John Morrissy Jul 27, 2011 – 3:04 PM ET
OTTAWA— Home prices measured by a major national index surged for a sixth straight month to new highs in May but are expected to ease in the months ahead.
The Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes in six metropolitan areas, rose 1.3% in the month, the second consecutive month in which it gained more than one per cent and the largest gain since July 2010.
The month-over-month gains were spread across all six cities covered, with all but Halifax reporting gains of 0.5% or more.
May gains were led by the Vancouver and Toronto markets, ahead 1.6% and 1.7%, respectively, and followed by Montreal (0.7%), Calgary (0.6%), Ottawa (0.5%) and Halifax (0.1%).
“The well-above-one-per-cent monthly rises of the composite index in April and May were fuelled by the Vancouver market,” said the report’s author, senior economist Marc Pinsonneault.
“Given the time lags between home sales and their entry in public land registries, it is possible that the large April and May rises of the composite index were due to front-loading of sales to beat the March effective date of an announced shortening of the maximum amortization period for insured mortgages.”
“This spike in activity is now behind us. Therefore, the recent large monthly rises in home prices in Canada should not be a lasting trend.”
On an annual basis, prices rose 4.4% in May, the same pace of advance as in May.
TABLE
Composite House Price Index for May
Metropolitan area / Index level /m/m change / y/y change
Calgary / 153.72 / 0.6 % / -4.1 %
Halifax / 134.26 / 0.1 % / 4.8 %
Montreal / 141.36 / 0.7 % / 6.3 %
Ottawa / 133.30 / 0.5 % / 5.6 %
Toronto / 128.72 / 1.7 % / 4.6 %
Vancouver / 164.92 / 1.6 % / 6.2 %
National Composite / 142.27 / 1.3 % / 4.4 %
Source: Teranet-National Bank
Thursday, July 28, 2011
Wednesday, July 27, 2011
Beyond debt ceiling, U.S. needs own GST
Special to Financial Post Jul 26, 2011 – 5:54 PM ET | Last Updated: Jul 26, 2011 5:57 PM ET
By Glen Hodgson and Kip Beckman
For drama, it might seem difficult to top the past couple of weeks on Capitol Hill, but the debt ceiling debate in the United States is really only the opening act of a long-running production. The Obama administration and Congress will eventually have to agree to some watered-down measures that will enable an increase to the debt ceiling, to ensure that the country’s creditors continue to be paid on time. However, the necessary deal between the White House and House Republicans will be a political deal. It will only put off the tough economic and policy decisions to another act of this drama.
The fundamental problem facing the U.S. federal government is bringing taxes and spending into balance over the long run. Even if sustained growth is fully restored, Washington will be taking in the equivalent of 15% of gross domestic product as revenue, but spending 20% of GDP. If the budget is ever to be rebalanced, the U.S. federal government will have to tackle structural factors.
The United States is currently spending about 5% of GDP on defence and homeland security, compared with around 3% before 9/11. Social Security — long the “third rail” of U.S. politics — has a huge unfunded liability, and aging demographics will have a major impact on other social spending entitlements if unchecked. Yet, large cuts to defence and social spending are unlikely to be enough. Increases in taxes, combined with fundamental program redesign and a reduction in benefits, will eventually be required.
The medium-term fiscal plans brought forward by Republicans and by the White House currently fall well short of fiscal sustainability. The Republicans are ready to slash spending but unwilling to consider tax increases, while the Obama plan relies too much on sustained economic growth to reduce future deficits. A third option, from a President-appointed bipartisan panel, proposed a broad mix of spending cuts and revenue measures, but there has been little political takeup so far. Initially, tax hikes will affect wealthy Americans. But there is a limit to how much tax revenue can be raised by hammering rich people. At some point, tax reform will have to hit the broad swath of Americans. Some of the targets could include the elimination of popular but costly incentives such as deductibility of mortgage interest payments. Even these measures, however, will probably still fall short. Eventually, we expect the United States will have to do what Canada and other rich countries have done — implement a value-added sales tax.
Republicans, and even some Democrats, may well threaten to fight to the last breath before ever agreeing to it, but the merits of a sales tax are unmistakeable: It provides stable revenues, it affects almost all of the population, and it has the least impact on business investment. And as Canada found out in the 1990s, a value-added tax is a prolific generator of revenue, which the United States desperately needs.
The United States may already be in the midst of a “lost decade” due to the 2008 financial crisis, and the debt ceiling debate — suspenseful though it is — could be but a prelude to something much more dramatic. If international and domestic bondholders ever decide to stop buying new U.S. government bonds to fund the chronic fiscal deficits, the politicians won’t have much choice. The hard laws of economics will eventually force even the United States to face fiscal reality.
Canadians have a lot riding on the outcome of the current debate, due to our deeply integrated economies. As the U.S. goes through a difficult period fiscally and economically, Canadian businesses must re-double their efforts to adapt, innovate, diversify their sales, and internationalize their business model if they are to remain globally competitive. But Canada must also remain fiscally responsible to help offset the potential shocks ahead, so that a lost decade for the United States does not become a lost decade for Canada as well.
Glen Hodgson is senior vice-president and chief economist of the Conference Board of Canada. Kip Beckman is principal economist at the Conference Board of Canada.
By Glen Hodgson and Kip Beckman
For drama, it might seem difficult to top the past couple of weeks on Capitol Hill, but the debt ceiling debate in the United States is really only the opening act of a long-running production. The Obama administration and Congress will eventually have to agree to some watered-down measures that will enable an increase to the debt ceiling, to ensure that the country’s creditors continue to be paid on time. However, the necessary deal between the White House and House Republicans will be a political deal. It will only put off the tough economic and policy decisions to another act of this drama.
The fundamental problem facing the U.S. federal government is bringing taxes and spending into balance over the long run. Even if sustained growth is fully restored, Washington will be taking in the equivalent of 15% of gross domestic product as revenue, but spending 20% of GDP. If the budget is ever to be rebalanced, the U.S. federal government will have to tackle structural factors.
The United States is currently spending about 5% of GDP on defence and homeland security, compared with around 3% before 9/11. Social Security — long the “third rail” of U.S. politics — has a huge unfunded liability, and aging demographics will have a major impact on other social spending entitlements if unchecked. Yet, large cuts to defence and social spending are unlikely to be enough. Increases in taxes, combined with fundamental program redesign and a reduction in benefits, will eventually be required.
The medium-term fiscal plans brought forward by Republicans and by the White House currently fall well short of fiscal sustainability. The Republicans are ready to slash spending but unwilling to consider tax increases, while the Obama plan relies too much on sustained economic growth to reduce future deficits. A third option, from a President-appointed bipartisan panel, proposed a broad mix of spending cuts and revenue measures, but there has been little political takeup so far. Initially, tax hikes will affect wealthy Americans. But there is a limit to how much tax revenue can be raised by hammering rich people. At some point, tax reform will have to hit the broad swath of Americans. Some of the targets could include the elimination of popular but costly incentives such as deductibility of mortgage interest payments. Even these measures, however, will probably still fall short. Eventually, we expect the United States will have to do what Canada and other rich countries have done — implement a value-added sales tax.
Republicans, and even some Democrats, may well threaten to fight to the last breath before ever agreeing to it, but the merits of a sales tax are unmistakeable: It provides stable revenues, it affects almost all of the population, and it has the least impact on business investment. And as Canada found out in the 1990s, a value-added tax is a prolific generator of revenue, which the United States desperately needs.
The United States may already be in the midst of a “lost decade” due to the 2008 financial crisis, and the debt ceiling debate — suspenseful though it is — could be but a prelude to something much more dramatic. If international and domestic bondholders ever decide to stop buying new U.S. government bonds to fund the chronic fiscal deficits, the politicians won’t have much choice. The hard laws of economics will eventually force even the United States to face fiscal reality.
Canadians have a lot riding on the outcome of the current debate, due to our deeply integrated economies. As the U.S. goes through a difficult period fiscally and economically, Canadian businesses must re-double their efforts to adapt, innovate, diversify their sales, and internationalize their business model if they are to remain globally competitive. But Canada must also remain fiscally responsible to help offset the potential shocks ahead, so that a lost decade for the United States does not become a lost decade for Canada as well.
Glen Hodgson is senior vice-president and chief economist of the Conference Board of Canada. Kip Beckman is principal economist at the Conference Board of Canada.
Tuesday, July 26, 2011
WATER DAMAGE!
These days, homes are at a greater risk of water damage than ever before. Heavier precipitation and less predictable weather patterns increase the chance of unwanted water entering our homes.
Water damage is serious business. It is a drain – financially, emotionally, even physically. Just one inch is all it takes to destroy sentimental or irreplaceable items, or to create structural damage that can depreciate the value of your home. The bacteria and mold it can leave in its wake can affect air quality in your home and create potential health risks.
The best way to deal with water damage is to prevent it from happening in the first place.
Here are some easy things you can do outside your home to help keep you safe and dry.
• Disconnect downspouts from the municipal sewer system. Extend downspouts at least 6 feet away from your basement walls and drain away from your house towards the street or backyard..
• Install a rain barrel to minimize the amount of surface water that could enter your home
• Grade the earth or hard surfaces around your home to slope away from your foundation.
• Before temperatures drop to freezing, turn off the water supply to outdoor taps and faucets, then open the taps to drain the water completely. Leave taps in the open position until spring.
• Keep gutters and downspouts clear of leaves and other debris – clean them out at least once a year – late fall is a good time.
With a little know-how and some routine maintenance, you can stay ahead of the wave and keep unwanted water out.
Water damage is serious business. It is a drain – financially, emotionally, even physically. Just one inch is all it takes to destroy sentimental or irreplaceable items, or to create structural damage that can depreciate the value of your home. The bacteria and mold it can leave in its wake can affect air quality in your home and create potential health risks.
The best way to deal with water damage is to prevent it from happening in the first place.
Here are some easy things you can do outside your home to help keep you safe and dry.
• Disconnect downspouts from the municipal sewer system. Extend downspouts at least 6 feet away from your basement walls and drain away from your house towards the street or backyard..
• Install a rain barrel to minimize the amount of surface water that could enter your home
• Grade the earth or hard surfaces around your home to slope away from your foundation.
• Before temperatures drop to freezing, turn off the water supply to outdoor taps and faucets, then open the taps to drain the water completely. Leave taps in the open position until spring.
• Keep gutters and downspouts clear of leaves and other debris – clean them out at least once a year – late fall is a good time.
With a little know-how and some routine maintenance, you can stay ahead of the wave and keep unwanted water out.
Friday, July 22, 2011
Dollar within striking distance of modern-day high
TORONTO (Reuters) - The Canadian dollar looks set to extend a rally that's taken it to 3-1/2 year highs against the U.S. dollar this week, as more hawkish Bank of Canada comments lifted the currency and global investors pushed into the safety of Canadian assets.
Given the central bank's clear signal it would likely resume interest rate hikes later this year, analysts said the currency might even revisit its modern-day high. It reached C$0.9059 to the U.S. dollar, or US$1.1039, in November 2007, according to Thomson Reuters dealing data.
"Yes, Canada could hit post-Civil War highs once again," said Michael Woolfolk, a senior currency strategist at BNY Mellon in New York.
"(Hitting the high) would not be altogether unwarranted if Canada begins raising interest rates again. It's certainly not in our forecasts, but it's a nontrivial possibility of hitting C$0.90 within the next 12 months."
Based on available data, the Canadian dollar was at an all-time high of C$0.36 to the U.S. dollar, or $2.78 in 1864.
A survey on Wednesday of Canadian primary dealers found most expect a rate hike in September or October, perhaps as much as a year before the U.S. Federal Reserve starts raising interest rates.
"Against a background of firm commodity prices and continued global diversification flows to the relatively safe harbor of Canadian bonds, we look for the loonie to stay close to around US$1.05 even by the early part of 2012, before Fed rate hikes start to kick in," said Douglas Porter, deputy chief economist at BMO Capital Markets in a note.
DRIVING FORCES
The currency began rallying on Tuesday after the Bank of Canada signaled it was closer to resuming rate hikes. Governor Mark Carney indicated that the central bank's focus was on inflation and not the Canadian dollar, despite concerns that a strong dollar could hurt the economy.
But other G10 currencies are still outperforming the Canadian dollar, with part of its strength coming from U.S. dollar weakness, and general strength from the bloc of Australian, New Zealand and Canadian dollars.
A release of draft conclusions from a euro zone meeting on Thursday to tackle contagion from Greece's debt woes helped push the Canadian dollar to a 3-1/2 year high of C$0.9425 to the U.S. dollar, or $1.0610, its highest since November 2007.
"That was viewed very constructively by the market and lifted the euro up. It also helped bolster risk appetite, which undermined the U.S. dollar," said Woolfolk.
Canada, with its relatively robust economy, stable debt market and internationally recognized sound banks, has become particularly appealing to investors as the U.S. and European debt crises send investors elsewhere.
"As uncertainty in Europe continues to rise and problems in the U.S. remain at the forefront, there is likely increased appetite to diversify holdings away from both USD and EUR based assets," Scotia Capital chief currency strategist Camilla Sutton said in a research note.
"Small open economies, with strong sovereign positions and flexible FX regimes, like CAD, are in demand. We expect this is a long-term trend...that will help support CAD into year-end."
RISKY BUSINESS?
Currency analysts polled by Reuters said this month they expected global risks to drag the Canadian dollar down against a stronger U.S. dollar, with parity a possibility within the next 12 months.
Marc Chandler, global head of currency strategy at Brown Brothers Harriman, said a stronger Canadian dollar will hurt non-commodity aspects of the economy, such as manufacturing.
"The Bank of Canada will get more concerned about ... the higher currency and may dampen expectations of a rate hike," Chandler said.
"The exports are heavily weighted toward commodities, but part of the country doesn't produce commodities, they're consumers of commodities. They get hurt, so it leads to this bifurcation of the economy, which makes it all the more difficult to conduct monetary policy and has political ramifications."
Woolfolk disagreed.
"We think conditions warrant higher interest rates in Canada, but (the central bank) is likely holding back because of the obvious positive it would have for the currency," he said.
Given the central bank's clear signal it would likely resume interest rate hikes later this year, analysts said the currency might even revisit its modern-day high. It reached C$0.9059 to the U.S. dollar, or US$1.1039, in November 2007, according to Thomson Reuters dealing data.
"Yes, Canada could hit post-Civil War highs once again," said Michael Woolfolk, a senior currency strategist at BNY Mellon in New York.
"(Hitting the high) would not be altogether unwarranted if Canada begins raising interest rates again. It's certainly not in our forecasts, but it's a nontrivial possibility of hitting C$0.90 within the next 12 months."
Based on available data, the Canadian dollar was at an all-time high of C$0.36 to the U.S. dollar, or $2.78 in 1864.
A survey on Wednesday of Canadian primary dealers found most expect a rate hike in September or October, perhaps as much as a year before the U.S. Federal Reserve starts raising interest rates.
"Against a background of firm commodity prices and continued global diversification flows to the relatively safe harbor of Canadian bonds, we look for the loonie to stay close to around US$1.05 even by the early part of 2012, before Fed rate hikes start to kick in," said Douglas Porter, deputy chief economist at BMO Capital Markets in a note.
DRIVING FORCES
The currency began rallying on Tuesday after the Bank of Canada signaled it was closer to resuming rate hikes. Governor Mark Carney indicated that the central bank's focus was on inflation and not the Canadian dollar, despite concerns that a strong dollar could hurt the economy.
But other G10 currencies are still outperforming the Canadian dollar, with part of its strength coming from U.S. dollar weakness, and general strength from the bloc of Australian, New Zealand and Canadian dollars.
A release of draft conclusions from a euro zone meeting on Thursday to tackle contagion from Greece's debt woes helped push the Canadian dollar to a 3-1/2 year high of C$0.9425 to the U.S. dollar, or $1.0610, its highest since November 2007.
"That was viewed very constructively by the market and lifted the euro up. It also helped bolster risk appetite, which undermined the U.S. dollar," said Woolfolk.
Canada, with its relatively robust economy, stable debt market and internationally recognized sound banks, has become particularly appealing to investors as the U.S. and European debt crises send investors elsewhere.
"As uncertainty in Europe continues to rise and problems in the U.S. remain at the forefront, there is likely increased appetite to diversify holdings away from both USD and EUR based assets," Scotia Capital chief currency strategist Camilla Sutton said in a research note.
"Small open economies, with strong sovereign positions and flexible FX regimes, like CAD, are in demand. We expect this is a long-term trend...that will help support CAD into year-end."
RISKY BUSINESS?
Currency analysts polled by Reuters said this month they expected global risks to drag the Canadian dollar down against a stronger U.S. dollar, with parity a possibility within the next 12 months.
Marc Chandler, global head of currency strategy at Brown Brothers Harriman, said a stronger Canadian dollar will hurt non-commodity aspects of the economy, such as manufacturing.
"The Bank of Canada will get more concerned about ... the higher currency and may dampen expectations of a rate hike," Chandler said.
"The exports are heavily weighted toward commodities, but part of the country doesn't produce commodities, they're consumers of commodities. They get hurt, so it leads to this bifurcation of the economy, which makes it all the more difficult to conduct monetary policy and has political ramifications."
Woolfolk disagreed.
"We think conditions warrant higher interest rates in Canada, but (the central bank) is likely holding back because of the obvious positive it would have for the currency," he said.
Wednesday, July 20, 2011
Why Canadian mortgage rates are on a roller coaster
Tom Fennell Yahoo Finance If there's one question being kicked around the barbecue more than any other this summer, it's probably this: should I lock in my variable rate mortgage?
But with interest rates bouncing around, to the point where they make a mortgage-rate chart look more like the diagram of a rollercoaster, homeowners can be forgiven if they are hesitant.
After all, every time mortgage rates rise, they seem to come back down again. Recently, Royal Bank tried to raise mortgage rates, increasing the cost of its five-year fixed mortgage by 0.15 per cent, only to quietly lower them a few weeks later.
What gives?
On the variable side, rates have been stable, holding at 2.1 per cent for so long it seems like the new normal. They are priced based on the Bank of Canada rate. And with the U.S. economy slowing (Alberta created more jobs than the U.S. did in the last quarter), it's little wonder that Bank of Canada governor Mark Carney decided not to raise interest rates this week - and it's doubtful he will anytime soon.
While the variable rate has held steady for months, fixed-rate mortgages are far more difficult to predict. Fixed mortgages are primarily priced off of the five-year bond, and as a result are subject to volatility in the bond market, which is being whipsawed by the European sovereign debt crisis.
As more European countries edge toward default, interest rates have risen on their bonds, in some cases to more than 10 per cent. Many investors, however, fearing widespread defaults, have fled to the safe haven of the U.S. bond market. In the process, that has kept U.S. rates in the 2.3 per cent range, and helped keep mortgages rates low in this country, with a five-year fixed term mortgage going as low as 3.29 per cent.
But these bedrock-low rates could rise quickly if the U.S. does not solve its own debt crisis. President Obama has asked Congress to lift the country's debt ceiling — the amount the country can borrow to meet its obligations. The Republican-controlled House of Representatives is refusing to grant the increase until Obama makes deep cuts to government expenditures.
They have until Aug. 2 to solve the impasse and if nothing is done, the U.S. will default on the latest round of payments it has to make on its debts. Bond rating agencies have already said they will downgrade U.S. bonds if a default occurs. If that happens, it will drive up interest rates in the U.S. and push rates up on Canadian mortgages in the process.
"If Europe gets into trouble and the U.S. gets into trouble, money will be looking elsewhere," says Kelvin Mangaroo, founder and president of RateSupermarket.ca. "Interest rates have been bouncing around and we might continue to see that until the U.S. credit situation gets sorted out."
Could the uncertainty in Europe actually drive interest rates lower in Canada?
If Obama and Congressional Republicans come to an agreement, there could be a sudden flight to quality as investors buy U.S. bonds. That could drive down interest rates on the U.S. five-year bond, and reduce rates on Canadian fixed mortgages.
"There is always the possibility that they could drop a bit still," said Mangaroo. "They've been lower before, so there is no reason that they can't go back."
With so much volatility in the market, should you lock in your mortgage? It's hard to say, but studies have concluded you are better off holding a variable mortgage. Then again, those studies also include periods of extremely high interest rates, but with rates now at historic lows they would only go marginally lower.
In fact, you can purchase a 10-year mortgage for just 4.84 per cent and a 25-year at 8.35 per cent. In effect, you could lock your mortgage costs in at today's historic lows and that would pay dividends long after the crisis in Europe and the U.S. has passed and rates are rising again.
Whether to lock in or not is the most common question Mangaroo gets at RateSupermarket.ca. About one-third of Canadian mortgages are variable, but Mangaroo says, "It all comes down to risk profile. And interest rates will be going up, so if you're uncomfortable with that, you should look at a fixed five-year term which is at 3.5 per cent."
But one thing is certain. If you hold a variable mortgage, you can breathe a little easier knowing Carney won't be raising rates anytime soon. Ian Lee, director of the MBA Program at Carleton University, says this is because of the ongoing failure by the European leadership to address, let alone resolve, the growing Eurozone debt crisis and the ongoing inability of the U.S. political leadership to seriously address their annual $1.5 trillion deficit and $14 trillion debt.
"This clearly suggests," says Lee, "that Governor Carney will think many times before raising interest rates now or in the fall
But with interest rates bouncing around, to the point where they make a mortgage-rate chart look more like the diagram of a rollercoaster, homeowners can be forgiven if they are hesitant.
After all, every time mortgage rates rise, they seem to come back down again. Recently, Royal Bank tried to raise mortgage rates, increasing the cost of its five-year fixed mortgage by 0.15 per cent, only to quietly lower them a few weeks later.
What gives?
On the variable side, rates have been stable, holding at 2.1 per cent for so long it seems like the new normal. They are priced based on the Bank of Canada rate. And with the U.S. economy slowing (Alberta created more jobs than the U.S. did in the last quarter), it's little wonder that Bank of Canada governor Mark Carney decided not to raise interest rates this week - and it's doubtful he will anytime soon.
While the variable rate has held steady for months, fixed-rate mortgages are far more difficult to predict. Fixed mortgages are primarily priced off of the five-year bond, and as a result are subject to volatility in the bond market, which is being whipsawed by the European sovereign debt crisis.
As more European countries edge toward default, interest rates have risen on their bonds, in some cases to more than 10 per cent. Many investors, however, fearing widespread defaults, have fled to the safe haven of the U.S. bond market. In the process, that has kept U.S. rates in the 2.3 per cent range, and helped keep mortgages rates low in this country, with a five-year fixed term mortgage going as low as 3.29 per cent.
But these bedrock-low rates could rise quickly if the U.S. does not solve its own debt crisis. President Obama has asked Congress to lift the country's debt ceiling — the amount the country can borrow to meet its obligations. The Republican-controlled House of Representatives is refusing to grant the increase until Obama makes deep cuts to government expenditures.
They have until Aug. 2 to solve the impasse and if nothing is done, the U.S. will default on the latest round of payments it has to make on its debts. Bond rating agencies have already said they will downgrade U.S. bonds if a default occurs. If that happens, it will drive up interest rates in the U.S. and push rates up on Canadian mortgages in the process.
"If Europe gets into trouble and the U.S. gets into trouble, money will be looking elsewhere," says Kelvin Mangaroo, founder and president of RateSupermarket.ca. "Interest rates have been bouncing around and we might continue to see that until the U.S. credit situation gets sorted out."
Could the uncertainty in Europe actually drive interest rates lower in Canada?
If Obama and Congressional Republicans come to an agreement, there could be a sudden flight to quality as investors buy U.S. bonds. That could drive down interest rates on the U.S. five-year bond, and reduce rates on Canadian fixed mortgages.
"There is always the possibility that they could drop a bit still," said Mangaroo. "They've been lower before, so there is no reason that they can't go back."
With so much volatility in the market, should you lock in your mortgage? It's hard to say, but studies have concluded you are better off holding a variable mortgage. Then again, those studies also include periods of extremely high interest rates, but with rates now at historic lows they would only go marginally lower.
In fact, you can purchase a 10-year mortgage for just 4.84 per cent and a 25-year at 8.35 per cent. In effect, you could lock your mortgage costs in at today's historic lows and that would pay dividends long after the crisis in Europe and the U.S. has passed and rates are rising again.
Whether to lock in or not is the most common question Mangaroo gets at RateSupermarket.ca. About one-third of Canadian mortgages are variable, but Mangaroo says, "It all comes down to risk profile. And interest rates will be going up, so if you're uncomfortable with that, you should look at a fixed five-year term which is at 3.5 per cent."
But one thing is certain. If you hold a variable mortgage, you can breathe a little easier knowing Carney won't be raising rates anytime soon. Ian Lee, director of the MBA Program at Carleton University, says this is because of the ongoing failure by the European leadership to address, let alone resolve, the growing Eurozone debt crisis and the ongoing inability of the U.S. political leadership to seriously address their annual $1.5 trillion deficit and $14 trillion debt.
"This clearly suggests," says Lee, "that Governor Carney will think many times before raising interest rates now or in the fall
Tuesday, July 19, 2011
Bank of Canada maintains overnight rate target at 1 per cent
OTTAWA, July 19, 2011 /CNW/ - The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
The global economic expansion is proceeding broadly as projected in the Bank's April Monetary Policy Report (MPR), with modest growth in major advanced economies and robust expansions in emerging economies. The U.S. economy has grown at a slower pace than expected and continues to be restrained by the consolidation of household balance sheets and slow growth in employment. While growth in core Europe has been stronger than expected, necessary fiscal austerity measures in a number of countries will restrain growth over the projection horizon. The Japanese economy has begun to recover from the disasters that struck in March, although the level of economic activity in that country will remain below previous expectations. In contrast, growth in emerging-market economies, particularly China, remains very strong. As a consequence, commodity prices are expected to remain at elevated levels, following recent declines. These high prices, combined with persistent excess demand in major emerging-market economies, are contributing to broader global inflationary pressures. Widespread concerns over sovereign debt have increased risk aversion and volatility in financial markets.
In Canada, the economic expansion is proceeding largely as projected, although the expected rotation of demand is somewhat slower than had been anticipated. Household spending remains solid and business investment robust. Net exports remain weak, reflecting modest U.S. demand and ongoing competitiveness challenges, particularly the persistent strength of the Canadian dollar. Despite increased global risk aversion, financial conditions in Canada remain very stimulative and private credit growth is strong.
Following an anticipated slowdown in growth during the second quarter due to temporary supply chain disruptions and the impact of higher energy prices on consumption, the Bank expects growth in Canada to re-accelerate in the second half of 2011. Over the projection horizon, business investment is expected to remain strong, household spending to grow more in line with disposable income, and net exports to become more supportive of growth. Relative to the April projection, growth in household spending is now projected to be slightly firmer, reflecting higher household income, and net exports to be slightly weaker, reflecting more subdued U.S. activity. Overall, the Bank projects the economy will expand by 2.8 per cent in 2011, 2.6 per cent in 2012, and 2.1 per cent in 2013, returning to capacity in the middle of 2012.
Total CPI inflation is expected to remain above 3 per cent in the near term, largely reflecting temporary factors such as significantly higher food and energy prices. Core inflation is slightly firmer than anticipated, owing to temporary factors and to more persistent strength in the prices of some services. Core inflation is now expected to remain around 2 per cent over the projection horizon. Total CPI inflation is expected to return to the 2 per cent target by the middle of 2012 as temporary factors unwind, excess supply in the economy is gradually absorbed, labour compensation growth stays modest, productivity recovers, and inflation expectations remain well-anchored.
The Bank's projection assumes that authorities are able to contain the ongoing European sovereign debt crisis, although there are clear risks around this outcome.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn, consistent with achieving the 2 per cent inflation target. Such reduction would need to be carefully considered.
The global economic expansion is proceeding broadly as projected in the Bank's April Monetary Policy Report (MPR), with modest growth in major advanced economies and robust expansions in emerging economies. The U.S. economy has grown at a slower pace than expected and continues to be restrained by the consolidation of household balance sheets and slow growth in employment. While growth in core Europe has been stronger than expected, necessary fiscal austerity measures in a number of countries will restrain growth over the projection horizon. The Japanese economy has begun to recover from the disasters that struck in March, although the level of economic activity in that country will remain below previous expectations. In contrast, growth in emerging-market economies, particularly China, remains very strong. As a consequence, commodity prices are expected to remain at elevated levels, following recent declines. These high prices, combined with persistent excess demand in major emerging-market economies, are contributing to broader global inflationary pressures. Widespread concerns over sovereign debt have increased risk aversion and volatility in financial markets.
In Canada, the economic expansion is proceeding largely as projected, although the expected rotation of demand is somewhat slower than had been anticipated. Household spending remains solid and business investment robust. Net exports remain weak, reflecting modest U.S. demand and ongoing competitiveness challenges, particularly the persistent strength of the Canadian dollar. Despite increased global risk aversion, financial conditions in Canada remain very stimulative and private credit growth is strong.
Following an anticipated slowdown in growth during the second quarter due to temporary supply chain disruptions and the impact of higher energy prices on consumption, the Bank expects growth in Canada to re-accelerate in the second half of 2011. Over the projection horizon, business investment is expected to remain strong, household spending to grow more in line with disposable income, and net exports to become more supportive of growth. Relative to the April projection, growth in household spending is now projected to be slightly firmer, reflecting higher household income, and net exports to be slightly weaker, reflecting more subdued U.S. activity. Overall, the Bank projects the economy will expand by 2.8 per cent in 2011, 2.6 per cent in 2012, and 2.1 per cent in 2013, returning to capacity in the middle of 2012.
Total CPI inflation is expected to remain above 3 per cent in the near term, largely reflecting temporary factors such as significantly higher food and energy prices. Core inflation is slightly firmer than anticipated, owing to temporary factors and to more persistent strength in the prices of some services. Core inflation is now expected to remain around 2 per cent over the projection horizon. Total CPI inflation is expected to return to the 2 per cent target by the middle of 2012 as temporary factors unwind, excess supply in the economy is gradually absorbed, labour compensation growth stays modest, productivity recovers, and inflation expectations remain well-anchored.
The Bank's projection assumes that authorities are able to contain the ongoing European sovereign debt crisis, although there are clear risks around this outcome.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn, consistent with achieving the 2 per cent inflation target. Such reduction would need to be carefully considered.
Monday, July 18, 2011
Condo owners stuck with $2.2M repair bill
Residents of a downtown Edmonton condominium believe better provincial regulations could have prevented them from having to pay $2.2 million to fix problems they say were caused by the developer.
The owners of decade-old Rossdale Court condominiums have spent the last four years fixing problems with pedways, balconies and window seals which are related to water leakage.
"It is pretty disheartening," said Lynn Yakoweshen with the Rossdale Court Condo Association.
"I bought in this building because it's a beautiful location, it's a wonderful neighbourhood, a great sense of community ... like kind of an isolated oasis, Unfortunately if you look around it hasn't been quite the oasis that I had hoped."
The owners of the building's 69 units have each spent between $28,000 to $40,000 on repairs, Yakoweshen said. The balconies needed restoration work and the building's exterior stucco had to be completely replaced.
"All of your savings are depleted," she said. "We're very loathe to open emails because you wonder, 'what now?'"
Liberal MLA Laurie Blakeman blamed the provincial government for the situation. She said building codes are insufficient and fines too low to be a deterrent. She said the current one-year warranty period doesn't help homeowners.
"Most problems turn up at the five, six-year mark and there's no protection for that," she said.
The province plans to take measures which include increasing fines for building code offences but Blakeman said the province hasn't set a timeline for when those changes will come into effect.
The Rossdale Court condo owners say they have had no luck suing the developer. Yakoweshen said the building was built under a company name that no longer exists.
"We have no legal recourse," she said.
Blair Hallet is the developer of Rossdale Court and Glenora Gates, another condominium now under repair because of water leakage problems.
The owners of decade-old Rossdale Court condominiums have spent the last four years fixing problems with pedways, balconies and window seals which are related to water leakage.
"It is pretty disheartening," said Lynn Yakoweshen with the Rossdale Court Condo Association.
"I bought in this building because it's a beautiful location, it's a wonderful neighbourhood, a great sense of community ... like kind of an isolated oasis, Unfortunately if you look around it hasn't been quite the oasis that I had hoped."
The owners of the building's 69 units have each spent between $28,000 to $40,000 on repairs, Yakoweshen said. The balconies needed restoration work and the building's exterior stucco had to be completely replaced.
"All of your savings are depleted," she said. "We're very loathe to open emails because you wonder, 'what now?'"
Liberal MLA Laurie Blakeman blamed the provincial government for the situation. She said building codes are insufficient and fines too low to be a deterrent. She said the current one-year warranty period doesn't help homeowners.
"Most problems turn up at the five, six-year mark and there's no protection for that," she said.
The province plans to take measures which include increasing fines for building code offences but Blakeman said the province hasn't set a timeline for when those changes will come into effect.
The Rossdale Court condo owners say they have had no luck suing the developer. Yakoweshen said the building was built under a company name that no longer exists.
"We have no legal recourse," she said.
Blair Hallet is the developer of Rossdale Court and Glenora Gates, another condominium now under repair because of water leakage problems.
Friday, July 15, 2011
C.D. Howe Institute monetary policy council urges Bank of Canada to raise rates
By The Canadian Press
OTTAWA - The C.D. Howe Institute's monetary policy council recommended Thursday the Bank of Canada raise its target for the overnight interest rate.
The group of economists recommended the central bank raise the key rate by a quarter point to 1.25 per cent at its rate announcement next week.
Bank of Canada governor Mark Carney is expected to keep rates on hold at one per cent when the announcement is made July 19.
"The principal theme of the group’s discussion was the contrast between the Canadian domestic scene, which most attendees felt justified a more restrictive stance by the Bank," the think tank council said in a statement.
However, the recommendation by the mix of private sector economists and academics was not unanimous.
Five members of the panel recommended the increase, while four others suggested the Bank of Canada keep the rate at one per cent.
The bank last hiked interest rates in September 2010.
"Looking abroad, participants generally agreed that the potential negative impact on global growth and on financial conditions in Canada and elsewhere of sovereign debt defaults was enormous, but they differed in their views about how the Bank of Canada should respond to this prospect," the council said.
"Some argued for more accommodative policy on the grounds that inflation expectations are well anchored and the Bank should support domestic demand. Others stressed the risks of postponing needed tightening for too long in preparation for events that might not occur. "
The group was unanimous though in their recommendation that the rate, which is at an exceptionally low level, needs to rise over the coming year.
The central bank will make its decision next week as the U.S. and global economy present an uncertain future. Even as the Canadian economy appears on track, weakness in the U.S. and threats of sovereign debt defaults threaten the outlook.
Speaking to a Senate committee last month, Carney warned that the U.S. economy is a shadow of its former self and a mountain of debt weighing on the balance sheets of advanced countries around the world will dampen growth for years.
Carney told the committee that the second quarter in Canada could see growth drop all the way to the one per cent range, from 3.9 per cent in the first three months.
OTTAWA - The C.D. Howe Institute's monetary policy council recommended Thursday the Bank of Canada raise its target for the overnight interest rate.
The group of economists recommended the central bank raise the key rate by a quarter point to 1.25 per cent at its rate announcement next week.
Bank of Canada governor Mark Carney is expected to keep rates on hold at one per cent when the announcement is made July 19.
"The principal theme of the group’s discussion was the contrast between the Canadian domestic scene, which most attendees felt justified a more restrictive stance by the Bank," the think tank council said in a statement.
However, the recommendation by the mix of private sector economists and academics was not unanimous.
Five members of the panel recommended the increase, while four others suggested the Bank of Canada keep the rate at one per cent.
The bank last hiked interest rates in September 2010.
"Looking abroad, participants generally agreed that the potential negative impact on global growth and on financial conditions in Canada and elsewhere of sovereign debt defaults was enormous, but they differed in their views about how the Bank of Canada should respond to this prospect," the council said.
"Some argued for more accommodative policy on the grounds that inflation expectations are well anchored and the Bank should support domestic demand. Others stressed the risks of postponing needed tightening for too long in preparation for events that might not occur. "
The group was unanimous though in their recommendation that the rate, which is at an exceptionally low level, needs to rise over the coming year.
The central bank will make its decision next week as the U.S. and global economy present an uncertain future. Even as the Canadian economy appears on track, weakness in the U.S. and threats of sovereign debt defaults threaten the outlook.
Speaking to a Senate committee last month, Carney warned that the U.S. economy is a shadow of its former self and a mountain of debt weighing on the balance sheets of advanced countries around the world will dampen growth for years.
Carney told the committee that the second quarter in Canada could see growth drop all the way to the one per cent range, from 3.9 per cent in the first three months.
Wednesday, July 13, 2011
Five costly reno mistakes to avoid
Shelley White Globe and Mail Update
I recently wrote about my kitchen renovation for Home Cents, detailing how I managed to keep my budget under $25,000 while still ending up with a functional and beautiful room.
There were a lot of comments (thanks for those, by the way) - some people thought I’d paid too much, some thought I’d paid too little. But there did seem to be a consensus that the post demanded some photographic evidence. So, due to popular demand, here are the before and after photos of my kitchen renovation. And please note: I took them myself, so excuse my not-quite-awesome camera skills.
Although I’m enormously pleased with how the renovation turned out, I certainly wouldn’t say the project was free of mistakes. In fact, there are some small things I might do differently if I had to do it all again (you may spot a couple of those in the photos, in fact).
So how can you avoid renovation missteps before they happen? HGTV has put together a useful collection of the 25 Biggest Renovating Mistakes. It’s quite a comprehensive list, but here’s a sampling of some of the factors I could relate to:
Gutting Everything
It can be tempting to want to just tear everything out - including the walls - and start from scratch. But that is where the additional costs can come creeping in. My contractor wisely elected to take a look inside the wall we were going to take down before totally ripping it out. Once we found out that tearing the wall would add challenges and money to the job, we changed the plan and kept the wall.
“I see this time and time again where people just start, and they think they’re going to pull a piece of wallpaper off, and by the time the process is over, they’ve completely gotten themselves into a deep, dark hole that’s very difficult to get out of,” says Mr. Eric Stromer, host of home reno show Over Your Head.
Inaccurate Measurements
I measured once, twice, three times and then again before ordering cabinets. My contractor was also meticulous with his measurements, but I could see how things could go quickly off the rails is someone was sloppy or rushed.
When dealing with countertops, always choose a company that will come and do the measuring for you, preferably using a cardboard template. That way, the onus is on them to ensure it fits correctly. That also allows you can take a look at the template and make sure you’re getting the shape you want. When you’re talking about a slab of stone worth thousands of dollars, you don’t want to take any chances.
Going Too Trendy
“People often make the mistake of wanting to be too hip and trendy in their new home by picking the latest, hottest, coolest things,” says Ms. Carmen De La Paz of HGTV show Hammer Heads. “What they don’t take into consideration is that trendy means that it’s short term.”
Five years ago I had my heart set on aqua-coloured glass tile for my kitchen backsplash. Sure, it would have looked good for a couple of years, but take it from someone who really loved her royal blue and bright yellow kitchen when she painted it 11 years ago – your taste will change. Unless you’ve got the extra cash to redo your kitchen, the best thing to do is keep it classic and simple. I think our choices will stand the test of time, but you can be the judge of that.
Ignoring Lighting
Hammer Heads carpenter Ms. De La Paz put it this way: “Another mistake that homeowners will often make is not taking into consideration the lighting in their home. The lighting in your home can completely change the colors, the feeling, the ambiance.”
In other words, ignore lighting at your peril. When I first planned our new kitchen, I completely forgot about lighting. Our old kitchen had one overhead lamp that cast a lot of shadows. Thanks to our contractor’s suggestions, we’ve got a number of pot lights on a dimmer plus under-cabinet lighting, and the difference is vast.
Failure to Anticipate Chaos
Now that it’s over, I can look back on our renovation experience and think, “It was a piece of cake.” But around week three, our kitchen was an utter mess. For readers that wondered why my family and I spent $2,200 to rent a condo instead of sticking it out at home – that place was a dust pit. Moving out was essential for our sanity and our health - drywall dust is not good for anyone.
Your reno might go smooth as molasses, but just in case, it’s a good idea to assume it will be dustier, messier and more annoyingly inconvenient than you ever could have imagined.
I recently wrote about my kitchen renovation for Home Cents, detailing how I managed to keep my budget under $25,000 while still ending up with a functional and beautiful room.
There were a lot of comments (thanks for those, by the way) - some people thought I’d paid too much, some thought I’d paid too little. But there did seem to be a consensus that the post demanded some photographic evidence. So, due to popular demand, here are the before and after photos of my kitchen renovation. And please note: I took them myself, so excuse my not-quite-awesome camera skills.
Although I’m enormously pleased with how the renovation turned out, I certainly wouldn’t say the project was free of mistakes. In fact, there are some small things I might do differently if I had to do it all again (you may spot a couple of those in the photos, in fact).
So how can you avoid renovation missteps before they happen? HGTV has put together a useful collection of the 25 Biggest Renovating Mistakes. It’s quite a comprehensive list, but here’s a sampling of some of the factors I could relate to:
Gutting Everything
It can be tempting to want to just tear everything out - including the walls - and start from scratch. But that is where the additional costs can come creeping in. My contractor wisely elected to take a look inside the wall we were going to take down before totally ripping it out. Once we found out that tearing the wall would add challenges and money to the job, we changed the plan and kept the wall.
“I see this time and time again where people just start, and they think they’re going to pull a piece of wallpaper off, and by the time the process is over, they’ve completely gotten themselves into a deep, dark hole that’s very difficult to get out of,” says Mr. Eric Stromer, host of home reno show Over Your Head.
Inaccurate Measurements
I measured once, twice, three times and then again before ordering cabinets. My contractor was also meticulous with his measurements, but I could see how things could go quickly off the rails is someone was sloppy or rushed.
When dealing with countertops, always choose a company that will come and do the measuring for you, preferably using a cardboard template. That way, the onus is on them to ensure it fits correctly. That also allows you can take a look at the template and make sure you’re getting the shape you want. When you’re talking about a slab of stone worth thousands of dollars, you don’t want to take any chances.
Going Too Trendy
“People often make the mistake of wanting to be too hip and trendy in their new home by picking the latest, hottest, coolest things,” says Ms. Carmen De La Paz of HGTV show Hammer Heads. “What they don’t take into consideration is that trendy means that it’s short term.”
Five years ago I had my heart set on aqua-coloured glass tile for my kitchen backsplash. Sure, it would have looked good for a couple of years, but take it from someone who really loved her royal blue and bright yellow kitchen when she painted it 11 years ago – your taste will change. Unless you’ve got the extra cash to redo your kitchen, the best thing to do is keep it classic and simple. I think our choices will stand the test of time, but you can be the judge of that.
Ignoring Lighting
Hammer Heads carpenter Ms. De La Paz put it this way: “Another mistake that homeowners will often make is not taking into consideration the lighting in their home. The lighting in your home can completely change the colors, the feeling, the ambiance.”
In other words, ignore lighting at your peril. When I first planned our new kitchen, I completely forgot about lighting. Our old kitchen had one overhead lamp that cast a lot of shadows. Thanks to our contractor’s suggestions, we’ve got a number of pot lights on a dimmer plus under-cabinet lighting, and the difference is vast.
Failure to Anticipate Chaos
Now that it’s over, I can look back on our renovation experience and think, “It was a piece of cake.” But around week three, our kitchen was an utter mess. For readers that wondered why my family and I spent $2,200 to rent a condo instead of sticking it out at home – that place was a dust pit. Moving out was essential for our sanity and our health - drywall dust is not good for anyone.
Your reno might go smooth as molasses, but just in case, it’s a good idea to assume it will be dustier, messier and more annoyingly inconvenient than you ever could have imagined.
Tuesday, July 12, 2011
Canadian businesses upbeat about hiring, Bank of Canada survey suggests
By Craig Wong, The Canadian Press
OTTAWA - Businesses across the country are planning to kick their hiring into high gear over the next year, according to a Bank of Canada survey that found corporate Canada in a generally upbeat mood.
"The balance of opinion on employment has risen to a record high level," the bank said in its summer business outlook survey released Monday.
"Intentions to increase employment over the next 12 months were widespread across all regions and sectors, particularly in the services sector."
The central bank said 57 per cent of the firms surveyed expected to hire new workers over the next year compared with just four per cent of firms that expected to have fewer employees over the next 12 months.
The Bank of Canada's report followed a better-than-expected Canadian employment report on Friday. Statistics Canada reported a net gain of 28,000 jobs for June, the third consecutive month of gains, which was in stark contrast to a disappointing report of only 18,000 jobs added in the United States.
The central bank survey was taken between May 24 and to June 16.
BMO Capital Markets senior economist Michael Gregory noted that businesses may not be as upbeat today as they were when the survey was done due to the turmoil in the global economy.
"But even if business expectations have become moodier, they still started from a position of relative, absolute and surprising strength," Gregory wrote in a note to clients.
"The survey is telling the Bank of Canada that its very accommodative monetary policy is doing a good job in stimulating the economy, closing the output gap and pushing underlying inflation back up to target."
The report also found that 25 per cent of firms faced difficulties finding workers and were limited in their ability to meet demand, suggesting there was less slack in the labour market than a year ago.
However the bank noted that the share of firms facing labour shortages was below the survey average.
The report comes as the Bank of Canada governor Mark Carney prepares to make his next interest rate announcement next week.
However, despite the positive outlook on the jobs front, the survey did little to push economists to change their belief that the Bank of Canada would likely keep its policy setting at one per cent.
"Key to our outlook for the Bank of Canada’s overnight rate is the combination of the improving domestic growth outlook and rising inflation expectations," TD economist Francis Fong said in a note.
"At this point, we feel that the increasingly dire situation in Europe and protracted softness in the U.S. are likely to keep the Bank on hold for the remainder of 2011 – however, we must concede that rising domestic inflationary pressures could potentially push them off the sidelines if they prove to be non-transitory."
The central bank also said Monday that its survey found on balance that firms saw an increase in sales growth over the past year and that they expect sales to rise even faster over the coming year.
The bank said strong commodity demand is fuelling the view by companies in Western Canada that sales growth will accelerate over the coming year, while those in the rest of Canada expect stable growth.
"Firms based in Central and Eastern Canada generally expect sales growth to be similar to that over the past 12 months, given an economic background characterized by continuing softness in U.S. demand, strong competition and a high Canadian dollar," the central bank said.
"Nonetheless, a number of firms reported that they expect to benefit from recent efforts to reposition their businesses or diversify their markets."
In its senior loan officer survey, the Bank of Canada says lending conditions in Canada for businesses are continuing to ease.
OTTAWA - Businesses across the country are planning to kick their hiring into high gear over the next year, according to a Bank of Canada survey that found corporate Canada in a generally upbeat mood.
"The balance of opinion on employment has risen to a record high level," the bank said in its summer business outlook survey released Monday.
"Intentions to increase employment over the next 12 months were widespread across all regions and sectors, particularly in the services sector."
The central bank said 57 per cent of the firms surveyed expected to hire new workers over the next year compared with just four per cent of firms that expected to have fewer employees over the next 12 months.
The Bank of Canada's report followed a better-than-expected Canadian employment report on Friday. Statistics Canada reported a net gain of 28,000 jobs for June, the third consecutive month of gains, which was in stark contrast to a disappointing report of only 18,000 jobs added in the United States.
The central bank survey was taken between May 24 and to June 16.
BMO Capital Markets senior economist Michael Gregory noted that businesses may not be as upbeat today as they were when the survey was done due to the turmoil in the global economy.
"But even if business expectations have become moodier, they still started from a position of relative, absolute and surprising strength," Gregory wrote in a note to clients.
"The survey is telling the Bank of Canada that its very accommodative monetary policy is doing a good job in stimulating the economy, closing the output gap and pushing underlying inflation back up to target."
The report also found that 25 per cent of firms faced difficulties finding workers and were limited in their ability to meet demand, suggesting there was less slack in the labour market than a year ago.
However the bank noted that the share of firms facing labour shortages was below the survey average.
The report comes as the Bank of Canada governor Mark Carney prepares to make his next interest rate announcement next week.
However, despite the positive outlook on the jobs front, the survey did little to push economists to change their belief that the Bank of Canada would likely keep its policy setting at one per cent.
"Key to our outlook for the Bank of Canada’s overnight rate is the combination of the improving domestic growth outlook and rising inflation expectations," TD economist Francis Fong said in a note.
"At this point, we feel that the increasingly dire situation in Europe and protracted softness in the U.S. are likely to keep the Bank on hold for the remainder of 2011 – however, we must concede that rising domestic inflationary pressures could potentially push them off the sidelines if they prove to be non-transitory."
The central bank also said Monday that its survey found on balance that firms saw an increase in sales growth over the past year and that they expect sales to rise even faster over the coming year.
The bank said strong commodity demand is fuelling the view by companies in Western Canada that sales growth will accelerate over the coming year, while those in the rest of Canada expect stable growth.
"Firms based in Central and Eastern Canada generally expect sales growth to be similar to that over the past 12 months, given an economic background characterized by continuing softness in U.S. demand, strong competition and a high Canadian dollar," the central bank said.
"Nonetheless, a number of firms reported that they expect to benefit from recent efforts to reposition their businesses or diversify their markets."
In its senior loan officer survey, the Bank of Canada says lending conditions in Canada for businesses are continuing to ease.
Thursday, July 7, 2011
Why working is the secret to happiness
And this is my view of life as well. I enjoy working and enjoy my client relationships so I may never retire!Neil "Mortgage Man" McJannet
Jenna Goudreau, On Wednesday July 6, 2011
I like yoga. The few times I do it a year, I feel warmer, more flexible and rather proud of myself for investing in my personal happiness (though I've often had the sneaking suspicion that jogging would have been a better workout and more cost effective). In a recent fit of daring, I even took an aerial yoga class—attempting to calm my breathing as I dangled upside down from fabric suspended from the ceiling. Clearly, I was on the path to inner bliss.
The most impactful part of a good yoga class, at least I am told, is the meditation at the end. Your heartbeat slows. Your body is at rest. Your mind empties. Well, it's supposed to anyway. Whenever I try to clear my thoughts through meditation, I end up thinking about dinner or tomorrow's to-do list or what might be wrong with me that I can't stop thinking.
Thus it comes as some relief to learn that yoga, relaxation, meditation and stress-free living are not clear paths to happiness. On the contrary, economist Todd Buchholz believes that peace and stillness might make you miserable. In his new book, Rush: Why You Need and Love the Rat Race, Buchholz outlines why he's decided that work is the secret to happiness.
The former White House director of economic policy and Harvard teacher set out to write a book about how Americans were destroying themselves by chasing success and achievement. Soon, however, he realized that it was that very pursuit that makes us happiest.
"Behavioural psychologists and yoga masters are flat wrong," Buchholz told me. "The idea that our entire society needs to de-stress is treacherous."
Despite the perception that work and stress stunt our happiness, Buchholz says our brains are wired to thrive in the rat race. He points to the frontal lobe, which evolved to plan for the future and craves forward thinking and motion. If we were to step off the wheel, retiring to an endless beach and flow of daiquiris, we would resort to "a life of stasis" that would "confound and frustrate the frontal lobe." Retirement, he says, ages us and causes brain function to decline.
Similarly, Buchholz dismisses the idea that smiling and serenity will boost our spirits. Rather he believes that rushing around and frequent activity converts into internal energy that revives us. Dopamine and serotonin—the body's natural feel-good drugs—flood our systems when we take a risk or begin a new challenge.
And all that society-wrenching competition going on in the workplace? Happiness inducing, Buchholz claims. "Typical academics would say the opposite of competition is cooperation," he says. "My argument is that competition can lead to cooperation. Human beings created cooperative hunting teams because they were competing against the elements. Competition is what drives people to improve their lives."
The workplace, then, is not a cesspool of greed, rivalry and political maneuvering. It's an arena that forces you to compete against the industry standard, your coworkers and even yourself, which ultimately drives innovation, creativity and personal growth.
To those that still think they'd be better off going back in time to lead a simpler life—uncomplicated by BlackBerry buzzing, Starbucks gulping or flight-hopping—Buchholz adds: "There's no evidence that a simple life made people happier. There was no traffic or Internet, but instead life expectancy was about 45 years."
Jenna Goudreau, On Wednesday July 6, 2011
I like yoga. The few times I do it a year, I feel warmer, more flexible and rather proud of myself for investing in my personal happiness (though I've often had the sneaking suspicion that jogging would have been a better workout and more cost effective). In a recent fit of daring, I even took an aerial yoga class—attempting to calm my breathing as I dangled upside down from fabric suspended from the ceiling. Clearly, I was on the path to inner bliss.
The most impactful part of a good yoga class, at least I am told, is the meditation at the end. Your heartbeat slows. Your body is at rest. Your mind empties. Well, it's supposed to anyway. Whenever I try to clear my thoughts through meditation, I end up thinking about dinner or tomorrow's to-do list or what might be wrong with me that I can't stop thinking.
Thus it comes as some relief to learn that yoga, relaxation, meditation and stress-free living are not clear paths to happiness. On the contrary, economist Todd Buchholz believes that peace and stillness might make you miserable. In his new book, Rush: Why You Need and Love the Rat Race, Buchholz outlines why he's decided that work is the secret to happiness.
The former White House director of economic policy and Harvard teacher set out to write a book about how Americans were destroying themselves by chasing success and achievement. Soon, however, he realized that it was that very pursuit that makes us happiest.
"Behavioural psychologists and yoga masters are flat wrong," Buchholz told me. "The idea that our entire society needs to de-stress is treacherous."
Despite the perception that work and stress stunt our happiness, Buchholz says our brains are wired to thrive in the rat race. He points to the frontal lobe, which evolved to plan for the future and craves forward thinking and motion. If we were to step off the wheel, retiring to an endless beach and flow of daiquiris, we would resort to "a life of stasis" that would "confound and frustrate the frontal lobe." Retirement, he says, ages us and causes brain function to decline.
Similarly, Buchholz dismisses the idea that smiling and serenity will boost our spirits. Rather he believes that rushing around and frequent activity converts into internal energy that revives us. Dopamine and serotonin—the body's natural feel-good drugs—flood our systems when we take a risk or begin a new challenge.
And all that society-wrenching competition going on in the workplace? Happiness inducing, Buchholz claims. "Typical academics would say the opposite of competition is cooperation," he says. "My argument is that competition can lead to cooperation. Human beings created cooperative hunting teams because they were competing against the elements. Competition is what drives people to improve their lives."
The workplace, then, is not a cesspool of greed, rivalry and political maneuvering. It's an arena that forces you to compete against the industry standard, your coworkers and even yourself, which ultimately drives innovation, creativity and personal growth.
To those that still think they'd be better off going back in time to lead a simpler life—uncomplicated by BlackBerry buzzing, Starbucks gulping or flight-hopping—Buchholz adds: "There's no evidence that a simple life made people happier. There was no traffic or Internet, but instead life expectancy was about 45 years."
Tuesday, July 5, 2011
Fixed-rate hike presents opportunity for brokers
This has always been a bit of a "crap shoot"!. With a VIRM there are risks but mainly there have been benefits. Historically the VIRM has been the winner and when most research was done VIRM were priced at PRIME and they are now PRIME -.75%. As a result it is hard to see Fixed Rates winning the battle. If rates go up by 1% over the next two years the VIRM would still be lower then the best Fixed rate available today.
There is always a down side possibility so "if you want to play be prepared to pay".
Neil "Mortgage Man" McJannet
By Vernon Clement Jones 04/07/2011 6:00:00 PM 0 comments
Selling fixed-rate mortgages may just have gotten a little easier for brokers, with the big banks leading a new round of rate hikes, threatening to kick start the “significant rise” some analysts had expect in the second quarter.
Broker channel lenders are expected to follow the lead of RBC and TD Bank, which moved Monday to raise their benchmark five-year fixed-rate mortgages by 15 basis points, to 5.54 per cent. Most other special and fixed rates at the banks, including Laurentian, also rose between 0.10 and 0.15 percentage points, with their “discounted rates” receiving a similar bump-up, climbing to 4.39 per cent. The banks are now pointing to rising bond yields, specifically a 35-basis point spike in the 5-year bond yield. It effectively increases the cost of money for prime lenders and directly impacts the interest they attach to fixed-rate product.
While mortgage rates remain historically low, analysts suggest the trend is toward further growth by the end of the first half of 2012. Canadian banks are, in fact, forecasting as much as a 100-basis point increase in 5-year bond yields over the next two years, making for a corresponding hike in fixed-rates mortgages over that same period.
The growth comes as an increasing number of brokers are helping clients lock into fixed rates in anticipation of the Central Bank’s move to raise its overnight rate later this year. Early last month economists switched their script, arguing that the Bank would continue to hold the key rate at 1 per cent until the Q2 2012 given a slower-than-expected global economic recover and fears of a double-dip recession in the U.S.
All bets may again be off as inflation fears resurface. Investors are now anticipating Bank of Canada Governor Mark Carney will boost the overnight rate by the end of the year after the country’s annual inflation rate in May jumped to the highest level in eight years. The rise could force the Central Bank to slow down consumer borrowing by raising the cost of those funds.
All the uncertainty may make it easier for brokers looking to convert preapprovals.
“With the fixed rates going up seven weeks ago and then going down and now up, it creates more momentum among risk-averse clients who were waiting to jump into the market,” Arnold Molder, a 35-year veteran of the industry and president of The Mortgage Centre Tridac Mortgages. “If it is a new client, we will offer them both options, but we are still leaning to fixed rates, which are still really near the bottom rate.”
There is always a down side possibility so "if you want to play be prepared to pay".
Neil "Mortgage Man" McJannet
By Vernon Clement Jones 04/07/2011 6:00:00 PM 0 comments
Selling fixed-rate mortgages may just have gotten a little easier for brokers, with the big banks leading a new round of rate hikes, threatening to kick start the “significant rise” some analysts had expect in the second quarter.
Broker channel lenders are expected to follow the lead of RBC and TD Bank, which moved Monday to raise their benchmark five-year fixed-rate mortgages by 15 basis points, to 5.54 per cent. Most other special and fixed rates at the banks, including Laurentian, also rose between 0.10 and 0.15 percentage points, with their “discounted rates” receiving a similar bump-up, climbing to 4.39 per cent. The banks are now pointing to rising bond yields, specifically a 35-basis point spike in the 5-year bond yield. It effectively increases the cost of money for prime lenders and directly impacts the interest they attach to fixed-rate product.
While mortgage rates remain historically low, analysts suggest the trend is toward further growth by the end of the first half of 2012. Canadian banks are, in fact, forecasting as much as a 100-basis point increase in 5-year bond yields over the next two years, making for a corresponding hike in fixed-rates mortgages over that same period.
The growth comes as an increasing number of brokers are helping clients lock into fixed rates in anticipation of the Central Bank’s move to raise its overnight rate later this year. Early last month economists switched their script, arguing that the Bank would continue to hold the key rate at 1 per cent until the Q2 2012 given a slower-than-expected global economic recover and fears of a double-dip recession in the U.S.
All bets may again be off as inflation fears resurface. Investors are now anticipating Bank of Canada Governor Mark Carney will boost the overnight rate by the end of the year after the country’s annual inflation rate in May jumped to the highest level in eight years. The rise could force the Central Bank to slow down consumer borrowing by raising the cost of those funds.
All the uncertainty may make it easier for brokers looking to convert preapprovals.
“With the fixed rates going up seven weeks ago and then going down and now up, it creates more momentum among risk-averse clients who were waiting to jump into the market,” Arnold Molder, a 35-year veteran of the industry and president of The Mortgage Centre Tridac Mortgages. “If it is a new client, we will offer them both options, but we are still leaning to fixed rates, which are still really near the bottom rate.”
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