Monday, June 29, 2009


Garry Marr, Financial Post

Heather Harding and her husband, film editor Graham Withers, have been on the real estate sidelines looking for a home for the past 18 months. The Toronto couple, renters, started their search when the market was at the top and every home they looked at was "just too expensive."

But now that prices are finally falling and affordability is increasing, there is another major stumbling block in their search: Job security.

"There just seems to be so much uncertainty. Prices in the range we have been looking at haven't changed all that much, either," said Mr. Withers.

"We keep waiting for the big housing crash," said Ms. Harding.

They look to the situation in the United States and see prices dropping by as much as a third in many markets, but that hasn't happened here. The Canadian Real Estate Association said prices across the country in the first four months of 2009 were down 6.7% compared with a year ago.

"We are looking for more of a deal. And more stability. I work on contracts and my wife just changed jobs," said Mr. Withers. "Unless we are going to get a deal, why would we introduce more uncertainty into our lives?"

That's the real-estate rub: Sales have stalled as vendors refuse to lower prices while buyers sit on the sidelines waiting for a deal after more than a decade of rising prices.

To be sure, the deals have finally begun to materialize, although not from plummeting prices. Rather, record-low interest rates, whether consumers are borrowing long-term or short, are a key factor in the new real-estate affordability.

Consider a $300,000 mortgage. At the 3.75% rate some mortgage brokers claim they can get for a five-year closed mortgage, the monthly payment is $1,537.67, based on a 25-year amortization. A couple of years ago, when the rate was closer to 5.75%, the same mortgage would cost 22% more, or $1,875.07 a month.

Cheap money has created a classic economic battle. In one corner stands the real estate industry, trying to lure buyers with rates so low it is now cheaper to own than to rent. In the other is the skittish consumer who is too focused on job concerns to care about interest rates.

For the first time this decade, the Royal Bank of Canada's Affordability Index, which measures the percentage of household income needed to carry a home, is declining.

"We've seen affordability improve across the board, but especially in some centres where it had deteriorated over the past few years," said Robert Hogue, senior economist with RBC.

Vancouver is one example. At the market peak, almost 80% of pre-tax household income (based on the median household income in the city) was needed to carry a standard two-storey home. The index is based on a 25% down payment, a 25-year amortization and includes the costs of principal and interest, property taxes and utilities.

Vancouver's affordability rating has improved to the 70% range, but so has job uncertainty, according to RBC. The decision to jump into Canada's most expensive city for housing has not gotten easier.

Nationwide, 43.7% of household income is needed to carry a detached bungalow, a decline from 46.6% in the fourth quarter of 2007. When RBC releases its first quarter results later this month, that figure is expected to fall again. The all-time peak in Canada was 52.6% in 1990.

"Consumers still are not jumping into the market en masse because of concerns over job uncertainty," says Mr. Hogue. "The job market continues to show losses. We are talking about a battle between confidence and affordability. This is likely to see-saw for some months ahead."

The real estate industry is busy pumping out the statistics to back up the affordability argument. CREA and others in the industry point to three straight months of improving sales activity, adjusted for seasonality. April sales were 32% above the decade's low point reached in January.

But the numbers still show very slow sales for 2009. April sales were off 9.2% from a year ago, while sales for the first four months of 2009 were down 20.7% from a year earlier.

In Windsor-Essex, ground zero for the Canadian auto industry, housing sales for the year were down 21% from a year ago, while the $152,856 average price of a home has sunk to the fourth lowest among the 25 urban centres CREA tracks.

"There are tons of homes up for sale," said Rick LaPorte president of Canadian Auto Workers local 444 in Windsor. "My house has probably dropped $20,000, maybe $30,000, in the last three years. It's a buyer's market -- as long as you have a job. ... If you have no way of paying for a mortgage, houses can be as cheap as you want." said Mr. LaPorte.

From the real estate industry's perspective, first-time buyers have been the cement that has held this market together. A survey by Royal LePage last month found 86% of potential first-time buyers indicated that low interest rates were a key motivator for buying. Lower prices was the second-biggest reason to purchase, with 81% of potential buyers citing that factor. But 76% of respondents also listed job security as a major factor affecting whether to buy.

The results back up LePage president Phil Soper's assertion that affordability trumps job security in this high-stakes game. "While these consumers appreciate government incentives such as tax credits, greater RSP deduction limits and rebates on home renovations, it is markedly improved affordability that is proving to be the powerful drawing card," he said.

Canadian Imperial Bank of Commerce senior economist Benjamin Tal has his own set of statistics. He say outstanding mortgage debt is rising 8.5% on a year-over-year basis, but the pace of borrowing continues to slow.

"That's the real test of affordability. If affordability was the only measure, you would see mortgage activity accelerating," said Mr. Tal. "Look at the U. S. market, it's extremely affordable. But is anyone buying? If you have no confidence, you are not buying a house, even if interest rates are zero because you cannot afford the risk."

Toronto appraiser Barry Lebow, of Lebow Hicks Ltd., said the Canadian real estate market has nowhere to go but down -- no matter how much cheap money is thrown at consumers. These days he's taking the conservative route when assessing the price of homes because he doesn't want to face the wrath of a bank that has to foreclose on a house that was valued too high and ends up selling for less than the mortgage placed on it.

"There are going to be tremendous changes in real estate... There are just not enough first-time buyers and the ones buying today, those people are not really buyers, You know what they are? They are renters of cheap money, variable-rate mortgages of 2.99%," says Mr. Lebow.

"If mortgage rates were 8% to 9%, these people wouldn't be buying. It's an artificial market. One hiccup in the rates and it's all gone."

Optimistic but worried

Paul Vieira, Financial Post Published: Thursday, June 11, 2009

The chief executive of Royal Bank of Canada, Gordon Nixon, said the chartered banks are ready to step in where the shadow banking system has withdrawn and make credit available-- at the right price. Mr. Nixon was at the International Economic Forum of the Americas in Montreal, where the future shape of the financial services sector has drawn much attention. Jeffrey Immelt, the CEO of General Electric Co., told delegates on Tuesday that the financial services sector has forever changed and that players will have to deal with more oversight and regulation. Mr. Nixon said that may be the case in the United States, but no drastic changes are likely in store for Canada. He agreed to speak with Financial Post reporter Paul Vieira, who is covering the Forum of the Americas.

Q There is a consensus that the worst is over, but are we not headed for a weak period of economic growth.

A I don't know if I am worried about it, but I do think it will be a muted recovery. The most important thing is for the economy to find bottom. And I do think we are starting to see signs of that occurring. But next year and beyond, anyone who is expecting a dramatic bounce back, in my judgment, will be disappointed. This will be a long and slow recovery.

Q Are you worried about governments trying to overreach with regulation to ensure a crisis such as this one never occurs again?

A It is a much less concern for the Canadian banks than it should be for other institutions in other countries. To some degree, I think our regulatory model is being looked at and being viewed as a good one.

Generally within Canada, the regulatory changes will be more at the margin than they will be in terms of significant restructuring.
When you look at other markets, like the U. S. and Europe, the restructuring will have a more dramatic impact. And there will be significant deleveraging that will occur because the [debt] in their systems is much greater than in Canada.

Q But there's been talk, at this conference, about how governments have to ensure from now on that the financial services sector is regulated in a way to ensure less financial innovation and more credit creation?

A There is no question that credit is extremely important to the functioning of the economy. But that's not just about banks. Credit comes from the bond, equity markets, and the shadow banking system. Many of those areas have collapsed alongside some of the banking systems.

We want to extend credit, we want to grow our balance sheet and loan books, as long as we are doing it on a basis in which we are taking on reasonable risk and getting paid to take bad risk.

The need for banks in the system is probably going to increase going forward.

Q Is there a recovery for the shadow banking system?

A I think it will recover and I think banks will play a bigger role in terms of credit intermediation. Remember, in the 1990s, banks represented a much, much higher proportion of intermediated credit than they did in 2007. I think you will see the trend where banks play a broader and bigger role in terms of credit intermediation.

Q What do you make of the risks that governments will turn inward and stop collaborating once the recession subsides?

A I want to quote Madeleine Albright -- I am very optimistic but I worry a lot. Notwithstanding the fact that there always is this tendency toward protectionism when things are difficult I think lessons learned from the past in terms of importance of globalization and global trade will override that. There will be specific issues -- and of course Buy American is the big one for Canada. But I think these will be challenging irritants as opposed to massive changes in government policy around protectionism. I don't see that happening; there would be much lost.

Housing starts beat projection

CMHC May data; 'Expected to improve throughout 2009'

Financial Post Published: Tuesday, June 09, 2009

Housing starts rose more than expected in May, with increased construction seen in both single and multiple dwelling sectors, according to Canada Mortgage and Housing Corporation.

The seasonally adjusted annual rate of starts increased to 128,400 units during the month from 117,600 in April, CMHC said yesterday.

"Housing starts are expected to improve throughout 2009 and over the next several years to gradually become more closely aligned to demographic demand, which is currently estimated at about 175,000 units per year," the Crown corporation said.

Economists expected housing starts to total 126,000 units in May.

The seasonally adjusted annual rate of urban starts was up 11.1% to 107,800 units in May, CMHC said. Multiple-unit urban starts rose to 60,900 units and single-unit starts increased to 46,900 units -- with both categories rising by a similar 11.1% from the previous month.

"The increase in May is broadly based, encompassing both the singles and multiples segments," said Bob Dugan, CMHC's chief economist.

Overall, urban starts were up 22% in Ontario, 16.8% in the Prairies, 7.3% in Atlantic Canada and 3.3% in Quebec. Urban starts fell 5% in B. C.

Rural starts were little changed at 20,600 units in May.

Toronto's new-housing market looked like it was starting to rebound. Condo and apartment starts were up 44.4% in May over the previous month, while detached housing starts were up 16.4%.

"It's a safe bet to say that the worst is over," said Ted Tsiakopoulos of the CMHC. "We have seen credit conditions improve, which would suggest that the we should see new-home construction move back to trend level," he added.

CMHC is confident that construction levels will return to normal and mirror the level of demographic demand by 2011.

"We saw a lot of the weakness in the first quarter [of 2009], and I think a lot of that is behind us now," Mr. Tsiakopoulos said.

Housing starts beat projection

CMHC May data; 'Expected to improve throughout 2009'

Housing starts beat projection

CMHC May data; 'Expected to improve throughout 2009'

Housing rebounds

Sales up again

Garry Marr, Financial Post Published: Tuesday, June 16, 2009

The housing market continued to rebound in May with a fourth consecutive increase in monthly sales, according to the Canadian Real Estate Association.

The Ottawa-based group, which represents about 100 boards across the country, said the average sale price of a home sold through the Multiple Listing Service reached a record $319,757.

Despite the new threshhold, the May average sale price was only 0.4% ahead of last year. Nationally, prices are up 16.4% from the January low.

"Sales activity is now closer to the pre-recession peak than it is to the recent low point reached last January," said Dale Ripplinger, the Reginabased president of the association. "Strengthening consumer confidence, low interest rates and improved affordability are drawing buyers to the housing market across Canada."

CREA said transaction activity in the country's most expensive markets is leading to an overall rebound, which is helping to skew the average price upward. In the past, the reverse has happened.

There were 49,521 units sold last month, a 0.8% decline from May, 2008. CREA said monthly sales have been increasing, on a seasonally adjusted basis, since January. The association noted sales were up 43% last month from the January bottom, on a seasonally adjusted basis.

Actual sales in May were up in 14 of the 25 major markets CREA surveys. Greater Vancouver sales jumped 16.4% in May from a year earlier. Toronto sales were up 1.9%, Montreal's 8.2%, Calgary's 11.3% and Edmonton's 18.7% from a year earlier.

A Re/Max Ontario-Atlantic Canada survey released last week showed the high-end of the market is starting to improve, too. The real estate company said Toronto set a monthly record for home sales of more than $1-million in May.

The jump in sales activity comes as supply is declining. The pace of new home construction is down close to 50% from last year while new listings in the existing homes market are also sharply declining.

CREA said new listings are at their lowest level since December, 2005. There were 49,438 new listings in the country's top markets, a 22.7% decline from a year earlier. Greater Vancouver saw new listings decline by 35% from a year ago while Toronto new listings were off 26.9%

Ensure you're insured

Buying a home? Don't forget to sign up for mortgage insurance

Denise Deveau, Canwest News Service

June Jell will never forget the time she and her husband, John, sat down with their agent and turned mortgage insurance down flat.

Six months later, he died suddenly of a heart attack at the age of 59, leaving her struggling to keep up with house payments.

While she got back on her feet eventually, it wasn't without sacrifices along the way --including the family home.

Now, she tells everyone she knows, "If you can get it, take it. We thought mortgage insurance was expensive at the time and because of our age, believed we could handle everything."

In retrospect she realized, "It really wouldn't have been that expensive after all. It would have been a blessing."

Insurance of any kind is one of those things people like to put on the back burner or do without.

"A lot of homeowners don't want to add the cost of insurance to their mortgage payment," says Feisal Panjwani, a senior mortgage consultant with Invis Inc. in Surrey, B. C.

"One of the biggest mistakes they make when they sign their mortgage is declining insurance, thinking they will research it on their own.
"Nine times out of 10, they don't get around to it. Then when something goes wrong, it's too late."

It's not surprising some homeowners balk at mortgage insurance, especially when they feel they are already stretching their monthly payments to the maximum.
Especially in these economic times, however, you can't afford to be without it, says Jennifer Hines, vice-president of creditor insurance for RBC Insurance.

"Clients at all stages need to make sure their mortgage is protected," she says.
"Some have life and disability insurance, but the family still could be left holding a debt on what tends to be a person's largest individual debt obligation."

The ideal time to look at options is when you do your mortgage application. The most common are insurance tied to the mortgage itself or to the lender. Tying insurance to a mortgage balance is usually preferred since you can switch lenders and keep the same policy.

This reduces the risk of facing higher premiums or finding out you are uninsurable when you reapply at another bank, says Lorne D. Greenwood, a real estate lawyer based in Milton.

"Getting insurance through an independent broker to cover the same amount means you won't have to re-qualify with each mortgage," he says.
This is also a good choice when your mortgage balance decreases and you want to reduce your premiums.

Mr. Panjwani notes that it's especially important for first-time or younger buyers to get coverage because the mortgage balance is high, insurance premiums tend to be in their favour and medicals are not generally required.

For those who think their disability and life insurance policies are enough if things go wrong, that may not be the case, warns Ms. Hines.

"Typically, disability policies will only pay 60% to 70% of your monthly income, so there is still a gap," she says.

"You still need coverage for other expenses. We tell people it doesn't have to be an either/or situation.

"We also suggest they consider whether they need to top up what they have, so they don't have to be concerned about mortgage payments if there is a death or disability."

When it comes to high-ratio mortgages, according to the Bank Act, anyone borrowing more than 80% of the value of the property must insure the mortgage to protect the lender against defaults.

The premium for this default insurance (not to be confused with conventional mortgage/life insurance coverage) is paid once at the time of the closing, at a rate that varies between 0.5% to 3.75% of the mortgage amount.

Title insurance is also an increasingly important option for protection against title problems and fraud.

Despite recovery signals, deflation more likely than inflation

Excess capacity

David Pett, Financial Post Published: Friday, June 12, 2009

Rallying equities, rising commodities and soaring bond yields have investors feeling scared that inflation is at hand. But with the global economy still running at half-speed, it may be too early to dismiss the threat of deflation just yet.

"Markets are running the danger of being the architects of their own demise here," said Derek Holt, vice-president of economics at Scotia Capital. "If they run too far on the supply-and-inflation trade, they will head right back into the soup again."

At the heart of the inflation-versus-deflation argument is the massive stimulus that the U. S. Federal Reserve has injected into the economy by way of near-0% interest rates and quantitative easing. Combined with that, there is growing optimism that the economy is heading for recovery based on a slowing decline in inventories and job losses. As a result, investors have abandoned the safe-haven trade in favour of such riskier assets as stocks and commodities, and bond yields have risen to their highest levels since the collapse of Lehman Brothers in September, 2008.

"On the face of it, market worries have some justification: If the U. S. economy is picking up and if the Fed is printing money, is that not inflationary?" Gabriel Stein, chief international economist, said in a note to clients. "But even so, market worries are -- at least for the time being vastly exaggerated."

Despite the Fed's monetary efforts, Mr. Stein said growth in the money supply, which accelerated from lows in 2008, appears to have peaked at the end of last year. As such, it is nowhere near rates consistent with trend output growth and thus inflation. With the U. S. economy already running a negative output gap of 6%, the lack of money growth will likely only result in a growing output gap. Ultimately, Mr. Stein says that will only put more downward pressure on consumer prices.

"Over the next four to six quarters, it is more likely that the level of consumer prices, ex oil, will fall rather than rise, let alone rise at any worrying rate," he wrote.

Mr. Holt contends that higher food and energy prices are helping drive worries about inflation, but so-called headline inflation, while already trending higher, doesn't necessarily mean core inflation will follow.

He explains that even the slightest improvement in demand can drive up food and energy prices because inventories are so low and vulnerable at the moment. "In particular, steel inventories in Canada and the U. S. are sitting at about 2 1/2 months supply. So even a gentle turn in housing market indicators will result in inflation in steel prices. I think that is true across a number of commodities."

But, he added, that doesn't lead to a breakout in core inflation. In fact, he doesn't expect to see core inflation for years, and expects it likely to fall in the coming months.

"In environments in which households and businesses are still cash flow constrained from lack of credit and wage disinflation is just starting to take hold, it is impossible to account for higher energy and grocery prices without crowding out discretionary spending," he said. "This is the worst recipe for the North American consumer. Bond markets are not seeing through that dynamic."

David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates, noted this week that even when oil prices were at US$147 a barrel last summer and other commodities such as copper were also soaring, it had little effect on the consumer price index.

Historically there has been a 37% "pass-through" from commodity increases to core inflation, meaning for every 10% increase in the CRB index, the CPI would increase by 3.7%. However, during the cycle lasting from 2002 to 2007, a 118% jump in commodity prices translated into only a 21% increase in the CPI, or an 18% pass-through.

"So from my lens, if U. S. retailers had difficulty passing along commodity costs in the last cycle when credit was abundant, I fail to see how they are going to do so in the current and prospective environment of declining household credit growth, rising savings rates and near-record excess capacity in the product and labour market," he said.

Thursday, June 4, 2009

The Incredible Shrinking 'Burbs

These days, small is big. It's like buying a condo, but you don't have to share the barbecue.

Lisa Van de Ven, National Post Published: Friday, May 22, 2009

What's 864 square feet, has one or two bedrooms, and comes complete with an east-end suburban address?

With that square footage, you might assume it's a condominium suite, tucked away in a high-rise building somewhere. But this unit comes with a backyard and a 40-foot frontage. It's the new raised bungalow design by Tribute Communities, one of several small detached-home layouts at the developer's Park Ridge and the Grove projects in Oshawa and Ajax.

But don't be surprised if you start seeing them in other locations. Super-small low-rise homes are catching on -- at least in certain locations around the greater Toronto area. Buyers want smaller homes, whether for convenience, affordability or environmental concern, and developers are responding.

"We're getting both empty nesters and we're getting first-time buyers," says Scott McLellan, Tribute's senior vice-president of sales and marketing. "It's funny how the perception of 864 sq. ft. is small, but if you're an empty nester and you're looking at a downtown condo, an 864-sq.-ft. one-bedroom-and-den is actually large."

And for buyers of small homes, the option is either a condo or a low-rise home. Whether they're a first-time buyer or an empty nester, they don't need the space found in a traditional suburban home. But they do still want a backyard and the privacy of a low-rise dwelling. In some cases, they also want the price tag that comes alongside: at Park Ridge, Tribute's 874-sq.-ft. traditional bungalow starts at $234,990, while the 864-sq.-ft. raised bungalow begins at $239,990. Small two-storey detached homes of 1,018 sq. ft. and up also start at $234,990. (Prices are slightly higher at the Grove). For $20,000 more, Tribute will also finish the bungalow basements; an option that doesn't exist in a condo suite.

According to Mr. McLellan, the new product was in response to demand. "The first-time buyers would come in and affordability was a concern," he says. "The empty nester didn't have a lot of urgency, but [couldn't find] what they were looking for. That's when we put our heads together."

But buyers themselves aren't the only ones driving the trend, says Sue Webb Smith, marketing director for the housing division of Geranium Home. At Geranium's freehold condominium townhouse site Cardinal Point, in Stouffville -- where sizes start at 1,081 sq. ft. -- the town itself suggested the smaller layouts.

"Geranium specifically went to the town and worked with the town to develop some smaller product," she says. "The town welcomed the idea."

The move was a reaction to environmental issues relating to urban sprawl, Ms. Webb Smith says. Stouffville is a popular location for commuters making their way to the city every day, and while the town wanted to encourage growth, it also wanted to keep its footprint as small as possible, with smaller home layouts. Buyers, meanwhile, have reacted well to the product, and the small layouts at Cardinal Point have been selling quickly, mostly to young first-time buyers in their late 20s to late 30s, some with small families but most without. "We really hit a niche," Ms. Webb Smith says.

Spring anomaly?

By Helen Morris, Published: Thursday, May 21, 2009

Predicting trends in the housing market is a rather uncertain business during today's economic times. Canada Mortgage and Housing Corp. (CMHC) this week suggested that the total number of housing starts in the greater Toronto area would likely decline to 28,100 this year. This would represent a considerable drop from the heady days of 2008 when there were 44,810 starts.

The report also indicates that many potential buyers will remain cautiously on the sidelines and sales of existing homes are likely to drop to 60,000 units in 2009, down from 76,387 last year. But the report's authors noted that sales were expected to recover toward the end of the year, in line with the anticipated upturn in the fortunes of the wider economy.

"The key to bear in mind with all of this ... is that despite our forecast decreases in most indicators ... they are going to be very much in line with the historical 10-year average," says Dana Senagama, CMHC's senior market analyst for the GTA. "The levels will be nothing compared with what we saw back in the mid-1990s when we experienced a severe downturn in the housing market."

Ms. Senagama says that, over the past 10 years, average annual resales for the GTA was about 62,000, and that now we are coming off a housing boom that lasted nearly eight years.

"So, coming in at 60,000 this year and 63,000 next year, it's really still very much bang on."

CMHC also predicted that the average selling price of an existing home in the GTA will fall 5% to reach $360,000 this year.

However, despite the favourable conditionsfor buying a home in the GTA, potential purchasers will want to be certain of their job prospects before stepping into the housing market.

The CMHC report suggests that the level of employment in Toronto will decline by about 1.5% this year. But the report authors note that this drop comes on the heels of job growth lasting 14 years and averaging 3% annually.

"We've entered a very favourable time to buy, provided you have the job security and the income security and the collateral," says Ms. Senagama. "Mortgages are at historic lows ... on par with the levels we saw back in the early '50s. You can negotiate your price more and these will prove to be great incentives for first-time buyers."

The positive conditions for buyers are already having an impact on sales.
The Toronto Real Estate Board said this week that realtors in the GTA reported 4,561 transactions in the first half of May. This number was a 3% increase on the same period last year.

"Members reported a rise in buying activity this month," notes TREB president Maureen O'Neill in a release. "Many homebuyers who were undecided about purchasing a home during the winter months are now proceeding with confidence as a result of the GTA housing market's affordability."

TREB also noted that the average price of a sale on MLS was $399,811, down less than 0.5% compared with last year.

"More sales and fewer listings resulted in tighter market conditions, which pushed the average selling price back up to last year's level," notes Jason Mercer, TREB's senior manager of market analysis in a release.

"Look for new listings to increase as home owners react to the positive news surrounding home sales and prices."

Back to the predictions and taking the province as a whole, CMHC says the sluggish economy will decrease demand for housing this year but that the expected recovery in 2010 will see sales recover.

"Ontario housing starts have been running above demographic trends in recent years," notes Ted Tsiakopoulos, Ontario regional economist for CMHC. "This trend will be reversed in the next few years, largely due to a slowing Ontario economy."
National Post

Genworth’s Homeowner Assistance Program

Helping Homeowners Through Difficult Times

At Genworth Financial Canada we go well beyond the initial purchase of the home. Whether in a strong market or during uncertain economic times, your customers could face unexpected life events that affect their ability to make mortgage payments.
Through our Homeowner Assistance Program we help homeowners who are experiencing temporary financial difficulties, which may put their mortgage at risk. This could be the result of a serious illness, marital separation, or loss of employment. If your customer has a Genworth-insured mortgage, they can take advantage of this program - at no extra cost.

How we help
Genworth has a dedicated team of Homeowner Assistance Specialists who are trained in identifying the best solutions for you and your customers. We will consider any solution that may alleviate the temporary financial burden of the homeowner. Each situation is assessed individually in order to determine the ideal result. Some common options that can be considered are:
• Capitalized Arrears
• Increased Amortization Period
• Partial or Shared Payment Plan
• Deferred Payments

Initiating a workout
Genworth’s Homeowner Assistance Program is a proven method for providing help to your valued customers when they need it the most. When a customer contacts you requesting financial assistance, there are some easy steps you can take, working with the lender and a Genworth Specialist, which will ensure a successful workout:
1. Identify the problem
2. Gather all the facts
3. Investigate & analyze
4. Contact Genworth Financial Canada
5. Create and implement a plan

Adding value
With these challenging economic times, informing and educating customers on all their mortgage options is increasingly important. By advising your customers of the immediate and long-term benefits of a Genworth-insured mortgage you can play an integral role in helping your customers should they experience difficult times. We will work in partnership with the lender and your customer to establish alternative arrangements to help your customers stay secure in their home when times get tough. By extending a helping hand, you become a trusted adviser ultimately strengthening your relationships and growing your business.

Be sure to download the new Homeowner Assistance overview sheet from so you can provide your clients with the information they need. And if you are aware of any client with a Genworth-insured mortgage having financial difficulty, refer them to Genworth as soon as possible. They can call us toll free at 1-800-511-8888 or send an email to: The more we reach out and encourage homeowners to be proactive, the better we can provide assistance and achieve the best outcome for all.

OTTAWA -- Canada's recession, likely its deepest since the Great Depression, may also be its shortest.

Bloomberg News Published: Wednesday, May 20, 2009

Rising home and car sales, unexpected gains in building permits and employment, easing credit conditions and higher commodity prices signal Canada's slump may be nearing an end. Eight of 11 economists surveyed by Bloomberg this month predict the economy will return to growth next quarter.

"It doesn't feel quite like it's over yet, but people are breathing a little bit better," said Russ Girling, president of pipelines at TransCanada Corp., the country's biggest pipeline company, which recorded a 12% rise in revenue in the first quarter.

All but one of the country's five post-Second World War major recessions have lasted at least one year, with the shortest in 1957 at nine months, according to Philip Cross, who tracks the country's business cycles for Statistics Canada.

Canada's economy contracted at a 3.4% pace in the last quarter of 2008 and growth in the first quarter may shrink at a 7.3% rate, the Bank of Canada estimates.

The U.S. recession started in December 2007, according to the National Bureau of Economic Research, the arbiter of U.S. business cycles. Statistics Canada, which defines a major recession as a slump in which both employment and output post annual declines, has yet to date the start of Canada's recession, Cross said. The Bank of Canada has said the country entered into a recession in the fourth quarter of last year.

No Bailouts
While Canada has suffered from falling U.S. demand for exports, the country's banks have largely avoided credit losses. No government money has been given to any of Canada's 21 banks since global credit seized up in August 2007. The U.S. government oversees about US$200-billion in investments in banks through the taxpayer-funded
Troubled Asset Relief Program.

Canada's housing market has also held up better than in the U.S., where prices declined 18.6% in February from a year earlier, according to the S&P/Case-Shiller index of 20 major cities. Average resale home prices in Canada dropped at less than half that pace during the same period, according to the Canadian Real Estate Association.

"We may not be in a recovery, but I think we might be in a position where it's not getting worse, where it's truly plateauing," Prime Minister Stephen Harper said in a May 8 interview, adding he'd like another "month or two" of data before coming to that conclusion.

Canada's benchmark Standard & Poor's/TSX Composite Index has posted a 50% gain in U.S. dollars since its low on March 9, compared with the 34% gain for the Standard & Poor's 500 Index over the same period.

Economists surveyed by Bloomberg this month said they expect Canadian growth to rebound at an annual pace of 0.5% in the third quarter and by 2% in the fourth quarter.

"In February, the rapid decline in demand had come to an end and by April, the rapid declines in employment had come to an end," Cross said. "Was that a temporary end or not? We don't know."

While Canada's jobless rate is at a seven-year high of 8%, the economy in April created new jobs for the first time in six months and sales of existing homes rose the most in more than five years. Credit markets are also improving. The Bank of Canada's composite index of financial market conditions is at its strongest since September.

Improved credit markets have allowed companies such as Enbridge Inc., the biggest transporter of oil to the U.S. from Canada's oil sands, to move ahead with the new debt sales to finance operations. Enbridge sold $400-million of bonds last week.

'Cross Our Fingers'
"Our approach is to watch for windows when we think there are opportunities to raise capital funds," said Richard Bird, Enbridge's chief financial officer. "This is a window and let's cross our fingers and hope that it's a trend."

A quick end to the recession would raise pressure on the Bank of Canada, led by Governor Mark Carney, to say it no longer plans to keep its benchmark lending rate near zero through June 2010. The country's central bank projected last month the economy will contract four consecutive quarters, bringing it closer to the average length of the last five major recessions.

"The Bank of Canada will have to revisit their own view of what they will do with interest rates," said Paul-Andre Pinsonnault, an economist at National Bank Financial. "GDP will be stronger than what they are looking for."

A quick end to the recession doesn't guarantee a strong rebound. DBRS Ltd., a rating company, predicts an L-shaped recovery for Canada, which it defines as "a prolonged period of flat or slowly improving performance."

"The earliest I can see an improvement is in October or November," said Jacques Plante, chief financial officer of Hart Stores Inc., a discount retailer. "I can't imagine we'll have anything positive this summer."