Canada First Mortgage

YES.  These are the types of articles that need MORE attention in my opinion.  Is there a reason we need credit coming out of our ears?  I know it’s difficult these days - sometimes we just wake up and find out that our credit has been extended without us even knowing it!  Lenders WANT us to spend more on credit so they can line their pockets with INTEREST.  Brilliant right?  Of course it is, and we’re mad because we didn’t think of it first.  Instead, we’ll just play within their rules and max out our cards on occasion….of course, ALWAYS paying back the amount that sits on the balance, right?!  Uhhh….not always.  In fact, rarely does that happen with most of the public that access credit.

Below is an article written by Michelle Warren with a fantastic outlook on credit.  

How many credit cards should you have?

by Michelle Warren, Bankrate.com

When banks introduced Canada’s first credit card, Chargex, in 1968, it was designed as a convenient tool for their most valued customers. Today’s creditors have a more egalitarian approach — it seems that if you have a pulse, you can have a credit card.

But why stop at one? According to Statistics Canada, there are 3.1 credit cards in circulation for every Canadian over the age of 18 — that’s 74 million cards.

According to Laurie Campbell, program manager for the Credit Counselling Service of Toronto, it’s not uncommon for people to carry eight or 10 cards and a debt load of $30,000 or more. “The biggest problem we see is overspending with credit cards,” she says. “There is a direct correlation between debt and the amount of credit cards you have.”

Canadians charged more than $170 billion to Visa and MasterCard in 2004, compared to $39 billion in 1990, according to Statistics Canada.

“People don’t see it as real money and that leads to impulse spending,” says Campbell. Indeed, studies show the average person spends 112 percent more on a credit card than he would if using cash.

As a result, people are living beyond their means. As many as 50 percent of credit card users don’t pay their balance each month, opting instead to carry debt and pay interest ranging from a 1.9 percent introductory rate to almost 30 percent on some retail cards.

Credit flux

“We don’t recommend consumers carry a balance,” says Scott Hannah, executive director of the Credit Counselling Society in Vancouver, B.C. Sometimes, however, it’s unavoidable when essential expenses arise, such as auto repairs. The key is recognizing the difference between a want and a need. “Easy and quick access to credit really obscures thinking,” he says.

Credit has never been more accessible. With more than 600 institutions issuing Visa and MasterCard cards, add to that the retail card market (24 million in circulation), and it’s easy to see why wallets are bulging with plastic. In 2003, Canadians received 191.7 million credit-card offers — about six for each person — according to market research firm Mail Monitor.

It’s a competitive market and credit card companies profit from interest and user fees. These days, juggling more than one card or carrying a balance is made easier because a standard minimum monthly payment is as low as two percent, whereas it used to be 5 percent. But remember, if you owe $5,000 at 18 percent interest and pay only the minimum each month, it will take about 30 years to pay off the card (that’s if you never use it again).

“People can carry a lot more debt,” Hannah says. “It’s easier to spend, but harder to pay back.”

The perks of credit

On the flip side, credit cards are hugely convenient and by today’s standards, a necessity — you can’t even rent a movie without one. With more transactions taking place on the Internet, a credit card is handy for finding deals on books or flights. Some cards also have benefits, such as travel insurance, member discounts or points programs.

Retail cards, while charging interest in the 24 to 28 percent range, offer lucrative reward programs and discounts. It’s OK to take advantage of such perks, but Campbell cautions there’s no real benefit if you carry a balance.

“It may make sense to have a credit card for a favourite retailer,” says Hannah, but not one for every store you shop at.

The magic number

Experts agree that in most cases one card is enough.

It used to be that some outlets only accepted one type of card, so it made sense to have a Visa, MasterCard and maybe an American Express, but those days are over. “If you have an all-purpose card, 99 percent of the time you’re going to be able to use that card,” says Campbell.

Hannah seconds the one-card rule, but he recommends keeping business expenditures separate with two cards.

Christine McDonald, a spokeswoman for the Financial Consumer Agency of Canada, says the key is “making sure you use the credit you have wisely.” She warns juggling too many cards makes it harder to keep track of spending and payments and hurts your credit score.

One’s credit rating is based largely on credit outstanding, but how much credit you have at your disposal is also considered. Even if there’s nothing owing, just having cards can influence lenders when it comes to granting a mortgage. Several credit cards indicate the potential to get in over your head fast.

Credit cards do help establish a credit history, but Campbell says “people don’t need more than one to build up their credit rating.”

Choosing a card

It’s important to choose the right card. As a general rule, those who carry a balance are better off paying a small annual fee for a low-interest-rate card, while those who pay in full each month may opt for a standard higher-rate card.

Cutting credit

When credit card spending is out of control, the best thing to do is cut up the cards and pay down debt. For some people it makes sense to consolidate debt with a lower-interest line of credit. Otherwise, Campbell recommends paying off the card with the highest rate of interest first. A credit counsellor can help explore the options. Once the debt is paid, contact the issuer and close the account.

Credit cards are two-faced — they’re convenient and come with plenty of perks, but can lead to trouble if you overspend or juggle multiple cards. One, perhaps, two, is all most people need — anything more is playing with fire.

Calgary housing market surging

 By Mario Toneguzzi, Calgary Herald

One year ago, the downturn in the Calgary residential real estate market was beginning to take hold on the heels of a global financial market meltdown.

But just two weeks into November, preliminary housing sale numbers indicate how dramatically the market has turned since then.

Sales in November of this year will eclipse those for November 2008. And at this pace, average sale prices will also be up from a year ago.

“It has a lot to do with the low mortgage rates,” said Nikki Harrison, a realtor with Re-Max Realty Professionals, adding that has stimulated buyers to purchase homes.

Last year at this time, the bad and uncertain economic news contributed to people sitting back and not moving, but now the overall outlook for consumers is more positive.

“We’re definitely optimistic that things are starting to change,” she said Friday at a home listed by realtor Ted Greenhough she is helping market for $1.2 million in the northwest Tuxedo neighbourhood.

The numbers seem to back up Harrison’s outlook for the Calgary real estate market.

According to the website of Mike Fotiou, of First Place Realty, so far this month until Nov. 18 there have been 662 single-family home sales for an average sale price of $470,774. For the entire month of November last year, there were 670 sales at an average price of $435,471.

Condo sales have already surpassed last-year levels. This month there have been 292 transactions at an average sale price of $300,118.November 2008 recorded 284 sales for an average of $285,820.

“It’s very difficult to predict what’s going to happen in this market because it’s rather volatile as far as interest rates(and where they’re)going. We’re not really sure and we’re just very optimistic that it will continue to get better,” said Harrison.

The more positive trend in the local real estate market has been seen since May, beginning six consecutive months of year-over-year sales increases for both the single-family and condo markets.

“Obviously, sales activity continues to remain fairly steady,” said Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp. “The presence of lower mortgage rates continues to benefit the homebuyers toward sales growth.

“The economy in general is also showing more signs of improvement. Employment levels on a seasonally adjusted basis have started to trend upwards and employment growth is also one of the primary drivers of housing demand.”

The year-over-year gain in sales may appear a bit pronounced in November as sales activity began to slow at the end of 2008, added Cho.

Todd Hirsch, senior economist with ATB Financial in Calgary, concurred that low mortgage rates continue to have a dramatic impact on the residential real estate market.

“There is a sense, a correct sense, that these mortgage rates aren’t going to stay this low forever, so people are getting in, I guess, while the getting’s good. They know that if they wait too much longer, like another year, those rates are going to start to go up,” said Hirsch.

Another factor for the housing market, he said, is that the city and the province continue to have positive in-migration numbers.

“That’s helping when they move here,” said Hirsch. “They’re not stampeding in like they were in 2006, but they’re still moving to Alberta and to Calgary and putting some upward pressure, especially at that entry-level homebuyers–the condo market or the smaller single-detached home. That’s adding some lift to the market there, too.”

mtoneguzzi@theherald.canwest.com

In a look back of historical rates of fixed vs. variable, it would prove that the most cost effective method would be choosing the variable rate mortgage MOST of the time.  In todays marketplace, it can be a difficult decision.  Of course, with historical low interest rates, we know that rates will eventually go UP…but during the interim, what’s going to give us the best bang for our buck? 

This article may help to shed some light on the subject…http://tinyurl.com/ybmzn27

Fed creates ’sweet spot’ for markets

Paul Vieira, Financial Post  - Equity markets, which have been on the ropes as of late, might have been given a second wind Wednesday as the U.S. Federal Reserve declared its easy-money strategy was here to stay for the foreseeable future.

“What the Fed has done is create a sweet spot for the equity market,” said Andrew Pyle, wealth advisor and markets commentator at ScotiaMcLeod. “What has happened to date can continue in an environment where rates are not going to be pushed up. It has given the equity market a lot more room to play with.”

Stock markets in Canada and the United States ended up with small gains following the release of the Fed statement, which acknowledged improvements in the U.S. economy such as an expansion in consumer spending and stable financial markets. But it reiterated that record low interest rates would remain in place for an extended period, as inflation expectations are expected to remain subdued “for some time.”

As a result, market players can continue to borrow short-term cash at very low rates to invest in higher-yielding assets. Low rates are also likely to be a boost to future corporate earnings, as borrowing costs remain cheap.

Keith Summers, chief investment officer and portfolio manager for Tricoastal Capital Management Ltd., said the Fed statement has removed the risk of a significant market correction.

“The result of what they are saying, which is easy money is here for the foreseeable future, is going to reassure people that the market is not going to be abandoned to its own devices,” Mr. Summers said. “Because of that there will be a bias toward buying as opposed to selling.”

Benchmark indexes in Toronto and New York have surged more than 50% from 52-week lows hit in March, as investors bet on an economic recovery. In recent weeks market indexes have shed some of the gains, as investors engaged in profit-taking on the belief that the market has fully priced in the recovery story.

The Fed statement offered some guidance as to when it might begin raising rates. In the only significant change from previous statements, the U.S. central bank said its record-low rate policy would continue due to “low rates of resource utilization, subdued inflation trends, and stable inflation expectations.” Should those elements change, then all bets are off, analysts said.

“This appears to spell out the Fed’s criteria for beginning rate normalization,” Michael Woolfolk, senior currency strategist at Bank of New York Mellon, said. “While the language was subtle, the clear message is to keep inflationary concerns to a minimum and to curb talk of higher rates.”

But analysts such as Mr. Pyle said the guidelines provided are somewhat vague because they don’t indicate, for example, how much slack has to be removed from the economy before a rate hike is warranted. In contrast, the Bank of Canada said it is prepared to keep its key benchmark rate at the record-low level of 0.25% until June 2010, conditional on inflation remaining subdued.

“The longer you keep this low interest-rate environment going, the greater the shock will be for households, businesses and investors when someone is forced to change the environment. We are setting ourselves up for a huge risk,” he said.

One factor that could force the Fed to move is further deterioration in the U.S. dollar, Mr. Pyle added. The U.S. dollar lost ground following the Fed decision, on improved risk appetite. Mr. Woolfolk said the U.S. dollar could lose further ground against major currencies, such as the euro, unless job data due out on Friday is worse than expected.

pvieira@nationalpost.com

Optimism returns to Canadian businesses, confidence highest since 2007   By Julian Beltrame        OTTAWA — Canada’s business leaders are turning bullish about the economy after a year of doom and gloom, a new survey suggests.

The Conference Board of Canada’s fall business confidence survey finds corporate leaders believe the recession is finally over and that the economy will rebound in the next six months.

The mood of confidence is particularly strong considering that recent indicators, particularly gross domestic product data for July and August, were disappointing.

Yet 63 per cent of business leaders surveyed said they expect the economy to improve over the next half-year, as opposed to only seven per cent who thought it will deteriorate.

Significantly, about a year ago the responses were almost exactly reversed.

The 16-point surge in the fall survey brought the confidence index to 97.8, the highest level since 2007.

The survey of about 2,000 representative firms from across the country was conducted between Sept. 14 and Oct. 22.

“After a year of despondency, Canadian business leaders are sensing an end to the deepest recession in a generation,” the Conference Board said about the results.

“Respondents appear very encouraged by signs of nascent recovery. More than half the respondents believe the present is a good time to expand their stock of machinery and equipment.”

Despite the apparent optimism, business still said they were concerned about under-utilization in their production levels, with 29 per cent describing their operations as substantially below capacity.

As well, leaders said they were concerned about the impact a strong dollar will have on their sales, the still weak demand, and about the ease of obtaining financing.

But it is in the forward indicators that business leaders were decidedly optimistic.

Almost 61 per cent said they expected their financial position to improve in the next six months, and more than half expect better profitability.

As well, more than half said it was a good time to expand, with 16 per cent saying they expected to increase their level of capital spending by more than 20 per cent in the next six months.

The Conference Board’s survey is roughly in line with results obtained by the Bank of Canada in September. The central bank’s survey of businesses showed 69 per cent of large firms optimistic their sales would increase in the coming year, and 42 per cent saying they expected to shift to hiring.

The Canadian Press