Mark
Monday, September 29, 2008
Guaranteed Financial Freedom and Success in Life
Mark
Sunday, September 28, 2008
MORTGAGE RATE INCREASE
Good Day ,
Mortgage rates have increased with most major lenders.
On average, the increase is .35% on most fixed rate terms of 3 years or greater.
Only 2 prime lenders that I know have yet to issue rate increases.
If you have recently decided to purchase, now is the time to get a rate hold. The rate hold/preapproval is available without risk, cost or obligation.
These rates are still available; however, subject to change without notice.
As of Sept 27, 2008
Prime Rate………….4.75%
Variable Rate………Prime less .45%
1 year closed……….4.80%
3 year closed……….5.35%
5 year closed……...5.04%*
7 year closed……….5.54%*
10 year closed……...5.80%*
25 year closed……...6.95%
* for mortgage of $500,000 or greater; slightly higher rates for lower mortgage amounts
Information subject to change without prior notice. APR.E.&O.E.
Please let me know if you have any questions.
Mark
Saturday, September 27, 2008
The Toronto Main Event
Unfortunately, I did not attend this event, but your musing summarizes this event beautifully. I had a few people contact me after this event and some did spend the nearly $1k on materials, but were happy to do so, go figure! As far as I know, none of them have purchased an investment property, to date!
Mark
Friday, September 26, 2008
Shorter Amortization on Canadian mortgages is better in the long run
I like these changes, for one, it reduces the possibility of a real estate meltdown as is currently happening in the US.
Government changes mortgage rules for CMHC
The federal government here in Canada is attempting to avoid the kind of sub-prime mortgage meltdown plaguing the United States. Effective October 15, 2008, the 40-year mortgages with no money down will no longer be covered through the federal government insurance program administered by Canada Mortgage and Housing (CMHC). Instead of this option, the longest period of amortization for a Canadian mortgage insured by CMHC will be 35 years.
As well, a buyer insured by CMHC will have to make a minimum down payment of five per cent of the home's value. This will be grandfathered, as Canadians already holding 40-year no-money-down mortgages won't be affected by the changes.
The regulations will apply to such federal agencies as CMHC, (the Canada Mortgage and Housing Corp)., which has an estimated 60 per cent share of the mortgage insurance market. However, private-sector mortgage insurance rivals such as Genworth Financial, PMI Mortgage Insurance Co. Canada and AIG United Guaranty are free to offer the product.
One difference is that the federal government will no longer provide insurance that protects lenders in the event of a default by the insurers.
Existing 40-year mortgages will be grandfathered, a Finance Department spokesman said. In 2006, the maximum amortization period was extended to 40 years from 25, and longer-term mortgage products have become increasingly popular with buyers looking for lower monthly payments as the price of Canadian homes soared.
Today's announcement marks a responsible and measured approach by the government to ensure Canada's housing market remains strong, and to reduce the risk of a U.S.-style housing bubble developing in Canada," the Finance Department said in a statement.
According to analysts, the Canadian housing market would have slowed sooner if longer- term amortizations had not been introduced. The longer amortizations mean much greater interest costs over the life of the mortgage, but smaller monthly payments, which allows buyers to bid on a more expensive home than they otherwise could afford.
Bank of Canada Governor Mark Carney said in May he was concerned about the prevalence of long amortizations. "They add to the momentum in the housing market, and if everyone has a 40- year amortization mortgage, then you just have higher housing prices."
This, combined with the fact that these mortgages are often combined with little or no equity, raised alarm bells with policy makers looking at the turmoil that took place in the U.S. when house prices started to fall.
"We've seen an inclination now, a trend, toward longer-term amortizations and smaller down payments, and that is a matter of some concern," Finance Minister Jim Flaherty said in a speech in May. Mr. Flaherty was not available for comment Wednesday.
Jim Murphy, president and chief executive of CAAMP, said in talks with him the government expressed concern about the risky lending products that collapsed the U.S. housing market. The Finance Department was also worried about the future impact of competition between mortgage insurers, which led to the introduction of 40-year mortgage in 2006, Mr. Murphy said.
"I think you have a clear case of the government sitting down and looking at its risk exposure and wanting to review that. They have financial guarantees in place for the CMHC and private insurers, and they were saying, 'What is our risk, and what is the risk to the Canadian taxpayer?' " he said.
Others, however, say home buyers and banks have been prudent with their finances, and are being punished for the more lax approach south of the border. "Things here are not like they are in the U.S. where they had those NINJA loans, no income, no job, no assets. … It's only going to hurt the consumer," said John Panagakos, owner of Toronto brokerage Mortgage Centre.
Reaction from the industry was mixed. "CMHC supports the new parameters … . We also support their efforts to maintain the strong Canadian housing market," said spokesperson Stephanie Rubec, adding CMHC will stop insuring 40-year and zero down payment mortgages in October.
"It's the right move," said Nick Kyprianou, president of Home Capital Group Inc., whose principal subsidiary, Home Trust Co., provides alternative mortgages. "Why get people overextended? Nobody wins by getting people right to the end of the cliff."
This was issued by CREA 10/07/2008
You may read more about this at my site, www.mississauga4sale.com
Thanks
Mark
Thursday, September 25, 2008
RBC comments on Canada's Economy
Canada’s economy limps along in the second quarter
Canada’s economic growth reports have been disappointing, with real GDP contracting at a 0.8% annualized rate in the first quarter and eking out only a mild 0.3% annualized growth rate from April through June. Hiding beneath these soft overall growth numbers, however, Canada’s domestic economy remained firm. Final domestic demand growth averaged 2.2% during the six-month period, slower than 2007’s 4.2% pace but much stronger than the tepid growth rate for the overall economy.
Slower-than-expected housing reports and the sharp 55,000 job loss in July are supporting worries that the domestic economy’s growth momentum is starting to crack. However, August’s 15,200 job gain took some of the heat from these concerns because the report suggested that July’s sharp drop may have overstated the weakening in the labour market.
The market is priced for the Bank of Canada to take action and cut the policy rate to shore up the economy despite the fact that the headline inflation rate is running above the top end of the Bank of Canada’s target band. To be sure, the core measure remains secured below the mid-point of the Bank’s target band but, with a 3.4% headline inflation rate, policymakers will remain wary about a pick-up in inflation expectations.
In its September 3 policy statement, the Bank highlighted both upside and downside risks to the inflation/growth outlook, indicating an even-handed assessment of the risks. To be sure, the Bank pointed to some greater downside risks to growth emanating from a faltering U.S. economy while acknowledging that the hit to inflation from higher energy prices may not be as pronounced as was feared in July. However, the downside risks to growth are focused more on activity in 2009, while Canada’s "strong" domestic economy and global inflationary pressures continue to present a near-term upside risk to the medium- term inflation outlook.
This characterization suggests that the central bank will remain on the sidelines monitoring the economic data to see whether one or the other risk comes to dominate. Our forecast assumes a 3.00% overnight rate through the end of this year before being gradually raised in 2009 as the downside risks to growth ease.
- Interest Rates
- Power of Sale Properties
- Price Trends
- or Search the MLS and more at my website
Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,
Mark
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
( BUS 905-828-3434
›mark@mississauga4sale.com
8 Website : Mississauga4Sale.com
- Thinking of selling in the next 3 to 6 months? Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
- On-Line Real Estate Newsletter sign up
- See seasonal housing patterns
Wednesday, September 24, 2008
RBC's comments on Global Economic outlook
Global economy gears down
Evidence of a global economic slowdown continued to accumulate in the past month even as the U.S. economy grew at a much stronger-than-expected pace in the second quarter. Economic reports from the other countries we follow were not so bright, with the U.K. economy stalling and likely moving into the early stages of a recession, while Japan’s economy posted the sharpest decline in seven years and the Eurozone economy contracted after a stronger-than-expected first quarter.
New Zealand’s economy is headed toward recession with its monthly economic data pointing to another negative quarter, and Australia’s economy is eking out only subdued growth. Canada’s economy showed a mild improvement in the second quarter after an unexpected contraction in the first, but growth was still anaemic at 0.3%.
- Interest Rates
- Power of Sale Properties
- Price Trends
- or Search the MLS and more at my website
Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,
Mark
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
( BUS 905-828-3434
›mark@mississauga4sale.com
8 Website : Mississauga4Sale.com
- Thinking of selling in the next 3 to 6 months? Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
- On-Line Real Estate Newsletter sign up
- See seasonal housing patterns
Tuesday, September 23, 2008
Variable rates are increasing!
Some lenders are still able to offer prime -0.60, but this could change any day now as the choice of lenders still offering this rate is to say the least, 'limited'.
If you feel would be interested in a variable rate, please contact me right away so I can put on on to a lender who can secure you for a rate hold for 120 days.
Remember also that you can still buy with no money down and amortize over 40 years as long as you have a firm purchase and sale agreement and application by 11pm October 13th and the closing date is within 120 days.
Let me know if you have any questions, or if you need mortgage assistance.
Today's lowest variable rate is prime -0.60 and the lowest 5 year fixed is 5.14 (quick close).
Mark
- Interest Rates
- Power of Sale Properties
- Price Trends
- or Search the MLS and more at my website
Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,
Mark
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
( BUS 905-828-3434
›mark@mississauga4sale.com
8 Website : Mississauga4Sale.com
- Thinking of selling in the next 3 to 6 months? Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
- On-Line Real Estate Newsletter sign up
- See seasonal housing patterns
Credit history affects ability to borrow
The ongoing credit issues have caused mortgage lenders to review their lending criteria, and they have become stricter allowing fewer approvals on an exception basis. The credit bureau report is a very important tool used by lenders.
Most clients have a strong credit history but there are always a few situations, either due to illness, previous unemployment or marital issues where a responsible borrower experiences a credit score drop below the lender's minimum. Credit scores change daily. A weak score can be improved within a few months (& the opposite is true also....scores can drop 75 points or more within a few months if credit is overuse or abused).
Many factors affect credit scores - I hope you find the information below helpful in understanding the score & how it can change. Also, I've included some tips for those who are starting to establish credit.
If you need a mortgage contact, please let me know.
Thanks
Mark
Credit Bureau – Credit Score
- Often referred to as a beacon score
- Score indicates credit worthiness
- Score is a statistical formula that indicates to lender the statistical probability of delinquency
- range from 300 – 900
Scores range from 300 – 900 & is determined by:
- 35% - payment history
- 30% - amount owed
- 15% - length of time on file
- 10% - new credit (how new account is handled)
- 10% - type of credit (bank credit cards, store cc, installment loans)
How to improve score?:
- Pay all bills on time – no matter how small the payment
- Keep account balance below 75% of credit limit
- Avoid applying for credit unless needed
- Too many inquiries – lenders will interpret as financial difficulty
- Score can be improved significantly over a few months if these tips are followed.
What causes a score to drop?:
- Late payment – can cost 30 – 75 points
- Maxing out on credit cards – can drop score by 50 – 100 points
For Mortgages:
- Scores under 580 – Prime lenders not interested – will need to look at alternate (B lenders)….higher interest rates & fees
- Prime lenders prefer scores of 600 + ….will consider between those around 580 & higher but really need to understand cause of low score (may require guarantor/insurance – case by case).
- 680 – considered a strong score – qualify for 100% financing, no income verification etc.
TIPS for New Borrowers – late teens/young adults should establish credit:
- Apply for credit card – major bank
- Pay on-time monthly
- Apply for an installment loan – shows ability to repay fixed amount on monthly basis. Make it small loan – can be secured by a GIC – keep it outstanding for full term (ie: 12 months)
- Avoid numerous credit cards – ie: retail stores.
Your rights with the Credit Bureau:
- View your bureau report (on-line or by post)
- Advise them of incorrect information (will be investigated)
- In event of identity theft or lost/stolen wallet they will add line to bureau to alert credit grantors to be extra cautious of verifying identity.
Monday, September 22, 2008
RBC comments on Canadian and US interest rates
Interest rate forecasts for Canada and U.S. lowered slightly
We have rebenchmarked our interest rate forecasts for the remainder of 2008 while maintaining our calls that the Bank of Canada and the Fed will hold policy rates steady for the remainder of the year. We now see the yield on the two-year Canadian government bond ending the quarter at 3.10% and the 10-year yield at 3.75%, lower than our previous call for these yields to end the quarter at 3.50% and 3.90% respectively. The spate of weakerthan- expected data, which pushed yields well below July’s levels, made our earlier forecasts unlikely to be reached.
Similarly, we have reduced our forecasts for end of September two-year U.S .Treasuries to 2.55% (from 2.90%) and the 10-year Treasury yield to 4.05% from 4.30%.
Our year-end forecasts for Canadian two-year and 10-year bonds stand at 3.3% and 4%, respectively, with the two-year U.S. Treasury bond yield expected to finish the year at 2.65% and the 10-year at 4.40%.
- Interest Rates
- Power of Sale Properties
- Price Trends
- or Search the MLS and more at my website
Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,
Mark
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
( BUS 905-828-3434
›mark@mississauga4sale.com
8 Website : Mississauga4Sale.com
- Thinking of selling in the next 3 to 6 months? Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
- On-Line Real Estate Newsletter sign up
- See seasonal housing patterns
Thursday, September 18, 2008
Interesting Perspective on the Canadian Markets
Recovery Risk
In one of the most memorable movie scenes of all time Butch Cassidy and the Sundance Kid find themselves trapped on top of a very high cliff overlooking a raging river. With the posse closing in, their only possible escape is to jump off the cliff into the river. The Kid is visibly reluctant and when Butch asks him what his problem is, the Kid replies “I don’t know how to swim!”...Butch starts to laugh uproariously and exclaims “Kid, it’s the fall that’s gonna kill ya!”
Sometimes our immediate fears cause us to overlook the larger risk and that is the case for many with respect to the recent turmoil in the financial markets. While the losses are of concern, the larger risk can be in how long it takes to recover. So, in this case it’s not the fall but the length of time it stays down that is the larger risk.
This “Recovery Risk” is highly sensitive to just how close an investor is to retirement.
Retired: Significant to Catastrophic Risk – for those drawing income the depletion of their capital is critical and a lengthy recovery seriously increases the chance they will run out of money. The risk is highest in the early retirement years and decreases somewhat for older retirees – a function of the total income needed for the balance of their lifetimes.
Within 15 Years of Retirement: Significant Risk – for those counting on investment growth for future retirement income, a lengthy recovery may result in a later retirement than planned and/or continued work of some sort during retirement. Those closer to retirement are at greater risk as they will start to draw income sooner.
More than 15 Years from Retirement: Possible Risk – historically, most recoveries take less than 15 years so the younger an investor is the lower the risk. Those in their 20’s and 30’s benefit from a long term investment period while the risk increases progressively starting at age 40.
For some perspective let’s take a look at the Dow Jones Industrial Average:
First, note that the Great Depression starting in 1929 saw the Dow fall by more than 85%, a magnitude of loss not seen since. But it’s the fact that the Dow did not recover for 25 years that was the bigger issue.
As you can see on the chart there have been other lengthy recovery periods including the one we are presently in, which began in October 1999.
So, what are the alternatives? Putting money into a Money Market Fund, Savings Account or GIC just locks in the loss of purchasing power over time:
Investment Amount $100,000
Interest Earned 4.0% $4,000
Income Tax 33.0% -$1,320
Inflation (July 2008) 3.4% -$3,400
Net Earnings -0.7% -$720
This may be viable for some retirees but is questionable for those under age 75.
Real Estate is another possibility although after 13 consecutive years of rising values we may be looking at a downturn soon. Prices in the GTA rose by less than 1% in the past year and sales are down more than 22%. It took more than 12 years for the real estate market to recover after the peak in 1989.
For those who have retired there is a way to guarantee retirement income of 5% for life while remaining invested such that future market gains may be realized. In fact, it is possible to have both the initial guarantee and to improve upon the guarantee value through resets over time.
For those within 15 years of retirement there is a way to guarantee 5% annual increases in future retirement income while remaining invested such that future market gains may be realized. In fact, it is possible to have both the initial guarantee and to improve upon the guarantee value through resets over time.
The Income Plus program was introduced in Canada less than 2 years ago and in my opinion is the best way in which to minimize risk for those who are building or drawing retirement income.
If you, or someone you know, is within 15 years of retirement or, has been retired for 15 years or less, you should learn more about Income Plus. In this period of uncertainty, it offers both a guaranteed minimum amount of income and the potential to benefit from future market gains – a unique combination in my experience and one which may not be available with the same features in the future.
In my view this is the best protection available today with respect to many risks but especially for Recovery Risk.
*Income Plus offers a unique benefit for new clients:
For those not taking an income in 2008, a 5% income bonus is paid on the initial deposit. This means that if you open an account before the end of the year you will receive a 5% increase in your Guaranteed Withdrawal Balance even though you may only have been a client for a few weeks or months.
New clients over age 65 may take a 5% income withdrawal in 2008 without reducing the amount of their guaranteed annual income for life.
In order to realize these benefits I recommend you act quickly as it often takes several weeks or longer to transfer funds and this benefit only applies to those funds received prior to December 31st.