The Bank of Nova Scotia has released a new forecast which tells Canadians to expect low interest rates until 2014.
In the forecast, Scotiabank economists Dov Zigler and Derek Holt estimate the economy will likely average 1.9 per cent growth this year, and 1.8 in 2013.
“At best, we’re going to see a very slow-growth environment with downside risks,” said Holt.
He went on to note that most developed countries will be in a similar position. He expects that strong growth will come from emerging economies like India, Indonesia, and China.
The report noted these factors should keep the Bank of Canada on hold at the current policy interest rate setting into 2014.
This goes against indications from Mark Carney who has signalled there may be a rate hike in the future. An article from The Canadian Press explains Holt’s argument, saying “that given that many global central bankers are easing lending conditions, any counter action from Canada will light a spark under the dollar, further weakening exports.”
Mortgages with variable
rates or fixed terms under five years typically require that you qualify at a
higher rate (called the “qualifying rate.”).
For example, if you apply
for a 2.25%, 5-year variable mortgage, the lender might make you qualify at
their posted 5-year rate (5.39% for example).
Qualifying rates are used
to ensure borrowers can handle their payments if rates go up.
In practice, lenders use
the qualifying rate to calculate your debt service ratios. Lenders then check
to ensure your debt ratios are low enough to meet their guidelines.
Here are a few things to
keep in mind:
- Your payments are typically based on the
contract rate (i.e., the regular rate you are quoted), not the qualifying
- As of April 19, 2010, all insured variable and
1- to 4-year fixed mortgages over 80% loan-to-value must be qualified
using the posted 5-year fixed rate, as published every Wednesday by the
Bank of Canada.
- Some lenders also apply the Bank of Canada
qualifying rate to uninsured mortgages, and mortgages with a loan-to-value
of 80% or less.
- Other lenders allow lower qualifying rates if
the loan-to-value is 80% or less (e.g. they use a 3-year discounted fixed
rate instead of the posted 5-year fixed rate).
Have you thought of being pre-approved before start looking for a home? It will give you many advantages. Some of them are : Knowing maximum mortgage you can afford, winning in bidding wars by having pre-approval in 'your pocket', avoiding frustration of selecting the house you cannot afford, etc.
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Once again, Mark Carney
and committee have left Canada’s
core interest rate
Our economy still isn’t
firing on all cylinders, says the Bank of Canada. This suggests that mortgage
holders can likely expect the 3.00% prime rate to remain
as is for a number of months.
Here were some focal
points from today’s Bank of Canada statement:
- “Global financial conditions have…deteriorated
- “Housing activity is expected to slow from
- “Canadian exports are projected to remain below
their pre-recession peak until the beginning of 2014”
- “The economy is expected to reach full capacity
in the second half of 2013”
- “To the extent that the economic expansion
continues and the current excess supply in the economy is gradually
absorbed, some modest withdrawal of the present considerable monetary
policy stimulus may become appropriate”
That last quote is what
the markets keyed in on. The Bank of Canada chose to retain this phrasing as a
reminder that borrowing costs could jump if inflation threats emerge. That
said, we’d likely have to see surprisingly strong economic performance for 3-4
months in a row before that happened.
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traditionally been the cautious, fiscally conservative society, watching
American economic dynamism from a safe remove (and subsisting on a small cut of
the branch-plant spoils). For us, paying off the mortgage was once the
equivalent of forgiveness for our acquisitive sins. Our public policies were
more prudent than the U.S.
policy of allowing home owners to deduct the interest on mortgage debt.
Canadian leaders rejected mortgage interest deductibility and fortunately
Canadians only briefly embraced the subprime mortgages that are still a huge
factor in Americans’ fiscal woes.
For the moment, it seems
that the risk-averse Canadian tortoise has the lead in the race against the
risk-taking American hare, who has singed his feet on his rocket pack. How
Canadians will respond to this at the household level remains to be seen. Are
we naively careering toward American-style (pre-crash) financial behaviour with
loaded credit cards, second and third mortgages, and a lax approach to savings
in a headlong pursuit of materialism, hedonistic pleasures, and instant
gratification? Or does it say something about our abiding national character
that we have so many sober souls in positions of power who will mete out
regular scoldings like the clergy in pulpits of old and do things like change
our mortgage rules to protect us from ourselves?
By Michael Adams , a president
of the Environics Institute and the author of
Fire and Ice: The United States, Canada, and the Myth of Converging
Currently, the average
Canadian household is more than $40,000 richer than the average American
household. (According to the latest Environics Analytics WealthScapes data, the
average household net worth in Canada
was $363,202 in 2011; in the U.S.
it was $319,970.) And these are not 60-cent dollars, but Canadian dollars more
or less at par with the U.S. greenback. Furthermore, these figures ignore
public-sector (government) debt that presumably people on both sides of the
border or their children will some day have to pay. Such debt is higher in the U.S. as a percentage of GDP than it is in Canada.
experienced a sudden surge of productivity or entrepreneurial genius? Not
exactly. Our resource sector is certainly firing on all cylinders, but the
biggest reasons for Canadians’ deep pockets relative to Americans’ in recent
years are the related phenomena of the 2008 economic crisis and the collapse of
housing market. Because house prices in the U.S. have plunged, the real estate
held by Canadians is now much more valuable than that held by Americans (worth
over $140,000 more on average). In fact, Canadians hold more than twice as much
real estate as Americans and, once mortgages are factored in, have almost four
times as much remaining equity in their real estate. Americans’ liquid
(non-real estate) assets are still greater than Canadians’.
to be continued..
Greater Toronto REALTORS®
reported 5,142 transactions through the TorontoMLS System during the first 14
days of May 2012.
This result was up by more than
14.5 per cent in comparison to the first 14 days of May 2011. The number of new
listings continued to grow at a slower pace than sales – up 13 per cent
year-over-year to 8,749.
“Annual growth in sales was
experienced across the GTA for all major home types in the first half of May.
Sales growth was strongest for the condominium apartment segment. While the
condo market has generally been the best supplied market over the past year, we
have continued to see enough demand to exert moderate upward pressure on
average selling prices in this market segment,” said Toronto Real Estate Board
President Richard Silver.
The average selling price for
transactions in the first 14 days of May was $517,242 – up by six per cent
compared to the same period in 2011.
of listings in the low-rise segment of the market has resulted in a lot of
competition between buyers and above average annual rates of price growth.
Tight market conditions are expected to remain in place for the balance of
2012,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.
April 18, 2012 – Greater Toronto REALTORS® reported 4,557 transactions through
the TorontoMLS system during the first two weeks of April 2012.
This represented an increase of almost seven per cent in
comparison to the same period in April 2011. The number of new listings grew
over the same period, but by a lesser annual rate than sales, which means
market conditions tightened compared to last year.
“Competition between buyers remained strong in many parts of
the Greater Toronto Area during the first half of April, with many listings
attracting a lot of attention. Strong competition meant that, on average,
sellers priced within market value range received offers that matched their
asking prices within three weeks,” said Toronto Real Estate Board President
The average selling price during the first two weeks of
April was $506,954 – up by five per cent compared to the first half of April
2011. The annual rate of price growth was stronger in the GTA regions
surrounding the City of Toronto.
“Growth in listings has not kept up with growth in sales. In
the City of Toronto,
new listings for low-rise home types during the first half of April were
actually down compared to last year. This helps explain why some of the
tightest market conditions in the GTA can be found within the ‘416’ area code,”
said Jason Mercer, TREB’s Senior Manager of Market Analysis
cleaning bug is upon us, but it doesn't have to stop at old clothes and
couches…. You might want to spring clean" your computer.
I don't mean
wiping down your keyboard, mouse and screen - which isn't a bad idea - but
rather squeezing some additional life out of your existing computer.
your PC or Mac can speed up performance, free up hard drive space and ensure
you're protected against the latest cyber attacks.
1. Back up important files
thing is to back-up all your important files and store them in a safe place. A
spare USB thumbdrive in your desk drawer should do the trick for documents, but
you might consider a free "cloud-based" online back-up solution, such
as Windows Live SkyDrive (25GB of free storage, per account), which you can
access from virtually any computer in the world.
Clean up the desktop, hard drive
programs you no longer need. This should be pretty simple.
Don't just delete the desktop icon, but for Windows users, click Start
(bottom-left corner), Control Panel and finally Add/Remove Programs (or simply
Programs) and uninstall old or unused software one-by-one. You should clear up
a lot of hard drive space, and also clean up the icons on your desktop, so you
can see your wallpaper again.
You can also
right mouse-click on your C: drive (in Windows Explorer) and click Properties,
followed by Disk Cleanup. Now check off the desired boxes -- such as
"Temporary Internet Files," "Recycle Bin" and
"Downloaded Program Files" - and it will tell you how much space it
can free up.
the built-in system tools
is another way to help your computer operate faster with more stability. Click
on the Start button, find All Programs, select Accessories, then System Tools
and finally Disk Defragmenter. Run the program on your hard drive to give your
PC maximum efficiency.
It might take a while but you should notice a marked performance improvement
when it's done. Because it's not recommended to use your computer while you're
defragging, perhaps you'll want to start the process before you go out for
lunch or before you go to bed (but turn off your monitor to conserve
your operating system and other software
second-last step to spring-cleaning your PC is to download the latest free
software updates for your operating system (Start>All Programs>Windows
Update) as these updates plug security holes and add functionality.
I have Windows 7 scheduled to download and install new updates whenever they
become available so I don’t have to manually do it. On a related note, be sure
to download all the updates to your favourite programs – such as a web browser,
media player and computer games – as they usually fix issues (like technical
bugs) or add new features.
A quick way to see if there's an update is to go to the About, Help or Settings
section of your software and you should see an option to check for updates.
There are often new updates for hardware accessories, too, such as a printer,
monitor and webcam, so you can also look for that online beginning with the
official website for the product.
anti-malware software for real-time protection
always recommended to have good antivirus and antispyware programs. The former
refers to software that can detect and remove online threats (such as viruses
or worms that can propagate through your address book), while the latter are
tools that can protect your PC from sneaky programs that hide on your hard
drive, monitor your web surfing behaviour, hijack your browser home page and
slow down your computer's performance.
Collectively, these threats are called "malware" (malicious
software). And if you've read the news lately, Macs aren't bulletproof, either.
Many free antivirus and antispyware tools are available from Download.com –
check out the Top 5 downloads on the main page – and once you start using one
be sure to regularly check for updates (if it doesn't do it automatically) to
ensure you're protected from the latest online threats.
Many complains come after the buyer moves in and reveals problems in the house.
Most complain about sellers who fail to disclose defects or home inspectors who fail to find them. The system is far from perfect. However, there are steps that buyers can take before and during a home inspection to protect their interests.
Simple steps you can do yourself:
Check all electrical outlets to make sure that they work.
Open windows, even in the winter, to make sure they are not stuck or painted shut.
Look under any area rug or bed and behind any picture to check for cracked tiles, stained carpets or walls. Lift anything on the kitchen counters to look for defects.
Do any of the appliances show any rust? How old are they? If they are discontinued models, you will likely have to replace them if they break down because of the difficulty of finding replacement parts.
Start the dishwasher at the beginning of any home inspection. By the end, it should have gone through its entire cycle, without leaking.
Put a thermometer inside the oven and turn it on to 350 degrees. After 10 minutes, check the temperature. Test stove burners.
Put a cup of water in the microwave for 45 seconds. Does it heat up?
Flush every toilet and see whether it stops running after it is filled.
Check sinks, tubs and showers in the house. Is there proper water flow from each faucet and does everything drain properly?
You may want to consider turning all the faucets on at the same time and then flushing a toilet upstairs to see whether the water pressure slows or stops in any sink. This could indicate a problem with the system.
In older homes, consider a separate sewage inspection. Stan Collini, the President of Roto-Rooter Plumbing and Drain Service in the GTA, tells me that for $295, you can do a video camera of a property’s sewer system to see if there are any problems that would not be visible on a typical home inspection.
Check under the water heater for leaks or stains on the floor.
Ask how old the air conditioning unit is and when was it last serviced Is there sufficient hot or cold air reaching all of the rooms in the house?
Does the owner have a plan with their gas company to inspect the furnace once a year? When was the last inspection conducted?
If the house has an addition, ask whether any upgrade was done to the heating or cooling systems to account for the additional living area.
Look for water stains in the ceiling which could indicate leaking from the roof or other problems with the plumbing system.
When your inspector is on the roof, ask them to check for broken or cracked shingles. If it is a flat roof, look for the low spots where water can collect for any evidence of a problem. Check the eaves to see if there is any rot or decay. If any concerns are noted, consider bringing in a roofing contractor for an additional opinion, especially if the home is 15-20 years old and it is still the original roof.
You may also want to consider a separate inspection for mould or termites, as these may not be visible on a home inspection but can result in significant costs to repair later. Check if this is a known problem in the area.
Always ask the seller and the seller’s agent if they know about any hidden defects that are not visible. They must answer truthfully if you ask them.
Consider looking into after-sale warranty protection. Many of these products on the market will generally cover problems with a home electrical, plumbing, heating and cooling system, as well as the major appliances. But like any warranty, ask about deductibles and what is excluded from coverage.
By being properly prepared and asking the right questions both before and during any home inspection, you will be better protected against costly surprises after closing.
The TD Canada Trust 2012 Condo Poll surveyed urban Canadians who recently bought or intend to buy a condo and found they are drawn to condos because they require less maintenance (60%), are more affordable (45%), and offer more amenities (25%) than a house.
Those findings specifically focused on condo amenities back up investors arguing monthly condo fees should explicitly be factored into rents. That move, if adopted by a majority of condo investors, could bump up rental values in new developments by as much as 10 per cent, say analysts.
That leverage increases in markets with occupancy rates sit near or at record highs. Many investors in the boom markets of Alberta and Saskatchewan are already asking tenants to pay all condo fees, some even adding a premium.
That may sit better with young renters hungry for hot and cold luxury, if their condo-buying counterparts are anything to go by.
The TD poll found that one-third of condo buyers (35%) are willing to pay up to $200 per month in condo fees, 44% would pay up to $400 and 17% would pay up to $800.
Across all cities, Torontonians are willing to pay the highest fees; 38% are willing to pay more than $400 and 16% more than $600.
There are so many benefits to registering
a second mortgage on those deals as a way of protecting your investment [ your
own home or your real estate investment].
In placing that secondary lien – equal to their
investment amount – money investors place themselves second in any queue of
creditors resulting from a default. They also gain firsthand oversight of what
their expert partners are doing with the property.
“The second mortgage means that you have to be
notified before any other liens are placed or if there is any attempt to
refinance the property, for example,” said Loeffler, who usually takes on the
role of expert investor, although routinely places a second on deals where he
provides the primary funding. “It just protects you on the back-end.”
That manoeuvre is always done with the full consent of
all JV partners. Its use is expected to grow as an increasing number of
investors form those joint venture relationships as a way of overcoming more
rigid lending guidelines.
The continuing growth in property values across most
Canadian markets also means many individual investors are having to band
together to be able to afford even single-family properties.
“Filing a caveat will accomplish some of
the same things,” said Greg Head, co-author of The Canadian Investor's Guide to
Secrets of the Real Estate Cycle. “It will make sure you’re notified about any
refinance or attempted sale, because ‘trust me’ doesn’t work in real estate.”
resale market has not suffered from a lack of willing buyers this year. Buyers
have been spurred on by the positive affordability picture brought about by low
mortgage rates,” said TREB President Richard Silver.
challenge has been a lack of inventory. Many listings have attracted multiple
interested buyers. Strong competition has led to annual rates of price growth
well above the long-term average.”
selling price in the GTA was $501,614 in March – up by 10 per cent in
comparison to March 2011.
of new listings was up last month in comparison to March 2011. However, based
on the historic relationship between price and listings, the GTA resale market
should be better supplied.
Toronto REALTORS® reported 9,690 sales through the TorontoMLS system in March
2012. This result was up by almost eight per cent in comparison to the 8,986
deals reported during the same period in 2011.
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TORONTO, November 16, 2011 -- Greater Toronto REALTORS® reported 3,379 transactions through the TorontoMLS® during the first two weeks of November. This result represented more than a 13 per cent increase compared to November 2010. New listings were up 16 per cent over the same period.
“The results for the first two weeks of November point to two important facts:
First, despite global economic uncertainty, buyers have remained confident in the affordable housing market in the GTA.
Second, stronger growth in new listings means that it is becoming easier for buyers to find a home that meets their needs,” said Toronto Real Estate Board President Richard Silver.
The average selling price through the first 14 days of November was $481,548 – up by 10 per cent compared to the average of $437,510 reported for the first two weeks of November 2010.
“Little or no movement is expected for mortgage rates through 2012. Low rates coupled with the consensus outlook for continued economic growth next year suggests that homes will remain affordable in the GTA and households will remain confident in doing deals. Look for the average selling price to advance to the $485,000 mark next year,” said Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis.