Monday, January 31, 2011

Canadians Better Off, Even If They Don't Feel It

John Ivison, National Post · J an. 23 marks the fifth anniversary of Stephen Harper's 2006 election victory and in early February, he will pass Lester B. Pearson's time in office to become Canada's 11th longest-serving prime minister. As Mr. Harper told Postmedia News this week, it has been a roller-coaster ride: "Some days it feels like five months, and other days it seems like 50 years."

The five-year milestone has presented the Liberal leader, Michael Ignatieff, with his latest electoral gambit -- to ask middle-class Canadian families whether they are better off after half a decade of the Harper government?

In fact, by almost every pocketbook metric, Canadian families are better off than they were five years ago --even if they don't feel it.

The new strategy emerged from research carried out by the Liberals' pollster, Michael Marzolini, as part of his firm Pollara's annual nationwide poll of Canadians' personal financial expectations. He found a new sense of caution and retrenchment, after optimistic expectations for 2010 were not met.

According to the Pollara poll, middle-class Canadians feel themselves under siege, with four in 10 claiming their incomes are failing to keep pace with the cost of living. They are anxious about their retirement, family debt and the value of their investments. Many Canadians believe every step forward they make is being hampered by assaults on their incomes such as new taxes and user fees. Ominously for the government, they appear less than impressed about claims Canada is doing better than its international competitors -- the economy may be improving but they feel their own situation is not.

Mr. Ignatieff has leapt on the survey's findings on his current 20-event, 11-ridings winter tour, making the claim that Canadians are worse off and the economy is weaker.

He is gambling that voters look at their own situation and calculate whether they have done well over the past five years. If the answer is yes, they will vote for the party they voted for before but, if not, he hopes they can be persuaded to switch.

Mr. Ignatieff's central contention is that Canadians' standard of living -- as measured by GDP per person--has fallen 1.3% since the Harper government came to power.

The only problem with this for the Liberal leader is that it isn't true -- real GDP per capita did fall between 2005 and 2009, the trough of the recession, but has since recovered. If you annualize the first three quarters of 2010, the numbers show real GDP per capita is up

0.2% over the 2005 figure.

Other indicators are similarly positive.

Average hourly wages have outpaced inflation, especially for men, who now earn $4 an hour more than they did at the end of 2005.

The fiscal and monetary response to the recession has created one very real problem identified by Mr. Ignatieff -- an extremely high level of indebtedness. Encouraged by cheap interest rates, Canadians now owe $1.50 for every dollar of disposable income, up from $1.08 in 2006.

Yet, national net worth per capita, which measures the health of assets like homes and investments, stood at a record high of $179,000 in the third quarter of 2010, up from $155,000 five years ago. Even at the bottom end of the socioeconomic ladder, the number of children living in low-income families fell by 250,000 between 2003 and 2008.

Retirement income is another leading concern raised by the Liberals but many more Canadians are now members of registered retirement plans than in 2005.

And the feeling that the tax burden is growing is also illusory, at least according to the Fraser Institute's Tax Freedom Day, the day on which the average Canadian family has earned enough money to pay all taxes imposed on them by three layers of government. It advanced to June 5 in 2010, from June 23 in 2005.

These bald statistics don't tell the whole story, of course. In the intervening years, there was a painful recession that saw unemployment spike at 8.7% in August 2009 (it is now sitting at 7.6%, still higher than the 6.8% in 2005).

Canadians remain anxious. According to Mr. Marzolini's research, two-thirds of the population thinks we're still in recession.

Yet, crucially, voters do not seem to blame the federal government, perhaps accepting that, if things are not noticeably better than they were five years ago, they could have been immeasurably worse.

Non-Conservatives can claim with some justification that the Harper government's record of achievement is pretty penny ante when compared with other five-year-old administrations.

But the picture improves when you consider what didn't happen. Mr. Harper is an incrementalist who agrees with Canada's longest-serving prime minister, William Lyon Mackenzie King, that "it's what we prevent, rather than what we do, that counts in government."

The pressures of power have forced Mr. Harper, by his own admission, to make compromises he never thought he would have to make. "We spent the first three years of our government in a situation where people were saying, 'Why don't you take more risks? Why don't you make more grandiose commitments? Why don't you have a bigger more ambitious agenda on anything?' And then all of a sudden, we're spending the next two years dealing with a crash in the global economy and trying to operate a situation where we're trying to protect what everybody has. So things just change constantly and you do have to be adaptable," he told Postmedia's Mark Kennedy this week.

There appears to be some appreciation that the Conservatives have provided solid, if stolid, government through the recession.

An Ipsos Reid poll before Christmas suggested six in 10 Canadians believe the political process is operating well and there is no need for an election. They may not vote Conservative, but they are not so disgruntled they are demanding change -- at least not to the extent they have coalesced around Mr. Ignatieff or any of the other opposition leaders. This bodes well for Mr. Harper, sincegovernmentstraditionally find themselves in real trouble when the time-for-change number rises above 60%.

"Every election comes down to that -- continuity or change," said Darrell Bricker, president of Ipsos Public Affairs. "Mr. Ignatieff is trying to increase the desire for change that is a pre-condition [for a Liberal government]. But Canadians are not overwhelmingly concerned about the economy and even if they become more concerned, his opponent is leading him on the issue by 20 points."

The Liberals insist that stress about the future has created enough volatility to give them a fighting chance. "Perceived reality is often a self-fulfilling prophesy," said Mr. Marzolini, the Liberal pollster, as he unveiled his New Year's poll to the Economic Club of Canada.

Mr. Ignatieff had best hope so, otherwise Mr. Harper will pass both R.B. Bennett (five years and 77 days) and John Diefenbaker (five years and 305 days) to become Canada's ninth-longest serving prime minister before the end of this year.

Friday, January 28, 2011

2011 Looks Promising For Investment According To Laurentian Bank Forecast

According to a new forecast released by the Laurentian Bank, 2011 provides great promise for investors and investments in Canada.

Laurentian’s chief economist, Mr. Carlos Leitao, believes that the recent economic improvements in the US will set the tone for the rest of the world. Similarly, he believes that the circumstances are being created for an excellent environment for investment. Low prices that are set to rise- in equities and real estate- will set the tone."Two significant events occurred at the end of 2010 that generated significant momentum for the American economy," explains Mr. Leitao. "The first was a new wave of quantitative easing, known under the acronym of QE2, which was announced in November.

The second was the prolongation in December of the Bush era's tax relief. These two interventions will serve to accelerate economic growth."

Leitao predicts that economic growth in the US will reach 3-3.5% in 2011, taking into account the flood of cash into the system with tax relief and quantitative easing programs- and the eventual impact on the country’s deficit.

“The stock market, which posted a strong finish in 2010, should be a major beneficiary of these measures in 2011," predicts Mr. Leitao. "In the wake of the sluggishness that prevailed during the months of July and August due primarily to the concern over sovereign debts in Europe, the tone has changed over the past few months and confidence has begun to reappear. As such, we anticipate that the economic environment in 2011 will be quite favourable for investment."

Considering also that the recession is over and the continued decline of the bond market- and the lows that many US stocks reached last year- there is no where to go but up in 2011. With this in mind, Leitao encourages Canadians to consider the US as a spot for investment- for securities – and in blue chip companies in particular.

"With the increased value of the dollar," emphasizes Mr. Leitao, "Canadian investors can now take advantage of a greater lever effect to purchase foreign assets." Blue chip securities are the most promising," he underlines, "particularly those of companies that offer products and services related to industrial and computer equipment. What should be avoided are the consumer staples and discretionary consumption sectors. The priority should be to consider companies that are leaders in their markets and that pay dividends.”

Migration at 20-year high

Nicolas Van Praet, Financial Post · Thursday, Jan. 27, 2011

MONTREAL — The number of Canadians moving to another province has punched to a high not seen in 20 years as people pack up in search of better jobs and salaries elsewhere.

Roughly 337,000 Canadians were on the move in 2010, says a report on interprovincial migration published Thursday by TD Economics. That’s 45,000 more than the year before and the most since the late 1980s. It also represents the largest share of the overall population since 1998.

“It’s a good sign in the sense that whenever you see that kind of movement, it’s an expression of a labour market that’s healing after a pretty severe recession,” said TD senior economist Pascal Gauthier, who wrote the study. “People are either returning home or moving to areas that didn’t have employment before. For those that are already employed, they’re finding potentially better prospects.”

Interprovincial migration matters because when there is a net movement of people to higher-employment and higher-productivity areas, that generates net economic output gains on a national basis. It’s also crucial for businesses because people often make big-ticket purchases when they move, which can have a significant impact on local housing and retail markets.

Canada’s situation lies in stark contrast with the United States, where census data show long-distance moves across states fell last year to the lowest level since the government began tracking them in 1948. Americans used to be a nation of big movers, with as many as one in five relocating for work every year in the 1950s. Now, experts are debating why they’ve become a nation of “hunkered-down homebodies,” as the New York Times put it.

Richard Florida, director of the Martin Prosperity Institute at the University of Toronto, says the United States is experiencing a new kind of class divide now between “mobile” people who have the resources and flexibility to pursue economic opportunity, and “stuck” citizens who are tied to places with weaker economies.

He argues the U.S. housing crisis is a big factor slowing mobility down. When the housing bubble popped, it left millions of Americans unable to sell their homes. “It’s bitterly ironic that housing, for so many Americans, has gone from being a cornerstone of their American dream to being a burden,” he wrote in a recent opinion piece.

Mr. Gauthier agrees that the housing crash is partly to blame for keeping Americans put. “There’s such a glut of supply that it’s just difficult to sell your house. In Canada, that’s not been an issue.”

In Canada, the biggest impediment to the free flow of labour between provinces and territories remains regulation as occupational requirements fall under provincial jurisdiction.

Workers in regulated professions and skilled trades, such as teachers and engineers, still face major barriers trying to work in provinces other than their own. Solving that problem will be key ahead of the looming labour force crunch, Mr. Gauthier argues.

Alberta, B.C. and Saskatchewan have seen the strongest net inflow of people of all provinces for the past three years and that will not change in the short term, the TD report forecasts. The three jurisdictions are working to implement a newly signed trade and labour mobility agreement between them that could eventually see seamless movement of workers between their borders.

TD says Ontario and Quebec will continue to lose residents to other provinces on a net basis, but the bleeding will be at a slower pace than in previous years. It says Manitoba and Prince Edward Island will be the only provinces still shedding a significant share of residents through the end of 2012.

In Manitoba’s case, it’s not that there aren’t any jobs. The province’s unemployment rate has been consistently lower than that of the rest of Canada since the 1990s. It’s that people are being lured by the prospect of higher-paying jobs in neighbouring provinces.

Bank of Canada urged to cut inflation target further

OTTAWA — Should the Bank of Canada tinker with success?

A leading economist says yes and is asking the central bank to change a policy that most consider has been an unqualified success for almost two decades — targeting annual inflation at two per cent.

University of Toronto economics professor Angelo Melino has issued a report for the C.D. Howe Institute arguing that the bank should lower the inflation target to 1.5 per cent when it comes time to sign a new five-year agreement with Ottawa later this year.

And five years from now, Melino says the target should move south further to one per cent.

Melino, who is a member of the C.D. Howe Institute monetary policy council, agrees that the current framework “is not broken” and has proven its worth in both good and bad times. But, if keeping price gains at two per cent has been good for the economy, then one per cent would be better, he argues.

“There’s nothing magical about two per cent,” he said. “We all see that having inflation at 10 per cent is lousy and at five per cent is also lousy, so the direction to lower inflation is the way we should go.”

The central bank has been thinking hard about what it should do when the current agreement with the federal government runs out at the end of this year almost from the moment it signed the last deal in 2006. At that time, it renewed an understanding in existence since 1991, that the central bank would seek to corral inflation within one and three per cent, aiming for two per cent.

It has not always managed to do that every year, but a look at inflation over the past 15 years shows prices have averaged a two per cent annual rise for the period.

It is that success that many believe will result in bank governor Mark Carney likely recommending that nothing be changed, particularly in the current climate of economic and financial uncertainty.

Merrill Lynch Canada chief economist Sheryl King, who is also on the C.D. Howe policy council, says there are some at the Bank of Canada who agree with Melino, but she adds that it is likely the bank will say it needs more time to study the issue.

“I think the bottom line is they are not going to do anything, it’s still too early,” she says.

On the other hand, some analysts suggest Carney may want to leave a lasting mark on the bank’s history by seeking to improve on a good record.

In speeches the past few years, bank officials have been running ideas up the flagpole to see if anyone salutes, without tipping their hand about which way they may be leaning.

The bank has posed three alternatives. The first is lowering the target as Melino suggests.

Another is moving toward what is called “price level targeting,” which basically means making up for misses — if inflation is three per cent one year, the aim should be to reduce it to one per cent the next so as to arrive at the proper average.

However, that’s exactly what has happened the past 15 years without resorting to price level targeting, so the bank may see this as a moot point.

The third is something officials had given little thought to before the most recent financial crisis — whether the Bank of Canada should use monetary policy to burst asset bubbles and maintain financial stability.

In a speech last August, deputy governor John Murray found some merit in all three options, but also highlighted deficiencies and wondered if the gains were large enough to tinker with a proven system.

“A final factor that must be considered before any decision is made is the proven track record of the present system. This represents a relatively high bar against which any future changes must be judged,” he concluded.

That argues against making dramatic changes, says Melino, but not against trying to improve the system incrementally, especially since there are very few risks.

Lowering inflation would better help individuals on fixed incomes, like seniors, keep up with a rise in the cost of living. Economists say businesses also operate more efficiently if they can count on stable prices.

“My recommendations have only a small upside potential for improving welfare, but the downside risks are even smaller,” Melino says.

And there’s a good reason to experiment, he adds. Canada may one day want to move the target closer to zero, and only by taking baby steps is it possible to test in the real word whether such a goal is desirable.

Thursday, January 27, 2011

Message heard? Canadian household debt growth slowing

Message heard? Canadian household debt growth slowing Tal believes the Bank of Canada interest rate move will come early, possibly in May

By Julian Beltrame, The Canadian Press

OTTAWA - Canadians may be starting to get the message about the perils of mounting debt, suggests a new report from CIBC.

A new analysis by the CIBC shows that many measures of household debt moderated in the third quarter of 2010, just as the often-quoted indicator of debt-to-disposable income hit a record 148 per cent.

The paper says that alarming number was due to falling incomes in the July-September compared with the April-June quarter — when Canadians were getting juicy tax refund cheques from Ottawa — not because debt levels were rising.

In fact, behind the scenes, credit growth was already falling.

Household debt in the third quarter grew at the slowest pace in nine years, while in the last month for which there is data — October 2010 — it was the softest in 15 years.

As well, lines of credit are now rising at a monthly clip of 0.3 per cent, the slowest pace since 2007.

While the mortgage market expanded by seven per cent year-over-year — still faster than income growth — mortgage debt was a small portion of household assets, a function of improved stock market portfolios and better home values.

"I'm not saying debt is not a problem. What I am saying is the problem is getting smaller," said economist Benjamin Tal, author of the CIBC report.

"Everybody is assuming debt is rising like crazy, but the reality is that if you look closely you see that the rate at which debt is accumulating is going down notably. We should not get panicky because it seems the system is starting to correct itself."

The Bank of Canada and the federal government have been warning Canadians about their debt exposure for well over a year.

But the hectoring picked up in recent months after the debt-to-income ratio rose to a record high in the third quarter, even beating out the U.S. indebtedness ratio.

In mid-January, Finance Minister Jim Flaherty announced new measures to rein in borrowing, including reducing the amortization period on mortgages from 35 to 30 years, limiting the size of home-equity loans and removing government insurance on lines of credit secured on homes.

Responding to the report at an event in Oshawa, Ont., Flaherty said he acted because he was seeing some "excesses" in borrowing and was concerned a minority of homeowners would not be able to make their monthly payments once interest rates start rising.

"Moderation is the key," Flaherty said.

Tal said Canadians got the "message" from the warnings of policy makers, but also that there was a natural exhaustion with borrowing.

Other economists, including Scotiabank's Derek Holt, have also talked about the Canadian consumer entering a new phase in which pent-up demand, particularly for housing, has been exhausted.

Still, Tal believes Flaherty acted correctly in tightening credit conditions, and also in keeping those measures modest and targeted. He estimates that when the new rules take effect in March, they will curtail new mortgage credit by between two and three per cent over the next 12 months.

"They chose an almost surgical approach where it hits where it hurts without causing too many side effects," Tal said. "They targeted marginal borrowing ... they will not derail the housing market."

The latest downward trend on credit will take some pressure off Bank of Canada governor Mark Carney to raise interest rates to keep Canadians from loading on too much debt.

Economists are divided as to when Carney will move off the super-low one per cent policy rate.

Some argue that uncertainty over the recovery, risks in the global economy and fear about stoking the dollar — more that debt levels — may be more decisive in convincing Carney to stay on the sidelines until at least the third quarter.

Tal believes the move will come early, possibly in May. He said while the central bank's 2.4 per cent growth forecast for 2011 is modest, the composition of that expansion is superior to what occurred last year.

Last year's recovery was bolstered by consumer borrowing and government stimulus, he said, while future growth will be anchored by "a vibrant business sector."

Tal said he does not believe higher rates, when they come, will cause a major panic among borrowers or disruption in the economy.

He notes that personal bankruptcies are already on the way down, and that all expectations are that Carney will be raising rates in a slow, measured way, rather than in large increments.

"The overall speed and magnitude of future rate hikes will be limited by the growing effectiveness of monetary policy and a modest recovery," he said.

Wednesday, January 26, 2011


One of the most influential things in our life is our attitude.

A negative attitude can make life seem dull, monotonous, and just plain boring. People with negative attitudes typically never have anything nice to say. All of that negative energy can make everything that they touch seem like a waste.

People who exude positive energy are generally more pleasant, willing, courteous, and kind. They make people feel good just by being around. They help make life special.

If you do not already have a fabulous outlook on life, try these little tricks to start to change...for the better:

1. Be grateful for all of the good things in your life, even what may seem bad. As the saying goes, things could always be worse!

2. Smile. There is something magical about a smile. It can warm up even the most cynical people. Smiling, even when you are not happy, can help you to stay focused on being positive. Sometimes you have to “fake it until you make it.”

3. Do something for you. It doesn’t have to be some big, grand retreat or jet-set getaway. Maybe just having a new flavor of ice cream or trying a new perfume is enough. Whatever generally makes you happy, do it.

4. Think of all the good in your life. Meditating on our lives and the good things can make us appreciate the positive experiences that we have already had and look forward to the future.

5. Exercise.Doing something physical will get your blood flowing and endorphins going. Endorphins are believed to improve mood.

6. Give compliments. Seeing the good in others is something that many people struggle with. However, when you see the good in others, they will reciprocate and find something good to say about you. It’s a win-win for everyone! Try it.

7. Offer love. It’s hard to give love when you are always negative. Give someone a hug or send someone else a nice little token of love to make their day special. You will feel wonderful about it. It can become a good habit to get into.

8. Learn from your experiences both good and bad. If things didn’t go the way you wanted them to at some point, don’t get frustrated or bitter. Remember, everything in our life happens for a reason. Our experiences can be a positive if we learn from them.

These are just a few ways for you to keep your outlook on life positive through the ups and downs
that we all face.

Your life is what you make it. Be good and it can be good for you. The choice is up to you. What do you want from your life?

Monday, January 24, 2011

Tighter mortgage rules may yet save us from ourselves

By Ray Turchansky, Freelance Edmonton Journal

People who remember the days when there was only one type of mortgage -- with interest fixed at five per cent annually for the entire 25 years -- will also remember the cartoon character Pogo saying: "I have met the enemy, and he is us."

Indeed, there are times when we need to be saved from ourselves.

Two years ago, when Trevor Hamon was branch manager with Dundee Private Investors, he warned of serious peril by banks offering home-equity lines of credit and by people taking debt into retirement. I've since seen people go $100,000 into their HELOC, lose it investing on penny stocks and essentially wind up paying for their home twice.

In fact, Canadians currently owe $1.48 for every dollar of their disposable income, which is more household debt per capita than in the United States. And the argument that household debt is immaterial as long as the value of the house increases is no longer comforting. TD Economics expects existing home sales in Canada to drop about eight per cent in 2011 and prices to slip one per cent.

So the government faced two options -- raise Bank of Canada interest rates, which would soon increase mortgage rates, or tighten mortgage lending rules, which was wisely done for the third time since 2008.

Effective March 18, the maximum amortization period is reduced from 35 to 30 years for government-backed mortgages with loan-to-value ratios greater than 80 per cent; and the maximum Canadians can borrow to refinance their mortgage falls from 90 to 85 per cent of the value of their homes.

In addition, effective April 18, the government will no longer insure lines of credit with homes as collateral, such as home-equity lines of credit.

The Canadian Association of Accredited Mortgage Professionals said in a news release that it "supports measures that strengthen owners' equity in their homes and encourages the reduction of their mortgages. CAAMP is also pleased that there was no change made to the down-payment requirement as it recommended."

Less enthusiastic was Randall McCauley, vice-president of government relations at the Canadian Real Estate Association, who said in a release: "We're not sure the government needed to take this step now."

Much has been made about how reducing amortization periods from 35 to 30 years on a $300,000 mortgage at four-per-cent interest will cause monthly payments to go up $105. Instead, people should be thankful that the change will save them $42,288 in interest.

Adrian Mastracci, portfolio manager with KCM Wealth Management in Vancouver, has shown that paying off a $240,000 mortgage at 5.75 per cent costs you $65,165 in interest if paid off in 10 years, but $313,410 in interest if paid off over 35 years.

Said Mastracci after the latest mortgage changes were announced: "The repayment of debt is a best investment for many, particularly in jittery times, and it's risk free."

Two rules of thumb are not to go into debt for consumer purchases using either home equity because the value of the home could drop, or retirement savings because you might not be able to fund living expenses once employment income ends. The exception is when you combine the two by taking out the $25,000 allowed from your registered retirement savings account under the Home Buyers Plan, which makes sense because you have to pay it back or be taxed on the withdrawal, and because you're not paying interest on the loan.

The concept of home ownership is often founded on three beliefs: that interest rates won't spike, making payments unbearable to maintain; that the homebuyer will remain employed; and that property value will continue to rise and build up equity.

But in the U.S., after prolonged near-zero interest rates lured people to buy houses, interest rates rose, the financial crisis boosted unemployment and people used their homes as automatic-teller machines, refinancing them to buy depreciating assets like gas-guzzling cars and flat-screen TVs. The result was a deluge of houses for sale, which lowered prices and in many cases wiped out home equity completely.

The Canadian government saw housing become a sinkhole in the U.S. and has decided to Sherpa us around that crevasse.

In 2006, mortgage insurers, including Canada Mortgage and Housing Corp., began extending amortization periods from 25 to 30 years, then 35 and even 40. There was even talk of 50-year mortgages. At the same time they began insuring interest-only loans that essentially required no down payment.

When more than half the mortgages taken out during the first six months of 2008 had 40-year amortization periods, the federal government started putting speed bumps on the road to ruin. It reduced mortgage maximums to 35 years and eliminated interest-only loans by requiring a minimum five-per-cent down payment.

Last year came a second round of changes, making borrowers meet the standards for five-year interest rates, lowering maximum mortgage refinancing from 95 to 90 per cent of home value and requiring a 20-percent down payment for government-backed mortgage insurance on rental or investment properties not lived in by the owner.

And now, a third wave of changes, to save us from ourselves.


Having read articles, listened to audio CDs, and attended workshops on how to effectively do a listing presentation, you most likely know the big basics:

* ask questions * explain your program clearly * listen carefully * take notes * smile, etc.

So what is it, then, that makes the difference between walking out the door without a listing and posting your the FOR SALE sign on the front lawn?


Some of those deceptively minor presentation tips often overlooked by REALTORS®:

1. Get good directions. Tardiness leaves a poor impression ALWAYS, no matter the excuse. You might know the area well, but get directions from the prospect anyway. Online maps arenʼt always accurate, and my GPS has taken me on the odd "milk run."

2. Bring Kleenex or the like. A running nose, (I have allergies) a spill from a coffee cup, a drooling dog — you never know when you could use one.

3. Make sure your pen works and carry a few spares. (Enough said here.)

4. NO REAL ESTATE JARGON. Never assume everyone else in the world knows industry terms, acronyms and what terms like “staging” mean. Often they don't, so don't risk embarrassing them by assuming that they do.

5. Be prepared with answers to common questions. You can probably guess at what these questions likely will be. Looking things up, or constantly saying, “Iʼll get back to you on that”, won't impress prospects.

6. Have a conversation, not a presentation. It may be termed a listing presentation, but when it gets down to it, really, it's a conversation. Ask questions and answer questions. Chat, but remember: youʼre doing all the talking, the chances of you getting the listing is low....So listen, listen, listen.

7. Arrive with a tidy, well organized presentation

As a carpenter, I've learned to respect my tools, so you must respect yours.

Papers crammed into the binder pockets, forms and other documents spilling out when you open your kit....UNACCEPTABLE. If prospects notice that, they might assume that youʼll handle the house sale in the same disheveled, disorganized fashion.

IN SHORT: Every little improvement you make to your listing presentation increases your chances of getting the deal — which, in turn, makes you more money.

Thursday, January 20, 2011

Lending standards may already be too tight: mortgage professionals

Flaherty is probably more right than wrong this time. These measures would mainly affect the CREATIVE shopper - one that wants but can't afford. That is the type of lending that took the US down their path of near ruin. Canadians will stil quailfy for mortgages but they just may have to temper their desires a bit.

Neil "Mortagge Man" McJannet

By Sunny Freeman, The Canadian Press

TORONTO - The risk of mortgage rates rising to unaffordable levels in the near future is "negligible" and recent measures taken by Ottawa to clamp down on housing loans may be too harsh, says Canada's mortgage industry association.

Due to the effect of tightened lending rules "housing demand at present and for the near future is probably lower than it needs to be," according to the Canadian Association of Accredited Mortgage Professionals, which represents brokers and others in the industry.

In fact, the group suggested in a report Wednesday that the rules may need to be relaxed.

CAAMP said that a vast majority of borrowers studied had left themselves room to absorb a hike of as much as one percentage point on fixed-rate mortgages and even more on variable-rate mortgages.

"Canadians — lenders and borrowers — have been highly prudent in the mortgage market," Will Dunning, the association's chief economist, wrote in the report.

"There have been some calls for mortgage lending criteria to be tightened further. This analysis concludes that Canadian lending criteria are already tight enough. In fact, some might argue that with the changes implemented in April 2010, Canadian criteria are currently too tight."

The report came two days after federal Finance Minister Jim Flaherty further altered lending rules to curb higher-risk borrowing in the housing sector. Changes coming into effect in March include reducing the maximum amortization period to 30 years from 35 for insured mortgages and limiting how much money Canadians can borrow using their homes.

It was the third time mortgage rules have been tightened in the past three years, a period in which historically low interest rates have been fuel for rampant borrowing.

On Tuesday, Bank of Canada governor Mark Carney left the key overnight lending rate untouched at one per cent, but with a renewed warning that household debt is mounting.

Both Carney and Flaherty have warned repeatedly over the past several months that Canadian consumer debt is rising too rapidly and threatens the future health of the economy.

Flaherty dismissed the CAAMP report Wednesday, noting that the group has a vested interest in seeing the housing and mortgage markets remain robust.

"My concern has been to strike the right balance between the availability of credit in the residential housing sector and the danger of developing any sort of bubble in the housing sector," he told reporters, adding that he doesn't believe further tightening will be necessary at this time.

John Andrew, a professor at Queen's University School of Urban and Regional Planning, said it's unlikely mortgage reforms would put a significant chill on the housing market because the changes are aimed at the highest-risk borrowers, who are already unlikely to qualify for insured borrowing from most lenders.

"I dispute their claim that the housing market is slowing down," he said.

"I don't see (mortgage changes) really affecting the market that much because there really aren't that many lenders that are going to be lending ... to that type of a borrower anyway."

But CAAMP said changes made by Flaherty last April had already disqualified a significant number of potential borrowers, thereby curbing debt growth.

Last April, the government introduced changes that forced borrowers to meet the standards for a five-year fixed-rate mortgage even when applying for a lower interest, shorter-term loan.

That slimmed average gross debt service ratios, a measure used by banks to test how much housing debt will eat into income, by about one per cent to 19.3 per cent in the second half of the year, the CAAMP report said.

The study also tested the impact of higher mortgage interest rates, assuming a rate of five per cent by the end of 2012. That would raise the cost of a fixed-rate mortgage by about one percentage point but would have a bigger impact for those with variable rates, about 2.5 per cent.

It found that expected increases in income levels should more than offset increases in interest rate payments and most borrowers would be able to absorb the shock.

"Recent mortgage lending, in an environment of very low interest rates, results in some risk of financial difficulties if and when interest rates increase in future," Dunning wrote in the report.

"However, the degree of risk does appear to be extremely small."

Still, the CAAMP report found the amount of outstanding mortgage debt in Canada surpassed $1 trillion in August and stood at $1.08 trillion in October — about 57 per cent higher than five years earlier.

That represented a debt growth rate of 9.4 per cent per year. The figure is slightly lower than the average over the past decade, but troubling because it far surpassed income growth.

Mortgage defaults also remain higher — at about 0.43 per cent — than they were before the recession, when the rate stood at less than 0.30 per cent, the report found.

However, CAAMP said that as the housing market slows, debt growth is already decelerating and as of October stood closer to seven per cent, below the 10 per cent average for the decade.

The report was based on 59,000 insured mortgages for home purchases and 26,500 for refinancing that were funded in 2010. The vast majority of those included in the data — 97 per cent —were considered high risk, meaning the loan-to-value ratio exceeded 80 per cent.

Wednesday, January 19, 2011

What's affecting your credit score?

Garry Marr, Financial Post · Tuesday, Jan. 18, 2011

I still have an Eaton’s department store credit card even though there is no where to shop with it.

That hasn’t stopped the long-forgotten card from making its way on to my credit report and ultimately affecting my credit score.

When contacted by a representative of TransUnion LLC — one of two companies providing credit ratings in Canada, the other being Equifax Inc. — for a story about how to improve credit ratings I decided it would be a good time to check my own score.

TransUnion gave me a code to download my score, something that normally costs $14.95 for a one-time credit profile and another $7.95 to get your credit score. The company also offers a program that allows you to monitor both whenever you want for $14.95 a month.

“One of the benefits of checking your credit report is to make sure information is accurate and up to date,” says Tom Reid, director of consumer solutions for, referring to opened accounts you may have forgotten about.

So how did I do? I scored 786 out of 900, considered “good” and better than 66.02% of the population. But I somehow feel like the kid who got a B on an assignment. I want that A.

According to my report, I have too many bank or national revolving accounts on my credit report. I have three major credit cards, American Express, Visa and MasterCard. I have a car loan and an unused line of credit with my bank.

That Eaton’s card probably didn’t help my score and then there’s the Hudson’s Bay card account that was still open that I haven’t used in a decade. Show me a Canadian who hasn’t opened up one of those to get the 10% discount. I just never closed mine.

There are five different categories that go into a credit score. The first is on-time record of payment — got that covered. Next up is the number of inquiries or applications for credit.

You remember getting that credit card for a free tee-shirt at a hockey game or signing up for the department store card to get the discount and then destroying it. You think that doesn’t matter? Think again.

“It could potentially have a negative impact on your score,” says Mr. Reid, about applications I’ve made to various department stores over the years. Fortunately, I haven’t made any in the last two years.

Your utilization of credit is also a major factor — that’s your balance divided by available credit. It’s not based on whether you have a balance at the end of the month but it’s the balance outstanding at a given moment divided by your available credit.

“If that number exceeds 40%, that is typically a warning sign,” says Mr. Reid, noting a higher credit limit will keep that percentage down.

The last factors are longer term credit history and the breadth of your credit, somebody who has just one credit card doesn’t look as strong as someone who also has a line of credit and say a mortgage.

“It’s a fantastic credit score,” says Mr. Reid, about my result, adding I shouldn’t have a problem getting credit. Yeah but my editor who took the same test scored 831.

All of this may just seem like a vanity project but there are real problems you can encounter with bad credit and a poor rating, says Vince Gaetano, a principal broker with Monster Mortgage.

“A number of things can happen if you don’t have a good score. Right now 680 seems to be the cut off for buying a home with mortgage [default] insurance,” says Mr. Gaetano. “If you are below 600, you are in real trouble, you are going to a B leader.”

Those lenders will just kill you on interest rates — 5% to 6% compared to 2.25% —not to mention the fact you’ll need to have at least a 20% deposit on your home.

Then there’s the fees for bad credit. Lenders charge 1% of the value of the mortgage for people with bad credit. Who wants to pay $3,000 extra on a $300,000 mortgage. The broker will also demand 1% because your bad credit means the bank is not compensating the broker for you, the questionable customer.

What’s the worst score Mr. Gaetano has seen. “Somebody had like 430-something. I mailed them a bullet. I wouldn’t lend a guy like that $5 for lunch. That’s happens when you stop paying everybody,” he says.

I’m starting to feel better about my score. But I still cancelled my open HBC card and started to investigate how one goes about cancelling a credit card for a store that no longer exists. :

Tuesday, January 18, 2011

Attic Renovation Tips

Many are already planning to renovate their attic as they start to build their budget for home renovations. Renovating your attic is a financially smart decision and can be an inexpensive way to add living space to your home. These six tips will help you plan for and overcome many of the challenges of remodeling an attic into living space.

Plan carefully.
Remember that the order in which inspections must be obtained will dictate your schedule. Think through every aspect of both the design and the project, consider possible challenges, and devise plans to overcome each challenge.

Design the space for the type of room.
The way you design and remodel the space will vary with the uses you plan for the finished room. For example, a bedroom may have different requirements than a playroom.

Plan access to the new room(s) carefully.
Creating access to the new space is challenging in some homes. If you are trying to reduce costs for your project, you will want to find and construct the stairs in the best point of access and in a way that involves the least modification of the existing structure. You will also need to check local building codes with reference to exit points.

Decide how you will work with the slope of the roof.
This is an important aspect of planning, and it will affect your cost and the appearance and functionality of the new room. Do you want a pitched or a cathedral ceiling? How will you construct it? How will you install adequate insulation?

Remember that ventilation and insulation are critical.
Remember that heat rises. Attics can become very warm. You will need to plan for adequate ventilation and insulation to keep the room comfortable without drastically increasing your heating and cooling costs.

Plan for wiring and plumbing well in advance.
Electrical wiring and plumbing can present unique challenges in attics. You will need to ensure that the flooring does not rest on any wires. A bathroom will cost less if placed in close proximity to another existing supply and drain line.

If you are planning to finish or remodel your attic into living space, careful planning and attention to the unique challenges presented by the space will be essential. You can expect to gain valuable living space as well as some increase in the value of your home.

Monday, January 17, 2011

Bankruptcy Chief Offers Stark Warning To Canadians

Monday, 17 January 2011 12:32
Written by Newsroom

Superintendent of Bankruptcy Household debtDebt to income ratioCanadian BankruptciesInterest ratesStephen HarperMark CarneyJames Callon Personal bankruptcies Pre-recession level InsolvencyBusiness bankruptcies Consumer bankruptciesDebt accumulationFinancial crisisIn yet another sign that disaster could be looming if Canadian household debt levels are not brought under control by tighter checks and balances, Superintendent of Bankruptcy James Callon issued a warning.
Callon says,” It’s important for Canadians to be aware of the risks and possible consequences of taking on a large amount of debt. Significant events, such as a change in employment or income, a change in family status or a serious illness, can cause a huge drain on finances. The combination of a large amount of debt and the sudden occurrence of a major life event could lead to the harsh realities of insolvency.”

Callon joins others, like Mark Carney and Stephen Harper, in voicing concerns about the swelling of the average Canadian debt load, possible increases in interest rates, and the disproportionate rate of debt to income growth.
The message is clear: It is time for over-extended debt holders to reel their debt in- and slow down in their accumulation. It is time for Canadians to get their financial houses in order- or run the risk of potential financial crisis.

Although personal bankruptcies rose a meagre 0.3% in October, the more concerning statistic, is that personal bankruptcies are still 22.5 % higher than the pre-recessionary levels of 2007-08.
So then, expect the unexpected, and try to prepare financially.

Consumers were the greatest numbers of financial fatalities during the recession, not having commercial strategies to paying out-of-control debt- like reducing staff or other expenses.

Since then, though, Canadians have taken advantage of historically low interest rates to load up on consumer credit- and the fear is- now with interest rates set to rise at some point, there will be consequences- and for some, they may be too much to bear financially.
According to the Office of the Superintendent of Bankruptcy, consumer insolvencies were 7,844 in October, - which indicates a slight rise from 7,822 a month earlier. Business bankruptcies dropped 0.7 % to 292 from 294 in September.

Bankruptcies rose modestly by 0.2 % to 8,136 from 8,116 altogether from September.

Flaherty tightens mortgage rules

Well it's not like I haven't been warning everyone that sooner or later the Government would legislate changes in mortgage practises. This may only be step one so if you are thinking of consolidating now may be the time to take action.

Neil "Mortagge Man" McJannet

Paul Vieira, Financial Post · Monday, Jan. 17, 2011

OTTAWA — Finance Minister Jim Flaherty unveiled changes Monday morning to mortgage lending rules that would see Ottawa stop backing home loans greater than 30 years and make it more difficult for households to use their property to access financing.

The changes, as reported by the National Post on Sunday, emerged as worries escalate among Bay Street leaders and the Bank of Canada about the record levels of household indebtedness, and how conditions could deteriorate unless pre-emptive action was taken.

The key change announced is that mortgages with amortization periods longer than 30 years will no longer qualify for government-backed mortgage insurance, which is required for buyers with less than a 20% down payment on a home. The previous limit was 35 years.

Also, Mr. Flaherty lowered the maximum amount Canadians can borrow against the value of their homes, to 85% from 90%, on a refinancing; and removed federal government backing for home equity lines of credit, or so-called HELOCs, whose popularity soared in the past decade with growth double that of mortgage debt.

"Canada's well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries," Mr. Flaherty said at a media conference. "The prudent measures announced [Monday] build on that advantage by encouraging hard-working Canadian families to save by investing in their homes and future."

Executives at Bank of Montreal applauded the government's move.

“The actions announced are prudent, measured, responsible and timely,” said Frank Techar, president of personal and commercial banking at Bank of Montreal.

The changes will be implemented in stages, with adjustments on amortization and refinancing limits coming into force on March 18. Government backing on HELOCs will be removed as of April 18.

The government said exceptions would be allowed after the new measures come into force when needed to satisfy a home purchase or sale and financing agreement struck before the March and April in-force dates.

The minimum down payment, at 5%, will remain as is. Further, there are no plans to target condominium purchases by requiring monthly condo fees be added to the list of expenses that is measured against income to decide whether a buyer can afford a mortgage.

Analysts at Scotia Capital said in a morning note the changes had been anticipated for some time. “We remain of our long-held belief that Canada is tapped out on housing and household finance variables that are all at cycle tops, in contrast to the U.S. that has already moved well off cycle tops and may be creating some pent-up demand,” said economists Derek Holt and Gorica Djeric.

The changes to the country’s mortgage rules -- the second in as many years -- emerge amid rising concern about the record levels of household debt, which measured as a ratio of money owed to disposable income nears a startling 150% as of the third quarter of last year. That surpasses the level of debt held by American households, whose appetite for borrowing helped stoke the financial crisis of a few years ago.

The Bank of Canada recently warned debt levels are growing faster than income, and the risk posed by consumer indebtedness to the domestic economy would continue to escalate without a “significant change” in how consumers borrow and banks lend.

Bank of Canada governor Mark Carney said policymakers have a “responsibility” to look at the benefits of pre-emptive action. Joining the chorus have been chief executives at the big banks, most notably Ed Clark at Toronto-Dominion Bank, in publicly advocating for tougher mortgage standards.

Last Friday, Prime Minister Stephen Harper acknowledged his government was considering changes to the rules governing mortgages.

In February of 2010, Mr. Flaherty moved to toughen up the mortgage rules amid worries that Canada was in the midst of a housing market bubble. The reforms, since introduced, compelled borrowers to meet standards for a five-year fixed-rate mortgage, even if the buyer wanted a shorter-term, variable rate loan; reduced the amount Canadian can borrow against their home, to 90% of the property value from 95%; and require purchasers of rental properties to issue a 20% down payment as opposed to 5%. The moves played a role, observers say, in slowing down real estate activity.

The Scotia Capital analysts suggested government regulation was the way to go in terms of curbing household appetite for credit as opposed to the Bank of Canada raising interest rates, which they said would be “imprudent” at this time.

The central bank issues its latest rate statement on Tuesday and it is expected to hold its benchmark rate at its present 1% level as signs indicate the economy may be benefiting from renewed business and consumer confidence in the United States.

Stewart Hall, economist at HSBC Securities Canada, said the extraordinarily low-rate environment “provides all the incentive to consumers to borrow and spend and none of the incentive to save. You can try to [regulate] that away but that is apt to be fraught with significant frustration.”

Sunday, January 16, 2011

Boomers Reluctant to Cut Costs in Retirement

This is a very interesting article. I think many people feel retirement will be a breeze and they can start to save for it LATER!! I also believe time flies very fast as well and I suggest you go to and look into the Wealth Management Tax Deductible Mortgage program. AND DO IT NOW!!

Neil "Mortgage Man" McJannet

Emily Brandon

Workers who haven't saved enough to retire comfortably have three choices: work longer, save more, or reduce your standard of living in retirement. When workers on the verge of retirement who have lost money in the stock market were given these three choices, most said they would delay retirement and continue to save rather than cut costs, according to a recent Center for Retirement Research at Boston College study.

These three choices were posed to workers between ages 45 and 59 who had accumulated at least $50,000 in retirement savings before the downturn, but then lost 10 percent or more of their retirement assets. Over half (51 percent) of the survey respondents said they would save more and work longer to recoup their losses. Just over a quarter (28 percent) of the baby boomers said they will only work longer and 16 percent plan to exclusively ramp up their retirement savings. Only 5 percent of the survey respondents said they would learn to get by with less money in retirement.

Some costs can be eliminated upon retirement, including commuting costs and work clothes. Paying off your mortgage can also give a big boost to your retirement prospects. But other costs may grow in retirement, such as out-of-pocket medical expenses and travel costs.

Previous research from Boston College found that many households actually increase their spending on the verge of retirement, especially after their children leave home. Per-person spending increases by an average of 51 percent in the years after the children move out, according to the analysis of 5,000 households between 2001 and 2007.

Most baby boomers aren't planning to cut costs in retirement. Only 15 percent of baby boomers turning 65 in 2011 plan to downsize to a smaller home in retirement, according to a recent AARP survey of 801 adults born in 1946. A few baby boomers even plan to move into a bigger home (3 percent) or purchase a second home (4 percent) in the coming years. To finance their desired lifestyle, over half (56 percent) of the employed boomers surveyed say they plan to continue to work until their late 60s or later.

Friday, January 14, 2011

China Raises Bank Reserve Rate In Latest Move To Curb Inflation

China Raises Bank Reserve Rate In Latest Move To Curb Inflation

In yet another effort to cool an overheating Asian market , put further controls on lending- and to throw the anchor down in the face of rising inflation, China’s central bank has increased the amount of cash banks must keep on reserve for the seventh time in a year.

This change will be effective as of January 20; the central bank on Friday will now require state-owned banks to have on hand an additional 0.5 % of deposits as reserves.

Although reserves do vary by institution, this move could mean that, for the biggest commercial lenders, they will now be required to have up to 20% cash on hand.

These latest efforts come on the heels of ‘lending spree’ , and is the latest effort by Beijing to slow the flood of money coming to market, after stimulus efforts took root to help stem the global financial crisis.

In addition to the latest restriction for bank lending, there is still wide speculation that another interest rate hike is looming in the near future, wreaking havoc on the stock market today.

In China, consumer prices skyrocketed 5.1 %t in November- signalling the highest increase in 28 months- which is mostly attributed to surging food costs. Although inflation numbers for December have not yet been released, there is wide belief that the December numbers will surpass those from November- pushing the Central Bank to action now.

Year-over-year, inflation is still a large presence so far in the first quarter, spurring speculation that more measures may need to be taken, as early as the current quarter.

Thursday, January 13, 2011

Rates to rise 1.5 per cent in 2011: Merrill Lynch Canada

Looks like there is no time like the present to do that consolidation loan to get the best rates possible. Feel free to call and discuss your needs any time.

Neil "Mortgage Man" McJannet

| Thursday, 13 January 2011

The Bank of Canada will likely increase interest rates by 1.5 percentage points because of anticipated inflation later this year, according to Sheryl King, chief investment strategist for Merrill Lynch Canada.

The rate rises would lead to increased costs for many types of consumer debt, including variable-rate mortgages.

King predicts inflation is growing because the economy is quickly using up the extra room from the 2008 recession. “I think that inflation in Canada is going to be the big story for 2011,” she said at the investment bank’s global outlook conference in Toronto.

The current core inflation rate, which excludes unstable factors such as food and energy, ranges between 1.4 and 1.5 per cent. This could double to almost 2.7 per cent by the end of the year, prompting King to forecast the higher borrowing costs.

Target buys Zellers leases for $1.8B

Last Updated: Thursday, January 13, 2011 | 11:59 AM ET Comments389Recommend184.
CBC News
The retail chain Target, which has 1,752 stores across the U.S., including this one in Wisconsin, is aqcuiring the leasehold interests of 220 Zellers locations in Canada. (Allen Fredrickson/Reuters)
U.S. retailer Target said Thursday it is buying the store leases of Canadian discount retail chain Zellers from the U.S. investor who owns the Hudson's Bay Co. assets for $1.8 billion.

Under terms of the deal, Minneapolis-based Target will make two payments of $912.5 million in cash, in May and September 2011, to acquire the leasehold interests of 220 Zellers locations in Canada.

The Zellers locations will continue to exist under that brand name for "a period of time," HBC said in a release. But Target will convert 100 to 150 of those Zellers locations to Target stores in 2013 and 2014 and sell the rest of the current Zellers network of store leases to other retailers.

"I think there would be a number of U.S. retailers that would feel that there is opportunity to make some inroads in Canada," said Paul Taylor, chief investment officer at BMO Harris Private Banking.

But the fate of the 70-odd Zellers stores that aren't destined to become Targets is far from clear. "The company still has plans to operate a portfolio of Zellers stores in some communities across the country," HBC spokeswoman Freda Colbourne told The Canadian Press.

"The company is still going to run a chain of Zellers stores, it just might be a little bit different than today, but for the next 12 months nothing is changing," Colbourne said.

"This transaction provides attractive long-term value and will allow us to invest substantial capital into our department store and specialty store businesses to continue to drive growth," HBC governor Richard Baker said in a news release.

A typical U.S. Target location employs between 100 and 200 people, so the deal should see the creation of some jobs. And Target estimates it will make an aggregate investment of more than $1 billion updating and renovating Zellers locations.

The Target chain currently has 1,752 stores in 49 states across the United States.

Baker's company bought all of HBC in 2008 for $1.1 billion. Selling the underperforming Zellers unit at a profit allows the company to focus on the iconic Bay brand, an initial public offering of which is much anticipated.

Target has long held ambitions in Canada, but the company was waylaid by the economic slowdown. A dearth of good locations for potential stores was a problem and the economic slowdown reined in consumer spending. Buying the Zellers infrastructure now helps it work around some of those issues, experts said Thursday.

"The Canadian consumer went into the recession in much better shape than the U.S. consumer," Taylor said.

Flaherty: loonie will stay at par with U.S. thanks to "sound" fiscal situation

By Lee-Anne Goodman, The Canadian Press

WASHINGTON - The Canadian loonie will hover at parity with the U.S. dollar for some time to come, and deservedly so thanks to Canada's economic strength, Finance Minister Jim Flaherty said Wednesday.

"This is a new world," Flaherty told reporters after speaking about controlling debt at a think-tank discussion at the Woodrow Wilson International Center for Scholars in the U.S. capital.

The high Canadian dollar reflects a "sound fiscal situation" in Canada, he added.

"It is unreasonable, given those fundamentals, for anyone in Canada to expect the Canadian dollar to go back to the days when it was significantly devalued vis-a-vis the U.S. dollar.... it makes sense for the Canadian dollar to be much closer to the U.S. dollar that it was for some years."

The Canadian dollar hit a two-and-a-half year high earlier Wednesday of $0.9848, or US$1.0154. It closed the day at $0.9869 to the U.S. dollar, or US$1.0133. The loonie's been at or near parity with the U.S. currency for weeks, a state of affairs that causes headaches for Canadian exporters who get paid in American dollars.

That's why Ottawa is throwing a lifeline to exporters and manufacturers by lowering corporate taxes, reducing tariffs and extending an accelerated capital cost write-off, Flaherty said.

The capital cost measure allows companies to accelerate the rate at which they can write off investments. It was scheduled to expire in 2011.

The finance minister spoke to the media after an event that proved something of a Canadian love-in. Those in attendance included Gary Doer, the Canadian ambassador to the U.S., and astronaut Julie Payette, who recently signed on for an eight-month stint as a public policy scholar at the Woodrow Wilson Center.

"We look at Canada as a good example of what we ought to do on several different fronts," David Biette, the director of the centre's Canada Institute, told Flaherty.

The finance minister also said Canada would put global financial standards in place well before deadlines imposed by the Basel Committee of international bank regulators.

The new regulations, dubbed Basel Three, are supposed to be in place by 2019. But Flaherty said Canada will move much faster than that, adding the new rules aren't onerous for Canadian financial institutions since they already practise so many of them.

The new standards would require banks to prepare for economic recessions by holding onto more cash and assets that can be easily sold off. They aim to ensure taxpayers aren't on the hook when a financial institution fails amid a global financial meltdown.

"It's an advantage for our financial system to move more quickly to the Basel III standards," Flaherty said. "It creates more business confidence. It creates more confidence outside of Canada for direct investment in Canada."

Wednesday, January 12, 2011

Thank goodness the "Liar Loan's" in the USA cracked before the Canadian banks got overly involved. As a result our housing market faired much better and now seems to be on it's way to recovery.

Neil "Mortgage Man" McJannet

Garry Marr, Financial Post ·

TORONTO — Canadian new home construction in 2010 finished 29% ahead of last year’s pace, but the "soft landing" many in the industry have been predicting appears to have finally arrived, based on data from Canada Mortgage and Housing Corp.

The Crown corporation said December starts were 171,500 on a seasonally adjusted annualized basis, down from 198,200 a month earlier. CMHC would not provide annual statistics for 2010 because the numbers will be revised later this month but economists pegged actual homes built in 2010 at about 192,500.

It’s a pretty big increase,” said Bob Dugan, chief economist of CMHC, comparing this year’s starts to the 149,081 in 2009. “It was a pretty strong recovery. It was kind of expected once the economy recovered and the jobs were being created again. There was a certain amount of pent up demand.”

Still, with CMHC forecasting only 175,000 starts for this year, it is starting to look like the glory days of the last decade, when starts hit 200,000 annually for seven straight years, are well behind us.

“I would call it a soft landing, what we are forecasting for 2011. The reason I say that is starts hitting 175,000 is pretty much in line with household formation,” said Mr. Dugan.

The economist says “never says never” but he can’t see the market having a similar bull run again. “You look a longer time projections of populations with baby boomers aging and going into retirement and the generations behind them being smaller we just won’t have the population growth to sustain that level of housing starts.”

CMHC actually has a range for its 2011 forecast with 148,00 on the bottom end and 203,000 on the top end. Mr. Dugan says a major change in the economy like another credit crunch would drive us to that lower number while the high end would need stronger than expected economic growth in the United States.

Toronto-Dominion Bank economist Sonya Gulati says the second half of 2010 was more of what economists had been expecting in terms of a downturn in the housing market. “Recent homebuilding activity supports our view that the market has begun to gradually correct itself, but in an orderly fashion consistent with a soft landing. We continue to believe that homebuilding activity will take its cue from the resale housing market such that both ease in 2011, before a pick up in activity in 2012,” said Ms. Gulati.

Year-end statistics from the Canadian Real Estate Association, which tracks the existing homes market, are not due out until mid-month but its statistics have been showing year over years sales declining by about 20% for a few months.

Even the president of the Canadian Home Builders’ Association Victor Fiume said he was actually surprised by the strength of the market in 2010 and called it a good rebound year.

“A lot of the deals that were done were already bought and paid for,” says Mr. Fiume, noting some of the construction now is from previous sales. “It’s softening. We see that on the ground. People are being cautious about their attentions. Purchasers are cautious, buyers are cautious. So far, that caution has held us in good stead.”

U.S. home price drops exceed Great Depression: Zillow

U.S. home price drops exceed Great Depression: Zillow

Al Yoon, Reuters · Tuesday, Jan. 11, 2011

NEW YORK - U.S. home prices fell for the 53rd consecutive month in November, taking the decline past that of the Great Depression for the first time in the prolonged housing slump, according to Zillow.

Home prices have fallen 26% since their peak in 2006, exceeding the 25.9% drop registered in the five years between 1928 and 1933, the housing data company said in a report on Monday. Prices fell 0.8% over the month.

It is a dubious milestone for the U.S. housing market which has failed to gain much traction despite a host of government programs to reduce delinquencies and encourage demand with temporary tax credits and lower interest rates. Many economists expect further price drops, even if there are some anecdotal signs of growing demand, such as in pending home sales data.

"For the next six to nine months, the larger factors affecting the housing market that will produce more home price declines will be the excess inventory of homes, high negative equity and foreclosure rates, and weakened demand due to elevated employment, Stan Humphries, Zillow's chief economist, said in a blog post.

Declines are accelerating, and it will take a while before falling unemployment and other signs of economic improvement support the market, Zillow said.

Home prices fell at a 0.78% pace in November, the fastest since February 2009, the company said.

Tuesday, January 11, 2011

Going Against The Tide

I would like toshare some lessons from one of my favorite entrepreneurs and marketers, Donald Trump.
The world is rich with examples of originality. Original means independent and creative in thought and action. Nowadays, we call it thinking outside the box, a phrase supposedly derived from a puzzle created by an early 20th-century British mathematician. Whatever you call it, it very often means going against the tide, which may not be the easiest way to go. But sometimes the easiest way is also the mediocre way, and that’s OK if that’s your standard. But it isn’t mine, and it most likely isn’t yours either if you’re taking the time to read this.

When I was starting out in real estate, my father thought I was nuts to want to build in Manhattan. It was going against the tide, and I knew I was up against some pretty big odds, but I wanted to carve my own niche. I had my own ideas and knew I’d have to be independent as well as creative to see them happen. I’m certainly happy I decided to take the chance and to go for it. It would have been easier for me to just stay with the family business and leave it at that.

Fortunately, I had a good education and experience behind me. I always warn people not to jump into anything unprepared. It’s that old fine line between bravery and stupidity. Know the tides before you dive in. There’s always a certain amount of danger, danger meaning the unknown, even in shallow waters. Riptides and sharks exist. Sometimes you don’t see them until it’s too late. Keep that in mind no matter how sensational or fool-proof you think your idea might be.

Charles de Gaulle is a figure of historic importance, especially as it pertains to World War II, and he came from a family of historians and writers. In fact, his father taught literature and philosophy. But the young Charles de Gaulle had a passionate interest in military matters, and he was determined in every respect to pursue this unexpected passion. He was a force in world history known for his extraordinary stubbornness. He became known as “the man who said no” when he refused to accept the terms of the armistice with Nazi Germany. When he said no, he meant it. There was no equivocating. I don’t know all the details of his early life, but I can imagine a boy from a family of intellectuals might have experienced some scrutiny when he displayed an intense interest in all things military. But he knew what he wanted to do, and he followed his own path.

It’s a good idea to take your own pulse once in a while, instead of just focusing on what the masses are doing. Take a break from expectations, from the media, and plug into yourself. You might find that your electricity is better suited to another socket. You might have to exert yourself, but look at the alternatives that remain. Get out of your so-called comfort zone. I call it complacency, and it’s a good way to get nowhere….

People often talk about something new being “innovative.” Most of the time, it’s simply putting together existing elements to create what appears to be new. I was touted as being innovative when I came up with the mixed-use condominium and hotel tower, which I did with the Trump International Hotel & Tower in New York City. Since then, the concept has been copied (by myself and others) and it has proven to be tremendously successful, nationally and internationally.

To me, the idea was common sense, and I didn’t think I was being particularly creative. When I look back, maybe I was. But when I read subsequent articles about innovation and certain inventors, it got me thinking about how one might become an innovator, which is something I think is important for students to think about.

I remember reading about a composer named Steve Reich who came up with a new idea called phasing, which is like windshield wipers going in and out of synch. Apparently, he was caught in a traffic jam one rainy day and the rhythm of the windshield wipers caught his attention, and he applied what he heard to his musical compositions. He has had a significant influence on contemporary music, and I think he’s a great example of an innovator. Sometimes new ideas can come from something as mundane and functional as your windshield wipers. The key is to pay attention and keep your brain and senses open to new stimuli.

It also helps to be able to think of two things at once—multilevel focusing is what I call it. Innovation follows the intersection of ideas—thinking in musical terms while listening to your windshield wipers; or thinking of a hotel tower and condominiums at one time; or maybe watching a stone roll and imagining a wheel. Who knows what will result? Sometimes it will be fantastic and other times it won’t, but it gets the mind working in new dimensions that can sometimes prove fruitful.

This can also happen without deliberately attempting to be innovative, so the other technique to employ—consciously and unconsciously— is to keep an open mind. That’s very important in business as well as in the creative arts. Don’t limit yourself to staid thinking because you want to excel in business. My first book was called The Art of the Deal because I view business deals as an art form. Maybe that’s why I’ve been a successful deal-maker. I employ both sides of my brain when I’m thinking and working.

You may be aware of the numeric value phi, which has an astonishing history. It’s been employed by people from Pythagoras to da Vinci, and most likely the builders of the pyramids used it as well. It’s been around for a long time, and the number itself is 1.6180339887. It’s called the golden ratio, and if you want to know more specifics, you can read The Golden Ratio by Mario Livio, who goes into great detail about it. My point is that it appears that some people use the number deliberately, and other people know it subconsciously and it can appear in their work with or without intention. But it can be used intentionally, and very often is. It’s very mysterious, as this ratio appears in unrelated works and natural phenomena, from the chambered nautilus to galaxies to artwork and architecture. It can make your innovative attempts a little easier when you make an effort to understand that there are mysteries in life and to be open to them.

I’m not advising you to dwell on the mysterious—a successful life requires common sense and hard work—but to be aware of things that are sometimes inexplicable because they can be a big step toward innovation. We don’t really create, but we assemble what has been created for us. Be a great assembler—no matter what your interests may be—and you’ll be on your way to inventiveness. A big mind requires a variety of thoughts and impulses to keep it well occupied, so make sure you keep your mind engaged in the best ways possible. It could very well be your calling card for success.

Have a great week unless you choose otherwise.

The Two Sides of the Foreclosure Crisis

Top News
Friday, 07 January 2011 15:39
By Enma Diaz
Miami, Fl

Build upon the foreclosure crisis, the Real Estate bubble has weakened the US national economy. Due to mortgage distress, homeowners are practically on the road to face an inevitable foreclosure crisis.

The conventional approach to mortgage refinancing of home loans has been considered as one of the biggest financial debacle in the US history. The leading force that accelerated this setback was the arising of home loan amount as opposed to the drop down of home value.

Due to home prices decline, the Real Estate market is currently living an unpleasant environment. The brand new constituted Affordability and Stability Plan by President Obama is a Home Affordable Refinance Program designed for troubled homeowners leaded up to an unfortunate foreclosure crisis. The program is an act by the US Government to rescue about nine million homeowners from facing foreclosure.

On the other side, the Federal Officials don’t agree with the decision taken by the Government to rescue the foreclosure crisis. The officials think that the government should let the foreclosure as well as the Real Estate crisis to get stable by its own. The officials predict that if foreclosure crisis is left by its own positive results will come for the housing market economy.

As foreclosure steps, the home prices drop down, leading to the rising up of affordable homes and residential properties in the market. With the home value dropping, the Real Estate market will gradually begin to witness normal housing prices. Therefore, the Real Estate bubble prices that have taken its toll over the past decade will vanish. So if the foreclosure crisis is permitted to get stable by its own, it will vanish the Real Estate bubble crisis and render the Real Estate market with home prices that are affordable.

As foreclosure intensifies, the home prices shall decline, thereby giving rise to affordable homes and residential properties. Once the home value drops, the Real Estate market will gradually begin to witness normal housing prices. As a result, the existing Real Estate bubble prices that have taken its toll over the past decade shall wither away. So if foreclosure crisis is allowed to adjust on its own, it will mitigate the Real Estate bubble crisis and render the Real Estate market with home prices that are reasonable and affordable.

Big investors are positively willing to purchase various homes and residential properties that are open to foreclosure. The outrageous interest rates on the mortgages are one reason why homeowners cannot afford to keep the homes for themselves. The investors are anxious to buy those properties which the lenders themselves are unwilling to take over, owing to the foreclosure crisis.

By: Enma Diaz, Editor
Mortgage Lending News, LLC

Home-equity loans surge twice as fast as mortgage growth: BoC

The last thing our economy needs is more Government intervention but it seems that we are getting more and more indications that they are set to move on lending policies for the banks. SO ONCE AGAIN I SAY - if you are thinking of doing a debt consolidation using your home as equity NOW is the time to do it. From all the indicators this intervention is probably going to occur sooner then later – it has happened in the US – by the lenders so rather than see rules legislate the change our lenders may act soon.

Neil "Mortgage Man" McJannet

Paul Vieira, Financial Post · Monday, Jan. 10, 2011

OTTAWA — Home-equity lines of credit surged 170% over the past decade, or twice the rate of mortgage growth, a Bank of Canada deputy governor said Monday as she acknowledged keeping interest rates low “create their own risks” for the economy as they pertain to household debt levels.

Agathe Côté said home equity loans, whose popularity grew as housing prices climbed and interest rates remained low, helped Canadians buy goods, such as additional real estate, or pay off higher-interest consumer debt. So-called HELOCs — secured loans that carry lower rates of interest compared to unsecured financing — now account for 12% of all household debt, which as of the third quarter was at a record high, or the equivalent to 148% of disposable income.

“If there were a sudden weakening in the Canadian housing sector, it could have sizable spillover effects on other areas of the economy, such as consumption, given the high debt loads of some Canadian households,” she said in remarks delivered to the Canadian Club of Kingston, Ont.

Data collected on behalf of the central bank suggest roughly one-third of the financing made available via HELOCs are used to pay off other debt, while another 20% is used for stock-market investments. The roughly 50% of financing remaining, Ms. Côté said, is used on current consumption, and renovating or purchasing other properties.

This real estate-related spending has a domino effect, she added, as it can accelerate the increase in house prices, “reinforcing the growth in collateral values and access to additional borrowing, thus leading to a rise in household spending.”

Analysts say this type of cycle could spell trouble for Canada’s growth prospects in an environment of rising rates and softer housing prices. That’s why the Bank of Canada is pressing individuals and lenders to proceed with caution now in terms of taking on or issuing debt.

“The issue is not whether we are going to see a wave of defaults,” said Benjamin Tal, deputy chief economist at CIBC World Markets. “It is how higher interest rates will lead to a softening in credit demand, and then consumer spending.”

In a recent interview, Finance Minister Jim Flaherty singled out the rapid-fire growth in home-equity loans as a cause for concern and that was one area the federal government may target should it move to try to cap household debt levels.

Since the trough of the recession, household credit has grown about twice as fast as personal disposable income.

Meanwhile, Ms. Côté tried to address the dilemma the central bank faces as it continues to warn about record levels of household debt while keeping its benchmark policy rate at extraordinarily low levels in the face of a still-fragile recovery. Bank of Canada policy is to set interest rates in an effort to reach or maintain 2% inflation.

“Some have asked if increasing interest rates poses such a threat to households, why raise them? Yet others have asked if household debt is such a concern, why not raise rates and discourage borrowing?” she said, noting rates are set to achieve or maintain 2% inflation. Annual headline inflation was 2% in November, although the core rate, which strips out volatile-priced items, fell to 1.4% in the month.

“The bank recognizes that low interest rates, while necessary to achieve our inflation target, create their own risks,” said Ms. Côté, who was appointed deputy governor last June.

Friday, January 7, 2011

Housing market should be resilient in 2011 thanks to low interest rates: LePage

Sunny Freeman, The Canadian Press

TORONTO - The Canadian real estate market will follow a similar pattern this year as that seen in 2010 as buyers pull sales forward into the early months in anticipation of higher interest rates, according to a report from one of Canada's largest real estate firms.

The aftershocks of the recession, including a lingering low interest rate environment, will continue to influence the Canadian real estate market in 2011 — a year that will be stronger than expected, said the report released Thursday by Royal LePage.

Royal LePage predicts that average home prices will rise three per cent to $348,600 in 2011, driven largely by a rush to buy in the first half of the year in advance of anticipated interest and mortgage rate hikes in the second half.

“Canadians realize that interest rates are unsustainably low and that homes will become effectively more expensive when mortgage rates return to normal levels," said Phil Soper, president of Royal LePage.

“2011 is expected to unfold much like 2010, when close to 60 per cent of sales volume occurred in the first half of the year in anticipation of interest rate increases that never materialized."

However, the number of transactions will be slightly lower than last year and activity will be modestly closer to the norm because the pull forward phenomenon last year was exacerbated by a tightening of mortgage qualification rules and the introduction of the HST in Ontario and British Columbia in the middle of the year.

Soper said the extension of low mortgage rates will be an unexpected boon to the market this year.

“Like many Canadians, we anticipated an end to the ultra-low interest rate era before year-end 2010," he said.

"Paradoxically, global economic weakness, particularly in the United States, allowed policy-makers and financial institutions to keep borrowing costs low, resulting in a stronger Canadian housing market and a better than forecast fourth quarter.”

Average house prices rose between 3.9 per cent and 4.6 per cent in the fourth quarter of 2010, while price appreciation is expected to continue a moderate and steady climb throughout the current year.

The report contrasts with some recent predictions by economists that prices should remain flat or decline over the next year.

The Canadian Real Estate Association has predicted prices will fall by 1.3 per cent to a national average of $326,000, this year, tied to weakness in British Columbia and Ontario — the hottest real estate markets of 2010. It has also forecasted a nine per cent decline in sales.

CREA has yet to release year-end data for 2010, but preliminary reports from two of the biggest markets, Toronto and Vancouver, released this week indicate 2010 declined as expected.

Sales were down by one per cent compared with 2009 in Toronto, while the average home selling price was $431,463, up nine per cent from 2009.

In Vancouver, sales declined 14.2 per cent from 2009, and were 10.3 per cent below the 10-year average for sales in the region. The average selling price in B.C.'s largest city was up 2.7 per cent at $577,808.

Canada's real estate market has been on a rebound over much of the past year after sales dried up in late 2008 and hit a multi-year low in January 2009.

The housing market's sudden plunge was sparked by a credit crunch that developed in the U.S. housing and lending industries, and gradually spread across the globe, causing a worldwide recession in the late summer and early fall of 2009.

The commercial real estate market experienced a similar plunge as investors lost confidence in the sector. However, the commercial market, which includes office and retail spaces, had a stronger than expected year in 2010 and that momentum is projected to strengthen throughout 2011, according to a report released Thursday by CB Richard Ellis Ltd. Some market observers had predicted a glut of vacancies in Canada's major business centres, but that didn't happen, said John O‘Bryan, vice-chairman of CB Richard Ellis Canada.

We‘ve had good news over the past twelve months with respect to interest rates, housing trends and employment gains, with many companies announcing plans for expansion, he wrote in the report.

"2011 may well be another good, stable year but should be viewed with cautious optimism in light of the concentration in employment growth on part-time jobs rather than the full-time positions that indicate confidence in long-term, sustainable growth."

Tuesday, January 4, 2011

Debt advisors flood Canadian market

This is likely a case of BUYER BEWARE! My brother and I had this type of business about 15 years ago for a couple of years when a recession hit. The big thing here is to get a TRUSTWORTHY advisor - do your research and a word of mouth referral is probably the best. I know it might be embarassing to talk about your situation but it is better to get proper help then to just go to anyone due to your financial preesures. Once you have made the step ask about how you can re-build your credit while still in proposal mode - there are ways and the advisor should help you there as well. If you have questions about how to start or what to do once the proposal is accepted feel free to contact me. My goal has always been to help people attain their dream of home ownership and you can come back from a proposal if you take the situation seriously and also if you have a plan for re-establishung your credit.

Neil "Mortgage Man" McJannet

Garry Marr, Financial Post · It’s not just personal debt that has climbed to record levels. The companies offering to help you with massive debt are also proliferating.

Call them debt-settlement agencies, debt-solution providers or whatever you want. Their names are plastered on bus shelters and newspapers and call out of over the airwaves and the Internet. Unregulated, it’s almost impossible to get a true sense of how big the industry has become but based on the amount of advertising dollars being spent it’s growing.

“This was a nonexistent category and companies have sprung up. Companies and services spring up because there is a consumer need and you have to tell consumers you are offering the service,” says Sunni Boot, chief executive of Zenithoptimedia, adding the top advertiser in the category is estimated to have had a 10-fold increase in spending over the past year.

The debt-to-income ratio has reached a record high of 148% in the third quarter in Canada, Statistics Canada says, putting Canada ahead of the United States. Consumers are looking for answers to get out of their credit mess.

While bankruptcies are still relatively low in Canada compared with the U.S. market, they did set a record of 116,000 in 2009 and by the end of the third quarter of 2010 another 95,000 had been registered.

Of course, the industry is not without controversy. It has drawn the ire of the non-profit debt-counselling agencies that are available in most cities across the country that have partly run their organizations by getting donations from credit companies.

“We want to make sure Canadians make wise choices,” says Patricia White, executive director of Credit Counselling Canada, an umbrella group for non-profit agencies across the country. “We understand there has been a telephone blitz in Western Canada by agencies saying [they] can help you get rid of your debt.”

She says in the United States, the federal trade commission stepped in to control the industry in the summer with a rule that for-profit companies that sell debt-relief services over the telephone could no longer charge a fee before they settle or reduce a customer’s credit card or other unsecured debt.

“What I’ve heard is the fees can be enormous that they charge,” Ms. White says.

The executive director of Credit Canada, a non-profit agency in Toronto that is also a charity, said one of the key differences between her group and ones that work for profit is she can offer counselling.

“We are accredited in counselling,” says Laurie Campbell, referring to the Ontario Association of Credit Counselling Services. Other provinces have similar accreditation, but in Ontario to become a counsellor you have to pass a series of courses to counsel people on debt.

At the end of the day, credit-counselling companies do get a chunk of their funding from the credit companies — something for-profit agencies are now pointing out in attack ads.

“We get donations,” says Laurie Campbell, splitting hairs about the fact her group gets money from credit card agencies when it settles someone’s debt.

Of course, the for-profit debt-management and debt-settlement agencies will try to arrange the same deals with the credit companies and be compensated for their efforts.

The question is who is going to get you the best deal? You have to consider the fact many of the private companies demand fees up front.

“When people are in crisis, they are desperate and when people are desperate there are predators,” Ms. Campbell says. “There is nothing wrong with being for profit, but you need to find out what they are all about.”

Barrie, Ont.-based Doug Nicholls, owner of Debtor Protection, says the nine-year-old for-profit company often negotiates with creditors before a person has to declare bankruptcy.

“If there is third-party money available I can do straight settlements and usually cash out the accounts for 35¢ to 50¢ on the dollar for a lump-sum settlement,” Mr. Nicholls says.

If you had, say, $100,000 in debt, he might ask you to pay $45,000 into a trust and he’ll settle with all of your creditors. If he can talk your creditors into taking less than $45,000, he keeps the difference.

He says a key advantage of signing up with him is the debtor gets someone looking after their interests. He says even if you decide to go the bankruptcy route, you need representation for yourself because a trustee doesn’t do that.

“The poor debtor goes out and hires a trustee and thinks the trustee is protecting only their interests,” says Mr. Nichols, adding by federal law trustees are officers of the court and by law mandated to work in best interests of the creditors.

“I sit down and analyze their situation and draft out a plan about what assets they want to keep and put it into a [consumer] proposal or bankruptcy plan and I literally take the client by the hand,” says Jeremy Kroll, a partner with A. Farber and Partners.

At the end of the day, though, you are going to have seen someone like Mr. Kroll, a partner with A. Farber and Partners, and also a trustee in bankruptcy.

You can’t make what is called a consumer proposal or declare a bankruptcy in Canada without using a trustee. A bankruptcy stays on your credit record for six years after your debt is cleared, a proposal after three years.

Under proposal, you agree to pay your creditors more money than they might otherwise get from a bankruptcy. Mr. Kroll says consumers opt for the proposal because they don’t want to go bankrupt.

He says the problem with debt consolidation is it usually doesn’t address the underlying issues of the consumers. “You can’t use debt to solve debt. What happens is they take the consolidation because they hope managing one payment will simplify their lives,” Mr. Kroll says. “They don’t change their problems. They keep the credit cards that are now empty and build them up again. They’ve probably already had their mother or brother help them out and now they are in trouble again.”

He tells people the only way to avoid a trustee if you are in serious debt is if you can pay the debts in full without interest and all your lenders are with major institutions who usually have arrangements with the non-profit agencies.

“The for-profit agencies often do not have arrangements with all creditors,” says Mr. Kroll, who cautions consumers should be wary about paying a huge up-front fee. “The challenge is the consumers don’t know who the legitimate people, the unlicenced and unregulated people, are and they are getting very confused.”