Thursday, April 27, 2006
TORONTO (CP) - Base and precious metals stock helped lift the Toronto stock market slightly higher Wednesday afternoon as investors took in another slew of positive earnings reports.
The Canadian dollar was up 0.29 of a cent at a 14 1/2-year high of 88.65 cents US, a day after the Bank of Canada raised interest rates and said another hike is likely.
'There is certainly not a lot of inducement to buy (stocks) right now,' said Julie Brough, assistant vice-president at Morgan, Meighen and Associates. 'It does look a little bit tired and the valuations, in my mind, are not anything to get excited about.'
U.S. indexes were higher on some better-than-expected corporate earnings reports, a broker upgrade for General Motors Corp. (NYSE:GM) and positive economic data.
Toronto's S&P/TSX composite index was 21.67 points higher at 12,351.46, held back by declines in tech stocks and energy stocks as oil continued to move away from last week's record highs.
The TSX Venture Exchange moved down 3.38 points to 3,091.61.
Wall Street's Dow Jones industrial average gained 62.44 points to 11,345.69, with GM jumping $1.31 to $22.72 US after Merrill Lynch upgraded the automaker one notch to 'neutral' from 'sell,' citing beliefs that its restructuring plan is moving in the right direction.
The Nasdaq rose 3.15 points to 2,333.45 while the S&P 500 was up 4.44 points at 1,306.18.
In economic news, the U.S. Commerce Department said orders of durable goods jumped 6.1 per cent in March, more than triple the 1.8 per cent economists predicted. The department also said new home sales climbed 14 per cent to 1.21 million for the month, handily beating estimates for 1.1 million despite the rebound in mortgage rates.
The base-metals sector climbed one per cent, with AUR Resources Inc. (TSX:AUR) ahead 55 cents at $16.55.
Ivanhoe Mines Ltd. (TSX:IVN) has agreed to exchange its Mongolian coal interests to Asia Gold Corp. (TSXV:ASG) for a majority stake in the junior miner. Ivanhoe shares advanced 19 cents to $10.97 while Asia Gold shares surged 29 per cent to $2.70.
The June contract for bullion on the Nymex was up $7.80 to $642 US an ounce, taking the TSX gold sector ahead 0.95 per cent. Kinross Gold Corp. (TSX:K) added 14 cents to $13.62.
Elsewhere in the materials sector, Alcan Inc. (TSX:AL) moved up $1.39 to $59.75 and Gerdau Ameristeel (TSX:GNA) rose 35 cents to $12.35.
The TSX energy sector fell 0.3 per cent as the June contract for light sweet crude on the New York Mercantile Exchange was down 63 cents at $72.25 US a barrel.
Prices headed lower as the U.S. Energy Department said gasoline inventories fell 1.9 million barrels last week while crude stocks fell 200,000 barrels.
Shares in EnCana Corp. (TSX:ECA) were 63 cents higher to $58.23 after the company said it is boosting its quarterly dividend as first-quarter profit jumped to $1.47 billion US on a huge accounting gain, while operating profit rose 14 per cent to $694 million US.
After its first reporting period as an income trust, Precision Drilling Trust (TSX:PD.UN) said its first-quarter profit rose to $224.2 million, from a year-earlier $138.5 million, and it will boost its distributions to unitholders by 15 per cent to 31 cents a unit. The company's units were up 50 cents to $41.60.
Information technology stocks losing ground included Nortel Networks Corp., (TSX:NT), down four cents to $2.97.
Potash Corp. of Saskatchewan Inc. (TSX:POT) shares fell 79 cents to $103.89 after the company reported a net profit of $125.5 million US, down from $131.3 million US for the same period last year as a pricing dispute cut fertilizer shipments to China.
Newsprint giant Abitibi-Consolidated Inc. (TSX:A) is cutting jobs and has narrowed its first-quarter loss to $33 million from $51 million a year ago as rising prices and tighter inventories helped the company improve its finances. Its shares fell 16 cents to $4.87.
Nova Chemicals shares (TSX:NCX) declined 19 cents to $34.03 as the firm swung to a first-quarter loss of $5 million US from a year-earlier profit of $94 million US.
Maple Leaf Foods Inc. (TSX:MFI) earned a $17.3-million profit in the first quarter of 2006, compared with $12.7 million in the year-ago period. Its shares edged seven cents higher to $12.90.
Fuel cell maker Ballard Power Systems (TSX:BLD) has cut its first-quarter loss to $17.2 million US from a year-earlier $32.4 million and revenues rose 14 per cent to $12.5 million US. Its shares gained 52 cents to $11.68 Cdn.
In the U.S., Boeing Co. (NYSE:BA) shares added 32 cents to $85.43 US as the company reported a better-than-expected 29 per cent jump in first-quarter profits.
Shares in PepsiCo Inc. (NYSE:PEP), the world's No. 2 soft-drink maker and owner of snacks maker Frito-Lay, were up 35 cents to $57.85 US after it said first-quarter profit jumped almost 12 per cent to $1.02 billion US.
Amazon.com (Nasdaq:AMZN) reported earnings dropped 35 per cent after a hefty gain boosted last year's profit. The online retailer's results still met Wall Street targets and its shares gained 26 cents to $35.81.
Published: Wednesday, April 26, 2006
Homeowners with variable mortgages will see their interest rates increase in response to a boost in the Bank of Canada's trendsetting overnight rate on Tuesday.
BMO Bank of Montreal and Scotiabank both announced rate increases of 0.25 percentage points, raising their three-year open rate to 5.75 per cent after the Bank of Canada said it was increasing its overnight rate by 25 basis points. All major banks also increased their prime lending rates to 5.75 per cent.
But fixed mortgage rates have remained unchanged, at least for now.
Rob Hafer, regional sales manager for Invis on Vancouver Island, said variable rates are attached to prime rates, so anyone with a variable mortgage will see rates rise. But even though fixed rate mortgages depend on a number of factors other than the prime rate, those rates have also been going up recently.
'So the costs of borrowing for all consumers is going up unless you are already locked into a [mortgage] term,' Hafer said.
And while rates go up, consumers should shop around to make sure they are getting the best deal, he said. Over the last few years, the number of lenders have steadily increased, making the market more competitive. As posted rates go up, lenders are getting more aggressive with the discounts they will offer from those posted rates, he said."
TORONTO (CP) - Tuesday's rise in variable mortgage rates will have some homeowners looking to lock in their rates, but experts say not to be hasty. It could be just a blip.
The cost of a variable mortgage has risen for the sixth time since the summer, after the Bank of Canada announced Tuesday it is hiking its benchmark interest rates by a quarter-point. About 22 per cent of Canadian mortgages are now variable, moving in step with the bank's prime lending rate, says CIBC World Markets (TSX:CM) senior economist Benjamin Tal.
Andrew Moor, CEO of mortgage brokerage firm Invis, says more customers have been opting for fixed-rate mortgages over the last few months as interest rates have risen.
But, he adds, the carrying costs on a variable mortgage are still less than those on a fixed-rate mortgage.
After Tuesday's rate hikes, a competitive variable mortgage rate will be about 4.85 per cent, up from 3.45 per cent at the beginning of September, according to Invis.
As a result, the payments on a $150,000 mortgage will have risen from about $745 a month to about $860.
A five-year fixed mortgage could be obtained at 4.5 per cent in September. That would cost about $830 a month on a $150,000, 25-year mortgage.
Today the rate is more like 5.25 per cent, costing $894, Invis said.
Within hours of the Bank of Canada's announcement Tuesday, mortgage lenders were already posting new variable mortgage rates that were up by a quarter of a percentage point.
"Every time something happens with the rates, there are people who decide, instead of going variable, to go fixed," said Jim Rawson, a regional sales manager for Invis working in downtown Toronto.
But he said economists don't expect the Bank of Canada to continue its credit-tightening policy for much longer.
"It may be a blip in the market and, therefore, you may not need to worry about going into a fixed term if you're used to playing the variable game," he said.
"There's really no need to panic. For those who are finding that it may be a bit of a pinch, there are things like longer amortizations."
He said stretching mortgage payments over a 30-or 35-year window may be a good temporary solution for young homeowners who need to reduce their monthly payments in the short term but know they can increase them in a few years when their salaries are higher.
"It comes down to your risk tolerance," Rawson said of the final decision on fixed-versus-variable mortgages.
"If you're the type of person who is going to lose sleep worrying about rates ... take a fixed-rate mortgage. It's not worth it if you're going to be worrying about it every day. But there are savings to be had with a variable-rate product."
Moor added that steep competition in the Canadian mortgage market has been good news for consumers.
"The pricing of variable-rate mortgages in Canada is becoming very competitive, and in fact Invis has witnessed mortgage lenders battling for market share by offering variable-rate mortgage rates well below prime - discounts not previously seen in the Canadian market," Moor said.
CTV.ca News Staff
The Bank of Canada boosted its trend-setting overnight rate by a quarter of a percentage point to four per cent on Tuesday.
The latest hike will impact the prime interest rate charged by commercial banks, affecting variable mortgage rates, as well as the cost of car loans and lines of credit.
This marks the sixth consecutive rate increase by the Bank of Canada since last summer -- when it was 2.5 per cent -- and some are wondering how many more rate hikes could be on the way.
In its statement today, central bankers said 'some modest further increase in the policy interest rate may be required to keep aggregate supply and demand in balance and inflation on target over the medium term.'
The Bank of Canada said the global economy is strong. 'At the same time, global competition and the past appreciation of the Canadian dollar continue to pose challenges for a number of sectors of the economy.'
Meanwhile, the core inflation rate appears to be staying within the central bank's target band of one to three per cent. Data released last week shows core inflation held steady at 1.7 per cent in March.
Canada's annual inflation rate remained unchanged at 2.2 per cent in March as higher gasoline prices were offset by lower prices for computer gear and clothing.
'Against this backdrop, the Bank decided to raise its target for the overnight rate,' said central bankers.
CTV's business editor Linda Sims said this probably means at least one rate hike is likely on the way. However, the rate is still quite low, compared to historic levels.
'We have got good job growth and decent economic growth in this country," Sims told CTV Newsnet.
"It will not put much of a crimp on the economy, including the housing market, going forward."
The next announcement on the overnight rate is scheduled for May 24.
Looking forward, the Bank of Canada predicts the Canadian economy will grow by 3.1 per cent in 2006, 3.0 per cent in 2007, and 2.9 per cent in 2008.
VANCOUVER � Runaway housing prices and a highly competitive mortgage industry are contributing to a growing problem with mortgage fraud across the country, experts say.
But it�s a complex issue and one lenders don�t really want to talk about.
'Mortgage fraud is a problem, and I don�t think anybody can deny it,' said Ken Fraser, executive director of investigations for B.C.�s Financial Institutions Commission, which investigates fraud complaints involving mortgage brokers and real-estate agents.
'A lot of figures have been bandied back and forth over the years about the degree of it, but I don�t think anybody has a figure on it. It is definitely escalating.'
Mortgage fraud is any act that convinces a lender to grant a mortgage that would have been rejected if the truth were known. For instance, providing a letter of employment listing an inflated salary, or a note from a relative confirming a gift toward the down payment on a purchase when the money is really a loan.
This is known as 'shelter fraud.' It happens when borrowers are trying to buy a home for which they don�t qualify.
In a hot real-estate market, these frauds are rarely detected and don�t result in a loss to lenders because the mortgages are repaid.
It�s 'fraud for profit' that is a growing concern for lenders � and in some cases, innocent property owners are the victims.
In these instances, unscrupulous mortgage brokers, bankers, real-estate agents, lawyers or appraisers may use false appraisals to increase the value of a property.
They are able to sell it a few times through fake documents and get a mortgage for a far higher amount than the real value of the property, leaving the ultimate purchaser to pay the bills.
Or false documents or identities may be used to mortgage homes for marijuana grow-ops or crystal meth labs.
Criminals also can use identity theft to pose as the owner of a property at the provincial land-title office. They then are able take out a mortgage on the home or sell it to an innocent purchaser and make off with the proceeds.
Earlier this month, a Surrey, B.C. woman pleaded guilty to mortgage fraud after posing as the owner of a vacant lot and taking out a $170,000 mortgage on the property.
The mortgage was arranged through a mortgage broker but another broker figured out the scam and alerted police.
The fraudster was ordered to repay the Royal Bank for the mortgage as well as $2,500 to cover the costs of the elderly Vancouver woman who owned the land and had to fight to clear her title. Two other suspects are still before the courts.
"The problem with mortgage fraud is you’re dealing with identity theft," said Barry Elliott, Ontario-based creator and coordinator of Phonebusters, a national police-sponsored call centre that tracks fraud.
"You can be victimized with a mortgage on your property and not be aware of it, or have property purchased in your name and not even know about it," he said.
Friday, April 21, 2006
The finance company plans to sell mortgages through independent brokers across Canada by year-end, and is trying to hit its market share target in three years, he said. GE Money started selling mortgages in Ontario last year, and has since become licensed in Alberta and British Columbia.
``We're on a pretty significant growth trajectory, but growing from zero,'' Motta, 43, said in a telephone interview. ``It is a longer-term vision we have for the Canadian market, rather than bursting on the scene, making some noise, and not being here three years from now.''
GE Money, a unit of the world's No. 2 company by market value, is competing with firms such as Toronto-based Xceed Mortgage Corp. Xceed estimates the so-called ``near prime'' market that GE Money is targeting may grow to about C$60 billion, or 10 percent of Canada's overall mortgage market.
Canada's mortgage business is growing as job and wage increases fuel expansion in the economy, which the Bank of Canada predicts will grow 3.1 percent in 2006, the fastest in six years. New home construction during the first three months of the year was the highest in more than 18 years, according to the Canada Mortgage and Housing Corp.
GE Money and Xceed offer loans at higher interest rates than standard mortgages because their clients are typically self-employed, new to the country or don't have a credit history. GE is focusing on"
Monday, April 17, 2006
A portfolio with the right mix of cash, fixed income and equity investments suited for your goals and risk level. Getting the right mix of mutual funds may generate higher potential returns while at the same time effectively manage risk.
Enhanced returns while minimizing risk
Selecting investments that tend to react differently to the economic climate helps to make it more likely that at least a portion of the investments will be performing well at any point in time. The highs and lows of any single investment should be partially offset by the performance of the other investments in the portfolio. Foreign investments will help to reduce risk and increase your potential returns.
Automatic portfolio rebalancing to keep your portfolio on track with your objectives
You get the freedom from monitoring your investments because your Strategic Portfolio will be reviewed on a quarterly basis and automatically rebalanced to your original asset mix.
Getting Started: Determine Your Investor Profile
Most banks will offer an easy-to-follow questionnaire that helps you understand your investment preferences. Based on this information, they will match you with an investment portfolio that is right for you.
The Conservative investor is looking for safe financial products. Your risk tolerance level is low, and you are most comfortable investing in products where the interest rate, maturity dates, and payout schedule of interest earnings are predetermined.
The Moderate investor is looking for significant investment income and a high level of security. However, you are willing to invest a portion of your funds in classic financial products carrying a certain level of risk.
The Audacious investor is ready to tolerate a little more risk to achieve long-term capital growth. While remaining cautious in your strategy, you invest close to half of your portfolio in the stock market.
The Ambitious investor is looking for high-growth potential over the long term. Since you are aiming for a higher return, you accept a higher level of risk for up to two-thirds of your portfolio, which is invested in the stock market.
The Dynamic investor has a high tolerance for risk and is looking for high-growth investments, opting for the potential for capital appreciation in the stock market. Your portfolio is mostly made up of stock securities.
Go to the questionnaire to find out what category you fall under
Saturday, April 15, 2006
What do tax tips and spring flowers have in common? They pop up in April.
I've gone through my garden of money-saving tax advice and picked some of the prettiest blooms for your inspection"
Don't pay interest on top of interest.
If you owe money, the government will charge daily compound interest on your debt. This means you pay interest not only on the original amount you owe, but also on the interest that starts adding up.
"If you can't pay the amount that's due, talk to your financial institution about a loan or a line of credit that charges a lesser interest rate than the Canada Revenue Agency," says lawyer Stanley Kershman, author of Put Your Debt on a Diet (Wiley).
Ottawa can also charge you a late-filing penalty — and interest on the penalty. So, you should file your return on time to avoid penalties, even if you can't pay the amount due.
Work out your tax factor.
This is important to know when you're making financial decisions, says Dale Ennis, editor of Canadian Moneysaver magazine.
Let's take Joe, an Ontario taxpayer with $35,596 in employment income. His marginal tax rate — what he pays on the last dollar of income earned — is 31.15 per cent.
If you divide 100 by 100 minus 31.15, you get 1.45. This is Joe's tax factor. It means he must earn about $1.45 in before-tax dollars to have $1 for his personal use.
Joe carries personal debt at 10 per cent interest. Multiply by 1.45 and you find his after-tax interest rate is 14.5 per cent.
Now let's take Sally, an Ontario taxpayer with $71,191 in income. She has a marginal tax rate of 37.16 per cent and her tax factor is 1.59.
Sally has to earn $1.59 in before-tax income to have $1 for her personal use. And a 10 per cent loan actually costs her 15.9 per cent after tax.
Know your break-even formula for investments.
You should try to come out ahead after taxes and inflation when investing your money outside a tax-sheltered retirement account.
Ennis has done some calculations on the break-even rate when inflation is running at a rate of 4 per cent.
Divide 4 by 100 minus your marginal tax rate. This will give you the break-even formula for an interest investment.
Joe has a marginal tax rate of 31.15 per cent. So, he needs to earn 5.81 per cent. to break even on his interest investments.
Sally has a marginal tax rate of 37.16 per cent. Her break-even rate for interest investments is 6.37 per cent.
Dividends are taxed at a lower rate than interest. Joe needs to earn 4.75 per cent to break even on dividends, while Sally's break-even rate for dividends is 5.52 per cent.
Capital gains have the lowest tax rate. Joe needs 4.74 per cent to break even on stocks and equity funds, while the rate Sally needs for capital gains is 5.11 per cent.
Claim tax credits for disabled family members.
Substantial tax credits are available for anyone with a severe or prolonged disability that is expected to last for a continuous period of at least 12 months.
To claim the disability amount, you have to get a medical practitioner to sign form T2201 (the disability tax credit certificate).
The tax credit can be transferred to a family member if the disabled person has no tax to pay.
"This is possibly one of the most lucrative, yet most missed, provisions on the tax return," says author Evelyn Jacks in her self-published book, Essential Tax Facts.
"Note that if a person was diagnosed with cancer in September and the condition of the disease became debilitating by the end of the year, the amount would be claimable for the whole year."
Claim tax credits for post-secondary students.
If you have children going to college or university, you can use any tax credits the children can't use.
Students are allowed to claim their tuition and $400 for each month they're enrolled full-time (or $120 a month for a part-time student).
Any unused credits can be carried forward indefinitely by the student. Or the credits can be transferred to a parent, grandparent, spouse or common-law partner. The maximum tax credit available to transfer is $800.
To claim the fees, you have to get form T2022A (tuition and education amounts certificate).
This tax form is provided by the educational institution, but not necessarily in the mail. You may have to go online, using the student's user name and password, and print out a copy.
Tuesday, April 11, 2006
Wasn't the real estate market supposed to slow down this year? Apparently not. And it's not just Vancouver that's experiencing double-digit price increases so far this year. Canadian Real Estate Association (CREA) figures show the average home price from February 2005 to February 2006 rose 26% in Calgary and 15.5% in Edmonton, both economic boomtowns of late. But even relatively moribund Toronto saw an increase of nearly 6%, for an average price of almost $354,000. That's a lot of money to put on the line if you're thinking of investing in the real estate market--let alone looking for a place to live.
No wonder people are talking about another housing bubble in the making. Prices continue to soar. Interest rates are on the rise. Vacancy rates are comparatively higher, making renting an attractive option once again. But let's get one thing clear: there isn't a housing bubble."
Monday, April 10, 2006
Senior homeowners can access up to $500,000 tax-free with no payments required on the loan until the home is sold or owners move out.
The amount available to the homeowners is based on the appraised value of the home, the age and gender of the homeowners, marital status, property type, and location. CHIP Reverse Mortgages are available in most areas across Canada, on most types of homes. Leaseholds, co-ops, manufactured homes and large rural acreages are not eligible.
The proceeds from the reverse mortgage are received as a cash lump sum. Homeowners are initially approved for a maximum sum, but may choose to receive a lesser amount initially and then request subsequent advances on the remaining available proceeds.
As part of a well-balanced financial plan, a CHIP Reverse Mortgage can add new flexibility to a senior’s finances and is an effective way to:
Create new and tax-efficient sources of income;
Preserve existing investments for continued growth and income generation opportunities;
Reduce personal income tax; Provide cash resources to fund a large project, purchase a vacation property, fund medical home care, start a new business or hobby, make cash gifts to children and grandchildren, and more.
Unique Protections and GuaranteesAlone among home equity borrowing options, the CHIP Reverse Mortgage offers these unique protections and guarantees:
No repayment is required while the homeowners continue living in the home.
The homeowners have complete freedom to sell or move at any time.
Homeowners will never be asked to move or sell to repay the loan.
As with other mortgages, up-to-date payment of property taxes, fire insurance, condominium/ maintenance fees, and maintenance of the property is required.
The loan amount to be repaid is guaranteed not to exceed the fair market value of the home at the time it is sold, protecting the balance of the senior’s estate.
Tax-savings OpportunitiesA CHIP Reverse Mortgage may also assist seniors in their tax-savings strategies. Proceeds from the reverse mortgage are received tax-free and are not added to taxable income. When the proceeds are used to purchase new investments, the interest expense of the loan may be used to offset tax on the new investment income and reduce the overall tax payable.
Terms of RepaymentBecause no payments are required on the reverse mortgage while the homeowners are living in their home, interest is added to the outstanding balance and is compounded semi-annually. The full amount only becomes due upon the death of the last surviving spouse, when the home is sold, or when the last surviving spouse moves out. The homeowner may leave the home for up to 12 months before the loan in considered payable, accommodating situations where a senior requires institutionalized medical/nursing home care for a short term.
All or a portion of the accrued interest may be paid once every calendar year, which can reduce the accumulation of interest on the outstanding balance and help preserve greater equity in the home.
The reverse mortgage may be repaid in full at any time. If payment is made within 36 months of the advance of funds, a pre-payment amount will apply. An interest rate differential payment may also be required. This will be waived if the reverse mortgage is repaid as a result of the death of the last surviving spouse or reduced if the reverse mortgage is repaid as a result of the long-term medical care institutionalization of the last surviving spouse.
A serious commitment to seniors.As Canada’s only national provider of reverse mortgages, CHIP’s commitment to seniors is at the core of the way the company does business. At every stage of their relationship with clients, CHIP ascertains that the senior is fully-informed and comfortable with the decision they are making. Seniors are encouraged to involve their family and their personal financial advisor. CHIP also requires the senior to seek an independent legal review of their contract. (CHIP offers a referral to a list of lawyers across Canada who have experience with reverse mortgages.)
If CHIP believes that a reverse mortgage is not in the best interests of a client, or that the senior is being pressured by outside influences, they will discuss that situation frankly and, if necessary, decline to proceed.
The CHIP Reverse Mortgage is available directly from CHIP by calling toll-free 1-800-563-2447 or by visiting the CHIP website. A do-it-yourself estimate is available on the CHIP website. Alternatively, seniors can request a CHIP Reverse Mortgage estimate through most of Canada’s major banks or with the assistance of their personal financial planner.
The best way to save time is to find out what is stopping you from getting approved and if there are some problems, how to fix them.
You can get your credit report from one of the following two credit bureaus in Canada
Equifax or Tranunion
You can pay for a copy of your credit report and see it immediately at the Equifax web site or you can fill out an application and get a copy mailed to you for FREE.
You can visit Equifax to view your Credit Report online now or
Request a FREE copy of your Equifax Credit Report here
After you have obtained a copy you can refer to the Credit Report Guide, this will explain how to read your Report.
If you have any questions please feel free to contact me and I would be happy to explain it to you.
Mortgage and Finance Specialist
Sunday, April 09, 2006
place during the month of March than during the same month a year ago, Toronto
Real Estate Board President John Meehan announced today. The March total of
8,707 sales was the second-highest ever, bringing the total for the first
quarter of 2006 to 19,831 sales, a record first quarter result.
"There is a lot to be positive about in this market," Mr. Meehan said.
"The year has started very strongly and it shows no signs of slowing as the
peak spring market approaches."
According to Jason Mercer, Senior Market Analyst for the Canada Mortgage
and Housing Corporation, strong economic fundamentals are helping to maintain
"Consumers remain upbeat about home ownership," he said. "Tight labour
market conditions with low unemployment and rising real wages, along with very
low borrowing costs have kept potential buyers confident in their ability to
purchase and pay for a home."
A number of areas across the city of Toronto showed high March sales
totals in comparison to totals recorded in March 2005:
Condominium sales represented the majority of sales as the Scarborough
Centre / Woburn area saw 57 per cent more overall transactions compared to
Condominium sales continued to fuel the Downtown / Harbourfront area as
it experienced an overall increase in sales of 34 per cent compared to March
of last year.
Further west, the Junction / High Park area of Toronto experienced
63 per cent more overall transactions compared to the same timeframe a year
"The housing market is in good shape overall," Mr. Meehan added. "There
are strong fundamentals in place and we are seeing that translate into steady
performances month after month. It is still a great time to be in the market."
Toronto REALTORS are passionate about their work. They adhere to a strict
code of ethics and share a state-of-the-art Multiple Listing Service. Its
22,765 listings resulted in March's 8,707 sales. Serving over 23,000 Members
in the Greater Toronto Area, the Toronto Real Estate Board is Canada's largest
real estate board.
Please fill out our form and we will send you your choice of FREE mortgage reports and information:
7 Things You Must Know Before Applying for a Mortgage!
Understanding Your Credit Report
Repair & Build Your Credit Fast!
Commercial & Income Properties Information
10 Questions You Must Ask When Applying for a Mortgage!
How To Get The Best Price for your Home!
Credit Card Secrets, that the credit card company doesn't want you to know!
Divorce and Your Home
How To Afford a Mortgage
How To Escape the Debt Rat Race!
Bi-Weekly Payments: Yes or No
10 Biggest Home Buying Blunders!
CMHC - Home Buying - Step By Step
Saturday, April 08, 2006
The information, gathered by Canadian public opinion firm Pollara in a phone survey in February, indicates 42 per cent of Canadian residential mortgage holders polled have not seen their overall standard of living significantly affected by recent mortgage rate increases.
'As the spring home buying season begins, interest rates remain at a historic low and mortgage holders continue to be satisfied with their rates,' said Ron Swift, president of the mortgage brokers institute.
'Our latest survey reveals that Canadians find their current mortgage rates manageable, despite increases over the past eight months. In addition, although mortgage holders anticipate further rises, the study suggests that a majority will be able to tolerate an increase of up to 1 per cent. That's great news for the marketplace.'
Mortgages now held by Canadians have an average interest rate of 4.9 per cent. Sixty-six per cent of consumers said they expect rate increases in the near future.
In anticipation of a rise in interest rates, consumers are more likely to renew their mortgages early to lock in to current rates.
The survey firm contacted 1,015 residential mortgage holders in Canada. The sampling is considered accurate within 3.1 percentage points, 19 times out of 20.
For a copy of the survey, visit http://www.cimbl.ca. "
Wednesday, April 05, 2006
Borrowing against this equity is currently a very popular method of getting a big chunk of credit, primarily because of low interest rates. Add to that the fact that the interest on most home equity loans is tax deductible and they become an appealing option if you need to make a major purchase.
Home equity loans are typically used for consolidating consumer debt or covering a large expense such as a big wedding, college tuition, or home renovations.
However, because your home is collateral for the loan, you should be very careful about using home equity loans. The problem is that if you default on the loan, the bank will foreclose on your home.
Types of Home Equity Loans
There are two types of home equity loans. A traditional home equity loan is also called a second mortgage and is when a bank lends you a lump sum of money that must then be paid back over time. With this type of home equity loan, interest begins building as soon as the bank issues you the money.
A newer type is a home equity line of credit, where a bank gives you a checkbook or credit card to make purchases, which then accrue against your home's equity. With this type of home equity loan, interest does not begin building until you actually make a purchase.
There are also several ways to repay a home equity loan. The most common option is to make regular payments toward both the interest and the principal.
However, some loans also give you the option of only paying the interest at the beginning of the loan and gradually paying more of the loan and gradually paying more of the principal. Finally, you may have the choice to pay both principal and interest, but to make extra payments in order to pay off the principal sooner. You should check with your lender about this, as some loans have penalties for paying ahead."
ANSWER: A reverse mortgage could pay off your existing mortgage and eliminate the monthly mortgage payments you are currently paying. This could free up some income for you to play with each month.
Here's essentially how it would work. A reverse mortgage would pay off your existing mortgage balance of $145,000. Then, rather than having to make monthly interest and principal payments, the interest charged on the loan would simply add to the balance of the loan.
Let's assume your home will appreciate by 4 percent in the coming years, and the reverse mortgage interest rate averages 6 percent. Ten years from now, your home is worth $703,000 and the balance on the reverse mortgage is $260,000. In 20 years, your home is worth $1,040,000 and the loan balance is $465,000.
When you move from the home, sell the home or pass away, the loan becomes due, and any equity in the home goes to you or your heirs. In the event the mortgage balance is greater than the value of the home, you can walk away from the loan without paying a dime.
In addition to using a reverse mortgage to pay off your existing mortgage, you could also pull out extra cash, secure a line of credit or receive monthly income. Obviously, the more money you pull out, the less equity you'll have in your home.
Unlike a traditional mortgage, the startup costs are high, so you wouldn't want to use a reverse mortgage if you plan to move soon.
A reverse mortgage can be a great option, but for those who want to leave a truckload of money to their kids, paying off a home loan out of retirement income would be a better option."
Thursday, March 30, 2006
That deterioration is coming at the end of ten years of generally 'excellent' affordability conditions, the report by the bank's economics department noted.
And, while affordability will likely continue to slide in the first half of this year, rising incomes and steady interest rates and house prices should stop the declines in 2007, economists said.
RBC Financial Group's (TSX: RY) latest housing affordability index, measures the proportion of pre-tax household income needed to service the costs of owning a home.
Such surveys are a popular promotional tool for Canada's banks and mutual fund companies. Many use public opinion polls to gauge demand for financial products and services, promote specific brand names and learn more about the public's financial management habits.
All the banks are focused on the housing market since mortgage lending is one of their key sources of profit and the average mortgage borrowed by homebuyers has been growing in recent years as house prices have soared.
Last year ended on a 'mildly sour note' after three quarters of improvement, the bank said, with housing affordability deteriorating across the country.
The worst-hit cities were Vancouver and Calgary, where house prices escalated rapidly as the economies in those energy- and mineral-rich western provinces grew faster than than the Canadian average.
While the markets in British Columbia and Alberta "continue to power forward," Royal Bank expects the pace of demand for new and existing homes in the rest of the country to slow moderately over the next two years because of the decline in affordability.
It will be "a controlled slowdown, with both new supply and demand expected to cool down simultaneously," the report said.
Much of the drop in affordability stems from slower growth in household income, said Derek Holt, the Royal Bank's assistant chief economist.
"This was unable to offset increases in mortgage rates, house prices and utilities costs," he said.
Benjamin Tal, senior economist at CIBC World Markets, expects affordability to get worse before getting better.
"Income growth in Canada is starting to accelerate, wages are rising," Tal said. "But the increase in house prices has been faster. Add to it higher interest rates, and the overall size of mortgages is rising, so affordability is going down."
The impact of rising interest rates has been more pronounced, Tal said, because about 22 per cent of mortgages are now variable-rate — moving with the bank's prime lending rate — rather than being fixed at long-term rates.
"With interest rates rising by maybe another (quarter to half point), we probably will see affordability continue to deteriorate, at least for the next few months," he said.
Beyond that, he expects it to stabilize because interest rates will stop rising, house prices will level off, and Tal predicts that incomes will be stronger than expected.
"So, I think affordability will not be much worse a year from now. It might even be better."
The housing market's soft landing will be supported by growth in home renovation spending, the Royal Bank report said.
Canada's renovation spending has grown by more than 50 per cent since 2000, to over $26 billion in 2005.
"While the recent takeoff in renovation spending is taken by some to be a sign of a bubble, our view is that homes built in the 1980s boom will continue to enter their prime renovation years, such that growth in renovation spending will partly offset weaker new home construction," the report said.
Ontario, in the meantime, is seeing new home construction decline as construction workers flock to Alberta.
Last year, housing starts in Ontario pulled back 7.4 per cent while residential building permits dropped for the first time in a decade.
"Migration and housing starts tend to move closely together in Ontario," Holt said. "Labour-hungry western provinces, most notably Alberta and British Columbia, continue to pull workers from other provinces, putting downward pressure on new home construction in Ontario, which still remains at elevated levels."
Wednesday's report suggests that condominiums were the most affordable Canadian housing type during the fourth quarter, with an index of 25.7 per cent. A standard townhouse is next at 30.1 per cent, followed by a detached bungalow at 37 per cent.
A two-storey home remains the least affordable type with an index reading of 43 per cent.
Wednesday, March 29, 2006
mortgage choices and perceptions in a changing market
TORONTO, March 28 /CNW/ - A majority of Canadians believe their current
mortgage interest rates are manageable, despite recent hikes, according to a
report released today by the Canadian Institute for Mortgage Brokers and
Lenders (CIMBL). The information, gathered by Pollara in a phone survey in
February and analyzed in conjunction with Canadian housing analyst and CIMBL
economist Will Dunning, indicates that 42 per cent of Canadian residential
mortgage holders polled have not seen their overall standard of living
significantly affected by the recent mortgage rate increases.
'As the spring home buying season begins, interest rates remain at a
historic low and mortgage holders continue to be satisfied with their rates,'
said Ron Swift, President of the Canadian Institute for Mortgage Brokers and
Lenders. 'Our latest survey reveals that Canadians find their current mortgage
rates manageable, despite increases over the past eight months. In addition,
although mortgage holders anticipate further rises, the study suggests that a
majority will be able to tolerate an increase of up to 1 percent. That's great
news for the marketplace.'
For the mortgages currently held by Canadians, the average mortgage
interest rate is 4.9 per cent. Consumers are in tune with what the Bank of
Canada and economist are forecasting - 66 per cent of consumers say they
expect mortgage rate increases in the near future.
CIMBL's research shows that current mortgage holders have a surprisingly
high tolerance for potential interest rate increases. The study suggests thatif rates remain at current levels, 62 per cent of Canadians would faceincreased interest rates at their next renewal. Yet, only 21 per cent ofmortgage holders would see a significant impact on their standard of livingfor a monthly mortgage rate increase of $100; 53 per cent would see an impactwith an increase of $200. Sequentially, a further increase of one-half of a percent wouldnegatively impact 20 per cent of Canadian mortgage holder's overall standardof living. An increase of one-half of a percent from current rates wouldresult in an average monthly increase of $50 in interest ($72 up from $22).Total interest costs for Canadian mortgage holders would jump by more than$2.7 billion ($3.9 billion up from $1.2 billion). An increase of one percentage point from current rates would negativelyimpact the overall standard of living of 29 per cent of mortgage holderspolled. Such an increase in rates would cause an average monthly interestpayment increase of $123, bringing the total interest costs for Canadianmortgage holders to $6.7 billion, up $5.5 billion from current costs. In anticipation of a rise in interest rates, consumers are more likely torenew their mortgages early to lock into current rates. For the 15 per cent ofconsumers scheduled to renew their mortgages in the next twelve months,relatively small increases are expected - an average of $6 per month. Forthose renewing during the next one to six years, average costs will rise andpeak in about four years. "As always, there is uncertainty about future changes in interest rates,"Swift added. "CIMBL's report demonstrates that although mortgage rates are onthe rise, Canadians continue to borrow - whether they are taking out a newmortgage, renewing or refinancing an existing one. There is still a strongreal estate demand in Canada." The survey, "Consumer Mortgage Choices in a Changing Market", contains awealth of additional industry data including the age distribution of mortgageholders in Canada, popularity and rates of different mortgage types andmortgage terms, and the amount of remaining principal on existing mortgages.For a full copy of the survey, please visit: www.cimbl.ca."