, CREA president. “Buyers are in less of a hurry.”
Economist Adrienne Warren of the Bank of Nova Scotia said the market has peaked.
“Canada’s housing market has clearly shifted gears, with monthly sales [seasonally adjusted] now running about 25% below last December’s peak,” she said. “The sense of urgency see n last fall and winter in the lead-up to tighter mortgage-lending criteria and the introduction of the HST in Ontario and British Columbia has faded.”
Financial Post
Existing home sales continued their rapid decline last month, with 70% of markets showing a drop in sales in June from May, the Canadian Real Estate Association says.
But at least one senior executive in the industry says market watchers need a little perspective about the real estate sector.
“The pace we had seen couldn’t be sustained. It’s important to have a word of caution when you talk about it slowing down,” said Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada.
“This is by no stretch a buyer’s market. At best it’s a balanced market in the majority of markets. People are not out there giving their houses away yet.”
Ottawa-based CREA, which represents 100 boards across the country, said sales were off 8.2% from a month ago on a seasonally adjusted basis. Toronto and Calgary led the decline.
CREA said tighter mortgage rules and rising rates were behind a 13.3% drop in sales over the past quarter.
“As expected, these two national factors contributed to a widespread decline in activity, with transactions down in all but a dozen or so smaller markets,” CREA said.
Sales activity was down 19.7% in June from a year ago, when there was a record number of sales for the month.
Actual second-quarter sales were down 2.8% from a year ago but for the year are still up 13.6%.
There was a slowdown in Canadians putting homes up for sale, which should be good for the market and prices. The number of new listings on the market in June dropped 6.8% from May.
But year-over-year price increases are starting to slow. CREA said the national average sales price rose just 4.9% from a year ago to $342,662.
CREA chief economist Gregory Klump said there could be help on the way for prices in the coming months. “While the pricing environment is becoming more challenging, a recovering economy and job market will provide support for housing activity and prices,” he said.
The number of months of inventory in the market, which represents the number of months it would take to sell current inventories at the current rate of sales activity, is also rising. It was 5.7 months across the country at the end of June, up from 4.2 months a year ago.
“The housing market is becoming more challenging for sellers,” said Georges Pahud, CREA president. “Buyers are in less of a hurry.”
Economist Adrienne Warren of the Bank of Nova Scotia said the market has peaked.
“Canada’s housing market has clearly shifted gears, with monthly sales [seasonally adjusted] now running about 25% below last December’s peak,” she said. “The sense of urgency see n last fall and winter in the lead-up to tighter mortgage-lending criteria and the introduction of the HST in Ontario and British Columbia has faded.”
Financial Post
Monday, July 26, 2010
Credit raters face new rules
Tara Perkins Financial Services Reporter
From Wednesday's Globe and Mail
Published on Wednesday, Jul. 14, 2010 2:00AM EDT
Regulators are moving to oversee credit rating agencies in Canada, widening the mandate of the watchdogs and slapping national rules on the sector for the first time.
The Canadian Securities Administrators, an umbrella group of provincial regulators, is expected to announce Friday new measures to toughen the accountability and transparency of the agencies, which came under fire after securities that investors believed were safe bets became frozen during the financial crisis.
The plan is the latest in a series of moves globally to toughen regulation of the financial sector, from banks to securities firms. Oversight of ratings agencies was one of many pledges made by the Group of 20 countries, along with reforms such as new capital rules for banks.
Regulation would give securities watchdogs the authority to review and demand changes to the way agencies such as DBRS Ltd., Standard & Poor’s and Moody’s Investors Service operate, industry sources said. The agencies would also have to sign on to a code of conduct that would deal with issues such as potential conflicts of interest.
The proposed rules are expected to be subject to changes after a comment period. In some cases, provincial bodies might require new powers by law.
Influential business voices including Canada’s top banking regulator and a number of Bay Street chief executives have pointed a finger at rating agencies for the role they played in the financial crisis. For their part, ratings agencies have said they have already improved their ratings systems and boosted their degree of transparency in light of market changes.
The prime example in Canada was the $30-billion-plus market for asset-backed commercial paper that was not sponsored by banks. It seized up during the credit crisis in 2007, leaving many investors without access to their money. Canada’s homegrown DBRS took heat for being the only agency to rate the paper, much of which received top ratings.
Similar situations occurred with other structured credit products and other agencies in the U.S. and elsewhere. Rating agencies have become engrained in the financial system because of laws that refer to them or require their ratings.
Canadian authorities first recommended regulating the agencies more than 18 months ago, and received feedback from the industry in early 2009. But they took time to see what other jurisdictions decided before making their move, and observers suggested the CSA has also been weighed down by the effort to create a single national securities regulator.
“We look forward to reviewing the proposed regulatory framework when it is published later this month,” DBRS said in an e-mailed statement Tuesday. “In the meanwhile, we have been consulting with investors and regulatory bodies, and have implemented policies that are consistent with global best practices including the IOSCO [International Organization of Securities Commissions] code of conduct for rating agencies.”
In a letter to the CSA, Moody’s said it was in favour of a regime that is governed more by broad principles than specific rules. “A prescriptive, rules-based regime that provides for a significant degree of day-to-day supervision by securities regulators could inadvertently create the perception that such approved [credit rating agencies] and their ratings are ‘fail-proof’ because they have a regulatory ‘seal of approval,’ ” the agency said.
Authorities have generally backed away from seeking major changes to the rating agencies’ business models, and are instead looking to bolster oversight. Shortly after the financial crisis, the European Union adopted a law requiring that rating agencies be registered, and the financial reforms that the House of Representatives recently approved in the United States will give the Securities and Exchange Commission new powers over rating agencies.
Since the 1970s, rating agencies have been charging companies and other issuers of debt fees for ratings. Critics charge that it’s a conflict of interest for agencies to be taking fees from companies that they rate, and argue that their revenue models should instead rely on payments from the investors who use the ratings.
In a comment piece published by American Banker last month, Standard & Poor’s president Deven Sharma argued that “the issuer-pays model allows us to publish our ratings for free on our website, whereas the subscriber-based model creates information haves and have-nots in the marketplace.” He said S&P is doing a top-to-bottom review of its ratings and making some changes to its procedures. “For instance, we have made changes to our criteria for rating mortgage securities so that it will be much more difficult for such a security to receive a triple-A rating.”
From Wednesday's Globe and Mail
Published on Wednesday, Jul. 14, 2010 2:00AM EDT
The Canadian Securities Administrators, an umbrella group of provincial regulators, is expected to announce Friday new measures to toughen the accountability and transparency of the agencies, which came under fire after securities that investors believed were safe bets became frozen during the financial crisis.
The plan is the latest in a series of moves globally to toughen regulation of the financial sector, from banks to securities firms. Oversight of ratings agencies was one of many pledges made by the Group of 20 countries, along with reforms such as new capital rules for banks.
Regulation would give securities watchdogs the authority to review and demand changes to the way agencies such as DBRS Ltd., Standard & Poor’s and Moody’s Investors Service operate, industry sources said. The agencies would also have to sign on to a code of conduct that would deal with issues such as potential conflicts of interest.
The proposed rules are expected to be subject to changes after a comment period. In some cases, provincial bodies might require new powers by law.
Influential business voices including Canada’s top banking regulator and a number of Bay Street chief executives have pointed a finger at rating agencies for the role they played in the financial crisis. For their part, ratings agencies have said they have already improved their ratings systems and boosted their degree of transparency in light of market changes.
The prime example in Canada was the $30-billion-plus market for asset-backed commercial paper that was not sponsored by banks. It seized up during the credit crisis in 2007, leaving many investors without access to their money. Canada’s homegrown DBRS took heat for being the only agency to rate the paper, much of which received top ratings.
Similar situations occurred with other structured credit products and other agencies in the U.S. and elsewhere. Rating agencies have become engrained in the financial system because of laws that refer to them or require their ratings.
Canadian authorities first recommended regulating the agencies more than 18 months ago, and received feedback from the industry in early 2009. But they took time to see what other jurisdictions decided before making their move, and observers suggested the CSA has also been weighed down by the effort to create a single national securities regulator.
“We look forward to reviewing the proposed regulatory framework when it is published later this month,” DBRS said in an e-mailed statement Tuesday. “In the meanwhile, we have been consulting with investors and regulatory bodies, and have implemented policies that are consistent with global best practices including the IOSCO [International Organization of Securities Commissions] code of conduct for rating agencies.”
In a letter to the CSA, Moody’s said it was in favour of a regime that is governed more by broad principles than specific rules. “A prescriptive, rules-based regime that provides for a significant degree of day-to-day supervision by securities regulators could inadvertently create the perception that such approved [credit rating agencies] and their ratings are ‘fail-proof’ because they have a regulatory ‘seal of approval,’ ” the agency said.
Authorities have generally backed away from seeking major changes to the rating agencies’ business models, and are instead looking to bolster oversight. Shortly after the financial crisis, the European Union adopted a law requiring that rating agencies be registered, and the financial reforms that the House of Representatives recently approved in the United States will give the Securities and Exchange Commission new powers over rating agencies.
Since the 1970s, rating agencies have been charging companies and other issuers of debt fees for ratings. Critics charge that it’s a conflict of interest for agencies to be taking fees from companies that they rate, and argue that their revenue models should instead rely on payments from the investors who use the ratings.
In a comment piece published by American Banker last month, Standard & Poor’s president Deven Sharma argued that “the issuer-pays model allows us to publish our ratings for free on our website, whereas the subscriber-based model creates information haves and have-nots in the marketplace.” He said S&P is doing a top-to-bottom review of its ratings and making some changes to its procedures. “For instance, we have made changes to our criteria for rating mortgage securities so that it will be much more difficult for such a security to receive a triple-A rating.”
Canada safe from U.S. double dip
Financial Post
David Pett July 12, 2010 – 12:56 pm
Add Moody’s to the list of those who think Canada’s economic recovery is safe, even if the U.S. economy falls back into recession.
In the wake of last Friday’s stunning jobs report that saw 93,200 new jobs created in June, Jimmy Jean, an economist at Moody’s Economy.com said a “collective effort” in dealing with the financial crisis has made Canada less vulnerable to U.S. shocks than it used to be.
“It is often thought that when the U.S. sneezes, Canada catches a cold, but with the shift toward a service-oriented economy over the last three decades, Canada has grown more immune to U.S. woes,” he said in a report.
“The last two U.S. recessions are solid proof that Canada is now better able to withstand strong headwinds from the south. Not that they’ve decoupled altogether, but should a downside mild double-dip U.S. recession materialize, Canada’s recovery would very likely survive.”
In addition to the country’s strong commodity sector, Mr. Jean said the success of Canada’s recovery is thanks to policy makers acting quickly in the depth of the crisis, consumers who shrugged off the recession and started spending again and employers who believed in the recovery and hired backed their workforce swiftly.
David Pett July 12, 2010 – 12:56 pm
Add Moody’s to the list of those who think Canada’s economic recovery is safe, even if the U.S. economy falls back into recession.
In the wake of last Friday’s stunning jobs report that saw 93,200 new jobs created in June, Jimmy Jean, an economist at Moody’s Economy.com said a “collective effort” in dealing with the financial crisis has made Canada less vulnerable to U.S. shocks than it used to be.
“It is often thought that when the U.S. sneezes, Canada catches a cold, but with the shift toward a service-oriented economy over the last three decades, Canada has grown more immune to U.S. woes,” he said in a report.
“The last two U.S. recessions are solid proof that Canada is now better able to withstand strong headwinds from the south. Not that they’ve decoupled altogether, but should a downside mild double-dip U.S. recession materialize, Canada’s recovery would very likely survive.”
In addition to the country’s strong commodity sector, Mr. Jean said the success of Canada’s recovery is thanks to policy makers acting quickly in the depth of the crisis, consumers who shrugged off the recession and started spending again and employers who believed in the recovery and hired backed their workforce swiftly.
Canadians falling short on saving
Scotiabank survey finds that nearly one-third don’t have a plan
Published On Tue Jul 13 2010
Madhavi Acharya-Tom Yew
Business Reporter
Ninety-four per cent of Canadians say they feel better when they have a safety net of savings to fall back on.
But nearly one-in-five, or 19 per cent, haven’t put any money aside for a rainy day, according to a survey released Tuesday by Scotiabank.
Personal finance experts say everyone should have an emergency fund that would cover one to three months’ worth of household expenses.
The bank’s survey found that one-quarter, or 25 per cent, of those surveyed have that much set aside. Another one-third have more than three months’ worth, and 23 per cent have squirreled away less than one month of expenses.
Sixty-eight per cent of Canadians say they have a plan in place to achieve their savings goals.
But nearly one-quarter, 23 per cent, say they like to live day-to-day and do not worry about saving money.
“We’re really become a consumer society and we are encouraged to spend. Having the discipline to put aside part of your income for the future or saving for discretionary needs are not things we are necessarily guided to do,” said Chris Hodgson, Scotiabank’s head of Canadian banking.
“There’s an opportunity to raise a level of awareness on how Canadians can build more of a nest egg. To us, this is an issue for Canada.”
Figures from Statistics Canada show that the personal savings rate was 2.8 per cent in the first quarter of 2010. That’s down 0.7 per cent from the last three months of 2009 and a decline of 2.4 per cent from the previous year.
Scotiabank released the survey as part of the kickoff to its Let the Saving Begin program. The goal is to “break the inertia around saving and help spark a movement among Canadians,” the bank said.
It has recruited broadcaster Valerie Pringle to travel across the country to speak with Canadians about the challenges they face when trying to put money aside.
“It’s like we’ve been living in a fool’s paradise of cheap money and buy, buy, buy, and our grandparents concept of saving to buy a refrigerator sounds like something from the dark ages,” Pringle said in an interview.
“There’s a lot of pressure on people, on families, and their wallets. We want to make Canadians aware that small steps can make a difference. Figure it out, get some advice, make changes and make yourself more financially healthy.”
Nearly three-quarters, or 72 per cent, of Canadians surveyed said that saving an additional $1,500 would improve their financial well-being.
“That’s about $4 a day. It’s not a huge amount,” Hodgson said.
Scotiabank will match 10 per cent of savings up to $150 accumulated between July 5, 2010, and Oct. 31, 2011 using automatic savings plans. Details are available on the bank’s website.
The online survey, conducted in late March, also found that the majority of Canadians, 83 per cent, said they would make some change to their spending habits to save more money, with 20 per cent saying they would make large changes and 63 per cent saying they would make small changes.
“We’re talking about creating a balance between borrowing and saving,” Hodgson said. “We’re not suggesting Canadians should be moving away from borrowing to buy a house or a condo or get an education, but there has to be a balance between the two.”
Published On Tue Jul 13 2010
Madhavi Acharya-Tom Yew
Business Reporter
Ninety-four per cent of Canadians say they feel better when they have a safety net of savings to fall back on.
But nearly one-in-five, or 19 per cent, haven’t put any money aside for a rainy day, according to a survey released Tuesday by Scotiabank.
Personal finance experts say everyone should have an emergency fund that would cover one to three months’ worth of household expenses.
The bank’s survey found that one-quarter, or 25 per cent, of those surveyed have that much set aside. Another one-third have more than three months’ worth, and 23 per cent have squirreled away less than one month of expenses.
Sixty-eight per cent of Canadians say they have a plan in place to achieve their savings goals.
But nearly one-quarter, 23 per cent, say they like to live day-to-day and do not worry about saving money.
“We’re really become a consumer society and we are encouraged to spend. Having the discipline to put aside part of your income for the future or saving for discretionary needs are not things we are necessarily guided to do,” said Chris Hodgson, Scotiabank’s head of Canadian banking.
“There’s an opportunity to raise a level of awareness on how Canadians can build more of a nest egg. To us, this is an issue for Canada.”
Figures from Statistics Canada show that the personal savings rate was 2.8 per cent in the first quarter of 2010. That’s down 0.7 per cent from the last three months of 2009 and a decline of 2.4 per cent from the previous year.
Scotiabank released the survey as part of the kickoff to its Let the Saving Begin program. The goal is to “break the inertia around saving and help spark a movement among Canadians,” the bank said.
It has recruited broadcaster Valerie Pringle to travel across the country to speak with Canadians about the challenges they face when trying to put money aside.
“It’s like we’ve been living in a fool’s paradise of cheap money and buy, buy, buy, and our grandparents concept of saving to buy a refrigerator sounds like something from the dark ages,” Pringle said in an interview.
“There’s a lot of pressure on people, on families, and their wallets. We want to make Canadians aware that small steps can make a difference. Figure it out, get some advice, make changes and make yourself more financially healthy.”
Nearly three-quarters, or 72 per cent, of Canadians surveyed said that saving an additional $1,500 would improve their financial well-being.
“That’s about $4 a day. It’s not a huge amount,” Hodgson said.
Scotiabank will match 10 per cent of savings up to $150 accumulated between July 5, 2010, and Oct. 31, 2011 using automatic savings plans. Details are available on the bank’s website.
The online survey, conducted in late March, also found that the majority of Canadians, 83 per cent, said they would make some change to their spending habits to save more money, with 20 per cent saying they would make large changes and 63 per cent saying they would make small changes.
“We’re talking about creating a balance between borrowing and saving,” Hodgson said. “We’re not suggesting Canadians should be moving away from borrowing to buy a house or a condo or get an education, but there has to be a balance between the two.”
Friday, July 23, 2010
Pre-Paying a Mortgage Before Discharge
July 23, 2010 Homeowners who break a closed mortgage before maturity will often make a pre-payment before the mortgage is discharged.
The idea is to reduce the mortgage balance and thereby pay less of a pre-payment penalty.
It’s a great idea if you have the funds to do it. Remember, however, that lenders have different policies on how close to the payout date you can make a pre-payment.
Some lenders, for example, won’t allow pre-payments to be made within 30 days of the date of discharge (the date you pay off your mortgage in full).
Therefore, if you plan to pre-pay a portion of your mortgage to reduce your penalty, remember to do two things:
1.Ask your lender how close to your payout date you can make a pre-payment and still have that payment count towards reducing your penalty. (Allow several days regardless. You don’t want to cut it too close.)
2.Make the pre-payment and then confirm that your lender has applied it to your account before your lawyer requests the payout statement. Otherwise, your pre-payment might not reduce your balance for the purposes of penalty calculation.
Taken from: www.canadianmortgagetrends.com
Wednesday, July 21, 2010
Mortgage hike and housing slump is no disaster
By Michael Taube Last Updated: July 21, 2010 12:02pm
GTA resale home transactions for June were down 23% from last year’s level — no surprise, as the real estate market has been saturated with overpriced homes, high volume of sales, and a wide variety of houses available for purchase for some time.
Toronto had to go through a real estate correction — not only because this is the way the market works, but also because asking (and final sale) home prices were out of whack, to put it mildly.
With housing rates falling, some people are concerned mortgage rates will start to rapidly increase — with Tuesday’s quarter-point hike being just the start.
The thinking is banks will need to hike 1-5 year mortgages to make up for the shortfall in sales. This will lead to more home defaults and foreclosures, reduce investor confidence, and create a drain on our economy — just like what happened in the U.S.
That’s what some people think. I’m not one of them.
I believe mortgage rates will gradually increase over the next year or two, but not as high as some fear.
Long-term mortgage rates (three years and up) follow the bond market. If bond yields are high, banks will usually spike mortgage rates to make up for funding costs. If bond yields remain low, mortgage rates also remain low.
Meanwhile, the correction in a real estate market does not mean market collapse. A repeat of the U.S. mortgage meltdown won’t happen here.
The subprime mortgage crisis was, in former U.S. Federal Reserve chairman Alan Greenspan’s view, “an accident waiting to happen.”
He’s right. It was a preventable accident. High-risk loans given to people with lousy credit was a bubble waiting to burst.
The late department store tycoon Marshall Field had a simple motto, “Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.”
That’s what happened in the U.S. While we blame “greedy” businessmen, “arrogant” government officials, or “dim-witted” low-income families for this financial mess, everyone had their fingers in the pie — and enjoyed the filling a bit too much.
In Canada, we don’t offer subprime mortgages to potential clients. Most importantly, credit checks matter.
If you don’t have sufficient personal income or assets, you ain’t getting the deed to the house.
As well, the Canadian economy continues to chug along. According to Statistics Canada, 93,000 new jobs were created in June, and most jobs lost during the recession have now been recovered. As long as our economy remains on track, real estate will not collapse in Toronto.
It’s up to federal politicians — and, to a lesser extent, provincial and municipal politicians — to ensure economic growth remains a priority so the real estate correction doesn’t become a real estate collapse.
But it’s also up to voters. If pro-business and pro-development forces are in charge of our political futures, the economy should remain on solid footing, bond yields should remain low, and mortgage rates should remain stable.
If not, the future of real estate in our fair city could be up in the air.
— Taube is a former speechwriter for PM Stephen Harper. His family has been involved in mortgages for more than 50 years
GTA resale home transactions for June were down 23% from last year’s level — no surprise, as the real estate market has been saturated with overpriced homes, high volume of sales, and a wide variety of houses available for purchase for some time.
Toronto had to go through a real estate correction — not only because this is the way the market works, but also because asking (and final sale) home prices were out of whack, to put it mildly.
With housing rates falling, some people are concerned mortgage rates will start to rapidly increase — with Tuesday’s quarter-point hike being just the start.
The thinking is banks will need to hike 1-5 year mortgages to make up for the shortfall in sales. This will lead to more home defaults and foreclosures, reduce investor confidence, and create a drain on our economy — just like what happened in the U.S.
That’s what some people think. I’m not one of them.
I believe mortgage rates will gradually increase over the next year or two, but not as high as some fear.
Long-term mortgage rates (three years and up) follow the bond market. If bond yields are high, banks will usually spike mortgage rates to make up for funding costs. If bond yields remain low, mortgage rates also remain low.
Meanwhile, the correction in a real estate market does not mean market collapse. A repeat of the U.S. mortgage meltdown won’t happen here.
The subprime mortgage crisis was, in former U.S. Federal Reserve chairman Alan Greenspan’s view, “an accident waiting to happen.”
He’s right. It was a preventable accident. High-risk loans given to people with lousy credit was a bubble waiting to burst.
The late department store tycoon Marshall Field had a simple motto, “Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.”
That’s what happened in the U.S. While we blame “greedy” businessmen, “arrogant” government officials, or “dim-witted” low-income families for this financial mess, everyone had their fingers in the pie — and enjoyed the filling a bit too much.
In Canada, we don’t offer subprime mortgages to potential clients. Most importantly, credit checks matter.
If you don’t have sufficient personal income or assets, you ain’t getting the deed to the house.
As well, the Canadian economy continues to chug along. According to Statistics Canada, 93,000 new jobs were created in June, and most jobs lost during the recession have now been recovered. As long as our economy remains on track, real estate will not collapse in Toronto.
It’s up to federal politicians — and, to a lesser extent, provincial and municipal politicians — to ensure economic growth remains a priority so the real estate correction doesn’t become a real estate collapse.
But it’s also up to voters. If pro-business and pro-development forces are in charge of our political futures, the economy should remain on solid footing, bond yields should remain low, and mortgage rates should remain stable.
If not, the future of real estate in our fair city could be up in the air.
— Taube is a former speechwriter for PM Stephen Harper. His family has been involved in mortgages for more than 50 years
Tuesday, July 13, 2010
First Time Home Buyers Do Their Homework
Canada NewsWire
Toronto
- TD Canada Trust releases 2010 Home Buyers Report -
TORONTO, July 5 /CNW/ - Researching mortgage options. Getting pre-approved. Estimating utility costs. First time home buyers are savvy when it comes to shopping for a home - but are their aspirations too high? The majority of home buyers say they expect to pay less than the asking price and they prefer newer and detached homes to older and semi-detached homes or condos. This is according to the first TD Canada Trust Home Buyers Report which surveyed Canadians who have purchased their first home in the past 2 years or who intend to purchase a home in the next 2 years.
Nearly all home buyers are making informed financial decisions before buying their home by learning about mortgage options (93%), getting pre-approved (91%), calculating closing costs (88%) and estimating utility costs (85%). However, land transfer tax, closing costs and legal fees were the top three costs that buyers felt unprepared for (48%, 47% and 47% respectively).
Six-in-ten first time home buyers bought or intend to buy a fully detached home and three-quarters want a new home, but can they afford it? Nine-in-ten first time buyers took out or expect to take out a mortgage for their home and of these buyers, only 30% plan to or have more than a 20% down payment. The remaining 70% will require their mortgage to be insured by organizations like the Canada Mortgage and Housing Corporation (CMHC). Seventy per cent are making a down payment of less than 20%. Six-in-ten are worried about being able to afford their home if interest rates rise.
"It's only natural to want your first home to be the home of your dreams, but it is important to be realistic about what you can afford as a down payment and what that will mean for both the type of home you buy and for your mortgage payments over time," says Farhaneh Haque, Regional Sales Manager, Mobile Mortgage Specialists, TD Canada Trust. "I advise first time home owners to consider a larger down payment because a 10% or greater down payment will make a big difference. It may mean that you need to save longer before buying your first home, but it will pay off in the end. Speak with a representative at your bank about setting up an automatic savings plan to help you save."
Home financing:
Most buyers report putting down as much as they can afford for a down payment (88%) and fifty-seven per cent say they saved or plan on saving for two years or less for their home purchase. Two-thirds say they expected or expect to pay less than the asking price for their home. Only 6% expect to pay more, while 29% expect to pay the asking price.
Nearly three-quarters of those surveyed have or plan to have a fixed-rate mortgage. "Historically you are more likely to save interest costs with a variable rate or short-term mortgage option, so if they can handle some volatility then I recommend buyers choose a variable rate. If people are adverse to interest rate fluctuations than a fixed-rate is best," says Haque.
What kind of home do Canadians want?
If two homes were at the same price point, three-quarters of first time home buyers would prefer a newer home over an older home, but they are evenly split on location. Fifty-five per cent would prefer a smaller home closer to work and 45% would prefer a larger home with a longer commute. While the majority prefer detached homes, 21% chose a condo, 12% prefer town homes and 10% seek a semi-detached home.
Not surprisingly, price is the most important factor when considering what kind of home to buy and where (99%). The second and third most popular were features of the home (96%) and layout of the home (95%).
About the TD Canada Trust Home Buyers Report:
Results for the TD Canada Trust Home Buyers Report were collected through a custom online survey conducted by Environics Research Group. A total of 1,000 completed surveys were collected between June 8-21, 2010. All participants either purchased their first home within the past 24 months, or intend to purchase their first home within the next 24 months.
Toronto
- TD Canada Trust releases 2010 Home Buyers Report -
TORONTO, July 5 /CNW/ - Researching mortgage options. Getting pre-approved. Estimating utility costs. First time home buyers are savvy when it comes to shopping for a home - but are their aspirations too high? The majority of home buyers say they expect to pay less than the asking price and they prefer newer and detached homes to older and semi-detached homes or condos. This is according to the first TD Canada Trust Home Buyers Report which surveyed Canadians who have purchased their first home in the past 2 years or who intend to purchase a home in the next 2 years.
Nearly all home buyers are making informed financial decisions before buying their home by learning about mortgage options (93%), getting pre-approved (91%), calculating closing costs (88%) and estimating utility costs (85%). However, land transfer tax, closing costs and legal fees were the top three costs that buyers felt unprepared for (48%, 47% and 47% respectively).
Six-in-ten first time home buyers bought or intend to buy a fully detached home and three-quarters want a new home, but can they afford it? Nine-in-ten first time buyers took out or expect to take out a mortgage for their home and of these buyers, only 30% plan to or have more than a 20% down payment. The remaining 70% will require their mortgage to be insured by organizations like the Canada Mortgage and Housing Corporation (CMHC). Seventy per cent are making a down payment of less than 20%. Six-in-ten are worried about being able to afford their home if interest rates rise.
"It's only natural to want your first home to be the home of your dreams, but it is important to be realistic about what you can afford as a down payment and what that will mean for both the type of home you buy and for your mortgage payments over time," says Farhaneh Haque, Regional Sales Manager, Mobile Mortgage Specialists, TD Canada Trust. "I advise first time home owners to consider a larger down payment because a 10% or greater down payment will make a big difference. It may mean that you need to save longer before buying your first home, but it will pay off in the end. Speak with a representative at your bank about setting up an automatic savings plan to help you save."
Home financing:
Most buyers report putting down as much as they can afford for a down payment (88%) and fifty-seven per cent say they saved or plan on saving for two years or less for their home purchase. Two-thirds say they expected or expect to pay less than the asking price for their home. Only 6% expect to pay more, while 29% expect to pay the asking price.
Nearly three-quarters of those surveyed have or plan to have a fixed-rate mortgage. "Historically you are more likely to save interest costs with a variable rate or short-term mortgage option, so if they can handle some volatility then I recommend buyers choose a variable rate. If people are adverse to interest rate fluctuations than a fixed-rate is best," says Haque.
What kind of home do Canadians want?
If two homes were at the same price point, three-quarters of first time home buyers would prefer a newer home over an older home, but they are evenly split on location. Fifty-five per cent would prefer a smaller home closer to work and 45% would prefer a larger home with a longer commute. While the majority prefer detached homes, 21% chose a condo, 12% prefer town homes and 10% seek a semi-detached home.
Not surprisingly, price is the most important factor when considering what kind of home to buy and where (99%). The second and third most popular were features of the home (96%) and layout of the home (95%).
About the TD Canada Trust Home Buyers Report:
Results for the TD Canada Trust Home Buyers Report were collected through a custom online survey conducted by Environics Research Group. A total of 1,000 completed surveys were collected between June 8-21, 2010. All participants either purchased their first home within the past 24 months, or intend to purchase their first home within the next 24 months.
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