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Hold on Interest Hikes

2010-08-30T14:31:50Z

CIBC Predicts Slowing Interest Rate Hikes
Continuing weakness in the US economy may force the Bank of Canada to put interest rate hikes on hold after September, notes a new report from CIBC World Markets Inc.   “North America’s story is again darkening,” says CIBC’s Chief Economist Avery Shenfeld in the latest Global Positioning Strategy report. “We were looking for a material second-half slowdown for the US but, as it turns out, it’s already happened.” Economic growth stateside from April to June is being revised downward, Shenfeld notes, and key indicators are pointing to growth that will be slower than anticipated by US monetary policymakers.  While Canada is in much better economic shape – it leads the US, Eurozone, UK and Japan in first-half growth and has a record gap over the US in the share of working age population holding a job – it “cannot move all the way to normalized interest rates while the US Federal Reserve is still on hold,” Shenfeld contends.

Flaherty Prompts Change to Interest Act Canada’s finance minister is proposing legislation that would make it easier for businesses to negotiate mortgage terms with lenders. Finance Minister Jim Flaherty wants to tweak the Interest Act to reflect companies in all shapes and sizes more favourably. Under the act, only corporations and joint stock companies can negotiate with lenders the penalty for paying off a long-term mortgage sooner than agreed. All other mortgage holders must pay a mandatory penalty of three months of interest when they pre-pay the full amount of the mortgage. Flaherty has issued a consultation paper on the matter, inviting all stakeholders to comment.

Tougher Rules for Banks
Tougher rules for banks will bring economic benefits that dwarf the costs of forcing them to hold more capital, according to the latest salvos by central bankers and regulators in the debate about whether stricter standards might stifle the recovery. A Bank of Canada analysis says that despite costs associated with the transition to new rules – such as more expensive credit – raising the amount of capital that financial institutions must keep on hand to backstop their loans would boost the economy “over time” by about $200 billion, or roughly 13% of Canada’s current gross domestic product. The report released last Wednesday coincided with others by the world’s two leading financial authorities, which also sought to counter pessimistic views of the banking industry. The Bank of Canada study argues that although the country’s banking industry fared well in the financial crisis, the economy was still affected. Beefed-up regulations would help Canada by making meltdowns elsewhere less frequent and less severe, it said.

Michael Hatch AMP
Mortgage Agent   Lic#M08008114
Integrity Financing – Dominion Lending Centres
Tel: 613.203.2030     Fax: 613.424.2111
Email: info@ottawashometeam.com
Web: www.ottawashometeam.com

New Lower Rates

2010-08-30T14:24:49Z

New Lower Rate on 3 Year 50/50 Mortgage
A weighted average of 2.87%!
With this product your client can enjoy the low rate of an adjustable mortgage without total exposure to interest rate increases. One half of the mortgage is adjustable and the other half is at a fixed rate. Product features 20%/20% pre-payment options and full 90 day rate hold.50/50 Mortgage Product features 3.69% on the fixed portion and prime minus .70% on the adjustable rate portion.
Importance of Home Ownership
75% of households own a home by retirement, and almost 3/4 of those don’t have a mortgage. That’s according to a Statistics Canada study issued on Monday.StatCan says, “The economic benefit of owning a home is equivalent to the rent that does not have to be paid.” And that benefit is significant because, as StatCan notes, net incomes decline by about 45% between a household’s peak earning years and the 70-plus retirement-age class.Not surprisingly, that makes mortgage-free home ownership a vital contributor to most senior citizens’ effective household incomes. For the entire study results go to http://www.statcan.gc.ca/pub/11f0027m/2010064/part-partie1-eng.htm

CPI Back Down To 1.0%
With all the excitement on Friday, you may not have noticed by the Inflation Rate (i.e. CPI) from Stats Canada was announced and it is back down to 1.0% which suggests any retaliatory Interest Rate increases may be put on hold for fear of creating deflation.Energy prices rose 1.3% between June 2009 and June 2010, after increasing 6.2% over the 12 months ending in May. Excluding energy, the Consumer Price Index (CPI) advanced 0.9% in June, following a 1.0% increase in May.The price of gasoline decreased 2.9% in June compared with the same month a year earlier, after rising 6.9% in May. This was the first year-over-year drop in prices at the pump since October 2009.Energy prices continue to be the big issue these days in terms of prices, and with Ontario slapping the PST/HST onto Gas that just adds more fuel to the fire.
12-month change in the Bank of Canada’s core index
The Bank of Canada core index advanced 1.7% in the 12 months to June, following a 1.8% rise in May. Price increases were recorded for the purchase of passenger vehicles, passenger vehicle insurance premiums, homeowner’s replacement costs, electricity and telephone services.

This means there is less reasons to increase interest rates in the near future, from this point of view at least (from the slowing down borrowing side of things, perhaps the jury is still out on that one)

Michael Hatch AMP
Mortgage Agent Lic#M08008114
Integrity Financing – Dominion Lending Centres
Tel: 613.203.2030 Fax: 613.424.2111
Email: info@ottawashometeam.com
Web: www.ottawashometeam.com

Prudence Paying Off For Canadian

2010-05-17T15:13:45Z

This week we thought we would pass along the big 5's long term predictions for mortgage rates, a consumer survey and a very interesting read from the Canadian Association of Accredited Mortgage Professionals (CAAMP) which offers insight into how the average Canadian consumer may be viewing the real estate market. May 17, 2010

Rumblings in the mortgage market suggest that discounts on adjustable mortgages will be on the rise in the future, bringing the age old question Fixed vs Adjustable back into focus.

Long-Term Mortgage Rate Forecast Here are the latest long-term interest rate forecasts from Canada’s major banks.

Overnight Rate Forecast

Bank	2010	2011
BMO	1.35	3.35
CIBC	1.25	2.50
RBC	1.50	3.50
Scotia	1.50	3.00
TD	1.50	3.50
Avg	1.42	3.17
Chg	1.17	2.92

5-Year Government Bond Yield Forecast

Bank	2010	2011
BMO	3.60	4.30
RBC	3.45	4.10
Scotia	3.80	3.95
TD	3.50	4.30
Avg	3.59	4.16
Chg	0.62	1.19

Summary
Big bank economists, on average, are forecasting a 2.92% increase in the overnight rate in the next 19 months. Their forecasts, if accurate, suggest that the prime rate will rise to roughly 5.25% from its current 2.25%.On the fixed-rate side, bond yeilds are expected to rise 1.19% in the same timeframe, according to bank estimates. (Bond yields drive fixed mortgage rates). Based on a typical 120 basis point spread above yields, this suggests deep-discounted 5-year fixed rates could rise to around 5.36% by year-end 2011.

All in the Family - A Marketing Opportunity?
According to a new survey from TD Canada Trust, 10% of Canadians are considering buying a condominium for their adult children. A year ago, only 2% of parents thought about buying the kids a condo."It could be something that the parents are looking at as a long-term source of income, letting their children live in it for now," says Chris Wisniewski, associate vice-president of real estate and secured lending with TD.It could also be that parents know condominium prices, like detached homes, have climbed to unprecedented levels, making it difficult for adult children to come up with a minimum 5% down payment, let alone the 20% needed to avoid costly mortgage default insurance.

Low interest rates are convincing parents to step up and buy their children homes. The condominium represents an attractive alternative to those parents because the costs are stable (since there are no maintenance costs). There have been endless studies that suggest the Boomers are set to inherit billions of dollars in the coming years from their parents, and will certainly have the financial ability to lend a hand.

Prudence Paying Off For Canadian Mortgage Borrowers
Canadians appear well prepared to face the new phase of the residential mortgage market, where interest rates are rising and house activity is easing off, according to the sixth bi-annual review of the Canadian mortgage market by the Canadian Association of Accredited Mortgage Professionals (CAAMP), released today.Highlights:

• Consumer concern about rising rates is offset by increasing home equity
• Many mortgages were renegotiated at lower rates; amortization periods are declining
• Many Canadians have used cost savings from low rates to pay more than required, providing flexibility to deal with mortgage rate increases
• Mortgage debt is a priority – the vast majority of Canadians have never missed a payment
• A high percentage of Canadians still believe it is a good time to buy a home

The report entitled Prudence Paying Off For Canadian Mortgage Borrowers is authored by CAAMP Chief Economist Will Dunning and based on information gathered by Maritz Research Canada in a survey of Canadian consumers conducted in April 2010.

Canadians positive about prices, but not rushing to buy Canadians are positive about the housing market in their communities, but very few (3.4 per cent) said they were very likely to buy, suggesting activity may slow during the remainder of this year. This number is slightly lower than that of previous surveys.

Still, Canadians across the country are bullish about house prices. Almost one half of those surveyed (49 per cent) expect prices to rise and 44 per cent expect them to remain stable. These numbers, when tabulated with previous survey results, show the highest number of Canadians indicating they expect house values to increase rapidly. Previously, attitudes varied between provinces, but this spring, optimism is nationwide.

Mortgage holders more conservative about borrowing and focused on repayment
The CAAMP survey report reveals the average outstanding principal is $138,000 and for mortgage borrowers the average amount of equity represents 53 per cent of the average value of homes ($297,000). Approximately 11 per cent of mortgage borrowers withdrew equity from their home in the past year, totalling $20 billion, a substantial reduction compared to the $34 billion estimate of 2009. The results indicate caution on the part of borrowers.

This view is accentuated by the fact that among mortgages transacted during the past year, 65 per cent are fixed rate, 29 per cent are variable or adjustable, and six per cent are combination mortgages. Most terms are long – 70 per cent are five years or longer, nine per cent have short terms of two years or less, and 21 per cent have terms of three or four years. Significantly, of the 65 per cent with fixed rates, 12 per cent locked in from a variable rate during the past 12 months and a further 10 per cent had locked in more than a year ago in anticipation of rising interest rates.The vast majority (93 per cent) of mortgage holders has never missed a payment and of the seven per cent who have, four per cent did so during the past year. The survey data indicates that recent purchases and extended amortization periods are no more risky than are prior purchases and shorter amortization periods.

Opportunities to weather rate increases
Mortgage holders have also been flexing their muscles – negotiating significant discounts on posted interest rates. Over 80 per cent of borrowers negotiated a discount of one percentage point or more. Last year, the average five year fixed rate was 4.10 per cent while the average posted rate was 5.57 per cent. For new mortgages taken out in the last year, fifty per cent obtained their mortgage from a Canadian bank, 30 per cent from a mortgage broker.

“Our spring survey report reveals a remarkably mature borrower,” said Jim Murphy, AMP, President and CEO of CAAMP. “We find that Canadians have taken advantage of the low interest rates to increase their regular payments (16 per cent) and make lump sum payments (13 per cent). This planning puts them in a stronger position to weather more expensive borrowing.”

The report simulates the impact of mortgage rate increases up to 5.25 per cent and finds that about 375,000 mortgage holders are already challenged by their current payments, and another 475,000 might be if their rate rises to 5.25 per cent. “But,” Dunning noted, “many borrowers are paying more than required, they already have significant equity, and they have flexibility to adjust payments in the event of future challenges. The very high percentage of Canadians who have never missed a payment confirms that Canadians take their mortgage obligations seriously.”

Economic recovery in the capital

2010-04-08T22:50:51Z

OTTAWA
Hold on to your hats, the economic recovery in the capital region could be brief.

The Ottawa-Gatineau economy could lose almost 10,000 government jobs over the next three years as new budget spending restraints cast a pall over the region.
In a new forecast Wednesday, the Conference Board of Canada predicted the decline could be the biggest since 1991-98 when 19,000 federal government jobs were lost to layoffs and budget cuts.
LINK

Economic Growth 2010-2011

2010-04-06T13:49:19Z

Increased domestic spending and improved credit markets expected to fuel economic growth in 2010 and 2011
March 24, 2010
With a peak in stimulus investment, improved credit markets and a recovery in consumer spending, Canada’s economy is poised for real GDP growth of 3.1 per cent, according to a new report by RBC Economics.
“An economic recovery is solidly taking root in Canada with the full impact of stimulus spending, historically low interest rates and improved credit markets all taking effect this year,” said Craig Wright, senior vice-president and chief economist, RBC. “Going forward, additional growth should be sustained by strength in the housing market and investment by the private sector, as corporations increase payrolls and investment.”The report indicates that Canada’s economy is expected to grow at a more moderate pace, after a five per cent surge in the final quarter of 2009. Stability in the auto sector and rising commodity prices should continue to support a gradual improvement in the labour market, as unemployment rates are expected to average 8.4 per cent in 2010 before falling to 7.7 per cent in 2011.According to the report, consumer spending is expected to continue to expand next year by 2.8 per cent, matching 2010’s pace with business investment set to rise by more than seven per cent. This should result in Canada’s GDP expanding by an even greater 3.9 per cent in 2011.Recent indicators for the housing market have suggested a strong recovery in activity, with housing starts expected to grow to 184,000 in 2010, representing a significant increase over 2009 (149,000).“The housing market should remain strong as improved labour conditions and low mortgage rates fuel demand,” added Wright. “We expect the market to slow by the second half of the year as interest rates begin to rise and affordability declines.With recent U.S. data showing a clear improving trend, RBC expects U.S. GDP to increase by 2.9 per cent in 2010 and 3.4 per cent in 2011. The report notes that U.S. domestic demand is increasing, along with rising consumer spending and improvements in residential construction and exports.Among Canadian provinces, economic growth in 2010 will be boosted by gains in Newfoundland and Labrador (4.1 per cent), Saskatchewan (3.6 per cent), B.C. (3.4 per cent) and Ontario (3.3 per cent). Growth in Alberta will rise only 2.5 per cent this year but strengthen to 4.4 per cent in 2011, the second highest rate of growth behind Saskatchewan (at 4.6 per cent).
Integrity Financing – Dominion Lending CentresMichael Hatch AMPMortgage Agent Lic#M08008114
Tel: 613-203-2030Email: info@ottawashometeam.com

Web: OttawasHomeTeam.com

Harmonized Sales Taxes

2010-01-12T18:47:28Z

The Ottawa Real Estate Board is taking a stand. Another way how REALTORS® represents the public’s interest!

CLick here for more information

Living in Ottawa

2008-04-10T05:00:00Z

As the capital of Canada, Ottawa is the fourth largest city in the country. It resides on the border of Ontario and Quebec on the south bank of the Ottawa River where it meets the Rideau River and Rideau Canal. Ottawa is a global technology centre where innovation prospers, and a recognized centre for both academic and professional training.

As a beautiful G8 capital, Ottawa is rich in culture and heritage, comprising of many national institutions, and historic buildings. Ottawa began as a bilingual city and is a place where our founding linguistic communities (French and English) have always lived and worked together. Adding to the multiculturalism, Ottawa houses Canada’s foreign embassies, consulates and diplomats. Ottawa’s citizens enjoy unparalleled health, comfort, and economic well-being. Benefiting from a unique combination of urban convenience and accessible nature, Ottawa combines small-city life with a cosmopolitan vibe.

15 Top reasons why Ottawa is a great place to be:

1. Ottawa is an Established Global Technology Centre
More than 1800 technology companies strong, Ottawa’s key industries include telecommunications, photonics, semiconductor, wireless, software, security and defence, customer technical support centres and life sciences, employing nearly 80,000 people. Source: OCRI Ottawa Technology Industry Survey

2. Strong Mix of Multinational Organizations and Small to Medium Sized Enterprises
Ottawa houses several multinational giants including Nortel Networks, Alcatel, Cognos, Cisco Systems, Avaya, MDS Nordion, IBM, Dell, RIM, and Corel. In addition, there are over 1500 high tech companies with less than 50 employees creating a strong and diverse, yet balanced private sector. Source: OCRI Global Marketing

3. The Most Educated Workforce in Canada
The Ottawa region’s current workforce has the highest percentage of university graduates in the country, and the highest concentration of PhDs in North America, tied with Boston. Source: Statistics Canada 2001 Census

4. High Concentration of Science and Engineering
Ottawa-Gatineau has the second largest concentration of science and engineering employment out of 316 North American cities, surpassed only by Silicon Valley. One in nine employees is a scientist or engineer. Source: Statistics Canada, May 2006.

5. One of the World’s Top Sites for R&D
With 90 per cent of Canada’s industrial telecommunications research and development conducted here, Ottawa is one of the world's top sites for R&D. The R&D infrastructure combines three major research engines: private, university, & government. Source: City of Ottawa

6. Canada’s Most Connected City
Ottawa ranks 1st among 20 Canadian cities for internet use in the home; 78.9% of households in the city have at least one regular internet user. Virtually 100% of Ottawa’s schools, universities, hospitals, libraries, research institutes and municipal facilities are wired with high speed internet access. No other city in Canada has the breadth and depth of fibre optic connectivity as Ottawa, making it Canada’s most connected city. Source: Ottawa’s Rural Communities Network (ORCNet)

7. Ottawa’s Advanced Technology Sector
Ottawa’s professional services providers have expanded and matured with Ottawa’s technology companies, offering value-added world class services tailored to an active globally competitive technology community. Source: OCRI Global Marketing

8. Strong Entrepreneurial Culture
The total amount of venture capital invested in Ottawa technology companies over the last decade amounted to over $4.7 billion CDN. Source: The OCRI Report 2005

9. Strongest Economic Activity in Canada
A recent study by the Canadian Imperial Bank of Commerce (CIBC) showed that Ottawa had the strongest momentum of economic activity in Canada during the first quarter of 2006. Source: CIBC Metro Monitor, June 2006

10. Top 20 in the World for Quality of Life
After being ranked as the most affordable city in Canada in 2005 (Mercer HR Consulting) Ottawa was once again ranked as Canada’s least costly major city to work and raise a family. Ottawa currently ranks as the 18th best city to live in the world. Consistently ranking in the top 20, Ottawa has increased in rank by two spots in the last year. Source: Mercer HR Consulting Quality of Life Survey 2006

11. Paradise for Outdoor Enthusiasts
Ottawa is in the midst of a giant outdoor playground featuring mountains, beaches, camping, skiing, golfing and hundreds of freshwater lakes. Ottawa has the world’s largest outdoor skating rink, over 850 parks, 300kms of biking trails and over 200kms of cross country ski trails to enjoy! Source: City of Ottawa

12. A City for Culture and the Arts
As Canada’s Capital, Ottawa is home to a variety of National institutions including the Museum of Civilization, the Museum of Nature, the Museum of Science and Technology, the National Art Gallery and the National Art’s Centre. Nightlife abounds in the Byward Market and on Elgin Street. A City of Festivals, Ottawa hosts over 50 ranging from the Tulip Festival and Winterlude to the Blues and Jazz Festivals to the Dragon Boat and Hot Air Balloon Festivals.

13. The Least Expensive Canadian City for Cost of Living
Ottawa remains the least expensive Canadian city according to the latest Cost of Living Survey from Mercer Human Resource Consulting, the global leader for HR and related financial advice. Source: Mercer HR Consulting Worldwide Cost of Living Survey 2006 – city rankings, London, 26 June 2006

14. A 4.9 per cent Cost Advantage Relative to the U.S.
According to the KPMG’s 2006 Competitive Alternatives Study (a guide to international business costs), Canada leads the G7 countries for low business costs, with a 5.5 per cent advantage over the United States. Business costs are expressed as an index, and Ottawa was assigned an index of 95.1, with the United States being assigned a baseline index of 100. This represents a 4.9 per cent cost advantage relative to the United States, and exceeds Toronto which only has a 3.5 per cent cost advantage. Source: KPMG Competitive Alternatives Study 2006

15. Ottawa ranked Canada's most sustainable city
Corporate Knights Magazine unveiled its second annual ranking of sustainable cities on Monday and Ottawa came out on top. The list ranks Canadian cities which, according to the magazine, "leave the smallest environmental footprint possible and create a healthy, thriving population." Source: Corporate Knights magazine, February 2008.