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TORONTO, Dec. 15 /CNW/ - Alberta’s economy continues to recover from its severe recession with real GDP set to grow 3.4 per cent in 2010 and then galloping to a solid 4.3 per cent in 2011, according to the latest Provincial Outlook report from RBC Economics. In 2011, RBC projects that Alberta’s economic growth will be second only to Saskatchewan, representing the fastest growth in the province since 2006.

Alberta’s strong forecast is owed to improvements in a number of areas, particularly the booming energy sector and increased job creation since spring which helped to bring down the stubbornly high unemployment rate.

“Improvements in the employment market helped reverse the net migration outflow to other provinces that earlier slowed population growth to the lowest rate in 15 years,” said Craig Wright, senior vice-president and chief economist, RBC. “These are the kinds of turnarounds that will spread the recovery more widely throughout Alberta’s economy next year.”

The RBC report notes Alberta’s employment sector is expected to lead the country with a rise of 2.3 per cent in 2011, up significantly from a scant 0.5 per cent in 2010. The anticipated increase represents the creation of 37,000 jobs and will usher in the highest total of new employment opportunities since 2007 which should ultimately contribute to a boost in population growth.

“With interest in developing Alberta’s oil sands growing ever higher, the gush of capital spending on megaprojects is expected to continue next year and beyond. This will pump tremendous activity into the provincial economy and act as a catalyst for both faster job growth and stronger migration from outside the province,” added Wright.

According to the RBC Economics Provincial Outlook, the impact of Alberta’s strengthening demographics will be especially positive for consumer spending in 2011 as retail sales are expected to soar to a rate of 5.6 per cent, higher than any other province. This, along with the 5.1 per cent increase in consumer spending expected this year, will go along way toward reversing the massive 8.4 per cent decline experienced in 2009.

Looking ahead to 2012, the rising tide of energy-related spending and the expanding of non-conventional oil production will continue to exert powerful lifting forces throughout the Alberta economy. RBC forecasts the province will sustain a solid pace of growth with GDP of 3.8 per cent which will keep the province near the top of Canada’s growth rankings.

The RBC Economics Provincial Outlook assesses the provinces according to economic growth, employment growth, unemployment rates, retail sales, housing stars and consumer price indexes.

Nicolas Van Praet, Financial Post · Thursday, Jan. 27, 2011

MONTREAL — The number of Canadians moving to another province has punched to a high not seen in 20 years as people pack up in search of better jobs and salaries elsewhere.

Roughly 337,000 Canadians were on the move in 2010, says a report on interprovincial migration published Thursday by TD Economics. That’s 45,000 more than the year before and the most since the late 1980s. It also represents the largest share of the overall population since 1998.

“It’s a good sign in the sense that whenever you see that kind of movement, it’s an expression of a labour market that’s healing after a pretty severe recession,” said TD senior economist Pascal Gauthier, who wrote the study. “People are either returning home or moving to areas that didn’t have employment before. For those that are already employed, they’re finding potentially better prospects.”

Interprovincial migration matters because when there is a net movement of people to higher-employment and higher-productivity areas, that generates net economic output gains on a national basis. It’s also crucial for businesses because people often make big-ticket purchases when they move, which can have a significant impact on local housing and retail markets.

Canada’s situation lies in stark contrast with the United States, where census data show long-distance moves across states fell last year to the lowest level since the government began tracking them in 1948. Americans used to be a nation of big movers, with as many as one in five relocating for work every year in the 1950s. Now, experts are debating why they’ve become a nation of “hunkered-down homebodies,” as the New York Times put it.

Richard Florida, director of the Martin Prosperity Institute at the University of Toronto, says the United States is experiencing a new kind of class divide now between “mobile” people who have the resources and flexibility to pursue economic opportunity, and “stuck” citizens who are tied to places with weaker economies.

He argues the U.S. housing crisis is a big factor slowing mobility down. When the housing bubble popped, it left millions of Americans unable to sell their homes. “It’s bitterly ironic that housing, for so many Americans, has gone from being a cornerstone of their American dream to being a burden,” he wrote in a recent opinion piece.

Mr. Gauthier agrees that the housing crash is partly to blame for keeping Americans put. “There’s such a glut of supply that it’s just difficult to sell your house. In Canada, that’s not been an issue.”

In Canada, the biggest impediment to the free flow of labour between provinces and territories remains regulation as occupational requirements fall under provincial jurisdiction.

Workers in regulated professions and skilled trades, such as teachers and engineers, still face major barriers trying to work in provinces other than their own. Solving that problem will be key ahead of the looming labour force crunch, Mr. Gauthier argues.

Alberta, B.C. and Saskatchewan have seen the strongest net inflow of people of all provinces for the past three years and that will not change in the short term, the TD report forecasts. The three jurisdictions are working to implement a newly signed trade and labour mobility agreement between them that could eventually see seamless movement of workers between their borders.

TD says Ontario and Quebec will continue to lose residents to other provinces on a net basis, but the bleeding will be at a slower pace than in previous years. It says Manitoba and Prince Edward Island will be the only provinces still shedding a significant share of residents through the end of 2012.

In Manitoba’s case, it’s not that there aren’t any jobs. The province’s unemployment rate has been consistently lower than that of the rest of Canada since the 1990s. It’s that people are being lured by the prospect of higher-paying jobs in neighbouring provinces.
http://www.financialpost.com/news/Migration+year+high/4180290/story.html#ixzz1CKVWbcer

Tal believes the Bank of Canada interest rate  move will come early, possibly in May

By Julian Beltrame, The Canadian Press

OTTAWA - Canadians may be starting to get the message about the perils of mounting debt, suggests a new report from CIBC.

A new analysis by the CIBC shows that many measures of household debt moderated in the third quarter of 2010, just as the often-quoted indicator of debt-to-disposable income hit a record 148 per cent.

The paper says that alarming number was due to falling incomes in the July-September compared with the April-June quarter — when Canadians were getting juicy tax refund cheques from Ottawa — not because debt levels were rising.

In fact, behind the scenes, credit growth was already falling.

Household debt in the third quarter grew at the slowest pace in nine years, while in the last month for which there is data — October 2010 — it was the softest in 15 years.

As well, lines of credit are now rising at a monthly clip of 0.3 per cent, the slowest pace since 2007.

While the mortgage market expanded by seven per cent year-over-year — still faster than income growth — mortgage debt was a small portion of household assets, a function of improved stock market portfolios and better home values.

“I’m not saying debt is not a problem. What I am saying is the problem is getting smaller,” said economist Benjamin Tal, author of the CIBC report.

“Everybody is assuming debt is rising like crazy, but the reality is that if you look closely you see that the rate at which debt is accumulating is going down notably. We should not get panicky because it seems the system is starting to correct itself.”

The Bank of Canada and the federal government have been warning Canadians about their debt exposure for well over a year.

But the hectoring picked up in recent months after the debt-to-income ratio rose to a record high in the third quarter, even beating out the U.S. indebtedness ratio.

In mid-January, Finance Minister Jim Flaherty announced new measures to rein in borrowing, including reducing the amortization period on mortgages from 35 to 30 years, limiting the size of home-equity loans and removing government insurance on lines of credit secured on homes.

Responding to the report at an event in Oshawa, Ont., Flaherty said he acted because he was seeing some “excesses” in borrowing and was concerned a minority of homeowners would not be able to make their monthly payments once interest rates start rising.

“Moderation is the key,” Flaherty said.

Tal said Canadians got the “message” from the warnings of policy makers, but also that there was a natural exhaustion with borrowing.

Other economists, including Scotiabank’s Derek Holt, have also talked about the Canadian consumer entering a new phase in which pent-up demand, particularly for housing, has been exhausted.

Still, Tal believes Flaherty acted correctly in tightening credit conditions, and also in keeping those measures modest and targeted. He estimates that when the new rules take effect in March, they will curtail new mortgage credit by between two and three per cent over the next 12 months.

“They chose an almost surgical approach where it hits where it hurts without causing too many side effects,” Tal said. “They targeted marginal borrowing … they will not derail the housing market.”

The latest downward trend on credit will take some pressure off Bank of Canada governor Mark Carney to raise interest rates to keep Canadians from loading on too much debt.

Economists are divided as to when Carney will move off the super-low one per cent policy rate.

Some argue that uncertainty over the recovery, risks in the global economy and fear about stoking the dollar — more that debt levels — may be more decisive in convincing Carney to stay on the sidelines until at least the third quarter.

Tal believes the move will come early, possibly in May. He said while the central bank’s 2.4 per cent growth forecast for 2011 is modest, the composition of that expansion is superior to what occurred last year.

Last year’s recovery was bolstered by consumer borrowing and government stimulus, he said, while future growth will be anchored by “a vibrant business sector.”

Tal said he does not believe higher rates, when they come, will cause a major panic among borrowers or disruption in the economy.

He notes that personal bankruptcies are already on the way down, and that all expectations are that Carney will be raising rates in a slow, measured way, rather than in large increments.

“The overall speed and magnitude of future rate hikes will be limited by the growing effectiveness of monetary policy and a modest recovery,” he said.

http://ca.finance.yahoo.com/news/Message-heard-Canadian-capress-3310848876.html?x=0

ulian Beltrame, The Canadian Press

OTTAWA - The supposedly tapped out Canadian consumer hasn’t put away the credit card yet, nor taken all his business south of the border.

Statistics Canada reported Friday that retail sales rose a surprisingly strong 1.3 per cent in November, both in terms of sales value and volumes. That is a massive number, particularly on the heels of five previous months of gains and an upwardly revised one per cent increase in October. The consensus had been for a relatively tame 0.4 per cent pickup.

Scotiabank economist Derek Holt said that because retail sales account for about a quarter of gross domestic product, November’s results will have economists taking out their calculators to revise upward the economy’s end-of-year performance. Gains were reported in eight of 11 subsectors, representing roughly 90 per cent of total sales. And nine provinces were in on the spending spree, with Nova Scotia the only wallflower.

Part of the hesitation about making more definitive estimates is that Statistics Canada is not as current as some countries about tabulating key data. While it was reporting sales for November on Friday, both the U.S. and the United Kingdom had already released data for December. Meanwhile, Canada’s statistical agency won’t be reporting November’s output performance until Jan. 31.

But what data has been released does point to a stronger fourth quarter, say economists, who also believe the momentum has been carried into the start of 2011. Friday’s retail report found overall sales rose to $37.3 billion in November, bolstered by a 3.6 per cent increase at new car dealers.

Gasoline station sales rose 1.4 per cent, while sales at food and beverage stores increased 0.8 per cent. Clothing, sporting goods, hobby, book and music stores also had a good month.

The largest decline occurred at electronics and appliances stores, where sales fell 2.2 per cent. http://ca.finance.yahoo.com/news/Consumers-continue-buck-capress-1176055459.html?x=0

Garry Marr, Financial Post · Tuesday, Jan. 18, 2011

I still have an Eaton’s department store credit card even though there is no where to shop with it.

That hasn’t stopped the long-forgotten card from making its way on to my credit report and ultimately affecting my credit score.

When contacted by a representative of TransUnion LLC — one of two companies providing credit ratings in Canada, the other being Equifax Inc. — for a story about how to improve credit ratings I decided it would be a good time to check my own score.

TransUnion gave me a code to download my score, something that normally costs $14.95 for a one-time credit profile and another $7.95 to get your credit score. The company also offers a program that allows you to monitor both whenever you want for $14.95 a month.

“One of the benefits of checking your credit report is to make sure information is accurate and up to date,” says Tom Reid, director of consumer solutions for TransUnion.ca, referring to opened accounts you may have forgotten about.

So how did I do? I scored 786 out of 900, considered “good” and better than 66.02% of the population. But I somehow feel like the kid who got a B on an assignment. I want that A.

According to my report, I have too many bank or national revolving accounts on my credit report. I have three major credit cards, American Express, Visa and MasterCard. I have a car loan and an unused line of credit with my bank.

That Eaton’s card probably didn’t help my score and then there’s the Hudson’s Bay card account that was still open that I haven’t used in a decade. Show me a Canadian who hasn’t opened up one of those to get the 10% discount. I just never closed mine.

There are five different categories that go into a credit score. The first is on-time record of payment — got that covered. Next up is the number of inquiries or applications for credit.

You remember getting that credit card for a free tee-shirt at a hockey game or signing up for the department store card to get the discount and then destroying it. You think that doesn’t matter? Think again.

“It could potentially have a negative impact on your score,” says Mr. Reid, about applications I’ve made to various department stores over the years. Fortunately, I haven’t made any in the last two years.

Your utilization of credit is also a major factor — that’s your balance divided by available credit. It’s not based on whether you have a balance at the end of the month but it’s the balance outstanding at a given moment divided by your available credit.

“If that number exceeds 40%, that is typically a warning sign,” says Mr. Reid, noting a higher credit limit will keep that percentage down.

The last factors are longer term credit history and the breadth of your credit, somebody who has just one credit card doesn’t look as strong as someone who also has a line of credit and say a mortgage.

“It’s a fantastic credit score,” says Mr. Reid, about my result, adding I shouldn’t have a problem getting credit. Yeah but my editor who took the same test scored 831.

All of this may just seem like a vanity project but there are real problems you can encounter with bad credit and a poor rating, says Vince Gaetano, a principal broker with Monster Mortgage.

“A number of things can happen if you don’t have a good score. Right now 680 seems to be the cut off for buying a home with mortgage [default] insurance,” says Mr. Gaetano. “If you are below 600, you are in real trouble, you are going to a B leader.”

Those lenders will just kill you on interest rates — 5% to 6% compared to 2.25% —not to mention the fact you’ll need to have at least a 20% deposit on your home.

Then there’s the fees for bad credit. Lenders charge 1% of the value of the mortgage for people with bad credit. Who wants to pay $3,000 extra on a $300,000 mortgage. The broker will also demand 1% because your bad credit means the bank is not compensating the broker for you, the questionable customer.

What’s the worst score Mr. Gaetano has seen. “Somebody had like 430-something. I mailed them a bullet. I wouldn’t lend a guy like that $5 for lunch. That’s happens when you stop paying everybody,” he says.

I’m starting to feel better about my score. But I still cancelled my open HBC card and started to investigate how one goes about cancelling a credit card for a store that no longer exists. : http://www.financialpost.com/personal-finance/What+affecting+your+credit+score/4126038/story.html#ixzz1BTyII8NL

Paul Vieira, Financial Post · Sunday, Jan. 16, 2011

The federal Conservative government is expected on Monday to introduce new rules aimed at toughening up mortgage lending in an effort to curb further growth in record household debt levels.

The key change Finance Minister Jim Flaherty is likely to unveil is a cut in the maximum amortization period, to 30 years from 35 years. Mortgages with amortization periods longer than 30 years will no longer qualify for government-backed mortgage insurance, which is required for buyers with less than a 20% down payment on a home.

Government sources also told the National Post Mr. Flaherty is expected to lower the maximum amount Canadians can borrow against the value of their homes, to 85% from 90%, and remove federal government backing of home equity lines of credit, or so-called HELOCs.

The sources, who spoke on condition of anonymity, add the minimum down payment, at 5%, will remain as is. Further, there will not unveil any plan to target condominium purchases by requiring monthly condo fees be added to the list of expenses that is measured against income to decide whether a buyer can afford a mortgage.

The changes to the country’s mortgage rules — the second in as many years — emerge amid rising concern about the record levels of household debt, which measured as a ratio of money owed to disposable income nears a startling 150% as of the third quarter of last year. That surpasses the level of debt held by American households, whose appetite for borrowing helped stoke the financial crisis of a few years ago.

The Bank of Canada recently warned debt levels are growing faster than income, and the risk posed by consumer indebtedness to the domestic economy would continue to escalate without a “significant change” in how consumers borrow and banks lend.

Bank of Canada governor Mark Carney said policymakers have a “responsibility” to look at the benefits of pre-emptive action. Joining the chorus have been chief executives at the big banks, most notably Ed Clark at Toronto-Dominion Bank, in publicly advocating for tougher mortgage standards.

Last Friday, Prime Minister Stephen Harper acknowledged his government was considering changes to the rules governing mortgages.

He said the government “remains concerned about growth in the level of household debt and will look at taking prudent steps to moderate that growth. We will look at what steps may or may not necessary.

In February of 2010, Mr. Flaherty moved to toughen up the mortgage rules amid worries that Canada was in the midst of a housing market bubble. The reforms, since introduced, compelled borrowers to meet standards for a five-year fixed-rate mortgage, even if the buyer wanted a shorter-term, variable rate loan; reduced the amount Canadian can borrow against their home, to 90% of the property value from 95%; and require purchasers of rental properties to issue a 20% down payment as opposed to 5%. The moves played a role, observers say, in slowing down real estate activity.

The new changes, though, reduce even further the amount people can borrow against their homes, to 85%. Also, the changes target HELOCs, which Mr. Flaherty cited as a source of concern in a recent interview. Home-equity lines of credit surged 170% over the past decade, or twice the rate of mortgage growth, and now represent 12% of overall household debt. With the new rules, Ottawa will no longer back the HELOC, as it was doing up until now through mortgage insurance. Instead, sources say, the government will signal that the banks are on the hook for any default linked to a HELOC it issued.

The cut in the amortization period, or the time required to pay off the home loan, follows a 2008 move by Ottawa to stop insuring 40-year mortgages.

While the federal government looks to curb borrowing, economists say the Bank of Canada may have to follow by raising its key interest rate sooner rather than later. The central bank issues its latest rate statement on Tuesday and it is expected to hold its benchmark rate at its present 1% level as signs indicate the economy may be benefiting from renewed business and consumer confidence in the United States.

Stewart Hall, economist at HSBC Securities Canada, said the extraordinarily low-rate environment “provides all the incentive to consumers to borrow and spend and none of the incentive to save. You can try to [regulate] that away but that is apt to be fraught with significant frustration.”

: http://www.financialpost.com/news/Buying+home+about+tougher/4117356/story.html#ixzz1BIHoc6n9

Sunny Freeman, The Canadian Press

TORONTO - The Canadian real estate market will follow a similar pattern this year as that seen in 2010 as buyers pull sales forward into the early months in anticipation of higher interest rates, according to a report from one of Canada’s largest real estate firms.

The aftershocks of the recession, including a lingering low interest rate environment, will continue to influence the Canadian real estate market in 2011 — a year that will be stronger than expected, said the report released Thursday by Royal LePage.

Royal LePage predicts that average home prices will rise three per cent to $348,600 in 2011, driven largely by a rush to buy in the first half of the year in advance of anticipated interest and mortgage rate hikes in the second half.

“Canadians realize that interest rates are unsustainably low and that homes will become effectively more expensive when mortgage rates return to normal levels,” said Phil Soper, president of Royal LePage.

“2011 is expected to unfold much like 2010, when close to 60 per cent of sales volume occurred in the first half of the year in anticipation of interest rate increases that never materialized.”

However, the number of transactions will be slightly lower than last year and activity will be modestly closer to the norm because the pull forward phenomenon last year was exacerbated by a tightening of mortgage qualification rules and the introduction of the HST in Ontario and British Columbia in the middle of the year.

Soper said the extension of low mortgage rates will be an unexpected boon to the market this year.

“Like many Canadians, we anticipated an end to the ultra-low interest rate era before year-end 2010,” he said.

“Paradoxically, global economic weakness, particularly in the United States, allowed policy-makers and financial institutions to keep borrowing costs low, resulting in a stronger Canadian housing market and a better than forecast fourth quarter.”

Average house prices rose between 3.9 per cent and 4.6 per cent in the fourth quarter of 2010, while price appreciation is expected to continue a moderate and steady climb throughout the current year.

The report contrasts with some recent predictions by economists that prices should remain flat or decline over the next year.

The Canadian Real Estate Association has predicted prices will fall by 1.3 per cent to a national average of $326,000, this year, tied to weakness in British Columbia and Ontario — the hottest real estate markets of 2010. It has also forecasted a nine per cent decline in sales.

CREA has yet to release year-end data for 2010, but preliminary reports from two of the biggest markets, Toronto and Vancouver, released this week indicate 2010 declined as expected.

Sales were down by one per cent compared with 2009 in Toronto, while the average home selling price was $431,463, up nine per cent from 2009.

In Vancouver, sales declined 14.2 per cent from 2009, and were 10.3 per cent below the 10-year average for sales in the region. The average selling price in B.C.’s largest city was up 2.7 per cent at $577,808.

Canada’s real estate market has been on a rebound over much of the past year after sales dried up in late 2008 and hit a multi-year low in January 2009.

The housing market’s sudden plunge was sparked by a credit crunch that developed in the U.S. housing and lending industries, and gradually spread across the globe, causing a worldwide recession in the late summer and early fall of 2009.

The commercial real estate market experienced a similar plunge as investors lost confidence in the sector. However, the commercial market, which includes office and retail spaces, had a stronger than expected year in 2010 and that momentum is projected to strengthen throughout 2011, according to a report released Thursday by CB Richard Ellis Ltd. Some market observers had predicted a glut of vacancies in Canada’s major business centres, but that didn’t happen, said John O‘Bryan, vice-chairman of CB Richard Ellis Canada.

We‘ve had good news over the past twelve months with respect to interest rates, housing trends and employment gains, with many companies announcing plans for expansion, he wrote in the report.

“2011 may well be another good, stable year but should be viewed with cautious optimism in light of the concentration in employment growth on part-time jobs rather than the full-time positions that indicate confidence in long-term, sustainable growth.”

Yes indeed - welcome 2011

I want to take a moment to thank all of our customers in 2010 for a tremendous year.  We have provided top quality mortgages; from Credit Unions - to Trust Companies - to the traditional banking institutes; we have seen a wide array of mortgages go out to our customers this year.  When it comes to Canadian mortgages, we wish to provide nothing short of the best in our Canadian marketplace!

Thank-you again for making 2010 one of the best years on record for us, and we look forward to 2011 as your mortgage professionals who you can count on.

Thinking of anyone in particular who needs to refinance or purchase a home?  Their one stop with us will be their last as their best mortgage options are surely covered!  We’ll even throw $100 your way for referring your friends, co-workers, and/or family.

$100 for your referral

And don’t forget to follow us on Twitter and Facebook!

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Canada First Mortgage - Twitter

Here’s to 2011!

Sincerely,

Dan Mass

dan@canadafirstmortgage.com

TORONTO, Dec. 15 /CNW/ - Alberta’s economy continues to recover from its severe recession with real GDP set to grow 3.4 per cent in 2010 and then galloping to a solid 4.3 per cent in 2011, according to the latest Provincial Outlook report from RBC Economics. In 2011, RBC projects that Alberta’s economic growth will be second only to Saskatchewan, representing the fastest growth in the province since 2006.

Alberta’s strong forecast is owed to improvements in a number of areas, particularly the booming energy sector and increased job creation since spring which helped to bring down the stubbornly high unemployment rate.

“Improvements in the employment market helped reverse the net migration outflow to other provinces that earlier slowed population growth to the lowest rate in 15 years,” said Craig Wright, senior vice-president and chief economist, RBC. “These are the kinds of turnarounds that will spread the recovery more widely throughout Alberta’s economy next year.”

The RBC report notes Alberta’s employment sector is expected to lead the country with a rise of 2.3 per cent in 2011, up significantly from a scant 0.5 per cent in 2010. The anticipated increase represents the creation of 37,000 jobs and will usher in the highest total of new employment opportunities since 2007 which should ultimately contribute to a boost in population growth.

“With interest in developing Alberta’s oil sands growing ever higher, the gush of capital spending on megaprojects is expected to continue next year and beyond. This will pump tremendous activity into the provincial economy and act as a catalyst for both faster job growth and stronger migration from outside the province,” added Wright.

According to the RBC Economics Provincial Outlook, the impact of Alberta’s strengthening demographics will be especially positive for consumer spending in 2011 as retail sales are expected to soar to a rate of 5.6 per cent, higher than any other province. This, along with the 5.1 per cent increase in consumer spending expected this year, will go a long way toward reversing the massive 8.4 per cent decline experienced in 2009.

Looking ahead to 2012, the rising tide of energy-related spending and the expanding of non-conventional oil production will continue to exert powerful lifting forces throughout the Alberta economy. RBC forecasts the province will sustain a solid pace of growth with GDP of 3.8 per cent which will keep the province near the top of Canada’s growth rankings.

The RBC Economics Provincial Outlook assesses the provinces according to economic growth, employment growth, unemployment rates, retail sales, housing stars and consumer price indexes.

The full report and provincial details are available online as of 8 a.m. ET today, www.rbc.com/economics/market/pdf/fcst.pdf.