Canada First Mortgage

As we continue forward into 2012, we find interest rates low and a vibrant city looking to take advantageous of the Spring market in Calgary.  Below are numbers that would prove that the city of Calgary is moving forward with zeal.  As you can see in the column below, one of Calgary’s realtors from Remax makes some good points about ‘why’ people are buying.

What is your indicator to buy or sell?

We would love to talk to you about any mortgage questions that you might have!

Total MLS residential sales in the city up 12.63%

CALGARY — Calgary’s housing market picked up steam in March as MLS sales surged compared with a year ago — led by stunning growth in the single-family category.

According to the Calgary Real Estate Board, total residential MLS sales in the city for the month was 2,167, up 12.63 per cent from March 2011. Also, the average MLS sale price increased by 3.69 per cent to $422,256.

In the single-family market, sales soared to 1,576, up 17.26 per cent from a year ago while the average sale price jumped by 2.36 per cent to $472,464 — that’s the highest it’s been since June 2011 when it was $479,580.

Christina Hagerty, a realtor with RE/MAX Realty Professionals in Calgary, said the market has been extremely active recently.

“Calgary seems to present the land of opportunity right now and people need homes. Renting does not seem like a reasonable option with the low interest rates. They also feel that the property values will be increasing so they want to secure an investment here,” said Hagerty.

She said employment and net migration growth in the city have boosted the real estate market.

Industry officials have cited low mortgage rates as a reason for the surge in market activity in the city.

In March in Calgary, the condo apartment market saw year-over-year sales increase by 7.23 per cent to 356 while the average sale price rose by 4.56 per cent to $271,724.

The condo townhouse category experienced a year-over-year sales decline of 5.24 per cent to 235 but the average sale price increased by 1.21 per cent to $313,581.

mtoneguzzi@calgaryherald.com

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/Calgary+house+sales+surge+March/6396629/story.html#ixzz1qtiOAUzb

In light of the talks about further mortgage rule changes, I cannot help but tip my hat to Jim Flaherty’s comments about the lenders who chirped about wanting the government to step in and “change the rules for them”.  Below is an excerpt from the Financial Post….and I think it’s worth the read.  (As for the banks that think it’s a good idea for the government to tighten mortgage rules further, IE: change the amortization period down to maximum 25 years…. I think it’s a good question: why don’t you do that with your bank?)

http://business.financialpost.com/2012/03/22/canada-stands-ready-to-tighten-mortgage-rules-flaherty/

OTTAWA — Finance Minister Jim Flaherty saw irony Thursday in major banks seeking changes to mortgage rules from government, given the control the banks themselves have over the industry.

Flaherty said, however, the possibility of tightening the insured mortgage market — which has been done three times under the current Conservative government — is there. Those decisions, however, result from constant evaluation of the markets.

“I find it a bit odd 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,” Flaherty said during an appearance in Stittsville, Ont., just west of Ottawa.

“We have bank executives in Canada going and saying ‘really, the rules on insured mortgages should be tightened up.’ They must forget that they are actually the ones that issue the mortgages. It’s their market. It’s not my market. They decide what they want to charge in interest rates.

“They’re the ones that make the profits out of this business, so I do find it a bit much when some of the bank executives turn to the government … and say ‘you ought to change the rules and make it tighter.’ It’s very interesting commentary from them.”

Ideally, the finance minister said, the mortgage market will be able to work out its own issues, for which he said he’s already seen positive signs.

“There’s a balance there. The new-housing market produces a lot of jobs in Canada, so there’s a balance that needs to be addressed,” he said. “I’d like the market to correct itself if it can. We’re seeing some evidence of that in the condo market, particularly in Toronto, where there is some softening of the market and that’s a good thing.”

Canada’s household debt-to-income ratio hit a record high of 151.9% last year, largely the result of mortgage borrowing. The ratio dipped slightly in the fourth quarter but at 150.6% was not far off the record.

Since 2008, Mr. Flaherty has lowered the maximum amortization period for new mortgages to 30 years from 40 years, raised minimum down payments required to qualify for government insurance, and required all borrowers to qualify for a five-year fixed-rate mortgage to get insurance.

“We will have modest savings-reductions in order to stay on track to a balanced budget in the medium term,” Flaherty said. “More importantly — and this really is the focus of the budget — if you concentrate on the savings, you’re going to miss most of what the budget is about. (It’s) about long-term sustainability for jobs, growth and prosperity, looking at retirement income, making sure our social programs are sustainable in the long-term for Canada.

“We’re coming back down in our deficits — you’ll see the numbers next Thursday. We’ve done very well this year, we’ll do better next year. We keep reducing the deficit and we’ll get to balance in the medium term.”

Flaherty also defended the government’s Economic Action Plan by referring to a number of infrastructure projects across the country, as well as numerous tax credits, including child fitness credits and those linked to volunteer firefighters.

He said that initiative has help keep unemployment down across the country as well, saying that despite the economic downturn, Canada’s unemployment “never went into double digits.”

Flaherty was particularly critical about provincial spending in Ontario and said change is needed in that province to put it in a better fiscal situation.

“What we’ve basically seen in Ontario is eight, almost nine years of spending mismanagement,” he said. “They need to focus in Ontario, and for the good of the country … on the spending side of the ledger and get things under control. What we’ve seen so far from Ontario — and this is disappointing, but not surprising — is this ‘we’re in a lot of trouble … so we’re going to blame Alberta and other Canadian provinces.’

“Next week I suspect they’ll blame … the federal government, despite the fact our transfers to Ontario are up 77 per cent since we took government in 2006. This year, we’ll transfer $19.2 billion to the government of Ontario, so I forewarn you about that, that we’ll see this ‘blame everyone else, and don’t look in the mirror’ (attitude).”

With files from Reuters

BMO offering 2.99% for a 5yr. fixed rate:

Is this a good mortgage fit for you?

Wow.  That IS a good rate.  But is it the right mortgage for you?  I ask that you spend the next 120 seconds to read this… it may just save you a lot of headaches in the future.

No Frill Mortgages: This means that “rate” is largest consideration towards a mortgage.  Let’s look at the guidelines (taken directly off of the BMO website), and break it down:

• Want a simple, easy to understand mortgage with a great rate  (“Easy to understand” is good, but we don’t necessarily want or need “simple”… keep reading, we’ll tell you why!)

• Want to become mortgage free within 25 years  (Who doesn’t want to be mortgage free in 25 years? (or less??)  The problem is that BMO does not permit a borrower to take a longer amortization period with this offer.  A lot of us would like to lower our payments, initially, by opting for a 30 year amortization period.  Later in the mortgage - let’s say after the first 5 years - perhaps we can lower our amortization period by choosing 25 years or less)

• Want peace of mind knowing your rate will not rise during the term  (This is called a fixed term mortgage… pretty standard.)

• Want 10+10 pre-payment options that let you pay down your mortgage faster (This is likely one of the lowest options of prepayment privileges offered by lenders on the market.  MANY other lenders offer 15+15, 20+20, and even 15+15+DOUBLE UP.  Our view is that the 10+10 prepayment privilege is not great compared to what else is on the market.)

• Want to budget with certainty, knowing that your mortgage payments won’t change  (Again, with a fixed term mortgage - found in all ‘fixed term mortgages’ - your payment does not increase over the term chosen.)

Stay with me for a moment…here’s the part that I want you to be aware of because THIS, is likely the most important downfall to this mortgage… the ‘fly in the ointment’ if you will…

NOTE:  During the term of the 5 year low-rate mortgage and in the first 5 years of the 10 year low-rate mortgage, full repayment before maturity can only occur if the property is sold to an unrelated purchaser at fair market value or if the mortgage is refinanced into another BMO mortgage product.

If I’m out to poke holes in this mortgage product, I have likely found the weakest threads in the material.  Watered down, what this mortgage product is saying to you as a borrower is; the only way to get OUT of this mortgage is to sell your home to someone who is not related - OR - you can only refinance into another BMO mortgage product.

When you’re submitted into a mortgage that does not allow you to break the mortgage unless you sell it, buyer beware - this is referred to as a Bona-Fide Sales Clause.

OK… so it’s not that big of a deal, if you want to refinance during this period of 5 years - you can refinance into another BMO product.  Is that a good thing, or a bad thing?  Well, the fact of the matter is - we don’t know right now.  What if BMO comes back in time and says, “No problem, we can refinance you into something else….here’s your rate now!”  (Gulp).  What if you don’t like it?  What if you know there’s better interest rates on the market at the time of refinancing?  You can always go and shop around, or even get your mortgage broker to look up another program for you right?  Wrong.  You’re tied into a BMO product for the 5 years unless you sell your home to someone else who is not related to you.

Hmmm…  2.99% IS a good rate.  But at what cost?  We all like to think that we know what our next 5 years is going to look like, but statistically speaking - MOST Canadians do not make it to over 3.5 years in their 5 year mortgage term.  AND, I would argue that a lot of them didn’t see it coming because of a change in the family structure, unforeseen events, marriages, divorces, education… the list goes on.

Allow me to leave you with this…

Most all other lenders (major lenders) have come in to compete with this BMO product, by offering a 2.99% 4yr. term mortgage.  The difference is:  Flexibility.  With most other offers at 4 years with a 2.99%, you can “up” your prepayment privilege, go with a 30 year amortization to lower your monthly payments (perhaps use these savings to put more down on principle by using the greater portion of the prepayment privilege!) - NOT have a restrictive Bona-Fide sales clause - AND be able to refinance out of your mortgage with the option to shop around at free will!

Is the BMO product the right mortgage for you…?  Maybe!  But as a mortgage broker we deal with MANY lenders and get to see everything on the market.  When there’s an opportunity to shed light on potential pitfalls to save you hassle, we want to share them with you.

Lastly - considering most Canadians do not make it to their 4th anniversary year in their mortgage, there are some incredible 3 yr. terms available… RIGHT NOW from various lenders as well.  Example:  2.79% (standard prepayment privileges / 30 year amortization available / NO bona-fide sales clause)

***We’ll also show you how by simply changing your payment frequency, you can shave YEARS off of your total mortgage.  Now THAT’S value and savings!***

Questions?  We love them… and we hope to hear from you.

Dan and Stacey Mass

403-294-0033

dan@canadafirstmortgage.com

stacey@canadafirstmortgage.com

Job and net migration growth fuel housing demand

CALGARY — Alberta will be the only province next year to buck the national trend for housing starts across the country.

According to an October 2011 Housing Forecast report released Tuesday by Altus Group, only Alberta is expected to see an increase in housing starts in 2012.

Subdued economic growth will take the “sizzle” out of Canadian housing starts in 2012 and deteriorating global economic conditions leading to lower Canadian growth expectations will constrain housing demand across the country, said the report.

“Based on recent data, the Canadian housing sector is performing at a very high level, with elevated housing starts, steady prices, and steady resale markets. Interest rates are also no longer expected to increase over the next year,” said Peter Norman, chief economist, Altus Group. “But at the same time a number of risk factors are emerging, especially deteriorating economic conditions and tighter mortgage rules. Canadians can expect lower levels of housing construction in most areas of the country next year.”

But the report said Alberta has seen job conditions and interprovincial migration rise sharply this year at the expense of Ontario and British Columbia, positively affecting housing demand next year.

Alberta will see housing starts in 2012 rise to 27,800 units from 24,881 this year. In 2010, there were 27,088 housing starts in the province.

Across Canada, housing starts will hit 192,000 units this year and dip to 181,600 units in 2012. There were 189,930 starts in 2010.

The Altus Group report said only Calgary and Edmonton, among major markets in Canada, will see a rise in housing starts next year. Calgary will jump to 9,400 units from 8,400 in 2011 while Edmonton will see a rise to 9,400 units as well from 8,900 this year.

In 2010, Calgary had 9,300 housing starts while Edmonton had 10,000.

mtoneguzzi@calgaryherald.com

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/Alberta+forecast+only+province+with+increase+housing+starts/5748958/story.html#ixzz1eXru6Qwq

CALGARY — MLS sales in Calgary rose by 22.1 per cent in August compared with a year ago — a greater year-over-year rate of growth than the rest of the country.

The Canadian Real Estate Association said Thursday that Calgary recorded 1,907 MLS sales for all residential properties during the month for an average price of $394,251, up 2.2 per cent from last year.

New listings in Calgary rose by 11.7 per cent in August to 3,819 and the sales as a percentage of new listings jumped by 4.2 per cent to 49.9 per cent.

In Canada, sales of 39,542 were 15.8 per cent higher than August 2010 and the average sale price of $349,916 was up 7.7 per cent.

New listings in Canada rose by 13.4 per cent to 73,125 and the sales as a percentage of new listings jumped by 1.1 per cent to 54.1 per cent.

“The housing market in Canada remained on a firm footing in August when compared to volatile financial markets,” said Gary Morse, president of CREA. “Through their actions, homebuyers are showing that they remain confident about the stability of the Canadian housing market, and recognize that the continuation of low interest rates represents an excellent opportunity to buy their first home or trade up.”

Gregory Klump, CREA’s chief economist, said economic and financial market headwinds outside Canada are keeping interest rates lower for longer.

“Those headwinds will likely persist until, and indeed after, fiscal quagmires in the U.S. and Europe are resolved,” he said. “In the meantime, the Bank of Canada will have ample reason to delay raising interest rates further, which is supportive for the Canadian housing market.”

mtoneguzzi@calgaryherald.com

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/Calgary+sales+jump+August/5406952/story.html#ixzz1Y27sqGt5

CALGARY — Preliminary, unofficial data indicates MLS sales in Calgary in August were up compared with a year ago.

Statistics on the website of realtor Mike Fotiou, of First Place Realty, show single-family sales during the month hit 1,106, up from 865 in August 2010. The average sale price last month was $453,269 compared with $445,814 a year ago. The median price also rose to $402,250 in August from $395,000 last year.

In the condo market, the preliminary data shows 468 sales for an average price of $285,487 in August, up from 362 sales but the average was down from $286,373 in August 2010. The median price in August was $255,000, down from $260,000 a year ago.

Official MLS data for August will be released by the Calgary Real Estate Board today.

Many Calgarians are watching the local real estate market closely these days to determine where it’s headed in the near future for both prospective buyers and sellers.

Alexandria (Ali) Cohen is one of them. She owns a home in Tuxedo, but is considering listing it for sale in the near future, and also looking to purchaser a bigger home.

“I’m a little conscious that the market’s low. However, the interest rates are holding and that should be relatively good for the near term for sellers and buyers. So that’s a good thing,” said Cohen.

With sales up in August from a year ago, that could be a boost for real estate locally.

“It should be but typically the summer months are definitely more active than the winter months. So if I don’t list in September, I’m not going to list until next year sort of thing,” added Cohen, who will be keeping a close eye on the market in the coming weeks.

mtoneguzzi@calgaryherald.com

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/Calgary+sales+rise+August/5339212/story.html#ixzz1WhsVg4tv

By Kim Guttormson, Calgary Herald August 3, 2011

CALGARY — Calgary’s housing market continues to gradually strengthen, with sales for July and the year-until-now up over last year.

Sales of single-family homes and condos neared 12,000 for the first seven months of 2011, a five per cent increase over 2010, but still 17 per cent below the 10-year average, the Calgary Real Estate Board reported Tuesday.

“I would underline the improvement is gradual and measured,” CREB president Sano Stante said. “We’re getting a good balance of listings and buyers. We’re not seeing too many buyers and no listings or too many listings and no buyers.”

“It’s more of a healthy recovery.”

For Jen Hosie, who will be moving into first home next month with husband Danny, the foray into the real estate market was smooth.

“It was very, very fast,” she said of a process that ended with the possession of a three-bedroom home in New Brighton. “I looked at 15 houses in one day and by the end of the day picked one I loved.”

After her husband had checked it out and also approved, they stopped looking.

“There were lots and lots to choose from,” she said of the housing selection. “And tons within our price range.”

The Hosies spent less than the average price of a single family home in July, which was just over $455,000.

Condo sales averaged just over $286,000.

Stante said prices remained relatively consistent with where they were last year, but he cautioned that some sellers, viewing the market a little too optimistically, were pricing their homes too high.

“Stuff that’s priced accordingly sells relatively quickly. There seems to be a good bit of product that’s not priced according to the current market that seems to be sitting,” he said.

Cody Battershill, with Re/Max House of Real Estate, said last month was his busiest July in about three years.

“It’s the craziest July I’ve had in years, even though in summer things slow down,” he said. “I think there’s optimism in the business community, in job growth.

“I think more people are buying, but the listing still has to be priced well to sell.”

According to the real estate board numbers, there were 11,798 sales in the first seven months of the year, up five per cent over the same period in 2010. If single-family homes are broken out, they rose eight per cent, while condo sales dropped by three per cent.

While the July numbers jumped over last year — condo sales were 14 per cent higher — Stante cautioned that last year was very slow for that month, as well as June.

He also pointed out that listings so far this year are lower than last year, leading to smaller inventories. That has dropped the condo inventory from a more than six-month supply last year just above four months this year.

kguttormson@calgaryherald.com

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/Calgary+housing+sales+over+last+year/5194965/story.html#ixzz1UAMju2rm

Remember the days when you didn’t like something about your house….so you just moved? Yes, that was a popular trend in the latest years, however more and more people are finding it much more cost effective to renovate.  Will your place get messy during the process?  Sure it will, but many more Canadians are keeping their eye on the prize of a completed renovation!

The reasons for renovating can vary:  Improve lifestyle, growing family, shrinking family, and yes - increasing value in your home.  When simply renovating to increase value in your home, there are some important factors that you may want to consider; for example - not all improvements will create the same amount of return on your home.  According to a study done by BMO Financial, 83% of Canadians plan on renovating some part of their interior of their home within the next two years.  83%!!  Wow.  Here are the Top 10 Renovation Plans for Canadians:

According to the BMO study, the top 10 renovation plans for Canadians are:

• Kitchens – 48 per cent
• Bathrooms – 46 per cent
• Landscaping – 39 per cent
• Basements – 38 per cent
• Exterior renovations (roof replacement, new windows) – 36 per cent
• Bedrooms – 25 per cent
• Family room – 21 per cent
• Dining room – 11 per cent
• Addition on the home – 7 per cent
• In-ground pool – 2 per cent

According to the Appraisal Institute of Canada, the most profitable home renovations are found in kitchens and bathrooms, which generally result in a return on investment (ROI) of 75 to 100 per cent, an interior paint job offers 50 to 100 per cent ROI, and with a finished basement homeowners can recoup 50 to 75 per cent of the original cost. The lowest returns?  In-ground pools and skylights; from zero to 25 per cent ROI.

OK…so renovation sounds good - but how am I going to pay for it?  As a mortgage professional, we are coached to streamline your efforts towards the most cost effective approach.  If you haven’t heard of it before, perhaps you should look into a program called “Refinance Plus Improvements”.  We would be happy to provide you with any information regarding this program…so feel free to give us a shout!

Happy Summer!

Transactions up over 30% from a year ago

CALGARY — Calgary’s residential real estate market experienced a significant upswing in sales in June compared with a year ago.

Single-family MLS sales during the month were 1,398, up 32.01 per cent from June 2010’s 1,059 transactions, according to data released by the Calgary Real Estate Board on Monday.

And for the first time since April 2010, condo sales were up year-over-year, increasing by 30.56 per cent in June to 581 transactions. In June 2010, there were 445 condo sales.

The average sale price for a single-family home in June dropped by 0.33 per cent year-over-year falling to $479,580 from $481,960.

But the condo average rose by 0.79 per cent to $296,501 from $292,182 a year ago.

June’s condo average condo price was the highest since May 2010.

According to CREB, June’s year-over-year increase in single-family home sales was the highest since January 2010’s 38.50 per cent while for the condo market it was the highest since March 2010’s 36.26 per cent.

On a year-to-date basis, single-family home sales for the first six months of this year are up 5.64 per cent from a year ago to 7,231 transactions while condo sales are down 4.91 per cent to 2,965 units.

“Strong monthly increases does not imply a housing boom, as it is important to put into perspective that sales activity remains below long-term averages,” said CREB in a statement.

Sano Stante, president of the Calgary Real Estate Board, said the housing market in Calgary has gradually improved throughout the year as anticipated.

“We had a late spring market this year,” he said. “It’s all starting to come together in June. And last year we had an exuberant market early on and it died in June. So to draw comparisons year-to-year for that month shows an exaggeration of the trend.”

After the first half of the year, it appears the recovery in the housing market is starting to find its footing, he added.

“This gradual levelling has been fuelled by growth in employment, and in particular growth in full-time jobs. Improved job prospects, combined with an increase in the number of people moving to Calgary, will give lift to our housing market for the remainder of this year and into the next.”

Stante said homes that are value-priced are selling and they’re moving relatively quickly. Homes that are over-priced are sitting on the market, he added.

Dan Sumner, economist with ATB Financial in Calgary, said a year-over-year comparison may be a little misleading as to the strength of the Calgary housing market in June specifically. June is often one of the busiest months for sales volumes but sales last June were abnormally slow, he explained.

“Fuelling sales is a stronger economy specifically in Alberta, which feeds through into consumer confidence and that’s making Albertans more comfortable with home purchases again. Very accommodative interest rates are also helping as well,” added Sumner.

He said prices have been stable for quite some time now, despite a fairly strong economy over the past year. Because housing prices have risen so much over the past 10 years in Alberta, they are about as high as they can be, he said.

“However, with the economy fairly strong in Alberta and rates increasing affordability, for the time being at least, that is preventing prices from moving any lower. What you end up with is resistance for prices to move in either direction, and flatness ensues,” said Sumner.

The key economic contributors to the current housing market include a strong energy sector and resource prices as well as an improving labour market and strong wage growth. Also interprovincial migration to Alberta has picked up, said Sumner.

“With economic conditions in Alberta strong and looking up, sales during the second half of 2011 should be higher than last year,” he said.

Richard Cho, senior market analyst for Calgary for Canada Mortgage and Housing Corp., said that although demand for housing has been gradually improving, resale activity this time last year was also moderating.

mtoneguzzi@calgaryherald.com

Read more: http://www.calgaryherald.com/business/Calgary+sales+soar+June/5045289/story.html#ixzz1RFGFbuKq

MONTREAL – The risk that the economic slowdown in the United States will turn into another North American recession is not high, Canada’s finance minister said Tuesday as he cautioned that too many people nevertheless remain jobless in this country.

“I do not think the risk is great,” Jim Flaherty said in response to a reporter’s question at the International Economic Forum of the Americas taking place in Montreal. “There are risk indicators with respect to which we are concerned which we reviewed in the budget [Monday] and which I reviewed with the private sector economists with whom I met last week. The nature of the risks have not changed. We are concerned about debts and deficit in the United States and the need for a convincing longer term plan in the United States” to deal with those problems.

Ottawa is also concerned about some evidence of continuing slowness in the U.S. real estate market which puts a damper on consumer confidence in that country, Mr. Flaherty said. As well, it is worried about the sovereign debt situation among some eurozone countries, including Greece.
“These are all risk factors but they are known risk factors,” Mr. Flaherty said, adding that to address the risk in the latest budget, federal finance officials discounted private sector growth assumptions by $10-billion in nominal GDP each year, equalling a revenue markdown of $1.5-billion annually.

The U.S. economy grew at a 1.8% annual rate in the first quarter but job growth remains anemic, prompting U.S. Federal Reserve Chairman Ben Bernanke to say Tuesday that the central bank should maintain monetary stimulus to boost a “frustratingly slow” recovery. U.S. employers hired 54,000 more people in April, well below the 165,000 expected by economists.

“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” Mr. Bernanke said in a speech in Altanta.

The U.S. economy is growing above “stall speed,” Deutsche Bank AG foreign exchange analyst Alan Ruskin told Bloomberg in an interview Tuesday.

“A lot of people say that if the U.S. economy slows below 2% in year-over-year gross domestic product historically, we’ve slipped in to recession. The key is that we stay above that line, otherwise that is perceived as stall speed and other issues kick in.”

The pace of economic recovery in the United States is crucial for Canada because America is Canada’s largest trading partner, buying 75% of all Canadian exports like oil, wood and cars. Any major slowdown would hurt Canadian businesses and force layoffs here.

Mr. Flaherty maintained that unemployment in Canada also remains too high, even as his government initiates targeted hiring investments. The country’s unemployment rate stood at 7.6% in April as the economy added 58,000 mostly part-time jobs. Employment has grown by 1.7% in the last year.

Asked if the Canadian government has picked a preferred candidate to lead the International Monetary Fund, Mr. Flaherty said not yet. Former IMF chief Dominique Strauss-Kahn resigned last month amid allegations he sexually assaulted a New York City hotel worker. Agustín Carstens, the head of the Mexican central bank, and Christine Lagarde, France’s finance minister, are vying for the job.

In a speech to conference delegates, Mr. Flaherty stressed the importance of sound fiscal management for an elected government, noting no one truly foresaw the credit crisis in the fall of 2008 and subsequent recession. He said “it’s unpredictable” when the next shock might come.

The finance minister on Monday delivered a budget that included a pledge to bring the federal government back into surplus position by 2014-2015. He said he will do that through a combination of $4-billion in annual spending cuts and closing tax loopholes to generate another $4.1-billion.

The cuts mark the most intense attempt to rein in public sector spending in more than a decade. The government is conducting an operational review of the federal service and some departments have begun laying off staff.

Opposition against the cuts is expected to grow in the months ahead.

Canadian Auto Workers union president Ken Lewenza said Monday the government’s  spending will wipe out thousands of jobs and hurt service delivery. “With the economic rebound being so uncertain and anemic private sector investment growth, these billion-dollar cuts are the last thing Canada needs,” Mr. Lewenza said.

But compared to what a private company would do to trim spending, the government’s $4-billion plan is not very ambitious, Mr. Flaherty argued.

Mr. Flaherty’s savings target represents 5% of Ottawa’s $80-billion in annual discretionary spending. The government won’t book the savings until it achieves them and has not provided any details of which programs and departments will be affected.

http://business.financialpost.com/2011/06/07/canada-can-offer-lessons-for-recovery-flaherty/