Thursday, April 23, 2009

Canada's recession resilience (article below)

There will be lots of information coming out today. Bank of Canada governor Mark Carney will be explaining (maybe vaguely) the reasons for the BoC rate drop and expectations we should have for the future, quantitative easing (printing money), and how this will all affect the Canadian economy. Here is an article from the Financial Post that expands on this. Keep an eye on this as it will affect bond rates/yields which could affect mortgage rates.

Terence Corcoran: Quantitative schemes at the Bank of Canada
Posted: April 22, 2009, 9:17 PM by Ron Nurwisah
Terence Corcoran, central banks
On Thursday we will learn what the Bank of Canada will do next to stimulate the economy, how it will apply the now famous “quantitative easing” phase of its ongoing effort.The bank is already giving away money, setting an overnight rate of 0.25% — “virtually zero,” as former governor John Crow says in his commentary. At the chartered banks, astute mortgage borrowers can almost lock in less than 2% for the next year, assuming borrowers are willing to take a flyer on current Governor Mark Carney’s statement that it will not be changing rates again for the next year.With mortgages going for next to nothing, you might expect house sales to be climbing. But they are not, at least not yet — an indication that there is more to getting an economy moving than monetary policy and interest-rate manipulation. Nor has there been much to show from the deficit spending extravaganzas announced by Ottawa and the provinces. And so now the Bank of Canada is apparently set to announce the next phase in its attempt to kick start borrowing and lending. The bank has already bought up more than $30-billion in various securities from private institutions over the last six months in an attempt to ease credit pressures in some markets. But it has done so carefully without creating excess monetary stimulus that would risk future inflation. This next phase will be different, “unconventional,” according to a Bank of Canada description.Until now, no Canadian central banker has ever used the words “quantitative easing.” Only in the last few weeks has the Bank of Canada issued quick definitions of the phrase. What is quantitative easing? It’s the bank’s “purchase of financial assets through creation of central bank reserves.” The result is twofold. First, the new reserves are also known as “printing money.” The reserves provide the chartered banks with new ability to increase their lending to business and households. Second, by buying financial securities, the Bank of Canada would be increasing the supply of money to a particular market, thereby driving down the interest rates on those securities. If the bank were to buy 10-year corporate bonds, for example, then 10-year bond rates should decline.So that’s the theory. Quantitative easing is supposed to do two things: increase the money supply via chartered bank expansion of lending and reduce longer-term interest rates in areas of the market the Bank of Canada usually has no influence over. The other technique, called “credit easing,” also involves buying private market securities, but in a way that does not necessarily increase the money supply and the risk of inflation.In its monetary report on Wednesday, the Bank is expected to more precisely identify how, when and even if it will start engaging in the business of buying up financial securities so as to drive down longer-term interest rates and increase the money supply beyond the rates of increase already taking place.The risks in this next phase are numerous. As John Crow reports, eventually the big run up in the Bank’s assets has to stop and the process will have to be reversed. The financial securities will have to be sold back into the market. Running around with mop, pail and squeegee to scoop up the excess monetary stimulus will require a degree of central bank fortitude that does not always come easy. The political pressure on central bankers to become what Mr. Crow calls “team players” in keeping growth up at the risk of higher inflation could weaken their resolve. In an odd note on this subject, the Bank of Canada’s recent Q & A says that “if a profound disagreement were to occur between the Bank and the government, the Minister of Finance could issue a written directive to the Governor ... This would most likely result in the Governor’s resignation.”That’s never happened, adds the bank, perhaps hopefully.Another uncertainty is that the quantitative and credit easings may not work. The credit markets and the economies of the world are stalled due to lack of confidence and a market belief that the investment climate is still too risky. The cause of the risk is not interest rates or lack of ready cash or liquidity. There is no absolute proof of this, but investors are likely holding back due to growing concern over government involvement in the economy, especially from the United States, the most crucial drag on the Canadian economy. The Obama administration is setting itself up as controlling manager and chief lever-puller of the banking and financial system, the auto industry and the energy markets. No amount of quantitative easing or stimulus activity in Canada can overcome that drag.
Canada's recession resilience
The Globe and Mail Report on Business RICHARD BLACKWELL
April 23, 2009
The International Monetary Fund's report yesterday said the world is in the deepest recession in 70 years. That's pretty depressing. Did they have any good news?
The IMF's world economic outlook was a discouraging read, but there was a little positive news about Canada.
For one thing, the report noted that Canada has had just three recessions since 1960, far fewer than most other countries. (New Zealand has had 12, Switzerland and Italy have each had nine.)
The report also said that many countries have been in economic decline for a long time, while ours is relative recent. Ireland's economy has been shrinking for almost two years, for example, and Denmark has been in recession for five quarters. Canada only fell into recession in the last quarter of 2008.
Still, the IMF notes that worldwide recessions prompted by financial crises are more severe and the recovery is slower than other downturns.
We hear a lot about the shift from full-time employment to part-time, but are there other measures of the quality of jobs available?
CIBC World Markets does an interesting analysis of the job market that looks at the "quality" of jobs. When full-time employment shrinks and the number of part-time jobs grows - as it has recently - the quality of the job market decreases. Similarly, when self-employment increases as regular jobs disappear, quality declines.
Still, while both those considerations have contributed to a decline in job quality, there is another factor that has offset the effects, CIBC says. Because so many job cuts have been among low-paying jobs (often held by younger workers), and high-paying positions have been relatively immune, the overall quality of employment has not changed much, the economists say.
That's not much comfort to those who are unemployed, but it is one other way of looking at the job picture in a macro light.
I understand that hourly workers at GM, Chrysler and Ford do not pay directly into their company pension plans. Does this mean they can also contribute to their own RRSPs, and effectively have two pensions?
The hourly auto workers are subject to the same rules as everyone else, which means they have a "pension adjustment" to their RRSP contribution limits, related to the value of the contributions the company makes to their defined-benefit plans.
This means that any worker's annual RRSP contribution room will be reduced considerably, depending on how much the employer puts into the pension. The adjustment depends on the total going into the plan - it doesn't matter who makes contributions.
Many workers with defined-benefit plans have some room for RRSP contributions, but it is often very limited.

Wednesday, July 23, 2008

CMHC Drops 100% Financing and 40 Year Amortizations- By Oct 15th, 2008

• 100% financing (5% will now be the minimum down payment on an insured mortgage)
• 40 year amortizations (35 years will be the new maximum on insured mortgages)

The government will also require the following with all new mortgages it insures:
• A new 620 minimum credit score requirement
• New loan documentation standards

The new rules will take effect October 15, 2008. This affects CMHC insured mortgages as well as mortgages insured by Genworth, AIG, etc. Insured mortgages are generally those with less than 20% down.

Certain conventional mortgages are also insured, however, in a statement from the Department of Finance said, "Today’s announcement marks a responsible and measured approach by the Government to ensure Canada’s housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada.
"These new rules pertain only to new, government-backed insured mortgages. This will not affect existing mortgages."

Monday, February 18, 2008

Canadian housing starts rebound: CMHC

Housing starts were up for January to a seasonally adjusted annual rate of 222,700 units, compared to 184,700 units in December, according to Canada Mortgage and Housing Corporation figures released Friday.

A seasonally adjusted annual rate measures monthly figures adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels.
"Historically low mortgage rates, solid employment and income growth as well as a high level of consumer confidence continue to underpin the high level of housing starts," chief economist Bob Dugan said in a news release.

"Housing starts in January returned to a level more consistent with our expectation that housing starts will total 211,700 units in 2008, remaining above the 200,000 mark for the seventh consecutive year." Continue Article

Wednesday, June 20, 2007

Housing boom roars on

Housing boom roars on

Thursday, September 07, 2006

Mortgage rates going downward

TORONTO — Most of the country’s big banks are cutting long-term mortgage rates by up to a tenth of a point, thanks to the lower cost of borrowing in the bond market.
Royal Bank of Canada, the biggest bank, announced Tuesday it is reducing the posted rate on three-year to 10-year loans by a tenth of a point. The reductions are effective Wednesday.
The rate on a three-year closed term loan falls to 6.5 per cent, to 6.75 per cent on a five-year loan and to 7.25 per cent on a seven-year loan.
The Bank of Montreal also made changes to its residential mortgage rates, lowering the three-year to 18-year rates a tenth of a point.
Effective Wednesday, the two-year rate falls by a fifth of a point, down to 6.40 per cent.

TD Canada Trust brought its three-year to six-year closed mortgage rates down by a tenth of a point — to 6.55 per cent and 6.85 per cent — while National Bank of Canada reduced its three-year to 10-year rates by 0.10 per cent.

Desjardins Group also reduced its three-year to 10-year rate by a tenth of a point for branches in Quebec and Ontario, bringing its three-year rate to 6.50 per cent, its seven-year rate to 7.25 per cent and the 10-year rate to 7.50 per cent.

The cuts reflect the lower cost of borrowing in the bond market, where banks finance their mortgage loans.

Friday, August 04, 2006

MPs pay mortgages with meal allowances

The secret board of MPs that manages internal House of Commons affairs is allowing MPs who own a house or condo in Ottawa as their second home to pay down their mortgages with a $75 per diem intended for meals, the Citizen has learned.

The per diem is in addition to a $25 daily accommodation allowance MPs receive year-round if they own a second house or condominium in the capital, and using it to buy a home is allowed despite a rule forbidding mortgage payments from a separate $24,000 expense allowance.

Combined, the per diem and the accommodation allowance could add up to $17,225 a year for house costs and mortgage payments if an MP spends only four days a week in Ottawa while Parliament is sitting.

The $25 daily accommodation allowance is available without receipts throughout the year as long as the MP does not rent out the residence.

The move outraged John Williamson, head of the Canadian Taxpayers Federation, who noted parliamentarians last week defended a $4,000 hike to the general expense allowance for all MPs by saying it was transparent compared to earlier expense payments.

"MPs insist their expenses are completely transparent and now we're discovering a meal per diem can be used to pay off a housing mortgage? This is the height of arrogance, this is beyond the pale," said a clearly upset Mr. Williamson.

A surprised Conservative MP Garth Turner said he was unaware of any option for using per diems to help pay down mortgages and added he lost money on a house he purchased during his first term as an MP from 1988 to 1993.

He argued the per diem and accommodation allowance could help an MP turn a profit by selling a house or condominium in a seller's housing market
"I didn't claim a nickel when I owned that house," Mr. Turner said. "If it looks like it subsidizes real estate purchases through a back door, it's wrong. Average Canadians have to pay their mortgages out of their after-tax dollars."


Condo living is not for everybody

MONEY 401 Those who want to be left alone to follow their own desires should look elsewhere,

Condo living requires flexibility, co-operation and compromise... words you don't see often in developers' ads.

It's not the right place for you if you want to be left alone to follow your own desires.

Moving into a condominium development means obeying its rules, even if you disagree with them.

You may have to leave your cat or dog behind.

You may be restricted from putting decorations on your front door.

You may be prohibited from renting out your unit for short periods.

These rules make sense in terms of avoiding conflicts among people trying to live closely and peacefully together.

Short-term rentals, for example, can be disruptive to long-term owners.

'If tenancies of under six months are permissible, you risk buying into a building that is really just a disguised hotel,' says Keith Bricknell, a condo owner in downtown Toronto.

'You will never really get to know or trust your neighbours, because some of them will be changing, as often as daily.

'Unfortunately, that has implications for things like security and the care that residents take in avoiding damage to the common elements.'

This is an extra dimension you rarely hear about when you move into a condo. You learn about it through experience.

You will be governed by a condo corporation, which can pass bylaws of all kinds. It has the power to raise your monthly fees and levy a special assessment for upgrades.


Good advice before buying summer home

By Douglas Hunter (Cottage Life Books, $35)

Never having owned a summer home, but having enjoyed many visits to cottages owned by friends and relatives, I didn't realize all the possible pitfalls. This book explains them.

Heavy emphasis is placed on the income tax aspects for both buyers and sellers.

If the book has a flaw, it is that author Douglas Hunter is Canadian and he constantly over-emphasizes the Canadian taxation and ownership laws. However, most of the book applies to buyers and sellers of virtually all vacation cottages.

Approximately half of the book is devoted to locating a suitable area for acquiring a cottage. After the search narrows, Hunter explains details of what to look for because buying such a property is much different than purchasing an urban house or condominium.

Unique methods of financing the purchase of a vacation cottage are explained, but without great detail. Hunter suggests contacting local mortgage lenders. He explains the tax consequences of deducting mortgage interest on a second home.

Unexpected in this book are the very complete discussions of sharing cottage ownership with friends or relatives and possible pitfalls to anticipate and resolve."

Mortgaged Dreams

Owning your own home is the great Canadian dream, and a wide range of mortgages means almost everyone can choose the debt that suits them best

Attitudes to debt have changed over the generations as real estate prices have skyrocketed in Greater Vancouver and the rest of B.C. While survivors of the Great Depression worked to be mortgage-free, many younger people have been anything but reluctant to borrow money to finance the home they have always dreamed about.

Lindsey McDonald bought her first real estate in Cloverdale two years ago when she was 22. The ambitious student sees her mortgage as an opportunity to build wealth and expects to sign up for more and bigger loans in the years to come.

In contrast, John and Joan Ross bought their first home in 1959 and 'survived and sufficed' to become the mortgage-free owners of a bigger home on Vancouver's west side by the end of the 1970s. As children of the Great Depression, the two seniors have avoided significant debt ever since.

In the middle are baby boomers such as Bill and Marlene McLean who bought their first property in the early '70s, worked like the dickens to pay off the mortgage within eight years, and have repeatedly refinanced their home to renovate or build 40 houses for sale. With retirement on the horizon, most of their contemporaries can only wish they had been so bold.

Attitudes to debt have changed over the generations as real estate prices have skyrocketed. At the same time, mortgages have evolved to do much more than simply sustain the great Canadian dream of home ownership.


CMHC mortgage moves may be on shaky ground

Canada Mortgage and Housing Corp. recently announced moves that critics say will drive many home buyers to the poor house, as it were, and could leave Canadian taxpayers on the hook.

CMHC is offering mortgage insurance for interest-only loans and on amortizations up to 35 years, while also scrapping the typical $165 application fee on high-ratio loan products for people with less than 25-per-cent down payment.

With an interest-only loan, a borrower can pay interest only for the first 10 years, then pay both interest and principal. Payments are initially low, but since the entire loan must still be paid off within the original amortization period, payments balloon as the principal starts being paid down, and again if interest rates rise.
The first issue is whether a government agency like CMHC should be competing with private companies like Genworth Financial in the business of offering mortgage insurance on interest-only loans.

If CMHC has to pay out a rash of defaults, the money will come out of Canadian taxpayers' pockets. The argument has also been made that mortgage insurance protects the money lender, not the homeowner.

A recent report by CIBC World Markets noted that outstanding residential mortgages rose by 10.9 per cent during the year ending this past April, adding that "the current wave of growth in mortgage outstanding is of a higher risk," and that the moves by CMHC imply that "we will see increased default risk in the mortgage market."

The second issue is the wisdom of making mortgages easier to get by Canadians who are already in a massive hole of debt, with a savings rate that has fallen from 16 per cent in 1985 to negative 0.5 per cent in 2005, meaning they are now spending more money than their current disposable income.


Condo market bubble?

A correction in the red-hot Toronto area condominium market 'cannot be far away,' says a leading housing economist.

Buying for investment purposes in the Toronto market has been 'far in excess of market needs' and buyers face 'very high risks,' said economist Will Dunning in his most strongly worded analysis yet of the Toronto market, released yesterday.

Nearly a decade into a robust housing cycle, high-rise sales remain extremely strong, with second quarter sales at an annual rate of 20,800, a record high, said Dunning."

While other housing economists have expressed concern over what they see as a potentially frothy condo market, Dunning, a former Canada Mortgage and Housing Corp. economist, has been among the most conservative.

Price appreciation for condos continues at a good clip — 5.9 per cent year over year — and the average condo rent has increased 2.1 per cent.
But this won't last long, according to the gloomy forecast.

"An onslaught of condo completions is just beginning and I expect that rents will start to fall late in the year with the possibility of price weakness to follow," said Dunning.


Title fraud can happen to anyone, cost can be enormous

(Jul 28, 2006)
It happened to Susan Lawrence. While going through proceedings to sell her home earlier this year, the area woman learned that she had become the victim of fraud, joining a growing number of Canadians who have been victimized by real estate title fraud.

"I went to the bank to discuss my mortgage because of the pending sale," says Lawrence, who has lived in her home for almost 30 years. "I found out my mortgage had been discharged and a new fraudulent mortgage assigned to my house at another bank without my knowledge. I couldn't believe it. I had heard of mortgage and real estate fraud, but never thought it could happen to me."

The scam occurred as follows: someone unknown to her forged her signature, discharged her existing mortgage, took out a new mortgage for almost $300,000, pocketed the money, then defaulted on the mortgage and disappeared.

Ms. Lawrence believes her nightmare started when a For Sale sign went up on her front lawn, giving fraudsters an opportunity to consult the MLS listing for the property and gather information they needed. Then they simply posed as her to fraudulently sell her house, discharge her small mortgage and take out a new one.

After several sleepless nights and endless hours spent with her lawyer, her bank finally withdrew a possession lawsuit, which meant she did not have to move out of her home. Good news under normal circumstances, except that now she is faced with having to restore her title, even though the new mortgage on her home was obtained fraudulently by a third party.

Susan Leslie, vice president of claims and underwriting at First Canadian Title, estimates the average case of real estate fraud to be $300,000, compared to estimates of $1,200 by the RCMP for cases involving credit card fraud. Meanwhile, industry insiders estimate that real estate fraud costs Canadians between $300 million and $1.5 billion a year.

"The onus is on homeowners to prove the crime and it can be very costly - financially and emotionally - to clear your name," said Leslie. "Unlike traditional forms of insurance, for a one-time premium, title insurance is an effective and inexpensive way to ensure title to your property is protected. Title insurance covers legal expenses related to restoring title and is available to existing home owners even if they have owned their property a long time."

Ms. Lawrence's troubles are the latest in a string of real estate title fraud cases across Canada. The Law Society of British Columbia, after four years of investigations, recently approved $32.5 million in payments to cover a multi-million-dollar real estate fraud case involving Vancouver lawyer Martin Wirick. The high-profile case involved transactions between 1998 and 2002 and affected hundreds of victims in the scheme. Other cases across the province include:
* A Mississauga man tried to sell his parent's home last year and discovered that someone had fraudulently sold the home for $400,000. The case was resolved after $11,000 in legal fees, but the fraudster is still at large.

* A Brantford woman received a call from a mortgage collector saying she was three months behind on her mortgage payments for a home she didn't know she owned. Later that night she also discovered that two other properties had been mortgaged in her name, leaving her on the hook for more than $400,000.

Visit to learn how to protect yourself.

Wednesday, June 21, 2006

this is an audio post - click to play

Thursday, June 15, 2006

Home inspectors save future headaches

It looks like your dream house on the outside, but a few weeks after you move in, you discover mice, electrical problems or asbestos.

Like a scene out of the 1986 comedy, The Money Pit, the beautiful house you were excited to move has now become a financial burden.

This is the case for some new home buyers who don't cover all their bases by doing research before moving into a new home.

Hiring a home inspector is a part of the home buying process that is optional, but may save numerous headaches down the road.


30 per cent of Canadian renters plan to purchase a home within three years,

Canadians continue to favour home ownership over renting despite rising home prices and modestly higher interest rates, according to the results of a study released today by Scotiabank, which indicates that 30 per cent of Canadian renters plan to purchase a home within three years.

"Steady job and wage gains continue to support Canadians who want to make the move from renting to owning," said Adrienne Warren, Senior Economist, Scotia Economics. "Many potential new homeowners, however, will look to less expensive housing options such as townhomes and condominiums due to some erosion in overall affordability."

Despite the optimistic view of homeownership, current renters who are not planning to buy, outlined a number of deterrents to purchasing a home. The study found the most commonly cited reasons include: commitment of ownership (37%), high cost of real estate (17%), living paycheque to paycheque (12%), poor credit (7%), and student loans (5%).


Mortgage rate peak near

Mortgage rate peak near economists: 'The end's not far away'

The short-term outlook for inflation and interest rates in Canada is a whole lot less clear since Friday's jobs report that signalled the economy is hotter than expected, but the long view is that borrowing costs and the pace of price increases are approaching their apex.

After Friday's report that Canada created almost 100,000 jobs last month, the Canadian dollar has shot up almost US2 cents to US91 cents in the past two trading days on bets the Bank of Canada is not done raising interest rates to corral inflation, and probably has one more quarter-percentage-point increase to go. That's a change from earlier last week, when the expectation was that the central bank's trend-setting target for overnight interest rates wasn't going any higher than the 4.25% it is now.
"If we are not done watching the Bank of Canada raise interest rates, we're 25 basis points from it, so the end's not far away," said Craig Wright, chief economist at Royal Bank of Canada.

The report that changed the view, and that has people calling mortgage brokers again on concern they should lock in before rates rise further, showed the economy created almost four times as many jobs as economists had expected. The unemployment rate dropped to 6.1%, the lowest since 1974.


Ontarians Eager to Buy Homes but Lack Understanding of Legal Risks

Only 10% Understand Real Estate Lawyer's Role

Many Ontarians have jumped into the busy real estate market without fully appreciating the legal dimensions of home buying.

Homebuyers put a great deal of time and energy into finding their dream home. Real estate lawyers put the same careful attention into investigating the legal issues related to the property and closing the sale," says Kathleen Waters, an experienced real estate lawyer and Vice President, TitlePLUS. "That's where your real estate lawyer becomes an invaluable resource: he or she navigates you through the major legal implications of home purchase, and can help prevent a dream home from turning into a nightmare."


Homeowners can expect more interest rate hikes

Homeowners can expect to another half percentage point interest rate hike over the next year, says the chief economist with the Canadian Institute of Mortgage Brokers and Lenders.

Will Dunning said that increase might take a little of the heat out of the real estate market, but he doubts it would be enough to cause prices to fall.

New home sales are strong, prices are continuing to rise and the new housing starts are either growing slightly or remain flat in most parts of the country, he said.

Speaking at a mortgage symposium in Halifax Monday, Mr. Dunning said fixed rates remain the most popular mortgage choice for homeowners, but the heavily promoted combination fixed rate/variable rate mortgages are gaining in acceptance as people looking at the uncertainty in the marketplace see them as a way of managing the risk.

Drawing on the results of a survey he carried out in March, he said most people renewing their mortgages are happy with their situation, generally because their payments on a five-year mortgage are less today than they were when they last renewed. People who took out a one-year mortgage might not be as happy as their payments are likely going up.

The survey also found that 66 per cent of people believe mortgage rates will continue to climb, but only 25 per cent believe the increases will negatively impact their standard of living.

With increasing rates, Mr. Dunning said mortgage holders will likely shop around more, a practice he encourages.

"Negotiate, negotiate, negotiate. The gap between the posted rates and the discount rates is as large as I’ve ever seen."

The posted rate at many major banks is around 6.75 per cent, while the discount rate is as low as 5.3 per cent, he said.

At least part of the reason for the gap is the tremendous growth in the number of companies getting into the mortgage business over the past few years and with an increasing number of players comes heightened competition.

Tuesday, June 13, 2006

Navigating the mortgage maze

Going crossed-eyed over the myriad mortgage options these days? Don't despair, says a local real estate expert and author.

With the right knowledge, research and professional team backing you up, there are some great deals to be had, says Douglas Gray, president of National Real Estate Institute Inc, and author of Mortgages Made Easy: The All-Canadian Guide to Home Financing.

And it all starts with proper preparation, including doing an online credit check to make sure your financial affairs are as they should be, and knowing how much a lender will potentially grant you, Gray says.

His No. 1 piece of mortgage advice: Don't deal directly with lenders, but work with a mortgage broker who can seek out the best deals from up to 100 different lenders.

'They know all the big players, and who's hungry - and you don't pay a penny to the mortgage broker,' says Gray, who also advises homebuyers to do a little comparison-shopping, and talk with at least three different brokers.

But with affordability rates in Vancouver at an all-time low, sometimes the best deal is still out of financial reach - and that's where parents come in.

More and more often, 'parents are giving their children a leg up, maybe because they've got a lot of equity in their own homes,' says Gray.

But don't expect them to hand over a down payment or co-sign a mortgage at the snap of your fingers - if you want your parents' help, impress them with your research and 'plant the seed' early, he says.


When it comes to mortgages, getting the best deal almost always comes down to preparation and research. Here are 10 key questions to ask yourself before you sign on the dotted line:

1. Is your income secure? Will it increase or decrease in the future?

2. Are you planning on increasing the size of your family, and therefore your living expenses?

3. Can you afford to put aside a financial buffer for unexpected expenses or emergencies?

4. Are you planning to purchase the property with someone else?

5. If so, can you depend on their financial contribution?

6. Have you determined the amount of mortgage you'll be eligible for?

7. Have you determined all the expenses you will incur relating to the purchase transaction?

8. If you're relying on income from renting out part or all of your newly acquired property, do you know the city and strata bylaws?

9. Have you researched mortgage brokers and companies on the Internet?

10. Have you run a credit check on yourself to see what lenders will see?

Source: Mortgages Made Easy: The All-Canadian Guide to Home Financing, Douglas Gray (John Wiley & Sons Canada, Ltd, 2006).

Bankruptcies keep falling

Personal bankruptcies have fallen to the lowest level in seven years, cushioned by a strong labour market, Canadian Imperial Bank of Commerce said Monday.

Bankruptcies, on average over the past three months, fell 7.6 per cent from last year but – like most economic reports of late – the headline number masked regional discrepancies. In Alberta, they tumbled 17.5 per cent, while bankruptcies in Quebec and Atlantic Canada rose 3.6 per cent and 1.8 per cent, respectively, CIBC said in its bankruptcy report.

At the same time, Ontario bankruptcies are falling as strength in Ottawa, Toronto and Kitchener offsets higher rates in Sudbury and Windsor, cities more vulnerable to the strong Canadian dollar.

“Looking at development in the pipelines, it appears that there is little risk of any significant deterioration in the bankruptcy situation in the near future,” CIBC economist Benjamin Tal said in the report.

In one barometer that shows fewer people are likely going belly up, the delinquency rate in credit cards has stabilized at about 4.6 per cent — lower than its long-term average. Mortgage arrears, meantime, remain well below their long-term average and are “unlikely to rise strongly in the near future,” the report said.

CIBC forecasts little change in the number of bankruptcies this year and a 3 per cent-5 per cent increase next year as economic activity weakens.

Business bankruptcies, meantime, have fallen more than 18 per cent, on average over the past three months, from last year — a rate not seen since late 2002.

The largest decline in business bankruptcies was in Alberta where the number of bankruptcy filings plunged by almost 40 per cent during the year ending April.

Ontario was the only province that saw an increase in the number of business bankruptcies in the period, weighed down by difficulties in the manufacturing sector.

The number of business bankruptcies is expected to fall by 7 or 8 per cent this year be little changed in 2007, CIBC said.
“At the same time, we expect the regional divergence to widen with bankruptcies in the manufacturing sector in Ontario and Quebec continuing to rise, reflecting the impact of a strong dollar and some softening in demand from south of the border.”