Don't be a dollar short and a day late again. This is starting to be like an old record that plays and plays and plays - then one day we wake up and there are CD's.
Neil "Mortgage Man" McJannet
ROB CARRICK | Columnist profile | E-mail
From Wednesday's Globe and Mail
Published Tuesday, Apr. 17, 2012 7:53PM EDT
Last updated Tuesday, Apr. 17, 2012 7:55PM EDT
The decade’s most ignorable piece of financial advice: Pay down your debts before interest rates rise.
You’ve heard this warning a hundred times, you ignored it and rates held steady at historic lows. Now, the Bank of Canada is signalling that borrowing costs could rise if economic conditions keeps improving. Here are 10 reasons not to tune out this time around:
1. Rates will eventually rise – it’s inevitable
Financial stress now seems a permanent feature of the global economy. Will China’s economy stall? Will Europe’s debt problems worsen? Can the United States address its debt problems and get its economy going again? These are all open-ended questions that suggest there’s a chance interest rates will need to stay low for longer. Not forever, though. It could be years until stability rules, but it could also be months.
2. Borrowing means you can’t afford the stuff you’re buying
Borrowing is okay when buying houses and cars because few of us can pay cash for such large expenses. But using a line of credit to finance your lifestyle is like living on other people’s money. Exception: If you use your credit line strategically to acquire things that are paid off quickly without immediately running up your debt again. Question for you: How often are you using your line of credit? If it’s more than a few times a year, you’re likely overspending.
3. Cutting debt gives you a buzz
I paid off a five-year car loan three years early in 2011. What a high. Better than buying the car.
4. Less stress
I can tell from reader e-mails that people are stressed about debt and wondering what to do. Try taking your tax refund and using it to pay down your credit card or line of credit balance. Stop contributing to your registered retirement savings plan or tax-free savings account for one year and use the money to lower your debt. Get rid of that second-car loan.
5. Your next mortgage renewal could be scary
People who bought homes in the past couple of years have benefited from historically low mortgage rates. As recently as last month, you could get a fully discounted, five-year, fixed-rate mortgage for about 3 per cent. That compares with an average of roughly 4.5 per cent over the past decade and a high of about 5.5 per cent.
Use this Globeinvestor.com calculator to look at scenarios showing how much more your mortgage will cost if you renew at higher rates: http://tgam.ca/DKA7 (you’ll need to find out what your balance on renewal is).
And don’t tell me that future pay increases will help you afford larger mortgage payments. Big raises are scarce these days and, when you get one, you’re not going to want to see it eaten up by your mortgage.
6. Your kids need help affording university
One of my pet peeves is that parents are not saving enough in registered education savings plans. Cut debt and you have some free cash flow you can put into a regular monthly RESP contribution plan.
7. You get more control over when you retire
Reduce your debts and you can also increase your retirement savings. The more you save for retirement, the less likely it is that you’ll have to continue working in some capacity after you turn 65 to generate income.
8. You won’t retire with debt
People over the age of 45 are among the biggest debt fiends in the country. What are they thinking? That it would be fun to be on a fixed income while trying to cope with rising borrowing costs on lines of credit or mortgages? It’s hard to believe this even needs to be said, but a financially secure retirement starts with zero debt.
9. You’re covered for emergencies
People without debts are better able to afford a health or dental emergency, a basement flood, a leaky roof or a major car-repair bill. If you don’t have an emergency fund, pay off a debt and use the monthly payments you were making to build up your savings.
10. There’s no down side
No one has ever told me: “I really regret paying off my debts.” There’s always a use for the money you save, even if it’s to rack up more debt.
For more personal finance coverage, follow me on Twitter (rcarrick) and Facebook (Rob Carrick).
Thursday, April 19, 2012
Wednesday, April 18, 2012
Once again: Pay down your debts before rates rise
ROB CARRICK | Columnist profile | E-mail
From Wednesday's Globe and Mail
Published Tuesday, Apr. 17, 2012 7:53PM EDT
Last updated Tuesday, Apr. 17, 2012 7:55PM EDT
The decade’s most ignorable piece of financial advice: Pay down your debts before interest rates rise.
You’ve heard this warning a hundred times, you ignored it and rates held steady at historic lows. Now, the Bank of Canada is signalling that borrowing costs could rise if economic conditions keeps improving. Here are 10 reasons not to tune out this time around:
1. Rates will eventually rise – it’s inevitable
Financial stress now seems a permanent feature of the global economy. Will China’s economy stall? Will Europe’s debt problems worsen? Can the United States address its debt problems and get its economy going again? These are all open-ended questions that suggest there’s a chance interest rates will need to stay low for longer. Not forever, though. It could be years until stability rules, but it could also be months.
2. Borrowing means you can’t afford the stuff you’re buying
Borrowing is okay when buying houses and cars because few of us can pay cash for such large expenses. But using a line of credit to finance your lifestyle is like living on other people’s money. Exception: If you use your credit line strategically to acquire things that are paid off quickly without immediately running up your debt again. Question for you: How often are you using your line of credit? If it’s more than a few times a year, you’re likely overspending.
3. Cutting debt gives you a buzz
I paid off a five-year car loan three years early in 2011. What a high. Better than buying the car.
4. Less stress
I can tell from reader e-mails that people are stressed about debt and wondering what to do. Try taking your tax refund and using it to pay down your credit card or line of credit balance. Stop contributing to your registered retirement savings plan or tax-free savings account for one year and use the money to lower your debt. Get rid of that second-car loan.
5. Your next mortgage renewal could be scary
People who bought homes in the past couple of years have benefited from historically low mortgage rates. As recently as last month, you could get a fully discounted, five-year, fixed-rate mortgage for about 3 per cent. That compares with an average of roughly 4.5 per cent over the past decade and a high of about 5.5 per cent.
Use this Globeinvestor.com calculator to look at scenarios showing how much more your mortgage will cost if you renew at higher rates: http://tgam.ca/DKA7 (you’ll need to find out what your balance on renewal is).
And don’t tell me that future pay increases will help you afford larger mortgage payments. Big raises are scarce these days and, when you get one, you’re not going to want to see it eaten up by your mortgage.
6. Your kids need help affording university
One of my pet peeves is that parents are not saving enough in registered education savings plans. Cut debt and you have some free cash flow you can put into a regular monthly RESP contribution plan.
7. You get more control over when you retire
Reduce your debts and you can also increase your retirement savings. The more you save for retirement, the less likely it is that you’ll have to continue working in some capacity after you turn 65 to generate income.
8. You won’t retire with debt
People over the age of 45 are among the biggest debt fiends in the country. What are they thinking? That it would be fun to be on a fixed income while trying to cope with rising borrowing costs on lines of credit or mortgages? It’s hard to believe this even needs to be said, but a financially secure retirement starts with zero debt.
9. You’re covered for emergencies
People without debts are better able to afford a health or dental emergency, a basement flood, a leaky roof or a major car-repair bill. If you don’t have an emergency fund, pay off a debt and use the monthly payments you were making to build up your savings.
10. There’s no down side
No one has ever told me: “I really regret paying off my debts.” There’s always a use for the money you save, even if it’s to rack up more debt.
From Wednesday's Globe and Mail
Published Tuesday, Apr. 17, 2012 7:53PM EDT
Last updated Tuesday, Apr. 17, 2012 7:55PM EDT
The decade’s most ignorable piece of financial advice: Pay down your debts before interest rates rise.
You’ve heard this warning a hundred times, you ignored it and rates held steady at historic lows. Now, the Bank of Canada is signalling that borrowing costs could rise if economic conditions keeps improving. Here are 10 reasons not to tune out this time around:
1. Rates will eventually rise – it’s inevitable
Financial stress now seems a permanent feature of the global economy. Will China’s economy stall? Will Europe’s debt problems worsen? Can the United States address its debt problems and get its economy going again? These are all open-ended questions that suggest there’s a chance interest rates will need to stay low for longer. Not forever, though. It could be years until stability rules, but it could also be months.
2. Borrowing means you can’t afford the stuff you’re buying
Borrowing is okay when buying houses and cars because few of us can pay cash for such large expenses. But using a line of credit to finance your lifestyle is like living on other people’s money. Exception: If you use your credit line strategically to acquire things that are paid off quickly without immediately running up your debt again. Question for you: How often are you using your line of credit? If it’s more than a few times a year, you’re likely overspending.
3. Cutting debt gives you a buzz
I paid off a five-year car loan three years early in 2011. What a high. Better than buying the car.
4. Less stress
I can tell from reader e-mails that people are stressed about debt and wondering what to do. Try taking your tax refund and using it to pay down your credit card or line of credit balance. Stop contributing to your registered retirement savings plan or tax-free savings account for one year and use the money to lower your debt. Get rid of that second-car loan.
5. Your next mortgage renewal could be scary
People who bought homes in the past couple of years have benefited from historically low mortgage rates. As recently as last month, you could get a fully discounted, five-year, fixed-rate mortgage for about 3 per cent. That compares with an average of roughly 4.5 per cent over the past decade and a high of about 5.5 per cent.
Use this Globeinvestor.com calculator to look at scenarios showing how much more your mortgage will cost if you renew at higher rates: http://tgam.ca/DKA7 (you’ll need to find out what your balance on renewal is).
And don’t tell me that future pay increases will help you afford larger mortgage payments. Big raises are scarce these days and, when you get one, you’re not going to want to see it eaten up by your mortgage.
6. Your kids need help affording university
One of my pet peeves is that parents are not saving enough in registered education savings plans. Cut debt and you have some free cash flow you can put into a regular monthly RESP contribution plan.
7. You get more control over when you retire
Reduce your debts and you can also increase your retirement savings. The more you save for retirement, the less likely it is that you’ll have to continue working in some capacity after you turn 65 to generate income.
8. You won’t retire with debt
People over the age of 45 are among the biggest debt fiends in the country. What are they thinking? That it would be fun to be on a fixed income while trying to cope with rising borrowing costs on lines of credit or mortgages? It’s hard to believe this even needs to be said, but a financially secure retirement starts with zero debt.
9. You’re covered for emergencies
People without debts are better able to afford a health or dental emergency, a basement flood, a leaky roof or a major car-repair bill. If you don’t have an emergency fund, pay off a debt and use the monthly payments you were making to build up your savings.
10. There’s no down side
No one has ever told me: “I really regret paying off my debts.” There’s always a use for the money you save, even if it’s to rack up more debt.
Monday, April 9, 2012
Canadians confused over real estate market
By Liam Lahey
Despite highly-competitive interest rates, Canadians are backing away from the real estate market. And it's no wonder. Consumers are bombarded with contradictory economic reports about the fragility of the housing market in the U.S., the blistering-hot Canadian real estate bubble -- is it even a bubble? -- and varying interest rates that seem to change on a dime according to the whims of the big-six Canadian banks.
These conflicting messages are playing out in housing market sentiment, suggests an annual Royal Bank of Canada survey.
According to the "19th Annual RBC Homeownership Poll", an increasing majority of Canadians believe that now is the time to get into the housing market (59 per cent, up four percentage points from last year), instead of waiting until next year (41 per cent).
And yet, more Canadians say they are unlikely to buy within the next two years (73 per cent, up two percentage points), even as confidence in homeownership is on the rise.
"What we're seeing here is consumers are taking a smart approach to buying a home. Canadians are recognizing housing is a good investment (88 per cent of respondents say so) and with the low interest rate environment and affordability at reasonable levels, they're telling us that now's a good time to buy," says Claude DeMone, director, Strategy and Portfolio, Home Equity Financing at RBC in Toronto.
"However, they're unlikely to do so within the next two years. I think that's people taking a smart approach, looking at their budget, and ensuring they have the resources to buy a home they can afford and that they can keep their mortgage payments are kept in line going forward."
The RBC poll also finds that after four years of sentiment favouring a buyer's market, the tide appears to be turning. More Canadians surveyed this year feel the current housing market is a seller's market, in which sellers have the advantage because the number of buyers exceeds the number of homes available (27 per cent, up from 20 per cent in 2011).
Nearly four-in-10 Canadians say it is a buyer's market (38 per cent, down two percentage points from a year ago). Fewer believe that the housing market is balanced (36 per cent, down from 40 per cent a year ago).
"With the low interest rates we've been seeing recently, it's a great story for consumers," he says. "If you're buying a home, this is a great time to get into the market but the right thing to do is to consider your budget and determine if you're ready. That's where some of the conflicting opinions on the market is: it's the difference between desire and ability."
Canadian economists have fretted about rising housing prices as household debt levels have soared. The ratio of debt to personal disposable income hit a record 151.9 per cent last year.
A Royal LePage House Price Survey shows strong year-over-year price gains for all housing types.
In Toronto, the numbers show it is most definitely a seller's market with prices steaduly on the climb in the first quarter of 2012:
Standard two-storey homes posted the largest price increases rising 7.5 per cent year-over-year to $645,467
Detached bungalows rose 5.5 per cent year-over-year to $544,450
Standard condominiums witnessed an increase of 3.5 per cent to $353,355 compared to the same period last year
The same holds true for Vancouver's hot housing market:
Standard two-storey homes saw the largest year-over-year price increases, rising 9.1 per cent to $1,182,250
Detached bungalows posted a similar 9.0 per cent year-over-year increase rising to $1,068,500
Standard condominiums rose a modest 0.5 per cent year-over-year to $510,000.
"Our housing market is being pulled in opposite directions by opposing economic forces," Phil Soper, president and chief executive of Royal LePage Real Estate Services, said in a statement.
"On one hand, there is the rapidly strengthening U.S. economy, increasing Canadian consumer confidence and what can only be called a national mortgage sale encouraging activity and bidding up home prices. On the other, we have signs of over-shooting values and strained affordability in our largest cities. We are likely to see much more modest price appreciation as the year unfolds."
Despite highly-competitive interest rates, Canadians are backing away from the real estate market. And it's no wonder. Consumers are bombarded with contradictory economic reports about the fragility of the housing market in the U.S., the blistering-hot Canadian real estate bubble -- is it even a bubble? -- and varying interest rates that seem to change on a dime according to the whims of the big-six Canadian banks.
These conflicting messages are playing out in housing market sentiment, suggests an annual Royal Bank of Canada survey.
According to the "19th Annual RBC Homeownership Poll", an increasing majority of Canadians believe that now is the time to get into the housing market (59 per cent, up four percentage points from last year), instead of waiting until next year (41 per cent).
And yet, more Canadians say they are unlikely to buy within the next two years (73 per cent, up two percentage points), even as confidence in homeownership is on the rise.
"What we're seeing here is consumers are taking a smart approach to buying a home. Canadians are recognizing housing is a good investment (88 per cent of respondents say so) and with the low interest rate environment and affordability at reasonable levels, they're telling us that now's a good time to buy," says Claude DeMone, director, Strategy and Portfolio, Home Equity Financing at RBC in Toronto.
"However, they're unlikely to do so within the next two years. I think that's people taking a smart approach, looking at their budget, and ensuring they have the resources to buy a home they can afford and that they can keep their mortgage payments are kept in line going forward."
The RBC poll also finds that after four years of sentiment favouring a buyer's market, the tide appears to be turning. More Canadians surveyed this year feel the current housing market is a seller's market, in which sellers have the advantage because the number of buyers exceeds the number of homes available (27 per cent, up from 20 per cent in 2011).
Nearly four-in-10 Canadians say it is a buyer's market (38 per cent, down two percentage points from a year ago). Fewer believe that the housing market is balanced (36 per cent, down from 40 per cent a year ago).
"With the low interest rates we've been seeing recently, it's a great story for consumers," he says. "If you're buying a home, this is a great time to get into the market but the right thing to do is to consider your budget and determine if you're ready. That's where some of the conflicting opinions on the market is: it's the difference between desire and ability."
Canadian economists have fretted about rising housing prices as household debt levels have soared. The ratio of debt to personal disposable income hit a record 151.9 per cent last year.
A Royal LePage House Price Survey shows strong year-over-year price gains for all housing types.
In Toronto, the numbers show it is most definitely a seller's market with prices steaduly on the climb in the first quarter of 2012:
Standard two-storey homes posted the largest price increases rising 7.5 per cent year-over-year to $645,467
Detached bungalows rose 5.5 per cent year-over-year to $544,450
Standard condominiums witnessed an increase of 3.5 per cent to $353,355 compared to the same period last year
The same holds true for Vancouver's hot housing market:
Standard two-storey homes saw the largest year-over-year price increases, rising 9.1 per cent to $1,182,250
Detached bungalows posted a similar 9.0 per cent year-over-year increase rising to $1,068,500
Standard condominiums rose a modest 0.5 per cent year-over-year to $510,000.
"Our housing market is being pulled in opposite directions by opposing economic forces," Phil Soper, president and chief executive of Royal LePage Real Estate Services, said in a statement.
"On one hand, there is the rapidly strengthening U.S. economy, increasing Canadian consumer confidence and what can only be called a national mortgage sale encouraging activity and bidding up home prices. On the other, we have signs of over-shooting values and strained affordability in our largest cities. We are likely to see much more modest price appreciation as the year unfolds."
Monday, March 26, 2012
Govt in no rush to tighten mortgage rules
Well isn't that a turn of events. The banks are asking for the government to impose rules rather than them making proper changes to their own lending policy. Well now that they see their own weakness maybe they will ask the government to lower the rates allowed to be charged on their charge cards. Ha Ha That one is far too profitable so they will keep it under wraps for a long time I am sure. Too bad the government watch dogs don't bite the banks in retaliation!
Neil "Mortgage Man" McJannet
The government seems prepared to sit pat with the current set of mortgage rules -- the Finance minister viewing, with some irony, banker calls for tighter ones.
“I find it a bit off that some of the bank executives are taking the position that the Minister of Finance or the government somehow should tell them how to run their business,” Jim Flaherty told reporters just outside Ottawa Thursday. “It’s their market. It’s not my market.
“They decide what they want to charge in interest rates.”
While analysts are still parsing through those comments, a consensus is emerging that the government will hold off on further tightening of the country’s mortgage rules, at least for now.
TD’s chief economist, among others, had urged Flaherty to use his budget address next week to announce one of three moves meant to slow down demand for housing.
On Thursday, the Minister hinted at none of those – a shorter amortization, a higher minimum down payment or new stress tests for borrowers.
“With respect to tightening up the mortgage insurance market we’ve done it three times,” he said. “If we have to tighten it some more we will. The new housing market produces a lot of jobs in Canada so there’s a balance that needs to be addressed. I’d like the market to correct itself, quite frankly, if it can.”
That may not please some property investors, quietly hoping for tighter mortgage rules and any uptick in demand for rental units that might result from tougher qualifying terms.
Neil "Mortgage Man" McJannet
The government seems prepared to sit pat with the current set of mortgage rules -- the Finance minister viewing, with some irony, banker calls for tighter ones.
“I find it a bit off that some of the bank executives are taking the position that the Minister of Finance or the government somehow should tell them how to run their business,” Jim Flaherty told reporters just outside Ottawa Thursday. “It’s their market. It’s not my market.
“They decide what they want to charge in interest rates.”
While analysts are still parsing through those comments, a consensus is emerging that the government will hold off on further tightening of the country’s mortgage rules, at least for now.
TD’s chief economist, among others, had urged Flaherty to use his budget address next week to announce one of three moves meant to slow down demand for housing.
On Thursday, the Minister hinted at none of those – a shorter amortization, a higher minimum down payment or new stress tests for borrowers.
“With respect to tightening up the mortgage insurance market we’ve done it three times,” he said. “If we have to tighten it some more we will. The new housing market produces a lot of jobs in Canada so there’s a balance that needs to be addressed. I’d like the market to correct itself, quite frankly, if it can.”
That may not please some property investors, quietly hoping for tighter mortgage rules and any uptick in demand for rental units that might result from tougher qualifying terms.
Wednesday, March 21, 2012
How Canadians can boost home value through renovation
By Gail Johnson http://ca.finance.yahoo.com/blogs/insight/canadians-boost-home-value-renovation-132555909.html
With the popularity of home-decorating shows like Trading Places soaring, suddenly everyone's an interior designer. But from a real expert's point of view, where are home-owners' renovation dollars best spent?
"Kitchens and bathrooms are the best place to start," says Toronto's Howie Track, owner of Traxel Construction, which specializes in high-end residential and commercial renovation and construction. "Kitchens and bathrooms are the first places people look, and if a new buyer sees that the kitchens and bathrooms have been done, then there's less for them to do."
Figures from the Appraisal Institute of Canada support Track's claim. According to the Ottawa-based property-valuation association, bathroom and kitchen renovations continue to be the most popular on the list of perennial home improvements, with a recovery rate of between 75 and 100 percent.
The organization defines "recovery rate" as the likely increase in a home's resale value that could be attributed to a renovation. If a $10,000 renovation increases a home value by $6,000, for example, the recovery rate is 60 percent.
Landscaping vies for top spot too, according to Track. "If you can wow potential buyers with some curb appeal and the kitchen or bathrooms have also been done, then selling will be that much easier," he says.
When it comes to renovating older homes, Track suggests updating wiring and plumbing. "Most knowledgeable home buyers will see this as a definite bonus. That said, many first-time homebuyers may not appreciate the work that has been done."
Approximately 1.9 million households in 10 major Canadian centres did renovations in 2010, totalling almost $23 billion. The average cost of renos was nearly $13,000.
According to the AIC's most recent data, energy-efficient upgrades are another popular focus for renovations, with an average recovery rate of 61 percent.
Other renovations that have higher recovery rates include the use of non-neutral interior paint colours (67 percent), the addition of a cooking island in the kitchen (65 percent), and the installation of a Jacuzzi-type bath separate from the shower stall (64 percent).
The biggest mistake people make when it comes to renovating is expecting Champagne-style results on a beer budget.
"Clients will say to me, 'Get a few prices and we will go with the cheapest,'" Track explains. "In construction, you get what you pay for, and if you only consider price, then you are asking for trouble. It's important not to overpay, but quality trades come at a cost. I always tell my subtrades that I want good work at a fair price."
Above all, planning is crucial. It takes at least two to three months to plan for a simple kitchen renovation, Track notes, urging people to read magazines and clip pictures of everything from layouts to paint colours.
"People who don't plan always run into problems," Track says. "People need to hire a good architect and a good designer to help them make informed decisions on materials and design. So many times I have clients who don't want to spend money on a good architect or designer, and inevitably this leads to problems. The better you plan, the less the chance of making mistakes and the better the chance of coming in on time and on budget.
"Try to make as many decisions as possible before you start," he adds. "By planning, you'll have a better idea of how long the job will take and how much it will cost. Also, make informed decisions about materials and do some research."
Budgeting is another basic, as is asking contractors for references and asking for examples of past projects.
"If you set a realistic budget for a job, you have a better chance of not exceeding it," Track says. "It's common for contractors to low-bid a job so that they get it. Once the job is underway, the client has no alternative but to pay all additional costs that arise in order to get the job done. There's a square-footage or unit price for almost everything in construction, so the only real difference between contractors should be the fee they charge."
Renovations that add features to a home that others in the neighbourhood already have, such as a second bathroom, have higher recovery rates than features not shared by adjacent properties, according to the AIC.
Poorly done renovations may have no positive impact or could actually reduce the value of a home.
Recovery rates and resale value aside, the AIC can't put a cost on professionally done renovations when it comes to home owners' sense of satisfaction and enjoyment. That's priceless.
With the popularity of home-decorating shows like Trading Places soaring, suddenly everyone's an interior designer. But from a real expert's point of view, where are home-owners' renovation dollars best spent?
"Kitchens and bathrooms are the best place to start," says Toronto's Howie Track, owner of Traxel Construction, which specializes in high-end residential and commercial renovation and construction. "Kitchens and bathrooms are the first places people look, and if a new buyer sees that the kitchens and bathrooms have been done, then there's less for them to do."
Figures from the Appraisal Institute of Canada support Track's claim. According to the Ottawa-based property-valuation association, bathroom and kitchen renovations continue to be the most popular on the list of perennial home improvements, with a recovery rate of between 75 and 100 percent.
The organization defines "recovery rate" as the likely increase in a home's resale value that could be attributed to a renovation. If a $10,000 renovation increases a home value by $6,000, for example, the recovery rate is 60 percent.
Landscaping vies for top spot too, according to Track. "If you can wow potential buyers with some curb appeal and the kitchen or bathrooms have also been done, then selling will be that much easier," he says.
When it comes to renovating older homes, Track suggests updating wiring and plumbing. "Most knowledgeable home buyers will see this as a definite bonus. That said, many first-time homebuyers may not appreciate the work that has been done."
Approximately 1.9 million households in 10 major Canadian centres did renovations in 2010, totalling almost $23 billion. The average cost of renos was nearly $13,000.
According to the AIC's most recent data, energy-efficient upgrades are another popular focus for renovations, with an average recovery rate of 61 percent.
Other renovations that have higher recovery rates include the use of non-neutral interior paint colours (67 percent), the addition of a cooking island in the kitchen (65 percent), and the installation of a Jacuzzi-type bath separate from the shower stall (64 percent).
The biggest mistake people make when it comes to renovating is expecting Champagne-style results on a beer budget.
"Clients will say to me, 'Get a few prices and we will go with the cheapest,'" Track explains. "In construction, you get what you pay for, and if you only consider price, then you are asking for trouble. It's important not to overpay, but quality trades come at a cost. I always tell my subtrades that I want good work at a fair price."
Above all, planning is crucial. It takes at least two to three months to plan for a simple kitchen renovation, Track notes, urging people to read magazines and clip pictures of everything from layouts to paint colours.
"People who don't plan always run into problems," Track says. "People need to hire a good architect and a good designer to help them make informed decisions on materials and design. So many times I have clients who don't want to spend money on a good architect or designer, and inevitably this leads to problems. The better you plan, the less the chance of making mistakes and the better the chance of coming in on time and on budget.
"Try to make as many decisions as possible before you start," he adds. "By planning, you'll have a better idea of how long the job will take and how much it will cost. Also, make informed decisions about materials and do some research."
Budgeting is another basic, as is asking contractors for references and asking for examples of past projects.
"If you set a realistic budget for a job, you have a better chance of not exceeding it," Track says. "It's common for contractors to low-bid a job so that they get it. Once the job is underway, the client has no alternative but to pay all additional costs that arise in order to get the job done. There's a square-footage or unit price for almost everything in construction, so the only real difference between contractors should be the fee they charge."
Renovations that add features to a home that others in the neighbourhood already have, such as a second bathroom, have higher recovery rates than features not shared by adjacent properties, according to the AIC.
Poorly done renovations may have no positive impact or could actually reduce the value of a home.
Recovery rates and resale value aside, the AIC can't put a cost on professionally done renovations when it comes to home owners' sense of satisfaction and enjoyment. That's priceless.
Tuesday, February 21, 2012
Mortgage fraud on the rise
Nicolas Van Praet Feb 21, 2012 – 7:19 AM ET
MONTREAL — Consumer credit company Equifax uncovered roughly $400-million worth of mortgage fraud in Canada last year, an “eyeopening” number industry experts estimate represents only a fraction of the cheating taking place in the country’s real estate market.
Atlanta-based Equifax says many financial institutions are tightening lending and, as a result, deceit in the property market is rising. A report the company released Tuesday says two-thirds of all the fraud it sniffed out last year was related to real estate.
“Mortgages are the biggest bang for the buck,” said John Russo, vice-president and legal counsel for Equifax Canada Inc. “So when credit gets tougher to get, that leads to more people falsifying documents, giving false pay stubs, inflating their income, kind of fudging things to get a home.”
The $400-million in mortgage fraud represents only a sliver of the roughly $1-trillion in total residential mortgage credit outstanding at the moment in Canada. But it rose sharply in 2011 from 2010 in dollar terms, increasing 150%, Equifax data suggest.
The figure is “eye-opening,” Mr. Russo says, because that’s just the amount Equifax flushed out on its own for its clients. “There’s a lot more out there that just goes under the radar and is not seen and not caught.”
Often tracking strong housing markets, mortgage fraud occurs nationally but is more concentrated in large urban areas in Quebec, Ontario, Albert and B.C., says the Criminal Intelligence Service Canada, a federal agency that shares intelligence between police forces. Numerous criminal groups across Canada are involved in a wide range of mortgage frauds at varying levels, the CISC says, sometimes with the help of industry insiders such as property agents, mortgage brokers and lawyers.
One growing trend is people setting up fictitious identities, building up credit for those fake people and then using the credit to borrow. Equifax says five years ago it had identified 300 such fictitious identities in its national database. Now there are more than 2,500.
Using mortgage fraud to further other criminal activity is also common. Criminals are buying properties to open marijuana growing operations, to trade drugs and to launder money.
An increasing number are getting caught and there’s been a dramatic increase in criminal and civil forfeiture cases as a result, said Andrew Bury, a lawyer specializing in loan security enforcement at Gowling Lafleur Henderson LLP in Vancouver.
“They’re grabbing these properties left, right and centre. And over and over again they’re crashing into the mortgage companies, the banks, [which are saying] ‘Wait a second, we have a mortgage on that property.’ “
Lenders are losing big sums while governments reap the re-wards of the seizures, Mr. Bury said.
But the bulk of mortgage swindling still involves ordinary people lying to obtain mortgages larger than their income can support, Equifax said. They’re living in homes that are simply too rich for them. Says Mr. Russo: “No matter how small or big the lie, it’s still mortgage fraud.”
It sometimes takes years for fraud to come to light, notes Toronto forensic accountant Al Rosen. He believes controls in the banking system remain inadequate.
“I see all sorts of situations where the appraised value of [properties] is just laughable. And some of these are not checked out very well,” he says. “Because the only thing that really counts is: What can you sell that property for?”
Canada’s highest-profile mortgage fraud to date is perhaps the case of Martin Wirick, a Vancouver lawyer sentenced to seven years in prison in 2009 for fraud and forgery in an elaborate scheme covering 107 separate real estate transactions conducted on behalf of his client, real estate developer Tarsem Singh Gill.
The scheme was so huge that the Law Society of B.C. raised special contributions from its lawyer members to compensate the victims. As of 2009, it had paid out $38.4-million for the Wirick fraud alone. Over a 40-year period before that, the society’s compensation fund disbursed a total of $52-million for all cases of lawyer misappropriation.
MONTREAL — Consumer credit company Equifax uncovered roughly $400-million worth of mortgage fraud in Canada last year, an “eyeopening” number industry experts estimate represents only a fraction of the cheating taking place in the country’s real estate market.
Atlanta-based Equifax says many financial institutions are tightening lending and, as a result, deceit in the property market is rising. A report the company released Tuesday says two-thirds of all the fraud it sniffed out last year was related to real estate.
“Mortgages are the biggest bang for the buck,” said John Russo, vice-president and legal counsel for Equifax Canada Inc. “So when credit gets tougher to get, that leads to more people falsifying documents, giving false pay stubs, inflating their income, kind of fudging things to get a home.”
The $400-million in mortgage fraud represents only a sliver of the roughly $1-trillion in total residential mortgage credit outstanding at the moment in Canada. But it rose sharply in 2011 from 2010 in dollar terms, increasing 150%, Equifax data suggest.
The figure is “eye-opening,” Mr. Russo says, because that’s just the amount Equifax flushed out on its own for its clients. “There’s a lot more out there that just goes under the radar and is not seen and not caught.”
Often tracking strong housing markets, mortgage fraud occurs nationally but is more concentrated in large urban areas in Quebec, Ontario, Albert and B.C., says the Criminal Intelligence Service Canada, a federal agency that shares intelligence between police forces. Numerous criminal groups across Canada are involved in a wide range of mortgage frauds at varying levels, the CISC says, sometimes with the help of industry insiders such as property agents, mortgage brokers and lawyers.
One growing trend is people setting up fictitious identities, building up credit for those fake people and then using the credit to borrow. Equifax says five years ago it had identified 300 such fictitious identities in its national database. Now there are more than 2,500.
Using mortgage fraud to further other criminal activity is also common. Criminals are buying properties to open marijuana growing operations, to trade drugs and to launder money.
An increasing number are getting caught and there’s been a dramatic increase in criminal and civil forfeiture cases as a result, said Andrew Bury, a lawyer specializing in loan security enforcement at Gowling Lafleur Henderson LLP in Vancouver.
“They’re grabbing these properties left, right and centre. And over and over again they’re crashing into the mortgage companies, the banks, [which are saying] ‘Wait a second, we have a mortgage on that property.’ “
Lenders are losing big sums while governments reap the re-wards of the seizures, Mr. Bury said.
But the bulk of mortgage swindling still involves ordinary people lying to obtain mortgages larger than their income can support, Equifax said. They’re living in homes that are simply too rich for them. Says Mr. Russo: “No matter how small or big the lie, it’s still mortgage fraud.”
It sometimes takes years for fraud to come to light, notes Toronto forensic accountant Al Rosen. He believes controls in the banking system remain inadequate.
“I see all sorts of situations where the appraised value of [properties] is just laughable. And some of these are not checked out very well,” he says. “Because the only thing that really counts is: What can you sell that property for?”
Canada’s highest-profile mortgage fraud to date is perhaps the case of Martin Wirick, a Vancouver lawyer sentenced to seven years in prison in 2009 for fraud and forgery in an elaborate scheme covering 107 separate real estate transactions conducted on behalf of his client, real estate developer Tarsem Singh Gill.
The scheme was so huge that the Law Society of B.C. raised special contributions from its lawyer members to compensate the victims. As of 2009, it had paid out $38.4-million for the Wirick fraud alone. Over a 40-year period before that, the society’s compensation fund disbursed a total of $52-million for all cases of lawyer misappropriation.
Friday, February 3, 2012
Looser mortgage lending raises worries
Garry Marr Feb 2, 2012 – 2:25 PM ET | Last Updated: Feb 2, 2012 6:21 PM ET
Financial institutions appear to be cracking down on rules for borrowers with self-declared income, a move that comes as Finance Minister Jim Flaherty said he’s concerned about a lack standards in the sector.
Responding to a question about whether the Office of the Superintendent of Financial Institutions was looking into the practice of banks loosening their standards for so-called stated income mortgages, Mr. Flaherty confirmed it is an issue.
“OSFI’s concern arises out of some work that OSFI has done as part of it – the ordinary course of its business to look at some of the — some of the loans being made by financial institutions. I was informed of what their assessment showed with respect to a few financial institutions which is a matter of concern and that is — that is being corrected,” he said.
The Financial Post first reported last month that the government was looking at another round of tough new mortgage rules, among the considerations being a crackdown on how the self-employed qualify.
Stated-income products have become very popular during this housing boom, allowing more banks to get involved in loaning to the self-employed. A source indicated many financial institutions have looked more at the financial behaviour of the self-employed — about 13% of the market — because income is hard to verify.
Vince Gaetano, principal of Monster Mortgage confirmed that CIBC’s wholesale arm FirstLine Mortgages Inc. is pulling out of the stated-income business. Mr. Gaetano said Street Capital Financial Corporation has followed the CIBC lead and he expects other financial institutions to follow very soon.
“We are hearing rumblings that everybody is going to be tightening up in the next week,” he said. “What’s happening is one person leads and everybody follows.”
What it ultimately means for the self-employed is they will end up back in the arms of non–traditional lenders and that means higher rates for them — something they faced in the housing market about five years ago.
“It’s bit like we are going back in history,” said one economist, who didn’t want to be named. “This is the way it used to be before the market took off.”
For his part, Mr. Gaetano said the federal government should blame itself for loosening standards on the minimum down payment required before consumers have to get mortgage default insurance. The government required 25% down last decade but it has since been lowered to 20%.
“The reason it changed is the banks were pushing their line of credit products. They could only lend up to 75% and they wanted the extra 5% to go to 80% without insurance under the Bank Act,” said Mr. Gaetano.
That drop in the minimum down payment could also be attributed to the banks being forced to buy more portfolio insurance for loans that have more than 20% down.
The banks have been seeking insurance on loans with even high down payments — something not required by law — so they can securitize those bulk lending loans, thereby getting them off their balance sheets and reducing their capital requirements. In those cases in which the loans to value is less than 80%, the bank pays the insurance charge instead of the consumer.
Canada Mortgage and Housing Corp. acknowledged to the Financial Post this week it had talked to lenders about reducing its bulk or portfolio insurance as it tries to allocate its resources. The Crown corporation, which guarantees mortgages held by financial institutions, is ultimately backed by the federal government, but it is getting close to its $600-billion limit. Third quarter results showed it was backstopping $541-billion of loans.
Banks have been scrambling to deal with the CMHC change and are said to have contacted private insurance Genworth Financial Canada and Canada Guaranty Mortgage Insurance which together have a $300-billion limit guaranteed by Ottawa for loans they insure.
Financial institutions appear to be cracking down on rules for borrowers with self-declared income, a move that comes as Finance Minister Jim Flaherty said he’s concerned about a lack standards in the sector.
Responding to a question about whether the Office of the Superintendent of Financial Institutions was looking into the practice of banks loosening their standards for so-called stated income mortgages, Mr. Flaherty confirmed it is an issue.
“OSFI’s concern arises out of some work that OSFI has done as part of it – the ordinary course of its business to look at some of the — some of the loans being made by financial institutions. I was informed of what their assessment showed with respect to a few financial institutions which is a matter of concern and that is — that is being corrected,” he said.
The Financial Post first reported last month that the government was looking at another round of tough new mortgage rules, among the considerations being a crackdown on how the self-employed qualify.
Stated-income products have become very popular during this housing boom, allowing more banks to get involved in loaning to the self-employed. A source indicated many financial institutions have looked more at the financial behaviour of the self-employed — about 13% of the market — because income is hard to verify.
Vince Gaetano, principal of Monster Mortgage confirmed that CIBC’s wholesale arm FirstLine Mortgages Inc. is pulling out of the stated-income business. Mr. Gaetano said Street Capital Financial Corporation has followed the CIBC lead and he expects other financial institutions to follow very soon.
“We are hearing rumblings that everybody is going to be tightening up in the next week,” he said. “What’s happening is one person leads and everybody follows.”
What it ultimately means for the self-employed is they will end up back in the arms of non–traditional lenders and that means higher rates for them — something they faced in the housing market about five years ago.
“It’s bit like we are going back in history,” said one economist, who didn’t want to be named. “This is the way it used to be before the market took off.”
For his part, Mr. Gaetano said the federal government should blame itself for loosening standards on the minimum down payment required before consumers have to get mortgage default insurance. The government required 25% down last decade but it has since been lowered to 20%.
“The reason it changed is the banks were pushing their line of credit products. They could only lend up to 75% and they wanted the extra 5% to go to 80% without insurance under the Bank Act,” said Mr. Gaetano.
That drop in the minimum down payment could also be attributed to the banks being forced to buy more portfolio insurance for loans that have more than 20% down.
The banks have been seeking insurance on loans with even high down payments — something not required by law — so they can securitize those bulk lending loans, thereby getting them off their balance sheets and reducing their capital requirements. In those cases in which the loans to value is less than 80%, the bank pays the insurance charge instead of the consumer.
Canada Mortgage and Housing Corp. acknowledged to the Financial Post this week it had talked to lenders about reducing its bulk or portfolio insurance as it tries to allocate its resources. The Crown corporation, which guarantees mortgages held by financial institutions, is ultimately backed by the federal government, but it is getting close to its $600-billion limit. Third quarter results showed it was backstopping $541-billion of loans.
Banks have been scrambling to deal with the CMHC change and are said to have contacted private insurance Genworth Financial Canada and Canada Guaranty Mortgage Insurance which together have a $300-billion limit guaranteed by Ottawa for loans they insure.
Wednesday, January 25, 2012
Many not prepared for retirement!
READ THIS AND THEN GO TO:
www.tdmp.com/index.php/mb625
And take action today!!
While all Canadians are likely aware that retirement looms on the horizon, a staggering majority are not prepared for it; many more don’t even have a plan in place to get them there.
A recent poll from ING Direct suggests that 58% of Canadians say that they are not prepared for retirement, and that 68% have no strategic plan assembled to help them along the way.
Not surprisingly, the poll found that the younger the respondents were, the less that retirement saving was on their minds, although most financial planners will tell you the key for gathering assets for retirement with the least amount of pain is to start early and have the power of compounding on your side.
The focus for most is repaying high interest debt in the short term before embarking on savings. Furthermore, respondents with children aged 18 or under living at home say that there are far too many other expenses taking precedence over retirement savings. Paying down their mortgage and saving for children’s education are taking up all of their time and their resources.
It is crucial though, to have a plan in place, or as many will tell you- retirement savings will not just happen. It takes a well-thought out, long term commitment. With governmental support for retirement likely dwindling in the coming years, as well as with the Baby Boomer cohort moving into retirement, the onus for financial planning is falling more squarely on the shoulders of average investors.
“Saving for retirement can't be an afterthought," said Peter Aceto, president and CEO, ING DIRECT Canada. "Despite the amount of debt people are carrying and what we keep hearing in the news, saving is still possible. Understanding the importance of starting early, even if it means starting small, has a huge influence on the ability to meet your financial goals. Canadians should also look at the value they're getting from their existing financial products and have ongoing conversations about money with friends, family and on social networks, which can play a big role in being better informed about personal finances."
Many do have RRSPs; the poll finds that for those that do have them are contributing on average $1001-$2500 each year.
The key is to make savings painless and invisible and habitual.
"Saving $50 a month, at a 2.5% interest rate compounded over 30 years would provide more than $25,000 in savings*. If you can't find $50 to contribute, start by taking a look at the fees you pay for your financial products. In many cases, this expense can be eliminated and redirected to savings," said Aceto.
He added, "A saving habit takes discipline but once you start it's very easy to maintain, especially with an automatic savings plan. Our clients are always happily surprised at how much they've built in savings even with small monthly contributions. It's exciting to see your savings grow and feel in control of your financial wellbeing."
www.tdmp.com/index.php/mb625
And take action today!!
While all Canadians are likely aware that retirement looms on the horizon, a staggering majority are not prepared for it; many more don’t even have a plan in place to get them there.
A recent poll from ING Direct suggests that 58% of Canadians say that they are not prepared for retirement, and that 68% have no strategic plan assembled to help them along the way.
Not surprisingly, the poll found that the younger the respondents were, the less that retirement saving was on their minds, although most financial planners will tell you the key for gathering assets for retirement with the least amount of pain is to start early and have the power of compounding on your side.
The focus for most is repaying high interest debt in the short term before embarking on savings. Furthermore, respondents with children aged 18 or under living at home say that there are far too many other expenses taking precedence over retirement savings. Paying down their mortgage and saving for children’s education are taking up all of their time and their resources.
It is crucial though, to have a plan in place, or as many will tell you- retirement savings will not just happen. It takes a well-thought out, long term commitment. With governmental support for retirement likely dwindling in the coming years, as well as with the Baby Boomer cohort moving into retirement, the onus for financial planning is falling more squarely on the shoulders of average investors.
“Saving for retirement can't be an afterthought," said Peter Aceto, president and CEO, ING DIRECT Canada. "Despite the amount of debt people are carrying and what we keep hearing in the news, saving is still possible. Understanding the importance of starting early, even if it means starting small, has a huge influence on the ability to meet your financial goals. Canadians should also look at the value they're getting from their existing financial products and have ongoing conversations about money with friends, family and on social networks, which can play a big role in being better informed about personal finances."
Many do have RRSPs; the poll finds that for those that do have them are contributing on average $1001-$2500 each year.
The key is to make savings painless and invisible and habitual.
"Saving $50 a month, at a 2.5% interest rate compounded over 30 years would provide more than $25,000 in savings*. If you can't find $50 to contribute, start by taking a look at the fees you pay for your financial products. In many cases, this expense can be eliminated and redirected to savings," said Aceto.
He added, "A saving habit takes discipline but once you start it's very easy to maintain, especially with an automatic savings plan. Our clients are always happily surprised at how much they've built in savings even with small monthly contributions. It's exciting to see your savings grow and feel in control of your financial wellbeing."
Wednesday, January 18, 2012
Carney holds rates steady even as his concerns increase
jeremy torobin AND sean silcoff
OTTAWA— From Wednesday's Globe and Mail
Bank of Canada Governor Mark Carney is getting more worried about record levels of household debt, but until the global recovery is on more solid footing, he’ll be relying on others to deal with the issue.
It’s Mr. Carney’s dilemma. Low interest rates have underpinned a worrisome surge of debt, but the economy is too weak to justify higher rates any time soon.
The central bank leader left his key interest rate at 1 per cent Tuesday for an 11th consecutive meeting, marking policy makers’ longest pause since the mid-1990s, as he and his team watch nervously to see how risks linked to the European debt crisis unfold.
Mr. Carney has repeatedly warned that low borrowing costs are enticing too many Canadians to take on debt that won’t be affordable once interest rates rise. On Tuesday he upped the ante.
Mr. Carney took the unprecedented step of noting in an interest rate decision that he expects the debt-to-income ratio will keep rising. Moreover, he attributed this to “very favourable financing conditions” – i.e. the Bank of Canada’s low policy rate, and its influence on the cost of mortgages.
“When they add something that wasn’t there before,” said Michael Gregory, a senior economist with BMO Nesbitt Burns, “it’s a signal that something has moved on their radar screen.”
Mr. Carney appears increasingly uncomfortable with a byproduct of his low-rate policy, even as debt-fuelled spending holds up the housing market and the economy at a time when soft global demand is crimping exports.
The debt-to-income ratio rose to a record 153 per cent in the third quarter, according to Statistics Canada, and exceeds the current level in the U.S. and the U.K. Canada is inching closer to the 160-plus threshold that got the U.S. and the U.K. into so much trouble four years ago.
Risks tied to the slack global economy are already affecting business decisions in Canada and arguably contributing to the slowdown in the labour market. For that reason, economists say it’s unlikely Mr. Carney will raise interest rates until next year.
Mr. Carney has stressed that there may be cases where interest rate changes can buttress moves by regulators to tame asset bubbles or dangerous buildups of debt that could threaten the entire economy. But higher rates now would hurt manufacturers in Central Canada and deter business investment, and tightening while the U.S. Federal Reserve is debating whether it needs to ease more would boost the currency, adding to exporters’ woes.
“The challenge of monetary policy is that it’s a blunt instrument,” said Derek Burleton, deputy chief economist with Toronto-Dominion Bank. “Regulation tends to have the benefits of surgical precision.”
Mr. Carney is no doubt keenly aware of the U.S. Federal Reserve’s failure to grasp the seriousness of trouble that was brewing in the U.S. housing market in the past decade, and criticism that Alan Greenspan fuelled that debacle by keeping interest rates low for longer than he should have.
But Mr. Greenspan was not presiding over an export-dependent economy that, according to new projections Mr. Carney released Tuesday, will grow just 2 per cent this year and 2.8 per cent in 2013, and that’s assuming the European situation is stabilized.
“Standing pat seems appropriate,” Mr. Gregory said. “But if things nudge either way – Europe clarifies itself a bit sooner, or housing takes off – the case for rate hikes will come a lot closer.”
In the meantime, is appears homeowners can’t resist the allure of rock-bottom mortgage rates.
“In my marketplace I see the consumer confidence to be very high, and it’s high because interest rates have been kept low,” said Peter Majthenyi, a Toronto-based mortgage broker. “Since the holidays, my phone hasn’t stopped ringing.”
OTTAWA— From Wednesday's Globe and Mail
Bank of Canada Governor Mark Carney is getting more worried about record levels of household debt, but until the global recovery is on more solid footing, he’ll be relying on others to deal with the issue.
It’s Mr. Carney’s dilemma. Low interest rates have underpinned a worrisome surge of debt, but the economy is too weak to justify higher rates any time soon.
The central bank leader left his key interest rate at 1 per cent Tuesday for an 11th consecutive meeting, marking policy makers’ longest pause since the mid-1990s, as he and his team watch nervously to see how risks linked to the European debt crisis unfold.
Mr. Carney has repeatedly warned that low borrowing costs are enticing too many Canadians to take on debt that won’t be affordable once interest rates rise. On Tuesday he upped the ante.
Mr. Carney took the unprecedented step of noting in an interest rate decision that he expects the debt-to-income ratio will keep rising. Moreover, he attributed this to “very favourable financing conditions” – i.e. the Bank of Canada’s low policy rate, and its influence on the cost of mortgages.
“When they add something that wasn’t there before,” said Michael Gregory, a senior economist with BMO Nesbitt Burns, “it’s a signal that something has moved on their radar screen.”
Mr. Carney appears increasingly uncomfortable with a byproduct of his low-rate policy, even as debt-fuelled spending holds up the housing market and the economy at a time when soft global demand is crimping exports.
The debt-to-income ratio rose to a record 153 per cent in the third quarter, according to Statistics Canada, and exceeds the current level in the U.S. and the U.K. Canada is inching closer to the 160-plus threshold that got the U.S. and the U.K. into so much trouble four years ago.
Risks tied to the slack global economy are already affecting business decisions in Canada and arguably contributing to the slowdown in the labour market. For that reason, economists say it’s unlikely Mr. Carney will raise interest rates until next year.
Mr. Carney has stressed that there may be cases where interest rate changes can buttress moves by regulators to tame asset bubbles or dangerous buildups of debt that could threaten the entire economy. But higher rates now would hurt manufacturers in Central Canada and deter business investment, and tightening while the U.S. Federal Reserve is debating whether it needs to ease more would boost the currency, adding to exporters’ woes.
“The challenge of monetary policy is that it’s a blunt instrument,” said Derek Burleton, deputy chief economist with Toronto-Dominion Bank. “Regulation tends to have the benefits of surgical precision.”
Mr. Carney is no doubt keenly aware of the U.S. Federal Reserve’s failure to grasp the seriousness of trouble that was brewing in the U.S. housing market in the past decade, and criticism that Alan Greenspan fuelled that debacle by keeping interest rates low for longer than he should have.
But Mr. Greenspan was not presiding over an export-dependent economy that, according to new projections Mr. Carney released Tuesday, will grow just 2 per cent this year and 2.8 per cent in 2013, and that’s assuming the European situation is stabilized.
“Standing pat seems appropriate,” Mr. Gregory said. “But if things nudge either way – Europe clarifies itself a bit sooner, or housing takes off – the case for rate hikes will come a lot closer.”
In the meantime, is appears homeowners can’t resist the allure of rock-bottom mortgage rates.
“In my marketplace I see the consumer confidence to be very high, and it’s high because interest rates have been kept low,” said Peter Majthenyi, a Toronto-based mortgage broker. “Since the holidays, my phone hasn’t stopped ringing.”
Tuesday, January 17, 2012
Better economic conditions likely dash any chance of interest rate cut
By Julian Beltrame, The Canadian Press
OTTAWA - Any thoughts Bank of Canada governor Mark Carney might have had about cutting interest rates further today likely flew out the window after a recent spate of relatively good economic news.
The Bank of Canada will announce its policy setting — which influences short term interest rates — at 9 a.m., and the opinion appears virtually unanimous there will be no change from the current one per cent perch.
That should keep in force a credit landscape that has seen borrowing rates across the spectrum of terms and conditions among the most generous in memory.
In fact, last week the Bank of Montreal offered the first 2.99 per cent five-year, fixed mortgage rate in modern Canadian history, forcing other banks to follow suit with similar actions.
In essence, the market is beating the central bank to the punch with credit easing, said Derek Holt, vice-president of economics with Scotiabank.
But there are other reasons analysts — with few exceptions — believe Carney will be loathe to move off one per cent, where he's been since September 2010.
That's because as weak as conditions are, with Europe still at risk of plunging the world into another recession, the economic indicators have been stronger than Carney thought they would be three months ago.
Then, the bank governor projected growth in the third quarter of 2011 would come in at a weak two per cent and the fourth at a barely visible 0.8 per cent. The third quarter is already in the books at 3.5 per cent and the fourth looks closer to two per cent, however.
As well, the resilience of oil prices to the global slowdown likely means inflation in 2012 will be a little stronger than the bank had been counting on.
"The combination of perhaps upward revisions to growth and inflation forecasts ... might be the thing that totally takes rate cuts off the table," said Holt.
There are some who still believe Carney's next move will be to trim interest rates, including Carleton University economist Nicholas Rowe, a member of the C.D. Howe Institute's monetary policy panel, and David Madani of Capital Economics.
Madani expects Carney will take the policy rate to 0.5 per cent by the end of the year. He has a darker than most view of the economy — with growth a mere 1.5 per cent this year, and the unemployment rate rising half-a-point to eight per cent by year's end.
"Although (the bank) ... will no doubt highlight that U.S. economic activity has improved somewhat, even they would admit that a sustained recovery is far from assured, particularly considering Europe's recession and the heightened risk of another global banking crisis," Madani wrote in a note to clients.
But Madani also said Carney is likely to wait out at least one more policy date before making his move.
The main news coming out of Tuesday's announcement, and Wednesday's monetary policy review — the bank's new forecast for the global and Canadian economies — is whether Carney sees the stronger-than-expected second half of 2011 as a precursor for 2012, or simply a blip that merely delayed the onset of weaker growth.
In the previous policy review, the central bank had predicted growth would come in at 2.1 per cent in 2011, 1.9 per cent in 2012, and 2.9 per cent in 2013.
With 2011 already in the books — although all the data points are not yet known — the expectation is that growth was more likely in the moderate 2.4 per cent range. But that may not change Carney's view that 2012 will be even weaker, with considerable downside if Europe's debt issues metastasize.
In past policy announcements, Carney has made it clear he views the current one-per-cent setting to be sufficiently accommodative for the current, slow-growth economy. Easy credit conditions stimulate spending and expansion in the economy.
Holt said it would likely take a European implosion for Carney to cut rates further.
OTTAWA - Any thoughts Bank of Canada governor Mark Carney might have had about cutting interest rates further today likely flew out the window after a recent spate of relatively good economic news.
The Bank of Canada will announce its policy setting — which influences short term interest rates — at 9 a.m., and the opinion appears virtually unanimous there will be no change from the current one per cent perch.
That should keep in force a credit landscape that has seen borrowing rates across the spectrum of terms and conditions among the most generous in memory.
In fact, last week the Bank of Montreal offered the first 2.99 per cent five-year, fixed mortgage rate in modern Canadian history, forcing other banks to follow suit with similar actions.
In essence, the market is beating the central bank to the punch with credit easing, said Derek Holt, vice-president of economics with Scotiabank.
But there are other reasons analysts — with few exceptions — believe Carney will be loathe to move off one per cent, where he's been since September 2010.
That's because as weak as conditions are, with Europe still at risk of plunging the world into another recession, the economic indicators have been stronger than Carney thought they would be three months ago.
Then, the bank governor projected growth in the third quarter of 2011 would come in at a weak two per cent and the fourth at a barely visible 0.8 per cent. The third quarter is already in the books at 3.5 per cent and the fourth looks closer to two per cent, however.
As well, the resilience of oil prices to the global slowdown likely means inflation in 2012 will be a little stronger than the bank had been counting on.
"The combination of perhaps upward revisions to growth and inflation forecasts ... might be the thing that totally takes rate cuts off the table," said Holt.
There are some who still believe Carney's next move will be to trim interest rates, including Carleton University economist Nicholas Rowe, a member of the C.D. Howe Institute's monetary policy panel, and David Madani of Capital Economics.
Madani expects Carney will take the policy rate to 0.5 per cent by the end of the year. He has a darker than most view of the economy — with growth a mere 1.5 per cent this year, and the unemployment rate rising half-a-point to eight per cent by year's end.
"Although (the bank) ... will no doubt highlight that U.S. economic activity has improved somewhat, even they would admit that a sustained recovery is far from assured, particularly considering Europe's recession and the heightened risk of another global banking crisis," Madani wrote in a note to clients.
But Madani also said Carney is likely to wait out at least one more policy date before making his move.
The main news coming out of Tuesday's announcement, and Wednesday's monetary policy review — the bank's new forecast for the global and Canadian economies — is whether Carney sees the stronger-than-expected second half of 2011 as a precursor for 2012, or simply a blip that merely delayed the onset of weaker growth.
In the previous policy review, the central bank had predicted growth would come in at 2.1 per cent in 2011, 1.9 per cent in 2012, and 2.9 per cent in 2013.
With 2011 already in the books — although all the data points are not yet known — the expectation is that growth was more likely in the moderate 2.4 per cent range. But that may not change Carney's view that 2012 will be even weaker, with considerable downside if Europe's debt issues metastasize.
In past policy announcements, Carney has made it clear he views the current one-per-cent setting to be sufficiently accommodative for the current, slow-growth economy. Easy credit conditions stimulate spending and expansion in the economy.
Holt said it would likely take a European implosion for Carney to cut rates further.
Monday, January 16, 2012
Credit counsellors ready for post-holiday rush as Christmas bills come due
Craig Wong
The Canadian Press
Published Friday, Jan. 13, 2012 1:18PM EST
The holiday hustle and bustle is over for most Canadians but now, as the bills begin to roll in, the busy season has begun for credit counselling services.
Scott Hannah, president and chief executive of the Vancouver-area-based Credit Counselling Society, said there's a pick up in inquiries every year as the bills for sometimes too-generous decisions made in December start coming due.
Attack your debt, Part One
Video
The Wealthy Barber on carrying debt
“January is a great time to reflect on what they want to do differently this year – whether it is lose weight, improve their finances or whatever their case may be,” he said.
“Typically, it starts around the middle of the month and coincides when a lot of consumers are just receiving or expecting the statements on their credit cards.”
While financial planners urge Canadians every year to make a plan for their holiday spending, there are some that inevitably don't and overspend or don't stick to a plan, despite the best of intentions.
Pat White, executive director of Credit Counselling Canada, said her organization has been seeing more clients aged 50 and over looking for help in recent years.
“We're seeing more of that side of the population where they still have debts at a time that we think people should be thinking about retirements without debts,” she said in an interview from Brantford, Ont.
Ms. White said as a general rule of thumb, if you can't pay your debts as they come due, you should be seeking help.
“If you're behind on things like utilities, those are obvious signals things are not going well,” she said.
But even if you are current on your bills, but feel stressed or are unable to sleep, she said it is better to seek help before a crisis emerges.
Before you meet with a credit counsellor, experts say you should make a list of your debts, including who you owe, how much, account numbers and when you last made payments as well as a list of your assets.
People also should take with them a statement of income like a pay stub and some idea of their living expenses.
Ms. White said counsellors start with an assessment of a client's financial health before examining their options, including looking for ways to reduce spending and increase income.
“Some people may say, we certainly can cut back on that and it wasn't until we went through this exercise of looking at our expenses did we realize that we were spending more than we thought in one area or another.”
If it is possible, Ms. White said one option to consider may be a bank loan to consolidate other higher interest debt such as credit card balances or a mortgage refinancing that could be used to pay back other borrowings.
But if those options aren't enough, Ms. White said a voluntary debt repayment program may be a possibility.
Under a voluntary debt repayment program, a credit counselling agency contacts lenders and makes arrangements in an informal way to reduce payments and stretch them out over a longer payment. The advantage to the lender is that they receives all that they are owed without having to resort to harsher measures.
There are also the options of bankruptcy or a consumer proposal.
A consumer proposal sees someone repay a percentage of their debt over time, while a bankruptcy is a declaration that someone has nothing left to pay their debts.
“People often think that those are quite drastic measures, but it depends on the circumstances of the person and those options may be the only things that are really viable for them,” Ms. White said.
But Ms. White said the majority of those her agency deals with only require counselling, while around 25 per cent end up taking more drastic steps.
According to the Office of the Superintendent of Bankruptcy Canada, there were 6,259 consumer bankruptcies in October, 2011, the latest month statistics were available, down 20.2 per cent form 7,844 in October, 2010. The number of consumer proposals totalled 3,709 for the month, up 3.1 per cent from 3,598 in the year ago period.
Bank of Canada governor Mark Carney and Finance Minister Jim Flaherty have repeatedly urged Canadians to reduce their debt levels, which stand near all-time highs.
Though economists don't expect the central bank to raise interest rates until perhaps as late as early next year, it is just a matter of time until they come off their near record lows and drive up rates for loans such as lines of credit and variable rate mortgages tied to the prime rate.
Mr. Hannah said with interest rates still sitting near record lows, now is the time to get one's financial house in order and pay down debt before rates start to rise.
He suggested that even those who aren't in financial difficulty should take an opportunity to review their finances to make sure they are on track.
“It is hard to be motivated to save money, especially when the interest that you are being paid by your financial institution maybe one or maybe one and a half per cent,” Mr. Hannah said.
“However, having savings on hand to deal with expenses like car insurance or Christmas is far better than not saving funds, using credit cards and then having to pay for those purchases at 20 or 28 per cent interest.”
The Canadian Press
The Canadian Press
Published Friday, Jan. 13, 2012 1:18PM EST
The holiday hustle and bustle is over for most Canadians but now, as the bills begin to roll in, the busy season has begun for credit counselling services.
Scott Hannah, president and chief executive of the Vancouver-area-based Credit Counselling Society, said there's a pick up in inquiries every year as the bills for sometimes too-generous decisions made in December start coming due.
Attack your debt, Part One
Video
The Wealthy Barber on carrying debt
“January is a great time to reflect on what they want to do differently this year – whether it is lose weight, improve their finances or whatever their case may be,” he said.
“Typically, it starts around the middle of the month and coincides when a lot of consumers are just receiving or expecting the statements on their credit cards.”
While financial planners urge Canadians every year to make a plan for their holiday spending, there are some that inevitably don't and overspend or don't stick to a plan, despite the best of intentions.
Pat White, executive director of Credit Counselling Canada, said her organization has been seeing more clients aged 50 and over looking for help in recent years.
“We're seeing more of that side of the population where they still have debts at a time that we think people should be thinking about retirements without debts,” she said in an interview from Brantford, Ont.
Ms. White said as a general rule of thumb, if you can't pay your debts as they come due, you should be seeking help.
“If you're behind on things like utilities, those are obvious signals things are not going well,” she said.
But even if you are current on your bills, but feel stressed or are unable to sleep, she said it is better to seek help before a crisis emerges.
Before you meet with a credit counsellor, experts say you should make a list of your debts, including who you owe, how much, account numbers and when you last made payments as well as a list of your assets.
People also should take with them a statement of income like a pay stub and some idea of their living expenses.
Ms. White said counsellors start with an assessment of a client's financial health before examining their options, including looking for ways to reduce spending and increase income.
“Some people may say, we certainly can cut back on that and it wasn't until we went through this exercise of looking at our expenses did we realize that we were spending more than we thought in one area or another.”
If it is possible, Ms. White said one option to consider may be a bank loan to consolidate other higher interest debt such as credit card balances or a mortgage refinancing that could be used to pay back other borrowings.
But if those options aren't enough, Ms. White said a voluntary debt repayment program may be a possibility.
Under a voluntary debt repayment program, a credit counselling agency contacts lenders and makes arrangements in an informal way to reduce payments and stretch them out over a longer payment. The advantage to the lender is that they receives all that they are owed without having to resort to harsher measures.
There are also the options of bankruptcy or a consumer proposal.
A consumer proposal sees someone repay a percentage of their debt over time, while a bankruptcy is a declaration that someone has nothing left to pay their debts.
“People often think that those are quite drastic measures, but it depends on the circumstances of the person and those options may be the only things that are really viable for them,” Ms. White said.
But Ms. White said the majority of those her agency deals with only require counselling, while around 25 per cent end up taking more drastic steps.
According to the Office of the Superintendent of Bankruptcy Canada, there were 6,259 consumer bankruptcies in October, 2011, the latest month statistics were available, down 20.2 per cent form 7,844 in October, 2010. The number of consumer proposals totalled 3,709 for the month, up 3.1 per cent from 3,598 in the year ago period.
Bank of Canada governor Mark Carney and Finance Minister Jim Flaherty have repeatedly urged Canadians to reduce their debt levels, which stand near all-time highs.
Though economists don't expect the central bank to raise interest rates until perhaps as late as early next year, it is just a matter of time until they come off their near record lows and drive up rates for loans such as lines of credit and variable rate mortgages tied to the prime rate.
Mr. Hannah said with interest rates still sitting near record lows, now is the time to get one's financial house in order and pay down debt before rates start to rise.
He suggested that even those who aren't in financial difficulty should take an opportunity to review their finances to make sure they are on track.
“It is hard to be motivated to save money, especially when the interest that you are being paid by your financial institution maybe one or maybe one and a half per cent,” Mr. Hannah said.
“However, having savings on hand to deal with expenses like car insurance or Christmas is far better than not saving funds, using credit cards and then having to pay for those purchases at 20 or 28 per cent interest.”
The Canadian Press
Friday, January 13, 2012
Average Metro home price to jump 2.3 per cent;
Strong market means house prices to rise in major cities, realtor says
Average Metro home price to jump 2.3 per cent; widespread calls for major correction this year can't be justified, says Royal LePage CEO
Canada's housing market will continue to be strong this year, with rising property values expected in all major markets, real estate brokerage firm Royal LePage said Thursday.
The company's forecast called for prices across to country to rise 2.8 per cent by the end of 2012, after stronger gains last year.
Even pricey housing markets in Metro Vancouver and Toronto - where standard two-storey homes averaged $1.1 million and $629,188, respectively, in the last quarter - will see continued price appreciation in 2012, though the gain for Metro will be more muted, according to the broker-age firm's forecast.
Metro Vancouver is expected to see its average house price climb 2.3 per cent to $802,000 in 2012, while Toronto is expected to see a 2.6-per-cent jump.
"Widespread calls for a major real estate correction in 2012 simply can't be justified," Royal LePage CEO Phil Soper said in a statement.
"The industry has significant momentum entering the year, and buoyed by the stimulative effect of very low interest rates, we expect the market to continue to expand - albeit at a slower pace."
However, Royal LePage said stronger gains will be seen in cities benefiting from commodity-based economies, such as Calgary, Regina and Winnipeg, where price gains will be in the range of four to five per cent.
According to the company, in the fourth quarter of 2011, the average price of a standard two-storey home in Canada was $375,427, up 4.2 per cent from a year earlier.
The average rate of a detached bungalow was up 6.1 per cent to $344,392, while condominiums gained 3.6 per cent to $234,680.
Statistics Canada reported Thursday that its new housing price index rose 0.3 per cent in November, following on a 0.2 per cent increase in October, and was up 2.5 per cent yearover-year.
Price increases in Toronto, Oshawa and Montreal offset declines in Calgary, Metro Vancouver and the Ontario metropolitan regions of Sudbury and Thunder Bay, the agency said.
In Vancouver, Statistics Canada said some builders offered promotional pricing in order to sell units, which helped push new-home prices 0.3 per cent in November from October, and made the
Builders in the other areas reported lowering prices in order to stimulate sales and remain competitive, while price increases elsewhere were attributed to higher material and labour costs.
The Canada Mortgage and Housing Corp. has forecast the average price of a listed homes for resale to be $363,900 this year, up 1.2 per cent from 2011. The Canadian Real Estate Association predicted that the aver-age price would be relatively flat at $362,700.
Both forecasts were made in November.
Average Metro home price to jump 2.3 per cent; widespread calls for major correction this year can't be justified, says Royal LePage CEO
Canada's housing market will continue to be strong this year, with rising property values expected in all major markets, real estate brokerage firm Royal LePage said Thursday.
The company's forecast called for prices across to country to rise 2.8 per cent by the end of 2012, after stronger gains last year.
Even pricey housing markets in Metro Vancouver and Toronto - where standard two-storey homes averaged $1.1 million and $629,188, respectively, in the last quarter - will see continued price appreciation in 2012, though the gain for Metro will be more muted, according to the broker-age firm's forecast.
Metro Vancouver is expected to see its average house price climb 2.3 per cent to $802,000 in 2012, while Toronto is expected to see a 2.6-per-cent jump.
"Widespread calls for a major real estate correction in 2012 simply can't be justified," Royal LePage CEO Phil Soper said in a statement.
"The industry has significant momentum entering the year, and buoyed by the stimulative effect of very low interest rates, we expect the market to continue to expand - albeit at a slower pace."
However, Royal LePage said stronger gains will be seen in cities benefiting from commodity-based economies, such as Calgary, Regina and Winnipeg, where price gains will be in the range of four to five per cent.
According to the company, in the fourth quarter of 2011, the average price of a standard two-storey home in Canada was $375,427, up 4.2 per cent from a year earlier.
The average rate of a detached bungalow was up 6.1 per cent to $344,392, while condominiums gained 3.6 per cent to $234,680.
Statistics Canada reported Thursday that its new housing price index rose 0.3 per cent in November, following on a 0.2 per cent increase in October, and was up 2.5 per cent yearover-year.
Price increases in Toronto, Oshawa and Montreal offset declines in Calgary, Metro Vancouver and the Ontario metropolitan regions of Sudbury and Thunder Bay, the agency said.
In Vancouver, Statistics Canada said some builders offered promotional pricing in order to sell units, which helped push new-home prices 0.3 per cent in November from October, and made the
Builders in the other areas reported lowering prices in order to stimulate sales and remain competitive, while price increases elsewhere were attributed to higher material and labour costs.
The Canada Mortgage and Housing Corp. has forecast the average price of a listed homes for resale to be $363,900 this year, up 1.2 per cent from 2011. The Canadian Real Estate Association predicted that the aver-age price would be relatively flat at $362,700.
Both forecasts were made in November.
Friday, December 16, 2011
Home sales up six per cent, prices up 4.6 per cent year-over-year in November
By Sunny Freeman, The Canadian Press
TORONTO - Canada's housing sector is edging closer to a sellers' market as sales and prices jumped again in November, but the number of listings dropped off.
Home resales rose six per cent last month on a year-over-year basis and jumped 0.5 per cent on a seasonally adjusted basis compared to October levels, the Canadian Real Estate Association said Thursday.
November marked the third straight month that national activity on its Multiple Listing Service was up from the one before.
The national average price increased 4.6 per cent year-over-year to $360,396. And while prices continue to rise, CREA noted that November's increase was the smallest jump since January. Meanwhile, the number of newly listed homes was down 3.4 per cent from October to November.
"The national housing market remains balanced, but is edging closer to seller's market territory," the association said in a release.
A sellers' market occurs when demand outweighs supply and owners can fetch a higher price for their homes in bidding wars between buyers.
The latest signs pointing toward a market that favours sellers stand in stark contrast to predictions earlier this year that demand would drop off, giving buyers a break from rapidly rising prices.
But a continuation of ultra low interest rates — which have sat at one per cent since September 2010 — due to trouble signs outside Canada's borders has kept demand strong and buyers competing.
New listings slipped lower in more than two-thirds of Canadian housing markets, with Toronto, the Hamilton-Burlington region, and Calgary falling the most. The national sales-to-new listings ratio a measure of market balance, rose to 55.5 per cent in November — its highest reading since the spring.
Sales activity rose in about 60 per cent of all local markets, CREA said. Record November sales in the Halifax-Dartmouth region offset a dip in sales in the white hot Toronto market.
"The Canadian housing market is proving resilient in the face of ongoing global economic and financial uncertainty, to the benefit of Canadian economic growth," said Gary Morse, CREA’s President.
And while sales so far this year have been stronger than expected, up 2.1 per cent on a year-to-date basis, they have remained in line with the 10-year average.
However, sales in November were so robust, that they broke that pattern to climb seven per cent above the 10 year average to the fourth highest level on record for the month.
But CREA's chief economist Gregory Klump noted that the upswing heading into year-end is similar to what happened last year.
"By contrast, national average price also picked up toward the end of last year, whereas this year it has held steady after having peaked in the spring," he added.
For the first time this year, Klump acknowledged that the hot real estate market — driven in part by a persistent low interest rate environment that is expected to last well into next year — could lead to signs of trouble.
"With interest rates expected to remain low for longer, the housing sector will no doubt be closely watched for signs of excess," said Klump.
"That said, current trends for resale housing and new home construction suggest that tightened mortgage regulations are working as intended and fostering economic stability in Canada."
Heavy borrowing activity signals dark clouds on the horizon for some households as debt reaches record levels — as much as 153 per cent of disposable incomes, according to data released earlier this week.
The most over-leveraged Canadians could find themselves unable to cope when interest rates eventually rise, federal Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney have warned.
A total of 432,048 homes have changed hands on CREA's MLS system so far this year, that's about 0.7 per cent above the 10-year average.
TORONTO - Canada's housing sector is edging closer to a sellers' market as sales and prices jumped again in November, but the number of listings dropped off.
Home resales rose six per cent last month on a year-over-year basis and jumped 0.5 per cent on a seasonally adjusted basis compared to October levels, the Canadian Real Estate Association said Thursday.
November marked the third straight month that national activity on its Multiple Listing Service was up from the one before.
The national average price increased 4.6 per cent year-over-year to $360,396. And while prices continue to rise, CREA noted that November's increase was the smallest jump since January. Meanwhile, the number of newly listed homes was down 3.4 per cent from October to November.
"The national housing market remains balanced, but is edging closer to seller's market territory," the association said in a release.
A sellers' market occurs when demand outweighs supply and owners can fetch a higher price for their homes in bidding wars between buyers.
The latest signs pointing toward a market that favours sellers stand in stark contrast to predictions earlier this year that demand would drop off, giving buyers a break from rapidly rising prices.
But a continuation of ultra low interest rates — which have sat at one per cent since September 2010 — due to trouble signs outside Canada's borders has kept demand strong and buyers competing.
New listings slipped lower in more than two-thirds of Canadian housing markets, with Toronto, the Hamilton-Burlington region, and Calgary falling the most. The national sales-to-new listings ratio a measure of market balance, rose to 55.5 per cent in November — its highest reading since the spring.
Sales activity rose in about 60 per cent of all local markets, CREA said. Record November sales in the Halifax-Dartmouth region offset a dip in sales in the white hot Toronto market.
"The Canadian housing market is proving resilient in the face of ongoing global economic and financial uncertainty, to the benefit of Canadian economic growth," said Gary Morse, CREA’s President.
And while sales so far this year have been stronger than expected, up 2.1 per cent on a year-to-date basis, they have remained in line with the 10-year average.
However, sales in November were so robust, that they broke that pattern to climb seven per cent above the 10 year average to the fourth highest level on record for the month.
But CREA's chief economist Gregory Klump noted that the upswing heading into year-end is similar to what happened last year.
"By contrast, national average price also picked up toward the end of last year, whereas this year it has held steady after having peaked in the spring," he added.
For the first time this year, Klump acknowledged that the hot real estate market — driven in part by a persistent low interest rate environment that is expected to last well into next year — could lead to signs of trouble.
"With interest rates expected to remain low for longer, the housing sector will no doubt be closely watched for signs of excess," said Klump.
"That said, current trends for resale housing and new home construction suggest that tightened mortgage regulations are working as intended and fostering economic stability in Canada."
Heavy borrowing activity signals dark clouds on the horizon for some households as debt reaches record levels — as much as 153 per cent of disposable incomes, according to data released earlier this week.
The most over-leveraged Canadians could find themselves unable to cope when interest rates eventually rise, federal Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney have warned.
A total of 432,048 homes have changed hands on CREA's MLS system so far this year, that's about 0.7 per cent above the 10-year average.
Thursday, December 1, 2011
Canada’s economy surges ahead
Christine Dobby Nov 30, 2011 – 7:06 PM ET
The Canadian economy was not as bad as first feared in the third quarter. In fact, it was much better than almost anyone had hoped.
Fuelled by record monthly output from the oil-and-gas and mining sectors and overall export strength as temporary headwinds drifted away, third-quarter economic growth shot past expectations.
Statistics Canada said Wednesday that gross domestic product for the period rose by an annualized 3.5%, beating economists’ more moderate average prediction of 3.0% growth and the Bank of Canada’s forecast of 2.0%. In September alone, the economy grew 0.2% from August, falling just short of a 0.3% increase economists predicted.
The growth during the quarter comes as a welcome change after a revised 0.5% contraction in the second quarter.
Net exports staged a decided recovery as external pressures like the fallout from the Japanese natural disasters in March were no longer a factor.
But the devil is in the details as flagging domestic demand and weak business investment lurked beneath the report’s strong headline growth. A close look at the data has economists forecasting only modest growth — in the range of about 2% — in the coming quarters and predicting the Bank of Canada will remain on hold with interest rate hikes.
Here’s what stood out from Wednesday’s report:
EXPORTS
The driving force behind the uptick in GDP for the quarter, exports grew at an annualized rate of 14.4%, up from a pullback of 6.4% in the previous quarter.
Paul Ferley, assistant chief economist at Royal Bank of Canada, said that factors that weighed on Canadian exports in the second quarter — including the Japanese supply-chain disruptions as well as wildfires in Northern Alberta that led to shutdowns of oil sand production facilities — were resolved in Q3 and contributed to the increase.
But, he cautioned, “The boost to third-quarter growth provided by the reversal of these factors is not expected to continue to the same extent into the fourth quarter.”
As the global economy stalls and prospects for a quick turnaround look increasingly grim, economists predict it will could spoil the Canadian export party.
HOUSING
Canada’s unstoppable real estate market was another bright spot during the quarter. Residential construction shot up 10.9% annualized, following on comparatively modest increases of 1.6% in Q2 and 6.7% in Q1.
“After quarters of booming housing starts data, the residential construction bonanza finally translated into the GDP numbers,” said Emanuella Enenajor, economist at CIBC Economics.
The expansion in this sector came from all three major components including fees and transfer costs related to resale transactions, new housing construction and renovation activity.
“Continued strength in new-home sales has elicited more and more new housing construction, particularly in the high-rise condo market,” said David Madani, Canada economist for Capital Economics.
He noted that a reported increase in housing starts bodes well for further strong growth in this category next quarter.
CONSUMER SPENDING
Canadians slowed their spending on goods and services during the quarter, raising red flags for economists concerned about sluggish domestic demand.
Personal expenditures grew at an annualized rate of 1.2%, down from an expansion of 2.1% in the previous quarter.
“A slowing pace of income growth owing to tepid hiring and weaker wage dynamics will likely continue to put downward pressure on consumption activity,” Ms. Enenajor said.
BUSINESS INVESTMENT
Business investment actually contracted during the quarter with a decrease of 3.6% annualized, down from last quarter’s 14.6% increase.
“Weak business investment is a worry, as it has been an important source of growth since early 2010 and replaced personal spending as the main source of domestic growth,” said Charles St. Arnaud, an analyst with Nomura Global Economics.
He noted that this, coupled with the fact that personal spending is likely to remain weak, “Could mean that domestic demand stays weak over the next few quarters, as global uncertainty remains high.”
FINAL DOMESTIC DEMAND
The combined slowdown in consumer spending and business investment was a drag on final domestic demand, which rose only 0.9% in the third quarter, down from a 3.1% gain in Q2. The other component, government expenditures, was flat in the quarter as government stimulus spending continues to slow to a trickle.
“Note that the pace of final domestic demand has been consistently slowing since 2010, weakening from around 6% to its current sub-1% pace,” Ms. Enenajor said.
The Canadian economy was not as bad as first feared in the third quarter. In fact, it was much better than almost anyone had hoped.
Fuelled by record monthly output from the oil-and-gas and mining sectors and overall export strength as temporary headwinds drifted away, third-quarter economic growth shot past expectations.
Statistics Canada said Wednesday that gross domestic product for the period rose by an annualized 3.5%, beating economists’ more moderate average prediction of 3.0% growth and the Bank of Canada’s forecast of 2.0%. In September alone, the economy grew 0.2% from August, falling just short of a 0.3% increase economists predicted.
The growth during the quarter comes as a welcome change after a revised 0.5% contraction in the second quarter.
Net exports staged a decided recovery as external pressures like the fallout from the Japanese natural disasters in March were no longer a factor.
But the devil is in the details as flagging domestic demand and weak business investment lurked beneath the report’s strong headline growth. A close look at the data has economists forecasting only modest growth — in the range of about 2% — in the coming quarters and predicting the Bank of Canada will remain on hold with interest rate hikes.
Here’s what stood out from Wednesday’s report:
EXPORTS
The driving force behind the uptick in GDP for the quarter, exports grew at an annualized rate of 14.4%, up from a pullback of 6.4% in the previous quarter.
Paul Ferley, assistant chief economist at Royal Bank of Canada, said that factors that weighed on Canadian exports in the second quarter — including the Japanese supply-chain disruptions as well as wildfires in Northern Alberta that led to shutdowns of oil sand production facilities — were resolved in Q3 and contributed to the increase.
But, he cautioned, “The boost to third-quarter growth provided by the reversal of these factors is not expected to continue to the same extent into the fourth quarter.”
As the global economy stalls and prospects for a quick turnaround look increasingly grim, economists predict it will could spoil the Canadian export party.
HOUSING
Canada’s unstoppable real estate market was another bright spot during the quarter. Residential construction shot up 10.9% annualized, following on comparatively modest increases of 1.6% in Q2 and 6.7% in Q1.
“After quarters of booming housing starts data, the residential construction bonanza finally translated into the GDP numbers,” said Emanuella Enenajor, economist at CIBC Economics.
The expansion in this sector came from all three major components including fees and transfer costs related to resale transactions, new housing construction and renovation activity.
“Continued strength in new-home sales has elicited more and more new housing construction, particularly in the high-rise condo market,” said David Madani, Canada economist for Capital Economics.
He noted that a reported increase in housing starts bodes well for further strong growth in this category next quarter.
CONSUMER SPENDING
Canadians slowed their spending on goods and services during the quarter, raising red flags for economists concerned about sluggish domestic demand.
Personal expenditures grew at an annualized rate of 1.2%, down from an expansion of 2.1% in the previous quarter.
“A slowing pace of income growth owing to tepid hiring and weaker wage dynamics will likely continue to put downward pressure on consumption activity,” Ms. Enenajor said.
BUSINESS INVESTMENT
Business investment actually contracted during the quarter with a decrease of 3.6% annualized, down from last quarter’s 14.6% increase.
“Weak business investment is a worry, as it has been an important source of growth since early 2010 and replaced personal spending as the main source of domestic growth,” said Charles St. Arnaud, an analyst with Nomura Global Economics.
He noted that this, coupled with the fact that personal spending is likely to remain weak, “Could mean that domestic demand stays weak over the next few quarters, as global uncertainty remains high.”
FINAL DOMESTIC DEMAND
The combined slowdown in consumer spending and business investment was a drag on final domestic demand, which rose only 0.9% in the third quarter, down from a 3.1% gain in Q2. The other component, government expenditures, was flat in the quarter as government stimulus spending continues to slow to a trickle.
“Note that the pace of final domestic demand has been consistently slowing since 2010, weakening from around 6% to its current sub-1% pace,” Ms. Enenajor said.
Monday, November 28, 2011
Canada’s slowing economy may need rate cuts: OECD
By Greg Quinn
Bloomberg
Canada’s economy is slowing because of weaker foreign demand and may need new stimulus from the central bank and government if things get worse, the Organization for Economic Cooperation and Development said.
Gross domestic product will grow 1.9% next year, the Paris-based OECD predicted Monday, down from its May forecast for a 2.8% expansion. The outlook for this year was pared to 2.2% from 3% in May, and it estimated 2013 growth of 2.5%.
Finance Minister Jim Flaherty said last week he may offer additional stimulus if required, adding the risks to the global recovery from Europe’s debt crisis are increasing. Bank of Canada Governor Mark Carney has kept his key lending rate at 1% since September 2010 and has said the economy won’t fully recover until well into 2013.
“Output is projected to expand at a slow pace as exports are restrained by sluggish external demand,” the OECD report said. “Domestic spending should sustain growth but at a moderate rate, as high debt and waning sentiment curb consumption growth.”
Consumers may be discouraged from spending by debts that are a record 150% of disposable income and by a weak job market marked by government cutbacks and slow private hiring, the OECD said. Unemployment will be little changed next year at 7.3% from this year’s 7.4% according to the report.
“Risks are skewed to the downside,” the OECD said, and if they materialize “the Bank of Canada should ease monetary policy via further interest rate cuts, which in a downside scenario would be consistent with the inflation target.”
The Bank of Canada has predicted inflation will slow to 1% in the second quarter of next year from 2.7% this quarter. The bank acts to keep inflation in the middle of a 1% to 3% band.
Bloomberg
Canada’s economy is slowing because of weaker foreign demand and may need new stimulus from the central bank and government if things get worse, the Organization for Economic Cooperation and Development said.
Gross domestic product will grow 1.9% next year, the Paris-based OECD predicted Monday, down from its May forecast for a 2.8% expansion. The outlook for this year was pared to 2.2% from 3% in May, and it estimated 2013 growth of 2.5%.
Finance Minister Jim Flaherty said last week he may offer additional stimulus if required, adding the risks to the global recovery from Europe’s debt crisis are increasing. Bank of Canada Governor Mark Carney has kept his key lending rate at 1% since September 2010 and has said the economy won’t fully recover until well into 2013.
“Output is projected to expand at a slow pace as exports are restrained by sluggish external demand,” the OECD report said. “Domestic spending should sustain growth but at a moderate rate, as high debt and waning sentiment curb consumption growth.”
Consumers may be discouraged from spending by debts that are a record 150% of disposable income and by a weak job market marked by government cutbacks and slow private hiring, the OECD said. Unemployment will be little changed next year at 7.3% from this year’s 7.4% according to the report.
“Risks are skewed to the downside,” the OECD said, and if they materialize “the Bank of Canada should ease monetary policy via further interest rate cuts, which in a downside scenario would be consistent with the inflation target.”
The Bank of Canada has predicted inflation will slow to 1% in the second quarter of next year from 2.7% this quarter. The bank acts to keep inflation in the middle of a 1% to 3% band.
Thursday, November 10, 2011
Bank of Canada could slash interest rates in a big way next year
John Shmuel Nov 9, 2011 – 4:10 PM ET | Last Updated: Nov 10, 2011 2:06 AM ET
As the nail biter in Europe continues this week, two economists are predicting the Bank of Canada will move to cut rates in a big way next year.
Sheryl King, an economist at Bank of America Merril Lynch, said in a note that the volatility hitting Europe and the risk of damage to the global economy means the Bank of Canada will move to cut its benchmark interest rate to ward off the risk of recession. Her prediction is the cut will be a whopping 0.75% decrease from the current rate of 1%.
“With the Eurozone sovereign debt and banking crisis showing no sign of containment, we think the Bank of Canada will cut rates back to the effective lower bound of 25 basis points (0.25%) early next year,” she said.
Ms. King forecasts that the cut would come in two phases, with a 0.50% trim being announced during the bank’s January 17 meeting, while the second and final 0.25% cut coming during the March 8 meeting.
Also predicting a lower interest rate next year was David Madani, Canada economist at Capital Economics. He is forecasting a more mild cut of 50 basis points, however, saying he expects it to occur in April or June.
Either way, Mr. Madani said he expects interest rates in Canada will remain low for some time.
“The Bank might communicate that its policy rate will remain at 0.50% for a lengthy period of time, conditional on its projected outlook for consumer price inflation,” he said, in reference to the Bank of Canada’s target of 2% annual inflation.
“Even if we are wrong, the broader message remains that interest rates will remain unusually low for a very long time.”
Most economists, however, are still predicting that the Bank of Canada will raise interest rates rather than lower them in 2012. In a recent Reuters survey of 40 economists last month, the consensus was that an interest rate increase will occur in the third quarter of next year.
If rates are cut, it will mark a sharp turnaround for the Bank of Canada, which only last year raised interest rates. Canada became one of the first advanced economies to raise its benchmark interest rates following the recession when the Bank of Canada implemented a 25 basis point hike in September of last year. The benchmark rate has since remained unchanged at 1%.
As the nail biter in Europe continues this week, two economists are predicting the Bank of Canada will move to cut rates in a big way next year.
Sheryl King, an economist at Bank of America Merril Lynch, said in a note that the volatility hitting Europe and the risk of damage to the global economy means the Bank of Canada will move to cut its benchmark interest rate to ward off the risk of recession. Her prediction is the cut will be a whopping 0.75% decrease from the current rate of 1%.
“With the Eurozone sovereign debt and banking crisis showing no sign of containment, we think the Bank of Canada will cut rates back to the effective lower bound of 25 basis points (0.25%) early next year,” she said.
Ms. King forecasts that the cut would come in two phases, with a 0.50% trim being announced during the bank’s January 17 meeting, while the second and final 0.25% cut coming during the March 8 meeting.
Also predicting a lower interest rate next year was David Madani, Canada economist at Capital Economics. He is forecasting a more mild cut of 50 basis points, however, saying he expects it to occur in April or June.
Either way, Mr. Madani said he expects interest rates in Canada will remain low for some time.
“The Bank might communicate that its policy rate will remain at 0.50% for a lengthy period of time, conditional on its projected outlook for consumer price inflation,” he said, in reference to the Bank of Canada’s target of 2% annual inflation.
“Even if we are wrong, the broader message remains that interest rates will remain unusually low for a very long time.”
Most economists, however, are still predicting that the Bank of Canada will raise interest rates rather than lower them in 2012. In a recent Reuters survey of 40 economists last month, the consensus was that an interest rate increase will occur in the third quarter of next year.
If rates are cut, it will mark a sharp turnaround for the Bank of Canada, which only last year raised interest rates. Canada became one of the first advanced economies to raise its benchmark interest rates following the recession when the Bank of Canada implemented a 25 basis point hike in September of last year. The benchmark rate has since remained unchanged at 1%.
Friday, November 4, 2011
Royal LePage Launches New Mobile Site
Wednesday, 02 November 2011 09:12
In an effort to make real estate shopping more accessible, flexible and convenient, Royal LePage Real Estate Services has launched a new mobile site for Android, iPhone and BlackBerry mobile devices.
The site will provide both information about listings and neighbourhood data, as well as feedback and comments from agents and residents that know the neighbourhood inside and out-giving this tool some personal context.
This tool has been nicknamed the “Neighbourhood Navigator”, which Royal LePage describes as the combination of” seller and agent comments ... with neighbourhood "walkability scores" and consumer rankings of nearby businesses to provide valuable insights for users.”
Furthermore, users can take advantage of GPS to position themselves in their targeted neighbourhood, helping them find useful items like open houses and neighbourhood amenities like schools, banks, grocery stores, restaurants and cafes.
“Buying a home is often the largest financial decision Canadians will make in their lifetime," said Phil Soper, president and chief executive, Royal LePage Real Estate Services. "To help prospective buyers make informed decisions, our new mobile site allows users to gain extra insights from the seller about their home and comments from the agent about the neighbourhood."
"While it will take some time to get the seller and agent comments populated, we have many advanced features to serve as the backbone for the mobile site," added Soper.
"The future is mobile and we're pleased to offer homebuyers and sellers the ability to access valuable real estate information right from their mobile devices," said Soper.
In an effort to make real estate shopping more accessible, flexible and convenient, Royal LePage Real Estate Services has launched a new mobile site for Android, iPhone and BlackBerry mobile devices.
The site will provide both information about listings and neighbourhood data, as well as feedback and comments from agents and residents that know the neighbourhood inside and out-giving this tool some personal context.
This tool has been nicknamed the “Neighbourhood Navigator”, which Royal LePage describes as the combination of” seller and agent comments ... with neighbourhood "walkability scores" and consumer rankings of nearby businesses to provide valuable insights for users.”
Furthermore, users can take advantage of GPS to position themselves in their targeted neighbourhood, helping them find useful items like open houses and neighbourhood amenities like schools, banks, grocery stores, restaurants and cafes.
“Buying a home is often the largest financial decision Canadians will make in their lifetime," said Phil Soper, president and chief executive, Royal LePage Real Estate Services. "To help prospective buyers make informed decisions, our new mobile site allows users to gain extra insights from the seller about their home and comments from the agent about the neighbourhood."
"While it will take some time to get the seller and agent comments populated, we have many advanced features to serve as the backbone for the mobile site," added Soper.
"The future is mobile and we're pleased to offer homebuyers and sellers the ability to access valuable real estate information right from their mobile devices," said Soper.
Wednesday, November 2, 2011
Variable Rate Holders May Face Trouble .
CANADIANS - don't worry too much. In the USA most clients were approved at the LOWER floating rate to the maximum of their buying ability. So naturally a rate change would hurt them - if you have a VIRM in Canada you were probably approved at around 4-5% and Prime is still on 3%. Once in a while it is good not to have "The American Way".
Neil "Mortgage Man" McJannet
Monday, 31 October 2011 10:18 Newsroom . . A new report from Bank of America Merril Lynch warns about the dangers facing some Canadian mortgage holders
The report suggests that there are a vast number of variable rate mortgage holders who will be vulnerable in the event of an interest rate hike. In fact, they suggest that two of every three new mortgages is a variable rate mortgage.
In the past, according to Bank of America Merril Lynch, typically around 25%-30% of mortgages were variable rate, suggesting that the tremendous shift in appetite could spell financial disaster for a big chunk of home owners in the event of a rate hike.
The good news, at least for the moment, is that many economists have put the possibility of a rate hike off the table until around 2013- but the fundamental vulnerability remains.
While it doesn’t mean that a rate hike will spell disaster, the possibility does remain. However, as many Canadian mortgage brokers will tell you, variable rate or not- they typically qualify a client at a higher fixed rate, so as to remove them from the danger zone in the event of a rate hike, simply as a part of due diligence. While the possibility of a US- style collapse exists in theory, the prevailingly stringent attitudes towards lending in Canada suggest that there are stop gaps in place to protect against such vulnerability.
Economists at Bank of America Merril Lynch suggest that, because rates have been so low for such an extended period of time, that mortgage holders are constructing false expectations about the true cost of a mortgage, and as such are taking more risk than they perhaps should be.
They indicate that Canadian mortgage holders must be mindful of the fact that rates will likely rise. According to their research, a rise of 2% will be enough to push those on the fringe into trouble
Neil "Mortgage Man" McJannet
Monday, 31 October 2011 10:18 Newsroom . . A new report from Bank of America Merril Lynch warns about the dangers facing some Canadian mortgage holders
The report suggests that there are a vast number of variable rate mortgage holders who will be vulnerable in the event of an interest rate hike. In fact, they suggest that two of every three new mortgages is a variable rate mortgage.
In the past, according to Bank of America Merril Lynch, typically around 25%-30% of mortgages were variable rate, suggesting that the tremendous shift in appetite could spell financial disaster for a big chunk of home owners in the event of a rate hike.
The good news, at least for the moment, is that many economists have put the possibility of a rate hike off the table until around 2013- but the fundamental vulnerability remains.
While it doesn’t mean that a rate hike will spell disaster, the possibility does remain. However, as many Canadian mortgage brokers will tell you, variable rate or not- they typically qualify a client at a higher fixed rate, so as to remove them from the danger zone in the event of a rate hike, simply as a part of due diligence. While the possibility of a US- style collapse exists in theory, the prevailingly stringent attitudes towards lending in Canada suggest that there are stop gaps in place to protect against such vulnerability.
Economists at Bank of America Merril Lynch suggest that, because rates have been so low for such an extended period of time, that mortgage holders are constructing false expectations about the true cost of a mortgage, and as such are taking more risk than they perhaps should be.
They indicate that Canadian mortgage holders must be mindful of the fact that rates will likely rise. According to their research, a rise of 2% will be enough to push those on the fringe into trouble
Thursday, October 27, 2011
Real estate appraisers decry Zoocasa calculator
Again everyone is running to save their souls. I would not use this service as "Gospel" but it sure sounds like a good idea as part of a personal research before buying a home.
Try It - You May like it!
Neil "Mortgage Man" McJannet
steve ladurantaye — REAL ESTATE REPORTER
Globe and Mail Update
Published Wednesday, Oct. 26, 2011 4:30PM EDT
Last updated Wednesday, Oct. 26, 2011 6:11PM EDT
The country’s professional real estate appraisers are sounding the alarm over a service that allows Internet users to receive instant estimates of a house’s worth using past appraisal data.
Zoocasa.com recently unveiled its Zoopraisal service, which allows anyone with a web connection to punch in an address and receive a valuation estimate. The estimate is generated using data provided by Centract Settlement Services, a property valuation company that has appraised millions of homes across the country on behalf of financial services companies.
But the Appraisal Institute of Canada says anyone who let Centract into their home wasn’t doing it so the data could be used by snoopy Internet surfers curious about property values along their street.
“Our organization has significant concerns relative to the confidentiality and custody of the data being used to populate the site,” said Keith Lancastle, the organization’s chief executive officer.
Zoocasa president Butch Langlois said the service isn’t intended to replace the services of professional appraisers or real estate agents, and the estimates are based on similar properties in a neighbourhood and not on any specific report on a specific property.
“We are not actually pulling any data on specific houses,” he said. “It’s based on sales and appraisals in the area around the home.”
Traditionally, the best way to get an estimate of a house’s value was to call a real estate agent. But as data become more available, web services such as Zoocasa are stepping in to make the process less cumbersome for consumers.
Appraisals are typically carried out when someone is looking to borrow money against a property. The Appraisal Institute of Canada has about 5,000 members who are certified to do the work. Mr. Lancastle said he was “concerned” that services such as Zoocasa’s could undermine his organization’s reputation.
“Much as a retail store blood pressure test is not a substitute for regular medical care, a web-based calculator is no substitute for a real property appraisal,” he said. “A proper appraisal comprises a number of stages – including research, analysis and interpretation – needed to provide an accurate estimate of the market value of a property.”
While some real estate agents have also expressed concern about the service, others such as George O’Neill of O’Neil Real Estate Ltd. in Toronto have welcomed it as a one more tool for consumers to use before they approach a professional for help.
“I would prefer that someone do all this research before contacting me so I can provide more value-added services rather than just provide numbers,” he said. “That may put me in the minority amongst my peers. But I’d rather spend my time getting someone the best price, because that can never be automated.”
Try It - You May like it!
Neil "Mortgage Man" McJannet
steve ladurantaye — REAL ESTATE REPORTER
Globe and Mail Update
Published Wednesday, Oct. 26, 2011 4:30PM EDT
Last updated Wednesday, Oct. 26, 2011 6:11PM EDT
The country’s professional real estate appraisers are sounding the alarm over a service that allows Internet users to receive instant estimates of a house’s worth using past appraisal data.
Zoocasa.com recently unveiled its Zoopraisal service, which allows anyone with a web connection to punch in an address and receive a valuation estimate. The estimate is generated using data provided by Centract Settlement Services, a property valuation company that has appraised millions of homes across the country on behalf of financial services companies.
But the Appraisal Institute of Canada says anyone who let Centract into their home wasn’t doing it so the data could be used by snoopy Internet surfers curious about property values along their street.
“Our organization has significant concerns relative to the confidentiality and custody of the data being used to populate the site,” said Keith Lancastle, the organization’s chief executive officer.
Zoocasa president Butch Langlois said the service isn’t intended to replace the services of professional appraisers or real estate agents, and the estimates are based on similar properties in a neighbourhood and not on any specific report on a specific property.
“We are not actually pulling any data on specific houses,” he said. “It’s based on sales and appraisals in the area around the home.”
Traditionally, the best way to get an estimate of a house’s value was to call a real estate agent. But as data become more available, web services such as Zoocasa are stepping in to make the process less cumbersome for consumers.
Appraisals are typically carried out when someone is looking to borrow money against a property. The Appraisal Institute of Canada has about 5,000 members who are certified to do the work. Mr. Lancastle said he was “concerned” that services such as Zoocasa’s could undermine his organization’s reputation.
“Much as a retail store blood pressure test is not a substitute for regular medical care, a web-based calculator is no substitute for a real property appraisal,” he said. “A proper appraisal comprises a number of stages – including research, analysis and interpretation – needed to provide an accurate estimate of the market value of a property.”
While some real estate agents have also expressed concern about the service, others such as George O’Neill of O’Neil Real Estate Ltd. in Toronto have welcomed it as a one more tool for consumers to use before they approach a professional for help.
“I would prefer that someone do all this research before contacting me so I can provide more value-added services rather than just provide numbers,” he said. “That may put me in the minority amongst my peers. But I’d rather spend my time getting someone the best price, because that can never be automated.”
Tuesday, October 25, 2011
With little doubt about interest rate, analysts look to Carney's call on economy
By The Canadian Press
OTTAWA - The Bank of Canada is expected to continue setting the conditions for economic recovery today by passing again on interest rate hikes.
Most economists and markets agree that governor Mark Carney will leave the rate at one per cent until the end of the year and likely well into 2012 or longer.
And, any thought Carney might have had of cutting the rate likely went out the window last week when Statistics Canada reported inflation rose to 3.2 per cent in September, above the bank's one-to-three per cent acceptable range.
TD Bank chief economist Craig Alexander says with uncertainty over Europe's debt issues high, and the U.S. economy still stumbling, the Canadian central bank is in wait and see mode for some time.
He says of greater interest today is what Carney will say about future prospects for the Canadian economy.
A few weeks ago, the bank was expected to dramatically downgrade its official growth projections of 2.8 and 2.6 per cent for this year and next. But with economic data coming in better-than-expected in recent weeks, including last month's surprising 61,000 jobs gain, the bank may not be as glum about prospects going forward.
OTTAWA - The Bank of Canada is expected to continue setting the conditions for economic recovery today by passing again on interest rate hikes.
Most economists and markets agree that governor Mark Carney will leave the rate at one per cent until the end of the year and likely well into 2012 or longer.
And, any thought Carney might have had of cutting the rate likely went out the window last week when Statistics Canada reported inflation rose to 3.2 per cent in September, above the bank's one-to-three per cent acceptable range.
TD Bank chief economist Craig Alexander says with uncertainty over Europe's debt issues high, and the U.S. economy still stumbling, the Canadian central bank is in wait and see mode for some time.
He says of greater interest today is what Carney will say about future prospects for the Canadian economy.
A few weeks ago, the bank was expected to dramatically downgrade its official growth projections of 2.8 and 2.6 per cent for this year and next. But with economic data coming in better-than-expected in recent weeks, including last month's surprising 61,000 jobs gain, the bank may not be as glum about prospects going forward.
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