News Articles - Archive
Kelleway Mortgage Architects
1. Negative effects have been gradually accumulating from the strong dollar and high commodity prices. This by itself was probably enough to generate a slowdown late this year and into 2009.2. With the sudden addition of the stock market downturn, it appears that during 2009 Canada will see very little job creation, and could even see job losses.3. For 2010, however, the weakening of the Canadian dollar should be a positive factor, resulting in better job creation.
Bank of Canada
October 21, 2008
Glen's Summary. The Bank of Canada (BoC) did move rates this morning. It decreased the overnight rate (i.e., considered to be the wholesale rate of lending) which means that the prime rate also went down to 4.25% . The prime rate is what the BoC suggests that lenders use as their short term lending rate. BUT as we saw with the last coordinated rate reduction on October 8, even though the BoC reduced its rate by 1/2 percent, the major charter banks only reduced theirs by 1/4 percent.
So when you see a posted prime rate by the charter banks (e.g,, TD prime rate, Scotia prime rate or "your bank's name" prime rate) do not expect it to automatically match the BoC rate. At this time there are a few lenders whose prime rates do not match the current BoC prime rate.
highlights Expect most lender to have:
1) their new secured lines of credit at prime + at least 1%
2) all new floating rate mortgages priced at prime + 3/4 % or higher
PDF link to Bank of Canada Rate Announcement
Glen's Summary. The Bank of Canada (BoC) did move rates this morning. It decreased the overnight rate (i.e., considered to be the wholesale rate of lending) which means that the prime rate also went down to 4.25% . The prime rate is what the BoC suggests that lenders use as their short term lending rate. BUT as we saw with the last coordinated rate reduction on October 8, even though the BoC reduced its rate by 1/2 percent, the major charter banks only reduced theirs by 1/4 percent.
So when you see a posted prime rate by the charter banks (e.g,, TD prime rate, Scotia prime rate or "your bank's name" prime rate) do not expect it to automatically match the BoC rate. At this time there are a few lenders whose prime rates do not match the current BoC prime rate.
highlights Expect most lender to have:
1) their new secured lines of credit at prime + at least 1%
2) all new floating rate mortgages priced at prime + 3/4 % or higher
Scotiabank Group
September 25, 2008
"The bottom line is that we do believe there to be considerable downsides to the Canadian housing market, but that comparisons of Canadian mortgage market prospects to the U.S. experience are off-base."
highlights
1. Debt growth over the full cycle
2. Leverage - night and day comparisons
3. Canadian mortgage markets are fundamentally healthier than the US
4. Canadian morthgages are funded, underwritten, and enforced in a totally different manner.
PDF link to Scotiabank Special Update
Fundamentals Overrun by Government Intervention: Banning Short Selling and Creating the RTCII.
RBC Capital Markets, Equity Research
September 19, 2008
Government launches massive assault on financial crisis.
PDF link to RBC Capital Markets
RBC Dominion Securities Market Comment
Portfolio Advisory Group
September 18, 2008
The most important thing that long term investors can do is avoid engaging their emotions and regain their bearings by focusing on the things that we do know...
PDF link to RBC Market Comment
North American & International Economic Highlights
Benjamin Tal, Senior Economist, CIBC World Markets
September 19, 2008
Unless you are over 80 years old, you have not experienced such volatility in financial markets before.
PDF link to CIBC Highlights
House Prices in Most Canadian Markets are Overpriced and Likely to Decline: UBC Study
Prof. Tsur Somerville, Sauder School of Business, Media Release
September 8, 2008
"The decade long boom in Canadian markets is over."
PDF link to UBC Study
Bank of Canada keeps overnight rate target at 3 percent
Jeremy Harrison, Bank of Canada Press Release
September 3, 2008
Overall, the level of economic activity is slightly lower than expected in July but still close to the economy's production capacity.
PDF link to Bank of Canada Rate Announcement
Household debt now rising faster than wealth: CIBC
Eric Beauchesne, Canwest News Service
August 19, 2008, Financial Post online
The mortgage market is still expanding by 13.4%, the report said, although it will likely slow by more than half to no more than 6% due to the correction in the formerly overheated markets in western Canadian cities and the tightening up of federal mortgage lending restrictions.
PDF link to Financial Post Online
Banks shedding 40-year mortgage loans*
Real Estate Weekly, Maple Ridge - Pitt Meadows, Vol. 28, No. 30
August 1, 2008
Big Banks such as TD and BMO are tightening their lending rules ahead of governement regulations coming into effect on October 15, 2008. Changes to their mortgage products are:
a) Fixing the maximum amortization period to 35 years (not 40).
b) Requiring a minimum payment of 5% down.
c) Requiring that the borrower(s)' debt servicing costs are no more than 45% of gross income.
d) Requiring that the borrower(s) have good credit rating(s).
PDF link to /Banks shedding 40-year mortgage loans
Government of Canada Moves to Protect, Strengthen Canadian Housing Market*
announcement from Honourable Jim Flaherty, Minister of Finance
Department of Finance, Government of Canada
July 9, 2008
These new rules pertain to government-backed mortgages (e.g., high-ratio insured mortgages). The new limits are planned to take effect October 15, 2008.
a) Fixing the maximum amortization period to 35 years.
b) Minimum payment of 5% down.
c) Consistent minimum credit score requirement.
d) New loan documentation standards.
PDF link to /Changes to High Ratio Mortgage Financing
Canada's Housing Boom Comes to an End
TD Economics Special Report
Craig Alexander, VP & Deputy Chief Economist
Pascal Gauthier, Economist
June 26, 2008
Sales are returning to 2004-06 levels and affordability is set to improve. Most of Canada's major housing markets are reflecting more moderate demand and an increased supply of properties for sale. Nevertheless, individual Canadian homeowners (unlike many of their American neighbours) are not under financial duress to sell their principal residence. The 2007 peak of house listings in Canada has more to do with home owners wanting to maximize their capital gains rather than minimize losses.
PDF link to Canada's Housing Boom Comes to an End
Glen’s highlights from attending Benjamin Tal Tour
Vancouver , BC
(Benjamin Tal, Senior Economist CIBC World Markets)
1. The Bank of Canada held rates steady much to the surprise of many economists who two days before the announcement were expecting the rates to decrease by a quarter point or more. Therefore, it looks like the Bank of Canada’s policy is aligning itself with the US Federal Bank’s policy to bring rate cuts to an end.
2. The benefit of mortgages remaining in a variable rate is coming to an end. If a person in a variable rate mortgage wishes to continue in that product, he or she should consider increasing their payments to the same as the current 5 year rate. If the variable rate increases as expected they will have the same principle left owing as if they had taken a 5 year fixed rate.
3. The wholesale rate of short term money (i.e., the overnight rate) is expected to increase 1.5% over the next two years. The prime rate is derived from the overnight rate. The prime rate, in turn, affects the fixed rate which is then expected to rise by 1.5% over the next two years.
4. The good news is that the Sub-Prime crisis in the US
June 10, 2008
Jeremy Harrison, Bank of Canada
OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 3 per cent. The operating band for the overnight rate is unchanged, and the Bank Rate remains at 3 1/4 per cent.
Link to BoC overnight rate target at 3%
CIBC World Markets: Weekly Market Insight
Economics & Strategy, May 16, 2008
North American & International Economic Highlights
Benjamin Tal, Senior Economist
…For Canadian Mortgage rates, it means that any future relief will be minimal and we might see rates rising in 2009, as the Bank of Canada starts hiking rates and the bond market starts reacting to rising inflation.
First-time buyers face big challenge ...Dana Johnson
16 Friday, January 26, 2007, pages 16-17
MAPLE RIDGE AND PITT MEADOWS TIMES
Link to TIMES website: http://www.van.net/
Much
Source:
Benjamin Tal, CIBC World Markets: Consumer Watch
April 18, 2007
Economics & Strategy
The Bottom Line...looking at the full cycle, our finding is that the widely held fear of a softening in housing market activity and structural downward pressure on prices due to the changing Canadian demographic landscape, are largely unsubstantiated. Our analysis suggests that when compared to the previous house cycle, the projected demographic changes in the coming 20 years will not be large enough to dramatically alter house market conditions.
Bank of
Source: Bank of
The operating band for the overnight rate is correspondingly increased, and the Bank Rate is now 4 3/4 per cent. As a result, the Prime Rate has now increased to 6.25%.
http://www.bankofcanada.ca/en/fixed-dates/2007/rate_100707.html
Total New Housing Starts and Average MLS resale price for local markets
Source: CAAMP Stats June 2007 issue
However, BC had the highest average MLS resale price at $591,722, followed by
http://www.caamp.org
Mortgage Interest Rates Predicted to Rise
(summary of published predictions by Glen Kelleway, AMP)
Next possible change in the floating rate is July 11, 2007, when the Bank of Canada meets. It may increase the overnight rate which will increase the rate for all floating rate mortgages (e.g., adjustable, variable, and lines of credit).
If the overnight rate is increased, we may see an increase in the short and medium term bond yields which in turn will likely be reflected as an increase in fixed mortgage rates.
Therefore, if you or someone you know is thinking of applying for a new mortgage or refinancing an existing one, please call me to arrange a pre-approval at current rates.
Total New Housing Starts and Average MLS resale price for local markets
Source: CAAMP Stats June 2007 issue
However, BC had the highest average MLS resale price at $591,722, followed by
http://www.caamp.org
Rate hikes likely despite cool May
Anne Howland, CanWest News Service
Wednesday, June 20, 2007
"While Canada
http://www.canada.com/vancouversun/news/business/story.html?id=fca57c42-4375-4c4a-ba0c-320d37778d3c
Mortgage rates climb to five-year record
Lori McLeod, Real Estate Reporter
June 14, 2007
Condos to Remain an Attractive Option for Many Home Buyers
Special Report
May 17, 2007