Wednesday, 29 December 2010
I've said it before and I will say it again -- the Government is going to tighten mortgage policy whether we like it or not. If you are considering a consolidation using a mortgage as a vehicle - do it NOW!!
Neil "Mortgage Man" McJannet
Prime Minister Stephen Harper hinted the government may adjust mortgage rules in 2011 to help Canadians avoid going deeper into debt.
“We’ve tightened mortgage rules before,” Harper told CTV during a year-end interview that aired on Christmas Day. “If we have to do that again, we will.”
Harper also committed to eliminating the federal deficit but will not use “slash and burn” cuts, particularly in the critical areas of health and education.
Thursday, December 30, 2010
Canadian home prices drop again
By Josh Rubin | Wed Dec 29 2010
Canadian housing prices dropped in October for the second straight month, but experts say it’s not the start of a precipitous decline like the plunges seen in the United States.
The Teranet-National Bank Composite House Price Index found that prices dropped by 0.4 per cent nationally, pushed by declines in Calgary (1.0 per cent) and Toronto (0.9 per cent).
A decline in September was the first drop after 16 straight months of increases. Since October 2009, national house prices are still up an average of 6 per cent.
National Bank senior economist Marc Pinsonneault, who conducted the study, said he believes prices could drop by another 5 per cent over the next two years, but said that number should be kept in perspective.
“That would mean prices would still be at their pre-recession peak, so this isn’t the start of something terrible,” said Pinsonneault. “We’re expecting to see house sale prices come more in line with rental prices and incomes, and that’s something that’s beneficial.”
In the U.S., housing prices have dropped more than 24 per cent, according to a report Wednesday. In some cities, the fall has been even more precipitous: In Las Vegas, house prices have dropped 51 per cent in the last three years, according to the S&P Case-Schiller Home Price Index.
Pinsonneault noted that another key measure of the housing market still very healthy in Canada compared to the U.S.
In the U.S., between 5 and 6 per cent of mortgages are 90 days in arrears. Here, that figure is more like 0.5 per cent, according to Pinsonneault.
“When everything is going really well, it might be 0.4 per cent. So 0.5 per cent really isn’t that bad at all,” he said.
Pinsonneault also wasn’t too concerned about the drops in Calgary and Toronto, saying they are not big signs of a local economic slide.
“The markets were maybe a bit more overheated in Calgary and Toronto. In Calgary with the oil sands, there was some speculation in the market. When we came out of the recession, it was more noticeable in Toronto than in other housing markets. But I wouldn’t say it was a bubble,” said Pinsonneault.
In central Toronto, Kevin Somers of Royal Lepage said he has noticed a bit of a softening in the market, but nothing particularly drastic.
“We’ve gone from a situation where there might have been 10 bidders to now there are 4 or 5,” said Somers, a broker who is also Royal Lepage’s area manager for central Toronto.
“The picture has been pretty stable. Shy of any significant changes in the economy or interest rates, I don’t really see things changing all that much.”
In the U.S., many homeowners in the worst-hit cities are “below water,” meaning they owe more on their mortgage than their house is worth. Somers says that is not the case here.
“There are a few one-off instances of people being under water in Toronto, but it’s not any trend at all,” said Somers, adding that choosing the right house in the first place is always good insurance against a slide in the market.
“If it’s a desirable property in a good location, it’s still always going to sell,” said Somers.
Canadian housing prices dropped in October for the second straight month, but experts say it’s not the start of a precipitous decline like the plunges seen in the United States.
The Teranet-National Bank Composite House Price Index found that prices dropped by 0.4 per cent nationally, pushed by declines in Calgary (1.0 per cent) and Toronto (0.9 per cent).
A decline in September was the first drop after 16 straight months of increases. Since October 2009, national house prices are still up an average of 6 per cent.
National Bank senior economist Marc Pinsonneault, who conducted the study, said he believes prices could drop by another 5 per cent over the next two years, but said that number should be kept in perspective.
“That would mean prices would still be at their pre-recession peak, so this isn’t the start of something terrible,” said Pinsonneault. “We’re expecting to see house sale prices come more in line with rental prices and incomes, and that’s something that’s beneficial.”
In the U.S., housing prices have dropped more than 24 per cent, according to a report Wednesday. In some cities, the fall has been even more precipitous: In Las Vegas, house prices have dropped 51 per cent in the last three years, according to the S&P Case-Schiller Home Price Index.
Pinsonneault noted that another key measure of the housing market still very healthy in Canada compared to the U.S.
In the U.S., between 5 and 6 per cent of mortgages are 90 days in arrears. Here, that figure is more like 0.5 per cent, according to Pinsonneault.
“When everything is going really well, it might be 0.4 per cent. So 0.5 per cent really isn’t that bad at all,” he said.
Pinsonneault also wasn’t too concerned about the drops in Calgary and Toronto, saying they are not big signs of a local economic slide.
“The markets were maybe a bit more overheated in Calgary and Toronto. In Calgary with the oil sands, there was some speculation in the market. When we came out of the recession, it was more noticeable in Toronto than in other housing markets. But I wouldn’t say it was a bubble,” said Pinsonneault.
In central Toronto, Kevin Somers of Royal Lepage said he has noticed a bit of a softening in the market, but nothing particularly drastic.
“We’ve gone from a situation where there might have been 10 bidders to now there are 4 or 5,” said Somers, a broker who is also Royal Lepage’s area manager for central Toronto.
“The picture has been pretty stable. Shy of any significant changes in the economy or interest rates, I don’t really see things changing all that much.”
In the U.S., many homeowners in the worst-hit cities are “below water,” meaning they owe more on their mortgage than their house is worth. Somers says that is not the case here.
“There are a few one-off instances of people being under water in Toronto, but it’s not any trend at all,” said Somers, adding that choosing the right house in the first place is always good insurance against a slide in the market.
“If it’s a desirable property in a good location, it’s still always going to sell,” said Somers.
Thursday, December 23, 2010
Flahery responds to banks' comments
I read this to mean Government Intervention is on the horizon! If you need to consolidate do it sooner then later.
Neil "Mortgage Man" McJannet
Thursday, 23 December 2010
While he still hasn’t ruled out tightening mortgage rules next year, Canadian Finance Minister Jim Flahery thinks it is up to banks and not government to slow lending as household debt continues to rise, aided by low interest rates.
“The primary responsibility for prudence in lending practices rests with the financial institutions,” Flaherty told Bloomberg News on Tuesday in Ottawa. “People also need to take responsibility for what they do and exercise common sense in terms of taking on debt.”
This comment was in contrast to what some leading bank executives have said in recent weeks, including Toronto Dominion Bank CEO Edmund Clark, who told The Globe and Mail that cutting Canada’s excessive household debt is a matter for the government rather than lenders, and would be best tackled through tighter rules on mortgages. No bank wants to lead the way in imposing stricter borrowing conditions for fear of losing customers to rivals, Clark, 63, told the newspaper.
“Banks are responsible for their own business practices and what I find odd from time to time is when a bank executive asks me to tighten lending rules,” Flaherty said. “It seems to me that’s the primary responsibility of the financial institutions and not the government.”
Canada’s debt levels topped the U.S. for the first time in 12 years, prompted by record-low interest rates, which saw consumers take on bigger mortgages, car loans and credit card balances.
Flaherty said he expects interest rates to “go up over time,” which will bring higher mortgage costs.
“People have to make sure they can afford, in particular, their mortgage payments when interest rates rise,” Flaherty said.
Neil "Mortgage Man" McJannet
Thursday, 23 December 2010
While he still hasn’t ruled out tightening mortgage rules next year, Canadian Finance Minister Jim Flahery thinks it is up to banks and not government to slow lending as household debt continues to rise, aided by low interest rates.
“The primary responsibility for prudence in lending practices rests with the financial institutions,” Flaherty told Bloomberg News on Tuesday in Ottawa. “People also need to take responsibility for what they do and exercise common sense in terms of taking on debt.”
This comment was in contrast to what some leading bank executives have said in recent weeks, including Toronto Dominion Bank CEO Edmund Clark, who told The Globe and Mail that cutting Canada’s excessive household debt is a matter for the government rather than lenders, and would be best tackled through tighter rules on mortgages. No bank wants to lead the way in imposing stricter borrowing conditions for fear of losing customers to rivals, Clark, 63, told the newspaper.
“Banks are responsible for their own business practices and what I find odd from time to time is when a bank executive asks me to tighten lending rules,” Flaherty said. “It seems to me that’s the primary responsibility of the financial institutions and not the government.”
Canada’s debt levels topped the U.S. for the first time in 12 years, prompted by record-low interest rates, which saw consumers take on bigger mortgages, car loans and credit card balances.
Flaherty said he expects interest rates to “go up over time,” which will bring higher mortgage costs.
“People have to make sure they can afford, in particular, their mortgage payments when interest rates rise,” Flaherty said.
Australia's still hot, Canada not so much: Scotiabank
Thursday, 23 December 2010
Global residential property markets experienced a modest but uneven recovery in 2010, supported by ultra-low interest rates and gradually improving economic conditions, according to the latest Global Real Estate Trends report released from Scotia Economics.
Of the 12 advanced nations tracked, the estimated average inflation-adjusted home prices increased this year in six (Australia, Canada, France, Sweden, Switzerland and the U.K.), were flat in two (Germany and the United States) and fell in four (Ireland, Italy, Japan and Spain). In 2009, eight of the 12 markets suffered price declines.
“The rebound lost some steam in the latter half of the year, mirroring the general loss of momentum in global growth, though regional performances remain highly varied,” said Adrienne Warren, Senior Economist, Scotia Economics. “Despite still attractive borrowing costs, the expiry of purchase incentives in many markets, the relatively slow pace of job creation and mounting concerns over the financial strains facing debt-heavy developed nations are weighing on confidence. These factors will likely keep many prospective buyers on the sidelines in 2011.”
Australia’s housing market is the clear front-runner in 2010. Demand is being supported by low unemployment, while tight housing supply is adding to the upward pressure on prices.
Nonetheless, consecutive interest rate increases by the Reserve Bank of Australia (RBA), totaling 175 basis points since October 2009, alongside the expiry of the enhanced First Home Owners Grant in January 2010, have succeeded in cooling its red-hot property market to some degree. Average inflation-adjusted home prices in the third quarter of 2010 were up 9.4 per cent year over year (y/y), compared with a 15.9 per cent y/y increase in Q1.
“We anticipate a further slowing in sales and price appreciation in 2011,” added Warren. “While Australia’s close trade ties with Asia and resource wealth will continue to underpin a solid pace of domestic activity, higher interest rates will worsen already strained affordability. The RBA has recently taken pause, but we expect the resumption of a gradual policy tightening path in 2011, with short-term rates rising an additional 75 basis points by year-end.”
Meanwhile, Canada had one of the better performing housing markets among advanced nations in 2010, though also one of the most volatile. An unusually active winter and spring, prompted by pent-up demand, expectations of rising interest rates that only partially materialized, the looming transition to a Harmonized Sales Tax (HST) in Ontario and British Columbia, and pending changes in lending qualifying criteria, gave way to an unusually soft summer. Over the fall, sales have returned to a more typical, sustainable level.
“We are neither overtly optimistic nor pessimistic regarding the outlook for 2011,” stated Warren. “On the one hand, we expect interest rates to remain at historically low levels, with the Bank of Canada deferring any further rate hikes to late 2011 given an uncertain global economic outlook and subdued inflation, and longer-term borrowing costs drifting up only modestly. This is an extremely powerful inducement for both first-time and move-up buyers and should maintain a decent level of sales.”
Yet, demand will likely be tempered by more moderate employment and income growth as government restraint efforts take hold. Public sector hiring has accounted for fully a third of the net new jobs created in Canada over the past year, a pattern not likely to be repeated next year.
“Overall, we anticipate a fairly lacklustre year for residential housing, with modestly higher sales volumes and flat inflation-adjusted prices,” commented Warren. “The bigger risk likely awaits 2012 when more significant interest rate increases, combined with record high home prices, will notably strain affordability.”
Global residential property markets experienced a modest but uneven recovery in 2010, supported by ultra-low interest rates and gradually improving economic conditions, according to the latest Global Real Estate Trends report released from Scotia Economics.
Of the 12 advanced nations tracked, the estimated average inflation-adjusted home prices increased this year in six (Australia, Canada, France, Sweden, Switzerland and the U.K.), were flat in two (Germany and the United States) and fell in four (Ireland, Italy, Japan and Spain). In 2009, eight of the 12 markets suffered price declines.
“The rebound lost some steam in the latter half of the year, mirroring the general loss of momentum in global growth, though regional performances remain highly varied,” said Adrienne Warren, Senior Economist, Scotia Economics. “Despite still attractive borrowing costs, the expiry of purchase incentives in many markets, the relatively slow pace of job creation and mounting concerns over the financial strains facing debt-heavy developed nations are weighing on confidence. These factors will likely keep many prospective buyers on the sidelines in 2011.”
Australia’s housing market is the clear front-runner in 2010. Demand is being supported by low unemployment, while tight housing supply is adding to the upward pressure on prices.
Nonetheless, consecutive interest rate increases by the Reserve Bank of Australia (RBA), totaling 175 basis points since October 2009, alongside the expiry of the enhanced First Home Owners Grant in January 2010, have succeeded in cooling its red-hot property market to some degree. Average inflation-adjusted home prices in the third quarter of 2010 were up 9.4 per cent year over year (y/y), compared with a 15.9 per cent y/y increase in Q1.
“We anticipate a further slowing in sales and price appreciation in 2011,” added Warren. “While Australia’s close trade ties with Asia and resource wealth will continue to underpin a solid pace of domestic activity, higher interest rates will worsen already strained affordability. The RBA has recently taken pause, but we expect the resumption of a gradual policy tightening path in 2011, with short-term rates rising an additional 75 basis points by year-end.”
Meanwhile, Canada had one of the better performing housing markets among advanced nations in 2010, though also one of the most volatile. An unusually active winter and spring, prompted by pent-up demand, expectations of rising interest rates that only partially materialized, the looming transition to a Harmonized Sales Tax (HST) in Ontario and British Columbia, and pending changes in lending qualifying criteria, gave way to an unusually soft summer. Over the fall, sales have returned to a more typical, sustainable level.
“We are neither overtly optimistic nor pessimistic regarding the outlook for 2011,” stated Warren. “On the one hand, we expect interest rates to remain at historically low levels, with the Bank of Canada deferring any further rate hikes to late 2011 given an uncertain global economic outlook and subdued inflation, and longer-term borrowing costs drifting up only modestly. This is an extremely powerful inducement for both first-time and move-up buyers and should maintain a decent level of sales.”
Yet, demand will likely be tempered by more moderate employment and income growth as government restraint efforts take hold. Public sector hiring has accounted for fully a third of the net new jobs created in Canada over the past year, a pattern not likely to be repeated next year.
“Overall, we anticipate a fairly lacklustre year for residential housing, with modestly higher sales volumes and flat inflation-adjusted prices,” commented Warren. “The bigger risk likely awaits 2012 when more significant interest rate increases, combined with record high home prices, will notably strain affordability.”
Foreclosure Axe To Fall on Foreclosures.Com Owner
Looks like no-one is safe! An interesting predicament brought on by the fledging real estate in the USA.
Neil "Mortgage Man" McJannet
Top News
Wednesday, 22 December 2010 17:29
By: Faridah Huller, Editor
Miami, FL
Miami, FL—A twist of irony is being served up by the media today with the news that the founder of Foreclosures.com is facing foreclosure and an auction of her house early next month.
Alexis McGee, owner of Foreclosures.com, has made a name for herself and the subscriber-based website she first built in 1995, by helping investors find and buy real-estate properties owned by people struggling to keep foreclosures at bay.
Those very same investors she helps now have a chance to grab the opportunity to buy her Craftsman-style home in Fair Oaks, Sacramento, at a courthouse sale in January 2011. McGee has joined the ranks of thousands of other distressed homeowners fighting off foreclosure.
According to a report by the Sacramento Bee, McGee and her spouse own two real-estate properties, the Fair Oaks home and another in a resort in Squaw Valley. Records show that the couple started having money problems nearly two years ago.
In March 2009, the state filed a lien against her property for $127,000 in unpaid taxes. In August this year, the federal government filed a lien for $210,000 in unpaid taxes.
In June, the couple went into default on their Fair Oaks home as well as on a property in the Squaw Valley. As of June 15 the couple was behind $65,000 on their Fair Oaks mortgage. As of June 28, they were $25,000 delinquent on their Squaw Creek loan.
The Squaw Creek property was scheduled for a foreclosure auction but McGee managed to arrange a short sale for it. That’s where she, as a buyer, got the lender to agree to let her sell the real estate for less than the money she owed on the mortgage.
She is also trying to set up a short sale for her Fair Oaks home. In Dec. 2010, the lender filed a notice of trustee sale which showed that amount owed on this property was $1.7 million. McGee told the Sacramento Bee that she is working with a Lyon real estate agent on a short sale even as the house is scheduled for auction in January 2011.
McGee thinks her house could sell for just under $1 million; way below the $3 million and above value appraised for it after it was built in 2007. McGee said she tried to get the loan modified but the lender, First Horizon Home Loan Corp. was not receptive.
"There's just not a lot of interest in working with the high-end homes. We’re lucky we knew what to do." she said on how she was quickly able to revise her strategy from seeking loan modification to securing a short sale.
The Foreclosures.com owner is not the only recognizable character that has fallen victim to a foreclosure. Fox News commentator and financial guru Tom Sullivan publicly admitted in October that he was looking to short sell his home. Earlier this year, former basketball player of the Sacramento Kings, Ron Artest and his former team mate Kevin Martin, also sought short sales for their homes.
Neil "Mortgage Man" McJannet
Top News
Wednesday, 22 December 2010 17:29
By: Faridah Huller, Editor
Miami, FL
Miami, FL—A twist of irony is being served up by the media today with the news that the founder of Foreclosures.com is facing foreclosure and an auction of her house early next month.
Alexis McGee, owner of Foreclosures.com, has made a name for herself and the subscriber-based website she first built in 1995, by helping investors find and buy real-estate properties owned by people struggling to keep foreclosures at bay.
Those very same investors she helps now have a chance to grab the opportunity to buy her Craftsman-style home in Fair Oaks, Sacramento, at a courthouse sale in January 2011. McGee has joined the ranks of thousands of other distressed homeowners fighting off foreclosure.
According to a report by the Sacramento Bee, McGee and her spouse own two real-estate properties, the Fair Oaks home and another in a resort in Squaw Valley. Records show that the couple started having money problems nearly two years ago.
In March 2009, the state filed a lien against her property for $127,000 in unpaid taxes. In August this year, the federal government filed a lien for $210,000 in unpaid taxes.
In June, the couple went into default on their Fair Oaks home as well as on a property in the Squaw Valley. As of June 15 the couple was behind $65,000 on their Fair Oaks mortgage. As of June 28, they were $25,000 delinquent on their Squaw Creek loan.
The Squaw Creek property was scheduled for a foreclosure auction but McGee managed to arrange a short sale for it. That’s where she, as a buyer, got the lender to agree to let her sell the real estate for less than the money she owed on the mortgage.
She is also trying to set up a short sale for her Fair Oaks home. In Dec. 2010, the lender filed a notice of trustee sale which showed that amount owed on this property was $1.7 million. McGee told the Sacramento Bee that she is working with a Lyon real estate agent on a short sale even as the house is scheduled for auction in January 2011.
McGee thinks her house could sell for just under $1 million; way below the $3 million and above value appraised for it after it was built in 2007. McGee said she tried to get the loan modified but the lender, First Horizon Home Loan Corp. was not receptive.
"There's just not a lot of interest in working with the high-end homes. We’re lucky we knew what to do." she said on how she was quickly able to revise her strategy from seeking loan modification to securing a short sale.
The Foreclosures.com owner is not the only recognizable character that has fallen victim to a foreclosure. Fox News commentator and financial guru Tom Sullivan publicly admitted in October that he was looking to short sell his home. Earlier this year, former basketball player of the Sacramento Kings, Ron Artest and his former team mate Kevin Martin, also sought short sales for their homes.
Tuesday, December 21, 2010
Prudence required when it comes to household debts: CIBC
| Monday, 20 December 2010
While Canadians aren’t in “hot water” yet when it comes to the pace of household debt, prudence is required over the next five years to ensure rising interest rates don’t push too many homeowners into default, according to a report released by CIBC World Markets.
“The pile of debt accumulated thus far doesn’t seem likely to be followed by a flood of defaults, given the restrained pace of interest rate hikes… nevertheless, at the margin, there is reason to begin to par the pace of mortgage and other credit growth in the coming years, particularly for the most marginal borrowers,” stated the report.
The report reiterated the fact that Canadian lending has not included a sub-prime component and that non-mortgage credit has been doled out to those consumers with better credit scores, in stark contrast to conditions in the U.S. prior to 2008.
The report also suggests that Canadians may take some of the required steps towards reducing debt, as the “pressure to borrow more has come from the efforts to keep pace with housing prices.” With prices looking to cool in 2011, mortgage sizes will come down over time and “better income growth ahead might also help make homes more affordable without extending debt loads to the max.”
Overall, the report predicts consumer spending and housing will “provide less of a lift to economic growth.”
While Canadians aren’t in “hot water” yet when it comes to the pace of household debt, prudence is required over the next five years to ensure rising interest rates don’t push too many homeowners into default, according to a report released by CIBC World Markets.
“The pile of debt accumulated thus far doesn’t seem likely to be followed by a flood of defaults, given the restrained pace of interest rate hikes… nevertheless, at the margin, there is reason to begin to par the pace of mortgage and other credit growth in the coming years, particularly for the most marginal borrowers,” stated the report.
The report reiterated the fact that Canadian lending has not included a sub-prime component and that non-mortgage credit has been doled out to those consumers with better credit scores, in stark contrast to conditions in the U.S. prior to 2008.
The report also suggests that Canadians may take some of the required steps towards reducing debt, as the “pressure to borrow more has come from the efforts to keep pace with housing prices.” With prices looking to cool in 2011, mortgage sizes will come down over time and “better income growth ahead might also help make homes more affordable without extending debt loads to the max.”
Overall, the report predicts consumer spending and housing will “provide less of a lift to economic growth.”
Banks required to do more stress tests for debt
| Tuesday, 21 December 2010
Canadian banks and insurers will be required to do more testing on the risks consumer debt places on their balance sheets, said the Office of the Superintendent of Financial Institutions (OSFI) on Monday December 20.
The increased “stress tests” are when banks create hypothetical scenarios, such as a sharp rise in unemployment or significant drop in house prices, to see the potential effects on balance sheets and capital assets. OSFI head Julie Dickson also told the Globe and Mail that it will be asking “many more questions about how banks are monitoring portfolios, including secured loans.”
There is fear that rising interest rates, falling house prices, further job losses or an unexpected economic shock could hurt consumers so that they would be unable to pay back their debts. This in turn could strain the Canadian banks and feed a cycle of dropping consumer spending.
Canadian banks and insurers will be required to do more testing on the risks consumer debt places on their balance sheets, said the Office of the Superintendent of Financial Institutions (OSFI) on Monday December 20.
The increased “stress tests” are when banks create hypothetical scenarios, such as a sharp rise in unemployment or significant drop in house prices, to see the potential effects on balance sheets and capital assets. OSFI head Julie Dickson also told the Globe and Mail that it will be asking “many more questions about how banks are monitoring portfolios, including secured loans.”
There is fear that rising interest rates, falling house prices, further job losses or an unexpected economic shock could hurt consumers so that they would be unable to pay back their debts. This in turn could strain the Canadian banks and feed a cycle of dropping consumer spending.
Monday, December 20, 2010
Christmas is a homebuyer's market
Garry Marr, Financial Post · Friday, Dec. 17, 2010
Don’t over do it this Christmas, if you want to sell your house, that is.
Royal LePage Real Estate Services says it’s time to start thinking about a smaller tree this year if you plan to list your home for sale over the holiday season. Those large, decorated trees can take over a room and make it appear smaller to potential customers.
The week between Christmas and New Year’s is a slow period for real estate transactions, meaning sellers need any advantage they can muster.
“When people are selling their houses at Christmas time, they are selling under some other stress. They are usually highly motived to sell,” says Dianne Usher, a vice-president with Royal LePage. “You’ve got the euphoria of the holiday season and, oops we have to sell. It’s a great time to buy.”
The real estate company is not being a total Scrooge about the season, it’s just calling for less of everything.
Among its other suggestions are avoiding too many lights and opting for white lights instead of multi-colored flashing bulbs to give your home a neutral glow.
Forget the stacks of presents under the tree too, they just give your home a cluttered look. And those holidays meals may smell great to you, but they are a strange odour to a potential buyer.
“You want to try to tone it down a bit. Take the personal aspect of your home out of it,” says Ms. Usher, adding Christmas marks your home more than usual. “It just adds too much of a distraction to the room.”
But should you have no Christmas decorations? Would that be a turn off to buyers?
“Not in major urban centres because we are so multicultural today,” says Ms. Usher, adding in some rural and suburban centres, a touch of Christmas can be important to selling.
Mary Helen Rosenberg, a partner in Stage To Sell, says the whole idea behind staging is to keep your home as neutral as possible, so it appeals to the widest audience of buyers.
“No, I wouldn’t get rid of the tree all together, but I wouldn’t overdo it with decorations, too,” Ms. Rosenberg says. “You can’t rob the family of traditions. I wouldn’t put the tree up Dec. 1 and take it down Jan. 20. I might close that window and keep it fairly short and allow the family to enjoy its regular traditions. If it’s serious and we need to sell your house, you bring the tree down a little earlier.”
Even the guys who grow the trees say it’s probably not a good idea to have a giant one in the middle of your living room during an open house.
“When it comes to selling a house, it is important to not fill the room with a large and wide tree loaded with decorations. The eyes of the buyer will look at how big a tree is and how small the room is, even if it’s in the basement,” said Lewis Downey, executive director of Canadian Christmas Tree Growers Association.
“I think you do need a tree though. It’s Christmas time and it’s natural to have a tree. If you don’t have a tree, it can have reverse effect and people may say, ‘What’s the matter, there’s no tree. They’re not happy to live there.’”
Don’t over do it this Christmas, if you want to sell your house, that is.
Royal LePage Real Estate Services says it’s time to start thinking about a smaller tree this year if you plan to list your home for sale over the holiday season. Those large, decorated trees can take over a room and make it appear smaller to potential customers.
The week between Christmas and New Year’s is a slow period for real estate transactions, meaning sellers need any advantage they can muster.
“When people are selling their houses at Christmas time, they are selling under some other stress. They are usually highly motived to sell,” says Dianne Usher, a vice-president with Royal LePage. “You’ve got the euphoria of the holiday season and, oops we have to sell. It’s a great time to buy.”
The real estate company is not being a total Scrooge about the season, it’s just calling for less of everything.
Among its other suggestions are avoiding too many lights and opting for white lights instead of multi-colored flashing bulbs to give your home a neutral glow.
Forget the stacks of presents under the tree too, they just give your home a cluttered look. And those holidays meals may smell great to you, but they are a strange odour to a potential buyer.
“You want to try to tone it down a bit. Take the personal aspect of your home out of it,” says Ms. Usher, adding Christmas marks your home more than usual. “It just adds too much of a distraction to the room.”
But should you have no Christmas decorations? Would that be a turn off to buyers?
“Not in major urban centres because we are so multicultural today,” says Ms. Usher, adding in some rural and suburban centres, a touch of Christmas can be important to selling.
Mary Helen Rosenberg, a partner in Stage To Sell, says the whole idea behind staging is to keep your home as neutral as possible, so it appeals to the widest audience of buyers.
“No, I wouldn’t get rid of the tree all together, but I wouldn’t overdo it with decorations, too,” Ms. Rosenberg says. “You can’t rob the family of traditions. I wouldn’t put the tree up Dec. 1 and take it down Jan. 20. I might close that window and keep it fairly short and allow the family to enjoy its regular traditions. If it’s serious and we need to sell your house, you bring the tree down a little earlier.”
Even the guys who grow the trees say it’s probably not a good idea to have a giant one in the middle of your living room during an open house.
“When it comes to selling a house, it is important to not fill the room with a large and wide tree loaded with decorations. The eyes of the buyer will look at how big a tree is and how small the room is, even if it’s in the basement,” said Lewis Downey, executive director of Canadian Christmas Tree Growers Association.
“I think you do need a tree though. It’s Christmas time and it’s natural to have a tree. If you don’t have a tree, it can have reverse effect and people may say, ‘What’s the matter, there’s no tree. They’re not happy to live there.’”
Friday, December 17, 2010
Foreclosure Listings: Tools For Success
Friday, 17 December 2010 19:46
By: Elizabeth Martinez, Editor
Miami, FL
If you are still wondering why real estate investors exert much effort into finding the best foreclosure listings, then you should know that they are just about the most powerful tools that one can have in order to succeed in foreclosure investing. Without them, a buyer or an investor will be helpless, with no sense of direction. This is why aside from investing in the properties themselves, seasoned buyers also invest in the quality of foreclosure lists that they use.
The Qualities Of A Good List
When you rely on a foreclosure list for information, it means that you are, in effect, putting your investment at the hands of a list that you think will serve your needs. However, not every foreclosure list that purports to give the best information regarding the market is actually useful and helpful to a buyer. Sometimes, you will encounter a list that does not really reflect what are currently being offered on the market. In short, if you are not too careful, you may be misled by false information.
In order to avoid this, you should first and foremost look for foreclosure listings that have high integrity and are well-esteemed in the industry. Of course, what determines its integrity usually are the persons behind such lists. If you have a team of professionals that handle your data and information, you can be sure that they are of high quality and released with the consumers' interest in mind.
The second quality that you should look for is its accessibility. A consistent access to a foreclosure list is an imperative aspect of competitive investing. If you cannot have access to your tool at the time that you need it, your investment may suffer. Know that the market is constantly moving and for this reason alone, you must be able to reach your tool and update yourself with newer and fresher information. This is the main reason why an online foreclosure list provider is your ultimate bet when it comes to foreclosure listings.
Finally, you must also look for a foreclosure list that has a complete and widecoverage of foreclosure offerings in all states of the country. This is to make sure that you do not miss any opportunity as soon as they are available on the market. Remembering these criteria will help you grab amazing opportunities from the foreclosures market.
By: Elizabeth Martinez, Editor
Mortgage Lending News, LLC
By: Elizabeth Martinez, Editor
Miami, FL
If you are still wondering why real estate investors exert much effort into finding the best foreclosure listings, then you should know that they are just about the most powerful tools that one can have in order to succeed in foreclosure investing. Without them, a buyer or an investor will be helpless, with no sense of direction. This is why aside from investing in the properties themselves, seasoned buyers also invest in the quality of foreclosure lists that they use.
The Qualities Of A Good List
When you rely on a foreclosure list for information, it means that you are, in effect, putting your investment at the hands of a list that you think will serve your needs. However, not every foreclosure list that purports to give the best information regarding the market is actually useful and helpful to a buyer. Sometimes, you will encounter a list that does not really reflect what are currently being offered on the market. In short, if you are not too careful, you may be misled by false information.
In order to avoid this, you should first and foremost look for foreclosure listings that have high integrity and are well-esteemed in the industry. Of course, what determines its integrity usually are the persons behind such lists. If you have a team of professionals that handle your data and information, you can be sure that they are of high quality and released with the consumers' interest in mind.
The second quality that you should look for is its accessibility. A consistent access to a foreclosure list is an imperative aspect of competitive investing. If you cannot have access to your tool at the time that you need it, your investment may suffer. Know that the market is constantly moving and for this reason alone, you must be able to reach your tool and update yourself with newer and fresher information. This is the main reason why an online foreclosure list provider is your ultimate bet when it comes to foreclosure listings.
Finally, you must also look for a foreclosure list that has a complete and widecoverage of foreclosure offerings in all states of the country. This is to make sure that you do not miss any opportunity as soon as they are available on the market. Remembering these criteria will help you grab amazing opportunities from the foreclosures market.
By: Elizabeth Martinez, Editor
Mortgage Lending News, LLC
A comment on Bond Yields from our MERIX economist, John Bordignon
Bond Yields are influenced by many factors....inflation being one.....based on the last inflation forecast, inflation has actually risen to an annualized rate of 2.0%, Bond yields were below 2.0% for a short period of time a few months ago......if you are an investor and inflation is 2.0%, why would you invest in a bond that yields a rate lower than inflation?.....if you did you would actually be losing purchasing power.
Secondly the bond prices are driven by supply and demand.....too much supply and not enough demand typically drives prices lower therefore yields rise........Canadian Bonds were a global darling a few weeks ago (European instability) and that drove prices up and yields down......as the situation settled in Europe demand dropped off and bond prices fell, yields went up.
Thirdly, U.S. is actually doing better than what people had been expecting, again, inflation is low in U.S.(less than 1%) so U.S. Bonds are becoming more attractive, this too puts pressure on our bond prices.
As you can see there is not ONE factor that drives bond prices, there are several.....the big factor is investor sentiment and thinking, like some investors, they may not always be rationale
Secondly the bond prices are driven by supply and demand.....too much supply and not enough demand typically drives prices lower therefore yields rise........Canadian Bonds were a global darling a few weeks ago (European instability) and that drove prices up and yields down......as the situation settled in Europe demand dropped off and bond prices fell, yields went up.
Thirdly, U.S. is actually doing better than what people had been expecting, again, inflation is low in U.S.(less than 1%) so U.S. Bonds are becoming more attractive, this too puts pressure on our bond prices.
As you can see there is not ONE factor that drives bond prices, there are several.....the big factor is investor sentiment and thinking, like some investors, they may not always be rationale
'Happy shoppers' lift holiday spending
Tobi Cohen, Financial Post ·
OTTAWA— Canadians are expected to dig deeper into their wallets this holiday season than they have in the last two years according to a new survey that predicts the average person will spend $968 in 2010.
Scotiabank’s annual Holiday Spending Study, which measures expected spending on gifts and entertaining, found that’s up from $891 last year and $884 in 2008.
“For the most part, Canadians appear to be happy shoppers this holiday season,” Scotiabank deputy chief economist Aron Gampel said in a statement accompanying the survey results.
“Unlike the performances throughout the developed world, Canada’s economy has fully recouped the employment and economic losses incurred during the recession, with increasing activity in the commodity-producing regions and buoyant housing markets helping underpin confidence and spending power.”
According to the survey, men are expected to spend more than women, young Canadians aged 18-34 are more likely to be working over the holiday and gift cards remain the most popular gift to both give and receive, the survey found.
Other popular gifts among givers are clothing (40%) and electronics (39%). Some 33% of people like to receive electronics while 32% prefer cash.
Women were most likely to ask for gift cards, clothing, trips, jewelry and housewares, while men wanted electronics, tools and sporting goods.
For the second consecutive year, Albertans are planning to spend the most on gifts ($886), while Quebecers will spend the least ($494).
Overall holiday spending among Albertans is expected to push $1,388, compared with $776 among Quebecers.
The survey also found half of all Canadians, particularly those over 50, said they’ve saved enough in advance to cover everybody on their list.
“Though concerns have mounted over the continuing run-up in household indebtedness, the survey indicates the responsiveness of Canadians to manage their finances and spend more responsibly,” Mr. Gampel said.
The online survey of about 1,000 Canadians was conducted by Harris/Decima between Oct. 25 and Nov. 2.
OTTAWA— Canadians are expected to dig deeper into their wallets this holiday season than they have in the last two years according to a new survey that predicts the average person will spend $968 in 2010.
Scotiabank’s annual Holiday Spending Study, which measures expected spending on gifts and entertaining, found that’s up from $891 last year and $884 in 2008.
“For the most part, Canadians appear to be happy shoppers this holiday season,” Scotiabank deputy chief economist Aron Gampel said in a statement accompanying the survey results.
“Unlike the performances throughout the developed world, Canada’s economy has fully recouped the employment and economic losses incurred during the recession, with increasing activity in the commodity-producing regions and buoyant housing markets helping underpin confidence and spending power.”
According to the survey, men are expected to spend more than women, young Canadians aged 18-34 are more likely to be working over the holiday and gift cards remain the most popular gift to both give and receive, the survey found.
Other popular gifts among givers are clothing (40%) and electronics (39%). Some 33% of people like to receive electronics while 32% prefer cash.
Women were most likely to ask for gift cards, clothing, trips, jewelry and housewares, while men wanted electronics, tools and sporting goods.
For the second consecutive year, Albertans are planning to spend the most on gifts ($886), while Quebecers will spend the least ($494).
Overall holiday spending among Albertans is expected to push $1,388, compared with $776 among Quebecers.
The survey also found half of all Canadians, particularly those over 50, said they’ve saved enough in advance to cover everybody on their list.
“Though concerns have mounted over the continuing run-up in household indebtedness, the survey indicates the responsiveness of Canadians to manage their finances and spend more responsibly,” Mr. Gampel said.
The online survey of about 1,000 Canadians was conducted by Harris/Decima between Oct. 25 and Nov. 2.
Thursday, December 16, 2010
Banks won't impose own tighter mortgage rules: TD
| Thursday, 16 December 2010
Canadian banks are not likely to impose stricter mortgage qualifying rules on their own to curb the nation’s rising household debt, TD chief executive officer Ed Clark told The Globe and Mail.
The banks fear they will suffer a major loss of customers to rivals so it would be up to the government to change mortgage policy if that’s the biggest concern for personal debt. “Personal banking is a highly competitive industry,” Clark told the national newspaper. “If we said, ‘Look, we’re going to be heroes and save Canada from itself, and we’ll impose a whole new mortgage regime on everyone else,’ the other four big banks would say ‘Let’s carve them up.’”
Earlier this week on Monday December 13, Finance Minister Jim Flaherty said if necessary Ottawa would tighten the mortgage rules further. TD’s analysis shows the most direct way to help the debt situation would be to shorten the maximum amortization schedule from 35 to 30 years.
Other options include forcing homebuyers to pay a higher minimum down payment, or extending the qualifying rate to six or seven years from five.
“Borrowers have become used to low rates and are borrowing more money, thinking that these low rates are sustainable,” Margo Wynhofen, Verico One Mortgage Corp. broker and president of the Independent Mortgage Brokers’ Association (IMBA) of Ontario, told MortgageBrokerNews.ca. “When mortgage rates go back up to seven-and-a-half, eight per cent, those payments will not be sustainable.” Wynhofen asks her clients if they’ll be able to afford the mortgage when the rate does eventually return to normal levels. But she sees other types of consumer debt as the bigger issue.
The CMP comment board from the Flaherty announcement shows other brokers are also pointing to non-mortgage-related places where the debt problem is being compounded, such as credit cards and car loans. “If any industry should be regulated, it should be the auto finance industry,” said one on MortgageBrokersNews.ca. “I see people who do not qualify for a mortgage debt consolidation but they are able to get a new car financed.”
Another wrote: “It’s credit card debt that’s the issue. The policies are way too loose in the first place. Every credit application should have to qualify on its own merits. There should also be support documents required and verified. The Canadian banks rake in huge profits off credit cards, lines of credit and loans. Of course the banks are not going to want tighter restrictions on the higher interest-generating business. Why ask them? Killing the mortgage industry is not the answer.”
Canadian banks are not likely to impose stricter mortgage qualifying rules on their own to curb the nation’s rising household debt, TD chief executive officer Ed Clark told The Globe and Mail.
The banks fear they will suffer a major loss of customers to rivals so it would be up to the government to change mortgage policy if that’s the biggest concern for personal debt. “Personal banking is a highly competitive industry,” Clark told the national newspaper. “If we said, ‘Look, we’re going to be heroes and save Canada from itself, and we’ll impose a whole new mortgage regime on everyone else,’ the other four big banks would say ‘Let’s carve them up.’”
Earlier this week on Monday December 13, Finance Minister Jim Flaherty said if necessary Ottawa would tighten the mortgage rules further. TD’s analysis shows the most direct way to help the debt situation would be to shorten the maximum amortization schedule from 35 to 30 years.
Other options include forcing homebuyers to pay a higher minimum down payment, or extending the qualifying rate to six or seven years from five.
“Borrowers have become used to low rates and are borrowing more money, thinking that these low rates are sustainable,” Margo Wynhofen, Verico One Mortgage Corp. broker and president of the Independent Mortgage Brokers’ Association (IMBA) of Ontario, told MortgageBrokerNews.ca. “When mortgage rates go back up to seven-and-a-half, eight per cent, those payments will not be sustainable.” Wynhofen asks her clients if they’ll be able to afford the mortgage when the rate does eventually return to normal levels. But she sees other types of consumer debt as the bigger issue.
The CMP comment board from the Flaherty announcement shows other brokers are also pointing to non-mortgage-related places where the debt problem is being compounded, such as credit cards and car loans. “If any industry should be regulated, it should be the auto finance industry,” said one on MortgageBrokersNews.ca. “I see people who do not qualify for a mortgage debt consolidation but they are able to get a new car financed.”
Another wrote: “It’s credit card debt that’s the issue. The policies are way too loose in the first place. Every credit application should have to qualify on its own merits. There should also be support documents required and verified. The Canadian banks rake in huge profits off credit cards, lines of credit and loans. Of course the banks are not going to want tighter restrictions on the higher interest-generating business. Why ask them? Killing the mortgage industry is not the answer.”
Top 10 Things To Avoid When Selling Your Home Over The Holidays, According To Royal LePage
TORONTO, Dec. 16 /CNW/ - Vacation time and slower work schedules create an ideal time for open houses. However, as homes fill up with presents, decorations and visitors, sellers are often faced with the challenge of striking the right balance between cozy and crammed. Keeping your home tidy and sparingly-decorated doesn't mean sellers can't celebrate the season in style, but remember that buyers are looking for just the right amount of sparkle.
"Potential buyers expect that there may be some decorations, but when they arrive they are trying to envision how they would spend their day-to-day lives in the home," says Phil Soper, president and chief executive, Royal LePage Real Estate Services. "Keeping the holiday decorations to the right level will be easier if you remember the goal is to bring out the home's structural charm," Soper adds.
We know that potential buyers can be put off by a home that has too many personal items. So while trying to manage the Christmas clutter, sellers should also remove items that remind buyers that the home belongs to someone else. To assist sellers, Royal LePage compiled a top ten list of things to avoid when selling a home during the holiday season.
Too many lights: A home will dazzle more if lights are kept to a tasteful minimum. Sellers should opt for white lights instead of multi-coloured flashing bulbs to provide a more neutral glow to a home.
Forgetting to clear the snow: Snow can look beautiful on trees, but driveways and walkways should be cleared as soon as the flakes fall. Buyers should be able to move freely during an open house so it's important to remember all the outdoor paths and patios around your home.
No life or landscape: Give buyers a chance to imagine the potential in your landscape. Frost-resistant plants like flowering kale or miniature trees allow sellers to liven up walkways without taking away the buyer's ability to envision his or her dream outdoor spaces
Not cozy: Everyone appreciates a warm, cozy home - especially in the winter. Set the thermostat at a warm temperature for the whole day, and be mindful that some thermostats have low temperature pre-sets during the day when no one is at home. When the home is attended, fireplaces and candles could also be lit to create a comfortable environment throughout the day.
Engage the senses: Simmering a pot of cider with cinnamon during open houses or showings will create a warm and festive feeling.
Lingering odours: Be aware of those holiday dishes that may leave a strong odour. If possible, wait until showings are completed before cooking those traditional favorites -- potential buyers will appreciate a neutral environment.
Hiding a home's seasonal bests: Photos of the home's back and front yards, gardens and patios in spring and summer will show potential buyers what the house looks like when it is not buried under snow and when the leaves are still on trees.
Don't let the tree take over: A smaller Christmas tree, with minimal decorations, will create the appearance of more space. A huge tree, on the other hand, will make the room look smaller, and busy decorations can intensify clutter.
Presents should not be present: It is important to cut back on clutter when showing a home; hide the wrapped presents to keep them out of eyesight.
Too many decorations: Remember, when selling a home during the holidays, less is always more. Whimsical ornaments can be great accents during the holidays, but be mindful not to go overboard. When it doubt, remove it!
"Potential buyers expect that there may be some decorations, but when they arrive they are trying to envision how they would spend their day-to-day lives in the home," says Phil Soper, president and chief executive, Royal LePage Real Estate Services. "Keeping the holiday decorations to the right level will be easier if you remember the goal is to bring out the home's structural charm," Soper adds.
We know that potential buyers can be put off by a home that has too many personal items. So while trying to manage the Christmas clutter, sellers should also remove items that remind buyers that the home belongs to someone else. To assist sellers, Royal LePage compiled a top ten list of things to avoid when selling a home during the holiday season.
Too many lights: A home will dazzle more if lights are kept to a tasteful minimum. Sellers should opt for white lights instead of multi-coloured flashing bulbs to provide a more neutral glow to a home.
Forgetting to clear the snow: Snow can look beautiful on trees, but driveways and walkways should be cleared as soon as the flakes fall. Buyers should be able to move freely during an open house so it's important to remember all the outdoor paths and patios around your home.
No life or landscape: Give buyers a chance to imagine the potential in your landscape. Frost-resistant plants like flowering kale or miniature trees allow sellers to liven up walkways without taking away the buyer's ability to envision his or her dream outdoor spaces
Not cozy: Everyone appreciates a warm, cozy home - especially in the winter. Set the thermostat at a warm temperature for the whole day, and be mindful that some thermostats have low temperature pre-sets during the day when no one is at home. When the home is attended, fireplaces and candles could also be lit to create a comfortable environment throughout the day.
Engage the senses: Simmering a pot of cider with cinnamon during open houses or showings will create a warm and festive feeling.
Lingering odours: Be aware of those holiday dishes that may leave a strong odour. If possible, wait until showings are completed before cooking those traditional favorites -- potential buyers will appreciate a neutral environment.
Hiding a home's seasonal bests: Photos of the home's back and front yards, gardens and patios in spring and summer will show potential buyers what the house looks like when it is not buried under snow and when the leaves are still on trees.
Don't let the tree take over: A smaller Christmas tree, with minimal decorations, will create the appearance of more space. A huge tree, on the other hand, will make the room look smaller, and busy decorations can intensify clutter.
Presents should not be present: It is important to cut back on clutter when showing a home; hide the wrapped presents to keep them out of eyesight.
Too many decorations: Remember, when selling a home during the holidays, less is always more. Whimsical ornaments can be great accents during the holidays, but be mindful not to go overboard. When it doubt, remove it!
Wednesday, December 15, 2010
Canadian Consumer Confidence Steady
OTTAWA, Dec. 15 /CNW/ - The latest Harris/Decima-Investor's Group Index of Consumer Confidence indicates that Canadian consumer confidence has increased very slightly over the past three months. Meanwhile, US consumer confidence rose over the same period as well.
The significant elements of the Index also remained relatively unchanged including:
•16% of Canadians indicating they are better off financially compared to a year ago, while 23% feel they are worse off. These numbers remain essentially unchanged from August when the split was 15%-24%.
•Canadians remain more likely to see good times financially for themselves a year from now than bad. In total, 27% believe they will be better off a year from now, consistent with the 26% recorded in the last wave. Conversely, 12% feel they will be worse off a year from now.
•One in five Canadians (19%) see good times ahead for the economy in the next twelve months, essentially unchanged from the 20% who said so in the last wave. Conversely, 14% see bad times over this same period, relatively unchanged from the 16% who said so in August.
•A majority (52%) believe there will be good times financially for the Canadian economy in the next 5 years, while 34% believe there will be unemployment and recession over this period. This split remains represents a slight dip from the 55%-32% split recorded in the previous wave.
•Half (50%) believe that now is a good time to make a major purchase. Nationally, 35% believe it is a bad time to make such a purchase. In August, this split was 49%-36%.
According to Senior Vice-President Doug Anderson, "As the year wraps up, Canadians remain cautious, but confident. These numbers suggest that while some media narratives may suggest a more pessimistic economic future, Canadians are referencing their own experiences and are stabilizing at roughly the same relatively positive outlook we were measuring in the quarters preceding the recession."
"Canadians appear to have acknowledged that the economic situation and their personal financial lives have become a little more stable," said Jack Courtney, Assistant Vice-President of Advanced Financial Planning at Investors Group. "This is a positive indication that we can continue to plan and move forward with confidence."
These data were gathered through teleVox, the company's national telephone omnibus survey for two weeks from November 18 to November 29 , 2010 for just over 2,000 completes. A sample of the same size has a margin of error of 2.2%, 19 times out of 20.
The significant elements of the Index also remained relatively unchanged including:
•16% of Canadians indicating they are better off financially compared to a year ago, while 23% feel they are worse off. These numbers remain essentially unchanged from August when the split was 15%-24%.
•Canadians remain more likely to see good times financially for themselves a year from now than bad. In total, 27% believe they will be better off a year from now, consistent with the 26% recorded in the last wave. Conversely, 12% feel they will be worse off a year from now.
•One in five Canadians (19%) see good times ahead for the economy in the next twelve months, essentially unchanged from the 20% who said so in the last wave. Conversely, 14% see bad times over this same period, relatively unchanged from the 16% who said so in August.
•A majority (52%) believe there will be good times financially for the Canadian economy in the next 5 years, while 34% believe there will be unemployment and recession over this period. This split remains represents a slight dip from the 55%-32% split recorded in the previous wave.
•Half (50%) believe that now is a good time to make a major purchase. Nationally, 35% believe it is a bad time to make such a purchase. In August, this split was 49%-36%.
According to Senior Vice-President Doug Anderson, "As the year wraps up, Canadians remain cautious, but confident. These numbers suggest that while some media narratives may suggest a more pessimistic economic future, Canadians are referencing their own experiences and are stabilizing at roughly the same relatively positive outlook we were measuring in the quarters preceding the recession."
"Canadians appear to have acknowledged that the economic situation and their personal financial lives have become a little more stable," said Jack Courtney, Assistant Vice-President of Advanced Financial Planning at Investors Group. "This is a positive indication that we can continue to plan and move forward with confidence."
These data were gathered through teleVox, the company's national telephone omnibus survey for two weeks from November 18 to November 29 , 2010 for just over 2,000 completes. A sample of the same size has a margin of error of 2.2%, 19 times out of 20.
Home Leasing Service Offers Distressed Homeowners New Way To Fight Foreclosure
Top News
Tuesday, 14 December 2010 19:49
By: Faridah Huller, Editor
Miami, FL
Miami, FL—An ingenious plan was hatched and spearheaded today by a company called Home Lease Exchange LLC (HLE) to offer distressed homeowners a novel way to fight off foreclosures and to force lenders to modify their mortgages.
Through the website ForceYourLenderToModify.com, HLE urges families who are facing foreclosures to sign up for this unique new service whereby distressed homeowners can set up and exchange long-term leases of their homes.
Armed with their fully-executed leases, distressed homeowners can then send copies of the leases to their mortgage servicers. Mortgage services and lenders are by law obligated to disclose to prospective buyers that the property they are trying to sell has an encumbrance attached to it in the form of the long-term lease.
Homes that have been put under trustee sales that carry an encumbrance of a five-year lease will not be snapped up by buyers, the company’s press release further explained.
“Banks don’t want to be landlords, so their best option is to modify the loan for the current homeowner. Homeowners can then cancel the lease if a modification occurs’ HLE managing director Michael Levin said in the press release.
The plan gives trouble homeowners “amazing leverage” with their lenders because according to the “Helping Families Save Their Homes Act” of the Obama Administration, tenants have the right to stay in their homes through the term of their lease, on the condition that the lease is entered before the title of the property has been completely transferred.
HLE provides a safe-haven for struggling individuals and families by over-riding credit checks or security deposits on the leases it executes, Levin further clarified. "Only the first month's rent is required to move into a property.”
“Homeowners will be making the lease terms easy through Home Lease Exchange because they realize that helping one another is their only defense against a system stacked against them," Levin added.
If a lender opts to foreclose on a home, HLE can also help the homeowner move from their home and lease another home that has been foreclosed in their neighborhood. The service is not limited to people fighting off foreclosures but to anyone looking to lease homes on very favorable terms.
Tuesday, 14 December 2010 19:49
By: Faridah Huller, Editor
Miami, FL
Miami, FL—An ingenious plan was hatched and spearheaded today by a company called Home Lease Exchange LLC (HLE) to offer distressed homeowners a novel way to fight off foreclosures and to force lenders to modify their mortgages.
Through the website ForceYourLenderToModify.com, HLE urges families who are facing foreclosures to sign up for this unique new service whereby distressed homeowners can set up and exchange long-term leases of their homes.
Armed with their fully-executed leases, distressed homeowners can then send copies of the leases to their mortgage servicers. Mortgage services and lenders are by law obligated to disclose to prospective buyers that the property they are trying to sell has an encumbrance attached to it in the form of the long-term lease.
Homes that have been put under trustee sales that carry an encumbrance of a five-year lease will not be snapped up by buyers, the company’s press release further explained.
“Banks don’t want to be landlords, so their best option is to modify the loan for the current homeowner. Homeowners can then cancel the lease if a modification occurs’ HLE managing director Michael Levin said in the press release.
The plan gives trouble homeowners “amazing leverage” with their lenders because according to the “Helping Families Save Their Homes Act” of the Obama Administration, tenants have the right to stay in their homes through the term of their lease, on the condition that the lease is entered before the title of the property has been completely transferred.
HLE provides a safe-haven for struggling individuals and families by over-riding credit checks or security deposits on the leases it executes, Levin further clarified. "Only the first month's rent is required to move into a property.”
“Homeowners will be making the lease terms easy through Home Lease Exchange because they realize that helping one another is their only defense against a system stacked against them," Levin added.
If a lender opts to foreclose on a home, HLE can also help the homeowner move from their home and lease another home that has been foreclosed in their neighborhood. The service is not limited to people fighting off foreclosures but to anyone looking to lease homes on very favorable terms.
Home Upgrades That Don’t Pay Off
Many home owner are probably thinking about making some home upgrades to attract flocks of admiring buyers. While it's certainly a smart move to make a few improvements, don't overdo it. If you spend stacks of cash on remodelling expenses, you'll probably never recoup your investment.
Before you invest tons of money into an elaborate renovation project, consider what the competing properties in your neighbourhood have to offer. While you want your house to stand out from the competition, you shouldn't make unwarranted upgrades that greatly exceed other properties in the area. Not only will you end up losing money, but you may even scare off potential buyers.
Find out how similarly priced homes in your neighbourhood measure up, and make improvements based on your specific marketplace.
1. High maintenance upgrades
If your upgrade requires too much upkeep, buyers may view it as more of a nuisance than an asset. A prime example is an in-ground swimming pool, which can cost a small fortune to install and maintain. Real estate agents anywhere, except in exclusive neighbourhoods of warm climates, will tell you that a swimming pool can be more of a negative than a positive on resale.
Buyers with young children often steer clear of homes with pools because of safety concerns. In other words, home buyers are more likely to view your in-ground pool as an inconvenience - not a selling point.
2. Replacing a popular feature
Before you consider making a major home change, such as converting your garage into a game room, take a look around. If every other home in your neighbourhood boasts a two-car garage, you should probably think twice. Do you really want to be the only house in the area with no garage? Most homebuyers would prefer to have a sheltered place to park their car than a room to play ping pong and darts.
3. Unpopular upgrades
Homeowners may, in an attempt to increase the value of a home, make improvements to the property that unintentionally make the home fall outside of the norm for the neighbourhood. While a large, expensive remodel, such as adding a second story with two bedrooms and a full bath, might make the home more appealing, it will not add significantly to the resale value if the house is in the midst of a neighbourhood of small one-story homes.
4. Extensive Landscaping
Homebuyers may appreciate well-maintained or mature landscaping, but don't expect the home value to increase because of it. A beautiful yard may encourage potential buyers to take a closer look at the property, but will probably not add to the selling price. If a buyer is unable or unwilling to put in the effort to maintain a garden, it will quickly become an eyesore, or the new homeowner might need to pay a qualified gardener to take charge. Either way, many buyers view elaborate landscaping as a burden and, as a result, are not likely to consider it when placing value on the home.
5. High-End upgrades
A home that has a beautifully remodelled and modern kitchen with stainless steel appliances and new granite countertop can be viewed as a work in progress if the bathrooms remain functionally obsolete. Therefore, the remodel might not fetch a high return if the rest of the home is not brought up to the same level. High-quality upgrades generally increase the value of high-end homes, but not necessarily mid-range houses where the upgrade may be inconsistent with the rest of the home.
6. Invisible Improvements
Invisible improvements are those costly projects that you know make your house a better place to live in, but that nobody else would notice or likely care about. A new plumbing system or HVAC unit (heating, venting and air conditioning) might be necessary, but don't expect it to recover these costs when it comes time to sell. Many homebuyers simply expect these systems to be in good working order and will not pay extra just because you recently installed a new heater. It may be better to think of these improvements in terms of regular maintenance, and not an investment in your home's value.
Overall, it's good to put some work into your house before you try to sell it, as it can add value and make it more attractive to potential buyers. However, there are some things that will have the buyer running for the door - or will at least not add anything to the house's closing price. Keep these things in mind when you're getting ready to put up that "For Sale" sign.
Before you invest tons of money into an elaborate renovation project, consider what the competing properties in your neighbourhood have to offer. While you want your house to stand out from the competition, you shouldn't make unwarranted upgrades that greatly exceed other properties in the area. Not only will you end up losing money, but you may even scare off potential buyers.
Find out how similarly priced homes in your neighbourhood measure up, and make improvements based on your specific marketplace.
1. High maintenance upgrades
If your upgrade requires too much upkeep, buyers may view it as more of a nuisance than an asset. A prime example is an in-ground swimming pool, which can cost a small fortune to install and maintain. Real estate agents anywhere, except in exclusive neighbourhoods of warm climates, will tell you that a swimming pool can be more of a negative than a positive on resale.
Buyers with young children often steer clear of homes with pools because of safety concerns. In other words, home buyers are more likely to view your in-ground pool as an inconvenience - not a selling point.
2. Replacing a popular feature
Before you consider making a major home change, such as converting your garage into a game room, take a look around. If every other home in your neighbourhood boasts a two-car garage, you should probably think twice. Do you really want to be the only house in the area with no garage? Most homebuyers would prefer to have a sheltered place to park their car than a room to play ping pong and darts.
3. Unpopular upgrades
Homeowners may, in an attempt to increase the value of a home, make improvements to the property that unintentionally make the home fall outside of the norm for the neighbourhood. While a large, expensive remodel, such as adding a second story with two bedrooms and a full bath, might make the home more appealing, it will not add significantly to the resale value if the house is in the midst of a neighbourhood of small one-story homes.
4. Extensive Landscaping
Homebuyers may appreciate well-maintained or mature landscaping, but don't expect the home value to increase because of it. A beautiful yard may encourage potential buyers to take a closer look at the property, but will probably not add to the selling price. If a buyer is unable or unwilling to put in the effort to maintain a garden, it will quickly become an eyesore, or the new homeowner might need to pay a qualified gardener to take charge. Either way, many buyers view elaborate landscaping as a burden and, as a result, are not likely to consider it when placing value on the home.
5. High-End upgrades
A home that has a beautifully remodelled and modern kitchen with stainless steel appliances and new granite countertop can be viewed as a work in progress if the bathrooms remain functionally obsolete. Therefore, the remodel might not fetch a high return if the rest of the home is not brought up to the same level. High-quality upgrades generally increase the value of high-end homes, but not necessarily mid-range houses where the upgrade may be inconsistent with the rest of the home.
6. Invisible Improvements
Invisible improvements are those costly projects that you know make your house a better place to live in, but that nobody else would notice or likely care about. A new plumbing system or HVAC unit (heating, venting and air conditioning) might be necessary, but don't expect it to recover these costs when it comes time to sell. Many homebuyers simply expect these systems to be in good working order and will not pay extra just because you recently installed a new heater. It may be better to think of these improvements in terms of regular maintenance, and not an investment in your home's value.
Overall, it's good to put some work into your house before you try to sell it, as it can add value and make it more attractive to potential buyers. However, there are some things that will have the buyer running for the door - or will at least not add anything to the house's closing price. Keep these things in mind when you're getting ready to put up that "For Sale" sign.
Economy to grow slightly faster in 2011 than this year, says RBC report
By The Canadian Press
TORONTO - Canadian economic growth will pick up the pace next year after a recent lull, to push the annual growth rate higher in 2011, according to the latest economic outlook from RBC Economics.
Economic growth slowed in the third quarter of this year, largely due to softness in the housing market and U.S. economy, the report found.
However, the report says, improving financial market conditions and lingering low interest rates will boost GDP to 3.2 per cent in 2011, slightly more robust than 2010’s projected growth of 3.1 per cent.
"The mid-year economic slowdown reflected a pullback in housing investment, which fell after five consecutive quarterly increases, and a mild downturn in exports," said Craig Wright, senior vice-president and chief economist at RBC.
"However, financial conditions remain supportive of domestic growth which will be the main engine of the expansion going forward."
Consumer spending, which has largely powered the economic recovery, is expected to slow. Instead, business capital spending will play a pivotal role in the economy's growth as consumer spending slows and pressure persists on businesses to boost productivity.
RBC's projected growth this year and next will be the fastest pace over the past four years.
"While the recovery is proving to be weaker than those previously experienced, economic growth in 2010 and 2011 is a substantial improvement from the contraction of 2.5 per cent experienced in 2009," Wright said.
But growth will still be moderate, meaning it will be difficult to lower the unemployment rate, which is expected to close out the year under eight per cent and decline slightly to 7.4 per cent by the end of 2011.
The bank forecasts that the unemployment rate will continue to moderate slowly, reaching seven per cent by the end of 2012, while GDP is expected to rise by 3.1 per cent that year.
Saskatchewan is expected to take over from Newfoundland & Labrador as the fastest growing province. Alberta will also move ahead of that province.
Nova Scotia, New Brunswick and Prince Edward Island are projected to remain at the lower end of the scale through to 2011.
Meanwhile, the bank expects U.S. GDP to improve in 2011 moving from an estimated 2.7 per cent this year to 3.3 per cent in 2011.
"The downdraft in U.S. growth in the middle of the year appears to have come to an end with the number of upside surprises in the economic data solidly outpacing the downside recently," the report said.
"Support to near term growth is also expected from recent rounds of increased monetary and fiscal stimulus, sending growth in 2012 up to 3.6 per cent
TORONTO - Canadian economic growth will pick up the pace next year after a recent lull, to push the annual growth rate higher in 2011, according to the latest economic outlook from RBC Economics.
Economic growth slowed in the third quarter of this year, largely due to softness in the housing market and U.S. economy, the report found.
However, the report says, improving financial market conditions and lingering low interest rates will boost GDP to 3.2 per cent in 2011, slightly more robust than 2010’s projected growth of 3.1 per cent.
"The mid-year economic slowdown reflected a pullback in housing investment, which fell after five consecutive quarterly increases, and a mild downturn in exports," said Craig Wright, senior vice-president and chief economist at RBC.
"However, financial conditions remain supportive of domestic growth which will be the main engine of the expansion going forward."
Consumer spending, which has largely powered the economic recovery, is expected to slow. Instead, business capital spending will play a pivotal role in the economy's growth as consumer spending slows and pressure persists on businesses to boost productivity.
RBC's projected growth this year and next will be the fastest pace over the past four years.
"While the recovery is proving to be weaker than those previously experienced, economic growth in 2010 and 2011 is a substantial improvement from the contraction of 2.5 per cent experienced in 2009," Wright said.
But growth will still be moderate, meaning it will be difficult to lower the unemployment rate, which is expected to close out the year under eight per cent and decline slightly to 7.4 per cent by the end of 2011.
The bank forecasts that the unemployment rate will continue to moderate slowly, reaching seven per cent by the end of 2012, while GDP is expected to rise by 3.1 per cent that year.
Saskatchewan is expected to take over from Newfoundland & Labrador as the fastest growing province. Alberta will also move ahead of that province.
Nova Scotia, New Brunswick and Prince Edward Island are projected to remain at the lower end of the scale through to 2011.
Meanwhile, the bank expects U.S. GDP to improve in 2011 moving from an estimated 2.7 per cent this year to 3.3 per cent in 2011.
"The downdraft in U.S. growth in the middle of the year appears to have come to an end with the number of upside surprises in the economic data solidly outpacing the downside recently," the report said.
"Support to near term growth is also expected from recent rounds of increased monetary and fiscal stimulus, sending growth in 2012 up to 3.6 per cent
Economy to grow slightly faster in 2011 than this year, says RBC report
By The Canadian Press
TORONTO - Canadian economic growth will pick up the pace next year after a recent lull, to push the annual growth rate higher in 2011, according to the latest economic outlook from RBC Economics.
Economic growth slowed in the third quarter of this year, largely due to softness in the housing market and U.S. economy, the report found.
However, the report says, improving financial market conditions and lingering low interest rates will boost GDP to 3.2 per cent in 2011, slightly more robust than 2010’s projected growth of 3.1 per cent.
"The mid-year economic slowdown reflected a pullback in housing investment, which fell after five consecutive quarterly increases, and a mild downturn in exports," said Craig Wright, senior vice-president and chief economist at RBC.
"However, financial conditions remain supportive of domestic growth which will be the main engine of the expansion going forward."
Consumer spending, which has largely powered the economic recovery, is expected to slow. Instead, business capital spending will play a pivotal role in the economy's growth as consumer spending slows and pressure persists on businesses to boost productivity.
RBC's projected growth this year and next will be the fastest pace over the past four years.
"While the recovery is proving to be weaker than those previously experienced, economic growth in 2010 and 2011 is a substantial improvement from the contraction of 2.5 per cent experienced in 2009," Wright said.
But growth will still be moderate, meaning it will be difficult to lower the unemployment rate, which is expected to close out the year under eight per cent and decline slightly to 7.4 per cent by the end of 2011.
The bank forecasts that the unemployment rate will continue to moderate slowly, reaching seven per cent by the end of 2012, while GDP is expected to rise by 3.1 per cent that year.
Saskatchewan is expected to take over from Newfoundland & Labrador as the fastest growing province. Alberta will also move ahead of that province.
Nova Scotia, New Brunswick and Prince Edward Island are projected to remain at the lower end of the scale through to 2011.
Meanwhile, the bank expects U.S. GDP to improve in 2011 moving from an estimated 2.7 per cent this year to 3.3 per cent in 2011.
"The downdraft in U.S. growth in the middle of the year appears to have come to an end with the number of upside surprises in the economic data solidly outpacing the downside recently," the report said.
"Support to near term growth is also expected from recent rounds of increased monetary and fiscal stimulus, sending growth in 2012 up to 3.6 per cent
TORONTO - Canadian economic growth will pick up the pace next year after a recent lull, to push the annual growth rate higher in 2011, according to the latest economic outlook from RBC Economics.
Economic growth slowed in the third quarter of this year, largely due to softness in the housing market and U.S. economy, the report found.
However, the report says, improving financial market conditions and lingering low interest rates will boost GDP to 3.2 per cent in 2011, slightly more robust than 2010’s projected growth of 3.1 per cent.
"The mid-year economic slowdown reflected a pullback in housing investment, which fell after five consecutive quarterly increases, and a mild downturn in exports," said Craig Wright, senior vice-president and chief economist at RBC.
"However, financial conditions remain supportive of domestic growth which will be the main engine of the expansion going forward."
Consumer spending, which has largely powered the economic recovery, is expected to slow. Instead, business capital spending will play a pivotal role in the economy's growth as consumer spending slows and pressure persists on businesses to boost productivity.
RBC's projected growth this year and next will be the fastest pace over the past four years.
"While the recovery is proving to be weaker than those previously experienced, economic growth in 2010 and 2011 is a substantial improvement from the contraction of 2.5 per cent experienced in 2009," Wright said.
But growth will still be moderate, meaning it will be difficult to lower the unemployment rate, which is expected to close out the year under eight per cent and decline slightly to 7.4 per cent by the end of 2011.
The bank forecasts that the unemployment rate will continue to moderate slowly, reaching seven per cent by the end of 2012, while GDP is expected to rise by 3.1 per cent that year.
Saskatchewan is expected to take over from Newfoundland & Labrador as the fastest growing province. Alberta will also move ahead of that province.
Nova Scotia, New Brunswick and Prince Edward Island are projected to remain at the lower end of the scale through to 2011.
Meanwhile, the bank expects U.S. GDP to improve in 2011 moving from an estimated 2.7 per cent this year to 3.3 per cent in 2011.
"The downdraft in U.S. growth in the middle of the year appears to have come to an end with the number of upside surprises in the economic data solidly outpacing the downside recently," the report said.
"Support to near term growth is also expected from recent rounds of increased monetary and fiscal stimulus, sending growth in 2012 up to 3.6 per cent
Free Ways to Enjoy the Holiday Season with Your Family
Fun family activities during the holiday season do not have to have a high price tag. Many families find that they prefer a more simple approach to the holidays and throughout the year. By doing a little research and pre-planning, many families can enjoy free or inexpensive kid-friendly entertainment during the holidays that can create lasting cherished memories.
Here are a few ideas:
Take your kids to Holiday Parades
Nearly every city has an annual holiday parade. They typically take place sometime between Thanksgiving and Christmas. Local parades are a source of free fun that can turn into a yearly tradition. Many times, free entertainment takes place before the actual parade as well. Adults and children alike enjoy watching decorated floats, marching bands, horses, Santa, and everything else that makes up a typical parade. If you and your family absolutely love parades, you can watch the ones in neighbouring cities as well.
Make your own decorations
Decorating your house for the holidays can be expensive both purchasing the items and on your electric bill. The easiest way to save money is make your decorating simple. Do not hang as many lights as you have in previous years. Put a timer on your lighting fixtures so that they are turned off during the day so electricity is not wasted.
To decorate your tree, there is nothing sweeter than homemade decorations. Have the children gather around to make decorations for the tree: popcorn strings, cranberry strands and paper chains. Your tree will look beautiful and you will have not spent a lot of money.
People who are out of work may find that they can use the extra time to make handmade gifts and ornaments, bake special treats, learn to play holiday music on an instrument, enjoy the beauty of nature in a season that is usually rushed and frantic, and have one-on-one time with their children.
Enjoy holiday decorations in other people’s yards
Pack the kids in the car, tune the radio to a station playing holiday music, and let the neighbours foot the light bill. Many people have simple to elaborate holiday decorations in their yards. Sometimes an entire community will put on a light show. Let the kids vote on their favourite light show or take turns picking the route. Kids can even work on skills such as counting and navigation along the way.
Look for free local holiday activities
Churches and local businesses usually run some kind of functions during the holidays. These events are almost always free of charge. Holiday church functions range from plays, to musicals, to live nativities. They usually love to have the public attend these events. You can find out about various church functions in your local newspaper.
Public libraries often have a great selection of holiday books, music, activities, and more. These may be enjoyed by the entire family during special times at home. Schools may have holiday-related programs open to the general public as well.
Many families discover that they enjoy helping others during the holidays. Check local shelters, Red Cross, Salvation Army, etc., for volunteer opportunities.
Shopping malls
Shopping malls are usually beautifully decorated for the holidays, and it can be a treat in itself to visit them and admire the decorations. Walking around, window shopping, and enjoying light refreshments can make for a very pleasant evening. If you keep an eye on the shopping centre's website, you will probably notice some free activities they will have around the holiday as well. Some of these free activities will likely be things like concerts, tree lighting, indoor parades, visits from Santa, and free horse drawn carriage rides.
Host a potluck dinner
If your family hosts a dinner for family and friends, make it a pot-luck dinner. Ask each family to make their favourites dish or drink to bring to the dinner. As the host of the party, you will provide the main course. This will help take the burden off your budget and still enjoy a wonderful holiday dinner. It will also allow others to showcase their signature dishes.
The holidays are a time to celebrate with loved ones. This does not imply you should spend more money than you have. A celebration should be enjoyed by all. Celebrating it with family and friends is all that is required to enjoy your holidays.
Here are a few ideas:
Take your kids to Holiday Parades
Nearly every city has an annual holiday parade. They typically take place sometime between Thanksgiving and Christmas. Local parades are a source of free fun that can turn into a yearly tradition. Many times, free entertainment takes place before the actual parade as well. Adults and children alike enjoy watching decorated floats, marching bands, horses, Santa, and everything else that makes up a typical parade. If you and your family absolutely love parades, you can watch the ones in neighbouring cities as well.
Make your own decorations
Decorating your house for the holidays can be expensive both purchasing the items and on your electric bill. The easiest way to save money is make your decorating simple. Do not hang as many lights as you have in previous years. Put a timer on your lighting fixtures so that they are turned off during the day so electricity is not wasted.
To decorate your tree, there is nothing sweeter than homemade decorations. Have the children gather around to make decorations for the tree: popcorn strings, cranberry strands and paper chains. Your tree will look beautiful and you will have not spent a lot of money.
People who are out of work may find that they can use the extra time to make handmade gifts and ornaments, bake special treats, learn to play holiday music on an instrument, enjoy the beauty of nature in a season that is usually rushed and frantic, and have one-on-one time with their children.
Enjoy holiday decorations in other people’s yards
Pack the kids in the car, tune the radio to a station playing holiday music, and let the neighbours foot the light bill. Many people have simple to elaborate holiday decorations in their yards. Sometimes an entire community will put on a light show. Let the kids vote on their favourite light show or take turns picking the route. Kids can even work on skills such as counting and navigation along the way.
Look for free local holiday activities
Churches and local businesses usually run some kind of functions during the holidays. These events are almost always free of charge. Holiday church functions range from plays, to musicals, to live nativities. They usually love to have the public attend these events. You can find out about various church functions in your local newspaper.
Public libraries often have a great selection of holiday books, music, activities, and more. These may be enjoyed by the entire family during special times at home. Schools may have holiday-related programs open to the general public as well.
Many families discover that they enjoy helping others during the holidays. Check local shelters, Red Cross, Salvation Army, etc., for volunteer opportunities.
Shopping malls
Shopping malls are usually beautifully decorated for the holidays, and it can be a treat in itself to visit them and admire the decorations. Walking around, window shopping, and enjoying light refreshments can make for a very pleasant evening. If you keep an eye on the shopping centre's website, you will probably notice some free activities they will have around the holiday as well. Some of these free activities will likely be things like concerts, tree lighting, indoor parades, visits from Santa, and free horse drawn carriage rides.
Host a potluck dinner
If your family hosts a dinner for family and friends, make it a pot-luck dinner. Ask each family to make their favourites dish or drink to bring to the dinner. As the host of the party, you will provide the main course. This will help take the burden off your budget and still enjoy a wonderful holiday dinner. It will also allow others to showcase their signature dishes.
The holidays are a time to celebrate with loved ones. This does not imply you should spend more money than you have. A celebration should be enjoyed by all. Celebrating it with family and friends is all that is required to enjoy your holidays.
Tuesday, December 14, 2010
Red alert for debt-strapped Canadians: Bank of Canada chief says reckoning ahead
By The Canadian Press
TORONTO - Bank of Canada governor Mark Carney is issuing a broad warning to Canadians, firms and governments that the financial and economic crisis is far from over and they need to rein in their appetite for cheap money.
Returning to a theme he began speaking about last week, Carney told the Economic Club in Toronto that the global recovery is so weak that advanced nations may need to keep interest rates super-low for a long period, and the U.S. may have to resort to yet another round of printing money.
"(But) cheap money is not a long-term growth strategy," he warned.
"Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks, induce a search for yield and delay balance sheet adjustments."
For Canadians, he noted with alarm that household credit has grown by seven per cent since the recession's trough, compared to a 3.5 per cent decline in the U.S., perhaps an indication that Canadians believe the easy ride on debt payments will be permanent.
When the reckoning comes, he warned, it could be swift and brutal. The Bank of Canada will set interest rates based on inflation, not on whether a large swath of Canadians have taken on too much debt, he added. In fact, he suggested the bank may tighten even in a low-inflation environment to discourage risky behaviour.
"While the bar for further changes remains high," he said, "the bank has the responsibility to draw the appropriate lessons from the experience of others who, in an environment of price stability, reaped financial disaster."
The speech gave no new forecast for the Canadian and global economies — Carney is saving his ammunition for the next interest rate announcement on Jan. 18 — but it is clear the central bank governor has become alarmed by what he sees happening in Europe and the U.S.
Twice in the speech he raised the spectre of Japan 's lost decade and even the Great Depression, suggesting some of the problems faced today are as formidable.
"The crisis is not over, but has merely entered a new phase," he said. "In a world awash with debt, repairing the balance sheets of banks, households and countries will take years. As a consequence, the pace, pattern and viability of global economic growth is changing, and Canada must adapt."
He said history suggests that recessions involving financial crises tend to be deeper and take twice as long to recover from, with reduced growth rates and higher unemployment lasting a decade. This recovery is following that trend, he said.
U.S. unemployment is in peril of becoming structural, meaning it will remain high even after the economy recovers.
The solutions are difficult, but as he did last week alongside the release of the bank's financial systems review, Carney singled out China and other Asian countries with artificially depressed currencies as particularly intransigent.
He said with currency tensions rising, there is a concern about protectionist measures as occurred during the Great Depression because of the "death grip" of the U.S. dollar.
"Over a dozen countries are now accumulating reserves at double-digit annual rates," he pointed out, "and countries representing over 40 per cent of the U.S.-dollar trade weight are now managing their currencies," or subtly manipulating them.
The global adjustment means Canadian exports will remain weak, he said, urging firms to improve their competitiveness to meet the challenge.
But the bigger warning is for borrowers, who are being lulled into a false sense of security because of low interest rates.
"Low rates today do not necessarily mean low rates tomorrow. Risk reversals when they happen can be fierce; the greater the complacency, the more brutal the reckoning," he said.
TORONTO - Bank of Canada governor Mark Carney is issuing a broad warning to Canadians, firms and governments that the financial and economic crisis is far from over and they need to rein in their appetite for cheap money.
Returning to a theme he began speaking about last week, Carney told the Economic Club in Toronto that the global recovery is so weak that advanced nations may need to keep interest rates super-low for a long period, and the U.S. may have to resort to yet another round of printing money.
"(But) cheap money is not a long-term growth strategy," he warned.
"Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks, induce a search for yield and delay balance sheet adjustments."
For Canadians, he noted with alarm that household credit has grown by seven per cent since the recession's trough, compared to a 3.5 per cent decline in the U.S., perhaps an indication that Canadians believe the easy ride on debt payments will be permanent.
When the reckoning comes, he warned, it could be swift and brutal. The Bank of Canada will set interest rates based on inflation, not on whether a large swath of Canadians have taken on too much debt, he added. In fact, he suggested the bank may tighten even in a low-inflation environment to discourage risky behaviour.
"While the bar for further changes remains high," he said, "the bank has the responsibility to draw the appropriate lessons from the experience of others who, in an environment of price stability, reaped financial disaster."
The speech gave no new forecast for the Canadian and global economies — Carney is saving his ammunition for the next interest rate announcement on Jan. 18 — but it is clear the central bank governor has become alarmed by what he sees happening in Europe and the U.S.
Twice in the speech he raised the spectre of Japan 's lost decade and even the Great Depression, suggesting some of the problems faced today are as formidable.
"The crisis is not over, but has merely entered a new phase," he said. "In a world awash with debt, repairing the balance sheets of banks, households and countries will take years. As a consequence, the pace, pattern and viability of global economic growth is changing, and Canada must adapt."
He said history suggests that recessions involving financial crises tend to be deeper and take twice as long to recover from, with reduced growth rates and higher unemployment lasting a decade. This recovery is following that trend, he said.
U.S. unemployment is in peril of becoming structural, meaning it will remain high even after the economy recovers.
The solutions are difficult, but as he did last week alongside the release of the bank's financial systems review, Carney singled out China and other Asian countries with artificially depressed currencies as particularly intransigent.
He said with currency tensions rising, there is a concern about protectionist measures as occurred during the Great Depression because of the "death grip" of the U.S. dollar.
"Over a dozen countries are now accumulating reserves at double-digit annual rates," he pointed out, "and countries representing over 40 per cent of the U.S.-dollar trade weight are now managing their currencies," or subtly manipulating them.
The global adjustment means Canadian exports will remain weak, he said, urging firms to improve their competitiveness to meet the challenge.
But the bigger warning is for borrowers, who are being lulled into a false sense of security because of low interest rates.
"Low rates today do not necessarily mean low rates tomorrow. Risk reversals when they happen can be fierce; the greater the complacency, the more brutal the reckoning," he said.
Monday, December 13, 2010
Almost two thirds of Canadians plan to decrease debt over the next 12 months
TORONTO, Dec. 13 /CNW/ - A majority of higher income Canadians are comfortable with their debt levels (67%). Despite this, most (64%) plan on decreasing their debt over the next 12 months, according to a consumer lending survey released today by PwC.
"Interestingly, while reducing debt appears important to a sizeable number of survey respondents, it isn't driven by fear of job loss as only 9% cite that reason for paying down their debt," according to John MacKinlay, Partner and Financial Services Advisory Leader for PwC.
What are Canadians most willing to delay purchasing in their efforts to reduce their borrowing levels? According to the survey it is big ticket items:
•A new car - 64%
•New electronics - 59%
•A new house - or upgrade to bigger house - 56%
"Even with relatively high consumer debt levels, 78% of respondents said that they think they have the capacity to borrow even more," says MacKinlay
The PwC survey was conducted by Leger Marketing in the fall of 2010 and a total of 603 interviews were completed among Canadian adults with an annual household income of over $100,000. A probability sample of this size yields a maximum margin of error of +\-4.0%, 19 times out of 20.
Overall, the vast majority of respondents are satisfied with the service they receive from their current bank and they would recommend their bank to a friend or family member. "The survey results show that Canadians are confident in our economy and they enjoy a good relationship with their banks," says MacKinlay.
That said, the report indicates Canadians would like more advice on credit management. Consumers seem to be looking for new products to help them better manage their debt, such as an integrated lending product. "But consumers told us they need a lot of advice around this type of product - and this conversation can be an opportunity for the banks to enhance the dialogue with their customers and to help educate them on all the options that are available," says Andrew Smee, Vice President, Financial Services Advisory at PwC.
"Integrated lending products combine all of a customer's borrowing into a single, easy to modify account, with the ability to set up individual facilities. For example, part of the loan could be a fixed rate for five years, part fixed for a shorter duration, and the rest available as a line of credit," says Smee.
Less than one in five respondents has an integrated lending product. However, when the survey described the characteristics of such a product, overwhelmingly, 87% of respondents would consolidate their debt into a single, easy to modify loan if the rate were lower. "We think that this is a good example of a win-win product: the customer gets the flexibility to set up individual facilities with different rates and terms, and potentially more money at a lower rate of interest. As well, the bank decreases risk and increases share of wallet on a long duration credit product," says Smee.
Approximately half of respondents would require advice from their banker before considering moving to this type of product. Interestingly, 47% of respondents have a personal banker. However, only 38% of those who have personal bankers meet regularly with them to discuss their personal financial situation. Seventy-seven per cent say they only meet with their personal bankers "when they want to get or change something."
"The good news is that of those who do have a personal banker, an impressive 86% value the advice they receive. So we see this as an excellent opportunity for banks to build awareness and educate their clients on the potential benefits of such an integrated lending product in helping them to responsibly manage debt. This is a relatively complex credit offering, and as such, it is necessary for personal bankers to have a conversation to understand their clients' needs, so that they can best position the most relevant product features," says MacKinlay.
"Interestingly, while reducing debt appears important to a sizeable number of survey respondents, it isn't driven by fear of job loss as only 9% cite that reason for paying down their debt," according to John MacKinlay, Partner and Financial Services Advisory Leader for PwC.
What are Canadians most willing to delay purchasing in their efforts to reduce their borrowing levels? According to the survey it is big ticket items:
•A new car - 64%
•New electronics - 59%
•A new house - or upgrade to bigger house - 56%
"Even with relatively high consumer debt levels, 78% of respondents said that they think they have the capacity to borrow even more," says MacKinlay
The PwC survey was conducted by Leger Marketing in the fall of 2010 and a total of 603 interviews were completed among Canadian adults with an annual household income of over $100,000. A probability sample of this size yields a maximum margin of error of +\-4.0%, 19 times out of 20.
Overall, the vast majority of respondents are satisfied with the service they receive from their current bank and they would recommend their bank to a friend or family member. "The survey results show that Canadians are confident in our economy and they enjoy a good relationship with their banks," says MacKinlay.
That said, the report indicates Canadians would like more advice on credit management. Consumers seem to be looking for new products to help them better manage their debt, such as an integrated lending product. "But consumers told us they need a lot of advice around this type of product - and this conversation can be an opportunity for the banks to enhance the dialogue with their customers and to help educate them on all the options that are available," says Andrew Smee, Vice President, Financial Services Advisory at PwC.
"Integrated lending products combine all of a customer's borrowing into a single, easy to modify account, with the ability to set up individual facilities. For example, part of the loan could be a fixed rate for five years, part fixed for a shorter duration, and the rest available as a line of credit," says Smee.
Less than one in five respondents has an integrated lending product. However, when the survey described the characteristics of such a product, overwhelmingly, 87% of respondents would consolidate their debt into a single, easy to modify loan if the rate were lower. "We think that this is a good example of a win-win product: the customer gets the flexibility to set up individual facilities with different rates and terms, and potentially more money at a lower rate of interest. As well, the bank decreases risk and increases share of wallet on a long duration credit product," says Smee.
Approximately half of respondents would require advice from their banker before considering moving to this type of product. Interestingly, 47% of respondents have a personal banker. However, only 38% of those who have personal bankers meet regularly with them to discuss their personal financial situation. Seventy-seven per cent say they only meet with their personal bankers "when they want to get or change something."
"The good news is that of those who do have a personal banker, an impressive 86% value the advice they receive. So we see this as an excellent opportunity for banks to build awareness and educate their clients on the potential benefits of such an integrated lending product in helping them to responsibly manage debt. This is a relatively complex credit offering, and as such, it is necessary for personal bankers to have a conversation to understand their clients' needs, so that they can best position the most relevant product features," says MacKinlay.
Perceptions of Low Rates Raise Risks,
Bank of Canada Governor Mark Carney TORONTO, Dec. 13 /CNW/ - Cyclical and structural factors have led to a low-interest-rate environment, Bank of Canada Governor Mark Carney said today in a speech that reviewed the implications of such an environment for financial stability and economic growth in Canada and globally. "Very low policy rates in the major advanced economies could be in place for a prolonged period—a possibility underscored by the recent extensions of unconventional monetary policies in the United States, Japan and Europe," he said.
"The crisis is not over, but has merely entered a new phase," Governor Carney told the Economic Club of Canada. "In a world awash with debt, repairing the balance sheets of banks, households and countries will take years. As a consequence, the pace, pattern and variability of global economic growth is changing, and Canada must adapt."
A wrenching adjustment to global demand that is already under way and the impact it is having on the international monetary system are reinforcing the low-interest-rate strategies of major advanced economies, the Governor said, adding that further rounds of quantitative easing may be required.
The Governor reviewed the implications of this trend for countries caught in the middle, like Canada, covering three aspects:
•the effect of the second round of quantitative easing in the United States;
•the implications for Canadian monetary policy; and
•the potential financial stability implications of "low for long" interest rates.
Interest rates at low levels for a long period of time could potentially distort behaviour in the public, financial, corporate and household sectors, the Governor noted. "Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks, induce a search for yield, and delay balance sheet adjustments," he said.
The Governor cautioned that "low rates today do not necessarily mean low rates tomorrow. Risk reversals when they happen can be fierce: the greater the complacency, the more brutal the reckoning."
In conclusion, Governor Carney suggested several lines of defence and, above all, urged individuals, companies, market participants and others to resist complacency. "Cheap money is not a long-term growth strategy," he said. "Monetary policy will continue to be set to achieve the inflation target. Our institutions should not be lulled into a false sense of security due to low current rates."
"The crisis is not over, but has merely entered a new phase," Governor Carney told the Economic Club of Canada. "In a world awash with debt, repairing the balance sheets of banks, households and countries will take years. As a consequence, the pace, pattern and variability of global economic growth is changing, and Canada must adapt."
A wrenching adjustment to global demand that is already under way and the impact it is having on the international monetary system are reinforcing the low-interest-rate strategies of major advanced economies, the Governor said, adding that further rounds of quantitative easing may be required.
The Governor reviewed the implications of this trend for countries caught in the middle, like Canada, covering three aspects:
•the effect of the second round of quantitative easing in the United States;
•the implications for Canadian monetary policy; and
•the potential financial stability implications of "low for long" interest rates.
Interest rates at low levels for a long period of time could potentially distort behaviour in the public, financial, corporate and household sectors, the Governor noted. "Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks, induce a search for yield, and delay balance sheet adjustments," he said.
The Governor cautioned that "low rates today do not necessarily mean low rates tomorrow. Risk reversals when they happen can be fierce: the greater the complacency, the more brutal the reckoning."
In conclusion, Governor Carney suggested several lines of defence and, above all, urged individuals, companies, market participants and others to resist complacency. "Cheap money is not a long-term growth strategy," he said. "Monetary policy will continue to be set to achieve the inflation target. Our institutions should not be lulled into a false sense of security due to low current rates."
Would You Have Smiled?
It is amazing what a smile or positive comment can do for someone.
Try it - I think you will like it!
Neil "Mortgage Man" McJannet
Christmas is one of our favorite times of the year, a time to spend with family and close friends and reflect on the abundant blessings God has given us. Conversely, we also know that this time can be overly stressful for people, trying to find the right gifts, the busyness of malls, traffic and extra work responsabilities often leave us feeling burned out, depressed and lonely.
We hope today's message from Zig Ziglar makes you think about the power of a smile.
The story is told of a man who went to the top story of the Empire State Building in New York for the purpose of jumping off. When he got to the top he discovered that it was fenced in. Committing suicide there was impossible. As he was riding down the elevator, it occurred to him that by doing it that way he might injure or kill other people in the process. He re-thought and decided to jump off the Brooklyn Bridge.
Since it was a long walk, he had time to do more thinking. He decided that, if on the way even one person smiled at him, he would consider life worth living and not take his own life. The question is, had you been one of the people he met that day, would you have smiled at him and saved his life?
I recognize that the question is rhetorical. However, the fact is that there are approximately three billion people on the face of this earth who go to bed hungry for food – but there are over four billion people who go to bed every night hungry for a smile, a word of encouragement, a friendly greeting.
Wouldn’t it be tragic if one of those people was your mate, your child, your parents, a brother or sister, a neighbor?
Maybe someone you work with who is a nice man or woman, but life has dealt them some cruel blows lately. A simple word of encouragement, an indication that you know of their difficulties and are concerned, can make a big difference in that person’s life. The interesting thing is that in the process of encouraging others, whether it’s with a smile, a friendly greeting, or a humorous, encouraging thought, we ourselves benefit.
So, give that smile to the person who doesn’t have one. It could make a difference. Give it a try and I’ll SEE YOU AT THE TOP!
Have a great week unless you choose otherwise.
Try it - I think you will like it!
Neil "Mortgage Man" McJannet
Christmas is one of our favorite times of the year, a time to spend with family and close friends and reflect on the abundant blessings God has given us. Conversely, we also know that this time can be overly stressful for people, trying to find the right gifts, the busyness of malls, traffic and extra work responsabilities often leave us feeling burned out, depressed and lonely.
We hope today's message from Zig Ziglar makes you think about the power of a smile.
The story is told of a man who went to the top story of the Empire State Building in New York for the purpose of jumping off. When he got to the top he discovered that it was fenced in. Committing suicide there was impossible. As he was riding down the elevator, it occurred to him that by doing it that way he might injure or kill other people in the process. He re-thought and decided to jump off the Brooklyn Bridge.
Since it was a long walk, he had time to do more thinking. He decided that, if on the way even one person smiled at him, he would consider life worth living and not take his own life. The question is, had you been one of the people he met that day, would you have smiled at him and saved his life?
I recognize that the question is rhetorical. However, the fact is that there are approximately three billion people on the face of this earth who go to bed hungry for food – but there are over four billion people who go to bed every night hungry for a smile, a word of encouragement, a friendly greeting.
Wouldn’t it be tragic if one of those people was your mate, your child, your parents, a brother or sister, a neighbor?
Maybe someone you work with who is a nice man or woman, but life has dealt them some cruel blows lately. A simple word of encouragement, an indication that you know of their difficulties and are concerned, can make a big difference in that person’s life. The interesting thing is that in the process of encouraging others, whether it’s with a smile, a friendly greeting, or a humorous, encouraging thought, we ourselves benefit.
So, give that smile to the person who doesn’t have one. It could make a difference. Give it a try and I’ll SEE YOU AT THE TOP!
Have a great week unless you choose otherwise.
Saturday, December 11, 2010
Watch out for rising debt levels, bank warns
If you are thinking of a debt consolidation using your home as an asset now may be the time to make that move. It looks like some of the tightening that has happened in the USA is moving North of the Border.
If you require any assistance in moving forward let me know.
Neil"Mortgage Man" McJannet
By Michael Lewis | Thu Dec 9 2010
As shoppers cram the malls this holiday season, the Bank of Canada has a Scrooge-like warning for consumers: Step away from the credit card and think about your ability to pay if borrowing costs rise or you lose your job.
In its twice-a-year economic assessment Thursday, the bank warned that heavily indebted consumers are in the danger zone as the uneven global recovery makes them vulnerable to financial shocks.
In its Financial System Review, the bank said economic risks have increased over the summer on worries about European sovereign debt, the widening global trade imbalance and consumer credit levels that surged during the recession and the early stage of recovery.
It said household debt has risen to 145 per cent of disposable income, with Canadians taking advantage of record low interest rates to buy homes and consumer goods on credit.
Issued two days after the bank held its key interest rate unchanged at 1 per cent, and after Ottawa said the economy contracted in September, the report urged institutions to use caution in issuing loans to Canadian consumers.
The bank said that while there has been moderation in the pace of debt accumulation since June, credit continues to grow faster than incomes.
And while the household sector’s debt-service ratio edged down in the second quarter and remains below the historical average thanks to low borrowing rates, the bank said mortgage and credit card loans in arrears were well above pre-credit crisis levels in the quarter.
Sal Guatieri, senior economist at BMO capital markets, noted that consumer spending has propelled growth in Canada this year, but debt levels will force spending to cool in 2011.
He said households could face the prospect of selling assets to meet credit obligations if interest rates rise and employment falls, a development that would hurt Canada’s finance sector as consumers struggle to make payments.
In a report earlier this month, however, BMO Capital Markets said it does not expect consumers to cut off spending entirely to focus on reducing debt.
It said savings levels remain healthy, while a 12 per cent gain in the value of the TSX main index this year and increased home values, have lifted household net worth to about six times disposable income, up from five times in the 1990s.
“While we are not blasé, we think the singular focus on debt portrays an overly negative picture and therefore an overly negative take on consumer spending,” BMO deputy chief economist Doug Porter said in a roundtable discussion last week.
“We think households can boost spending by 3 per cent next year and while we see a mild slowdown, the emphasis is on mild.”
The central bank review, however, said that “the risk of a system-wide disturbance arising from financial stress in the household sector is elevated and has edged higher since June. This vulnerability is unlikely to decline quickly, given projections of subdued growth in income.”
The central bank also cited threats from trade imbalances that fuel protectionism, arguing that a trade war could not be ruled out, and said sovereign debt impacts may spill over into Canada. It said market concerns over the debt could force countries to reduce deficits more rapidly, resulting in slower global growth.
“A key concern is that acute fiscal strains in peripheral Europe and weaknesses in the European financial system could reinforce each other and have adverse effects on other countries,” the bank said.
Despite its assessment that the domestic financial system remains comparatively sound, the bank said “global financial stability could be undermined by an adverse feedback loop between weak economic activity, fiscal strains and the financial system.”
It said progress was made to ease trade imbalances between consumer and producing nations during the recession, but the gap is widening again as China and other emerging economies continue to fix their currencies at depressed values to encourage exports and discourage consumption of foreign goods.
The bank said governments can reduce risks by acting on plans to rein in deficits, by moving to floating currency exchange rates and by closely monitoring consumer debt.
If you require any assistance in moving forward let me know.
Neil"Mortgage Man" McJannet
By Michael Lewis | Thu Dec 9 2010
As shoppers cram the malls this holiday season, the Bank of Canada has a Scrooge-like warning for consumers: Step away from the credit card and think about your ability to pay if borrowing costs rise or you lose your job.
In its twice-a-year economic assessment Thursday, the bank warned that heavily indebted consumers are in the danger zone as the uneven global recovery makes them vulnerable to financial shocks.
In its Financial System Review, the bank said economic risks have increased over the summer on worries about European sovereign debt, the widening global trade imbalance and consumer credit levels that surged during the recession and the early stage of recovery.
It said household debt has risen to 145 per cent of disposable income, with Canadians taking advantage of record low interest rates to buy homes and consumer goods on credit.
Issued two days after the bank held its key interest rate unchanged at 1 per cent, and after Ottawa said the economy contracted in September, the report urged institutions to use caution in issuing loans to Canadian consumers.
The bank said that while there has been moderation in the pace of debt accumulation since June, credit continues to grow faster than incomes.
And while the household sector’s debt-service ratio edged down in the second quarter and remains below the historical average thanks to low borrowing rates, the bank said mortgage and credit card loans in arrears were well above pre-credit crisis levels in the quarter.
Sal Guatieri, senior economist at BMO capital markets, noted that consumer spending has propelled growth in Canada this year, but debt levels will force spending to cool in 2011.
He said households could face the prospect of selling assets to meet credit obligations if interest rates rise and employment falls, a development that would hurt Canada’s finance sector as consumers struggle to make payments.
In a report earlier this month, however, BMO Capital Markets said it does not expect consumers to cut off spending entirely to focus on reducing debt.
It said savings levels remain healthy, while a 12 per cent gain in the value of the TSX main index this year and increased home values, have lifted household net worth to about six times disposable income, up from five times in the 1990s.
“While we are not blasé, we think the singular focus on debt portrays an overly negative picture and therefore an overly negative take on consumer spending,” BMO deputy chief economist Doug Porter said in a roundtable discussion last week.
“We think households can boost spending by 3 per cent next year and while we see a mild slowdown, the emphasis is on mild.”
The central bank review, however, said that “the risk of a system-wide disturbance arising from financial stress in the household sector is elevated and has edged higher since June. This vulnerability is unlikely to decline quickly, given projections of subdued growth in income.”
The central bank also cited threats from trade imbalances that fuel protectionism, arguing that a trade war could not be ruled out, and said sovereign debt impacts may spill over into Canada. It said market concerns over the debt could force countries to reduce deficits more rapidly, resulting in slower global growth.
“A key concern is that acute fiscal strains in peripheral Europe and weaknesses in the European financial system could reinforce each other and have adverse effects on other countries,” the bank said.
Despite its assessment that the domestic financial system remains comparatively sound, the bank said “global financial stability could be undermined by an adverse feedback loop between weak economic activity, fiscal strains and the financial system.”
It said progress was made to ease trade imbalances between consumer and producing nations during the recession, but the gap is widening again as China and other emerging economies continue to fix their currencies at depressed values to encourage exports and discourage consumption of foreign goods.
The bank said governments can reduce risks by acting on plans to rein in deficits, by moving to floating currency exchange rates and by closely monitoring consumer debt.
Friday, December 10, 2010
Are Canadian Rates NEXT??
At some time rates will have to react to what is happening South of The Border-
Now may be the time to take a serious look at your own personal situation! If I can be of help let me know.
Neil "Mortgage Man" McJannet
Rising Mortgage Rates To Dampen American Dream of Owning or Refinancing
Top News
Friday, 10 December 2010 20:39
By: Faridah Huller, Editor
Miami, FL
Miami, FL—Freddie Mac’s weekly survey of mortgage rates has shown that as of Dec. 9, rates for 30-year and 15-year terms have not stopped rising since last month. The latest figures indicate an increase of 4.61% from 4.46% on Dec. 2 for a 30-year fixed-rate mortgage.
The rate for a 15-year fixed rate mortgage went up from 3.81% last week to 3.96% this week. As of Nov. 24, the rates for 30-year and 15-year stood at 4.40% and 3.77% respectively from 4.39% and 3.76% on Nov. 18.
The hikes are raising concerns that the housing market, still reeling from the recession, will take another blow. Homeowners who were planning to refinance but waited to see if rates might fall further have had their hopes dashed. Sentiments in the marketplace now are, “Don’t wait, refinance now before it’s too late.”
Real-estate experts in the media have speculated on the factors that might have send mortgage rates up higher and among several mentioned was President Obama’s tax-cut deal. The much vaunted tax-cut deal will supposedly be another economic stimulus but at the same time will stoke up budget deficits neither of which is trusted to add up to much by bond investors.
But Frank Nothaft, vice president and chief economist of Freddie Mac, sums it up best. "After Europe made strides in its debt situation, investors left the security of U.S. Treasury debt causing bond yields to rise and mortgage rates along with them. Interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the record low set in mid-November, which for a $200,000 conventional loan amounts to $50 more in monthly payments.”
There are suggestions that homeowners caught in the jaws of an adjustable-rate mortgage should not delay refinancing into a fixed term while rates are still below 5%. Rates are still considered very low and buyers cannot expect to do any better if they can lock in at today’s rates. Even if buyers today have less money to squander, there’s never been a better time to buy because of falling home prices.
In an economic recovery, progressive mortgage rate increases are natural. But in a sickly economy, rate increases can put a damper on an already soaked ground of the housing market. Housing represents the largest part of consumer prosperity while helping to support construction and financial services industries.
Refinancing, according to some opinions highlighted in the media, will become unappealing to over five million borrowers who owe an estimated $1 trillion in mortgage debt, said Steven Ricchiuto, chief economist at Mizuho Securities USA as quoted in a Wall Street Journal (WSJ) report Friday. The figure further breaks down to roughly 26% of the total market for 30-year fixed rate mortgages with rates between 4.7% and 5.1%. The prevailing assumption is that borrowers require an advantage of a half-percentage point before they will consider refinancing as viable option.
The trouble is, those five million borrowers who just missed out refinancing at lower rates are the most credit-worthy, said Kevin Cavin, mortgage strategist at Sterne Agee in Chicago, in the WSJ report. These borrowers hold the best chance of refinancing at a time when banks lending policies are more stringent than ever.
By: Faridah Huller, Editor
Now may be the time to take a serious look at your own personal situation! If I can be of help let me know.
Neil "Mortgage Man" McJannet
Rising Mortgage Rates To Dampen American Dream of Owning or Refinancing
Top News
Friday, 10 December 2010 20:39
By: Faridah Huller, Editor
Miami, FL
Miami, FL—Freddie Mac’s weekly survey of mortgage rates has shown that as of Dec. 9, rates for 30-year and 15-year terms have not stopped rising since last month. The latest figures indicate an increase of 4.61% from 4.46% on Dec. 2 for a 30-year fixed-rate mortgage.
The rate for a 15-year fixed rate mortgage went up from 3.81% last week to 3.96% this week. As of Nov. 24, the rates for 30-year and 15-year stood at 4.40% and 3.77% respectively from 4.39% and 3.76% on Nov. 18.
The hikes are raising concerns that the housing market, still reeling from the recession, will take another blow. Homeowners who were planning to refinance but waited to see if rates might fall further have had their hopes dashed. Sentiments in the marketplace now are, “Don’t wait, refinance now before it’s too late.”
Real-estate experts in the media have speculated on the factors that might have send mortgage rates up higher and among several mentioned was President Obama’s tax-cut deal. The much vaunted tax-cut deal will supposedly be another economic stimulus but at the same time will stoke up budget deficits neither of which is trusted to add up to much by bond investors.
But Frank Nothaft, vice president and chief economist of Freddie Mac, sums it up best. "After Europe made strides in its debt situation, investors left the security of U.S. Treasury debt causing bond yields to rise and mortgage rates along with them. Interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the record low set in mid-November, which for a $200,000 conventional loan amounts to $50 more in monthly payments.”
There are suggestions that homeowners caught in the jaws of an adjustable-rate mortgage should not delay refinancing into a fixed term while rates are still below 5%. Rates are still considered very low and buyers cannot expect to do any better if they can lock in at today’s rates. Even if buyers today have less money to squander, there’s never been a better time to buy because of falling home prices.
In an economic recovery, progressive mortgage rate increases are natural. But in a sickly economy, rate increases can put a damper on an already soaked ground of the housing market. Housing represents the largest part of consumer prosperity while helping to support construction and financial services industries.
Refinancing, according to some opinions highlighted in the media, will become unappealing to over five million borrowers who owe an estimated $1 trillion in mortgage debt, said Steven Ricchiuto, chief economist at Mizuho Securities USA as quoted in a Wall Street Journal (WSJ) report Friday. The figure further breaks down to roughly 26% of the total market for 30-year fixed rate mortgages with rates between 4.7% and 5.1%. The prevailing assumption is that borrowers require an advantage of a half-percentage point before they will consider refinancing as viable option.
The trouble is, those five million borrowers who just missed out refinancing at lower rates are the most credit-worthy, said Kevin Cavin, mortgage strategist at Sterne Agee in Chicago, in the WSJ report. These borrowers hold the best chance of refinancing at a time when banks lending policies are more stringent than ever.
By: Faridah Huller, Editor
Watch out for rising debt levels, bank warns
By Michael Lewis | Thu Dec 9 2010
As shoppers cram the malls this holiday season, the Bank of Canada has a Scrooge-like warning for consumers: Step away from the credit card and think about your ability to pay if borrowing costs rise or you lose your job.
In its twice-a-year economic assessment Thursday, the bank warned that heavily indebted consumers are in the danger zone as the uneven global recovery makes them vulnerable to financial shocks.
In its Financial System Review, the bank said economic risks have increased over the summer on worries about European sovereign debt, the widening global trade imbalance and consumer credit levels that surged during the recession and the early stage of recovery.
It said household debt has risen to 145 per cent of disposable income, with Canadians taking advantage of record low interest rates to buy homes and consumer goods on credit.
Issued two days after the bank held its key interest rate unchanged at 1 per cent, and after Ottawa said the economy contracted in September, the report urged institutions to use caution in issuing loans to Canadian consumers.
The bank said that while there has been moderation in the pace of debt accumulation since June, credit continues to grow faster than incomes.
And while the household sector’s debt-service ratio edged down in the second quarter and remains below the historical average thanks to low borrowing rates, the bank said mortgage and credit card loans in arrears were well above pre-credit crisis levels in the quarter.
Sal Guatieri, senior economist at BMO capital markets, noted that consumer spending has propelled growth in Canada this year, but debt levels will force spending to cool in 2011.
He said households could face the prospect of selling assets to meet credit obligations if interest rates rise and employment falls, a development that would hurt Canada’s finance sector as consumers struggle to make payments.
In a report earlier this month, however, BMO Capital Markets said it does not expect consumers to cut off spending entirely to focus on reducing debt.
It said savings levels remain healthy, while a 12 per cent gain in the value of the TSX main index this year and increased home values, have lifted household net worth to about six times disposable income, up from five times in the 1990s.
“While we are not blasé, we think the singular focus on debt portrays an overly negative picture and therefore an overly negative take on consumer spending,” BMO deputy chief economist Doug Porter said in a roundtable discussion last week.
“We think households can boost spending by 3 per cent next year and while we see a mild slowdown, the emphasis is on mild.”
The central bank review, however, said that “the risk of a system-wide disturbance arising from financial stress in the household sector is elevated and has edged higher since June. This vulnerability is unlikely to decline quickly, given projections of subdued growth in income.”
The central bank also cited threats from trade imbalances that fuel protectionism, arguing that a trade war could not be ruled out, and said sovereign debt impacts may spill over into Canada. It said market concerns over the debt could force countries to reduce deficits more rapidly, resulting in slower global growth.
“A key concern is that acute fiscal strains in peripheral Europe and weaknesses in the European financial system could reinforce each other and have adverse effects on other countries,” the bank said.
Despite its assessment that the domestic financial system remains comparatively sound, the bank said “global financial stability could be undermined by an adverse feedback loop between weak economic activity, fiscal strains and the financial system.”
It said progress was made to ease trade imbalances between consumer and producing nations during the recession, but the gap is widening again as China and other emerging economies continue to fix their currencies at depressed values to encourage exports and discourage consumption of foreign goods.
The bank said governments can reduce risks by acting on plans to rein in deficits, by moving to floating currency exchange rates and by closely monitoring consumer debt.
As shoppers cram the malls this holiday season, the Bank of Canada has a Scrooge-like warning for consumers: Step away from the credit card and think about your ability to pay if borrowing costs rise or you lose your job.
In its twice-a-year economic assessment Thursday, the bank warned that heavily indebted consumers are in the danger zone as the uneven global recovery makes them vulnerable to financial shocks.
In its Financial System Review, the bank said economic risks have increased over the summer on worries about European sovereign debt, the widening global trade imbalance and consumer credit levels that surged during the recession and the early stage of recovery.
It said household debt has risen to 145 per cent of disposable income, with Canadians taking advantage of record low interest rates to buy homes and consumer goods on credit.
Issued two days after the bank held its key interest rate unchanged at 1 per cent, and after Ottawa said the economy contracted in September, the report urged institutions to use caution in issuing loans to Canadian consumers.
The bank said that while there has been moderation in the pace of debt accumulation since June, credit continues to grow faster than incomes.
And while the household sector’s debt-service ratio edged down in the second quarter and remains below the historical average thanks to low borrowing rates, the bank said mortgage and credit card loans in arrears were well above pre-credit crisis levels in the quarter.
Sal Guatieri, senior economist at BMO capital markets, noted that consumer spending has propelled growth in Canada this year, but debt levels will force spending to cool in 2011.
He said households could face the prospect of selling assets to meet credit obligations if interest rates rise and employment falls, a development that would hurt Canada’s finance sector as consumers struggle to make payments.
In a report earlier this month, however, BMO Capital Markets said it does not expect consumers to cut off spending entirely to focus on reducing debt.
It said savings levels remain healthy, while a 12 per cent gain in the value of the TSX main index this year and increased home values, have lifted household net worth to about six times disposable income, up from five times in the 1990s.
“While we are not blasé, we think the singular focus on debt portrays an overly negative picture and therefore an overly negative take on consumer spending,” BMO deputy chief economist Doug Porter said in a roundtable discussion last week.
“We think households can boost spending by 3 per cent next year and while we see a mild slowdown, the emphasis is on mild.”
The central bank review, however, said that “the risk of a system-wide disturbance arising from financial stress in the household sector is elevated and has edged higher since June. This vulnerability is unlikely to decline quickly, given projections of subdued growth in income.”
The central bank also cited threats from trade imbalances that fuel protectionism, arguing that a trade war could not be ruled out, and said sovereign debt impacts may spill over into Canada. It said market concerns over the debt could force countries to reduce deficits more rapidly, resulting in slower global growth.
“A key concern is that acute fiscal strains in peripheral Europe and weaknesses in the European financial system could reinforce each other and have adverse effects on other countries,” the bank said.
Despite its assessment that the domestic financial system remains comparatively sound, the bank said “global financial stability could be undermined by an adverse feedback loop between weak economic activity, fiscal strains and the financial system.”
It said progress was made to ease trade imbalances between consumer and producing nations during the recession, but the gap is widening again as China and other emerging economies continue to fix their currencies at depressed values to encourage exports and discourage consumption of foreign goods.
The bank said governments can reduce risks by acting on plans to rein in deficits, by moving to floating currency exchange rates and by closely monitoring consumer debt.
Thursday, December 9, 2010
Once a joke, Iceland may get the last laugh
BRIAN MILNER Report on Business
The experts have started writing off Ireland, with its shattered banks, flatlined economy and disillusioned populace, as a long-term basket-case with dim recovery prospects. Maybe they should
That would be Iceland, which has just posted economic growth of 1.2 per cent in the latest quarter. That’s pretty feeble, even by European standards. But it comes after nearly two years of contraction. And to bring even more Christmas cheer to its resilient but still suffering citizenry, inflation fell last month to 2.6 per cent from 3.3 per cent in October, the lowest level since 2004. And the benchmark interest rate has dropped to a more manageable 4.5 per cent.
At the height of the global financial crisis that destroyed its massively overleveraged banks, shredded its economy and drove the government to the brink of bankruptcy, Iceland’s official interest rate soared to 18 per cent.
So the Irish can take heart. It is possible to force international creditors to eat some losses, restructure debt and survive the destruction wrought by greedy, short-sighted bankers, foolish governments and even inept central banks.
Of course, Icelanders had one small advantage over the euro zone’s basket cases – their own currency and an independent monetary policy. When the krona collapsed, plenty of Icelanders moaned that they should have opted to join the EU long ago. But capital controls revived their battered currency, which has climbed more than 20 per cent against the euro in the past year. As much of their trade is conducted in euros, this has helped fatten export gains, which have underpinned the economic recovery.
Like Ireland and Greece, Iceland had to get a bailout to survive the worst of the storms. But unlike the Europeans, Iceland did not pour good money after bad in a futile effort to rescue its zombie banks. Iceland simply pulled the plug on banks that had no means of saving themselves. Bank bondholders will be lucky to get 25 cents back on the dollar. But that’s the pain investors must bear for buying a story that was always too good to be true.
And it’s the same path the Europeans will eventually have to follow, if they ever want to get out of their current predicament
The experts have started writing off Ireland, with its shattered banks, flatlined economy and disillusioned populace, as a long-term basket-case with dim recovery prospects. Maybe they should
That would be Iceland, which has just posted economic growth of 1.2 per cent in the latest quarter. That’s pretty feeble, even by European standards. But it comes after nearly two years of contraction. And to bring even more Christmas cheer to its resilient but still suffering citizenry, inflation fell last month to 2.6 per cent from 3.3 per cent in October, the lowest level since 2004. And the benchmark interest rate has dropped to a more manageable 4.5 per cent.
At the height of the global financial crisis that destroyed its massively overleveraged banks, shredded its economy and drove the government to the brink of bankruptcy, Iceland’s official interest rate soared to 18 per cent.
So the Irish can take heart. It is possible to force international creditors to eat some losses, restructure debt and survive the destruction wrought by greedy, short-sighted bankers, foolish governments and even inept central banks.
Of course, Icelanders had one small advantage over the euro zone’s basket cases – their own currency and an independent monetary policy. When the krona collapsed, plenty of Icelanders moaned that they should have opted to join the EU long ago. But capital controls revived their battered currency, which has climbed more than 20 per cent against the euro in the past year. As much of their trade is conducted in euros, this has helped fatten export gains, which have underpinned the economic recovery.
Like Ireland and Greece, Iceland had to get a bailout to survive the worst of the storms. But unlike the Europeans, Iceland did not pour good money after bad in a futile effort to rescue its zombie banks. Iceland simply pulled the plug on banks that had no means of saving themselves. Bank bondholders will be lucky to get 25 cents back on the dollar. But that’s the pain investors must bear for buying a story that was always too good to be true.
And it’s the same path the Europeans will eventually have to follow, if they ever want to get out of their current predicament
Wednesday, December 8, 2010
Interest rate held in check
By Julian Beltrame OTTAWA — Canada’s economy is taking a battering from the high dollar combined with low productivity and still needs the stimulus of low interest rates, the Bank of Canada says.
In a previously telegraphed move, the central bank announced Tuesday it will keep its trendsetting interest rate at one per cent until next year — and likely much longer.
But analysts focused on the accompanying statement from governor Mark Carney, which conceded that both the Canadian and global recoveries are struggling under stiffening headwinds of risk, as a signal of future intentions.
“The global economic recovery is proceeding largely as expected, although risks have increased,” the statement said, citing renewed concerns that European debt woes will spill into global financial markets.
The bank said demand in the U.S., Canada’s largest export market, remains weak, and even generally robust emerging markets such as China and India are seeing a deceleration of economic activity.
“The recovery in Canada, in the second half of 2010, appears slightly weaker than the bank projected” largely as a result of falling exports, it added.
“This underlines a previously identified risk that a combination of disappointing productivity performance and persistent strength in the Canadian dollar could dampen the expected recovery of net exports.”
Statistics Canada reported two weeks ago that the third-quarter current account deficit had hit a record $17.5 billion, with net trade slicing 3.5 percentage points off gross domestic product growth. The strong currency contributes to the deficit in two ways — by making Canadian exports more expensive in foreign markets, and foreign imports less expensive for Canadians.
TD Bank economist Diana Petramala said the cautionary tone of the bank statement likely means it won’t act on interest rates until at least next July.
“At this juncture in time, hiking too soon can be more detrimental to the Canadian economy than keeping rates stimulative for a longer period of time,” she said.
Carney has long expressed concerns about an extended period of super-low interest rates, fearing they could lead to inflation and irresponsible borrowing by consumers, such as occurred in the U.S. following the recession.
But with the U.S. Federal Reserve keeping rates effectively at zero, and in the middle of a second round of quantitative easing that deflates the U.S. dollar, increasing the rate spread between the two countries risks boosting the loonie to even higher altitudes.
The bank had expected the second half of 2010 to be weaker than the first, but nothing like what has come to pass.
After a torrid start to the year that appeared to convince Carney the recovery was well-entrenched — at least enough to hike rates three times over the summer — the last two quarters have sowed doubts.
The first quarter’s 5.6 per cent advance was followed by a cold-shower 2.3 per cent in the second quarter, and a further wake-up call in the third, when growth braked to one per cent. All were lower than the bank had expected.
Meanwhile, Canada’s robust labour market has similarly fizzled — with no appreciable gain in employment since June.
Economists have said most of the problems emanate from the U.S., particularly that country’s weak housing and auto markets, which cut into Canadian exports.
There was some good news on that front Monday with an agreement between President Barack Obama and the Republican Congress to extend Bush-era tax cuts another two years.
In a conference call Tuesday morning, Scotiabank economists predicted next year’s growth in North America, Europe and Japan will be slower than this year’s, although they added a double-dip recession was unlikely.
“The lengthy process of bringing outsized fiscal deficits under control, withdrawing unprecedented monetary stimulus and restructuring the global financial system will impede growth prospects in many countries through mid-decade,” said chief economist Warren Jestin.
The third quarter did see business investment pick up and a better-than-expected bump from consumer spending, but not enough to offset the exports hit, the Bank of Canada said.
Although the bank seldom offers clear guidance on future direction of monetary policy, it noted that “any further reduction in monetary stimulus would need to be carefully considered.”
The statement accompanying the interest rate decision was shorter than normal, suggesting Carney may be preparing for another downward revision on his projections for the economy on Jan. 18, the next scheduled policy announcement date.
The Canadian Press http://news.therecord.com/Business/article/826512
In a previously telegraphed move, the central bank announced Tuesday it will keep its trendsetting interest rate at one per cent until next year — and likely much longer.
But analysts focused on the accompanying statement from governor Mark Carney, which conceded that both the Canadian and global recoveries are struggling under stiffening headwinds of risk, as a signal of future intentions.
“The global economic recovery is proceeding largely as expected, although risks have increased,” the statement said, citing renewed concerns that European debt woes will spill into global financial markets.
The bank said demand in the U.S., Canada’s largest export market, remains weak, and even generally robust emerging markets such as China and India are seeing a deceleration of economic activity.
“The recovery in Canada, in the second half of 2010, appears slightly weaker than the bank projected” largely as a result of falling exports, it added.
“This underlines a previously identified risk that a combination of disappointing productivity performance and persistent strength in the Canadian dollar could dampen the expected recovery of net exports.”
Statistics Canada reported two weeks ago that the third-quarter current account deficit had hit a record $17.5 billion, with net trade slicing 3.5 percentage points off gross domestic product growth. The strong currency contributes to the deficit in two ways — by making Canadian exports more expensive in foreign markets, and foreign imports less expensive for Canadians.
TD Bank economist Diana Petramala said the cautionary tone of the bank statement likely means it won’t act on interest rates until at least next July.
“At this juncture in time, hiking too soon can be more detrimental to the Canadian economy than keeping rates stimulative for a longer period of time,” she said.
Carney has long expressed concerns about an extended period of super-low interest rates, fearing they could lead to inflation and irresponsible borrowing by consumers, such as occurred in the U.S. following the recession.
But with the U.S. Federal Reserve keeping rates effectively at zero, and in the middle of a second round of quantitative easing that deflates the U.S. dollar, increasing the rate spread between the two countries risks boosting the loonie to even higher altitudes.
The bank had expected the second half of 2010 to be weaker than the first, but nothing like what has come to pass.
After a torrid start to the year that appeared to convince Carney the recovery was well-entrenched — at least enough to hike rates three times over the summer — the last two quarters have sowed doubts.
The first quarter’s 5.6 per cent advance was followed by a cold-shower 2.3 per cent in the second quarter, and a further wake-up call in the third, when growth braked to one per cent. All were lower than the bank had expected.
Meanwhile, Canada’s robust labour market has similarly fizzled — with no appreciable gain in employment since June.
Economists have said most of the problems emanate from the U.S., particularly that country’s weak housing and auto markets, which cut into Canadian exports.
There was some good news on that front Monday with an agreement between President Barack Obama and the Republican Congress to extend Bush-era tax cuts another two years.
In a conference call Tuesday morning, Scotiabank economists predicted next year’s growth in North America, Europe and Japan will be slower than this year’s, although they added a double-dip recession was unlikely.
“The lengthy process of bringing outsized fiscal deficits under control, withdrawing unprecedented monetary stimulus and restructuring the global financial system will impede growth prospects in many countries through mid-decade,” said chief economist Warren Jestin.
The third quarter did see business investment pick up and a better-than-expected bump from consumer spending, but not enough to offset the exports hit, the Bank of Canada said.
Although the bank seldom offers clear guidance on future direction of monetary policy, it noted that “any further reduction in monetary stimulus would need to be carefully considered.”
The statement accompanying the interest rate decision was shorter than normal, suggesting Carney may be preparing for another downward revision on his projections for the economy on Jan. 18, the next scheduled policy announcement date.
The Canadian Press http://news.therecord.com/Business/article/826512
Housing prices will rise 3 per cent in 2011, Re/Max predicts
The Canadian Press
MISSISSAUGA — Real Estate agency Re/Max says all Canadian cities will see housing prices rise in 2011, with the average price expected to go up three per cent to $350,000 by the end of next year.
Meanwhile, Re/Max predicts a five per cent fall in new and resale home sales to 441,000 units this year compared with last, with around the same number expected to sell in 2011.
Lower inventories in several markets are boosting prices, but low interest rates and improved consumer confidence will lead to improved sales in every province moving forward.
Re/Max said there will be an increase in home values in nearly every city next year, with St. John’s, N.L., leading the way with an expected eight per cent increase in the average price.
Home values in Greater Vancouver, Kelowna, B.C., Regina, Saskatoon, London, Ont., Ottawa, Sudbury and Greater Montreal are all predicted to climb five per cent.
Re/Max says the average price in Kitchener and Waterloo will end 2011 at $305,000, an increase of 1.7 per cent from the $300,000 average it is forecasting for the end of this year.
The company says the Greater Vancouver area will see the largest jump in sales next year, at 10 per cent, followed by Victoria at eight per cent, and Kelowna, B.C., at six per cent. Windsor home sales will jump five per cent.
It says house sales in Kitchener and Waterloo will increase 0.8 per cent to 6,350.
The Greater Toronto Area will see more stability in 2011 as the economy improves, with average home prices going up two per cent to an average of $440,000, it said.
Meanwhile, condominiums are expected to get a bigger share of the market in 2011, and first-time buyers will be most active, looking for affordable homes under $500,000.
“The relentless drive in the market reminiscent of years past will be gone and, instead, we can expect to see more normal, balanced market conditions, with buyers maintaining a slight edge,” Elton Ash, regional executive vice-president, Re/Max of Western Canada, said in a statement.
MISSISSAUGA — Real Estate agency Re/Max says all Canadian cities will see housing prices rise in 2011, with the average price expected to go up three per cent to $350,000 by the end of next year.
Meanwhile, Re/Max predicts a five per cent fall in new and resale home sales to 441,000 units this year compared with last, with around the same number expected to sell in 2011.
Lower inventories in several markets are boosting prices, but low interest rates and improved consumer confidence will lead to improved sales in every province moving forward.
Re/Max said there will be an increase in home values in nearly every city next year, with St. John’s, N.L., leading the way with an expected eight per cent increase in the average price.
Home values in Greater Vancouver, Kelowna, B.C., Regina, Saskatoon, London, Ont., Ottawa, Sudbury and Greater Montreal are all predicted to climb five per cent.
Re/Max says the average price in Kitchener and Waterloo will end 2011 at $305,000, an increase of 1.7 per cent from the $300,000 average it is forecasting for the end of this year.
The company says the Greater Vancouver area will see the largest jump in sales next year, at 10 per cent, followed by Victoria at eight per cent, and Kelowna, B.C., at six per cent. Windsor home sales will jump five per cent.
It says house sales in Kitchener and Waterloo will increase 0.8 per cent to 6,350.
The Greater Toronto Area will see more stability in 2011 as the economy improves, with average home prices going up two per cent to an average of $440,000, it said.
Meanwhile, condominiums are expected to get a bigger share of the market in 2011, and first-time buyers will be most active, looking for affordable homes under $500,000.
“The relentless drive in the market reminiscent of years past will be gone and, instead, we can expect to see more normal, balanced market conditions, with buyers maintaining a slight edge,” Elton Ash, regional executive vice-president, Re/Max of Western Canada, said in a statement.
Tuesday, December 7, 2010
Housing sales to remain static for 2011: Re/Max
Tuesday, 7 December 2010
Despite an improved economy, residential real estate sales are expected to remain static in most major centres next year, according to a Re/Max report released Tues. Dec. 7.
The Re/Max Housing Market Outlook 2011 saw this year’s home-buying activity fall short of 2009 levels. By year-end, approximately 441,000 homes will have been sold nationally, a five per cent decline from the 465,251 sales reported in 2009. Housing values still continued to rise in all 26 areas surveyed, and was up an estimated seven per cent to $340,000 compared with $320,333 a year earlier.
Though some see this resale housing activity as a “new normal,” it is actually a return to the traditional real estate cycle, said Michael Polzler, executive vice president and regional director of Re/Max Ontario-Atlantic Canada.
“The past decade was truly unprecedented—never before have we experienced a run-up that was as strong or lasted as long,” added Polzler. “As we have digressed from the typical pattern, people have forgotten what the usual healthy cycle looks like, but all the hallmarks are there: Ample inventory levels, steady demand, and moderate growth, both in terms of sales and prices, will characterize the market in 2011.”
Greater market stability is expected to take place in 2011, with Canadian housing sales predicted to mirror 2010 levels at 441,000 next year, while the average price is forecasted to rise by three per cent to $350,000 by year-end 2011.
Despite an improved economy, residential real estate sales are expected to remain static in most major centres next year, according to a Re/Max report released Tues. Dec. 7.
The Re/Max Housing Market Outlook 2011 saw this year’s home-buying activity fall short of 2009 levels. By year-end, approximately 441,000 homes will have been sold nationally, a five per cent decline from the 465,251 sales reported in 2009. Housing values still continued to rise in all 26 areas surveyed, and was up an estimated seven per cent to $340,000 compared with $320,333 a year earlier.
Though some see this resale housing activity as a “new normal,” it is actually a return to the traditional real estate cycle, said Michael Polzler, executive vice president and regional director of Re/Max Ontario-Atlantic Canada.
“The past decade was truly unprecedented—never before have we experienced a run-up that was as strong or lasted as long,” added Polzler. “As we have digressed from the typical pattern, people have forgotten what the usual healthy cycle looks like, but all the hallmarks are there: Ample inventory levels, steady demand, and moderate growth, both in terms of sales and prices, will characterize the market in 2011.”
Greater market stability is expected to take place in 2011, with Canadian housing sales predicted to mirror 2010 levels at 441,000 next year, while the average price is forecasted to rise by three per cent to $350,000 by year-end 2011.
Bank of Canada maintains overnight rate target at 1 per cent
OTTAWA, Dec. 7 /CNW/ - The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
The global economic recovery is proceeding largely as expected, although risks have increased. As anticipated, private domestic demand in the United States is picking up slowly, while growth in emerging-market economies has begun to ease to a more sustainable, but still robust, pace. In Europe, recent data have been consistent with a modest recovery. At the same time, there is an increased risk that sovereign debt concerns in several countries could trigger renewed strains in global financial markets.
The recovery in Canada is proceeding at a moderate pace, although economic activity in the second half of 2010 appears slightly weaker than the Bank projected in its October Monetary Policy Report. In the third quarter, household spending was stronger than the Bank had anticipated and growth in business investment was robust. However, net exports were weaker than projected and continued to exert a significant drag on growth. This underlines a previously-identified risk that a combination of disappointing productivity performance and persistent strength in the Canadian dollar could dampen the expected recovery of net exports.
Inflation dynamics in Canada have been broadly in line with the Bank's expectations and the underlying pressures affecting prices remain largely unchanged.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.
Information note:
The next scheduled date for announcing the overnight rate target is 18 January 2011. A full update of the Bank's outlook for the economy and inflation, including risks to the projection, will be published in the Monetary Policy Report on 19 January 2011.
The global economic recovery is proceeding largely as expected, although risks have increased. As anticipated, private domestic demand in the United States is picking up slowly, while growth in emerging-market economies has begun to ease to a more sustainable, but still robust, pace. In Europe, recent data have been consistent with a modest recovery. At the same time, there is an increased risk that sovereign debt concerns in several countries could trigger renewed strains in global financial markets.
The recovery in Canada is proceeding at a moderate pace, although economic activity in the second half of 2010 appears slightly weaker than the Bank projected in its October Monetary Policy Report. In the third quarter, household spending was stronger than the Bank had anticipated and growth in business investment was robust. However, net exports were weaker than projected and continued to exert a significant drag on growth. This underlines a previously-identified risk that a combination of disappointing productivity performance and persistent strength in the Canadian dollar could dampen the expected recovery of net exports.
Inflation dynamics in Canada have been broadly in line with the Bank's expectations and the underlying pressures affecting prices remain largely unchanged.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.
Information note:
The next scheduled date for announcing the overnight rate target is 18 January 2011. A full update of the Bank's outlook for the economy and inflation, including risks to the projection, will be published in the Monetary Policy Report on 19 January 2011.
Friday, December 3, 2010
Bank of Canada seen hiking rates in first half of 2011
Claire Sibonney, Reuters ·
TORONTO - The Bank of Canada is unanimously expected to keep interest rates on hold next week, but the uneven economic recovery has primary dealers and global forecasters divided on the timing of the next hike in 2011.
The Reuters poll, released on Thursday, showed 93% median probability that the Bank of Canada will keep its key rate at 1% at its next policy announcement date on Dec. 7, with all 44 forecasters polled predicting no move.
Among the 42 that forecast the central bank’s next hike, the majority saw it happening in the first half. The median forecast for the May 31 policy date has the rate rising to 1.25%.
But among the 12 Canadian primary dealers — the institutions that deal directly with the central bank to help it carry out monetary policy — the majority forecast rate hikes in the second half with a median prediction of a first hike in July.
When compared with a similar poll taken in October, the more recent survey showed rate hike forecasts had been moved deeper into 2011.
Thirty of the 44 forecasters surveyed say the central bank will still be at 1 percent after March 1, a more pessimistic view than the last poll.
“Given that the Bank of Canada had indicated that they didn’t want to see that great a divergence with U.S. rates and the Fed was actually doing quantitative easing, it made sense to push out the Canadian rate hike as well as opposed to adamantly defending a Q1 move,” said David Watt, senior fixed income and currency strategist at RBC Capital Markets.
“We’ve had a lot of recovery and we’re seeing some fade at the present time, so you get that caution that maybe the domestic side of the economy is not strong enough to offset the still sizable trade hit and currency strength.”
A report out on Tuesday showed Canada’s economy disappointed in the third quarter with the weakest growth rate in a year, while the economy shrank outright in September, adding pressure on policy makers to safeguard the patchy recovery.
Bank of Canada Governor Mark Carney in October gave a blunt assessment of the global and Canadian economic recoveries, saying the central bank would plot its next move with extreme caution.
Massive new monetary stimulus by the U.S. Federal Reserve to support a flagging U.S. economy also prolongs low rates south of the border, and Canada is seen not wanting to race too far ahead of its largest trading partner.
Mr. Watt noted that a concern for the central bank has been a Canadian dollar strengthening near parity without having seen a strong rebound in oil and natural gas prices.
“Sluggish Canadian growth and an elevated exchange rate will keep the Bank of Canada on hold until well into 2011 if, as we expect, core inflation readings return to their more muted earlier monthly trend,” said Avery Shenfeld, chief economist at CIBC World Markets.
“The U.S. Fed should still be on hold at a near-zero funds rate in early 2012, and wider interest-rate differentials would push the (Canadian dollar) to levels that would be too damaging to Canada’s export prospects.”
Estimates of the central bank’s target for the overnight rate by the end of 2011 range between 1% and 2.5%.
Next on the domestic data front, analysts will keep a close eye on the monthly jobs report on Friday and inflation figures later in the month.
TORONTO - The Bank of Canada is unanimously expected to keep interest rates on hold next week, but the uneven economic recovery has primary dealers and global forecasters divided on the timing of the next hike in 2011.
The Reuters poll, released on Thursday, showed 93% median probability that the Bank of Canada will keep its key rate at 1% at its next policy announcement date on Dec. 7, with all 44 forecasters polled predicting no move.
Among the 42 that forecast the central bank’s next hike, the majority saw it happening in the first half. The median forecast for the May 31 policy date has the rate rising to 1.25%.
But among the 12 Canadian primary dealers — the institutions that deal directly with the central bank to help it carry out monetary policy — the majority forecast rate hikes in the second half with a median prediction of a first hike in July.
When compared with a similar poll taken in October, the more recent survey showed rate hike forecasts had been moved deeper into 2011.
Thirty of the 44 forecasters surveyed say the central bank will still be at 1 percent after March 1, a more pessimistic view than the last poll.
“Given that the Bank of Canada had indicated that they didn’t want to see that great a divergence with U.S. rates and the Fed was actually doing quantitative easing, it made sense to push out the Canadian rate hike as well as opposed to adamantly defending a Q1 move,” said David Watt, senior fixed income and currency strategist at RBC Capital Markets.
“We’ve had a lot of recovery and we’re seeing some fade at the present time, so you get that caution that maybe the domestic side of the economy is not strong enough to offset the still sizable trade hit and currency strength.”
A report out on Tuesday showed Canada’s economy disappointed in the third quarter with the weakest growth rate in a year, while the economy shrank outright in September, adding pressure on policy makers to safeguard the patchy recovery.
Bank of Canada Governor Mark Carney in October gave a blunt assessment of the global and Canadian economic recoveries, saying the central bank would plot its next move with extreme caution.
Massive new monetary stimulus by the U.S. Federal Reserve to support a flagging U.S. economy also prolongs low rates south of the border, and Canada is seen not wanting to race too far ahead of its largest trading partner.
Mr. Watt noted that a concern for the central bank has been a Canadian dollar strengthening near parity without having seen a strong rebound in oil and natural gas prices.
“Sluggish Canadian growth and an elevated exchange rate will keep the Bank of Canada on hold until well into 2011 if, as we expect, core inflation readings return to their more muted earlier monthly trend,” said Avery Shenfeld, chief economist at CIBC World Markets.
“The U.S. Fed should still be on hold at a near-zero funds rate in early 2012, and wider interest-rate differentials would push the (Canadian dollar) to levels that would be too damaging to Canada’s export prospects.”
Estimates of the central bank’s target for the overnight rate by the end of 2011 range between 1% and 2.5%.
Next on the domestic data front, analysts will keep a close eye on the monthly jobs report on Friday and inflation figures later in the month.
Bankruptcies, proposals rise in September, but well down from 2009
The Canadian Press, 2010 OTTAWA - The federal bankruptcy office says more Canadian households and businesses became insolvent in September than in the month before. The office says bankruptcies rose 9.6 per cent — 9.9 per cent for consumers — in September from the August numbers.
Insolvencies, which combine bankruptcies and proposals to refinance debt, rose 7.6 per cent overall.
The increases reverse a trend toward declining insolvencies since the recession, but the Office of the Superintendent of Bankruptcy says it's not unusual to see an increase in the month of September.
Insolvencies for the third quarter overall are down 9.2 per cent, the office says, and bankruptcies are 11.4 per cent lower. From last year, September's insolvencies dipped 26.5 per cent and bankruptcies fell 36.6 per cent
Insolvencies, which combine bankruptcies and proposals to refinance debt, rose 7.6 per cent overall.
The increases reverse a trend toward declining insolvencies since the recession, but the Office of the Superintendent of Bankruptcy says it's not unusual to see an increase in the month of September.
Insolvencies for the third quarter overall are down 9.2 per cent, the office says, and bankruptcies are 11.4 per cent lower. From last year, September's insolvencies dipped 26.5 per cent and bankruptcies fell 36.6 per cent
Thursday, December 2, 2010
Household finances better than thought
Thursday, 2 December 2010
Canadian household finances may not be as terrible as previously suggested and won’t hurt consumer spending next year, according to a new BMO Capital Markets study.
The negative focus has purely been on household debt reaching a record level of 145 per cent of household income, but was missing the fact that family wealth has risen at the same time, the report said. Rebounding stock markets and an improved savings rate boosted household net worth to about six times disposable income, up from five times in the 1990s.
“While we are not blase, we think the singular focus on debt portrays an overly negative picture and therefore an overly negative take on consumer spending,” BMO deputy chief economist Doug Porter said in a roundtable discussion. “We think households can boost spending by three per cent next year and while we see a mild slowdown, the emphasis is on mild.”
BMO mortgage expert Laura Parsons also said not all debt is bad debt. A mortgage, for example, is seen as a long-term investment, as long as the household monthly budget has been tested to withstand an increase in interest rates.
Parsons added the real debt problem is usually related to credit cards. “Credit cards are good for emergencies and for collecting points but if you do not have the money to pay them off monthly, you can quickly get into trouble,” she said.
Canadian household finances may not be as terrible as previously suggested and won’t hurt consumer spending next year, according to a new BMO Capital Markets study.
The negative focus has purely been on household debt reaching a record level of 145 per cent of household income, but was missing the fact that family wealth has risen at the same time, the report said. Rebounding stock markets and an improved savings rate boosted household net worth to about six times disposable income, up from five times in the 1990s.
“While we are not blase, we think the singular focus on debt portrays an overly negative picture and therefore an overly negative take on consumer spending,” BMO deputy chief economist Doug Porter said in a roundtable discussion. “We think households can boost spending by three per cent next year and while we see a mild slowdown, the emphasis is on mild.”
BMO mortgage expert Laura Parsons also said not all debt is bad debt. A mortgage, for example, is seen as a long-term investment, as long as the household monthly budget has been tested to withstand an increase in interest rates.
Parsons added the real debt problem is usually related to credit cards. “Credit cards are good for emergencies and for collecting points but if you do not have the money to pay them off monthly, you can quickly get into trouble,” she said.
RBC report says BoC likely to hold rates until March 2011
This month's RBC Financial Markets Monthly publication reports that the Bank of Canada is likely to hold rates until March 2011.
Report Excerpts:
Canada takes a breather after sprinting out of recession
With real GDP standing a hair’s breadth away from its pre-recession peak and final domestic demand already treading into new territory, reports of more moderate activity in July did not prove too surprising. The sharp recovery in the housing market started to stall in mid-2010 because pent-up demand generated during the recession was satiated and buying—ahead of the mild tightening in mortgage rules and the implementation or increase in the HST in three provinces—was exhausted. The robust sales pace left a high level of household debt in its wake resulting in the debt-to-income ratio rising to an all-time high in the first quarter.
Recent growth has not been strong enough to exert significant downward pressure on the unemployment rate and inflation pressures have been moderate with the core rate at 1.6%. The headline inflation rate was 1.7% in August, thereby holding below the Bank’s 2% target, even after the harmonization of provincial and federal sales taxes in Ontario and BC were incorporated into the price measure. Unlike in the US, where we expect that core inflation will remain very low, we forecast Canada’s core rate to hold just below the 2% target during the forecast horizon and gravitate above 2% in mid-2012.
Rate increases likely to resume in early 2011
Our overall assessment of the Canadian outlook has changed little in the past month, so we are maintaining our call that the Bank will gradually raise the overnight rate to 2.25% in the second half of 2011. This gradual reduction in policy accommodation will keep a lid on the degree that term interest rates will rise especially against a backdrop of very low U.S. rates. We trimmed our 2011 forecast for yields looking for the two-year rate to end 2011 at 2.85% and the 10-year bond yield at 3.75%.
Other highlights from this month's Financial Markets Monthly:
■U.S. data have been a mixed bag and confirm that the U.S. recovery is continuing, albeit slowly. The risk of deflation, not inflation, appears to be at the top of the mind for policymakers now with the Fed likely to implement another round of quantitative easing to ensure that growth and inflation do not slow further.
■The uncertain global outlook is likely to be the dominant factor in the Bank of Canada shifting to the sidelines for the remainder of 2010.
■Policymakers in the UK are unlikely to deliver a further easing in policy unless conditions become much worse.
■The RBA stayed on the sidelines this month although the statement showed a clear tightening bias which sets up for a hike before year end.
■Canada’s economy sputtered in July after very robust domestic demand earlier in the year.
■Inflation remains mild with both the headline and core rates below the Bank’s 2% target.
■The uncertain global outlook is likely to be the dominant factor in the Bank shifting to the sidelines for the remainder of 2010.
Report Excerpts:
Canada takes a breather after sprinting out of recession
With real GDP standing a hair’s breadth away from its pre-recession peak and final domestic demand already treading into new territory, reports of more moderate activity in July did not prove too surprising. The sharp recovery in the housing market started to stall in mid-2010 because pent-up demand generated during the recession was satiated and buying—ahead of the mild tightening in mortgage rules and the implementation or increase in the HST in three provinces—was exhausted. The robust sales pace left a high level of household debt in its wake resulting in the debt-to-income ratio rising to an all-time high in the first quarter.
Recent growth has not been strong enough to exert significant downward pressure on the unemployment rate and inflation pressures have been moderate with the core rate at 1.6%. The headline inflation rate was 1.7% in August, thereby holding below the Bank’s 2% target, even after the harmonization of provincial and federal sales taxes in Ontario and BC were incorporated into the price measure. Unlike in the US, where we expect that core inflation will remain very low, we forecast Canada’s core rate to hold just below the 2% target during the forecast horizon and gravitate above 2% in mid-2012.
Rate increases likely to resume in early 2011
Our overall assessment of the Canadian outlook has changed little in the past month, so we are maintaining our call that the Bank will gradually raise the overnight rate to 2.25% in the second half of 2011. This gradual reduction in policy accommodation will keep a lid on the degree that term interest rates will rise especially against a backdrop of very low U.S. rates. We trimmed our 2011 forecast for yields looking for the two-year rate to end 2011 at 2.85% and the 10-year bond yield at 3.75%.
Other highlights from this month's Financial Markets Monthly:
■U.S. data have been a mixed bag and confirm that the U.S. recovery is continuing, albeit slowly. The risk of deflation, not inflation, appears to be at the top of the mind for policymakers now with the Fed likely to implement another round of quantitative easing to ensure that growth and inflation do not slow further.
■The uncertain global outlook is likely to be the dominant factor in the Bank of Canada shifting to the sidelines for the remainder of 2010.
■Policymakers in the UK are unlikely to deliver a further easing in policy unless conditions become much worse.
■The RBA stayed on the sidelines this month although the statement showed a clear tightening bias which sets up for a hike before year end.
■Canada’s economy sputtered in July after very robust domestic demand earlier in the year.
■Inflation remains mild with both the headline and core rates below the Bank’s 2% target.
■The uncertain global outlook is likely to be the dominant factor in the Bank shifting to the sidelines for the remainder of 2010.
Wednesday, December 1, 2010
Economy growth slows during summer months
By Julian Beltrame
OTTAWA — Canada’s economic recovery all but flatlined during the summer, as the high dollar sabotaged the ability of manufacturers to sell their goods to foreign markets.
Statistics Canada reported Tuesday that the July to September period saw the economy slow to a crawl, eking out a one per cent gain in gross domestic product.
That’s about half a point less than analysts and the Bank of Canada had been expecting, and compares unfavourably to the U.S.’s 2.5 per cent advance during the same period.
“The story is staring us in the face. We can thank a strong Canadian dollar for a not-so-strong Canadian economy,” said CIBC chief economist Avery Shenfeld.
“Our exports to the U.S. are floundering in quarters in which the U.S. has seen a huge rise in its overall imports.”
Exports declined 1.3 per cent on a quarter-to-quarter basis, a whopping five per cent on an annual basis. The trade imbalance — imports rose 6.4 per cent annualized — sliced about 3.5 per cent off the gross domestic product.
The other major weakness was residential construction, which fell an annualized 5.3 per cent annualized.
Economists had expected a weak quarter, but not this weak. The consensus was for a growth rate of about 1.5 per cent, while the Bank of Canada had forecast a 1.6 per cent advance.
Part of the surprise was that September, the last month of the quarter, showed the economy contracting 0.1 per cent, when a flat or tiny uptick had been expected.
The September data is also giving a weak send-off to the fourth-quarter performance, which won’t be known for some time.
“In a nutshell, this result is a clear disappointment,” said Douglas Porter of BMO Capital Markets. “Bottom line for the Bank of Canada — there’s zero rush to raise (interest) rates again.”
Bank governor Mark Carney is due to make his next interest rate announcement next week, but few expect him to move the policy rate above the current one per cent.
TD Bank economist Diana Petramala said her bank’s view is that Carney won’t move again on interest rates until the third quarter of next year, an opinion shared by Shenfeld.
Still, she said she expects the third quarter to have been the bottom of the economic deceleration, and that the fourth quarter will see a modest improvement to about two per cent.
The markets saw little to like in the GDP numbers, taking it out on the loonie in early morning trade. The dollar fell over 80 basis points to 97.34 US.
Statistics Canada did upgrade second-quarter growth somewhat by three-tenths of a point to 2.3 per cent, but that effect was offset by a downward revision of the first quarter to 5.6 per cent from the previously reported 5.8.
For the year so far, Canada’s economic speed is barely ahead of the U.S.
Based on recent performance, however, it’s no contest — the U.S. economy advanced by 2.5 per cent in the third quarter, compared to Canada’s one per cent.
The welcome news in the report was that, as expected, Canadian businesses were finally taking advantage of the high dollar to purchase machinery and equipment and gear up for future production. Investments in machinery and equipment rose 6.5 per cent in the quarter — 29 per cent annualized — led by purchases in industrial machinery, and computers and other office equipment.
On a year-to-year basis, business investment was up 8.7 per cent, as opposed to the 20-per-cent decline of 2009.
Consumers also played their part, spending 3.5 per cent annualized more on services, cars, and clothing and footwear.
OTTAWA — Canada’s economic recovery all but flatlined during the summer, as the high dollar sabotaged the ability of manufacturers to sell their goods to foreign markets.
Statistics Canada reported Tuesday that the July to September period saw the economy slow to a crawl, eking out a one per cent gain in gross domestic product.
That’s about half a point less than analysts and the Bank of Canada had been expecting, and compares unfavourably to the U.S.’s 2.5 per cent advance during the same period.
“The story is staring us in the face. We can thank a strong Canadian dollar for a not-so-strong Canadian economy,” said CIBC chief economist Avery Shenfeld.
“Our exports to the U.S. are floundering in quarters in which the U.S. has seen a huge rise in its overall imports.”
Exports declined 1.3 per cent on a quarter-to-quarter basis, a whopping five per cent on an annual basis. The trade imbalance — imports rose 6.4 per cent annualized — sliced about 3.5 per cent off the gross domestic product.
The other major weakness was residential construction, which fell an annualized 5.3 per cent annualized.
Economists had expected a weak quarter, but not this weak. The consensus was for a growth rate of about 1.5 per cent, while the Bank of Canada had forecast a 1.6 per cent advance.
Part of the surprise was that September, the last month of the quarter, showed the economy contracting 0.1 per cent, when a flat or tiny uptick had been expected.
The September data is also giving a weak send-off to the fourth-quarter performance, which won’t be known for some time.
“In a nutshell, this result is a clear disappointment,” said Douglas Porter of BMO Capital Markets. “Bottom line for the Bank of Canada — there’s zero rush to raise (interest) rates again.”
Bank governor Mark Carney is due to make his next interest rate announcement next week, but few expect him to move the policy rate above the current one per cent.
TD Bank economist Diana Petramala said her bank’s view is that Carney won’t move again on interest rates until the third quarter of next year, an opinion shared by Shenfeld.
Still, she said she expects the third quarter to have been the bottom of the economic deceleration, and that the fourth quarter will see a modest improvement to about two per cent.
The markets saw little to like in the GDP numbers, taking it out on the loonie in early morning trade. The dollar fell over 80 basis points to 97.34 US.
Statistics Canada did upgrade second-quarter growth somewhat by three-tenths of a point to 2.3 per cent, but that effect was offset by a downward revision of the first quarter to 5.6 per cent from the previously reported 5.8.
For the year so far, Canada’s economic speed is barely ahead of the U.S.
Based on recent performance, however, it’s no contest — the U.S. economy advanced by 2.5 per cent in the third quarter, compared to Canada’s one per cent.
The welcome news in the report was that, as expected, Canadian businesses were finally taking advantage of the high dollar to purchase machinery and equipment and gear up for future production. Investments in machinery and equipment rose 6.5 per cent in the quarter — 29 per cent annualized — led by purchases in industrial machinery, and computers and other office equipment.
On a year-to-year basis, business investment was up 8.7 per cent, as opposed to the 20-per-cent decline of 2009.
Consumers also played their part, spending 3.5 per cent annualized more on services, cars, and clothing and footwear.
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