Thursday, April 28, 2011

Tips for dealing with a renovations contractor

Michael Sanibel
Since they rely heavily on word-of-mouth to spread their businesses, contractors are motivated to fully satisfy their customers and build a solid reputation. But because bad news travels faster and farther than good news, it's far more common to hear stories about bad contractors than it is to hear about good ones. (You think your updated house looks great, but potential buyers may not feel the same way.
Hiring a top-notch contractor will pay off in the long run, even if the initial cost is a bit higher than if you simply go with the lowest bidder. If the job is done right to begin with, it will last longer and avoid the cost to correct shoddy workmanship. Plus, you save yourself a lot of time and aggravation because you're dealing with someone you can trust.
The Search
Millard Blakey, cofounder of the remodeling company WreckCREATIONS, in Lexington, KY, says that it's best to know the qualities you're looking for in a contractor before you begin your search. Once you determine those qualities, use referrals from friends, family and neighbors to come up with an initial list of names. Interviewing at least three potential contractors before deciding to ask for a cost proposal is recommended, in order to ensure that you are comfortable with your decision.
Shaun Smith of Koru Landscape Construction in Louisville, CO says that the interview process works both ways. "My experience lets me know very fast what they are really trying to achieve, and if I am the right contractor for them." He encourages homeowners to contact local resources for a list of local contractors. This will help to narrow the search and support the craftsmen in your area. He also recommends touring nearby neighborhoods to find a few homes that are undergoing construction. "Stop by and talk with the owners about how their project is coming along," he advises.
Smith warns against contractors who try to convince you they are the only one for your job. He says that their work should speak for itself, and a strong portfolio, good references and pictures of previous jobs can often say more than the answer to any interview question can.
Many homeowners get into trouble because the work they want done isn't clearly defined at the outset. Then, as the work progresses, they change the scope of work causing additional costs to the contractor that are passed on to the owner. That's not the contractor's fault, but he often gets the blame. The way to avoid this is to produce a thorough remodel plan that completely covers every aspect of the job, including the specific materials to be used. A good contractor will let you know if your proposed project and budget is realistic. (Some renovations will mean a bigger sale price on your home, while others will just cost you.
Get everything written down in the form of a contract that includes cost, schedule, materials, bonding and insurance information and a list of subcontractors. For the homeowner, a fixed-price contract is preferred over paying by the hour, because it locks in the maximum liability. However, this leaves you open to price increases if you change any of the work content.
Contractors are entitled to a reasonable down payment in order to cover their initial labour and material costs. This is negotiable, depending on the nature of the job, but should usually not exceed one-third of the total contract amount. The balance of the money can be allocated to completion milestones that incentivize the contractor to stay on schedule. For example, discrete milestone payments could be made upon completion of the framing, plumbing and electrical installations. Hold a sizable amount of money for the final payment that is contingent on your personal inspection and satisfaction of the finished project.
Perhaps most important is to keep the lines of communication open. A failure to effectively communicate may be the reason for many failed relationships between homeowners and contractors. Whether the issue is money, jobsite cleanliness, finish expectations or even how to deal with additional work, it's critical to discuss these matters as soon as they arise. If you believe the work being done is unsatisfactory, approach the contractor immediately and attempt to get a resolution. Most contractors will work with you to try and solve the problem.
The Payoff
The importance of hiring the right contractor can't be overstated. A good contractor will save you money by doing the job right the first time, and will not only save you money in the long run, but also eliminate stress by ensuring a quality finished product.

Wednesday, April 27, 2011

FirstLine raises the floor on discounts for variable mortgages

By Vernon Clement Jones | 27/04/2011 With or without a Central Bank move, brokers are bracing for an increase in adjustable rates offered through the broker channel after FirstLine Mortgages raised its floor by 25 basis points.

“We got notice that FirstLine had changed its five-year closed from (prime minus 0.65) to prime minus 0.40 effective Tuesday,” Michael Di Stefano, agent and co-owner of Dominion Lending Centres BTB Mortgage Solutions in Niagara Falls, told “We’re now expecting the other lenders to follow suit over the next week. Basically the spreads are too thin and there just isn’t enough profitability for lenders is what I’ve been told.”

Brokerages across the country are now anticipating that collective move following on the heels of FirstLine, which effectively lowered the maximum discount off of prime now available to brokers and their clients.

Other lenders are now sending out emails to their status brokers warning them to get their clients in before their own hammers drop.

Still, any mass buyer response may be slowed by the Central Bank decision earlier this month to hold the overnight rate steady. It means many prospective homebuyers simply weren’t anticipating any change in adjustable rates this season.

On April 12, the Bank of Canada pointed to global economic challenges, spiking oil prices and a soaring Loonie as chief reasons to hold off on a rate hike. What’s more, there was very little reason for lenders in and outside the broker channel to expect the bank to adjust the overnight before the fall. That inaction may have forced lenders to take matters into their own hands by independently adjusting their discounts in order to widen profit margins hemmed in by rock-bottom interest rates.

The associated bump-up in rates may actually accrue to the benefit of brokers, said Darick Battaglia, head of Dominion Lending Centres Bankfighter. Although FirstLine may lose out in the short term until its competitors slash their own discounts, now running at 65 to 50 basis points below prime.

“Any change in rates or products has historically encouraged those sitting on the fence to jump off into the market,” Battaglia told

Safe as houses? That loud knocking is falling prices

From Tuesday's Globe and Mail
The most enduring and simplistic argument for buying a house is that you’re making an investment.
What an understatement. Between your mortgage, property taxes, utility bills, maintenance, furnishings, renovations, landscaping and such, you’ll be investing non-stop in your home. But what’s the return on your money?
Looking back a decade, houses have been an excellent investment that rivalled the stock market. But the view ahead is not nearly so positive. Bear this in mind if you’re considering a jump into this high-priced and increasingly unaffordable real estate market of ours.
How did the market get where it is today? Housing economist Will Dunning says resale housing prices have grown by an average annual 4.9 per cent in Canada since March, 1988, which is the year that comprehensive real estate industry data begins.
The more recent experience with housing is even better, Mr. Dunning found. The 10-year average annual price gain for a house is 8.3 per cent, almost on par with the average 8.9-per-cent increases logged by the S&P/TSX composite index, including dividends.
What we have here is a housing market that has been rising at close to double its long-term rate in the past decade. Don’t expect this to continue.
“I’m not in the camp that says we have a big correction coming, but I think we are looking at a fairly long period of moderate changes in house prices – plus or minus 2 per cent,” Mr. Dunning said.
In its most recent update on housing affordability, Royal Bank of Canada predicted a period ahead of very modest price increases. “(The) rapid home-price appreciation of the past 10 years has likely run its course overall in Canada,” the report said.
We’ll call that the optimistic view of what’s ahead for the market. For the pessimists, the question is how far prices will fall, and for how long. Sample prediction: Toronto-based Capital Economics sees a decline in prices of up to 25 per cent in the next three years.
The negative outlooks for housing are based primarily on factors such as prices, income growth and interest rates, all of which are a function of current economic conditions and thus short-term in nature. A long-term concern for housing values is Canada’s changing demographics.
The fastest-growing component of our population comprises those who are 65 and older. In other words, people who are going to be selling houses over the decades ahead and doing very little buying, if any. That’s bound to affect demand for homes and the potential for price appreciation.
For an actual real life example of how real estate prices can fall, let’s look at what happened in Toronto between April, 1989, and February, 1996. According to Mr. Dunning’s numbers, the average resale home price in the city fell to $192,406 from $280,121, or 31 per cent.
That was an extreme plunge, fuelled in part by a level of rampant speculation that we aren’t seeing in today’s market. But prices can still fall in today’s market. Check out the Calgary market, which dipped 1.7 per cent in March.
“The fact remains that housing can decline in value, and for prolonged periods,” Moshe Milevksy, a finance professor at York University’s Schulich School of Business, wrote in his 2009 book Your Money Milestones. “It is definitely not a risk-free investment.”
Buying a house and living in it for decades can protect you from temporary market dips, just as long-term investing in stocks smoothes out the stock market’s ups and downs. Still, it’s worth noting that someone who bought an average-priced house in Toronto around the ’89 market peak and still owned it would be looking at modest annualized gains in the 2-per-cent range.
Historical changes in housing prices are just a guideline, anyway. They don’t consider things like mortgage interest, property taxes and maintenance, none of which add any value to a home.
Houses bought today have questionable investment value, but there are some other factors to consider if you’re thinking of getting into the market. First, gradually paying down the mortgage on your house is a kind of forced savings plan. Not a great savings plan, but better than nothing.
Second, there’s the best reason of all to own a house. It’s freedom: Your family, your rules, your lifestyle. That’s really what you’re investing in when you buy a home today. ---------------------------------------------
Here's how the housing market compares to other investments over the 10 years to March 31. Returns are expressed on an average annual basis.
Houses (Average resale housing price in Canada) 8.30%
Stocks (S&P/TSX composite index with dividends included) 8.90%
Bonds (DEX Universe Bond Index) 6.10%
T-bills (91-day Treasury Bill Index) 2.60%
Gold bullion (per ounce, in U.S. dollars) 19.10%

Tuesday, April 26, 2011

The 'thrill' of buying a house

William Hanley, Financial Post · Apr. 21, 2011
You walk into the open house, take one look and say to yourself: This is it. It’s the house I have to live in. Where do I pay? A bidding war? I’m in.
Over my years of buying houses, I never bought one that did not have that frisson moment, that thrill of finding a place so suited to my wants. Indeed, I have in the past decided that I wanted to buy a house in what seems, in retrospect, to be nanoseconds. (By contrast, I’ve taken weeks to decide on the right pair of shoes.)
It is no way to make an “investment,” to be sure. But, as I’ve previously discussed in this space, buying a house is perhaps the most uninvestment-like of investments.
Just about anyone who’s purchased a property or thought about purchasing knows that it is much about gut-feel, in which the senses can conspire to trump sense.
Now, as the major real estate selling season gets under way, along comes a survey commissioned by BMO Bank of Montreal to give statistical weight to the notion that intuition carries a particularly heavy weight in the house-buying process.
The survey by Leger Marketing found that more than two-thirds of Canadians cited a “good feeling” toward the property as a reason to buy. Meantime, though, good sense is not thrown out of that gorgeous bay window and into those manicured flower beds. More than 90% of house-hunters value affordability and location over resale value.
So, the axiom that there are three important things in real estate – location, location and location – might reasonably be replaced by the Three Ps: Price, place and personality.
Nevertheless, that resale value is not a big concern to these surveyed house-hunters – people between 25 and 45 who plan to buy a home within two years – is a telling sign of the real estate times.
With some dips here and there, Canadian house prices have been rising strongly for more than a decade. Indeed, even the recession created just a downward blip in the chart of ever-growing values, with the average national price rising 8.9% last month from the previous March (but just 4.3% excluding Vancouver).
As a result, most of the house-hunters surveyed might never have been aware of a housing market that was not rising. I suspect many in this 25-to-45 demographic believe house prices basically keep going up forever, that though they downplay resale value in the survey, the expectation for solid gains is, well, a given. (Any significant drop in prices would surely shake that belief.)
In recent times, investors have been asked if they are stocks or bonds. If you’re a stock, you are prepared to take on more investment risk. If you’re a bond, you are not.
Perhaps, though, many people are probably houses when it comes to investing. A home is both partly a stock and a bond – and somehow neither.
It is a bond because over the long term it will likely produce modest returns through the enforced savings required by paying down the mortgage. It is a stock because the gains could be outsized if the investor were to buy and sell at propitious entry and exit points for market-timing gains.
And it is neither because it is an “investment” with many moving parts and frictional costs. You don’t live in a stock or a bond, but when the house leaks, it costs money and cuts into the investment. Meantime, the costs associated with buying and selling a property are becoming more daunting in many jurisdictions, with some observers reckoning that a house is often a mediocre investment at best.
But most young first-time buyers and mover-uppers are not fazed by such commentary. Home ownership is a cornerstone of our culture, with 70% of the population owning properties and many of the other 30% looking to join the majority.
And the real estate industry has become far more adept at marketing and selling than in the days decades ago when I was in the market. Today, houses are often professionally “staged” to produce that frisson moment. Prices are sometimes set artificially low to produce that exciting bidding war and that extra frisson of “winning.”
A house, it is said, is not a home. And a home is not strictly an investment. But does a stock have granite counters? Does a bond have stainless steel appliances?

Monday, April 25, 2011

Canadian consumers expected to remain cautious as interest rates set to rise

By LuAnn LaSalle, The Canadian Press
Higher food and gasoline prices and hefty debt loads likely to be made worse by interest rate hikes will impact consumers' buying habits going forward, say those who track retail spending.
It's going to be tough for consumers who have depended on a low interest rate environment, said TD Bank economist Francis Fong, adding that rates are expected to go up this summer.
"The rising interest rate environment, this high household indebtedness situation — that's all going to impede the ability of consumers to spend going forward," Fong said Thursday from Toronto.
Statistics Canada said retail sales increased 0.4 per cent in February to $37.3 billion, giving retailers some relief after declining sales at the start of the year.
Consumers filling their tanks with higher-priced gas, along with those buying furniture and clothing, pushed sales higher in February.
But Fong said consumer spending will no longer be the same driving force going forward as it has been throughout the economic recovery.
The Retail Council of Canada said consumers are "still hanging back a little bit," especially now that they have to spend more of their incomes on food and gas.
"Clearly, if they're going to have spend a little bit more on basic necessities, they may pull back a little bit on the nice-to-haves, but not on the need-to-haves," said spokeswoman Anne Kothawala.
Consumer confidence is soft and that mirrors spending, she added.
"Gas and food prices are actually very closely related. It costs more to transport goods," Kothawala said.
Statistics Canada said the largest contributor to February's increase in retail purchases in dollar terms was gasoline sales, which increased 1.3 per cent.
Gasoline prices have been surging along with crude oil, which began rising sharply in February with the outbreak of unrest in Libya, an OPEC member that accounted for about two per cent of the world's crude output before civil war there.
As of Thursday, the Canadian average price compiled by was 129.6 cents per litre, up from about 118 cents per litre at the end of February.
But lower retail sales in Quebec — a 0.8 per cent decline — contributed the most towards the dampening of national retail sales, Statistics Canada said.
"The decline reflected, in part, lower sales of new motor vehicles in the province," the federal agency said. "This was the second decline in retail sales in Quebec following six consecutive monthly gains."
Quebec also increased its provincial sales tax to 8.5 per cent in January, up a percentage point.
Sales at clothing and clothing accessories stores were up 2.5 per cent, offsetting a decline in January. Sales at furniture and home furnishings stores grew 2.1 per cent in February, helped by gains in real estate sales.
Prof. Ken Wong of Queen's University business school said once consumers pay down debt and spend more money on food and gas, there isn't much left for anything else.
"You have to ask yourself what can be delayed and what can't be delayed," Wong said of consumer purchases.
"We cannot rely on interest rates remaining as low as they are as long as they have been going forward," said Wong, who teaches business and marketing strategy.
Geographically, retail sales in February gained in six of 10 provinces, powered by Ontario where sales increased 0.7 per cent after two consecutive monthly declines.

Saturday, April 23, 2011

Inmate Football

Wouldn't the world be a better place if we all treated each other this way!!

Neil "Mortgage Man" McJannet

In the fall of 2008, there was an unusual high school football game played in Grapevine, Texas. The game was between Grapevine Faith Academy and the Gainesville State School. Faith is a Christian school and Gainesville State School is located within a maximum security correction facility.

Gainesville State School has 14 players. They play every game on the road. Their record was 0-8. They've only scored twice. Their 14 players are teenagers who have been convicted of crimes ranging from drugs to assault to robbery. Most had families who had disowned them. They wore outdated, used shoulder pads and helmets. Faith Academy was 7-2. They had 70 players, 11 coaches, and the latest equipment.

Chris Hogan, the head coach at Faith Academy, knew the Gainesville team would have no fans and it would be no contest, so he thought, "What if half of our fans and half of our cheerleaders, for one night only, cheered for the other team?" He sent out an email to the faithful asking them to do just that. "Here’s the message I want you to send," Hogan wrote. "You’re just as valuable as any other person on the planet."

Some folks were confused and thought he was nuts. One player said, "Coach, why are we doing this?" Hogan said, "Imagine you don’t have a home life, no one to love you, no one pulling for you. Imagine that everyone pretty much had given up on you. Now, imagine what it would feel like and mean to you for hundreds of people to suddenly believe in you."

The idea took root. On the night of the game, imagine the surprise of those 14 players when they took the field and there was a banner the cheerleaders had made for them to crash through. The visitors’ stands were full. The cheerleaders were leading cheers for them. The fans were calling them by their names. Isaiah, the quarterback-middle linebacker said, "I never in my life thought I would hear parents cheering to tackle and hit their kid. Most of the time, when we come out, people are afraid of us. You can see it in their eyes, but these people are yelling for us. They knew our names."

Faith won the game, and after the game the teams gathered at the 50-yard line to pray. That’s when Isaiah, the teenage convict-quarterback surprised everybody and asked if he could pray and he prayed, "Lord, I don’t know what just happened so I don’t know how or who to say thank you to, but I never knew there were so many people in the world who cared about us." On the way back to the bus, under guard, each one of the players was handed a burger, fries, a coke, candy, a Bible, and an encouraging letter from the players from Faith Academy.

What an incredible act of Christian witness and kindness and goodness that was. Proverbs 11:17 says, "Your own soul is nourished when you are kind." Proverbs 3:27 says, "Do not withhold good when it is in your power to act." Be kind to someone this week. Be kind to every person you meet.

Thursday, April 21, 2011

Canadians struggling to save and pay off debt; 38 per cent have no savings

LuAnn LaSalle, The Canadian Press

Many Canadians are finding themselves caught between the struggle to save money and repay their debts, says a survey from TD Bank.

And with interest rates expected to rise this summer, clearing debts probably won't get any easier. In the report, 38 per cent of Canadians surveyed said they had no savings at all.

"I think it's worrisome," said Carrie Russell, senior vice-president of retail banking at TD Canada Trust "The reality is that we are all going to come into unexpected expenses from time to time, be it a car or health or a job loss and this can really derail you and your family if you have no cushion behind you," Russell said from Toronto.

Russell said the major factor preventing Canadians from saving is that they are using disposable income to pay down debt, whether it be credit cards, car loans or mortgages.

She recommends a cushion of three to six months of income saved to get through unexpected financial shocks.

One-third of Canadians who responded to the recent online survey also said they didn't have enough money to cover living expenses like rent or food bills.

The survey found that 54 per cent of the 1,003 people who took part in the survey said it was a real struggle or impossible to save.

Repaying those debts will only get harder if the Bank of Canada raises interest rates this summer, as expected. A spike in Canada's inflation rate in March was driven by higher food and gasoline prices.

Shopping is also taking a toll on tucking money away for a rainy day.

Russell said 12 per cent of those surveyed said they couldn't save because "they shopped beyond their means." Nineteen per cent of those surveyed under the age of 35 said they spent too much on shopping, she added. "This really comes down to the age-old question of budgeting, choices and skills required in making plans for a healthy financial future."

Changing habits starts with children and making sure they understand how much things cost and understanding the difference between a "want" versus a "need," she said.

"We don't send our children into the deep end of the ocean without teaching them how to swim. We shouldn't send our children out into the workforce and independent lives without giving them the basics of financial literacy."

On the flip side, 30 per cent of respondents said they had enough money saved to cover living expenses for at least four months.

Russell said those who were most successful with savings were "paying themselves first" and using automatic savings programs to put money aside.

Certified financial planner Marta Stiteler had some tough love for Canadians without nest eggs: learn to live with less and start saving every month even if it's just $50.

"People are using the downturn as an excuse," said Stiteler, an associate at Pillar Retirement in Hamilton, Ont..

"The reality is you just have to bite the bullet and save. If you don't save you're going to spend it because your lifestyle will eat up that money," she said. "It's about discipline."

The Vanier Institute of the Family has said that average family debt in Canada hit $100,000 in 2010.

"I do think many families are behind the eight ball and the public supports really aren't there where they once were," said Katherine Scott, director of programs at the Ottawa-based organization.

Scott said local credit and non-profit agencies can provide resources to help families get a financial plan so they can "start to dig themselves out of that hole."

The online survey, based on a representative sample of Canadian adults, was conducted from Dec. 2 to Dec. 7, 2010, by Environics Research for the bank

Wednesday, April 20, 2011

Jury convicts Taylor Bean's majority owner on all 14 counts in $3B mortgage fraud trial

The American Way is alive and well. These sort of situations make Canadian Banks look even better. Brings a whole new meaning for me to "Bet heavy and sleep in the streets" - I guess it is steal lots and sleep in jail.

Neil "Mortgage Man" McJannet

By Matthew Barakat, The Associated Press

ALEXANDRIA, Va. - A jury on Tuesday convicted the majority owner of what had been one of America's largest mortgage companies on all 14 counts in a $3 billion fraud trial that officials have said is one of the most significant prosecutions to arise from the U.S. financial crisis.

Prosecutors said Lee Farkas led a fraud scheme of staggering proportions as chairman of Florida-based Taylor Bean & Whitaker. The fraud not only caused the company's 2009 collapse and the loss of jobs for its 2,000 workers, but also contributed to the collapse of Alabama-based Colonial Bank, the sixth-largest bank failure in U.S. history.

The jury returned its verdict late Tuesday after more than a day of deliberations.

Colonial and two other major banks — Deutsche Bank and BNP Paribas — were cheated out of nearly $3 billion, prosecutors estimated. Farkas and his cohorts — six of whom entered guilty pleas to related charges and testified against him at the two-week trial in U.S. District Court — also tried to fraudulently obtain more than $500 million in taxpayer-funded relief from the government's bank bailout program, the Troubled Assets Relief Program (TARP).

While TARP at one point gave conditional approval to a payment of roughly $550 million, ultimately neither Taylor Bean nor Colonial received any TARP money, and investigators from that office, along with the FBI and other agencies, helped uncover the fraud.

Farkas testified in his own defence at the trial and claimed he did nothing wrong. He claimed he was unfamiliar with details or knowledge of many aspects of the various fraud schemes.

In closing arguments, Farkas' lawyer Bruce Rogow, said the six executives at Colonial and Taylor Bean who struck plea deals skewed their testimony to bolster the government's case in the hope of receiving lighter prison sentences for their co-operation. Rogow said Farkas and everyone else at Taylor Bean was working honestly and ethically to get control of its finances and perhaps could have done the job if the government hadn't essentially shut the company down when it raided company headquarters in 2009.

But prosecutors said the evidence against Farkas was overwhelming. They said the fraud began in 2002, when Taylor Bean overdrew its main account with Colonial by several million dollars. Midlevel executives at Colonial agreed to transfer money into Taylor Bean's accounts at the end of each day to avoid generating overdraft notices, a process known as "sweeping."

As the hole grew to well over $100 million, Taylor Bean and a handful of Colonial executives concocted a scheme in which Taylor Bean sold hundreds of millions in worthless mortgages to Colonial — mortgages that had already been sold to other investors. More than $1 billion in such phoney mortgages were eventually sold to Colonial, which listed them on its books and on its quarterly reports as legitimate assets, prosecutors alleged.

In a related scheme, Taylor Bean created a subsidiary called Ocala Funding that sold commercial paper — essentially glorified IOUs — to banks including Deutsche Bank and BNP Paribas. But prosecutors said the collateral that supposedly backed that commercial paper was worthless, and when Taylor Bean collapsed in 2009, the two banks lost roughly $1.5 billion.

Time management secrets anyone can use

Helen Coster, Forbes · Apr. 13, 2011 |

In the two hours that I've been at work today, I've found many ways to not write this article. I've scanned 44 new emails and visited a colleague down the hall. I've skimmed The New York Times, read a few updates on Facebook, checked a Yahoo account that consists mostly of spam and spent a disproportionately long time writing an email connecting two friends in Beijing. Before I wrote a word of this story I decided that I absolutely needed a cup of tea. And a granola bar. And an orange. And a napkin to clean up after the orange. And where is Butler University, anyway? Thank you, Google.

If you're reading this article instead of doing your work, chances are you face similar obstacles to your focus. You're not alone. According to a survey by, the average worker admits to wasting about two hours of each eight-hour workday, not including lunch or scheduled breaks. The Web is like the next-door neighbor who keeps asking us to play when we know we have homework to do. It and email provide so much distraction on a minute-by-minute, hour-by-hour basis that we find it nearly impossible to give our full attention to higher-level tasks. And because there are no defined edges to most of our projects — and certainly not to our workdays — we live in an endless jumble of work and life. We can book a trip to Mexico while participating in a conference call. We can send work emails from a chairlift above the ski slopes of Vermont. It's tough to establish boundaries and focus on any one thing.

Today more than ever, American workers have more to do and less time to do it. Thankfully, there's an entire community of people who specialize in productivity and time management. Their guru is David Allen, author of the 2001 book Getting Things Done: The Art of Stress-Free Productivity — or GTD to its devotees. I've read some of Allen's teachings, as well as those of Merlin Mann, founder of the blog 43 Folders, and the highly addictive and others. There's no one-size-fits-all approach to productivity, but Allen and company have some great ideas to help you declutter your life and make way for big, creative boosts of productivity.

Some of their advice, like "don't multitask," is counterintuitive. Apparently, you'll be much more productive if you check your email only a few times a day, rather than incessantly, as I do. But much of it is common sense, in an "I know I should do that, but I never actually do" kind of way. Allen's mission is to help people rein in all the to-do-list items that float around in their heads, and then organize them systematically. A system allows you to identify the next step to take on every project and keep those projects moving forward, while freeing up your mind to relax and dwell on loftier things. "Keeping things out of your head and managing a clear and complete inventory of your commitments brings a great increase in clarity, focus, and control," Allen says. "And it provides the critical background for then making the important distinctions about where you're going and what's really important, so you can make decisions about what to do, and not do, on those lists."

A lot of productivity-speak involves managing technology. My friend Gretchen Rubin, whose blog The Happiness Project is a vital part of my morning routine, describes technology as a great servant but a terrible master. Allen says that if replying to or disposing of an email takes less than two minutes, you should always do so right away. Turn off those annoying email alerts — do not have a sign flash up on your screen every time a new email comes in. Send less to receive less: Keep your emails short, and write fewer of them.

Allen is also a huge proponent of to-do lists. He says that everyone should have an organized, clear and simple way of writing down everything they need to remember.

That way you never need to lie in bed at night trying to recall some crucial thing you're sure you've forgotten. Productivity experts say to keep multiple lists, including a short list of one to three things that you absolutely need to do each day. Hand off anything that can be delegated, and be realistic about what you can reasonably accomplish every day. Don't set yourself up for failure by starting each day with an unrealistically long agenda.

At a time of year when many of us are engaged in some kind of therapeutic spring cleaning, cutting off distractions, decluttering our workspaces and developing systems to keep track of where things go can feel deliciously Type A, and necessary. Now back to my inbox.

Thursday, April 14, 2011

After temporary growth spurt, Canadian economy is slowing, says Bank of Canada

Seems like more good news for the Variable Rate Mortgages.

Neil"Mortgage Man" McJannet

OTTAWA – The Canadian economy likely expanded by a surprisingly strong 4.2 per cent in the first three months of the year, but it was a temporary burst of activity that is already over, the Bank of Canada says in its new outlook.

The central bank’s new quarterly outlook paints a picture of an economy that is settling down to a protracted period of slow growth, being held back by a high loonie, a tapped-out consumer and government spending restraint.

The bank says the current second quarter will see growth brake to two per cent, less than half what it was in the first, in part because of supply disruptions to Canada’s auto sector caused by the Japanese earthquake and tsunami. The disruption will lessen going forward, however.

On an annual basis, the economy is forecast to slow from 2.9 per cent this year, to 2.6 per cent next year and 2.1 per cent in 2013.

The overall take from the document is that the bank appears in no hurry to start raising interest rates to slow the economy because other factors are doing the job.

The bank doesn’t appear to be overly worried that high oil and food prices might trigger inflation. It briefly notes that inflation may hit three per cent, at the upper end of the bank’s acceptable range, in the next few months, but appears unconcerned.

“The combination of modest growth in labour compensation (wages) and higher productivity is expected to continue to dampen inflationary pressures, with the higher assumed value of the Canadian dollar providing further restraint,” the bank said.

Economists had been pointing to either May or July as the most likely dates for the bank to start raising its policy rate from the current one per cent, which would have the effect of also raising short-term interest rates for such things as variable mortgages.

But the dovish tone of the latest outlook suggests interest rates could remain low longer, especially amid fears that moving aggressively in advance of the United States likely would have the undesired effect of lifting the loonie even higher.

The bank does concede that it has been taken by surprise by the 3.3 per cent expansion in the fourth quarter of 2010, and the likely even stronger 4.2 per cent spurt in the first three months of this year.

That means Canada’s economy will likely return to full capacity by the middle of next year, earlier than previously expected.

But it stresses temporary factors were responsible, including stronger exports and domestic consumption, and that there is still plenty of slack in the economy.

The exports surge is already over, the bank says, and the persistently strong dollar averaging $1.03 US will continue to restrain exports going forward.

“The bank continues to project ... that the recovery in exports will be subdued relative to earlier global recoveries, with the higher level of the Canadian dollar assumed in this projection adding to long-standing competitive challenges,” it said.

Consumption may remain moderately stronger than would be assumed, the bank says, in part because high commodity prices are increasing household purchasing power through gains in the terms of trade, the difference between export and import prices. It estimates the country’s gross domestic income will rise by 4.7 this year.

Still, it believes the housing market will continue to cool and that government spending restraint will be a net drag on the economy this year.

The biggest engine of growth remains business investment, it says, in part because the higher Canadian dollar makes investment in foreign-made machinery and equipment less expensive.

Globally, the bank sees little change in the economic outlook, although it continues to stress risk factors such as high debt both among households and governments in the advanced economies, the Japanese crisis, turmoil in the Middle East and high commodity prices, especially oil.

Despite the risks, it says the global recovery is becoming more rooted and that even growth in troubled Europe is strengthening.

“The global economic recovery is projected to proceed at a steady pace over 2011-13,” the bank says, projecting growth of 4.1 per cent this year and 3.9 per cent next.

The bank has slightly lowered its forecast for U.S. growth this year to three per cent, from its previous 3.3 per cent call four months ago.

Wednesday, April 13, 2011

Surprise, surprise: Central Bank holds overnight rate at 1 per cent

By Vernon Clement Jones | 12/04/2011
In what may be the worst kept secret, the Bank of Canada today announced it will maintain its key overnight rate at 1 per cent, pointing to global economic challenges courtesy of the Japan disaster and the soaring Loonie’s drag on exports.

What’s more, there’s little indication the bank will move to adjust its key interest rate on May 31, the next review date. Tuesday’s report repeats the same cautious wording used in the March 1 rate decision, which preceded today’s announcement: “Any further reduction in monetary policy stimulus would need to be carefully considered.”

The bank is hinting that the overnight may go up later in the year, given its improved outlook for 2011. The bank has now raised the forecast by a half-percentage point, suggesting economic recovery is moving at a faster clip than expected.

That stepped-up performance continues to be challenged by the soaring Loonie, which has tamped down on global demand for Canadian exports, a key driver of economic growth.

“As in January, the bank expects business investment to continue to rise rapidly and the growth of consumer spending to evolve broadly in line with that of personal disposable income, although higher terms of trade and wealth are likely to support a slightly stronger profile for household expenditures than previously projected,” says the bank announcement. “In contrast, the improvement in net exports is expected to be further restrained by ongoing competitiveness challenges, which have been reinforced by the recent strength of the Canadian dollar.”

Tame global recovery -- especially stateside -- has also played a part in the bank’s decision to keep the overnight rate steady: “The global economic recovery is becoming more firmly entrenched and is expected to continue at a steady pace. In the United States, growth is solidifying, although consolidation of household and ultimately government balance sheets will limit the pace of the expansion.”

While European growth has strengthened, even in the face of ongoing sovereign debt and banking challenges, the Japan disaster “will severely affect its economic activity in the first half of this year and create short-term disruptions to supply chains in advanced economies,” says the bank report.

The Central Bank seems prepared to wait until its July review to start nudging its key rate upward, although it could move as early as May if Canadian business begins to replace the economic stimulus now being provided by the bank’s low interest rates.

“The bank expects business investment to continue to rise rapidly and the growth of consumer spending to evolve broadly in line with that of personable disposable income – although higher terms of trade and wealth are likely to support a slightly stronger profile” than previously expected, according to the bank.

Tuesday, April 12, 2011

10 tips to organize and tidy up your finances

Golden Girl Finance,

Happy spring! The sun is out, the birds are singing, and here in Canada, we probably only have one or two more surprise snowfalls before summer.

This is the time of year when we emerge from our dark rooms, stretching and blinking into the sun. We peel off our woolly layers and start thinking about what bikini we will flaunt this summer (yikes). And then we start going for long walks again and haul out the bicycles. Yes, spring is a time to open the windows, clean out the closets, flip the mattresses and sweep away the cobwebs.

While you are busy freshening up your home and garden, you might want to consider pulling out your wallet, blowing off the dust and giving it a good seasonal purge as well. Your finances are like anything else in life: after a while, you start to forget your good habits, and things tend to get sloppy, neglected and disorganized. So seize the spring, darling. Carpe ver!

Here are ten tips to organize your finances and clean up your budget:

1. Clean out the wallet! Lord knows what is lurking in there. Stuffed full of receipts and bank slips, expired discount cards, phone numbers with no names attached, business cards from your last three jobs. As our feng shui sisters might say, you must make space in the wallet for the money to flow to you.

2. Be an A-Lister. Dedicate space for lists in your BlackBerry or a notepad that you carry at all times. Lists are critical for clearing trivia out of your head and keeping you focused when it's time to spend. Mark down items you need as you think of them; that way, when you get to the grocery or department store, you won't get that overwhelmed, "why am I here?" feeling and end up with a cart full of cocoa puffs and tea lights.

3. Reality check. Fitness memberships are an essential expense to many of us. However, if your gym is $90 a month and you only show up three times a month, that's $30 a visit. Be honest with yourself and your schedule. You might be better off paying as you go, or finding a gym where you can buy 10 sessions at a time.

4. Subscribe to this. What is with that messy stack of unread newspapers and magazines on your coffee table? Don't you have enough to dust? Subscriptions are no bargain if you're not reading the products. Consider weekend-only newspaper delivery and buy magazines at the newsstands when you have time to read them.

5. Stay on season. Now that it's spring, we can look forward to fresh fruit and vegetables from local farmers. Check labels and choose food products from close to home — not only will they be fresher, but they won't be packed with big fuel and shipping costs.

6. Be a contrarian. On the other hand, when it comes to big-ticket items, it helps to be delightfully off-season. The end of February is the time to nab a Prada ski jacket in the clearance sales, saving you money to buy Swarovski Christmas tree ornaments in July and Pottery Barn patio furniture in September.

7. Friend and follow. Before you shop, check the website of your favourite store or mall for online-only specials and coupons. Sign up for the Facebook or Twitter accounts of your favourite retailers, restaurants or hotels, which often use their online profiles for giveaways, contests and special deals to their friends and followers.

8. Spring THAW. Remember that trip to Costco where you got 40 chicken breasts for four dollars? Take an inventory of your deep freeze and start planning meals around what you already have on hand. Or throw a dinner party and use up everything you bought more than three months ago. Buying on sale is a waste if you end up throwing out freezer-burnt food.

9. Get your Groupon. Clipping coupons gets stylish with deal-of-the-day sites such as Groupon. The site offers limited-time discounts on everything from $25 off at The Gap (NYSE:GPS) to half price scuba diving lessons. Going on vacation? Check the site for deals at your destination. When you're going out a lot, who wouldn't want to score a free plate of appetizers or two-for-one tickets to a show?

10. Cheap and cheerful. Fun doesn't need to cost nearly as much as you think. A morning with the whole family at the playground is just as rewarding as a day at a theme park and much cheaper than driving, parking and paying for family passes. A night in with the girls and a bottle of wine is every bit as fun and boisterous as going out to the newest hotspot. Bonus: by making it OK to have fun on the down-low, everyone feels better about hosting or getting together more often.

Of course, along with the flowers come the inevitable showers. You know what they say about rainy days, don't you? By cleaning up your financial bad habits and getting in shape for spring, you might actually be able to save a little something…maybe enough to buy yourself one of these must-have items for spring:

West coast residents focusing on debt management

One way to beat some of this - if you are close to the border is using the USA for gas and groceries. Their prices are way better in many products than Canada. We make regular trips to buy our gas at .80 per litre-- I always say we are going to the USA to buy Canadian gas at US prices!

Neil"Mortgage Man" McJannet

TORONTO, April 12 /CNW/ - One-third (33 per cent) of B.C. residents say that rising food and gas prices have had a significant impact on their budget, according to the latest quarterly RBC Canadian Consumer Outlook Index (RBC CCO). In addition, more than half (53 per cent) of British Columbians say they have delayed a major purchase because of the current economic climate.

Confidence in the economy, however, is rising on Canada's west coast. B.C.'s overall economic outlook index has moved up nine points to reach 98, its highest level this year. Coupled with this rosy outlook, nearly half (49 per cent) of B.C. residents believe they are managing their debt well, the highest ranking in the country and well above the national average of 38 per cent.

"B.C. residents are confident in the job market and believe the economy will continue to improve," said Graham MacLachlan, regional president, British Columbia, RBC. "However, rising day-to-day costs of gas and food are starting to have an impact, so it's good to see British Columbians making debt management a top priority. We continue to stress the importance of meeting with a financial advisor, who can help you refine your budget and financial plan, to ensure there is always room to adjust for everyday financial pressures."

According to the most recent Economic Outlook by RBC Economics, the B.C. economy will grow at a rate of 2.9 per cent this year. "B.C. will continue to benefit from improved market conditions for most commodities produced in the province, as well as from growing demand from China," said Craig Wright, senior vice-president and chief economist, RBC. "Expanding trade ties with fast-growing China and the further strengthening in the U.S. economy will help the B.C. economy set a slightly faster pace of growth of 3.2 per cent in 2012."

The RBC CCO is Canada's most comprehensive consumer assessment of the economy, personal financial situation and economic and purchasing expectations. Other provincial highlights from the March 2011 RBC CCO include:

· Economic Outlook: More than six-in-ten (63 per cent) of B.C.'s residents rate the current Canadian economy as good, two points higher than the national average; nearly half (46 per cent) believe the economy will continue to improve over the next year, compared to 42 per cent nationally. Job anxiety has dipped to 17 per cent, just one point higher than Saskatchewan and Manitoba who have the lowest job anxiety in the country at 16 per cent.

· Interest rates: The vast majority (80 per cent) of B.C. residents believe that interest rates will rise this year, compared to the national average of 74 per cent. To combat this expected interest rate increase, 31 per cent of British Columbians plan to find ways to reduce their interest costs or monthly payments, 28 per cent plan to increase their savings and/or investments and 43 per cent intend to spend less in other areas.

· Personal Financial Situation Outlook: While more British Columbians feel that, over the last quarter, their personal situation has worsened (32 per cent) rather than improved (23 per cent), more than a third (36 per cent) expect it to improve over the next year.

Monday, April 11, 2011

Escaping from mortgage prison

So don't get your advise from an American advisor- They also tell people to wait for rates to go down before making a dceision to renew early - but the US does not have an Interest Rate differential cost either. Stick with Canadians for Canadian advise. The USA is very differennt in many ways from Canada.

Neil "Mortgage Man" McJannet

Garry Marr, Financial Post · Let's just say you owed somebody a ton of money but there was no legal way to force you to pay it back?

Would you? What if it was one of those evil corporate banks that make for an easy target? Did the answer just get a little easier?

Not for 60% of Americans who say it is never OK to simply stop making payments on your home, according to a survey by Eagan, Minn.-based, a free legal information website.

Another 34% say it's OK to walk away from a mortgage, but only if you can't make the monthly payments. Only 3% believe you should be able to walk away from a mortgage anytime you want, according to the survey, which interviewed 1,000 American adults and had a margin of error of plus or minus three percentage points.

It's an interesting survey given that U.S. law in a number of states allows consumers to simply hand over the keys to their homes without the lender going after their other financial assets -something that is all but impossible in Canada.

That is not to say that walking away from a mortgage isn't affecting the credit of Americans who do so. They might not be able to buy another house for years unless they do so with cash.

Despite what the survey says, Americans have been walking away from mortgages in droves because it makes financial sense.

Think about it. You have a home with a $500,000 mortgage on it. The present value of it is $250,000. Why would you not walk away, if you could?

"We just asked people what do you think of the idea, not would you do it yourself or have you thought about doing it yourself," said Leonard Lee, the researcher behind the survey. "There is a practical argument, but there's a whole philosophical argument."

If you were shareholder in a company that owned a $250-million building but kept making payments on a $500-million mortgage even though the company had the ability to walk away from the debt, how would you feel? Would the executives be breaching a fiduciary responsibility?

The U.S. real estate industry even has a term for all this: strategic default. "You are asking at some point, doesn't it make more sense to walk away from the mortgage where you are unlikely to recoup your original investment," Mr. Lee says.

Ted Rechtshaffen, certified financial planner and president of TriDelta Financial, says once you put aside the moral issues, it would come down to a simple choice.

"It will impact your credit rating, but from a financial perspective, why wouldn't you do it? You are getting a $250,000 head start. Another investment is probably going to be better than your current house," Mr. Rechtshaffen says.

But Benjamin Tal, deputy chief economist with CIBC World Markets, says while it might not make economic sense, there is evidence Americans are not actually walking away from property as much as they probably would if they were listening to a financial advisor.

"Whatever the default rate is now in the U.S., people say it's 8% and that's extremely high. I say that's surprisingly low," Mr. Tal says. "You have up to six to seven million households that could default any day, namely because they are in a negative equity position."

What's in it for them to keep paying? There is something to say for wanting to stay in your home where you have been living and raising a family. There is also a stigma that comes with somebody slapping a foreclosure sign on your property -suddenly your neighbours know a little more about your financial situation.

"At the end of the day though, that's the rational thing to do. You are talking about houses that are under water more than 20%. Based on an economics textbook, that would be the rational thing to do," Mr. Tal says.

In Canada, it's pretty tough to do. For starters, if you have an insured mortgage backed by the government, the bank will get paid off for its loan. But the insurance company, whether it's Canada Mortgage and Housing Corp. or a private insurer, will go after you for any deficiency created by proceeds from the property being less than the mortgage.

It's the case in most of the country for uninsured mortgages, too, says John Turner, director of mortgages for Bank of Montreal. Rules are slightly different in Alberta and are designed to protect consumers, but Mr. Turner says banks can elect to go after other assets in some circumstances.

There's also the scenario where you might have bought a condominium as an investment before it was built and put down, say, a 20% payment. If you think you can walk away if prices dropped by 50% once the building is up, forget it. You'll be sued.

"As lawyers, we can't advise someone to break a contract. The law is not you don't have to obey it, the law is the consequences of not obeying [the contract]," says Calgary lawyer Jeff Kahane. "You haven't broken the law, you've broken your promise. Is it any different than saying why would I want to pay for a chocolate bar at 7-11 when I can put it into my pocket and steal it if I can get away with it."

Friday, April 8, 2011

More than half of young adults waiting till next year to buy home: RBC survey

By Sunny Freeman, The Canadian Press

TORONTO - As rising home prices continue to outpace income growth, many young Canadians have decided to delay home ownership for another year, according to a poll released Thursday by Royal Bank of Canada.

RBC's annual home ownership poll found that 55 per cent of respondents aged 18 to 34 said it made sense to delay a home purchase until next year. That's 10 percentage points more than the national average for all age groups.

Meanwhile, about half of the young people in the survey who had already delved into home ownership said their mortgage was eating up too much income — suggesting their peers may have good reason to wait.

A sharp rebound in housing market activity as Canada emerged from a recession in late 2009 and early 2010 has sent home prices soaring.

The national average home price rose 8.8 per cent year over year to a record $365,192 in February, although it was skewed upward by sales in the red hot Vancouver market where the average home price was $790,380.

Meanwhile, Canada's job market has taken longer to recover and income levels haven't grown at the same rate. A Bank of Montreal report released last month found average resale home prices compared with personal incomes are 14 per cent above the long-term trend.

That makes it more difficult to afford a home — as mortgage payments eat into a larger portion of Canadians' paycheques — especially those of young people who are just settling into careers and tend to have less money saved.

In addition, young people already struggling with student loan payments may be influenced by a steady stream of warnings over the past year about Canadian debt-to-income ratios reaching record highs, suggested Bernice Dunsby, RBC's director of client acquisition for home equity.

"Canadians are heeding some of the advice around larger debt levels and stretching themselves too thin so they're actually taking the time to pause and reflect and plan accordingly, especially when it comes to things like their down payment," Dunsby said.

Some young people watching home prices soar beyond pre-recession levels may be waiting for a widely predicted drop anticipated over the next year or so, said David Madani, Canada economist at Capital Economics.

"We've kind of reached a threshold in the sense that affordability is pretty tough," he said.

"If you're talking about a potential young home buyer who is living in Toronto or Vancouver or some other big market, it's really pricey to get into right now, so that's discouraging for some young home buyers."

First-time buyers account for a huge portion of all Canadian housing sales, making the demographic influential in determining the health of the country's housing market.

This year's survey, conducted by Ipsos Reid in mid-January, came at a cooling off period in the Canadian housing market following a spate of frenzied buying in the early months of last year.

There will be a drop in demand this year after a number of factors last year combined to drive buyers to jump into the market earlier than planned, Dunsby said.

Many first-time buyers rushed into the market in the first half of 2010 while the Bank of Canada's key interest rate — which influences commercial lending rates — was set at emergency lows of 0.25 per cent because of the recession.

Those changes affect a minority of mortgage holders who opt for variable rate mortgages linked to the commercial banks' prime rates.

"(However) they may look at interest rates as an indicator of when to jump into the market," said Dunsby.

Some buyers also wanted to enter the market before the new harmonized sales tax was implemented last July in Ontario and British Columbia, two of the country's largest real-estate markets.

Although the HST only applied to some services associated with a home purchase, such as lawyers’ fees, some buyers thought it could push closing costs up a lot more.

First-time homebuyers are also most affected by government moves to change mortgage rules that made it more difficult to qualify for a mortgage. Stricter lending rules brought in the spring of 2010 require all homebuyers to qualify for a standard five-year, fixed-rate mortgage.

More recently, new changes enacted last month shortened the maximum amortization period for a mortgage to 30 years from 35, increasing the size of monthly mortgage payments.

Demand for homes began to wane last spring in the face of rising home prices and short-term mortgage rates, along with stricter mortgage rules and the exhaustion of pent-up demand from the recession.

That has put buyers and sellers on a more even footing when they negotiate.

"In a more balanced housing market, it makes sense that younger and first-time homebuyers are waiting to assess all of their options and do their research before buying a home," Dunsby said.

"It's also important to get expert advice on what you can afford and leave yourself with a little extra wiggle room in your budget so you don't become house poor, as home maintenance and lifestyle costs can add up."

While 43 per cent of younger Canadians told Ipsos Reid they were paying off their mortgage faster than expected, two-thirds, or 66 per cent, said their mortgages were still larger than they would like.

Rising real estate prices, along with having a large enough down payment, were the biggest concerns among young people surveyed.

Still, 43 per cent of the young adults who responded to the survey said they were looking to buy in the next two years, suggesting the housing market will continue to be healthy going forward.

That's higher than the national average of 29 per cent for all age groups.

In comparison, only 29 per cent of Canadians aged 35 to 54 said they want to buy within two years and only 17 per cent of respondents over 55 were looking.

The survey also revealed that young people have different ideas about how to seek advice on home ownership than those belonging to older generations.

Most young people said they were more inclined to use websites, family or friends for advice while more than 70 per cent of Canadians over 45 said they would rely on a real estate agent.

The survey's findings are based on responses from an online panel of 2,103 Canadians, conducted Jan. 12 to 17. A survey of this size has a margin of error of plus or minus two percentage points 19 times out of 20

Thursday, April 7, 2011

Why we might see a rate hike sooner rather than later

Paul Vieira, Financial Post

OTTAWA — Stronger economic growth, propelled by a commodity boom and an improving U.S. job market, will prompt the Bank of Canada to begin rate hikes in July to a 2% level by the end of the year and 3.5% in late 2012, economists at BMO Capital Markets said Wednesday in releasing its updated outlook.

The investment bank’s economics team project first-quarter annualized growth of 4.4%, helping to power the Canadian economy to a 3% advance in 2011 -- an improvement from the 2.7% gain BMO Capital Markets had forecast back in January. By year’s end, the country’s unemployment rate should drop to 7.4% from its present 7.8% level.

“The combination of low interests and high commodity prices are fuelling the domestic economy,” said Sal Guatieri, senior economist at BMO Capital Markets.

Consumer spending is expected to ease from 2010 levels, to 3%, but he said exports and a 12.8% surge in non-residential business investment would pick up the slack.

Canada also stands to benefit from an improving U.S. economy, poised to expand 3.2% in 2011, as the job market begins to turn around based on March data, he added. Monthly job gains in the 200,000-plus range could boost confidence among U.S. firms and households, translating into increased spending and investment.

Risks to the outlook include soaring oil prices, which could deliver a “serious blow” to the North American economy; Europe’s sovereign debt woes, with Portugal on the brink of an international bailout and concerns mount over Spain; and any further fallout from Japan’s earthquake and subsequent nuclear crisis.

The Bank of Canada, which issues its next rate decision on April 12, is likely to upgrade its outlook for 2011 based on the data that has emerged, Mr. Guatieri said. In its last outlook tabled in January, the central bank expected 2011 growth of 2.4%, with a first-quarter annualized advance of 2.4% -- which is now well below estimates in the 4% and 5% range.

“The economy is growing much faster than the bank expected, implying less inflation-dampening slack,” Guatieri said, adding he expects the Bank of Canada to move up the timetable as to when the output gap — a measure of spare capacity — closes to mid-2012 from the previous call of the end of next year.

“The central bank will now likely move a little more aggressively on rates than planned.”

While Canada inflation remains muted, with the core rate at 0.9% as of February, Mr. Guatieri said BMO expects price increases to pick up steam in the months ahead. The central bank sets rates to achieve and maintain 2% inflation.

“We are at a low point on inflation,” he said. “The central bank can’t delay rate hikes indefinitely or it might face an inflation problem down the road.”

The European Central Bank is set to raise its benchmark rate on Thursday, even though sovereign debt worries have resurfaced, on inflation concerns.

Tuesday, April 5, 2011

Canada's big banks raising residential mortgage rates ahead of busy period

Looks like a profit taking exercise - the banks don't make enough money so why not raise rates when the martket is going to be a bit better.
Look for rates to decline again in the coming weeks.

Neil "Mortgage Man" McJannet

By The Canadian Press

TORONTO - Several of Canada's big banks are raising most of their fixed-term mortgage rates ahead of the busy spring real estate market.

TD Canada Trust (TSX:TD) TD said the biggest increases will be for mortgages with terms of five to 10 years, which will all go up by 0.35 percentage points starting Tuesday.

The move was matched by CIBC (TSX:CM).

The Royal Bank (TSX:RY) raised its rates on mortgages for five and 10-year terms by 0.35 percentage points and its seven-year rate by 0.15 percentage points. The posted rate for five-year closed mortgages — one of the most popular types of loans for Canadian home owners — will rise to 5.69 per cent.

Scotiabank (TSX:BNS) raised its posted rate for a five-year closed mortgage by 0.4 percentage points to bring it to 5.69 per cent.

Fixed mortgage rates, which are closely tied to the bond market, tend to climb when traders shift investment activity to riskier equity assets from bonds, which are considered safer.

Monday, April 4, 2011

Stop Kissing Frogs!

Very interesting and amazingly very true- sometimes our rose colored glasses affect out ability to properly judge a situation. Take a good look at every opportunity before discarding it.

Neil "Mortgage Man" McJannet

The change began with a homeless man in a San Diego park. My friend was talking with various homeless people as part of a Heart of the Samurai exercise, when she looked into one particular man’s pale green eyes. His eyes took her beyond his filthy clothes, the stink of his unbathed body, and his uncut matted hair, because in them she saw a human being. As she spoke with this man, she came to see that he had fallen into a pit of illiteracy, alcoholism and emotional problems that, as of yet, he hadn’t been able to climb out of. After this encounter, she could no longer judge a homeless person, and later when her own son struggled with drug addiction her perspective changed even more. Every homeless person she drove by could be her son.

Each of us has our own set of judgments. Based on our experiences and personalities, we put on sunglasses early in life, seeing our view of the world as the right and often, only one. These sunglasses can become “shoulds” for our spouses, employers, employees, children and friends – and even the strangers who cross our paths daily. When they don’t live up to our standards, we become right, they become wrong, and we judge them.

For example, when we get married we come with our list of what Prince or Princess Charming should be like. For a woman, Prince Charming might need to be romantic, hard-working, and must always put his clothes away and the toilet seat down. A man might want his Princess Charming to be beautiful, always supportive and ready to jump into bed. But what happens when a woman or man finds out their prince or princess is really a frog? He farts and burps and leaves piles of paper everywhere. She likes to wear sweats and tends to nag. In fairy tales it takes only a kiss to turn a frog into a prince, but fairy tales are not real life! A woman might kiss her frog over and over, trying all sorts of manipulations to change him into the perfect Prince Charming, but the simple truth is, you can’t change another person.

As compassionate samurai, we limit our contributions to others by the barriers our sunglasses put up. So how can we take them off? Emotional experiences such as the encounter between the woman and the homeless man are quickest. Here are some other things to consider.

1.Begin by being aware that you are wearing sunglasses. The imperfect people around us are there to reveal our sunglasses to us.
2.Quit kissing frogs! Recognize that when you are trying to keep control by resisting someone or something because it doesn’t fit your ideal, you are actually out of control. The things you resist control you.
3.Begin small by asking yourself, “What judgments can I more easily let go of?” These might be as small as how you squeeze the toothpaste tube.
4.As humans, we tend to focus on the negative, not the positive. Focus on the many positive things about the person who isn’t measuring up, not the few things we’d like to change.
5.Remember that letting go of judgment doesn’t mean letting go of accountability. Accountability is neither good nor bad, and done without judgment.

Broker: TD shift to business lending a good thing

My main concern when I see a major bank make this move is that in all likelyhod the Prime rates will start to move as the Government sets in more rules for lenders. It would be nice if the powerful Canadian Banks were allowed to lend where they want for their shareholders interest. BUT the fact is that the arrogant governement bodies seem to feel they always know what is best for the Canadian public. Nice to have a big brother sometimes and sometimes it is not.

Neil "Mortgage Man" McJannet

By Vernon Clement Jones |

TD Bank’s plans to use a significant uptick in business lending to make up for a cooling mortgage market is garnering mixed – albeit positive – reaction from brokers and mono-line lenders.

On Thursday TD chief executive Ed Clark told shareholders that the big bank is seeing a transition from consumer to business lending as the economy finally gets back on its feet.

While there’s increasing economic data suggesting Canadian consumers are hesitant to take on new debt for cars or homes, according to TD, there are also indicators suggesting manufacturers, retailers and other business owners are ramping up their borrowing.

That new money will likely get pumped into equipment, supplies and merchandise, said Clark, calling the increased activity “a good thing.”

"One of the deserving elements during the downturn is that while the consumer kept on borrowing and spending in Canada — different than what occurred in the United States — the commercial sector was still tentative about whether to invest." said Clark at Thursday’s annual meeting. "Now it seems their confidence level has moved up and our business leaders are in fact now starting to draw down, take down money and reinvest in their businesses."

While TD's talk of a slowing mortgage sector has taken some mortgage professionals by surprise, the bank’s shift to business lending is largely seen as a sign of good times ahead for the industry as it grapples with federal rule changes, ushered in last month. They seek to curb consumer borrowing.

“I think the TD move to increase its business lending is a really good sign,” James Robinson, an agent with The Mortgage Centre Mortgage Watch Inc, told MortgageBrokerNews Friday. “It signals that in the long-term there is going to be the kind of economic growth that creates jobs, increases consumer capacity, and allows consumers to pay down bad debt and take on good debt – mortgages.”

Still Robinson and others in the sector resist the idea that the country’s mortgage business is now entering into period of short-term decline as Canadians seek to cull their record-high debt levels.

“We just haven’t seen a falloff,” said David MacVicar, VP of Verico Premiere Mortgage Centre, headquartered in Halifax. “We’re up year over year in Ontario and Atlantic Canada, and we’ve seen consistent volumes.”

The latest national data present a more-varied picture.
According to the Teranet-National Bank Composite House Price Index, Canadian existing home prices rose 0.4 per cent in January from a month earlier, although the growth follows three consecutive monthly declines, starting in September. And while prices rose in four cities – including Halifax, where prices jumped 0.4 percent – the numbers for most other cities slipped. Ottawa, for instance, saw January’s existing-home sales drop by 0.6 per cent, representing the fifth straight monthly decline.

TD’s shift toward business lending may reflect that uncertainty. But the move may ultimately create opportunity for the country’s mono-line lenders as they fight the Big Five for market share.

“It’s interesting, the approach that TD is taking in shifting focus,” Karen Biernaski, First National Financial’s marketing director, told MortgageBrokerNews Friday. “But we’re staying the course and are continuing to look for ways to help grow market share for us and the broker channel. That remains a real possibility.”

Sunday, April 3, 2011

Vancouver rent appraisal company set sights on Calgary, Toronto

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Neil "Mortgage Man" McJannet

By Vernon Clement Jones

A new Vancouver outfit offering online rent appraisals -- in real-time -- is pushing east, planning to offer the automated service in Calgary and Toronto where the number of income suites is on the rise.

“There are automated systems that provide real estate value assessments,” said Jason Upton, president of the newly-minted Aedis e-rent. “But there’s never been anything that did it specifically for rental appraisals and for specific markets. We do.”

The company, quietly launched last fall, has developed appraisal software focused on Metro Vancouver’s burgeoning rental market. It gathers intelligence from thousands of past and present classifieds, MLS listings, its own appraisers and, even, Craigslist before crunching the data and spewing out a fair market rental value.

Lender and brokers are driving company growth, said Upton, also counting credit unions among users of a service billed as “cheaper and faster” than industry averages.

The service has proved particularly handy for mortgage professionals evaluating the revenue potential of a residential property’s income suite.

Vancouver’s mature housing market has led the country in the growth of basement, second-floor and garage-apartment conversions, all done with an eye to providing a revenue stream for homeowners grappling with the highest housing prices in Canada.

“The rent appraisals a very useful tool for us given the number of income suites on the market and the fact that lenders don’t often require a full appraisal for owner-occupieds with loan-to-value ratios below 90 per cent,” said Deb White, a broker and owner of DLC White House Mortgages in Vernon, B.C.

Her brokerage has been using Aedis’s quick assessments for the past five months, even in cases where sellers can furnish lease agreements for their income apartments.

“Sometimes the rental agreements that you see can have overinflated values,” White told, “and the economic rent appraisal letter provides the lender with a more objective valuation of the rental income potential.”

There’s also the problem of getting an appraiser access to a rental unit, said one Vancouver broker.

“A lot of times we have everything ready to go, but we’re held up waiting for a tenant to allow access,” said Garth Ellis, president of Verico Ellis Mortgages Canada, pointing to the rules and regulations of the Residential Tenancy Act, which set out restrictions on immediate access for landlords.

Calgary and Toronto brokers are increasingly in the same boat as Vancouver, with more and more homebuyers looking to defray the cost of carrying a property with the help of an income suite. The move reflects the real estate value climbs in those markets, only now coming under downward pressure.

Upton plans to adapt his automated system for Calgary and, then, Toronto – both within the year. The move anticipates the growing need for rent value appraisals separate and apart from the more-comprehensive property valuations that usually include that data.

Still, Aedis e-rent remains a niche service.

“It’s not something that all brokers will need all the time,” said Upton, “but it’s there when they do need it as a one-stop shop for economic rent appraisals.”

Friday, April 1, 2011

Consumers turning to home equity loans

Sarah Staples, Postmedia News · Mar. 30, 2011

When Sean Fitzgibbons needed a short-term loan last year to cover his daughter's first year of university, his wife's master's degree and a bathroom renovation, the real estate industry veteran knew exactly what to do.

Mr. Fitzgibbons took out a bank-structured home equity line of credit, or HELOC, a form of financing that's zoomed in popularity in the last decade.

"We wanted to protect ourselves, to make sure we had good cash flow, and we knew based on experience that an option would be to dip into equity in our home," says Mr. Fitzgibbons, a former real estate agent who runs the Toronto office of Multivista Construction Documentation Inc., which photographs home renovation and commercial construction sites.

But is a HELOC the right option for this borrower, and for thousands of Canadians who have turned it into one of the trendiest instruments of personal finance?

The volume of HELOCs has ballooned by up to 170% in 10 years, nearly double the speed of mortgage debt, according to the Bank of Canada.

Critics say HELOCs, which account for 12% of overall household debt, make it easier for Canadians to borrow too heavily against their homes. They're non-amortizing, so borrowers can opt to pay interest on whatever is drawn down, not the principal, which arguably imposes less discipline than a mortgage with fixed repayment terms for interest and principal.

And since a HELOC is almost always a variable interest rate product pegged to the Bank of Canada's prime, if interest rates rise too quickly, a borrower might not be able to keep pace.

The government recently tightened mortgage rules: changes that took effect March 18 allow borrowers to secure up to 85% of their home's assessed value through a refinancing, down from 90% previously (HELOCs are only available to a maximum of 80% loanto-value). Loans may be made on a 30-year amortization -or repayment -schedule, instead of 35 years. And effective April 18, the Canada Mortgage and Housing Corporation will no longer offer mortgage insurance for non-amortizing loans such as HELOCs.

But the mortgage industry says HELOCs aren't proven to be the culprit behind rising consumer debt. And if used judiciously, they're a low-cost financing option for Canadians who might otherwise rack up expensive credit card debt to cover urgent needs.

"The biggest downside is definitely the temptation to use the money because it's there," says Marcel Ghazouli, a mortgage broker with Premiere Mortgage Centre of Mississauga, Ont. "The advantage is, it's money there when you need it."

HELOCs provide revolving credit: once approved, they can be continually repaid, without penalty, and the credit drawn down again and again.

There's no obligation to re-qualify for assistance, for example, following a sudden drop in the family's income, since the loan is secured against the home.

Canadians typically play it safe with such financing, says Jim Murphy, president and chief executive of the Canadian Association of Accredited Mortgage Professionals.

A study by his association last fall revealed one in five Canadians withdrew equity from their home in 2010, averaging $46,000 per borrower; of those, 45% used the money to consolidate and repay higher-interest debt, 43% made home improvements, and 19% paid for education.

According to Mr. Murphy, it's "too early to say" if the federal rule changes will dampen enthusiasm for HELOCs.

"The basic result is you can borrow less on your home than you could have," he concludes, "but you can still borrow a lot on the value of your home."

Repaying fully within two to five years should be the goal, Mr. Ghazouli says.

HELOCs are especially useful for funding renovations to improve a home's resale value - better still, if the home is to be listed for sale soon afterward, and proceeds will be used to pay off the loan, he says.

Taking advantage of the current real estate market in Toronto, Mr. Fitzgibbons was able to maximize the amount of his credit line at historically low interest rates.

Similar to selecting a contractor, he put several mortgage companies through the paces, getting references and ultimately choosing a reputable broker to guide him through the array of HELOC products on offer.

"People will go into a bank and say, 'I need a line of credit or a credit card,' the bank will say OK," Mr. Fitzgibbons says.

"But if you've done your homework and know what to ask for, and you have a broker who's on it every day, you'll get better advice."