Kevin Usselman

The world wants what Alberta has an abundance of; namely energy, food, fertilizer and lumber.

Cutting Edge Research President Don Campbell has been tracking Canadian real estate for 19 years and he says the province is in a good position to cash in.

Campbell says vacancy rates are again on the decline while job creation numbers are on the rise.

He says Alberta’s economy is going to act like a magnet in the next 18 to 24 months and people need places to live.

Subsequently, Campbell has a rather bullish economic and housing forecast for the province and for Calgary in particular.

He doesn’t believe Calgarians are going to see another housing boom like the one experienced back in 2006-2007, but thinks sales and prices could rise anywhere from seven to 12 per cent by 2013.

Campbell is also glad to see the city moving forward with major transportation projects like the west leg of the LRT, although he’s disappointed more efforts aren’t being made to address the secondary suite issue.

Hi there,

Just a quick note to let you know that not all lenders have moved their rates up…YET!  When fixed rates move up, it means there is very little margin in the pricing of their money.  Fixed rates are priced according to the Canadian bond market, and most lenders want to see a spread of anywhere between 1.35%, and 1.55%.  With the current bond margin spreads, the pricing of money has become extremely tight with the current fixed rates being offered, so the lenders are upping the interest rates to create more breathing room in their margins.  This is not uncommon…it happens with every lender when the bond market shifts.
Having said that, there are a couple lenders left who have indicated that they will be raising their interest rates by tomorrow; which means that TODAY we can still get in for about 3.89% for a 5yr. fixed rate….but only until tonight!
Any questions at all…just drop a line!

dan@canadafirstmortgage.com

First quarter see prices, sales and listings fall compared with 2010

CALGARY — Calgary’s real estate market is in balance, with March seeing lower prices, sales and listings compared with a year ago, according to the latest report by an industry association.

That’s good news for people on the prowl for a new home as the average price for a single family home fell by two per cent from a year ago, the Calgary Real Estate Board said Friday.

The average price of $462,947 was virtually unchanged from February, the board said.

During the first quarter, sales were up four per cent to 3,309 from a year prior, driven by a combination of stable prices, low interest rates and stronger job numbers, president Sano Stante said.

“We’ve come to a period where we have a combination of good affordability, low interest rates and large selection,” said Stante. “That makes it a really attractive market to buy in to.”

Single family homes are more affordable in a wider area of Calgary, enabling people to buy into neighbourhoods which used to be out of their price range, he noted.

The less happy news for realtors is the number of single family home sales in the city slid three per cent last month from March 2010, to 1,355.

However, a 19 per cent drop in new listings, year-over-year, could support the market heading toward the spring.

Sales in Calgary’s northwest quadrant were the strongest, seeing a 13 per cent increase over the first quarter in 2010.

The most affordable quadrant in the city remains the northeast, where single family homes averaged around $282,713 during the first quarter.

Meanwhile, the southwest recorded the highest single family average home price during the quarter, at $570,748 compared with an average price of $464,990 in the northwest and $422,821 in the southeast.

The improved sales during the quarter were offset by declining condominium sales, the board said.

Condo sales dropped during the quarter by 11 per cent from a year ago, with prices sliding two per cent on average, excluding the sale of a $4.1-million condominium.

The board considers quarterly results more indicative of overall real estate trends.

More to come …

domeara@calgaryherald.com

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/Calgary+home+prices+static+March/4544924/story.html#ixzz1IcZP8HO0

Denise Deveau, Postmedia News · Mar. 30, 2011 |

Cheryl Hutton and Aaron Coates always thought getting a mortgage would be a challenge. But within 18 days of visiting a mortgage broker, they were able to close a deal on a new townhouse in Calgary without a hitch.

Now in their early thirties, both have careers in the theatre, something Ms. Hutton says has been a bit of a sticking point with banks. “In our industry we never fit the paperwork guidelines ‘for the banks.’ For some reason, people don’t think we pay our bills.”

Although it was their first home purchase, Ms. Hutton says it was surprising how easy the whole process was once they had someone who could walk them through it. “He sat us down, told us what our options were, showed us that it was possible and explained all the steps we needed to take. If it wasn’t for him, we may not have made the leap.”

Sorting through a mortgage process and negotiating rates can be overwhelming for first-time and seasoned home buyers alike. That’s why people such as Ms. Hutton and Mr. Coates turn to brokers to do the legwork for them.

Yet mortgage brokers will tell you that a good portion of home buyers out there don’t really understand what they do. “Part of the challenge we have in our world is that people aren’t really sure what a mortgage broker is,” says Gary Siegle, regional manager for Invis Inc., a mortgage brokerage firm in Calgary.

Brokers should not be confused with “rovers,” mortgage specialists attached to a specific financial institution who visit customers outside of banking hours, Mr. Siegle explains.

“They only deal with that bank’s product. A broker, however, is an intermediary whose job is to make a match between a lender and a borrower. We represent the individual, not the bank.”

About 30% of mortgages in Canada are done through a broker, according to Perry Quinton, vice-president, marketing, for Investor Education Fund, a Toronto-based non-profit financial information service.

“The reason more people don’t know about them is because the banks are so visible. It’s easy to gravitate to them when you have your savings accounts, credit cards and investments there already,” Ms. Quinton says.

Going for the comfort factor could cost you however, she adds. “A broker has access to different lenders including banks, and can shop rates and features. A half per-cent may not sound like much but that could make a difference of about $20,000 for a $250,000 mortgage amortized over 25 years. Any little bit helps.”

Mr. Siegle confirms that shopping around can deliver significant savings.

“Let’s take today’s average posted rate of 5.44%, and you get a point off that at your bank. So you think you just got a really great deal. But the vast majority of rates we deal with as brokers would be another 30 basis points lower -around 4.14%. And if you look at preferred deals that don’t offer features such as prepayment privileges, it can get as low as 3.89%. That’s another 25 basis points below what’s generally available.”

The reason for that is simple, he says. “We offer wholesale rates, banks offer retail.”

For anyone considering a broker, Ms. Quinton advises people to do a bit of groundwork first if they have the time.

“It helps to educate yourself about options and what you can afford. Look at all your living expenses, including student loans and credit card debt. Chances are you are understating those.”

Another thing to look into is the different types of available mortgages and features, including interest rates, payment frequency, amortization, cash-back programs and the ability to make lump sum payments.

“Knowing these things before you go in can save you a lot of money,” she adds.

Any mortgage broker you choose should always meet the right licensing and education requirements, so be sure to check their registration.

If you’re not completely prepared, however, that shouldn’t be a concern when working with a good mortgage broker, Mr. Siegle says.

“After all, mortgages are pretty much all we do. So even if you come in cold, good brokers will walk you through the process and ask all sorts of questions,” Mr. Siegle notes.

“You just need to be prepared to answer them openly and honestly so they can get you the best deal possible.”

http://www.nationalpost.com/news/Experts+best+brokering+mortgage/4525573/story.html

By MYKE THOMAS, SUNMEDIA

New mortgage regulations shortening the maximum amortization period from 35 to 30 years have been in effect for more than a week and appear to have had an impact on the market, but not of the sort regulations introduced last April did.

The reason for the new regulation was federal government concerns about the rising debt-to-income ratio in the average Canadian household and the inference too many people on the edge of qualifying for a mortgage still managed to secure financing, putting them at risk.

Shortening the amortization term might keep some potential buyers out of the market, as monthly payments will increase, but over the long haul, the upside is paying a whole lot less in interest on the loan.

But back to the bigger picture — debt-to-income ratios — which a majority of Canadians don’t seem too worried about, according to the annual RBC Homeownership Study released earlier this month.

The study found Canadians are confident in their ability to continue paying down their mortgages and believe they have the means necessary to handle a drop in house prices, should that occur.

“Almost three-quarters of Canadians, or 73%, believe that they or their families are well-positioned in the event of tumbling home prices,” says the study, undertaken by Royal Bank of Canada.

Of the respondents in a poll conducted to form the study, 85% feel they are “doing a good or excellent job of paying down their mortgage, while 90% … are confident that real estate in Canada is a good investment.”

Certainly, any risk of a financial meltdown in the housing market, which some believe would lead to a U.S.-style collapse, must be taken seriously, but the actual potential of a meltdown must also be measured.

“There’s been a lot of noise around debt-to-income ratios,” said Marcia Moffat, RBC head of home equity financing. “(I find) it comforting such a large segment of Canadians said they were able to handle what is typically the biggest purchase of an individual’s life.”

The high confidence level is based on stable employment and rising incomes, said Moffat.

An earlier report from the Canadian Association of Accredited Mortgage Professionals supports the RBC study’s viewpoint.

Will Dunning, author of the CAAMP report, said Canadians have been much more careful with their finances than our American cousins.

“The essential finding of (our) research report is that Canadians — lenders and borrowers — have been highly prudent in the mortgage market … a vast majority of borrowers have left themselves considerable room to absorb increases in interest rates,” said Dunning, adding in his conclusion, “There is always risk in the mortgage market. In the Canadian experience, the major risk factor is loss of ability to pay (especially due to job loss).

“A secondary risk factor is unaffordable increases in payments. This research report concludes that this is a negligible risk factor at present and in the near-to-medium term future.”

Dunning’s report is available at http://www.caamp.org

We at Verico Canada First Mortgage are pleased and very excited to announce that we have found ourselves as finalists for two Canadian Mortgage Awards this year!  This year for the 2011 CMP awards, we are up for:

Brokerage of the year (less than 25 employees)

Broker of the year (less than 25 employees)

It is a terrific honor to not only be mentioned, but to have made it as one of the finalists - this is truly humbling to say the least.  The awards are held in Toronto on April 29th, 2011, and we anticipate a wonderful evening surrounded by our peers and colleagues of the industry.  I wish to congratulate all the nominees this year.

Whether we walk away with an award or not come April 29th, I would like to say that having the opportunity to surround myself with such a wonderful group of mortgage associates has been a dream.  The team that we have assembled here at Verico Canada First Mortgage are second to none with their caring and empathetic dispositions and professionalism.  Truly top drawer colleagues!

Thank you very much for all your support in our 5 and a half years of growth….we are simply excited to be a part of such a wonderful industry in assisting fellow Canadians with their mortgage needs.

Yours Sincerely,

Dan Mass, AMP

Broker / Owner - Verico Canada First Mortgage

403-294-0033

But wait a minute, the government of Canada said on January 17th there will no longer be 35 yr. amortization periods offered after March 18th.  For the past two months we have been inundated with every broker in every corner of every city preaching “beware the mortgage rule changes - time is nigh!”  March 18th is in one day….time is indeed nigh for the INSURED mortgage rule changes.

Insured mortgages are mortgages that do not have greater than 20% equity in the home.  For example, if you purchase a home and do not have 20% down payment to purchase that home, then you will require an insured mortgage.  However, if you have 20% equity in the home - then you will require what’s considered a conventional mortgage.

When we say not all lenders will change their amortization periods, we simply mean that some lenders are choosing not to conform with the insured policies when it comes to offering conventional mortgages.  In fact, a couple lenders never actually took away their 40 year amortization periods for their conventional mortgages!  Seriously!!  Now…that’s not to say that you SHOULD choose these periods - that’s a separate conversation we should have; however it’s notable to mention that not all mortgages are created equally…and probably more importantly, that’s why you should be dealing with a mortgage broker.  We have the numerous lenders that offer many different mortgage products….including extended amortization periods past 30 yrs.!
Stuck with your mortgage situation or have questions?  We love questions and would love to assist you….anytime!

Happy St. Patrick’s Day

With a mere few days left to take advantage our the “current” Mortgage rules, we have found ourselves with many questions that CMHC has addressed and taken the liberty to post on their website.  Hoping you find some value in us relaying the message over to our blog!

The following Q+A was taken from the CMHC website…

*FAQs — New Parameters on Mortgage Insurance - Canadian Mortgage and Housing Corporation

On January 17, 2011, the Government of Canada announced adjustments to the parameters governing the application of the government’s mortgage loan insurance guarantee.

What are the new mortgage loan insurance requirements?

CMHC will implement the following new measures to all applications for mortgage loan insurance:

Effective March 18, 2011:

• Reduce the maximum amortization period from 35 to 30 years for new insured mortgages with loan-to-value ratios of more than 80 per cent.
• Lower the maximum amount Canadians can borrow when refinancing  a 1 – 4 unit owner-occupied property from 90 to 85 per cent of the value of their homes.

Effective April 18, 2011:

• Mortgage loan insurance will no longer be available for non-amortizing secured home equity lines of credit, or HELOC.

I already have an insured mortgage. How will these changes affect me?

CMHC mortgage insurance is good for the life of the mortgage. Borrowers renewing an insured mortgage will not be affected by these changes. For example, if a borrower had a 40 year amortization and there are 37 years remaining on the mortgage, the mortgage can be renewed with a 37 year amortization, as long as no new funds are being added to the mortgage.

What is required to qualify for an exception to the new parameters?

If the approved lender has documentation of a binding purchase and sale, financing or refinancing agreement and that agreement was dated before March 18, 2011, CMHC will not apply the new parameters, even if the application for insurance is received by CMHC on or after March 18, 2011.

Will a purchase and sale agreement dated prior to March 18, 2011 be considered binding if there are outstanding conditions that have not been fulfilled prior to March 18?

Yes, if the date on the purchase and sale agreement is earlier than March 18, the new parameters will not apply, even if the conditions of the agreement have not been waived.

Will the new refinancing rules allow a borrower with a mortgage above 85 per cent loan-to-value (LTV) to refinance by extending the amortization period?

No. Effective March 18, 2011, borrowers will not be permitted to refinance a mortgage above an  85% loan-to-value, unless the borrower has a binding refinance agreement dated prior to March 18, 2011.

I have a written mortgage pre-approval from a lender, dated before March 18, 2011 with a 35 year amortization. Will I still be eligible for a 35 year amortization if I don’t sign an agreement of purchase and sale until March 18 or later?

No, a mortgage pre-approval is not considered to be a “binding agreement”. You may have a 35 year amortization only if your agreement of purchase and sale is dated before March 18, 2011.

Will the new parameters apply to assignment (“switch” or transfer) of a previously-insured loan from one approved lender to another?

No. As long as the loan amount and amortization period are not increased, the new parameters will not apply to a switch/transfer/assignment of mortgage to a different approved lender.

If I sell my current home and buy another, will the new parameters apply if I transfer the outstanding balance of my CMHC-insured mortgage to the new home?

As long as the outstanding balance of the insured loan, the loan-to-value ratio and the remainder of the amortization period are not increased, the new parameters will not apply when the CMHC mortgage insurance is transferred from one home to another.

What if I need to increase the amount of my insured loan when I sell my current home and buy another?

In this situation the new parameters will apply for any insured loan.

Is it only new Home Equity Lines of Credit (HELOCs) that are affected by the new parameters or existing HELOCs as well?

As of April 18, 2011, CMHC  will no longer offer mortgage loan insurance on non-amortizing lines of credit to approved lenders, such as HELOCs. However, if a HELOC is already CMHC insured then it remains insured for the  life of the mortgage.

HELOCs will no longer be insurable as of April 18, 2011. Is there any situation which would quality for an exception (e.g. binding agreement) to allow for these loans to be insured?

* FAQs — New Parameters on Mortgage Insurance – Canadian Mortgage and Housing Corporation

For additional clarification on the upcoming new Mortgage Parameters, please see link below:

http://www.cmhc-schl.gc.ca/en/corp/faq/faq_008.cfm

It’s important for us here at Verico Canada First Mortgage to relay the sadness we feel that comes from the devastation that has occurred during this frightening natural disaster in Japan.  Before we get into any talks about “economic effects” from what has occurred, we firstly wish to send our thoughts and prayers to all who are affected by the earthquake.  We hope for safety and speedy recoveries…Godspeed.

Below is taken directly from the TD’s economic release:

“TD - This Weeks Bottom Line“…

United States
• An 8.9 magnitude earthquake wreaked havoc on Japan last night, pushing Asian and European stocks lower.
It is too soon to accurately assess the impact on the global economy, so markets may exhibit some volatility
in the coming days as additional information becomes available.
• Debt downgrades in Europe, possible signs of slowing growth in China and ongoing discord in the Middle
East also cast a shadow of uncertainty on the global economy.
• U.S. data was generally positive as consumer credit and retail sales continued to grow.
• We don’t expect the Fed to change its policy stance at next week’s monetary policy meeting. But, we will
be looking very carefully for any changes in the Fed’s language on exit strategies and inflation.
Canada
• After dramatic swings over the past few years, this week’s economic data painted a picture of an economy
going through a normalization process.
• At 181,300 units in February, housing starts were largely in line with demographic fundamentals. Meanwhile,
Canada posted a merchandise trade surplus for a second consecutive month in January.
• The labour market added a disappointing 15,000 jobs in February, and the unemployment rate stalled at
7.8%. Nonetheless, on a trend basis, jobs gains have been consistent with healthy, relatively sustainable
economic growth.
• International risks intensified this week, pushing the S&P/TSX index down 4.5%. The Canadian dollar was
relatively flat, supported by still elevated commodity prices.

Andrew Pyle, On Friday March 4, 2011,

The Bank of Canada has now kept its official interest unchanged at 1 per cent for the fourth meeting.

Those with floating-rate debts will no doubt be relieved; however, economists were looking for a signal from Mr. Carney and crew that improving economic conditions were paving the way for a return to rate hikes sometime soon.

Had this week’s policy meeting taken place a few weeks ago, it’s likely we would have received that signal. Indeed, most indicators have pointed to stronger-than-expected activity in Canada and the U.S., while emerging economies have maintained a torrid pace of growth.

That would have been before the recent developments in Egypt, Tunisia, Yemen and now Libya. The grassroots uprising against incumbent regimes might be welcome from a democratic ideal perspective, but it has created a rift in energy markets.

Crude awakening

After dipping briefly below $85/barrel in February, the price of crude oil has now broken above $100 for the first time since October 2008, testing $103.40 last week — the 61.8 per cent retracement mark from the July-December 2008 collapse.

A close above this level will increase the odds of a move to $120 (recall that $147.27 was the intraday high from July 2008). And if you thought the recent spike in pump prices was unnerving, gasoline futures have already crossed above the 61.8 per cent retracement level and are trading above three bucks (US) a gallon.

In July 2008, futures broke above $3.70/gallon. Even if prices simply hold near current levels, average pump prices in Canada could easily gravitate towards $1.30/litre. That’s not good news for those planning to drive to their March break vacation spots, or for those returning snowbirds.

One might suspect the Bank of Canada would see the boost to inflation, that will come from commodities like oil and gasoline, as something that needs to be worked against through tighter monetary policy, but that’s old school.

These commodities, like food (which is also seeing some inflation strain), are essentials and represent a significant share of our non-discretionary spending. Unless incomes rise by the same amount as the cost of these essentials, everything else being different, there will be less to spend on discretionary goods and services. In other words, real consumption growth in Canada could slow.

Not so fast

How much of a slowdown we experience in consumer spending (and let’s throw in housing expenditures too), depends greatly on that above-mentioned phrase “all other things being equal.”

If employment grows at a decent clip and wages go with it, then the affect on spending will be less pronounced. As of the end of 2010, average weekly earnings in Canada were up 4.5 per cent over the same period a year ago, which was the fourth-best growth rate in earnings since records started in the early 1990s.

To put this in perspective, when crude oil was climbing towards $150 back in the summer of 2008, weekly earnings growth was heading in the opposite direction.

There were other headwinds facing Canada back in 2008, including the cost of borrowing. When oil reached its peak, the 5-year conventional mortgage rate in Canada was above 7 per cent. Today, it sits near 5.5 per cent. The 1-year rate was also close to 7 per cent (yes, we had a very flat yield curve before the walls came tumbling in), compared to 3.5 per cent today.

Now, I’m not suggesting that we’re going to stay in interest rate limbo forever, but the Canadian consumer is in better shape to handle higher pump prices today than back two years ago.

How long can they sit on the fence?

What the Bank of Canada has to be careful of here is the oil price shocks emanating from across the pond turn out to be temporary and there is no slowdown in consumption growth. Bank economists are already looking towards 2012 as the likely period where excess capacity in Canada’s economy disappears and inflation returns to target (using the core inflation measure).

It is easy, however, to accelerate that trip back to zero excess and just as easy to push the economy into a situation of excess demand.

Coming back to the Bank’s decision this week, it may have been surprising to see it lean against speculation of near-term tightening. But, it would be a mistake to assume the Bank can’t and won’t pull the trigger on rates before the summer.

There are two policy meetings left this half (April and May), so if Mr. Carney and crew wake up and realize there is too much potential inflation risk in leaving rates unchanged, they will need the April meeting to deliver the guidance towards a May rate hike — something economists thought was going to happen this week.

And if energy price shocks don’t intensify and the Bank fails to deliver such guidance, don’t be surprised if the bond market creates the guidance for them. http://ca.finance.yahoo.com/news/Central-bank-still-hike-rates-yahoofinanceca-1276928971.html