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Mortgage Rates – How to protect yourself when they increase – Video message!

Heres a video I personally did on how to take a proative approach to protect and prepare yourself with rising interest rates in the future and save thousands of dollars! Click below to view video

Inflation Hedge Strategy - Learn to protect yourself from rising rates

Lisa Alentejano

Posted in Bank of canada rates, BC Mortgages, Canadian Economy, Canadian Housing Market - Lisa Alentejano, Canadian Mortgage News, Debt, Fixed rates, Kamloops Mortgages, Mortgage Affordability, Mortgage Broker Kamloops, mortgage financing kamloops, new mortgage rules canada, rate fixed mortgage, Real Estate Market

Mark Carney signals long pause in rate hikes

Bank of Canada Governor Mark Carney held his benchmark interest rate at 1 per cent Wednesday and suggested his year-long pause will last much longer as a bleaker outlook for the global economy quashes any urgency to make it harder to borrow and spend.

In explaining the decision to leave borrowing costs alone for an eighth meeting, as expected, the central bank said it believes Canada’se conomy is growing again after stalling in the second quarter, but painted a troubling picture for the United States and Europe, and said exports will be a “major source of weakness.”In light of slowing global economic momentum and heightened financial uncertainty, the need to withdraw monetary policy stimulus has diminished,” the central bank said.

“The Bank will continue to monitor carefully economic and financial developments in the Canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2-per-cent inflation target over the medium term.’’

Without doing so explicitly, the central bank also left the door open for an interest-rate cut should the external backdrop deteriorate further, in part by reiterating it is less worried about inflation than just weeks ago when policy makers hinted they might raise rates by the end of the year.

Still, the Canadian dollar made a small gain against the U.S. currency after Mr. Carney’s decision. And economists generally interpreted his language as suggesting he will stay on hold until mid-2012 or later, but reckoned he will eventually need to raise rates if the rebound survives the current turmoil.

“Once again, the tug-of-war between offshore and internal factors is holding the Canadian economy and Bank of Canada policy in limbo,’’ Michael Gregory, a senior economist at BMO Nesbitt Burns, said in a note to clients. “We still judge (as does Carney & Co.) that at least modest growth will resume in(the second half of 2011) and push the Bank’s policy bias back to the tightening side.’’

Policy makers did not include new projections for growth and inflation in their statement, tracking closely to comments Mr. Carney made on Aug. 19, when he appeared with Finance Minister Jim Flaherty before an emergency meeting of the House of Commons finance committee. The recovery has likely resumed, the bank said, after gross domestic product shrank at a 0.4-per-cent annual rate in the second quarter, and growth will be led by business investment and household spending.

However, policy makers said, “lower wealth and incomes will likely moderate the pace of investment and consumption growth,” even as the supply and cost of credit for both businesses and households “remain very stimulative.”

Financial conditions have tightened some and could continue to do so should the global situation worsen, the bank said. Plus, net exports – the difference between what Canadians buy from overseas and what they sell abroad – will be a big drag on the economy, both because of weaker demand around the world and because of “ongoing competitive challenges” like a currency that, while weaker in recent weeks, is still near parity.

Several of the “downside risks” the central bank has identified for the global rebound’s trajectory have come to fruition, policy makers said.

“The global economic outlook has deteriorated in recent weeks,” the bank said. “The European sovereign debt crisis has intensified, a broad range of data has signalled slower global growth, and financial market volatility has increased sharply.’’

The fiscal and financial strains linked to Europe’s crisis have caused upheaval in markets as investors shy away from risk, and “could prompt more severe dislocations” in global markets.

Resolving those strains, the bank said, “will require additional significant initiatives by European authorities,” – an obvious yet significant comment given that in July the central bank said its outlook for the economy at that point assumed that Europe would be able to contain the crisis.

South of the border, Canada’s main export market will see weaker growth than the central bank was anticipating, policy makers said, and household spending “will be even more subdued in the face of high personal debt burdens, large declines in wealth and tough labour market conditions.”

Moreover, the stimulus spending that propped up the U.S. recovery from its worst downturn since the Great Depression will soon give way to restraint and cuts that will undoubtedly crimp U.S. growth.

And although growth in emerging markets like China and India is still “robust” and commodity prices will remain “relatively high,” as those rapidly-expanding economies lift the rest of the world, they too will be affected by sluggishness in the developed world, as consumers and businesses everywhere retrench.

The global recovery’s decline in momentum will keep Canadian inflation in check, the bank said, as energy and food prices ease, wage growth “stays modest” and Canadian companies improve their productivity in the face of the slowdown.

The central bank’s decision comes in a potentially pivotal week that features a bevy of central bank policy meetings, a major speech by U.S. Federal Reserve chairman Ben Bernanke and a nationally televised address by U.S. President Barack Obama before a joint session of Congress, where he is expected to unveil a $300-billion (U.S.) plan to kick-start hiring in the world’s biggest economy.

The week concludes with a gathering of finance ministers and central bankers from the Group of Seven nations in Marseille, France, on Friday and Saturday.

Mr. Carney’s next interest-rate decision is scheduled for Oct. 25, and he will release an updated forecast for the Canadian and global economies the following day.


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Canadians comfortable with their mortgage debt levels

One third have made additional payments in the last 12 months
Canadian Association of Accredited Mortgage Professionals releases
Annual State of the Residential Mortgage Market in Canada report
Toronto, ON (November 8, 2010) – Canadian homeowners are comfortable with their
mortgage debt, have significant home equity and could withstand an increase in their mortgage
interest rate, according to the sixth Annual State of the Residential Mortgage Market report from
the Canadian Association of Accredited Mortgage Professionals (CAAMP), released today.
• The vast majority of Canadians with mortgages are able to afford at least a $300
increase in their monthly mortgage payments.
• One in three (35 per cent) mortgage holders have either increased their payments or
made a lump sum payment on their mortgage in the last year.
• 89 per cent of Canadian homeowners have at least 10 per cent equity in their homes
and 80 per cent have more than 20 per cent equity.
• Overall home equity is at 72 per cent of the total value of housing in Canada; for
homeowners who have mortgages, equity level averages 50 per cent.
• As of August 2010, there was $1.01 trillion in outstanding residential mortgage credit in
Canada, an increase of 7.6 per cent from last year.
“Canadians are being smart and responsible with their mortgages,” said Jim Murphy, AMP,
President and CEO of CAAMP. “They are building equity in their homes and making informed,
long-term mortgage decisions. The survey results speak to the strength of our mortgage market,
especially when compared to the United States.”
Homeownership is a good long-term investment. Most Canadians agree that buying a home is a good long-term investment and are focused on their mortgages to support that investment. Many mortgage holders are making voluntary additional payments: 16 per cent have increased monthly payments during the past year, 12 per cent have made lump sum payments, and 7 percent did both.
Canadians are exercising caution when taking out their mortgages, with a majority choosing a
fixed-rate (66 per cent). A five-year fixed-rate mortgage remains the most popular option in
Canada. Despite the fact that variable rate mortgages have become much less expensive
compared to fixed rates, the majority choice is still fixed rates: this decision is based on people’s
individual assessments of risk, not just the cost difference. Potential rate increases won’t be a problem.
The CAAMP study found that a vast majority of Canadians have significant capabilities to afford
higher payments if and when mortgage interest rates rise. 84 per cent report that they could
weather an increase of $300 or more on their monthly payments.
Most of the people who have low tolerances for increased payments have fixed rate mortgages,
by the time their mortgages are due for renewal, their financial capacity will have expanded and
their mortgage principal will have been reduced.
Also, Canadians have been able to negotiate better than posted mortgage interest rates. For
five year fixed rate mortgages arranged in the past year, the average rate is 4.23%, which is
1.42 points lower than typical, advertised rates.
Of the 1.4 million Canadians who renewed their mortgage in the past year, 72 per cent were
able to renegotiate a decreased rate: on average, rates are 1.09 percentage points less than the
rates prior to renegotiating.
Canadians have significant equity in their homes, strengthening the housing market Canadians’ home equity is impressively high. Among homeowners who have mortgages, the
average amount of equity is about $146,000, or 50 per cent of the average value of their homes.
The amount of equity take-out in the past year is unchanged from last year with around one in
five homeowners, or 18 per cent, taking equity out of their home, at an average of $46,000. The
most common purpose for equity take-out is debt consolidation and repayment (45 per cent)
followed by home renovations (43 per cent), purchases and education (19 per cent) and then
investments (16 per cent).
The report is authored by CAAMP Chief Economist Will Dunning and based on information
gathered by Maritz Research Canada in a survey of Canadian consumers conducted in October

Posted in BCMortgage, Best Rate Mortgages, British Columbia Mortgages, Canadian Housing Market - Lisa Alentejano, Canadian Mortgage News, Home Loans, Real Estate Market

Real estate association members ratify deal giving consumers wider choice

ST. JOHN’S, N.L. — Delegates from Canada’s 101 local real estate boards Sunday ratified a deal worked out by the federal Competition Bureau and the real-estate industry.

It would allow consumers to choose what services they want from their agent when selling their homes, and to pay for only those services.

The deal was reached after months of negotiations between the competition watchdog and the Canadian Real Estate Association that represents some 100,000 realtors.

The bureau chief was quick to praise the ratification.

“I am pleased that CREA members have voted in favour of this agreement,” said commissioner Melanie Aitken. “For Canadian homeowners, it ensures that they will have the freedom to choose which services they want from a real-estate agent and to pay for only those services.”

Association president Georges Pahud also welcomed the vote.

“We are pleased that after careful consideration and reflection, real-estate boards and associations from across Canada have endorsed the agreement,” Pahud said.

Under the deal, the Canadian Real Estate Association has agreed that its rules as well as those of its members should not deny or discriminate against realtors wishing to offer mere posting services.

The Competition Bureau has been pressuring the association to change rules it calls “anti-competitive” on behalf of realtors and consumers who want more flexible services.

“This 10-year agreement brings a close to a long process of negotiation with the Competition Bureau and will allow CREA and realtors to do what they do best — help people with the biggest financial decision of their lives, buying and selling a home in these challenging economic times,” said Pahud.

But experts say the doors to lower-cost services won’t be thrust open overnight because the industry is dominated by traditional agents who are reluctant to change their business models.

Realtors currently operate on the principle that selling agents will split the standard five per cent commission with the buyer’s agent.

Canadian Real Estate Association members voted on amendments to the organization’s rules in March that were expected to appease the Competition Bureau, but the watchdog took issue with a clause in the amendments that said the changes are subject to the rules of local boards.

The watchdog said it would settle for nothing less than a legally binding agreement so that the association couldn’t change its rules back on a whim.

With Sunday’s ratification, the deal will be legally binding as of today and will remain in effect for 10 years, with hefty penalties for any violation.

Posted in Applying for a mortgage - Lisa Alentejano services the interior, BC Mortgages, BCMortgage, Best Rate Mortgages, Canadian Economy, Canadian Mortgage News, Home Buyer Closing Costs, HST, Kamloops Mortgage Broker, Kelowna Mortgage Broker, Mortgage Affordability, Real Estate Market, Salmon Arm Mortgage Broker, Vernon Mortgage Broker

Whats the impact of the HST when buying a home?

What’s the impact of the HST when buying a home?

The BC government’s move to introduce a harmonize sales tax, or HST, that combines the federal and provincial sales taxes into a single 12% will mean increased costs for some homebuyers.

Most importantly, new homes in BC will be subject to the 12% HST. Re-sale homes are not subject to the HST.

According to the BC Real Estate Association, “To offset the increase in costs, the BC Government is offering a partial rebate of the HST for new housing, intending that new homes up to $525,000 should bear no more tax than under the previous PST system. Homes above $525,000 will receive a flat rebate of $26,250. New home sales over $525,000 will be impacted, as buyers will have to pay an additional 7% tax less the $26,250 flat rebate.”

“On November 18, 2009 the provincial government announced the HST transitional rules on housing which includes a threshold increase from $400,000 to $525,000, moving the threshold to above the median new home price in the province.”

The British Columbia Harmonized Sales Tax of 12% HST is also applicable to any costs and fees associated with your property/home purchase including legal/notary fees, real estate commissions and other closing costs.

Posted in BC Mortgages, British Columbia Mortgages, Canadian Economy, Canadian Housing Market - Lisa Alentejano, Canadian Mortgage News, Home Equity, Home Loans, Low Interest Rates, Mortgage Affordability, Protecting your biggest investment your mortgage, Real Estate Market

Your House Might Be Underwater for Years

An interesting read for you from Bloomberg;

The housing market has usually led the U.S. economy into and out of recessions. It certainly led us into the latest slump.

The same can’t be said of the recovery. If anything, housing today is stifling economic expansion.

Rebounds in housing have typically been driven by declines in mortgage rates. Not this time. Rates on a 30-year mortgage have dropped to about 4.5 percent — the lowest since the early 1950s — with little effect. Tax credits and other programs to encourage buyers have provided only a modest, temporary boost.

Other traditional measures of value, such as the size of monthly mortgage payments relative to income, show that housing is a bargain now.

None of that matters because houses are bought with an eye toward the future and in anticipation of an eventual sale.

We saw what happened in the boom in the middle of the decade — even though prices soared, demand increased as consumers thought about how much money they would have made had they bought sooner. People bought homes, often with no plans to occupy with an eye toward selling and making a quick profit.

In short, the housing market in the middle of the decade had all the characteristics of a bubble.

Bust Time

Now we’re seeing the opposite mindset. If a potential buyer believes that housing prices may fall more, then mortgage rates of 4.5 percent won’t attract home buyers. Rates could even drop to zero and it might not outweigh consumers’ negative perceptions.

Household expectations of future U.S. home price appreciation aren’t directly measured, and are probably based on recent experience.

If expectations reflect changes in home prices over the last three years, for example, consumers seem to anticipate annual house price declines of 3.7 percent to 10.4 percent, depending on which of the various house price indexes is used.

This pessimism is heightened by increased uncertainty, because home ownership typically ties up a high portion of an individual’s assets. Diversification isn’t likely to offset the risk associated with home ownership.

What will it take to turn this attitude around? Only a sustained flow of favorable information is likely to alter negative perceptions of housing as an investment. The market is unlikely to provide such good news in the near term.

Declines to Come

More likely, market conditions will reinforce expectations of further price declines. Even with new home construction declining, there are too many houses for sale. And when the bounce provided by the home buyer tax credit ends, there will be renewed pressure on prices.

It’s true that the inventory of new homes for sale has been reduced. But this is offset by the glut of homes currently and potentially in the market. The homeowner vacancy rate, or empty homes for sale as a share of all homeowner units, was at 2.5 percent in the second quarter of 2010. Between 1956 and 2006, the rate never exceeded 2 percent.

Moreover, Census Bureau data indicate that there was a net increase of 1.4 million single family homes in the rental market between 2005 and 2009. Although some of those homes became rentals as deliberate long-term investments, many were rented out only because the owners couldn’t sell. This is a hidden source of future downward pressure on prices: Should the market show signs of turning around, many of these homes will go back on the market for sale.

Foreclosure Pipeline

This doesn’t even take into account the large number of homes with defaulted mortgages in the foreclosure pipeline.

On the demand side, while mortgage rates are low, plenty of households may have trouble meeting new, stricter lending standards. Then there are those consumers who would like to buy, but whose credit records were damaged by mortgage defaults or other difficulties repaying debt. They will be locked out of the housing finance system for years, so even if they want to buy their ability to borrow is nil, further limiting potential demand.

The attempt to stimulate housing demand with tax credits wasn’t foolhardy, but could only have a temporary effect. It has been criticized as merely changing the timing of home purchases. That is no doubt true. Yet, if that meant home purchases now rather than in 2012 or 2013, it would represent an excellent trade-off.

As we have seen, though, much of the effect was only to shift sales from May or June to March or April, when the credits expired. Although existing home sales data, based on closings, haven’t yet shown the effect of the end of the tax credit, new home sales and contracts on existing homes have both fallen to record lows following the end of the tax credits.

The reality is that the real estate market won’t fully recover until builders and consumers start believing once again that housing is a relatively safe investment with reasonable returns, and that will take some time.