A recent survey shows that 65% of Canadians do not compare between lenders when their mortgage comes up for renewal. It may be the easiest route to simply renew with your original lender. However, renewing at a lower rate can mean the difference of thousands of dollars in interest. This article illustrates that there are several reasons to do some comparitive shopping before renewing your mortgage. Your mortgage needs are likely different now than they were when you originally purchased your home, or even the last time you renewed. Renewing at a lower interest rate can lower your monthly payments, giving you more financial freedom. You may even be able to use the equity you have built towards home repairs, renovations or even debt consolidation. If it's time to renew your mortgage, consider your options. Enlisting the services of a professional mortgage broker can be of substantial benefit to you. February 22, 2012 Canada's current house market is thriving thanks to the recent decrease in mortgage rates. This interview with George Athanassakos, a professor of finance at the Richard Ivey School of Business shows housing investment as a percentage of the gross domestic product (GDP). Historically, when this ratio reaches the 7% mark, the price of the average home tends to decrease. Based on figures from Statistics Canada, the ratio of Canada's housing investment to GDP is currently close to reaching 7%, meaning we should see a correction in home prices in the coming months. February 21, 2012 Three major factors to keep in mind when applying for a first mortgage are credit, employment and a down payment. For many new graduates, these factors may seem intimidating. Many believe that student debt and a new career can negatively impact the chances of getting approved, but the Globe and Mail reports that this is not always the case. The first priority is to formulate a realistic budget. Once you start house hunting, it is easy to get caught up in that ideal "dream home". However, this can easily lead to over spending. It is important to know what you can realistically afford. Once you have a budget in mind, speak to a professional mortgage broker. This will give you viable information regarding what lenders are looking for when you apply. For instance, student debt is often viewed as a negative when, in reality, if you are making your payments in full and on time, this has a positive impact on your credit rating. Employment is also important. It is recommended to be able to show at least a year of steady employment in your new career to prove stability. Purchasing your first home is an exciting endeavor. This article is an excellent summary of very important points to get you started. February 17, 2012 When To Consider Raising Your Home Buying Budget Setting a budget for your home purchase is an important decision.  You need to know how much you can afford each month and translate that into the amount you can afford to take out on your new mortgage.  When you start house hunting with that budget in mind, you may find that you are not seeing many homes in the price range you have set that match your needs. There are three choices you have in this situation.  The first is to wait it out, keep looking, and hope the house you want comes up on the market in your price range.  The second is to compromise and buy a house that is affordable but not really what you want.  The final choice is to look at raising your home buying budget. How Much Will It Really Cost? The first thing to consider when you are looking at raising your maximum purchase prices is what difference it will make in your actual monthly payment.  In many cases, the difference may not be as difficult to handle as you might think.  Pull out that mortgage calculator and figure out what it would cost you per month to go $25,000 over budget, $50,000 over budget, or even $100,000 over budget.  Sometimes even a small raise in your maximum price can put you into a whole new class of available homes. Do You Have A House In Mind? So you drove past a house for sale the other day and fell in love, but it's out of your price range.  Take that number home and punch it into your mortgage calculator.  Can you afford that house, even if it might be a stretch?  Are you willing to consider making other budget cutbacks, such as on entertainment, to have the home of your dreams?  Prioritize your expenses and be realistic about your needs versus your wants. If having the right house is important enough, and the increased price is not going to strain your finances too much, you can consider going for it.  Remember that you can always offer less than asking price, and hope to get that dream home for a price closer to the original budget. A little flexibility is always a good idea when you start searching for the right house.  Remember that a new home is an investment and sometimes spending a little more will reward you later in terms of property value.  It can also save you from having to move again when you decide the compromise to save money was not worth it. February 16, 2012 Before diving into a new mortgage for a rental property, there are several things to consider. Purchasing an investment property while you rent is a terrific way to get started in the mortgage market, however, one needs to be well informed of the differences between purchasing one's own home and a property that is being rented. This article gives a summary of important points to keep in mind when making this decision. The first thing to consider is to establish contact with Revenue Canada regarding any taxes you would be liable for. They can also inform you of which expenses can be offset against the rental income. It is also important to know that while some lenders will advance 80% to purchase an investment property, it is often less expensive to put 20% down. Finally, keep in mind who will be inhabiting this residence. It is recommended to view renting a property as a business transaction. However, it may be difficult for some to detatch emotionally when a large portion of their savings is involved. February 15, 2012 With two weeks left to make RRSP contributions, many Canadians are grappling with the tough decision of where to invest their contributions. Many take the traditional route and invest in GICs, stocks or bonds. However, the Financial Post shows that the funds from your RRSPs can be invested in your mortgage. It is important when considering an investment of this nature to know that it comes with a set of strict regulations. One should also bear in mind the costs involved, such as mortgage administration fees and insurance premiums. Investment options aren't always easy to choose, however, this article gives relevant information on an option that could prove to be a lucrative one. February 14, 2012 The Canadian Mortgage and Housing Corporation, the crown corporation that insures Canadian mortgages, seems optimistic about the housing market in the next two years. Recently, there have been steadily rising concerns of what record low mortgage rates will do to the housing market. However, in this article we learn the CMHC is predicting the market will stay at a steady pace into 2013. This coupled with the expanding Canadian economy is expected to keep the market on an even keel. We also learn the average home price will slightly increase in 2012 and into 2013. These increases are moderate and shown to be consistent with the market conditions of 2011. February 13, 2012 While some may seem like they have it all figured out, many Canadians are struggling with the choice between the largest financial priorities in their lives. With a mortgage, a growing family and retirement in the future, where should the bulk of your income be spent? Building equity in your home, contributing to an RRSP or saving for your children's education? Of course, these choices will not be the same for everyone. Depending on interest rates, some are able to pay their mortgage off faster which will allow for a little more financial freedom in their retirement. Ultimately, this decision boils down to the individual and their personal goals. This article gives a little more insight into a decision with many factors. February 10, 2012 Before diving into a new home purchase, a thorough home inspection is a must. Although finding a trustworthy home inspector may not be a challenge, it is difficult, especially for first time homebuyers to put all of their trust in one person. This article gives a detailed list of areas to check that you or your home inspector may not think of. From inspecting and possibly running appliances to very simple things like moving items on counters to look for defects, this list is a comprehensive summary of important details to keep in mind when inspecting your dream home. A new mortgage is an incredibly important decision, and the home inspection is one of the most important steps included in the process. Taking some extra time and effort when inspecting your home can save you ample time and maintenance later on. February 9, 2012 The Globe and Mail reports a January decline in housing starts compared to December. The January rate of annualized housing starts was 197,900 units compared to December's rate of 199,900. Despite this decrease, the statistic is still above the expected rate of 194,000. It has been suggested by the Bank of Canada that some markets have become overvalued, and building permits in December reached a 4 1/2 year high. However, regulators are closely monitoring the situation. Although there is some concern on behalf of lenders that mortgage seekers are spending more than they earn, it is expected that the housing market will stabilize. February 8, 2012 The MLS Home Price Index shows an increase of 0.27 percent over last month and a 5.2 percent increase over last year. The Home Price Index monitors home prices in five major urban markets but does not provide any actual prices. In this article, we learn that although home prices are up from last year, month to month growth appears to be steadying and is expected to stabilize in the coming months. The good news for mortgage seekers is that townhouse and apartment prices are showing signs of slowing. Canada's policy makers should be pleased with this development, as these market trends should decrease the fears of a housing bubble. February 7, 2012 As we draw nearer to tax time, Canadians will receive a high frequency of reminders to make their RRSP contributions. This is believed to be good advice for most. However there are cases where putting your savings into an RRSP isn't always the best idea. As a first time home buyer, clients have the opportunity to withdraw funds from their RRSP to apply to their first purchase. RRSP contributions are ultimately a tax deferral or sheltering tool. This article illustrates the situations in which making an RRSP contribution will not necessarily give these benefits. Will your salary be increasing in the upcoming years? Are you met with a high volume of expenses alongside your mortgage? Do you have a pension plan at work? If you fall into one of these categories, you will also be given other options to consider that may benefit you more, such as contributing to a Tax Free Savings Account (TFSA) or making the contribution to your RRSP and simply not claiming it in this year's tax return. February 6, 2012 On Tuesday, documents released by Bloomberg showed signs that the Office of the Superintendent of Financial Institutions is concerned about the effect that loosening mortgage standards will have on the Canadian economy. In this Globe and Mail article, it is reported that lenders are tending to hand out loans without sufficient income requirements. Banks are under scrutiny as reports reveal that loans are being administered with the mere promise of repayment. Finance Minister Jim Flaherty shares this concern, but assures the public that these issues are being corrected. February 3, 2012 Renovating your kitchen is a great way to add value to your home and simplify your day to day routine. This article provides the top ten tips for a smooth kitchen renovation. From what materials will be the best for you to what important decisions to make before you start, these tips should prove extremely helpful when planning your kitchen renovation. You'll also learn what common pitfalls to avoid, like choosing a stain for your cabinets that isn't cohesive with the rest of your colour schemes. It is suggested you select surfaces that are easy to maintain and clean. In addition, keep it simple. Don't go overboard with decorative details or over the top appliances with all the bells and whistles. It is sometimes unecessary and may not always give you the best bang for your buck. For many people who have the goal of a dream kitchen, there are several refinancing options available. Make your dream a reality! Refinance or take out a Home Equity Line of Credit. This can be an excellent way to achieve your renovating dreams. February 2, 2012 Retiring with a mortgage doesn't have to be a nightmare. After retirement, continuing mortgage payments isn't always ideal. However, having a plan can provide options. This article outlines how mortgage payment options can assist you with your transition into retirement. February 1, 2012 As the Crown corporation draws closer to the 600 billion dollar cap imposed by the Federal government, the Canada Mortgage and Housing Corp. is starting to cut back on the amount of mortgages it will insure. Recently the CMHC has been met with an unexpected volume of requests for portfolio insurance. Click here to find out more ... January 31, 2012 Despite warnings about Canada's overstretched housing market, this article indicates we are not in the midst of an economic meltdown.  It is believed a true meltdown would only be precipitated if we see a sudden spike in mortgage rates. January 31, 2012 See how weighing the options of using your RRSP's vs using your TFSA can help first time homebuyers. January 30, 2012  Steve Maxwell :  SPECIAL TO THE STAR A good house in good repair. This is my idea of home improvement success, and if it’s also yours, then I want to explain something that rarely gets talked about. Whether or not you’re seriously into doing renovations and maintenance yourself, or you hire a professional to do everything right up to replacing the light bulbs, the key to a good house isn’t fundamentally about hands-on skills. Sure, the ability to work with tools is important (either your ability or that of the pros you hire), but skills are not enough. I’ve seen more than a few skilled people spend a lot of money renovating homes badly. I’ve also seen naturally klutzy people transform ugly, rundown places into beautiful houses in great condition. So what’s the difference? The make or break issue boils down to the way you handle inevitable, unforeseen problems as they emerge, especially in relation to time. Every human endeavour spawns problems and unpleasant surprises. Roadblocks are inevitable, but they’re especially common whenever home improvements are involved. And the older your house, the wilder and more interconnected your roadblocks are likely to be. Take a typical flooring replacement job in an older home as an example. You’ve got it in your mind to install that laminate flooring that’s been piled in your living room for a week, and you’ve taken four days off from work to get the job done. You spend the morning tearing up the old carpet, and discover why the floor has always been so squeaky. The original subfloor is made with pine boards alone, not capped with plywood as you expected. These boards are secured with nails that have worked loose over the years. You could screw the boards down, except that the screws you have kicking around in the basement are only long enough to penetrate ½ inch into the underlying joists, instead of a more reliable 1 inch. The boards are also uneven here and there, and you seem to remember something about laminate flooring needing a nice flat surface underneath to support it. With the carpet gone, you also notice drafts coming up from the basement through cracks between boards. It’s decisions you make at stages like these that determines whether you’ll have a good house or a bad one. The thing about home improvement disasters is that they rarely look like disasters in their embryonic state. What appears to be a little surprise about the subfloor in your living room actually holds the seeds of three different reasons your new floor could end up being a total mess. The loose, uneven and gapped subfloor boards are unforeseeable roadblocks, and the difference between success and failure depends entirely on resisting the common and powerful emotion of impatience. Before you started your flooring job, you had your heart set on walking on a new floor before going back to work. That’s a good goal, but the fact that it was based on incomplete information doesn’t naturally eliminate the urge to plow ahead and “get things done” even though circumstances are different than you initially believed. So do you use those screws that are not quite long enough, or get in the car and buy the right ones? Do you go online and find out how flat a subfloor really needs to be to properly support your particular brand of laminate flooring, or do you go ahead and lay the floor as things are, hoping for the best? And when you go online and find out that the 1/8-inch ridges in the subfloor are too tall, do you track down a power planer and hog them off after setting all the old nail heads below the surface of the wood? The route to home success in any venture is rarely a straight line. It almost always involves backing and forthing as new information comes in and new realizations appear. Home improvement success is often based on your ability to say no to the timeline of your initial game plan in favour of doing things optimally. Notice I didn’t say “perfectly.” There is no such thing as absolute perfection in this world, and trying to achieve it will drive you and any hired trades people crazy. That said, things can be functionally perfect, and this is worth shooting for. You or your pros need to understand the need to bend and flex in the pursuit of functional perfection. This often comes down to nothing more than the ability to endure short-term disappointment (no new floor before your next shift at work), in favour of better long-term results. Show me a person’s home and you’ve shown me how they deal with roadblocks throughout their entire life. The ability to flex and optimize with wisdom and patience as reality intrudes on our plan is where quality really comes from. January 27, 2012 Ryan Remiorz THE CANADIAN PRESS OTTAWA—A new analysis of household finances shows Canadians least able to afford it — boomers nearing retirement and those already in hock — are the ones piling up the most debt. The CIBC says its analysis suggests Canada may have a bigger household debt problem that the raw numbers suggest. The raw numbers are bad enough. The ratio of household debt to disposable annual income has reached 153 per cent. That’s a record high for Canada and approaches the 160 per cent level that preceded the housing collapse in the United States four years ago. But a closer look at who holds the debt shows those already above the 160 per cent line — about one-third — hold three-quarters of all the household debt. As well, a rising share of the highly indebted are 45 years and older, a time when the opposite would be expected. CIBC chief economist Avery Shenfeld says the micro analysis of debt does not point to a crash, but suggests that household spending will need to slow and will dampen economic activity going forward. January 26, 2012 Jonathan Chevreau  Jan 25, 2012 – 7:59 AM ET It was front-page news recently when BMO’s 5-year mortgage rates dipped below 3% for the first time in its 190-year history. Other banks followed with similarly sweet deals: RBC offered a four-year special 2.99% fixed-rate mortgage and a 3.99% rate on a seven-year term. When a week later the Bank of Canada held the line on interest rates, it should have been clear these historically good times for indebted homeowners may continue for some time. But is it an equally auspicious time to borrow to maximize retirement savings plans? RRSP “top-up loans” are available for up to $22,000 to maximize this year’s contribution, for those who lack the cash.  The idea is to repay a big chunk of it with the resulting tax refund come April, then pay off the rest over the next six months, in time to start the cycle again a year from now. But there’s a bigger opportunity if you’re among the many Canadians with tens of thousands of dollars in unused RRSP contribution room built up over previous years. Consider “catching up” with RRSP catch-up loans. Most banks will happily lend good customers $50,000 or even $100,000 for the noble purpose of padding retirement accounts — especially if you choose their investment products. Total accumulated RRSP room is shown on your last notice of assessment or you can check “My Account” on the Canada Revenue Agency’s web site. Even if you contribute the whole amount you don’t have to deduct it all this year: you may want to deduct some of the contribution in future years if you’re in a higher tax bracket. Unlike borrowing for non-registered (taxable) portfolios, interest on RRSP loans is not tax deductible. But if you believe the combination of reasonable stock valuations and low interest rates is compelling, it’s worth considering. Apart from the large tax refund RRSP catch-up loans may generate, there is potential for this investment to grow over time. Uncertainty in financial markets has kept a lid on stock prices. Financial educator Talbot Stevens says data since 1956 shows that when the Canadian market is down at least 10% one year, as in 2011, it often rises more than that the next. Borrowing to invest is safer when markets are down. But if you borrow for your RRSP, avoid the temptation to spend the refund: pay off the loan and/or reinvest the refund into the following year’s RRSP contribution. Under certain circumstances, RRSP borrowers can get rates almost as low as their mortgaged counterparts. John Turner, national director of specialized lending for BMO Financial Group, says customers can get RRSP loans with rates as low as its prime rate of 3% if they invest in BMO products. If investing in non-BMO products, it’s prime plus half a per cent, or a total 3.5%. Note that these are variable-rate loans so it’s not quite analogous to the 5-year fixed rates of 2.99% homeowners are enjoying. “Given this rate and refund environment, most customers are opting for the variable rate,” Turner says. It’s not a requirement but most pay off their RRSP loans right away, he adds. These loans are fully open, with no restriction on repayments: payments can be bumped up or lump sums can be applied to pay down some or all outstanding balances at any time. But what if you choose a larger catch-up loan that requires several years to repay? It would be nice to pay only 3% on a variable-rate loan but what if you believe rates will start rising in two or three years?  Can you lock in an RRSP loan at a low rate that can be repaid over five years, just like homeowners ? Yes, but at BMO the rate is quite a bit higher if it’s an unsecured loan: a whopping 9% unless the loan is backed by real estate or non-registered investments. In that case, investors could get the same 2.99% fixed-rate over five years as homeowners. The problem with straight mortgages is they have less flexibility if reborrowing. An alternative is BMO’s HELOC (Home Equity Line of Credit), which it calls Homeowner ReadiLine. This lets you borrow both variable and fixed in a single instrument, which Turner likens to “dollar cost averaging for mortgages.” For small loans of $10,000 or $15,000 to be repaid in two years, Turner says it makes sense to go with variable at prime or prime plus a half. For such a short term, the security of opting for a fixed rate isn’t worth it. Rates are a bargain currently and the market somewhat depressed so “it would be a great time to get in but you need to sit down with an advisor and make sure the investment meets with your risk profile.” Scotiabank’s catch-up loan lets you repay over 15 years and lets you defer three monthly payments. CIBC’s RRSP Maximizer Loan lets you borrow over terms of one to five years. At TD Canada Trust, RRSP loans start at prime plus 1% to prime plus 1.5%, says associate vice-president personal lending Shahz Beig. The On the Spot RRSP Loan lets you borrow up to $22,000, with a one-year term. Customers can defer payment the first 120 days so they can receive a tax refund and pay off much of the outstanding balance. There are no penalties for paying it off early. TD calls its fixed-rate catch-up loans “carry forward” loans, which can be amortized up to ten years. If you want a 5-year term, you could get a fixed rate of 5.5% or gamble on variable at 4.5%. Beig says it may not make sense for those close to retirement to take out a long-term RRSP loan. It will be harder to repay once retired and RRSP loans count as outstanding credit and may impact applications for other credit needs. At the Royal Bank, vice-president personal lending Richard Goyder recommends paying off RRSP loans within a year since rates may rise by 2013 or 2014. Until then, low rates mean manageable debt servicing costs and an opportunity to pay down principal. He doesn’t recommend lines of credit be used for RRSPs because of their revolving nature. “An RRSP loan has a special purpose and should be paid down over a set term.” Typically, that term is the one year of a top-up loan. Catchup installment (or term) loans up to $100,000 may be available with longer amortizations. Depending on the term and credit rating, the rate will be no more than prime plus two or three points. Not everyone is keen on RRSP loans. Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada, Inc., thinks Canadians are too responsive to marketing pitches based on ultra-low interest rates. He sees no problem with smaller RRSP top-up loans if they’re paid back within 90 days but says people with debt problems are often in lower tax brackets and can’t count on the refund paying off 46% of the loan, as is the case with higher-bracket folk. Schwartz is skeptical about larger RRSP catch-up loans if they entail taking on debt over multiple years. In this time of low interest rates and stock volatility, he’s not convinced the financial returns on such loans will cover their carrying cost. It’s worth noting you may be able to catch up on your RRSP without borrowing, if you also have a non-registered portfolio. You can “transfer-in-kind” securities to an RRSP (or a TFSA), but may have to pay capital gains tax if you have a profit on what the taxman views as a “deemed disposition.” Ideally, you find securities roughly the same value as when acquired. January 25, 2012 Garry Marr Financial Post A new round of mortgage rules from Ottawa could include tough new measures for calculating how the self-employed qualify for loans and tighten regulations for condominium buyers, according to two separate sources. Ottawa remains concerned about the possibility of an inflated housing market and wants to crack down on the practice where consumers self-disclose what they make when applying for a loan. In the case of the condominium buyer, the government continues to consider a proposal that would have 100% of condo fees count when assessing how much debt a consumer could afford. “None of this is happening just yet. The housing market has slowed down and the government wants to see what will happen next,” said one source. “If the spring market picks up, then we will see more changes to the rules.” Bank of Canada Governor Mark Carney said Sunday that some parts of the Canadian real estate market are “probably overvalued” and policymakers are monitoring to see if further steps are needed to cool it. “We see that in a number of real estate markets in Canada, valuations are at a minimum, firm; in others, they’re probably overvalued. So there are risks there. We’re watching it closely. We’re working with our partners, the federal government, the superintendent of financial institutions,” he said in an interview broadcast on Sunday on CTV. ” Measures have been taken. They’ve been effective. We’ll keep up that vigilance. If more needs to be done, I’m sure the appropriate authorities will take those measures.” Stated-income products have become very popular during this housing boom, allowing more banks to get involved in loaning to the selfemployed. “These are individuals that are self-employed, have great credit and won’t be able to validate their ability to pay if they are not showing their income on their notice of assessment,” said one source. He says those people with stated income could have to make an even higher down payment than the normal 20% that exempts consumers from buying expensive mortgage default insurance. The source said some self-employed are qualifying for loans based on the assumption they have a lot of write offs, like car payments and housing costs associated with home office costs. “They get to include that based on the assumption that self-employed people have an advantage from a tax perspective,” said the source. “The government is trying to figure how they would present this.” A source with one of the banks said the government is trying “zoom in” on marginal borrowers so it doesn’t get into a U.S. type of situation where they were not verifying income. “What banks are doing usually when it comes with self-employment is not dealing with declared income because nobody believes it. What they do is look at their behaviour and put more weight on it,” said the source, referring to how those consumers handle their debt. “With an employer, you can call and verify their income.” The labour market is roughly about 13% self-employed so new rules could have a major impact but the source indicated it does not mean those people would be shut out of the loan market. “It will be just more difficult for them. You are going to have to prove income in a more precise way,” he said. The suggestion the government might crack down on condo buyers is not new, having been scrapped last year in favour of tougher new rules on amortization lengths and refinancings. Most people in the real estate sector now believe amortizations will be reduced to 25 years after having been as long as 40 just three years ago. Brad Lamb, a Toronto real estate broker and condo developer, has heard the government is again considering including 100% of condo fees in calculating debt levels but doesn’t think it will happen. “The 25 year amortization is a no brainer, they should do it,” said Mr. Lamb. “It’s not smart to have loose lending rules. But the condo market is hot because of investors not speculators. These investors are coming [from around the globe]. This silly [condo fee] change will do nothing. These people are buying with cash.” January 24, 2012 By Paula McCooey, The Ottawa Citizen   If you have a queasy stomach, you may want to take a Gravol because the Ottawa real estate market may be in for a bit of a bumpy ride over the next few years. That's the prediction of two economists speaking at the Greater Ottawa Home Builders' Association economic forecast seminar this week. RBC economist Paul Ferley and TD economist Sonya Gulati say Ottawa and the rest of the country are not protected from the world's economic woes. "The Ontario housing market outlook is not immune to global financial market pressures," says Ferley. "The development in Greece and Italy may seem like someone else's concerns, but they do present a threat to the local economy." And with more than half of Ontario's economy relying on exports to the U.S., the province is "very much dependent on U.S. growth," he says. They both forecast the economic recovery across the country will be moderate and urge the province and individuals to practise fiscal restraint, particularly given that Canadian households are holding record debt levels, which will pose a massive problem when interest rates finally climb. Given the U.S. Treasury Board is expected to maintain lower rates until 2013, Canada is likely to follow suit. But once lending rates do rise, which will happen - as soon as next year, they say - that will pose an issue for families struggling to make ends meet. "We have to watch debt," says Gulati. "If there's a 1.5-percentage point increase in rates, that translates into $250 extra for the average household. That is significant for people on a tight budget." She estimates Canadian homes are overvalued by 10 per cent, so we should expect a price correction of around the same amount. She says home affordability will remain low and gradually deteriorate due to impending higher interest rates. "You can expect a gradual unwinding of home prices and sales activity," she says. January 23, 2012 It is truly astounding how many people lack the appropriate amount of insurance.  Continue reading to learn some interesting facts about disibility insurance. Click here to read about the mortgage insurance that is available for your new Mortgage Brokers City Inc. mortgage. January 20, 2012 Are more sellers taking the advice of their real estate agents and jumping into the market early this year?? This article shows early indications that they are heeding the advice of their agents.  These decisions are based on several factors including the recent reduction in mortgage rates. Click here to find out more about our best mortgage rates. January 19, 2012 Even though the most recent stats indicate a mild softening of the market, this article implies that Jim Flaherty is not going to be quick to intervene. Though mortgage rates are still quite low Flaherty cautions consumers not to make too many assumptions about how long the rates will remain low.  January 18, 2012 Click here to read the full article. January 17, 2012 "Buyer Beware"...  Though some lenders have dropped their 5 yr mortgage rates lower than ever before, be sure to read the fine print.  This announcement does not come without restrictions.  Explore all your options  first, to see what type of mortgage is best suited to you. To find out more about what rates are available to you, please contact us today.     January 16, 2012 Read on to see how having a low credit score can cost you real dollars and cents.  In this excellent article, the costs to client equated to more than $200 per month.  To check your own credit score, go to the Equifax website and order yours today. Click here to explore what factors influence your credit score. January 12, 2012 Thursday, Jan. 05, 2012 4:09PM EST Canada’s housing boom is among the most long-lived in the Western world at 13 years, but the next few years could chip away at the gains that have seen the average house increase in value by 85 per cent since 1998. In a report released Tuesday that said the Canadian housing market was the strongest in the developed world in the third quarter, Bank of Nova Scotia economists said “the slow pace of the global economic recovery, intensifying sovereign debt concerns, weak consumer confidence and high unemployment all continue to weigh on residential property markets” in 10 countries it tracks. The malaise has already set in – of the 10 countries studied in the third quarter, average inflation-adjusted home prices were below year-ago levels in seven of them, and above in three (including Canada, where prices are 4.8 per cent higher). The other countries to post gains were France at 4.4 per cent and Switzerland at 3.3 per cent. The sharpest declines, meanwhile, were seen in Ireland were prices were down 14.7 per cent. “Canada remained a notable outperformer, though activity here too shows some signs of cooling. Weak market conditions will likely persist well into 2012,” economist Adrienne Warren wrote. “While the combination of low borrowing costs and lower home prices have bolstered housing affordability, there is insufficient domestic momentum in the majority of advanced nations to support a significant revival in demand. An oversupply of housing and a more cautious lending environment also will hold back the recovery.” Merrill Lynch warned Monday that prices could correct by as much as 10 per cent in the next two years in Canada because of weakness in the economy, expressing particular concern about Toronto’s condo market. The Bank of Canada also warned the Toronto market looks overbuilt and could see prices drop. “The cycle of rising real home prices is long, lasting on average 12 years,” Ms. Warren wrote. “Italy’s boom was the shortest at 8 years, while Ireland and Sweden count 15 years. Canada’s ongoing housing boom is in its 13th year... Canada’s residential real estate boom started several years later than many of its counterparts, with the economy still feeling the effects of the deep recession of the early 1990s and weak labour markets through mid-decade.” From the report: "The Canadian housing market remains an outperformer among advanced nations, with real home prices up 4.8 per cent y/y in Q3. While the sector’s continued buoyancy is impressive, monthly data through November suggest prices have leveled off since the spring, with conditions in the majority of local markets in ‘balanced’ territory. Ultra-low interest rates are still attracting buyers, but increased economic uncertainty combined with some recent slowing in the pace of hiring could dampen demand in the new year. In the United States, average inflation-adjusted home prices fell 7.5 per cent y/y in Q3, bringing the cumulative decline since the 2005 peak to over 30 per cent. Despite near-record affordability, persistently high unemployment, tight credit conditions and a lingering oversupply of unsold and foreclosed properties suggest a sustainable recovery could still be several years away. The French housing market remains the most resilient in Europe. Average inflation-adjusted home prices were up 4.4 per cent y/y in Q3, and are nearing pre-crisis record highs after a brief downturn in 2008-2009. Tight housing supply is underpinning prices, but these continuing gains appear unsustainable in an environment of high unemployment, government restraint and slowing regional exports. Switzerland’s housing market also remains relatively buoyant, with average prices up 3.3 per cent y/y in Q3. Ireland still holds title to the weakest residential market in our sample, with average inflation-adjusted home prices down 14.7 per cent y/y in Q3 and by a cumulative 44 per cent from their early 2007 highs. The steep and continuous price declines of the past four years have essentially wiped out a decade of price appreciation. U.K. house prices are declining again after a brief recovery in 2010. Real home prices have contracted on a year-over-year basis for the past three quarters, falling 6.7 per cent y/y in Q3. Spain’s deep housing slump continues, with average prices down 8.9 per cent y/y in Q3 and almost 25 per cent from their early 2007 peak. Prices have also recently dipped into negative year-over-year territory in Sweden, consistently one of the region’s better performing housing markets. In Australia, average inflation-adjusted home prices fell 5.7 per cent y/y in Q3. Even so, the slowdown follows strong gains in 2010, leaving prices near record levels. While domestic economic conditions remain relatively solid, some potential buyers have been sidelined by deteriorating housing affordability and a more uncertain global outlook. There is still no end in sight to Japan’s two-decade long property slump, with residential land prices down 3.3 per cent y/y in Q3." January 9, 2012 By Vito Pilieci, The Ottawa Citizen January 6, 2012 Ottawa’s unemployment rate held steady in December, ending three months of increases, according to Statistics Canada. The national statistics watchdog said the creation of 5,400 new jobs in the region helped to keep the unemployment rate at 6.3 per cent during the month. More than 697,800 Ottawa residents were employed during the month, up from 692,400 in November. According to Statistics Canada, 71.6 per cent of 745,000 eligible workers are actively seeking jobs. In November, 71.1 per cent of eligible workers were employed or seeking employment. The jobless rate bottomed out at 5.2 per cent in August. These numbers are adjusted for seasonal influences. Despite the federal government’s austerity plans, public administration added almost 6,000 jobs in December, growing to 116,000 from 110,900 in November. Nationally, the Canadian economy added fewer jobs than expected in December but still managed to bounce back from declines in the previous two months. Statistics Canada said Friday that 17,500 jobs were created last month, even as the unemployment rate edged up to 7.5 per cent from 7.4 per cent in November as more people entered the labour market in search of work, the agency said. The gains follow 54,000 job losses in October and another 18,600 in November. Economists had expected 20,000 jobs to be added in December. “Taking the string of the last few months together, Canada’s job market still looks soft, and a rising unemployment rate has been in contrast with the drop seen stateside, said Avery Shenfeld, chief economist at CIBC World Markets. “We may have less reason to feel smug about Canadian outperformance, at least in terms of the near-term growth trend.” December saw an increase of 43,000 in part-time work, while full-time employment declined by 26,000 positions. Most of those job gains, 3,800, were in the private sector, while public-sector employment fell by 17,300. “Over the past 12 months, employment growth totalled 1.2 per cent (199,000), with nearly all of the gains in the first half of the year,” Statistics Canada said. Ontario gained 15,700 jobs in December, reducing its unemployment rate by 0.2 percentage points to 7.7 per cent. Douglas Porter, deputy chief economist at BMO Capital Markets, said “while far from stellar, the modest job gain is a mild relief after two months of declines.” “The good news was that manufacturing was up 30,000, as the sector had shed almost 80,000 jobs in the prior three months alone. On the weak side, construction and finance and real estate posted double-digit drops,” he said. On Thursday, a survey by the Economic Club of Canada and Pollara Strategic Insights showed 70 per cent of Canadians believe this country is already in another recession, albeit a mild one Michael Marzolini, chairman of Pollara, said the survey unveiled “the most pessimistic findings we’ve had in 16 years.” “Canadians are more self-centred. They believe themselves under siege,” he said in releasing the poll results. Francis Fong, at TD Economics, said Canada’s unemployment rate is expected “to continue treading higher, likely to about 7.7 per cent, while job gains will average a paltry 10,000 per month, more heavily weighted to the second half of the year.” “Government hiring is likely to remain under pressure in the coming months and private sector hiring will likely be tested by further deterioration in Europe’s debt crisis.” January 6, 2012 January 5, 2012  03/01/2012 4:00:00 PM Mortgage Brokers News Housing prices will continue to rise in the short term even as Canada’s resale housing market tightened slightly in November, as sales rose in more than 50 per cent of markets while the number of listings declined, according to the Conference Board of Canada. Sales rose in 16 of the 28 markets the board tracks for its metro resale index, with seven of those markets posing a gain of more than five per cent over October’s number. Year-over-year sales rose in 15 areas, down from October, when 20 of the urban areas posted sales growth over 2010. “The supply of new listings fell in 23 of 28 markets in November, but still exceeded year-earlier levels in 20 jurisdictions,” the board said. “An easing in supply of listings, combined with slightly weaker sales gains, lifted the sales-to-listings ratio in November in 23 markets. This left four areas as ‘sellers’ markets, while 21 remain ‘balanced’.” The drop in listings resulted in higher prices in 17 areas month-over-month, while the year-over-year price was higher in 19 — with 16 markets recording growth of four per cent or more. The Conference Board predicts all but three of the 28 markets it tracks for the index will see some increase in housing prices in the short term — the Ontario cities of Oshawa, London and Windsor being the exceptions. Saskatoon and several Quebec markets — Gatineau, Montreal, Quebec, Sherbrooke, Trois-Rivieres and Saguenay — are expected to see the biggest increases in housing prices in the near term, the board said, predicting a seven per cent year-over-year gain. A five per cent gain appears to be in the cards for Victoria, Vancouver, B.C.’s Fraser Valley, Calgary, Edmonton, Regina, Winnipeg, Halifax and Newfoundland, the board said. It expects housing prices to rise three per cent in Saint John, as well as the Ontario centres of Thunder Bay, Sudbury, Toronto, Hamilton, St. Catharines, Kitchener, Kingston and Ottawa. January 4, 2012 Katherine Scarrow Globe and Mail Update Posted on Friday, December 30, 2011 6:19AM EST As global housing markets coughed and sputtered in 2011, Canada's barrelled ahead, even turning a few nervous heads along the way. In fact, recently the Economist branded Canada one of the nine countries where “home prices are overvalued by about 25 per cent or more,” and among the four where prices are in line with those in the United States "at the peak of its bubble." Is there really a cause for alarm? Are we doomed to ride this white-knuckled rollercoaster in 2012? Probably not, according to Benjamin Tal, deputy chief economist of CIBC. "The housing market of tomorrow will not be as exciting as the housing market of yesterday,” he said in an interview. While the current real estate market is overshooting, with home prices far higher than than they should be, we shouldn't expect a crash either, he explains. As long as interest rates remain relatively low and subprime mortgages kept at bay, the most likely scenario is that the market will plateau. “Prices are already softening, housing starts aren’t in the sky, MLS [multiple listing service] activity is starting to soften, so it suggests the market is already starting to level off, and that’s what we need,” he said. How will a more relaxed real estate market affect new homebuyers, investors and renovators in 2012? Here are Mr. Tal's predictions: 1. First-time home buyers Affordability and interest rates will be the major concerns in 2012. Prices will continue to be expensive, especially in urban centres like Vancouver and Toronto, since interest rates are likely to remain low for the time being. But rates won't stay low forever, which is why you should estimate mortgage payments based on interest rates that are 2 or 3 percentage points higher than current interesst rates, and if you cannot afford that, get a smaller mortgage and buy a less expensive house. Expect an end to bidding wars, or at least a temporary ceasefire. New home buyers will have the luxury of time in terms of looking at properties without being rushed into decisions. That’s the positive. The negative is that prices continue to be drastically higher than they were five or 10 years ago. 2. Investors and flippers If you’re in it to flip it – meaning you buy a home hoping the price will rise by just doing minimal changes – those days are over. In some pockets of the country, you may even see prices go down. 3. Renovators The cost of renovations will not increase significantly so long as interest rates remain at their current level, so it’s a good idea to take advantage of this time to finance these projects. For those looking to take on a second mortgage, remember to make sure you’re equipped to finance them if interest rates creep up. Variable-rate mortgages are still a good option for those who are able to withstand fluctuations in the market and "ride the ups and downs without getting a stomach ache."   January 3, 2012 Time Cestnick From Thursday's Globe and Mail Last updated Wednesday, Dec. 28, 2011 8:27PM EST Once again it’s time for my annual New Year’s resolution. That’s right, a single resolution. This year, I’m getting into shape again. I’m going to start by eating slowly in 2012. It’s not about slowing my metabolism. It’s about my kids. They eat so much that if I slow down my pace of eating, there won’t be anything left by the time I’ve finished my salad. That’ll do it. What about you? If you’re still thinking about your New Year’s resolutions, consider adding tax savings to the list. If you make just one change to your affairs annually to save tax, you’ll do yourself a world of good in a short time. Consider one of these ideas: 1. Create self-employment earnings. Self-employment is still one of the greatest tax shelters available. Why? Deductions. Operating a part-time business from home is all you need to do. This can open the door to deducting a portion of those things you’re paying for anyway, such as mortgage interest, rent, property taxes, home insurance, home repairs, utilities, vehicle repairs, gas, auto insurance, interest on a car loan or lease payments, computer costs and more. 2. Pay family members a salary. If you have self-employment earnings you can move income into the hands of a family member who is in a lower tax bracket by paying wages or a salary for work performed. If you’re an employee, speak to your employer about requiring you to hire your own assistant for your work. Our tax law will allow an employee to deduct salary or wages paid to an assistant provided your employer required you to pay for one. Hiring your spouse or a child who is in a lower tax bracket will keep the money in the family and will save tax dollars. 3. Make your interest deductible. If you’re paying interest costs that are not deductible, and have some cash or investments on hand, consider doing a “debt swap” to create a deduction for your interest. You can do this by taking some of your cash, or selling some investments to create the cash, and using the cash to fully or partially pay down your non-deductible debt. You can then re-borrow to replace those investments or that cash. As long as the new debt is used for an income-producing purpose you should be entitled to deduct your interest costs. 4. Extract cash from your company tax-free. If you own a corporation, consider paying yourself capital dividends, repaying shareholder loans owing to you, and returning “paid up capital” to yourself to access the cash in your company tax-effectively. Also, consider claiming a refund of “refundable dividend tax on hand” (RDTOH) by paying yourself taxable dividends. All of this may sound like a foreign language, but a visit to a tax pro, perhaps your friendly chartered accountant, will help. 5. Consider a leave of absence or sabbatical. You can defer tax by setting aside some money in a deferred salary leave plan (DSLP). You can then take a leave of absence or sabbatical in a later year and collect your deferred salary at that time. Speak to your employer about setting up a DSLP. A DSLP must be in writing and meet certain criteria, such as: No more than one-third of your salary can be set aside for the leave, your leave must be at least six consecutive months, the leave must begin no later than six years after the salary deferral begins, and following the leave you must return to work for a period at least as long as the leave. There are other details that must be looked after as well, so your employer will need to seek advice on this. 6. Create pension income for the credit. If you have eligible pension income you’ll be entitled to claim the pension tax credit. If you and your spouse each claim the credit, this could fully or partially shelter the tax on $4,000 ($2,000 each) of pension income. It’s not going to make you wealthy, but it’s all part of building up tax savings year after year. You can create eligible pension income by, for example, converting part of your registered retirement savings plan to a registered retirement income fund to create $2,000 of RRIF income annually. You can also provide your spouse with eligible pension income by reporting up to half of certain pension income in his or her hands. December 29, 2011 Jeremy Torobin  OTTAWA— From Monday's Globe and Mail Last updated Monday, Dec. 26, 2011 6:48PM EST For debt-addled Canadians across the country, 2012 will be a crucial test of whether they can rein in their borrowing in another year of super-low interest rates. After Boxing Week caps off a holiday spending spree that by many measures outstripped the previous year’s, households will be back to the unpleasant reality of an uncertain economic climate, stagnant wages and the risk that global threats like the European crisis cause job losses at home. But experts say spending money helps people calm their nerves, even when they’re nervous about their financial burdens, so there’s no guarantee Canadians will hunker down, other than those who have literally exhausted their capacity to borrow. That’s why Bank of Canada Governor Mark Carney, who is expected to keep his main interest rate at 1 per cent for at least another year after 15 months at that level, spent this December much as he did in 2009 and 2010: flagging the dangers of taking on debt that will be less manageable when rates rise, and urging households to start living within their means. While he is mainly concerned about the most vulnerable 10 per cent of households, and says debt is not yet a “clear and present danger” to the economy, he still considers it the No. 1 domestic risk. And no wonder: The debt-to-income ratio rose to a record 153 per cent in the third quarter, according to Statistics Canada. That compares with 146 per cent in 2010 and exceeds the level in the U.S. and the U.K., where families are working to rebuild wealth lost to housing crashes. Canada is inching closer to the 160-plus threshold that got the U.S. and the U.K. into so much trouble four years ago. A sudden negative event such as a surge in unemployment, a drop in house prices – which many analysts say are roughly 10 per cent higher than they should be – or rising interest rates could land up to two million Canadian households in trouble. And, regardless, the more people spend on interest payments, the less they have to spend on everything else, crimping the consumer spending that accounts for most of the economy at a time when prospects for exports over the next year or two are shaky. Still, economists point to an encouraging sign: Though debt loads grew in 2011, they did so at the slowest pace in almost a decade. Mortgage debt, the vast majority of all consumer credit, rose at about a 7-per-cent annual pace, down from 12 per cent two years ago, and credit-card debt growth, aside from the usual holiday-shopping season spike, has also moderated. The debt-to-income ratio has risen largely because incomes are gaining at a slower pace than debt loads are. Jeffrey Schwartz, executive director of Consolidated Credit Counselling Services of Canada Inc., said that in the past year, more of the most vulnerable Canadians – people devoting at least 40 per cent of their incomes to debt-servicing costs – have started to regain control by coming to groups such as his for help. The question is whether this vigilance can be sustained, with some economists predicting no change in interest rates until late 2013. “The test will be the next 12 to 24 months, how we behave in the low interest-rate environment and whether we are able to resist the temptation,” said Benjamin Tal, deputy chief economist at CIBC World Markets. “If next year house prices are up 12 per cent, and mortgage activity and credit is up 15 per cent, I will be very concerned. Interest rates will eventually rise, and we would be in a much more vulnerable position than we are now.” Analysts speculate that at some point this year, Finance Minister Jim Flaherty may step into the mortgage market to tighten eligibility requirements for the fourth time in three years. Most, however, see this as unlikely until the European debt crisis stabilizes. Craig Alexander, chief economist at Toronto-Dominion Bank, said that without the mortgage measures already taken, the debt-to-income ratio would have soared past 160 per cent. The latest crack was last winter, when Mr. Flaherty announced that Ottawa would no longer insure mortgages with 35-year amortizations, essentially reducing the limit on insured mortgages to 30 years, and cut the maximum amount Canadians can borrow when refinancing their mortgages to 85 per cent of the value of their homes from 90 per cent. Ottawa also pulled government guarantees on lines of credit secured by homes. Many economists – and Ed Clark, TD’s chief executive officer – say further cutting the maximum length on federally insured mortgages to 25 years would be prudent, and that such a move wouldn’t necessarily hurt the economy or the housing market. For now, though, even as Mr. Carney and Mr. Flaherty emphasize they are closely watching debt growth, they continue to rely on moral suasion to cajole consumers, and banks, into showing restraint. In a Dec. 12 speech, Mr. Carney argued Canada has a limited window to cut its reliance on unsustainable, “debt-fuelled” consumer spending. As investors around the world pour capital into Canada, he warned, too much is being used to fund household borrowing instead of building the economy’s productive capacity, and he urged businesses to boost investment to fill the “noticeable gap” in the economy as households cut back. That sort of long-term thinking is music to the ears of economists like Mr. Alexander, who argue Canadians must do more to shift their behaviour while they still can. While most of the attention has been focused on lower-income households, however, Mr. Alexander noted that Canadians near retirement have also piled up debt. “Whenever interest rates rise, it will be a shock to a lot of people, and I think it’s going to be a national shock, because they’ve been low for so long,” he said. “But that might be a 2013 story or, more important, a 2014 story.” December 28, 2011 Jonathan Chevreau Dec 24, 2011 It’s been a crazy year in the markets, with government profligacy at the fore from the world’s largest economy (the U.S.) to the fragile group of nations embracing the euro. It may seem daunting for average Canadians to cope with but the new year offers a chance to wipe the slate clean and return to financial sanity — at least at the individual level. We have concentrated on wills, insurance, debt, savings and investing. Get your act together on these five fronts and 2012 could turn out to be a positive year, however insane things get politically and economically. Wills A good place to start is your will. Without one, the province decides who gets everything you own, says Toronto-based estate lawyer Barry Fish, co-author of Where There’s An Inheritance. Without a will, there will be no executor who can act immediately upon your death, no guardian for minor children and your kids will take their full inheritance at the age of majority. Cutting costs with a “will kit” can be penny wise but pound foolish. After you die, you won’t be around to explain what you meant. “We review many home made wills that are missing important clauses, are not signed or witnessed properly, and often use imprecise language that can lead to a family war,” Fish says. For example, one do-it-yourselfer’s will said “ I leave all my antiques to my sister and everything else I own is to be equally divided between my brother and my sister.” This language is more ambiguous than it may appear. “A court might have to interpret the validity of your brother’s argument that your expensive lamps from the 1950s are not  really antiques,” Fish points out. Bottom-line is wills are not one-size-fits-all documents. They must be tailored to your own life situation. The needs of single people are markedly different from married couples with children. Insurance Like wills, life insurance is one of those must-haves if you’re married with children, or even just contemplating starting a family. For young people just starting out, basic 10-year term insurance will do the job, says financial planner and chartered life underwriter Paul Philip. “It’s very cheap initially but the downside is it gets very expensive later.” Most policies are guaranteed renewable and convertible so if you’re happy with the price on, say, a $1 million policy, the insurer can’t deny coverage later. You have the right to convert to permanent insurance later in the event your health changes and you become otherwise uninsurable. Permanent insurance provides both an investment and an insurance component and ultimately may provide useful tax and estate planning advantages. Philip, of Toronto-based Financial Wealth Builders Inc., doesn’t focus on property and casualty insurance but suggests homeowners use the same insurance provider for both their car and home insurance. He suggests considering raising deductibles on both policies and using the premiums saved to bump liability insurance from $1-million to $2-million. The additional liability coverage can be set up as an “umbrella” and floats between your home and car, providing you dual duty. “My thing is to get more than one turn from a dollar if it can be done.”  If you’re paying for full replacement of goods on your home policy, you need to document your possessions. An easy way to do it is to shoot a 5-minute walkthrough of your home with the video function of a smartphone or cellphone. Debt  If there’s one thing the experts agree on in this post financial crisis world, it’s the problem of debt, both of individuals and of governments. In Financial Recovery in a Fragile World, tax guru Evelyn Jacks and her co-authors devote the first 25% of the book to detailing how the sovereign debt crisis in Europe, Japan and even the United States is unlikely to leave Canadians unscathed. We may not be able to control macroeconomic risks like inflation, interest rates or stock volatility but we can take steps to get our personal financial house in order. The best defence is to get liquid and eliminate as much debt as possible. In his just-published Crushing Debt, chartered accountant David Trahair lays out the reasons why Canadians should “drop everything and pay off debt.” I couldn’t agree more and believe we shouldn’t even think about retiring while still encumbered by consumer or even mortgage debt. Trahair devotes a chapter to how Canadians can extricate themselves, whether slightly extended on credit cards or so hopelessly mired in debt that insolvency is on the horizon. Simplest is to stop spending and pay off existing debt, renegotating with your creditors and/or consolidating all debts with lower-interest debt like a line of credit. The second way is to pay off at least outstanding principal with the help of a Debt Management Program offered by credit counsellors. Third is a consumer proposal, where you pay off only a portion of principal owing to creditors and the most extreme is outright bankruptcy, a last resort that nevertheless won’t help wipe out your mortgage or car loan. Savings  Once debt is eliminated, the next two steps are saving and investing. Investing is the glamour topic that gets all the media attention but without saving, there can be no investing. Saving is simply a matter of spending less than you earn and directing the surplus into a savings account that removes the temptation to spend it. David Chilton dedicated the entire first half of The Wealthy Barber Returns to raising awareness of the poor savings levels of Canadians and how they must improve. Almost his very first words there are “you’ll have to learn to spend less than you make.” And the magic words that will help you pull that off? “I can’t afford it.” Chilton has always espoused the notion of “Pay Yourself First,” which means setting up a pre-authorized chequing arrangement so that 10% or more of your paycheque automatically is siphoned off into savings (and ultimately investments) before you’re tempted to spend it. This automatic savings approach is also the heart of a series of books by U.S. author David Bach: The Automatic Millionaire. Investing Finally, we come to investing, which we’ve deliberately placed last to emphasize the importance of the other four seemingly more mundane measures. Normally, your first savings will be in interest-bearing vehicles like GICs or savings bonds. With interest rates still near 50-year lows, it’s hard to build wealth for the faraway future this way. By all means, establish an emergency cushion of savings in “safe” liquid vehicles like GICs or money market funds, enough to carry you through six months in the event of job loss. The best place to shelter such a fund is the new Tax Free Savings Accounts or TFSAs, launched by Ottawa in 2009. But don’t be fooled by the “S” in TFSA. Like the RRSP, the TFSA is an excellent place to start investing for the long term by including slightly riskier securities like dividend-paying stocks or investment funds that will ultimately give you more growth and protection against future inflation. As of January 2012, you can contribute another $5,000 to a TFSA (and your spouse can too), bringing the total to $20,000 per person, or $40,000 for a couple. BMO Retirement Institute head Tina Di Vito says if you can’t come up with a lump-sum to invest today, consider making monthly contributions. “You’ll be surprised how quickly and painlessly you can accumulate a substantial amount of money. You’ll also benefit from dollar cost averaging by buying into the market during both the ups and downs rather than trying to time the market.” TFSAs are ideal for young people in low tax brackets and also for low-income seniors who don’t want to see their GIS benefits clawed back. The vast majority between these extremes will want to invest in both TFSAs and RRSPs, particularly RRSPs if they’re in the top tax brackets. That’s because RRSPs cut your taxable income and should create a tax refund come April. TFSAs don’t but one day in the far future when you’re retired, you’ll love the tax-free income TFSAs will generate. So next time a friend asks about your finances, you can reply “We’re not out of the woods yet, but we’re well on our way.” December 24, 2011 Julian Beltrame The Canadian Press   OTTAWA—Canada’s annual inflation rate remained relatively strong at 2.9 per cent last month as Canadians continued to pay considerably more for food and gasoline than they had 12 months earlier. Statistics Canada said food rose sharply by 4.8 per cent in November from last year, as consumers saw double-digit increases for such basics as fresh vegetables and bread, while meat rose a healthy 6.2 per cent. The monthly overall gain in food was the highest recorded since July 2009, the agency said. Meanwhile, gasoline also continued to be a key driver of annual inflation, rising 13.5 per cent in November from 12 months earlier. Gasoline price inflation is on a downward track after peaking in May at close to 30 per cent. On a month-to-month basis, Canadians actually paid 2.3 per cent less for gas in last month than they did in October. The continuing high cost of gasoline helped push the transportation component up 5.7 per cent, although that was less than the 6.7 per cent gain recorded in October. Overall, Statistics Canada said that prices rose in all eight major components it tracks and in every province in Canada, with the highest rate — 4.1 per cent — recorded in Newfoundland and Labrador. Still, the Bank of Canada has repeatedly stressed that it is not worried about inflation even though it has remained above the bank’s two per cent target for more than a year. The bank’s core inflation index, which tracks underlying price pressures by excluding volatile items such as energy and some foods, was also north of target at 2.1 per cent in November. But in its most recent report on the state of the economy, the central bank said it expects overall inflation to decline to one per cent by mid-2012 as gas continues to decline. There’s little in November’s report that will likely to detract from that sentiment. Aside from food and energy, most price increases in November were tame. Shelter costs rose 1.5 per cent, although fuel oil, which is related to the energy component, was still 24.4 per cent higher than 12 months ago. Consumers also paid 4.4 per cent more for car insurance. However, home mortgage and interest costs fell 1.1 per cent, natural gas declined 2.7 per cent, video equipment dropped 12.4 per cent, women’s clothing slimmed by 2.1 per cent and furniture cost 2.1 per cent less. On a month-to-month basis, inflation was a tepid 0.1 per cent in November from October, the agency said. December 20, 2011 Preet Banergee  Last updated Tuesday, Dec. 20, 2011 9:39AM EST   We often hear about the income gap. But what about the debt gap? Some people have no debt and some people have debt up to their eyeballs. It has nothing to do with numeracy (how good one is with numbers). After preparing many financial plans, I can tell you that this phenomenon cuts across net worth. It doesn't matter much if someone earns $40,000 or $400,000, some people have a tendency to use too much credit. Stephan Meier and Charles Sprenger's study, Present-Biased Preferences and Credit Card Borrowing, finds that people who are present-biased (desire immediate consumption) have significantly higher amounts of credit-card debt. The study controls for income and other social factors, not to mention the well-documented evidence that people tend to under-report their total debt levels. Their research cited an average of $3,027 in non-mortgage debt a person, but when you look only at people who carry balances on their credit cards this number almost doubles to $5,799. Someone who wants the latest iPhone the day it’s released is obviously more likely to borrow money to finance the purchase. And they may not place an equal importance on future ramifications. With the holidays stepping into high gear, many people break their spending rules with the simple justification, “It's Christmas!” or whatever holiday they celebrate. This is a similar line of thinking as “You only live once!” Those four words are usually uttered moments before doing something you know is stupid. Suspending the requirement to balance your cheque book occurs for other occasions as well. A promotion at work, a new job, getting married. The list is endless, with some offences clearly worse than others. But the point is that these once-in-a-while splurges are justified with emotions, not math. This is exactly the present bias described in the study. If you happen to be one of those people who lives and spends in the moment, you have to learn how to handle your bias. Think back over the course of the year and figure out how much “extra” money you spent on indulgent expenses. Add it up and divide by 12. This is your new monthly savings amount. Set it up with your bank to withdraw it automatically every month. This new (somewhat draconian) plan will mean that for the next year not only will you have a cash-flow drain from the automatic savings, you will still have to pay off the debts from last year (and who knows how many previous years carried forward). But welcome to the real world where past choices catch up with you. You can choose to fix it now, and that might mean delayed gratification for a year or two, or you can roll the dice and see what happens when interest rates start to rise. Earning interest is better than being charged interest, and in the long run it means you can actually buy more. Because it's true. You only live once. So don't screw it up. Some things to consider: Canadian debt levels have swollen faster than our waistlines will over the holidays. Come January, consider building a debt plan to go with your new workout routine. Number of credit cards in circulation in 1977: 8.2 million Number of credit cards in circulation in 2010: 70.3 million Total sales and cash advances on credit cards in 1977: $4.04-billion Total sales and cash advances on credit cards in 2010: $308.98-billion Source: Canadian Bankers Association From a survey of 1,000 Canadian homeowners with household income over $50,000: 56% do not, or do not intend to, have a debt-repayment plan with an ultimate pay-off date 65% did not shop for better interest rates on their mortgage through different providers 55% do not plan to work with an adviser to get advice on debt management 43% do not plan to consolidate credit into a single low-interest rate December 20, 2011 By Michael Oliveira, The Canadian Press TORONTO - Most Canadians still aren't pulling out their phones to check their bank account balances and pay bills but experts and users alike expect a whole lot more will be doing so in 2012. "We definitely see there's been humongous growth on the banking front on the phone platform," says Bryan Segal, vice-president of the digital measurement firm comScore. Canadians are among the world's leaders when it comes to embracing online and mobile banking, according to comScore. Last year, Canada ranked as the top country for online banking usage, with almost 65 per cent of our Internet users going on the web each month to check their accounts. More recently, comScore estimated there were about 13.3 million Canadians regularly doing online banking, compared to 63.6 million in the U.S. On a per capita basis, our online banking customer base is about twice as large as south of the border. Now that online banking has become familiar and comfortable for plugged-in Canadians, mobile is expected to grow. Segal says about 13 per cent of Canada's mobile users now access their banking on their phone on a monthly basis, which is roughly on par with the U.S. market and ahead of the European Union. Given that comScore recently pegged the Canadian mobile market at 20.1 million customers strong, that suggests we're nearing three million Canadians using mobile banking. "About 22 per cent of those people actually access their bank accounts on a daily basis," Segal adds, "for 36 per cent it's at least once a week, and for 41 per cent it's once to three times throughout the month." In March, 77.5 per cent of Canadian mobile banking users were on a smartphone, with most using an iPhone. TD Bank (TSX:TD.TO - News) and RBC (TSX:RY.TO - News) had the biggest chunk of the market, with 26.7 per cent and 25.7 per cent of mobile banking users, followed by CIBC (TSX:CM.TO - News) with 17 per cent, Scotiabank (TSX:BNS.TO - News) with 13.2 per cent and ING Direct with 9.8 per cent. ING conducted a survey in October to gauge interest in mobile banking and found about half of Canada's smartphone users expect to use their phone to check their account in the next year or two. Of those in the 18 to 34 age bracket, 64 per cent saw themselves using mobile banking. ING said it handled over 200,000 fund transfers and one million balance inquiries on its mobile platform in the previous 18 months. According to a survey by the Canadian Wireless Telecommunications Association, the biggest reason users are avoiding mobile banking is security. About 52 per cent said they had security-related concerns, while 24 per cent said they simply found online banking easier than mobile banking. December 16, 2011 Helen Morris, Nest Egg As temperatures head down to their seasonal norm, we’re turning up the heat at home. That means higher bills, but having an energy-efficient home can keep heating costs under control. EnerQuality designs and operates five “green” building standards for the construction industry in Ontario. “These focus on the design and construction of the home,” says EnerQuality president Corey McBurney. “[We are concerned with] building a better home that requires less energy to perform and performs better. In practice, Energy Star for New Homes, which concerns itself exclusively with energy consumption, is by far the most popular [green home category]. We label over one in five new homes a year in Ontario and of those, 95% are Energy Star.”  Mortgage insurers Genworth and the Canada Mortgage and Housing Corporation (CMHC) offer incentives to borrowers who buy energy-efficient homes but who have less than a 25% down payment. “A client that purchases a new-construction home that is EnerGuide rated 80 or above or an Energy Star home in Ontario, may receive a rebate of 10% of the [mortgage insurance] premium excluding taxes,” says Jason Neziol, vice-president of regional sales in Ontario for Genworth Financial Canada. “If they decide to take a 30-year amortization instead of a 25-year, the client would typically pay 20 extra basis points,” Mr. Neziol says. “We will rebate that full amount to the [qualified] client when the house closes. If a client takes a $300,000 mortgage at 5% down and a 30-year amortization … they would receive $1,425 back.” The benefits are also available to high-ratio borrowers who improve the energy efficiency of an existing home. “The client can purchase a home and do renovations to increase its energy efficiency,” Mr. Neziol says. “They have to move the EnerGuide rating five points to a minimum of 40.” With just 20% of new homes in Ontario attracting a green rating, energy-efficiency credentials are not, evidently, at the top of all buyers’ lists. “A lot of people look at what they can do that won’t cost a lot of money and afford a quick pay-back,’” says Gary Siegle, regional manager of Invis, Alberta South and Saskatchewan. “The green mortgage rebate is a sweetener to get you there, but it is not a quick payback” on the full cost of the renovations. Beginning Jan. 1, Ontario will have one of the most rigorous building codes in North America: “With Energy Star, we are taking an already fairly high baseline and making it that much more efficient,” Mr. McBurney says. “Usually about 25% more efficient.” Green-certified buildings that meet a higher standard and provide longer-term savings attract consumers, Mr. McBurney says, but acknowledges that North American’s relatively low energy costs make it less of a priority for some. “The reality is I pay more to operate my BlackBerry on a monthly basis than I do to heat my home in the middle of winter,” he says. “As long as energy prices in Canada remain as low as they are, people are likely to continue on with their busy lives rather than  make energy efficiency in their homes a priority.” December 15, 2011 The credit burden of Canadian consumers is climbing as they take on more debt amid stagnating incomes. The ratio of debt to personal disposable income, the key measure of where a consumer stands, hit 152.98 per cent in the third quarter from 150.57 per cent in the prior quarter, Statistics Canada said Tuesday. It’s the third quarter in a row that debt has increased. The report comes a day after Bank of Canada Governor Mark Carney reiterated that household debt is the No. 1 domestic risk in the country, as debt burdens have surpassed levels of both the United States and the United Kingdom. “Credit growth continues to outpace the growth of disposable income, while the continued financial market turmoil has weighed on the asset side of the balance sheet,” noted David Onyett-Jeffries, economist at Royal Bank of Canada. About 10 per cent of Canadian households are vulnerable to an adverse economic shock according to central bank estimates, meaning they could face trouble once interest rates start to rise. Mortgage credit rose to $1-trillion in the quarter and other consumer debt to $448-billion, the statistics agency said. Household net worth in the quarter fell by 2.1 per cent, marking the second straight decline, as stock values more than offset the gains in house prices. Per capita household net worth tumbled to $180,100 in the quarter from $184,700 in the second quarter, the agency said. “This marked the sharpest quarterly reduction in stock prices and per capita household net worth since the fourth quarter of 2008.” December 13, 2011 Christine Dobby, Financial Post · Dec. 8, 2011 With the eurozone on the precipice of collapse, the United States grappling with its own debt issues and even China slowing down, what does 2012 hold for the global and Canadian economies?  CIBC World Markets Inc. released a handful of economic forecasts Thursday. Here are five key developments to look for in the year to come:  A hurdle for Canada’s unstoppable real estate market?  Benjamin Tal, CIBC’s deputy chief economist, said data on household debt and the health of the residential real estate market suggests a levelling off in prices in the next year or two with a more dramatic drop down the road.  “Further out, the most likely scenario is that the eventual increase in interest rates will lead to a modest decline in prices, probably in the magnitude of 10% to 15%,” he said.  But Mr. Tal said absent a trigger like the sub-prime mortgage crisis that triggered the recent U.S. housing market meltdown, a violent market correction is likely not in the cards for Canada.  Sluggish global growth in 2012 and not much to look forward to  “Excepting Europe, we’re not destined for recession, but global growth will barely top 3% next year, and 2013 won’t be a whole lot better, well below the bounteous 5% pre-recession pace,” said Avery Shenfeld, chief economist at CIBC.  The United States could defer its first round of budget tightening by extending tax measures for another year, he said, noting that if it does, “it will be feeling an even tougher fiscal squeeze in 2013.”  Meanwhile, Europe may have clawed its way back up somewhat by 2013 but growth there is still likely to be “lacklustre,” Mr. Shenfeld said.  The dark side of austerity measures  Apart from the pain felt by pension-holders, taxpayers and other stakeholders, harsh austerity measures being implemented across Europe may not be a silver bullet for return to growth.  “The myth that shrinking government brings an automatic offsetting boost to private sector spending is simply that — a myth,” Mr. Shenfeld said.  “The countries in Europe that have been first to tackle budget deficits through tax hikes or spending cuts have paid the price in growth.”  2011 GDP growth in countries that have tightened their belts already, including the United Kingdom, Spain, Greece, Ireland and Portugal, hovers at around 0.7% while other European Union nations had GDP growth closer to 2%.  “What helped Canada survive fiscal tightening in the 1990s — an ultra-cheap currency, strong growth outside our borders and falling bond yields — isn’t on the menu for Europe or the U.S. in 2012,” Mr. Shenfeld said.  Canadian growth stuck at 2%  Mr. Shenfeld predicted a pace of growth of about 2% over the next two years for Canada, which, as an open economy, can’t avoid the effects of a global economy on pause.  “Domestic fundamentals should guard against recession risks, but we will need a big lift from interest-sensitive domestic spending to keep the economy growing at even a 2% pace through 2013,” he said.  Although home building in Canada survived the recession, business construction and equipment spending will be in the spotlight over the next several years, Mr. Shenfeld said.  “Spending in energy, aluminum smelting, shipbuilding facilities and other private sector megaprojects will provide at least some antidote to the retreat underway in public sector capital spending as the recession’s stimulus is wound down,” he said.  He predicted exports would suffer, feeling the pinch from global economic slowing, but oil patch prices should hold up enough to facilitate ongoing capital spending in that sector.  The loonie takes a dive?  With weak global growth expected to continue to drive sentiment Mr. Shenfeld predicted the resource-linked Canadian dollar “has room to slide further in the coming months, until the crisis fires in Europe are quenched.”  He forecast the loonie dipping to US$0.92 before the currency regains support on diminishing fears of global crisis.  At noon on Thursday the Canadian dollar stood at US$0.9813. December 9, 2011 OTTAWA — Housing starts in the capital plunged in November as builders scaled back from the frenzied pace they had set over the past two years, according to Canada Mortgage and Housing Corp. The housing market watcher said the number of homes started in Ottawa in November fell to 553, a 40.4-per-cent drop from the 928 starts recorded in November 2010. CMHC had been warning that builders would begin scaling back in late 2011 as consumer confidence slumps and demand for new homes begins to taper. Despite the drop in overall home starts, single family homes remained in demand. “Builders have responded to the recent surge in demand at sales offices by breaking ground on 289 new single-detached homes. This way singles posted the best month in two years and surpassed all other dwellings combined,” said Sandra Pérez Torres, senior market analyst at CMHC. However, the pace of construction for high-density multiple dwelling units, including condominiums, dropped off in November. High-density units have been responsible for much of the growth in Ottawa’s housing sector in 2011 because they are particularly attractive to first-time buyers and baby boomers. Construction on multiple family dwelling units dropped to 264 units, a 60-per-cent decline compared to the 660 started during the same month last year. Overall the pace of construction in Ottawa in 2011 is lagging about 11.4 per cent behind 2010, according to CMHC. Builders have started construction on 5,231 homes during the first 11 months of 2011. During the same time frame in 2010, builders began construction on 5,904 homes. Nationally, the trend was similar. Canadian housing starts fell in November as construction of multiple-unit buildings declined. The seasonally adjusted annual rate of starts was 181,100 units last month, down from 208,800 units in October. Economists had expected activity to ease to 200,000 unit in November. “Housing starts declined in November, reaching a level which is more consistent with the rate of household formation,” said Mathieu Laberge, CMHC’s deputy chief economist. “The decrease in housing starts was due to a moderation in the multiples segment.” The seasonally adjusted annual rate of urban construction fell 14.4 per cent to 158,900 units in November, CMHC said. Single-unit activity rose 3.5 per cent to 63,600 units, while multiple-unit starts dropped 23.3 per cent to 95,300 units. Urban housing starts were down 30.6 per cent in Ontario, 13.4 per cent in the Prairies and 3.6 per cent in British Columbia, the federal housing agency said. However, urban starts were up 8.3 per cent in Atlantic Canada and 3.2 per cent in Quebec. Rural starts, on a seasonally adjusted annual basis, totalled 22,200 units in November, down from 23,100 units the previous month. In a separate report Thursday, Statistics Canada said new home prices rose 0.2 per cent in October, following a similar increase the previous month. The major contributors to the October increase were the metropolitan regions of Toronto and Oshawa, and Edmonton, while the biggest declines were in Victoria and Saskatoon. December 8, 2011 Christine Dobby  Nov 30, 2011 – 7:06 PM ET The Canadian economy was not as bad as first feared in the third quarter. In fact, it was much better than almost anyone had hoped. Fuelled by record monthly output from the oil-and-gas and mining sectors and overall export strength as temporary headwinds drifted away, third-quarter economic growth shot past expectations. Statistics Canada said Wednesday that gross domestic product for the period rose by an annualized 3.5%, beating economists’ more moderate average prediction of 3.0% growth and the Bank of Canada’s forecast of 2.0%. In September alone, the economy grew 0.2% from August, falling just short of a 0.3% increase economists predicted.   The growth during the quarter comes as a welcome change after a revised 0.5% contraction in the second quarter. Net exports staged a decided recovery as external pressures like the fallout from the Japanese natural disasters in March were no longer a factor. But the devil is in the details as flagging domestic demand and weak business investment lurked beneath the report’s strong headline growth. A close look at the data has economists forecasting only modest growth — in the range of about 2% — in the coming quarters and predicting the Bank of Canada will remain on hold with interest rate hikes. Here’s what stood out from Wednesday’s report: EXPORTS The driving force behind the uptick in GDP for the quarter, exports grew at an annualized rate of 14.4%, up from a pullback of 6.4% in the previous quarter. Paul Ferley, assistant chief economist at Royal Bank of Canada, said that factors that weighed on Canadian exports in the second quarter — including the Japanese supply-chain disruptions as well as wildfires in Northern Alberta that led to shutdowns of oil sand production facilities — were resolved in Q3 and contributed to the increase. But, he cautioned, “The boost to third-quarter growth provided by the reversal of these factors is not expected to continue to the same extent into the fourth quarter.” As the global economy stalls and prospects for a quick turnaround look increasingly grim, economists predict it will could spoil the Canadian export party. HOUSING Canada’s unstoppable real estate market was another bright spot during the quarter. Residential construction shot up 10.9% annualized, following on comparatively modest increases of 1.6% in Q2 and 6.7% in Q1. “After quarters of booming housing starts data, the residential construction bonanza finally translated into the GDP numbers,” said Emanuella Enenajor, economist at CIBC Economics. The expansion in this sector came from all three major components including fees and transfer costs related to resale transactions, new housing construction and renovation activity. “Continued strength in new-home sales has elicited more and more new housing construction, particularly in the high-rise condo market,” said David Madani, Canada economist for Capital Economics. He noted that a reported increase in housing starts bodes well for further strong growth in this category next quarter. CONSUMER SPENDING Canadians slowed their spending on goods and services during the quarter, raising red flags for economists concerned about sluggish domestic demand. Personal expenditures grew at an annualized rate of 1.2%, down from an expansion of 2.1% in the previous quarter. “A slowing pace of income growth owing to tepid hiring and weaker wage dynamics will likely continue to put downward pressure on consumption activity,” Ms. Enenajor said. BUSINESS INVESTMENT Business investment actually contracted during the quarter with a decrease of 3.6% annualized, down from last quarter’s 14.6% increase. “Weak business investment is a worry, as it has been an important source of growth since early 2010 and replaced personal spending as the main source of domestic growth,” said Charles St. Arnaud, an analyst with Nomura Global Economics. He noted that this, coupled with the fact that personal spending is likely to remain weak, “Could mean that domestic demand stays weak over the next few quarters, as global uncertainty remains high.” FINAL DOMESTIC DEMAND The combined slowdown in consumer spending and business investment was a drag on final domestic demand, which rose only 0.9% in the third quarter, down from a 3.1% gain in Q2. The other component, government expenditures, was flat in the quarter as government stimulus spending continues to slow to a trickle. “Note that the pace of final domestic demand has been consistently slowing since 2010, weakening from around 6% to its current sub-1% pace,” Ms. Enenajor said. December 8, 2011 Published on December 6, 2011 Canada's robust housing market is expected to continue into 2012 despite economic concerns from outside its borders, according to a new report from the Re/Max real-estate sales organization. The real estate organization said in its housing outlook Tuesday that the market A "defied logic" and outperformed expectations in 2011. "The trend is expected to carry forward into 2012 as Canadians continue to demonstrate their faith in homeownership, despite concerns over the European debt crisis and its impact on the global economy," the firm added. Home prices are expected to have risen in 23 of the 26 local markets that it tracks with about 460,000 homes expected to change hands this year. That's up three per cent from the 447,010 units reported in 2010. "Instead of responding to economic concerns both here and abroad with a retreat in sales and prices, residential real estate markets actually experienced an upswing in the volatile third and final quarters," said Michael Polzler, executive vice president, Re/Max Ontario-Atlantic Canada. "While clearly not impervious to the impact, Canadian consumers are intent on making their moves now, in advance of higher housing values and rising interest rates down the road." The forecast comes at a time when central banks in Canada and the United States are keeping their key lending rates low to counter the economic drag caused by the European debt crisis. The assurance of relatively low borrowing costs has probably given home buyers confidence while rising home values have kept new listings at a healthy level. Stable employment has provided some assurance to owners and buyers alike, although they have also been monitoring the darkening economic clouds. Re/Max expects that sales and prices will continue to grow next year, but at a more moderate pace, with sales rising about one per cent over this year to 464,500 units in 2012. It expects Calgary, Saskatoon and Halifax-Dartmouth will likely lead the country in unit sales in 2011, with the volume increasing by five per cent. The Greater Toronto Area, St. John's, N.L., Saint John, N.B., Moncton and Regina are expected also see more sales next year, about three per cent above 2011. Consistent with other data, Re/Max said the Canadian housing market picked up steam as the year went on _ helped by low interest rates and rising prices. Many economists had expected the Bank of Canada would begin raising its key interest rate by the middle of 2011 but that didn't happen. The central bank has kept interest rates low to stimulate the economy by making it less costly for businesses and consumers to borrow for their purchases. That has also kept buyers competing for homes, sending the average home price up seven per cent this year to $363,000 this year, according to Re/Max's predictions. By year-end 2012, it expects the average price in Canada will increase another two per cent to $371,000. "The economic underpinnings support ongoing demand, particularly as job creation efforts continue and unemployment rates edge down further," says Elton Ash, regional executive vice president, for Re/Max in Western Canada. "Nationally, we remain on an upward track, and the confidence consumers have demonstrated in housing over the past decade will prove well founded once again next year," he said. "Overall, we're seeing an extension of the homeownership cycle, and it's great news for housing." The Canadian Real Estate Association upwardly revised its housing forecast for 2011 and 2012 in November. The industry association is now projecting sales this year will be up 1.4 per cent from 2010, half a percentage point better than the previous forecast. CREA expects there will be slightly fewer units sold next year than in 2011, but the 0.5 per cent decline is an upward revision. The association is now forecasting 453,300 home sales countrywide this year, up from 446,915 in 2010. The forecast for 2012 is 451,200 homes sold. December 6, 2011 The Bank of Canada kept its overnight interest rate at 1% on Tuesday, predicting that Europe’s recession would be “more pronounced” than previously thought but giving no suggestion of an impending rate cut. “Conditions in global financial markets have deteriorated as the sovereign debt crisis in Europe has deepened,” the central bank said in announcing it was keeping its key interest rate on hold for the “medium term.” “Additional measures will be required to contain the European crisis. The recession in Europe in now expected to be more pronounced than the bank anticipated in October.” Last month, Bank of Canada governor Carney told a Montreal business audience that the central bank sets monetary policy “in the real world, where shocks are a fact of life.” Those shocks have continued as European leaders struggle to tame the region’s debt crisis, which began in smaller economies – such as Greece, Spain and Ireland – and now threatens to spread to stalwarts Germany and France, unthinkable only a few months ago. On Monday, the leaders of Germany and France agreed to a plan to tighten fiscal policy among the 17 nations that share the euro currency. Those proposals will be presented to the European Union at a summit Friday in Brussels. On the same day, however, rating agency Standard & Poor’s threatened to downgrade domestic ratings across most of the eurozone. That was met with a blunt response from German Economy Minister Philipp Roesler, who said his country “will not be influenced by . . . the short-lived verdict of one rating agency.” Meanwhile in Canada, gross domestic product grew by 0.9% between July and September, or 3.5% on annualize rate. The third-quarter jump followed a 0.5% contraction in the second quarter. The central bank says growth in the second half of 2011 “is slightly stronger than the bank projected in October.” “Household expenditures have more momentum than had been expected and business investment remains solid.” While third-quarter GDP was better than expected, Canada’s employment picture remains cloudy. The country lost 18,600 jobs in November and the unemployment rate edged up to 7.4% from 7.3%. The Bank of Canada’s key interest rate has been at 1% since September 2010, with policy-makers attempting to avoid another recession by encouraging spending by businesses and consumers. “With the target interest rate near historic lows and the financial system functioning well, there is considerable monetary stimulus in Canada,” the bank said in its Tuesday statement. Canada’s annual rate of inflation eased to 2.9% in October from 3.2% the previous month. Still, that marked the 11th straight month that the overall consumer price index was above 2%, the Bank of Canada’s target within a range of one to 3%. The core inflation rate, which factors out volatile items including some food and energy products, now stands at 2.1%, down from 2.2% in September. “Although total CPI inflation has been slightly higher than projected, the bank continues to expect the inflation rate to decline as a result of reduced pressures from food and energy prices and ongoing excess supply in the economy,” the Bank of Canada said Tuesday. However, the bank said it would “continue to monitor carefully economic and financial developments in the Canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2% inflation target over the medium term.” The Bank of Canada’s next interest rate decision will be announced Jan. 17, followed the next day by an updated outlook for the economy and inflation. December 6, 2011 Patience is a virtue – one that benefits your personal finances, researchers have found. A new study shows impatient people have lower credit scores. Economists, working at the U.S. Federal Reserve’s Center for Behavioral Economics and Decisionmaking at the time of the research, recruited 437 low-to-moderate income participants to examine the psychological factors that explain why people default on their mortgages. The participants were asked to fill out a questionnaire, in which they were required to make choices between smaller immediate rewards or bigger rewards later. They also gave researchers access to their credit scores. Impatient participants, those who chose the immediate rewards, had poorer credit scores. “Conceptually, it does make sense that how people discount the future, i.e. how impatient they are, affects their decision to default on their loans,” researcher Stephan Meier, who is now at Columbia University, said in a press release. “Individuals accumulate debt and then have to decide whether to repay the money or use the money for something else?” He noted that while people don’t always default on a loan deliberately, some may resort to “strategic defaulting,” making decisions based on having more money now and face the consequences later. Patience is a quality embraced by some of the world’s most financially savvy. December 5, 2011 After years of whipping out their credit cards and tapping into lines of credit, there is further evidence that Canadians are thinking twice before taking on more consumer debt. A quarterly analysis from credit bureau TransUnion showed that the average Canadian’s non-mortgage debt was $25,594 in the third quarter of 2011. That is down $9 from $25,603 in the previous quarter but $431 higher than $25,163 a year ago. While the quarterly drop might not sound impressive, it marks the third-consecutive quarter that debt loads have either declined or remained about the same following 26-straight quarterly increases. TransUnion’s report pointed to a deceleration in total debt increases, which basically means Canadians are taking on more debt at a slower pace. Thomas Higgins, TransUnion’s vice-president of analytics and decision services, said the latest data suggests “Canadian debt loads are stabilizing.” He attributed the slowdown to global economic uncertainty. “In the third quarter alone, Canadian consumers witnessed major stock market declines, the European debt crisis and continued high unemployment,” Mr. Higgins said. The latest TransUnion report comes on the heels of new analysis from Canada Mortgage and Housing Corp. that shows the rate at which Canadians are racking up new mortgage debt has also slowed. Policy makers like Bank of Canada Governor Mark Carney have been warning Canadians about excessive debt loads and their ability to repay the money they owe once interest rates rise from their current lows. The average Canadian household has debt that is 150 per cent of income, and mortgage debt accounts for the largest chunk of credit that Canadian consumers hold. Outside of mortgages, Canadian household debt levels have surged as consumers rely more on their credit cards and lines of credit. Lines of credit, which have lower rates than credit cards, now account for more than 40 per cent of all Canadian non-mortgage debt, TransUnion said. TransUnion's data showed that average Canadian credit card debt fell 2.65 per cent from a year ago but rose 0.59 per cent on a quarterly basis as the holiday season approaches. But Canadian lines of credit debt rose 4.5 per cent from a year ago and 0.79 per cent on a quarterly basis. While debt delinquencies have remained relatively stable, both increased unemployment rates and the upcoming holiday shopping season may weigh in over the upcoming months, TransUnion noted. December 2, 2011 For an explanation, Canadians can look to the European sovereign-debt crisis, according to the latest Housing Trends and Affordability report by RBC Economics.   The report found the average housing cost of a standard two-storey home was 48.8% of the median pre-tax income, down 0.6% from the previous quarter. “It appears that developments related to the (debt) crisis likely provided some benefits in the form of lower interest rates,” said the report, authored by chief economist Craig Wright and senior economist Robert Hogue.   The authors noted fixed mortgage rates on a five-year, posted basis eased 5.3% in the third quarter from an average of 5.6% in the second quarter.   “This ran counter to expectations of generally rising interest rates just prior to this summer’s latest bout of global anxiety,” said Wright and Hogue. Vancouver, which has the worst affordability of any Canadian city, saw the cost of owning a two-storey home drop to 94.4% in the third quarter, down 0.8% from the previous quarter.   The most affordable option in a major city nationally was a condo in Edmonton, with the ownership cost at 20.9% of median income in the city, and down 0.3% in affordability. Only one city remained more affordable than the average since the index began measuring the Canadian market in 1985 – Calgary.   Detached bungalows in Calgary were at 37.6% of income this past quarter, compared to the city’s average of 40.2; standard two-storey homes were at 38.2% compared to the average of 40.8%; and standard condominiums were at 38.2% last quarter compared to a 40.8% average for the city.   The RBC report noted a 3.7% increase in jobs in Calgary this year was creating momentum in the market, and may eventually decrease some of the affordability. The most affordable region remained Atlantic Canada.   “Faithful to its reputation, Atlantic Canada’s housing market continues to show everything in moderation,” said Hogue. “When considering the prospects of owning a home, households in the region continued to face some of the lowest homeownership costs in Canada. In short, housing on the east coast is affordable.” December 2, 2011 OTTAWA — Canadian homeowners are doing a good job of paying off their mortgages early, according to the Canada Mortgage and Housing Corp., which released its third-quarter results Tuesday. While mortgage repayments can be spread out over 30 years, the CMHC reports that the average amortization period for mortgages insured by the national housing agency is under 25 years, and the loan-to-value ratio of those homes was 80% or less. As of Sept. 30, the outstanding loan amount per household for all homeowner loans was $159,740, slightly above the figure for the previous year. “CMHC analysis shows that a substantial percentage of CMHC-insured high ratio borrowers are ahead of their scheduled amortization,” the agency said in its report. “Accelerated payments shorten the overall amortization period, reduce interest costs, increase equity in the home at a faster rate and lower risk over time.”  The agency says its mortgage arrears rate is 0.42%, in line with industry trends. Rules brought in by the federal government in March, in response to historic levels of household debt, which reduced amortization periods on certain mortgages, and limited the amount that can be borrowed when a house is refinanced, cut refinancing activity by 31% from last year, the CMHC said. The agency’s homeowner purchase mortgage insurance showed a year-over-year decrease of 12%. “The level of household debt remains a concern but there are encouraging signals,” it says. “There has been a significant deceleration in the growth of mortgage credit since March, particularly in recent months, impacting the growth rate of total household credit. Growth in personal loans, lines of credit and credit cards has levelled off in recent months.” The agency notes general economic conditions have been favourable in 2011, with stable mortgage rates, a healthy housing market and a declining unemployment rate. “Overall arrears levels and arrears rates have been improving and (mortgage insurance) claims volumes have been lower than expected,” it said. “Given current economic forecasts, it is expected that trends will improve moderately going forward, although both downside and upside risks remain.” While housing sales have slowed since January, the CMHC expects sales for the year to fall within a range of 423,600 to 470,100 units, and next year’s sales to be somewhere between 406,100 and 509,000 units. Prices should “modestly grow as market conditions are expected to remain in the balanced market range,” it said. The agency notes it keeps an eye out for bubbles, but so far it sees “little evidence of over-valuation” in the Canadian housing market. November 29, 2011 Tara Perkins Globe and Mail Update Last updated Tuesday, Nov. 29, 2011 12:15PM EST The rate at which Canadians have been racking up new mortgage debt has slowed in recent months, lending credence to the theory that the country’s housing market will hold up, Canada Mortgage and Housing Corp. suggests. The crown corporation released its third-quarter financial results Tuesday, offering a new glimpse into the country’s mortgage market. “The level of household debt remains a concern but there are encouraging signals,” it said. The growth of mortgage debt has significantly decelerated since March, particularly in recent months, it said. The growth of personal loans, lines of credit and credit cards has also levelled off recently. But the largest debts that Canadians hold are their mortgages, and so the trend in that area is helping to reduce the growth rate of total household credit. At the same time, CMHC says is analysis suggests house prices are in line with demographic changes and economic growth. “CMHC, in consultation with the Bank of Canada and the Department of Finance, is continuing to refine models and techniques used to help identify risks of house price bubbles,” it stated. “At the moment, there is little evidence of a significant over-valuation in the Canadian housing market overall, although some centres warrant close monitoring.” CMHC expects housing markets to stabilize next year, and house prices to grow modestly going forward. Finance Minister Jim Flaherty took action earlier this year to reduce the growth of mortgage debt, including tightening up the rules surrounding mortgage refinancing, and decreasing the maximum length of insured mortgages from 35 years to 30. (Canadian mortgages must be insured if borrowers have a downpayment of less than 20 per cent). CMHC says that the refinance activity it’s seeing, which initially fell by nearly 40 per cent, is still down 25 per cent compared to the level it was at before the new rules came into effect. The overall level of mortgage insurance that’s being sought from the crown corporation dipped by about 10 per cent initially, but has since recovered. November 29, 2011 Home prices frothy: EconomistA new study of global housing markets by The Economist warns that markets in Canada and some other countries still appear "uncomfortably overvalued." Indeed, the magazine calls it downright frothy in its latest update of house prices indicators. Overall, the report shows prices falling in eight of 16 countries studied in terms of a price-to-income ratio, which measures affordability, and a price-to-rent ratio. By averaging the two readings, The Economist warns that prices are overvalued by 25 per cent or more in Canada, Australia, Belgium, France, New Zealand, Britain, the Netherlands, Sweden and the ever-unfortunate Spain. Here's a really troubling bit: For Canada, Australia, Belgium and France, housing "looks more overvalued than it was in America at the peak of its bubble." The magazine notes that some economists dismiss its measures, citing the fact that lower interest rates - Canada is such an example - can justify fatter prices because they allow heftier mortgages. The magazine responds to that just as Bank of Canada Governor Mark Carney and others have: It will not always be thus, and rates will inevitably rise. Here's another warning, also along the lines of what we've been told for months now: "Australia, Britain, Canada, the Netherlands, New Zealand, Spain and Sweden all have even higher household-debt burdens in relation to income than America did at the peak of its bubble." Canadian housing markets have been cooling down, and many forecasters project a continued softening, though not a crash. November 24, 2011 He gave no indication, however, whether his next move might be to actually reduce the trendsetting overnight rate from the current one per cent, as at least two major economists have urged. In a speech to a business audience in Montreal, the central banker made clear that he sees recent indicators that the Canadian economy rebounded strongly in the third quarter, and continued to perform well in October, as a temporary respite from the approaching storm. Carney, who was pessimistic about the second half of this year when he delivered his monetary policy report in October, conceded that the tail end of 2011 will be better than he thought. In last month's outlook, he had predicted Canadian growth would be a tepid two per cent in the third quarter, and a miserable 0.8 per cent in the fourth. Economists now expect the third quarter, which ended in September, to come in at three per cent or even higher, while early indications are that the fourth will also be stronger than thought. "Preliminary evidence suggests that economic growth in the second half of the year will be slightly stronger than the bank had projected," Carney said in notes of the speech released in Ottawa prior to the start of his address. "However, as outlined in the October report, a weaker external outlook is expected to dampen growth in Canada through financial, confidence and trade channels... These shocks from abroad imply more subdued growth in household expenditures and less vigorous growth in business investment." Carney is taking a cautious view of efforts in Europe to deal with the continent's sovereign debt and banking crisis, calling the situation a "crisis ... barely contained." He acknowledged that as recently as July markets were expecting him to start raising the bank's trendsetting policy rate, which has been at one per cent since September 2011, given that the outlook appeared to be brightening and inflation was at or above the bank's comfort zone of between one and three per cent. Canada has since been hit by a blast of headwinds from abroad, he said, and the future doesn't look nearly as bright. The forecast now is for Canada's economy to muddle along with excess capacity well into 2013. He did not change his projection that the economy will grow by a modest 1.9 per cent next year, although he highlighted that risks remain high. "In this environment, the bank judges it appropriate to maintain the considerable monetary stimulus in place," he said. As for inflation, Carney said he expects that rather than staying at the top of the bank's target range – it is currently at 2.9 per cent – consumer price escalation will slow to about one per cent by mid-next year as oil and food prices moderate. Analysts with Merrill Lynch and Capital Economics recently suggested the economy will slow so sharply next year that Carney will need to reduce the policy rate to half a per cent or even as low as 0.25 per cent, where it was during the recent recession. On his future intentions, Carney was noncommittal, merely repeating his mantra that the bank is monitoring economic and financial conditions, as well as risks, and will set the policy marker consistent with achieving two per cent inflation over the medium term. The theme of the governor's address to the Montreal Board of Trade centred on the bank's just concluded agreement with the federal government to continue targeting inflation at two per cent, within a control range of one-to-three. As the bank explained at the time, Carney still has flexibility to tackle financial instability and imbalances – such as a housing bubble – but only in extraordinary cases when they threaten the economy and inflation in the country as a whole. Generally, he said, monetary policy's "bluntness" makes it an inappropriate tool to deal with difficulties in an isolated sector. "The paramount goal of monetary policy in Canada has been, and remains, price stability," he stressed. November 23, 2011 Gillian Livingston Globe and Mail Update People who fail to pay off their mortgages by the time they hit their golden years are risking their dream of having a secure and fulfilling retirement, says Patricia Lovett-Reid, a senior vice-president at TD Waterhouse. “If we spend a third of our life in retirement you don’t want to be setting aside a portion of your income to satisfy the debt that should have been retired itself when you were working,” she says. “My greatest fear is that many Canadians may wake up and find that they’re living a quality of life that isn’t as fulfilling because they compromised tomorrow for a better today.” And with interest rates so low right now, it has encouraged too many people to borrow more than they can afford and live far beyond their means as they focus on their wants and not just their needs. “There will be a day of reckoning,” she says, especially when rates begin to rise and that debt burden becomes too heavy for some to manage. Earlier this week, Royal Bank of Canada’s latest housing study found that 57 per cent of Canadians surveyed expected they’d still be paying off their mortgage debt after they turned 55, and nearly one-third said they’ll still be carrying that debt past the age of 65. Elisseos Iriotakis, a partner at Safebridge Financial Group, says the root of the problem is that more people are living in more expensive cities – with higher house prices and living costs – and what used to take 25 years to pay off is now taking much longer. “A dollar can only get stretched so far,” he says. And today, people’s finances are being pulled in so many directions: paying for the cost of living, repaying debt, building up RESPs for their kids, RRSPs for their retirement and TFSAs for their emergency funds. Here are some of their tips to help people get rid of their mortgage debt before they’re eligible for seniors discounts. Put your mortgage first “You have to prioritize,” says Mr. Iriotakis, and realize that paying down your debts, including your mortgage, gives you a guaranteed return – something you won’t get from the volatile stock market. So paying yourself by paying down your mortgage is a “guaranteed” return, he says. “It’s better than a GIC, so by knocking down your mortgage you’re guaranteed that 3 to 4 per cent.” And paying off your mortgage debt faster will save you thousands of dollars in interest payments, he adds. Ms. Lovett-Reid says if you don’t take your hefty mortgage seriously, you won’t pay it off. And while paying off your mortgage may not be “exciting,” it will bolster your personal balance sheet. Give your mortgage payment a raise Mr. Iriotakis suggests home owners increase their mortgage payments each year by the rate of inflation, at a minimum, and if you get a raise, increase your payments by the same percentage. And if you have a variable-rate mortgage, “keep your payments at a five-year [fixed] rate or greater ... so that helps you to reduce your principal a lot quicker.” Choose your mortgage carefully If you have some expenses coming up, Mr. Iriotakis suggests to his clients to keep with a 25-year amortization with their mortgage even if they can afford larger monthly payments. That way they won’t have to borrow at higher rates to cover those other expenses and can make lump-sum payments on their mortgage when they have extra cash. But this only works if you have the discipline to save the money and make the extra payments, he notes. Mr. Iriotakis also suggests people don’t blindly take on a five-year mortgage because that’s what their bank says. On average, most mortgages are about 3.5 years long – which means many people locked into five-year mortgages are breaking them – and paying substantial fees – before they come due. About 70 per cent of consumers break their mortgage before its term is up, he says, some due to divorce, refinancing or to get a better interest rate. If you are not disciplined with your cash, then pay as much each month as you can afford towards your mortgage and choose accelerated bi-weekly payments, since that’s basically a forced savings plan, he says. Be disciplined The best way to avoid having too much mortgage debt is not to get it in the first place, says Ms. Lovett-Reid. Don’t get lured into buying the biggest house possible. Choose one you can afford, she says. Put debt reduction targets and deadlines in place. And have the courage to stick to them. Focus on paying off your debts and living below your means so that you don’t find yourself saddled with a huge debt from your mortgage and line of credit when it comes time to retire. She says people have to ask themselves: “Is my lifestyle sustainable in retirement?” Because by the time people hit retirement “they want to be channelling any excess cash that they may have – not to mortgage payment, not to a debt – but to a life and an experience instead.” Any windfall cash should be put towards your mortgage, says Mr. Iriotakis. It’s always nice if a rich uncle gives you a pile of cash, he jokes. But if you get a tax refund, put it towards your mortgage, and make sure you’re maximizing all your tax benefits to get the biggest refund you can. A way out if you’re buried in mortgage debt If you are heading towards retirement and still have a significant amount of mortgage debt, you have a few choices to make, says Mr. Iriotakis. You can bite the bullet and downsize by moving to a smaller house or condo, or moving to a cheaper location. “That’s a quick way of getting rid of the mortgage,” he says. Or, you can refinance your home and take a longer amortization so your monthly payments are less and will be affordable for you on a lower income. Ms. Lovett-Reid says while retiring with debt isn’t ideal, it can be managed. You can delay your retirement for a few years, or look for a part-time job to have while you’re retired. Retirees can also look at the possibility of a reverse mortgage, or boosting their exposure to equity with the hope that their savings will generate more income over the long term. November 22, 2011 Jesse Kline, National Post · Nov. 21, 2011 | Last Updated: Nov. 21, 2011 2:08 AM ET Even as the clouds were gathering over the American economy, most people refused to believe the storm was coming. The few economists who were warning of the economy's impending downfall were cast aside and laughed at. No one wanted to believe that the real estate market was a house built of cards. We can dig up more gold and build more cars, but God is never going to create more land, or so the theory went. When the market finally exploded in glorious fashion, the bubble that had been building since the mid-'90s was revealed to all. And yet, just because we know the bubble existed, does not mean that everyone fully understands it. Bubbles form when outside forces prevent a market from operating in a normal fashion. Prices stabilize at the point where the supply of a given product is equal to the demand for that product. In the case of the U.S. housing market, two outside forces were causing it to expand at an unnatural rate: Artificially low interest rates and a policy of increasing home ownership by securitizing and insuring mortgages through Fannie Mae and Freddie Mac - the two government sponsored enterprises (GSEs). Central banks, including the Federal Reserve, have for years been using interest rates to control behaviour and thus affect the economy - in this case, by (successfully) encouraging borrowing and spending. At the same time, the GSEs were mandated by Congress to increase the rate of homeownership. They did so by purchasing increasingly risky mortgages from the banks, a policy that removed the risk from financial institutions and caused banks to issue progressively riskier loans. The combination proved deadly. Of course, conventional wisdom has it that Canada's banking system is far more stable and regulation has led to more stringent lending practices, which allowed this country to escape the collapse of the housing market. Perhaps. But we must consider whether, like the Americans before us, we're having a hard time seeing a bubble we're already in. Much like in the United States, the Bank of Canada has kept interest rates artificially low. The rate now stands at a mere 1% and many economists believe it will be lowered to its recessionary level of 0.25%. The low rate has caused consumer borrowing to increase sharply. In fact, the level of debt, relative to income, has grown much more sharply in Canada than it has in the States, and Canadians now have higher household debt levels. And although Canada does not have GSEs, we do have the Canada Mortgage and Housing Corporation (CMHC), a Crown corporation that has a monopoly position in the mortgage insurance and securitization markets. The CMHC controls roughly 70% of the mortgage insurance market. Since the government guarantees 100% of the principal and interest on CMHC-insured mortgages, banks don't have to worry about risk. The government will take care of it. Of course, there are many differences between the two countries, including stricter regulations on what type of loans qualify for mortgage insurance, which prevented the formation of a large sub-prime market. But the rapid increases in housing prices in Canada is remarkably similar to the American experience before the housing collapse. And contrary to conventional wisdom, houses aren't always a good investment. According to the well-respected Case-Shiller Real Housing Price Index, U.S. house prices rose a mere 3.5% in inflationadjusted dollars between 1946 and 1995. It then rose by 70% between 1999 and 2006, and has since been plummeting toward its pre-bubble trend-line. In Canada, according to the Teranet-National Bank House Price Index, six major markets (national figures are not available) show a consistent pattern: In each case, prices stay steady, or rise only modestly, until the late-1990s, at which point house prices skyrocket. A report conducted by RE/MAX and released at the beginning of the month found that the average price of a Canadian home doubled in the first decade of the new millennium. So is our housing market in the midst of a bubble? "It seems reasonable to view housing as bubbly - well beyond effervescent," wrote Finn Poschmann, vice-president of research at the C.D. Howe Institute in an email to the National Post. "Bracing for a winter of discontent would be wise." If the Canadian housing market were to collapse, Canadian taxpayers would be hit hard. The federal government is fully liable for any losses incurred by the CMHC, which currently backs somewhere in the order of $600-billion worth of mortgages. It has been bailed-out by the government twice in the past. The government needs to act quickly to remove the factors that are causing the market to expand so rapidly, as well as to disperse the risk across the financial system. The CMHC should be privatized, much like the Australians successfully did in 1997. Banks and insurance companies should be allowed to do what they do best - assess risk, without standards being forced upon them by government bureaucrats. Doing so would not only spread the risk throughout the financial system and protect taxpayers, it would also reduce the likelihood of Canada experiencing a U.S.-style housing crisis. November 21, 2011 Garry Marr, Financial Post,Nov. 16, 2011 8:37 AM ET The Canadian housing market continues to defy those who have long predicted its collapse. If anything, the market seemed to pick up steam in October as sales across the country ended up the best they have been since January. Sales of existing homes rose 1.2% in October from the previous month, building on September's 2.5% gain, the Canadian Real Estate Association (CREA) said. The upward push caused CREA to revise its sales predictions slightly for 2011. It now says sales will rise 1.4% from a year ago, instead of 0.9%. "The continuing strength of home sales activity in the face of ongoing financial volatility speaks volumes about the con-fidence of Canadians in our housing market," said Gary Morse, president of CREA. Even going into 2012, CREA doesn't see much change in the market since interest rates are near record lows. CREA calls for a relatively minor 0.5% reduction in sales in 2012. The industry has seen annual sales holding steady at about 450,000 for each of the past three years. Prices have also shown a steady upward trajectory and are now forecast to attain an average of $362,700 in 2011, which would be a 7% increase from the year before. Next year, prices are expected to remain flat - something most people in the real estate industry see as an accomplishment under the present economic environment. "Home sales actvity over the past couple of months suggests buyers are confident that the Canadian economy will remain relatively unscathed by global economic risks, since every home purchase is a homebuyer's vote of confi-dence in the future," Gregory Klump, CREA's chief economist, said Tuesday. He said there is a strong feeling fiscal policy will be coordinated to give housing any support it should need in the event of an economic pullback. So far, the industry seems to be getting the support it needs from low interest rates, which have kept buyers in the market. Variable rate mortgages tied to prime are still available as low as 2.7%, while a fiveyear fixed-rate closed mortgage is now being discounted to 3.19%. CREA said a total of 397,561 homes have traded hands this year, a 1.8% rise from the first 10 months of 2010, but in line with the 10-year average. Toronto continued to carry the national market in October: Sales were up 14.3% from a year ago. The actvity in Canada's largest city helped boost overall sales activity, which rose 8.5% from a year earlier. Prices across Canada continued to moderate. The 5.5% year-over-year increase was the smallest since January and the average price of a home sold in October was $362,899. The consensus among economists is that the housing industry may not have much more to give in price or sales increases but nor is it set for a massive decline. "The fact that prices are overvalued today does not necessarily mean they will crash tomorrow," said Benjamin Tal, deputy economist with CIBC World Markets. He said a "violent market meltdown" would need a catalyst, such as the subprime crisis, or a sharp increase in interest rates, such as those of 1991. "We do believe the housing market in Canada will stagnate in the coming year or two," said Mr. Tal. A report from TD Economics indicates housing is a key component of the Canadian economy. It noted the construction industry accounts for 10% of gross domestic product. November 17, 2011 Rob Gerlsbeck Globe and Mail Update Last updated Monday, Nov. 14, 2011 10:19AM EST I recently decided to get serious about putting away money for my retirement and my kids’ education. I know what you’re thinking. Smart idea. But you’ll be less impressed once I tell you my age: I just turned 41. Forty-one! I can just picture financial planners out there shaking their heads. Don’t I know that starting to get serious about personal finance at 41 is like picking up the violin as a teenager and thinking I’ve got a shot at playing with the New York Philharmonic? What have I been doing? Just imagine how fat my RRSP portfolio would be if I had spent the last 10 years maxing out my account. Just imagine the cash savings I could have amassed if I had diligently banked a tenth of my income each and every year. I look at things a bit differently. At 41, I think I’m doing just fine. I’ve got a house, a wife and three kids. We get by on one middle-class income –comfortably. A big reason is that throughout most of my 30s I eschewed the financial advice that is so often given to people my age. I’m no financial wizard, mind you. But I’ve learned from experience that your 30s are not the decade to worry about getting rich or saving for retirement. There are more important priorities. If you take care of them, you’ll enter your 40s in remarkably good shape. But first things first. If you have yet to hit your 30th birthday, I can assure you that, financially speaking, you are about to experience one tough decade. In your 20s, your biggest dilemma was deciding between buying beer or textbooks. In your 30s the choices get frighteningly real. Shortly after our first son was born, I made several bleary-eyed trips to the drugstore in which I paid for diapers and baby formula with a credit card because I wasn’t sure we had enough money in our bank account to cover both those necessities and the mortgage payment that was coming out the next morning. Kids, of course, are one big reason people struggle at this age. The average Canadian couple is around 30 when they start a family. It costs them over $60,000 to raise a child to the age of five. Even if one parent stays home to save on daycare costs, your finances take a hit because you have to get by on one income rather than two. Right around the time most of us are changing our first diapers, we’re also buying our first house. Mortgage payments, property taxes, home maintenance and other home-ownership costs swallow 48 per cent of a typical family’s pretax annual income. The double-whammy of children and life as a homeowner are overwhelming for thirtysomethings, says Debbie Gillis, a credit counselling co-ordinator with K3C/Kingston Counselling in Kingston, Ont. “Suddenly you feel like an adult, and it’s a big slap in the face.” I can relate to Gillis’s assessment. My wife and I were 29 when our first child was born and we bought a house. We thought we were in good shape. We had no student or credit card debt and our car was paid for. But we were surprised how quickly our financial position began to unravel, especially after we decided that my wife would stay home rather than go back to work. Our income was chopped in half, and that was a shock. Owning a home turned out to be an even bigger shock. It wasn’t the mortgage payments, which were about equal to what we had been paying in rent. It was the maintenance costs. Our house was close to 90 years old and our big green monster of a furnace soon conked out. A new one set us back $4,000. Then our roof leaked and we had to hire a contractor to reshingle. That set us back another $5,000. We put most of these repairs on our credit card and home equity line of credit. As our bank account dwindled, we tried to make every penny count. We clipped coupons and cranked down the heat on winter nights. We didn’t go out to a restaurant or the movies for three years, and while other young parents took their toddlers to Disney World, we spent three days camping in a provincial park at a cost of $30 a night. Here’s the insanity, though. We were far from broke. Both of us were still putting up to $3,000 a year into RRSPs. We had started buying mutual funds in our 20s and we were afraid to stop. We were bombarded with advice warning us that by not saving enough now, we risked spending our old age in the poorhouse. Trouble was, it felt like we were already in the poorhouse. A lot of people get stuck in the same trap, says Gillis. “I’ve seen people who put money aside for retirement and then they miss a mortgage payment.” As silly as that sounds, you can understand why people try to do everything at once. Not only are thirtysomethings expected to buy a house and raise a family, but most self-help books and personal finance articles preach a lengthy checklist of other must-dos: build your career, save for retirement, put away cash for the kids’ education, pay down your student debt, escape credit card debt. Oh, yeah, and load up on life insurance, too. Fact is, even a couple earning an above-average income can’t accomplish all these goals simultaneously. So how do you survive your 30s? It took some trial and error but my wife and I eventually found that following three rules makes a huge difference in our financial lives: You can’t do everything, so don’t try Raising kids and building a career are stressful enough. My advice? Concentrate on those two priorities in your 30s and pass on some of the other stuff. That’s not to say you should spend wildly or ignore your finances. But rather than take a scattershot approach to money, focus on one goal at a time. For most of us, the first and most important goal consists of simply getting out of debt – student debt, credit card debt, car loans and mortgages. Gillis points out that some of her clients make the mistake of trying to save money for their kids’ education while still paying off their old student debts. That makes no sense at all. Better to tackle your own debt first, then worry about helping your kids out. Or consider the situation my wife and I found ourselves in. While we were shoving money into our RRSPs we were also going into debt to do home repairs. What were we thinking? We were paying 6 per cent interest on our line of credit and 18 per cent on our credit cards. Meanwhile, the annual return from our RRSPs was hovering at 2 per cent to 3 per cent, and because we weren’t earning a large income, the tax breaks were small. It took us a couple of years to realize what we were doing, but we came to our senses at last and stopped contributing to our RRSPs until we had paid off our debts. Finally, we could breathe. Take small steps. Then repeat After we got rid of our debts, we decided to make our mortgage the next priority. Whenever we had extra cash, we paid down a part of our principal. A couple of thousand dollars a year has added up and we expect to have our entire mortgage paid off in 14 years rather than 20. That should save us thousands of dollars in interest. Our next goal: saving for retirement and our kids’ education. No matter what your priorities are, don’t feel guilty about accomplishing them slowly. “To some degree your 30s are a time of debt accumulation rather than asset accumulation, and as long as it’s good debt – like a house or a reasonable car loan – that’s okay,” says Scott Ellison, a certified financial planner in Halifax. Relax. It does get better Ellison, who is 39 with three kids, says that while our 30s might be the most stressful period of our lives, there is light at the end of the tunnel. By the time most people reach 45 they’re in much better shape financially. Your salary is higher, your kids no longer need expensive day care, your mortgage is dwindling. “In your 30s your long-term financial goal should be to end up with no debts and no mortgage by the time you retire, and for a lot of people time really does take care of that,” he says. I know what he means. At 41, I’m still a long way from watching my kids move out of the house. Even though my son will be turning 13 this year, we added to our family three years ago with twin girls. And we bought a bigger house, too. But by doing one thing at a time, my wife and I are in a position to comfortably handle all of our financial responsibilities – and even contribute to our RRSPs as well. I enjoyed my 30s and I’m looking forward to enjoying my 40s even more. Excerpted with permission. Retire Wealthy: A Financial Plan for Canadians of All Ages ($19.95), edited by Duncan Hood, Dan Bortolotti and David Aston, is published by MoneySense and is available at Chapters, Shoppers Drug Mart, Loblaws, London Drugs, Walmart Canada and other retailers across the country. November 16, 2011 November 15, 2011 Leslie Penney Propertywire Canada Late last week there was a class action lawsuit filed in B.C. and Ontario against CIBC Mortgages Inc., claiming that mortgage borrowers were treated unfairly when they broke their mortgage before maturity.   Basically, in the suit, the lawyers are claiming that:- ‘CIBC applied terms and conditions to certain mortgage contracts to allow it unfettered discretion for calculation of mortgage payment privileges.’- ‘The quantification of prepayment penalties applied by CIBC are in breach of the mortgage contracts.’Essentially, back in 2005 they used language in their contracts concerning their penalties was quite vague and hardly enforceable.  These terms were used in contracts at the CIBC branches, PC Financial locations, as well as through brokers via FirstLine Mortgages.  According to the lawyers involved, they estimate that the value of the case is in the tens of millions of dollars – that’s quite a large sum of money. However, they have also said that these cases get settled out of court quite often, remaining low profile. Out of all this, the big question that comes to mind is how are the banks getting away with it and what can be done about it. Well, first of all, the big banks and Government are so close that you can’t fit a pin between them. Secondly, the only way to curb this would be to use standardized calculations. As of right now, on a fixed mortgage a client is charged a penalty based on an interest rate differential penalty (IRD), which pretty much varies from lender to lender. On a variable it’s usually a penalty of three months interest.  In the case of fixed rate products, there should be a standardized calculation used by all lenders and easily calculated by mortgage holders so they can determine what their penalty would be. Just last week I had a client that was doing a refinance and with their payout statement from their lender the IRD calculation was there. I calculated it and was out by only a few dollars, which was due in the discrepancy in the bond yield between when they done it and I done it. They should all be that easy. As mentioned in my article a few weeks back, regulators are keeping a closer eye on banks’ practices and are fielding a large number of complaints, many specific to prepayment penalties when breaking mortgages. Banks are in the business to make money and they have the power to do so. However, regulators also need to be aware of what banks are charging in penalties and unwarranted fees. If you look closely at most contracts with banks, they have wording that allows them to change fees or change additional fees without notice. Hardly fair to the consumer. What are your thoughts on prepayment penalties and calculations used by banks and other mortgage lenders? November 15, 2011 OTTAWA— The Canadian Press Published Tuesday, Nov. 15, 2011 9:56AM EST The Canadian Real Estate Association says home sales in Ontario were stronger than anticipated during the third quarter — resulting in a slightly brighter outlook for CREA's 2011 and 2012 national forecasts. The industry association is now projecting sales this year will be up 1.4 per cent from 2010, half a percentage point better than the previous forecast. CREA expects there will be slightly fewer units sold next year than in 2011, but the 0.5 per cent decline is an upward revision. October's sales activity through CREA members was the highest since January and the national average price was up 5.5 per cent from October 2010. November 15, 2011 JOHN HEINZEL From Friday's Globe and Mail Last updated Friday, Oct. 28, 2011 6:39AM EDT The Home Buyers Plan is a great tool for first-time home buyers. It allows you to withdraw up to $25,000 tax-free from your RRSP to buy or build a qualifying home, and to repay the money to your RRSP over a period of up to 15 years. However, your predicament underscores why it’s important to read the fine print before you make any important financial decision. The Canada Revenue Agency is very clear on the rules. “Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they may not be deductible for any year,” the CRA’s website says. For example, if you made your RRSP contribution on Sept. 1, you would have to wait until Nov. 29 to withdraw the money, or you would not qualify for an RRSP deduction for the funds. (This is assuming you did not have any other money in the RRSP before you made the $25,000 contribution.) There may be ways around the problem, however, says Camillo Lento, a chartered accountant and lecturer in accounting at Lakehead University. For example, you could try to delay your closing date and withdrawal until after the 90-day period has passed. The CRA would then allow you to deduct the $25,000 from your income, potentially creating a tax refund. You need to be aware of another rule, however. Before applying to withdraw funds under the HBP you must have a written agreement to buy or build a home, with the condition that your final withdrawal under the HBP can be no later than 30 days after the closing date. Any withdrawals after the 30-day period would be included in your income and subject to tax. Keeping these rules in mind, Mr. Lento suggests another option: You could plan to close your home purchase, say, 62 days after you made the RRSP contribution, using a line of credit to make the down payment. You could then withdraw the $25,000 under the HBP 29 or 30 days later and pay off the line of credit. That way, you would meet both the 90-day and 30-day conditions and qualify for a refund. “If he hasn’t purchased the house yet, he can probably make it work,” Mr. Lento says. If you’ve already bought the house and it’s not an option to delay the closing, you can still access the $25,000 for your down payment by bypassing the HBP and just making a regular withdrawal from your RRSP, he says. In that case, you would be subject to withholding tax on the funds, but you would qualify for a deduction and tax refund. Ultimately, it would be a wash, because the $25,000 RRSP contribution and $25,000 withdrawal would cancel each other out. Before you make a decision, I recommend you consult the CRA or a tax professional. November 15, 2011   Canadians heed debt warnings and exhibit confidence in their ability to manage their mortgage: CAAMP Canadian Association of Accredited Mortgage Professionals releases Annual State of the Residential Mortgage Market in Canada report Toronto, ON (November 9, 2011) – Canadians have heard the many cautions about carrying too much debt and are taking action to insulate themselves from future economic downturns, according to the seventh Annual State of the Residential Mortgage Market report by the Canadian Association of Accredited Mortgage Professionals (CAAMP), released today. Highlights: About one-third (32 per cent) of homeowners with mortgages had some mortgage activity in 2011, with 23 per cent renewing or refinancing their mortgage Fixed rate mortgages remain most popular (at 60 per cent), while 31 per cent have variable rate mortgages  Among those who renewed their mortgage in the past 12 months, 78 percent saw a reduction in their rate Among those who renewed or refinanced their mortgages in the last year, 21 per cent changed lenders Levels of equity takeout have dropped in 2011 - only 10 per cent of mortgage holders took out equity in the last year, a 40 per cent drop from 2010 "Overall, our survey paints a picture of Canadians generally and homeowners in particular as very focused on their finances. They are planning ahead, aggressively paying down their mortgage in advance of any further economic jolt,"" said Jim Murphy, AMP, President and CEO of CAAMP. "Prudent is the word that best sums up how Canadians are feeling at this time." Canadians secure in their own positions; skeptical about others The 2011 survey found an interesting contrast between individuals’ own debt levels and their feelings towards other Canadians’ financial positions. Forty-six per cent of respondents agreed that "as a whole, Canadians have too much debt" and many believe that "low interest rates have meant that a lot of Canadians, who probably should not have, became homeowners over the past few years." However, among those with a mortgage, most disagree with the statement "I regret taking on the size of mortgage I did" and a substantial number agree that mortgage debt is "good debt." Canadians also agree overall that "real estate in Canada is a good long-term investment." And, despite being concerned about overall debt levels of Canadians, they believe that they personally have acted responsibly. Canadians could weather a potential storm Canadians have insulated themselves by shopping for the best interest rates with the help of a mortgage broker whose market share has increased. Among those who renewed a mortgage in the past year, the number who switched lenders was up to 21 per cent in 2011. At the same time, three quarters of Canadians who renewed or refinanced their mortgage this year saw a decrease in their mortgage rates. For a five year fixed rate mortgage, the average discount has been 1.46 per cent during the past year. And fewer Canadians have taken out equity, down to 10 per cent in 2011. By comparing rates with different mortgage lenders, aggressively paying down their mortgages, and decreasing the amount of equity they take out of their mortgages, most Canadians appear to be in a comfortable position to weather the economic challenges ahead. In fact, eighty-four per cent of mortgage holders said they can handle an increase of $200 per month in their mortgage payments, and 78 per cent have at least 25 per cent equity in their homes. "Despite less than positive feelings towards the economy, or maybe because of that, Canadians are showing a level of prudence in their decisions that is inspiring," said Murphy. "That suggests to us that there is no need for policy makers to introduce new measures that would reduce housing activity." The report is authored by CAAMP Chief Economist Will Dunning and based on information gathered by Maritz Research Canada in a survey of Canadian consumers conducted in October 2011. The CAAMP survey report contains a wealth of industry information, including consumer choices and borrowing behavior, opinions on current "hot topics" related to housing and mortgages, regional breakdowns of responses, and an outlook on residential mortgage lending. For a copy of the report, please visit www.caamp.org. November 9, 2011 November 8, 2011 Since 2000, the value of a Canadian home has doubled, rising from $163,951 to $339,030 in 2010, says a Canadian real estate organization. According to a report released by Re/Max, billions spent in new construction, renovation, and infill over the past decade have contributed to a serious upswing in the calibre of Canada’s housing stock, propping up residential average price in the country’s major centres. Nowhere has the upswing been better captured than in both the value of residential building permits issued nationally between 2000 and 2010—at $340 billion—and the estimated $450 billion spent in renovation. The impact of these two forces alone has fuelled the Canadian residential real estate market—as well as the construction industry—for more than 10 years. As a result, investment in Canada’s housing stock is at an all-time high in the 16 Canadian residential real estate markets examined in the Re/Max Housing Evolution Report. Higher quality housing translated into extraordinary price appreciation across the country - with 62 per cent (10 markets) experiencing increases in excess of 100 per cent since 2000. “While a number of external variables were also behind the exceptional gains, revitalization—amid an aging housing stock—and newer construction are largely underestimated factors supporting Canadian housing values,” said Michael Polzler, Executive Vice President, Re/Max Ontario-Atlantic Canada. “The trend is expected to continue for years to come as investment in residential real estate through renovation, infill, and redevelopment ramps up across the country. City planners, builders, developers, and homeowners have only just begun.” The report found that the unprecedented sum funneled into housing has effectively changed the landscape of Canada’s major centres. New home construction has advanced suburban sprawl, giving rise to new sought-after pockets in virtually every centre across the board. “Renovation has also had a tremendous impact on housing throughout the decade, so much so that it’s emerged as, arguably, Canada’s next national past time,” said Polzler. “Residential renovation spending has been gaining momentum year-over-year since the early part of the decade and now exceeds $60 billion annually.” November 8, 2011 The housing market may be a boring place for the next year, according to CMHC, as the number of starts remains near current levels and resale prices hold steady. In its fourth quarter market update, Canada Mortgage and Housing Corp. said mortgage rates would likely remain at historically low levels at least until the last half of 2012. The housing market’s fate is largely tied to rates, the agency said. Economists and market watchers have predicted a variety of scenarios for house prices in the next year, with some suggesting prices could drop as much as 10 per cent by the end of 2012. Capital Economics goes a step further, having predicted a drop of 25 per cent in the next several years as demand weakens amid higher mortgage rates. “Should rates move lower than projected, housing starts and MLS sales could be higher than expected and house prices could grow at a faster pace than forecast,” the report stated. “Alternatively, should financial market expectations improve and interest rates move higher than projected, housing starts and MLS sales could be lower than expected and house prices could grow at a slower pace than forecast.” CMHC said there could be as many as 470,100 resales in Canada this year, and expects that number to rise to 485,500 in 2012. “We expect balanced market conditions to prevail and the average MLS price to remain fairly flat to the end of 2012,” the report stated. CMHC said 186,750 new homes would be built in 2012, compared to 191,000 for 2011. Analysts generally agree that at least 175,000 new homes are needed each year to meet demand from new families and immigration. “Ontario, Saskatchewan and Nova Scotia’s growth will be the strongest, while Prince Edward Island and British Columbia are forecast to see modest growth,” CMHC said. “The other provinces, on the other hand, are expected to see decreases. In 2012, housing starts are forecast to increase in British Columbia, Alberta and Manitoba.” Other highlights from the report: · Posted mortgage rates will remain relatively flat until late 2012. For 2012, the one-year posted mortgage rate is expected to be in the 3.4 to 3.8 per cent range, while the five-year posted mortgage rate is forecast to be within 5.2 to 5.7 per cent. · Single starts have rebounded coming out of the recession. After an increase in the third quarter of this year, they are expected to moderate before rising later in 2012. · Since the beginning of 2011, new listings steadily outpaced existing home sales. As a consequence, the resale market has moved from sellers’ to balanced market conditions. The agency said the economic outlook for the country was uncertain, making it difficult to forecast growth in the housing market. “Sustained financial market uncertainty has heightened risks but, there are both upside and downside risks to the outlook,” the agency stated. The positive: “Some upsides include the potential that the U.S. could recover stronger than is forecast, thus increasing U.S. employment and economic growth. This could, in turn, boost employment growth in Canada and lead to stronger than anticipated housing demand.” The negative: “Some downsides include a slower than expected recovery for the U.S., reduced economic growth in emerging economies and a downturn in parts of Europe. Such events could result in slower employment growth in Canada, which could lead to lower demand for housing.” November 8, 2011 Financial Post · Nov. 4, 2011 OTTAWA — The outlook for construction activity in Canada weakened in September, as the value of building permits declined for the third straight month. Statistics Canada said Friday that permit values fell 4.9% to $5.6 billion during the month. Economists had expected an increase of as much as 2.8%. The federal agency also revised its estimate for August, lowering the decline that month to 10.1% from 10.4%. “The decline nationally was mainly attributable to lower construction intentions for both the residential and non-residential sectors in British Columbia, and the non-residential sector in Alberta,” the agency said. The value of permits increased, meanwhile, in Ontario, Manitoba, Saskatchewan and Nova Scotia. The non-residential sector recorded a drop of 11% to $2 billion in September, the third consecutive monthly decline, with Alberta, B.C. and Ontario accounting for much of the weakness. Non-residential permits rose, however, in five provinces, led by Saskatchewan and Quebec. Residential permit values slipped by 1% to $3.6 billion. That followed a 6% drop in August. Six provinces posted declines in September, led by British Columbia. In a separate report Friday, Canada Mortgage and Housing Corp. said housing starts would total 191,000 units this year and 186,750 units in 2012. CMHC also said existing home sales will total 450,100 units in 2011 and 458,500 units next year. The average home price will be $363,900 this year and $368,200 in 2012, it said. “Despite continued uncertainty in the global economy, Canada’s economic fundamentals remain positive, particularly with respect to interest rates, employment and immigration. These factors will continue to support Canada’s housing sector in 2012,” said CMHC deputy chief economist Mathieu Laberge. November 4, 2011 The house is nearly perfect: decent condition, nice neighbourhood and while it's priced at the higher end of their budget, the young couple feels they can shoulder the cost. The only thing standing between them and the purchase of their first home is the dreaded circa 1960s bathroom. With its cracked ceramic tile, leaky taps and old bathtub, it’s in dire need of an overhaul - an expensive deal-breaker that wasn't accounted for in the homebuyers’ original budget. So, what are their options? The first, of course, is to walk away until they find something they can afford. A complete bathroom renovation can cost upwards of $15,000 and if the couple doesn’t feel comfortable tacking on the additional debt, they need to think twice. Another option is to obtain a line of credit. They’re an easy way to access low interest short-term cash quickly but they’re not necessarily the smartest way to go, at least not according to David Chilton, the Wealthy Barber himself. “People cannot resist lines of credit,” he said in a speech at a conference of the Canadian Pension & Benefits Institute in May. “And the worst combination in the country is a line of credit and a home renovation – once they renovate one room, the other rooms pale by comparison, so they go on to the next room and it’s a never-ending cycle of renovation as they get deeper and deeper and deeper in debt.” A third, less common route the couple could take is to apply to the purchase plus improvements program (PPIP). Also known as the improvement, renovation or high-ratio mortgage, this option covers the sale price of the home, as well as any renovations that would increase the value of the property. The program allows homebuyers to take advantage of the historically low interest rates associated with a mortgage and pay one lump sum monthly payment. But the PPIP involves a few steps, the first being to make the purchase offer conditional on getting approval for the renovation mortgage program. The next step is to get quotes from a contractor to determine the cost of the renovations, says Daniel Natereno, a mortgage broker. The Canadian Mortgage and Housing Corporation (CMHC) will approve a loan of up to 95 per cent of the ‘as improved’ value of the home, provided the money you’re putting into the home does, in fact, improve the value. Renovations cannot be strictly cosmetic in nature, warns Mr. Natereno, but must rather be part of a broader project like changing a bathroom, kitchen or flooring. The bank will send an inspector to confirm that, based on the list of improvements that are requested, they’ve been done sufficiently. Then the inspector will send the report back to the bank indicating that everything’s complete and they’ll release the funds to the client. Quotes are often required in order for the lender to release funds, though some lenders will make exceptions for small improvements. Inspection reports can cost betweens $100 to $200, says Mr. Natereno. Depending on the homebuyers’ current situation, the PPIP can offer more benefits than a traditional line of credit. “Most banks will give you a line of credit of up to 80 per cent of the market value of the property, whereas the PPP/CMHC-insured mortgage can go up to 95 per cent of the improved value of the property, so it provides a way for homeowners who've only got 5 per cent of the down payment to be able to buy the home they want and improve it as well,” says Tina Tehranchian CFP financial advisor. But there are certain disadvantages to these high-ratio mortgages, and they’re certainly not right for everyone, explains Ms. Tehranchian. Those looking to obtain up to 65 per cent of the purchase price plus improvement value must pay a 0.50-per-cent premium, whereas those wanting more than 90 per cent must pay a 2.75-per-cent premium on the total loan amount. It may not make sense for someone looking for a loan on the lower end of the scale to pay this premium, since most financial institutions offer lines of credit of up to 75 per cent of the value of the home. “As long as that’s the maximum that they need, that would be a better option because there’s no CMHC premium,” says Ms. Tehranchian. The PPIP also doesn’t necessarily make sense for people whose cash flow fluctuates, such as some business owners. To these borrowers, the line of credit option lets them pay down the loan more quickly than they could on a mortgage, so long as the they’re disciplined. Lines of credit are also good in the bad times, explains Ms. Tehranchian, since you can just revert to paying the minimum when things slow down. The other caveat with the PPIP is that while they make it easier for borrowers to qualify and force them to be more disciplined with the one monthly payment, they can tempt homebuyers to bite off more than they can chew. “Homebuyers should do their homework and make sure they’re going to be able to afford those loans, even if they went up 3 per cent from their current levels. The last thing you want to do is have a very low down payment (5 or 10 per cent) and then have the property market drop. You’ll see your down payment wiped out and you’re stuck with a mortgage that costs you way more than you expected,” says Ms. Tehranchian. November 1, 2011 Helen Morris, National Post It is always satisfying to get yourself a really low mortgage rate, knowing even a 0.5 percentage point reduction in your rate can mean substantial savings in interest payments over the lifetime of any deal. However, advisors urge clients to carefully examine the offer as some terms and conditions could, in the long term, prove to be more costly than a higher rate with flexible terms. "Some lenders advertise a really good rate but you're not allowed any pre-payments during the term," says John Filice, a mortgage broker in Toronto. The rate is suitable for a first-time buyer with a limited cash flow, he says, but not for someone who can make extra payments. For clients who have the ability to make extra payments, Mr. Filice says it may make more sense to pay a slighter higher rate and increase the frequency of payments, rather than take longer to pay off a lower-rate mortgage with no pre-payment facility. " You want to make sure that the mortgage is portable to another house," says Mike Missere, a mortgage broker in Thunder Bay. He says taking one of today's low-rate deals with you when you move could save early repayment penalties for your existing mortgage, as well as higher interest costs on a future new deal, but cautions that you check how the early repayment penalty is calculated. "There's two formulas, either three months' interest or the interest rate differential," Mr. Missere says. "Depending on your interest rate and how much time you have to maturity, those interest rate differentials can be substantial." Mr. Filice says borrowers need to check what documentation a lender requires and when this material needs to be submitted. He says customers should check how long it will take to actually get the money from the lender. "Some banks will need 30 days once a file is complete to fund a deal, whereas some lenders can do it in five days," Mr. Filice says. "If you're refinancing, or you need funds for a certain timeframe, that does affect it." Mr. Filice says some lowrate offers can be short-lived. "Some lenders will have a quick-close special and if it doesn't fund within 30 days, the rate will jump," he says. "Either have a backup plan or be sure you can meet [documentation and closing] requirements." Again, for refinancing Mr. Filice says check conditions carefully. "If you're doing a refinance to pay off some debts, do the lenders want you to pay off those debts up front?" Mr. Filice says. "Or will they just allow you to pay out the debts on your own?" "A lot of people spend more time looking for a fridge or a stove than they do for the right mortgage," Mr. Missere says. "The right mortgage makes more sense. It's the largest expense they're going to have. They want something that can be managed properly to reduce costs over time. Interest rate is important, but so are all the features." October 31, 2011 Financial Post · Oct. 26, 2011 | Last Updated: Oct. 26, 2011 1:07 PM ET OTTAWA — Housing prices rose in August for the ninth month in a row, according to the Teranet-National Bank national composite house price index, released Wednesday. The 0.9% gain in August —the fifth time in those nine months that the increase was 0.9% or above — took the index to a new high of 149.46 (the baseline being 100 in June of 2005). Toronto, where home prices rose 1.6%, led the gains in the index, which would have risen by just 0.6% if Canada’s biggest city was excluded. It was one of four metropolitan areas monitored in the index where housing price increases in August exceeded the national average; the others were Winnipeg (1.3%), Hamilton (1%) and Ottawa-Gatineau (0.9%). Calgary saw a 0.7% gain month-over-month, while Vancouver and Edmonton both posted a 0.6% increase and Montreal prices rose 0.3%. Prices were flat in Victoria and Quebec and down 0.2% in Halifax. “Vancouver’s August increase extended its string of consecutive gains to 11, currently the longest run of monthly rises among the markets covered,” said Marc Pinsonneault, senior economist with National Bank. “The Halifax decline was the second in a row.” Year-over-year, the national increase was 5.4% in August, a level exceeded by five of the index’s 11 metropolitan areas — Vancouver (9.9%), Winnipeg (7.6), Quebec (6.7), Toronto (5.6%). Prices increased over the previous year’s levels by 3.9% in Ottawa-Gatineau, 2.9% in Halifax, 2.4% in Hamilton and 0.8% in Calgary. “The Calgary appreciation broke a nine-month run of 12-month deflation,” Pinsonneault said. “Prices remained down from a year earlier for a 10th consecutive month in Edmonton (-2.1%) and for a ninth consecutive month in Victoria (-1.2%). October 27, 2011 The Toronto stock market was lower Tuesday with investors cautious amid weak earnings reports and a warning from the Bank of Canada of slowing economic conditions as it kept its key interest rate unchanged at one per cent. There was also heightened uncertainty over what sort of plan will be unveiled Wednesday by eurozone leaders to deal with the region’s debt crisis. The S&P/TSX composite index closed down 52.54 points to 12,109.75 as a big jump in bullion and gold stocks limited losses while the TSX Venture Exchange was up 5.12 points at 1,565.45. The Bank of Canada said Tuesday the global economy is slowing and Europe may actually fall back into a brief recession. It added that Canada’s economy will have a tougher time getting back to full speed. It estimated Canada’s economy will likely grow a modest 2.1 per cent this year — most of it in the first quarter — and will fare even worse at 1.9 per cent next year. Both numbers were 0.7 percentage points less than the bank had projected in July. “It sends a signal that you aren’t getting a rate hike any time soon,” said Gareth Watson, vice-president investment management and research, Richardson GMP Ltd. “Supposedly we’re doing better than everyone else, which maybe as a snapshot in time is true, but over the long-run (the economy) is going to follow the path of the big leaders.” The Canadian dollar plunged following the bleak economic assessment by the central bank after earlier moving past parity with the U.S. dollar for the first time in five weeks. The loonie was down 1.29 cents to 98.4 (U.S.) after rising as high as 100.11 (U.S.). New York markets tumbled as the Dow Jones industrial index fell 207 points to 11,706.62, the Nasdaq composite index dropped 61.02 points to 2,638.42 and the S&P 500 index declined 25.14 points to 1,229.05. Uncertainty over the European debt crisis grew after officials decided that key parts of a package meant to deal comprehensively with the eurozone’s government debt crisis will not be ready in time for a leaders’ summit on Wednesday. A meeting of European Union finance ministers, which was to be held just before the summit, was called off. A summit of EU and eurozone leaders planned for Wednesday evening will still be held, but its conclusions on the grand plan may remain vague without the technical work concluded. It has been expected that among the measures, the 17-country eurozone was set to boost the powers of its bailout fund. German lawmakers said the fund’s lending capacity could reach more than 1 trillion euros. The plan is also expected to lighten Greece’s debt load by having the country’s private bondholders agree to sharper losses. Meanwhile, ailing European banks will be asked to raise fresh capital to protect them against such losses. “What the market has been absolutely dying for is details,” Watson said. “They want specifics, they want numbers. They want to know if you’re a Greek bondholder what is the haircut you’re finally going to take so we can get Greece off the map and stop talking about them.” Earnings misses included Canadian Pacific Railway Ltd., which said its net earnings were $186.8 million or $1.10 per share, missing analyst estimates by a penny as higher fuel prices and operating expenses offset stronger revenues. The railway’s revenue came in at $1.34 billion (U.S.), which met expectations. Its shares lost 31 cents to $59.52. Shares in U.S. manufacturing conglomerate 3M fell 6.24 per cent to $77.05 (U.S.) as it lowered its earnings expectations for the year as slowing growth overseas continues to impact its business. Buyers were also discouraged by data showing that consumer confidence in the U.S. economy fell in October to its lowest level since 2009 when the U.S. was in the middle of a deep recession. The Conference Board says that its Consumer Confidence Index dropped more than six points to 39.8, down from a revised 46.4 in September. The TSX found support from the gold sector as bullion prices advanced with the December gold contract up $48.10 to $1,700.40 (U.S.) an ounce. The group gained about 3.5 per cent as Barrick Gold Corp. climbed $1.60 to $48.05 (U.S.) while Goldcorp Inc. improved by $1.90 to $48.34. Oil prices charged ahead for a third day as markets grow more optimistic that European leaders are set to deliver a comprehensive plan to deal with the region’s debt crisis on Wednesday. The December crude contract on the New York Mercantile Exchange was ahead $1.90 at US$93.17 a barrel. But the energy sector stepped back 1.64 per cent as Suncor Energy declined 44 cents to $31.14 (Canadian) while Talisman Energy was down 35 cents at $13.79. The base metals sector moved back 2.6 per cent as copper prices stepped back, down three cents to $3.42 (U.S.) a pound. Chinese manufacturing data helped send the metal 23 cents higher on Monday. China is the world’s biggest consumer of the metal. Teck Resources lost 98 cents to $35.82 and First Quantum Minerals fell 60 cents to $17.23. The financial sector declined 1.07 per cent with Scotiabank down 81 cents to $51.43. Online investment broker TD Ameritrade says its fiscal fourth-quarter profit shot up 44 per cent to $163.7 million (U.S.) or 29 cents a share, missing estimates by two cents. Revenue came in at $703.5 million, which missed estimates of $713.6 million. TD Bank, which owns a minority stake of the U.S. online broker, said it expects TD Ameritrade’s fourth-quarter earnings to translate into a contribution of $54 million (Canadian) to the Canadian bank’s fiscal fourth-quarter net profits. TD shares fell $1.28 to $73.68. October 26, 2011 25 October 2011 Contact: Jeremy Harrison Ottawa - The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent. The global economy has slowed markedly as several downside risks to the projection outlined in the Bank’s July Monetary Policy Report (MPR) have been realized. Financial market volatility has increased and there has been a generalized retrenchment from risk-taking across global markets. The combination of ongoing deleveraging by banks and households, increased fiscal austerity and declining business and consumer confidence is expected to restrain growth across the advanced economies.  The Bank now expects that the euro area—where these dynamics are most acute—will experience a brief recession. The Bank’s base-case scenario assumes that the euro-area crisis will be contained, although this assumption is clearly subject to downside risks. In the United States, diminished household confidence, tighter financial conditions and increased fiscal drag are expected to result in weak real GDP growth through the first half of 2012, before growth strengthens gradually thereafter. In Japan, reconstruction activity is projected to boost growth over 2012-13, although Japan’s economy will be constrained by reduced global activity and the sharp appreciation of the yen.  Growth in China and other emerging-market economies is projected to moderate to a more sustainable pace in response to weaker external demand and the lagged effects of past policy tightening. These developments, combined with recent declines in commodity prices, are expected to dampen global inflationary pressures. The outlook for the Canadian economy has weakened since July, with the significantly less favourable external environment affecting Canada through financial, confidence and trade channels.  Although Canadian growth rebounded in the third quarter with the unwinding of temporary factors, underlying economic momentum has slowed and is expected to remain modest through the middle of next year.  Domestic demand is expected to remain the principal driver of growth over the projection horizon, though at a more subdued pace than previously anticipated.  Household expenditures are now projected to grow relatively modestly as lower commodity prices and heightened volatility in financial markets weigh on the incomes, wealth and confidence of Canadian households. Business fixed investment is still expected to grow solidly in response to very stimulative financial conditions and heightened competitive pressures, although it will be dampened by the weaker and more uncertain global economic environment.  Net exports are expected to remain a source of weakness, owing to sluggish foreign demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar. Overall, the Bank expects that growth in Canada will be slow through mid-2012 before picking up as the global economic environment improves, uncertainty dissipates and confidence increases.  The Bank projects that the economy will expand by 2.1 per cent in 2011, 1.9 per cent in 2012, and 2.9 per cent in 2013. The weaker economic outlook implies greater and more persistent economic slack than previously anticipated, with the Canadian economy now expected to return to full capacity by the end of 2013.  As a result, core inflation is expected to be slightly softer than previously expected, declining through 2012 before returning to 2 percent by the end of 2013. The projection for total CPI inflation has also been revised down, reflecting the recent reversal of earlier sharp increases in world energy prices as well as modestly weaker core inflation.  Total CPI inflation is expected to trough around 1 per cent by the middle of 2012 before rising with core inflation to the two per cent target by the end of 2013, as excess supply in the economy is slowly absorbed. Several significant upside and downside risks are present in the inflation outlook for Canada. Overall, the Bank judges that these risks are roughly balanced over the projection horizon. Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. With the target interest rate near historic lows and the financial system functioning well, there is considerable monetary policy stimulus in Canada. The Bank will continue to monitor carefully economic and financial developments in the Canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2 per cent inflation target over the medium term. October 25, 2011 By Marnie Bennett, Ottawa Citizen For most prospective buyers, those first few steps into a circa 1970s or 1980s finished basement can be a shocking and scary experience. For most, it's difficult to see past the passé decor of orange shag carpet, wood panelling and dated fireplace; all very typical to the era of these rec rooms. Those of us who belong to a certain generation, however, can remember when these retro spaces were a big stepup. Finished basements were a relatively new concept. Until the late '50s, basements were typically concrete bunkers that housed mom's laundry and dad's workbench. Throw in a dartboard and - presto - there was your recreation. It's hardly surprising that the first family on the block to get wall-to-wall carpeting and a Formica bar was the envy of the neighbourhood. Oh, how tastes have changed. It's a good lesson to keep in mind when finishing your own basement. As with all design projects, there are two basic approaches: One is to do things the way you really want them, throwing any resale considerations to the wind; the other is to temper your choices to better stand the test of time. There is merit in both, but it's crucial to understand which path you're going down and to recognize that there is a chance you may not entirely recoup your investment. Don't stress. It's safe to assume that finishing a space will bump up your property value. In terms of what you can expect back with a basement renovation, the Appraisal Institute of Canada quotes a range of 50 to 75 per cent. In addition to the increase in property value, finishing a basement can drastically expand your livable space. Take a bungalow for example; it will actually double in size with a finished basement. If your living quarters are feeling a little cramped, it may be worth some serious consideration. Conventional uses of a finished basement include family rooms, entertaining spaces, children's playrooms and exercise areas. Some families may require a fourth bedroom or guest room, which can be a great use of space. A gifted interior designer can help you combine several functions with a natural flow and direct your lighting choices (so important) with a trained eye. Even when the budget is tight, consider springing for a two-hour consultation: An investment this sizable should really have some professional input. One trend making huge strides now is the home theatre, complete with projection television, an elaborate sound system and tiered cinema-style seating. Now this is a great example of a renovation choice that should be made for the joy it will bring today, as opposed to the money it will bring in later. While it can be costly to install, it will ultimately appeal to a more narrow audience - no pun intended. (The Appraisal Institute estimates investment recovery for a home theatre between 25 and 50 per cent). Buyers of pre-construction homes face the same issue but ask themselves a very different question: Should they finish the basement right away or delay? There are decided benefits to having your builder take charge. It's more convenient, it's covered by warranty and the cost can be included in your mortgage. On the other hand, your mortgage may simply not stretch that far. Some buyers choose a middle road, paying the builder to insulate and drywall the exterior walls, with roughed-in electrical and plumbing. This certainly reduces the hassle come renovation time. Owners of older homes often have to contend with issues of moisture, which may require dampproofing, lot regrading and/or addressing drainage issues; the last thing you want is water damage on your beautiful new drywall or flooring. Where older, shallow basements used to be non-contenders for finishing, it's recently become more common to "dig down" in order to provide comfortable head clearance. This can yield incredible results - but the process is most definitely messy and pricey and not for the faint of heart. It's not the kind of project to engage in if you're planning on moving in a few years; rather, it's a commitment to make when you've found your "forever house." For some families, this extra space means the difference between reluctantly leaving the home of their dreams and putting down roots for years to come. October 24, 2011 Garry Marr Financial Post Oct. 22, 2011 Holy crap! That was the reaction from my then-10 year old when I showed him the electricity bill once. We all have a disconnect sometimes from spending to bill paying - my wife still leaves her bedside light on all day and I tend to forget about the plugged-in laptop - but children seem to have no concept of what anything costs. If your children are clueless about your household finances, it's your fault. That's what makes a survey from the Canadian Institute of Chartered Accountants (CICA) so significant. The group, which represents about 78,000 CAs across the country, found 78% of Canadians 16 to 22 years old are familiar with their parents' financial situation. The same survey found 83% believe the knowledge they had of the household finances helped them with their budgeting. It makes sense children mimic their parents. You can find study after study showing the children of smokers are more likely to smoke. Why wouldn't the children of spenders be more likely to spend? "The parents who are the most successful at teaching financial management are those who talk to their teenagers about how they manage the family money," says Nicholas Cheung, director of member services with the CICA. But where do you draw the line? Do you pull out your pay stub and let the kid see how much you make after taxes and deductions? "What is important is to familiarize young people with the family's situation. It opens the doors of conversation and produces a higher level of trust," Mr. Cheung says. You don't have to tell them how much is outstanding on the mortgage but a conversation about having a mortgage and saving to pay off the debt on your house is probably worth having. "The key is to be honest," says Mr. Cheung. "You have to tell them this house is not free." The consequences of not having the conversation can be dire. The same study found 54% of the 1,209 of those surveyed between July 20 and Aug. 2 own a credit card. Incredibly, 22% of those 16 to 22 year olds are carrying a balance this young in life. The accountants believe financial skills need to be taught at a younger age and noted their survey found youth aged 16 to 18 are significantly less likely than those aged 19-22 to have discussed issues like credit card use. "One of the most common mistakes parents are making is delaying talking about specific money skills until children are in their late teens," says Mr. Cheung, who thinks children can learn about finances as soon they start putting money in their piggy banks. Edmonton certified financial planner Al Nagy tells clients there are two kinds of financials lessons - hard money skills and soft money skills. Hard money deals with budgeting and planning while soft money involves things like goals and dreams. "I tell people share the ideas as soon as they are able to grasp the stuff. Money is something to be enjoyed but you have to be responsible with it," says Mr. Nagy, who thinks there are three phases for lessons. He thinks around ages six to 10 you can open a bank for your child, teach them about budgeting from 10 to 16 and after that you can get even more serious issues, even discussing income taxes. But it's also your own actions that will have a major impact on how your children behave financially, Laurie Campbell, executive director of Credit Canada, says. "If you're dressing your kids in OshKosh when they are babies, don't expect them to not have major expectations when they are older," says Ms. Campbell. "If your credit card pops out whenever you see something you want, that's what they see as normal." Ms. Campbell, who deals with some of the worst financial basket cases, says children get a pretty good sense of what is going on in the household and can feel the tension when things are not going well. "I think talk about it no matter what.," she says. "Take them to the grocery store and talk about the cost of food. Kids just think you make money and that's it. Parents have sheltered their children about finances for far too long." October 22, 2011   [OTTAWA – Oct. 19, 2011] – Most Canadians appear satisfied with the way the national economy is performing, and specific personal financial concerns have subsided over the course of the past year, a new Angus Reid Public Opinion poll has found. Personal Financial Concerns   In the online survey of a representative national sample of 1,003 Canadian adults, 63 per cent of respondents say the national economy is in good or very good shape, while 33 per cent say it is in poor or very poor shape. Across the country, the highest level of economic confidence is in Alberta (76%) and the lowest in Atlantic Canada (56%). Since a similar survey conducted in October 2010, the proportion of Canadians who feel the national economy is in good or very good shape has increased by 15 points. More than half of Canadians (53%) rate their own personal financial situation as good or very good, while 45 per cent deem it bad or very bad. Also, while most Canadians (60%) expect the national economy to remain the same over the next six months, 22 per cent of respondents foresee a decline, and 12 per cent expect an improvement.   Personal Financial Concerns The biggest financial issue for Canadians right now is the value of their investments, with 36 per cent of respondents saying they have worried occasionally or frequently about it over the past couple of months. One third of Canadians (32% have worried about the safety or their savings, and three-in-ten (29%) have worried about unemployment affecting the household, while only one-in-five have been concerned about being able to pay the mortgage or rent (20%, down 11 points since October 2010) or their employer running into serious financial trouble (19%). Inflation and Debt Despite the confidence expressed in the domestic economy, Canadians are still expecting to pay higher prices over the next six months, particularly for groceries (81%) and gasoline (80%). Two-in-five (40%) also think real estate will be more expensive, while one third (34%) expect to pay more for a new car, and one-in-five (20%) believe a new television to be more expensive. If Canadians had an extra $1,000 they could use for anything, they would allocate the largest proportion ($360) to paying down debt. The rest of the money would be allocated to savings ($167), covering day-to-day expenses ($160), a holiday ($82), a big purchase such as a car or a home renovation ($81), buying personal gifts or treats ($78), investing in mutual funds ($37), and investing in individual stocks ($35). Analysis Confidence in the Canadian economy has definitely improved over the past two years, when respondents were evenly divided in their assessment. Now, those who think the economy is doing well outnumber the ones who think it is doing badly practically by a 2-to-1 margin. Albertans remain particularly buoyant, but no region is providing a negative assessment of the country’s current economic standing. There is also a slight uptick in the proportion of respondents who feel their personal financial situation is good. The other aspect that shows a shift since October 2010 is the way Canadians feel about specific financial concerns. The proportion of respondents who have worried occasionally or frequently about most of the five issues tested has fallen over the past 12 months, with a double-digit drop on the number of Canadians who are concerned about being able to pay their mortgage or rent. However, while most Canadians expect the economy to remain the same, about one-in-five believe that it will decline—a proportion that is highest in Quebec (27%) and lowest in Alberta (13%). The biggest financial issue for Canadians right now is the value of their investments, with 36 per cent of respondents saying they have worried occasionally or frequently about it over the past couple of months. October 20, 2011 Financial Post · Oct. 19, 2011 | Last Updated: Oct. 19, 2011 10:04 AM ET OTTAWA — A wide gauge of Canada’s economic performance declined in September, after months of relatively flat readings, reflecting weaker performances by the manufacturing sector and the stock market. Statistics Canada said Wednesday its index of leading indicators slipped 0.1% last month during the month, compared to analysts’ expectations for a 0.1% increase. Six of the 10 components of the index managed gains in September, the same amount as August, the federal agency said. “The weakness in the index was concentrated in the stock market and the manufacturing sector, largely offsetting the rebound in the housing sector,”it said in Wednesday’s report. Scotia Capital economists Derek Holt and Karen Cordes Woods said the index “registered a zero print in June well before gloomy talk accelerated, a paltry gain of 0.1 in July, and then another flat print in August.” “Readings like that suggest a sudden sharp loss of forward momentum into Q3-Q4,”they said. Statistics Canada said all three manufacturing components fell in September. New orders were down 0.7%, after 3.4% increases in the previous two months, while shipments of finished goods declined 0.025% and the average hourly workweek fell 0.5%. “While sales rebounded after two straight declines, the ratio of shipments to inventories continued to fall, reflecting rising stocks of finished goods,” it said. The stock index fell 3.5% amid market turmoil caused by global economic uncertainty. Meanwhile, the housing component of the index rose 1.2% in September, the biggest gain since the spring. That helped lift furniture and appliance sales by 0.4%, the agency said. October 19, 2011 By Peggy Mackenzie A recent Direct Energy  survey found that  56 per cent of Ontario homeowners are concerned or angry about their upcoming winter bills. Count me among this group. My Enbridge gas heating bill rose from $1,600 a few years ago to a projected $2,100 for the 2011/2012 heating season, despite the fact that my gas boiler furnace never gets turned on before mid-October and is off by the end of April and we keep the thermostat at 17C.How cold does it have to get before you turn the heat on in your home?Every year, my husband and I see who cries “uncle” first before we bleed the radiators and turn on the furnace. We try to make it to November like my Montreal friend Deborah, but we always fall short. The closest we came was Oct. 24th in our first year as homeowners but that was due more to ignorance than fortitude since we didn’t know how to turn on the furnace. When temperatures plummeted to 5C at the beginning of October, our kids threatened legal action if the heat wasn’t turned on , luckily Thanksgiving rewarded us with balmy temperatures.I stumbled across this blog at the Times Union, which proves that many of us delay putting the heat on in the fall.  The 14-day forecast for Toronto shows temperature highs hovering around the 15C mark so to try and hold out as long as possible my family will be following these non-renovation tips gleaned from myself,  Michael Bluejay (Mr. Electricity) and About.com. We'll still use them when we do turn on the heat: Use space heaters: Heating the whole house is more expensive than heating the rooms you're using. Use ceiling fans: Change the direction to blow the air upwards so it bounces hot air off the ceiling and back into the room. Dress in layers: Now is the time to wear that Icelandic sweater your girlfriend knit you in university. Wear wool socks and pad around in slippers. Put on a hat. Unpack the throw blankets: they’re a stylish accessory for couches and provide warmth for couch potatoes. Oven: Keep the oven door open after baking. Electric blankets: Needless to say, flannel is on our beds, but if I see a good sale on electric blankets I’ll be adding them to the arsenal. Close the fireplace damper: Heat escapes through the damper when the fireplace is not in use. Window coverings: Gain passive solar energy and let the sun shine in during the day; close the curtains at night and keep the cold out. October 18, 2011 Garry Marr, Financial Post · Oct. 17, 2011 Prices for existing homes continued to moderate with September year over year gains the smallest they have been since January, according to the Canadian Real Estate Association. Sales continued to rise up 2.7% in September from August but the Ottawa-based group, which represents about 100 boards across the country, left little doubt about the state of the market. "The national housing market tightened in September from the month before, but remains firmly entrenched in balanced territory," the group said in a release. The average price of a home sold across the country in September was $352,581, a 6.5% jump from a year earlier. Sales for the first nine months of the year are now 1.2% ahead of last year's pace boosted by an 11% gain in September from a year earlier. Toronto led a number of other major markets boosting September sales It was the highest level for national sales since the government tightened mortgage rules again earlier this year. “The Canadian housing market remains a bright spot against a backdrop of mixed headline news about the global economy,” said Gary Morse, CREA president. “Low mortgage rates continue to draw buyers to the housing market, while recently tightened mortgage regulations are working as intended." CREA said new listings nationally have changed very little over the last two months but that the figure was affected by an averaging out of markets. New listings rose in Toronto, Montreal, Ottawa, Oakville and Vancouver but were offset by fewer new listings in markets like Edmonton and the Fraser Valley. The group says the nationally the sales-to-new listings ratio was 52.8% in September, up from 51.6% in August, and still considered a balanced market. CREA says almost two-thirds of Canadian markets have a sales-to-new listings ratio of 40% to 60% which is considered balanced. The number of months of inventory, which is based on how long it would take to sell current listings based on the current sales pace, was 6.1 months in September. It was 6.2 months in August. Gregory Klump, chief economist for CREA, noted housing has remained stable in face of market volatility which has contributed to Canadian confidence in the economy. “Interest rates are expected to remain low for longer, and evidence suggests that recent changes to mortgage regulations are preventing the kind of excesses they were designed to avert. Both of these developments are good news for the housing market,” said Mr. Klump. October 17, 2011 National Post Oct. 14, 2011 Richmond Hill for countertops. North York for new doors. Across to Mississauga for appliances. Home improvement projects can disrupt your life at the best of times. The last thing you need is to travel across the city and surroundings for the materials you require for your home renovation - never sure if you're getting the best deal because you're too exhausted to drive any further just to compare prices. Yet, that's exactly what home renovators today do: With thousands of small-to medium-sized home improvement suppliers spread across the greater Toronto area, spending days on the road just to find everything you need is simply part of the home renovation process. But wouldn't it be nice if things were different? If all of those suppliers you needed were in a single location? Wouldn't it save you time and money if you had one destination for all of your home improvement needs? Improve - Canada's largest home improvement centre - promises exactly that, for a more convenient and less time-consuming home renovation experience. Scheduled to open in 2013, it will be the first of its kind in the country: a new model for shoppers looking to find the right supplies and services for their next home improvement project. "This property's going to be marketed as a destination point. It will be a huge drawing card," says Larry B. Purchase, chair of the executive council commercial division of the Toronto Real Estate Board. Most Canadians today live in their own home or apartment. They invest in real estate. And part of that investment means renovating and improving their home so that it feels comfortable to them and increases in value for future buyers. Home renovating might as well be considered a Toronto pastime - approximately 2.5 million GTA homeowners are actively renovating at any given time. The Canada Mortgage and Housing Corporation, in 2009, reported close to $8.7-billion spent on home renovations in Toronto alone, with about $25.8-billion spent across the country. Whether they're in a new home or an old one, homeowners will always find something to improve on or personalize - and as they move on to their next new house, they'll do the same there. And with 100,000 to 150,000 new immigrants coming to the GTA annually, there are always new homeowners with new home improvement needs. Improve will help new and existing homeowners alike, but without the hassle they currently encounter. Consider more than 400 shops all under one roof, and all focused on selling top-quality home improvement and construction products at different price points to service different income groups, and with negotiable delivery terms. Think about small-and medium-sized suppliers, all with approximately 500 square feet to showcase their goods and services, in a central Vaughan location that will spread over 310,000 square feet and 21 acres. Improve will give homeowners exactly what they've been looking for - even if they didn't realize that they were looking for it. Competition will be encouraged so that shoppers will be able to compare products and prices to find the best alternative for their home improvement needs. And there will be restaurants and bars where they can sit and consider their options between showroom visits, as well as meeting rooms and conference halls where suppliers can present new technologies and services. Shoppers can benefit from comparing and contrasting and mixing and matching, without having to get into their car to drive from place to place. It's not only efficient and economical, they'll also get better, more personalized service directly from showroom owners and they will be able to discuss the terms of their purchase with professionals who know their business like no one else. All of the goods will be delivered, so there will be no waiting in line or looking through an overstuffed warehouse to find what you need - and you can negotiate the delivery terms that work for you. "There may be a symbiotic relationship that develops between the various vendors," adds land surveyor Sasa Krcmar, executive director of Krcmar Surveyors Ltd. "And I think there will be a lot of good referrals back and forth. So I think it's almost like being in a renaissance of new thought, where a lot of these people can push each other's products in a way that wasn't maybe thought up before." Improve will be designed to make an impression, too, with architecture from Torplan Consultants Inc. and a design from Montreal-based GHA Design Studios; the award-winning retail design firm has credits that include work at the Promenade Mall, Yorkdale Shopping Centre, Fairview Mall and Bayview Village Shopping Centre. A cross between a shopping mall and an upscale design centre - with all of the benefits of a home show but without the prohibitive costs and inconvenient timing - Improve will be a welcome experience for the whole family. There will be playrooms for the children, lounge areas and beautifully decorated halls and bright windows to enhance the shopping experience. "I often think of a place like Copenhagen, or I think of somewhere in Europe . They've done this and they've done it really, really well. And there's already a format there for it," says Lisa Rogers, designer and TV personality. In fact, home improvement centres have thrived in locations through Europe and Asia. Market research shows the same model will flourish in the Toronto market, too. But Toronto's just the start: Improve is expected to attract national attention. Once the Toronto location is built - and the showrooms are up and operating successfully - the ownership team behind Improve plans on taking the model to major cities throughout the country. For now, though, the focus is on the GTA - and the Vaughan location that will be Improve's new home. Close to Highway 407, Highway 7 and Highway 400 - as well as Steeles Avenue and Keele Street - Improve will be conveniently located for shoppers coming from throughout Toronto and the surrounding areas, with plenty of parking available. The extension of the Spadina line will also bring subway access to Vaughan by 2015; when it does, Improve will run a shuttle bus from the Steeles West subway station to conveniently bring shoppers to its doors. It's the perfect location - one that the Improve team spent a year trying to find. "I think there was some great vision on the part of Improve to come to Vaughan," says planner Mark Emery, president of Weston Consulting Group. "Vaughan is almost the centre of construction and construction supply for the GTA." The City of Vaughan, too, is the perfect partner, supporting the Improve vision from the start. "We always welcome innovation and technology, and a better way of doing things, and I believe this project falls within that category," says Gino Rosati, Vaughan's deputy-mayor and regional councillor. Once it is up and running, more than 1,500 people are expected to visit Improve on a daily basis, taking advantage of suppliers in a range of categories, from flooring and roofing to grills and barbecues, and from hot tub and pool supplies to security systems. There won't be any toy stores or clothing outlets, though - everything will be home-related, targeted specifically to home renovators. And for those renovators who hire designers to take on their home improvement challenges - and pay them by the hour - it's a bonus as well. "Not only would it help me but it will save my client money," Ms. Rogers says. "Because at the end of the day, I can go to one place - it's going to cut my time in half." Improve will be efficient, pricesavvy and convenient - it's a model that's proven effective and will continue to do so in the Toronto market. It promises to improve the home renovation process, and to make homeowners' lives easier at the same time. Frankly, what could be better than that? For more information, visit the Improve website at improvecanada. com. October 14, 2011 By Susan Pigg | Wed Oct 12 2011 For baby boomers, home is turning out to be more than just where the heart is. It’s where the kids are — and seem to have no immediate plans to vacate. Some 17 per cent of Canadian baby boomers are delaying plans to downsize because they need the extra space to accommodate adult children, says TD Canada Trust’s 2011 Boomer Buyers Report. That number is closer to 22 per cent in British Columbia where Vancouver’s hot housing market has pushed the price of even tiny condos into the stratosphere and made living at home the only viable option for many young people. Almost 40 per cent of boomers who plan to retire in the next three years still have a mortgage on their home and 35 per cent say their living expenses are so high, they are unlikely to pay it off before they stop working. But nearly one-third of the more than 1,000 boomers who completed the online survey said they do plan to downsize as part of their retirement strategy. While the TD findings hint at a boom of boomer houses to come onto the market over the next few years, financial planners and retirement experts say they are seeing interesting trends to the contrary. “Downsizing can mean different things to different people,” says Peter Drake, vice president of retirement and economic research for Fidelity Investments Canada which does an annual survey. “There was a time when having debt in retirement used to be a big no-no. But baby boomers have always set their own standards and had big aspirations.” Instead of downsizing, many are buying bigger and better houses, or buying up into more expensive condos with all the modern amenities. And don’t assume all those kids are still living at home because they are forced to, Drake notes, adding that many boomers value the importance of higher education for this generation. “Boomers tend to think of consumption in very broad terms,” says Drake, whose own two grown children lived at home off and on while working on doctorate degrees. In fact, Fidelity’s surveys of boomers who’ve already retired found five per cent tend to spend more — not less — once they’ve left work. A growing number are doing consulting or contract work, as much to keep busy as help pay for exotic trips and fancy homes. ScotiaMcLeod financial planner Rod White was astounded when a client built a 4,000 square foot home with a pool two years after he retired. “He said, we’ve very social and I’ve always wanted a house that I can entertain in. Besides, we use the pool for exercise, not just for sitting around having a glass of wine.” October 13, 2011 "We have seen in the past year some softening in the Canadian housing market, in part due to the tightening of the insured mortgage market rules that we did earlier this year … That's an appropriate result from that tightening," Flaherty said during a news conference. "It will take clear evidence of a bubble in the housing market in Canada, which we have not seen."Flaherty made those comments despite Royal LePage’s finding in its quarterly housing survey released on Wednesday that the average detached home price in Vancouver in the third quarter rose 17% on a year-over-year basis to more than $1 million. That’s three times the national average. The soaring prices in Vancouver have largely been influenced by a flood of foreign money being invested into wealthy neighbourhoods like Richmond, Phil Soper, president and CEO of Royal LePage, said.     Asian investors, who are surrounded by some of the most inflated real estate markets in the world – especially in Hong Kong and Australia – typically see Vancouver’s prices as a bargain. Soper said he believes the Vancouver market will likely soften next year because of slowing domestic demand, but the steady flow of foreign money into the city will likely reduce the amount of overall moderation.“Vancouver is being influenced at the margin by foreign investment. I believe that that is a sustainable scenario,” he told CRE Online. Foreign investors tend to purchase homes in Vancouver with cash. That means they are in no way influenced by the Bank of Canada’s interest rate policy. “So that investment will cushion the downside to the Vancouver market because most of those foreign buyers are purchasing with cash,” he said. October 12, 2011 You can’t read a paper these days without crossing paths with dramatic headlines about economic distress, extreme volatility in the equity markets, and a general feeling of financial malaise brewing in various pockets of the globe. Even the most casual observer can string together with some ease, the relationship between cause and effect, poor economic data, consumer confidence, sluggish spending, and sputtering economic growth. Despite a flurry of analyst dartboard predictions with forecasts for growth and retraction, warnings about rising household debt and warnings about housing market collapse, contrasted with continued growth in the housing market, the real question is, what’s the average homeowner to do- especially when it comes to deciding on a fixed rate over a variable rate? Things We Know While interest rate activity is a bit of a dartboard throwing activity these days, there are certain fundamentals at play, suggesting while we can’t tell exactly in what direction rates are going to go- and when, but we may be able to draw some conclusions from the economic context that is currently present- as well as what we know from history. Historically, data typically shows that variable rates are more attractive over the long term.  According to research from the Bank of Montreal, since 1975, the most cost-effective option for borrowers was to stay variable 83 % of the time. Also, we know that, while Canada has many economic foundations firmly in place, there are an abundance of risks present outside our borders, particularly in the case of the growing sovereign debt crisis overseas, and talk of a US recession on the horizon; there are just simply too many factors present to suggest that a rate hike is anywhere on the horizon. In fact, BMO Economic released a report this week stating that rate hikes in Canada are likely off the table now until 2013. Although employment numbers are good in Canada and the housing market is robust, there has been talk of the possible need for further monetary easing in the coming months, depending on how deeply the impact is felt from the economic trouble brewing elsewhere. Again, this does not tell us the when and the how much for interest rates- nor does it suggest the intrinsic strategic value of choosing to roll the dice with a variable rate over locking in with a  fixed rate- but it helps frame the decision. Trish Pigott, Broker/Owner, Primex Mortgages, in Coquitlam, B.C, says one thing to point out to clients, is that they are currently in a unique win/win situation: “At this point in time, you can’t go wrong with what ever your choice is.  Rates are at historical lows on the fixed side and very close to all time lows on the variable.  Choosing between a fixed and variable is a personal choice depending on the comfort level and risk tolerance for each applicant.” Ally and Partner In turbulent times, there is an opportunity for those in client-centric, relationship based business. People who are fundamentally nervous, seek reassurance and guidance from other rooted in training and experience to help guide them towards making decisions that not only are the best suited for them personally- but are best suited for them in the economic climate which provides context for their financial circumstance.  In times of trouble, people not only seek support- they seek professional partnership.  How to best communicate this to clients, and how to advise them in the current climate.  Julia Krause, Kelowna  B.C. Mortgage Broker, suggests that clearly defining your role as a broker, and as an advisor has a lot to do with sharing your knowledge with your clients- and making them active participants in the process. And with an eye to setting the perimeters for the partnership, Krause throws the concept of ‘advice’ out the window. “I don't give advice. I educate. I help my clients to make an informed decision. We determine what is most important to the client, and what option 'feels' right to them, and go from there. I explain exactly how variable rate and fixed rate mortgages work, how 'split term' mortgages work, how the 'prime rate' works, and how I will keep them informed on what's happening with interest rates & the economy (via my regular newsletter) and that they can call me any time, before during, or after, if they have questions.”   Pigott says that the time is now for her clients to take a good look at their financial picture, before they fully decide what makes most sense for them. “(Clients need) to look at their overall finances. If they can afford a payment increase if the variable rate goes up, and it will not make a significant impact on their household budget then they may want to consider a variable rate” “As well, the ideal variable candidate would have more than 20% equity in their home but if their financial situation is strong enough to handle the fluctuations, then ultimately it’s the client’s decision.  I will do my best to provide them with the facts and details surrounding each product which will help them decide the best fit for their lifestyle and budget.  That being said, I may also recommend a client that is on the fence on what to choose, to take the variable rate with a set payment and remind them that they have the ability to lock in at any time without penalty if they begin to feel uncomfortable.”   The House isn’t just a Home   Although a home functions as shelter, it is often one of the largest assets held in a portfolio- and it is the most leveraged asset usually as well.  It also may be worth having your clients think about their total financial holdings- not just their real estate asset part of their portfolio. It is a well known fact, that diversification is one of the best ways of mitigating against risk, and depending on what their other holdings are in their investment portfolios, including their RRSP’s and non-registered assets they may want to include that in their decision making process- and you may want to suggest to them to consult their financial advisors as well. If a client trying to decide between a fixed rate and a variable rate mortgage is highly invested in risky equities, they may want to consider a fixed rate in order to mitigate against a double hit of a falling stock market- coupled with rising interest rates.  Economic data currently suggests that rates will stay low for the time being, but there are no guarantees. It is important to remember, in this instance that owning a home is not just for purposes of shelter- but that it is an investment- and may be part of a larger pool of investments.  As such, it is sometimes wise to use principles of balance within the portfolio, to balance out net worth. As a mortgage broker, you obviously are not going to advise your clients on other investments, but this goes back to partnership. Home ownership, and interest rate strategy can either help or hurt the total investment value- and it is worthwhile to have your client consult other members of their financial team so that they can make the best decision for them, in the current environment.   Know Your Client   What is comes down to, fundamentally- is knowing your client- and matching the right product to the right person. To draw on historical data, and make a case for either or, really only takes into account the financial implications. What is probably more important, and more impacting on a daily basis for the client- is how much they are going to be thinking about their mortgage rate, when they should be thinking about other things. Krause says, “For me personally, I choose variable rate. But there isn’t one better option for every person across the board. The better option depends on the individual client.  This is why mortgage brokers are supposed to get to know their clients and their clients' individual situations, then educate the client on the options, then decide together what the best option is.  If your mortgage broker isn’t doing this, RUN.  Run away.” And as Pigott points out, a mortgage is for the long term. “It’s all about risk tolerance and comfort level.  For a client that is extremely rate conscious and concerned about fluctuating rates, I would say that they should choose the fixed rate.  When you are taking a mortgage, most people know they are going to have that mortgage for a long time, so stressing over the rate morning and night is not worth it.  Take the fixed rate, give yourself peace of mind.  For clients that have that higher tolerance and are willing to flow with the market and able to financially handle increases, then they would be able to comfortably take the variable rate.  “ Krause, on the other hand, says that ‘risk’ is in the eye of the beholder- or the rate holder as the case may be- and that the risk can be mitigated somewhat : ”Where is the ‘risk’ in having a variable rate mortgage? Variable rate mortgages are about paying as little interest as possible and taking advantage of prime while it's at record low levels. There's nothing wrong with that. But again, as a mortgage broker I’m different. I have actual relationships with my clients. I keep them up to date on what’s happening with interest rates. I won’t allow any ‘risk’.” Fundamentally, you need to compare apples to apples. Looking at historical data, and where rates are coming from, and where they are likely headed- touting the financial benefit to a client is irrelevant.  The volatile environment in which we find ourselves currently, underscores the need to connect with clients, foster that relationship for the long term, and understand where they are coming from to steer them in the right direction.   October 12, 2011 Financial Post Oct. 11, 2011 OTTAWA — Home construction rose more than expected in September, led by multiple-units activity, according to Canada Mortgage and Housing Corp. CMHCsaid Tuesday that housing starts totalled a seasonally adjusted 205,900 units during the month, following an upwardly revised 191,900 units in August. “Housing starts picked up in September due to an increase in multiple starts in the Atlantic region, Quebec and in British Columbia,” said Mathieu Laberge, CMHC’s deputy chief economist. “Multiple housing starts are expected to move back towards levels consistent with demographic fundamentals in the near term.” The seasonally adjusted annual rate of urban starts rose 8% to 185,900 units in September. Multiple-unit urban starts jumped 14.2% to 118,000 units, while urban single-unit construction fell 1.5% to 67,900 units. Rural starts edged up to 20,000 units from 19,700 in August. Economists had forecast overall housing starts of about 190,000 in September. “With single starts declining mildly, multiple starts were the main driver for the increase in home building activity, although this category is widely expected to scale down in the months ahead,” said CIBC World Markets economist Emanuella Enenajor. “The data suggest that residential construction could be a plus for GDP in Q3 as home building continues to garner support from a low rate environment, and a robust multiples market.” Economist Robert Kavcic, at BMO Capital Markets, said the housing market “continues to hold up well in Canada, helped by extremely low interest rates and a solid, though cooling, labour market.” October 11, 2011 dawn walton Calgary— Globe and Mail Update Posted on Monday, October 10, 2011 6:49AM EDT Sometime during the fog of an early morning feeding with my newborn, I remember reading an article in a parenting magazine reminding new mothers and fathers to have life insurance. I didn’t want to think about death while I had a new life snuggled on my lap. But moderate panic set in. My self-employed husband had no coverage and while on maternity leave, I was on a significantly diminished salary. If something happened to him, my daughter and I would be (among other things) in serious financial trouble. As any financial adviser – and the insurance industry – will tell you, the magazine was right. “When you have liabilities and you have a family, you want to make sure that you provide them with some protection should something happen to you,” said Wendy Hope, of Canadian Life and Health Insurance Association Inc., which represents the industry. According to a TD Insurance Risky Business Poll last year, 31 per cent of Canadians said they didn’t have life insurance. Of those, 40 per cent said they didn’t think it was necessary, 23 per cent confessed they probably should have coverage and 23 per cent said they didn’t think they could afford it. The survey of 1,500 adults also noted that another third of Canadians worried that they didn’t have adequate protection under their existing insurance policies. The solution seems straightforward enough; get sufficient coverage. But navigating the world of life insurance where dozens of providers are anxious to sell a variety of products – such as permanent versus term life insurance – is not so simple. And trying to find the money, when you are already struggling to pay down debt and save for retirement, is difficult. It’s little wonder that many people don’t bother. Some financial advisers suggest a coverage rule-of-thumb of five to seven times your net income. But the amount of coverage should be based on individual needs that take into account such things as marital status, dependents, employment status and liabilities. This country’s three largest insurers are Great-West Life, Manulife Financial and Sun Life Financial, but there’s a myriad of other providers, and many have online calculators that will tally items including mortgage, income and investments to spit out a total for suggested coverage. But that’s just a start. Life insurance agents and brokers will help calculate coverage and narrow down the coverage options. And just because you finally settle on a policy, it doesn’t mean your work is done. It should be reviewed periodically, especially when a milestone is reached, such has getting married, buying a house or having a baby. The industry association has posted this online helpful step-by-step guide. “Even though you’re paying for a mortgage or you’re paying for your children’s education, you’ve got all these other outstanding liabilities, you would want to think about the fact that you need – if something should happen to you – to cover those liabilities for your family,” Ms. Hope said. The latest statistics show that at the end of 2010, almost 21 million Canadians had some form of life insurance. Among those, 56 per cent had individual insurance while 44 per cent had group insurance, which includes 61 per cent on groups of employees, 7 per cent was on members of unions and associations, and 32 per cent was on insured individuals who had borrowed from credit agencies such as banks and mortgage brokers. October 11, 2011 Rob Carrick From Thursday's Globe and Mail Posted on Wednesday, October 5, 2011 7:10PM EDT Let’s hope the housing market holds up better than the stock market has. If not, we really have problems. Feeling bummed out about how your registered retirement savings plan or investment account is shrinking in value as stocks plunge? Just wait and see what happens if the housing market slumps. Far more than stocks, a rising housing market makes us feel wealthy and sustains the economy. But the reverse is true, too. “If you want to knock consumer confidence out from under people, just let their largest asset decline in value,” said Ben Rabidoux, who has been crunching data on Canada’s housing market on his blog, The Economic Analyst. Consumer spending accounts for about 64 per cent of our economy, which is to say it’s crucial. And, it’s under pressure. The latest quarterly Consumerology report from ad agency Bensimon Byrne says half of Canadians feel worse off about their personal economic situation than they did a year ago, and they expect to feel worse in a year’s time. Overall confidence levels have fallen by levels not seen since the stock market crash of 2008, the survey found. A reversal of fortune in housing would make things worse. While the risk of a real estate slump shouldn’t be exaggerated, it should be recognized – if only to provide perspective that may help people keep a level head. Comments made about Canada’s housing market on Wednesday were typical of the lack of consensus on what’s ahead. The International Monetary Fund expressed concern about the hot housing market’s role in the build-up of consumer debt in Canada, while Finance Minister Jim Flaherty said the market has cooled somewhat and shows no clear signs of a bubble in prices. While reporting average year-over-year price gains of between 5.7 and 7.8 per cent in the third quarter, realtor Royal LePage said the housing market in some parts of the country is softening and a broader slowdown is expected in the months ahead. And, last week, Bank of Montreal issued a forecast for a “soft landing” in which sales and prices remain steady. BMO summed up housing market supply and demand as follows: Low mortgage rates, relatively low unemployment and strong immigration versus high prices, elevated household debt and slowing employment. Why worry about the possibility that the negatives in the housing market get the upper hand? For answers, let’s consider the wealth effect of a strong housing market. Mr. Rabidoux, an instructor at Georgian College in Owen Sound, Ont., quotes an academic paper that found every $1 rise in the price of a house has an economic impact equivalent to 6 cents’ worth of increased consumer spending. “People go out and buy stuff they wouldn’t otherwise buy if they didn’t feel so wealthy and confident,” he said. “People also feel richer, so they don’t feel the need to immediately save.” Owning a house has been getting progressively more expensive over the years. So how is it that rising house prices feed higher consumer spending? We can thank lines of credit for that, Mr. Rabidoux said. His data indicate that LOC balances increased 95-fold since 1985 while incomes and economic output have tripled. Some of the money has gone into investments, he said. “But there’s no doubt that a good chunk of it has gone to support consumption to finance second cars, vacations or whatever.” In a perverse sort of way, a drop in housing prices might actually be good for the country. Without the housing wealth effect, people might cut back on spending. This in turn would leave more money available for debt reduction and increased saving. This is what’s happening in the United States right now and it’s seen almost as a detox process after years of consumer excess. But the healing process for household balance sheets has been a major drag on growth. Earlier this week, U.S. Federal Reserve chief Ben Bernanke described the economy as “close to faltering,” which is about as bleak as a central banker is likely to get in public statements. Mr. Rabidoux thinks it would be a good thing over the long term if the housing wealth effect lessened and Canadians both saved more and spent less. “But my perspective is that you can’t have that shift without exerting some level of pain in the economy.” Put your own financial security and that of your family ahead of what’s good for the economy. Cut spending and save more as required. If there’s anything left over, do your patriotic duty and buy something.   October 6, 2011   Roma Luciw Globe and Mail Update Published Tuesday, Oct. 04, 2011 8:55AM EDT Last updated Tuesday, Oct. 04, 2011 9:27AM EDT Catherine and her husbandtapped into their first home equity line of credit 15 years ago, when they needed $30,000 to buy a car. The rate on the line of credit was attractive and, having been mortgage-free for a decade, the Thornhill couple figured it would be a quick and easy way to get cash. A few years later, they needed another car, so their bank happily raised the amount to $70,000. Then Catherine unexpectedly lost her job. Fifteen years later, she is working again but earning substantially less. And that line of credit is hovering at just below the max. “We try to put $1,000 in there a month and then we end up taking it right back out,” says the 54-year-old mother of two, who asked to remain anonymous. “The money is just too accessible.” Catherine, who has resigned herself to working past 65, would like to boost their line of credit by another $40,000, use that to pay for the new kitchen she so badly wants and then repackage all of their debt into a mortgage, which they would eliminate through structured monthly payments. Although it might sound excessive, her story is hardly unique. Lured by rock-bottom interest rates, Canadians are taking on record debt. A recent Statistics Canada report showed that household debt rose to a new high in the second quarter of 2011, surpassing levels seen in the United States. And with interest rates set to remain low for the foreseeable future, policy makers are concerned that instead of paying down some of that debt, people will be tempted to borrow even more. According to credit bureau TransUnion, the average Canadian has racked up more than $25,000 in consumer debt, including credit cards, lines of credit, student debt and car loans but excluding mortgages. The bulk of that is made up by lines of credit, which have lower variable rates. (Read their report here.) Chartered accountant and financial author David Trahair, whose new book on debt will hit the shelves next month, says home equity lines of credit are a dangerous trap. Using their house as security, people take out a line of credit, and use it to pay off their credit card debt, instantly reducing the interest rate on the payments to between 3 and 4 per cent from the typical rate of 15 to 20 per cent. “The problem is it takes your eye off … the overall level of the principal of the debt,” Mr. Trahair says. “It convinces people to spend more and more, they don’t change their habits. ... They end up with more combined debt than a person who does not even have a home equity line of credit.” He believes Canadians should ask themselves these six questions before they take on more debt: 1. How much debt do you have? Most people never bother listing the balance on each type of debt, but this is a vital step. You need to know what shape you are in before taking on another dime. 2. Will you be debt-free at retirement? You must aim to retire totally debt-free. That means no consumer debt and no mortgage on your home (if you can afford a home). Here’s how to find out if you’re on track: Take your total family debt today and divide by the number of years to retirement. Say it’s $250,000 and you want to retire in 10 years. That’s $25,000 in principal you’ll have to repay each year. Compare that to your family income. 3. What is the ratio of debt to your family income? The average Canadian household has a debt-to-personal disposable income ratio of 151 per cent. To find your ratio, take your total family debt and divide by your family’s annual after-tax income. If your ratio is below the average you are in a much better position to consider increasing your debt. 4. What type of debt is it? If most of the debt is consumer debt, including credit card balances and lines of credit used to buy consumer goods, 151 per cent would be dangerous. If the debt is just a mortgage to buy the home you live in, you'd probably be in good financial shape. If your debt is mostly consumer debt, that should be a warning to reduce it. 5. What interest rate will you pay? One attribute of bad debt is that it has a higher interest rate than good debt. Credit card debt is especially bad since the interest rate on the revolving balance is often 10 to 20 per cent – or higher. Obviously if you are going to add debt it makes sense to ensure the interest rate is as low as you can get. 6. Will a fixed-rate mortgage protect me? Many Canadians have mortgages and lines of credit at a variable interest rate tied to the prime rate, which is currently 3 per cent. If/when interest rates rise from the almost historical lows of today, the resulting increased monthly payment amounts may be too much for many to handle. Interestingly, credit card debt interest rates are not affected by changes in the prime rate – they charge 20 per cent no matter what. October 4, 2011 Rob McLister, editor of Canadian Mortgage Trends One could wax on about how grim the United States (US) economy is, but Mark Carney put it succinctly: “The (U.S.) housing market remains a mess, the consumer is weak, and government actions can be expected to reduce growth…The U.S. economy is close to stall speed…” That sort of thing puts Canada in a quandary. When the American economy is in the toilet, the Canadian economy is usually on the rim, ready to fall in. The American Federal Reserve (Fed) itself admits that the U.S. is facing "significant downside risks” and 3 out of 4 Canadian exports go to the States. The mortgage-relevance here pertains to how America’s woes affect Canadian interest rates. To answer that, let’s first have a look at the historical policy rate differences between the two countries. Since 2000, when the Bank of Canada (BoC) adopted fixed announcement dates, Canada’s key lending rate has never exceeded 225 basis points above the Fed funds target rate. At the moment, no reputable economist foresees that level being eclipsed anytime soon. The reason: If the BoC got too aggressive it would drive up the loonie and punish economic growth. On the other hand, Carney was clear last Tuesday that, “We do not outsource our monetary policy to the U.S. Federal Reserve.” That means the BoC will raise or cut Canadian rates depending on domestic inflation prospects, not what’s happening south of the border. So where do rates go from here? At this point, the Fed seems almost impotent in its ability to spur the U.S. economy. Its latest adrenaline shot (a $400 billion bond swap) is likely too small and too drawn out to ignite a recovery. U.S. fiscal restructuring and global economic events (including the Eurozone debacle) will ultimately determine the fate of mortgage rates. Just for argument sake though, suppose the Fed maintains the status quo on rates until third quarter 2013 (as it forecast). In that case, Canada will be hard pressed to raise rates extensively. For what it’s worth, here’s what the crystal ball gazers (major economists) are forecasting now: 2012 will see 75 bps of hikes (as per the Big 6 banks’ current published forecasts) The next rate increase will occur in Q3 2012 (according to the latest Reuters dealer poll) 2013 will see rates rise an additional 75 bps (based on the limited number of economic forecasts stretching out that far) Do not bet the barn that these forecasts won’t change. In fact, don’t even bet the rooster wind vane that sits on top of the barn. That said, if economists are remotely accurate this time, the above forecasts represent 150 bps of tightening in the next two years. This implies a 4.50% prime rate by year-end 2013. (The 10-year average of prime is 4.27%.) Based on the above hypothetical and a properly qualified borrower, the mortgage value zone remains in the 3- and 4-year market. Both of these terms are still available at 2.99% or less and they've performed quite well in a variety of our rate simulations. Conversely, if you’re a little more bearish on the economy and want to speculate on fewer rate hikes through 2013, today’s 2-year fixed at 2.49% is tough to beat. Even a surprise BoC rate cut (which OIS traders predict in defiance of economists) leaves the 2-year in okay standing. A prime - 0.45% variable may have the edge if rates drop, but the 2-year fixed guards against inflation risk and rate hike potential in 2013. Moreover, you can potentially early renew your 2-year fixed (or lock in a fixed or variable rate elsewhere) up to six money prior to maturity.  October 3, 2011 John Greenwood, Financial Post · Sept. 27, 2011  Canada's financial regulator is hiking its scrutiny of residential mortgages held by banks, a tacit acknowledgement of the heightened dangers around surging consumer debt. The Office of the Superintendent of Financial Institutions is "stepping in to increase the monitoring" of home loans and lines of credit secured by real estate, said the head of the organization. While recent moves by the federal government to tighten the rules around home loans have helped reduce the growth of mortgage lending, Julie Dickson told reporters in Toronto Monday that the issue remains a significant concern. The comments come a week after the ratings agency Moody's Investors Service Inc. warned in a report that record household loans pose a threat to the Canadian banking system. Indeed it was only the latest in a series of admonitions delivered by observers, including Mark Carney, governor of the Bank of Canada, and Jim Flaherty, the Minister of Finance, going back as far as 2006 when then Bank of Canada governor David Dodge tore a strip of the Canada Mortgage and Housing Corp. for bringing in what he felt were excessively loose mortgage lending rules. Ms. Dickson said she is delivering an "early warning" to the banks about problems that could emerge down the road, and that she is working on the issue in parallel with Messrs. Carney and Flaherty. The Canadian banks have enjoyed surging profits since the financial crisis, partly on the back of their consumer lending operations, which have enjoyed consistent revenue growth largely because of the ongoing low-interest rate environment. The biggest single asset on bank balance sheets are their residential mortgages, about half of which are insured by the Canada Mortgage and Housing Corp. However the worry is that the other half is not protected and in the event to a serious housing market correction, lenders could wind up with losses. Banks "need to keep an eye on" their uninsured mortgages, Ms. Dickson said. In a speech to business leaders the same day, Ms. Dickson said the Financial Stability Board, an international body created by the G20 to promote financial stability, is also looking at mortgage lending in con-nection with an effort to develop principles for safe mortgage lending. A central concern for regulators in both the United States and Canada is that the low-interest-rate environment "has likely increased the incentive for consumers ... to borrow," Ms. Dickson said. "Banks also have an incentive to lend." In the face of intense competition for business, banks are increasingly looking for ways to get an edge over their peers and that could lead to reduced lending standards, she warned. Ms. Dickson advised lenders to "guard against loosening historical underwriting standards" by, for instance, waiving due diligence requirements or lowering the amount of collateral required for loans. Regarding OSFI's participation in the international effort to beef up financial regulations, she said there will likely be a decision to publish a list of so-called too-bigto-fail banks later this year, but that no Canadian banks are likely to make the cut. Currently there are 28 institutions being considered "but the list is not static," she said. Under proposals put forward by the Basel committee on banking supervision, banks identified as being systemically important would be required to hold more capital than their peers, but that plan is attracting fierce opposition from the financial industry where players worry that the move would leave them less competitive. September 28, 2011 Michael Babad Globe and Mail Update Last updated Tuesday, Sep. 27, 2011 10:22AM EDT How housing market faresCanada's resale housing market is slowing, but still outperforming markets in much of the developed world, Bank of Nova Scotia says. Indeed, senior economist Adrienne Warren said in a new report today, Canada, France and Switzerland stood alone among nine markets measured in recording annual price gains, based on second-quarter data. “In the majority of the major markets we track in North America , Europe and Australasia, inflation-adjusted home prices declined on a year-over-year basis in the second quarter of 2011,” Ms. Warren said.“While Canada’s hot housing market also has begun to cool, it remains a notable outperformer.” Scotiabank expects housing demand around around the world to remain "moribund" until the recovery picks up. And, while Canada's real estate market is notable for its "resilience and longevity," a stalled jobs market could still keep some buyers out of the market. "On balance, we anticipate a modest slowdown in the volume of sales transactions heading into year-end, alongside relatively flat prices," Ms. Warren said. Canadian house prices, on average and adjusted for inflation, climbed 5 per cent in the second quarter, according to Scotiabank. That compares to 5 per cent in France and 4 per cent in Switzerland. Prices fell 6 per cent in the United States, 6 per cent in Britain, 10 per cent in Spain, 14 per cent in Ireland, 1 per cent in Sweden, and 6 per cent in Australia. September 27, 2011 Outdoor maintenance took a backseat to summer pleasure at my house. But with fall officially here,  it’s time to clean up my act and the exterior of the house before winter sets in. According to the Canada Mortgage and Housing Corporation (CMHC), fall can be the most gruelling season for your home, and I would add, the owners. Thousands of dollars in repairs can be saved with preventative maintenance, and also energy costs. Here’s my family's maintenance checklist.  Click here to read CMHC’s seasonal checklist. Install storm windows: My 80-year-old dining room storm windows need to keep the weather outside for at least another five years before they’re replaced by patio doors. This weekend they’ll be treated to a light sanding followed by painting. Remove window screens: Over the next few weeks, we’ll be leaning our screens against a tree, spraying them with the garden hose, and then leaving them in the sun to dry. We hoist them into the attic and cover lightly with a used bed sheet to keep dust and heavy objects away. Eavestroughs and downspouts: Make sure leaves and debris are removed from the eavestroughs. We’ve had a sapling grow in our gutters and then experienced the resulting leak in the basement. We’ve learned our lesson and have them cleaned professionally in the fall and the spring including the downspout. As Leslie Anderson of The Gutter Shop, previously told the Toronto Star, "There's no point in cleaning the eaves if your downspout is blocked.” Empty the rain barrel: When the City of Toronto started  disconnecting downspouts from sewers, many homeowners placed a rain barrel at the end of the downspout. Before the first frost comes, drain the water or else the ice may crack the barrel. Weatherstripping: Ensure all windows, doors and skylights shut tightly, including the door between your house and garage; repair or replace weatherstripping, as needed. Covers: Use vinyl covers over the air conditioner, the barbecue, and any outdoor furniture you can’t store inside a garage or shed. Do not store a gas or propane barbecue indoors. Our 8-year-old gas barbecue is used all winter long and the tight cover keeps it well protected even in storms. Drain and store outdoor hoses: Close the valve to the outdoor hose connection and drain the faucet unless you want the water to freeze, crack the water pipe and burst inside your basement. Heating systems: Make sure your gas, oil, or other non-electric heating system, is serviced by a qualified company (every two years for a gas furnace and every year for an oil furnace or in accordance with the manufacturer’s instructions). Radiators and Boilers: Bleed air from the hot water radiators, and turn the gas furnace pilot light on. Chimney or combustion vent: Check for nests or other obstructions before turning on your heating system. We have this checked the same time our gutters are cleaned. If you have a furnace, check and clean or replace filters on a monthly basis during the heating season. Baseboards: Gently vacuum in and around hot water baseboard and electric baseboard heaters to remove dust. Remove the grilles on forced-air heating systems and vacuum inside the ducts. Ensure airflow dampers are open. September 23, 2011 Here's a look at  five trends on the horizon that will affect you in the next year from mortgage rates to food prices.Gas prices to drop   The good news for beleaguered drivers – you’re likely to get a break on prices this fall, according to a gasoline industry analyst. Jason Toews, co-founder of Gasbuddy.com (and its sister site torontogasprices.com), says prices in the Greater Toronto Area have already dropped 9 cents a litre in the last two weeks, and are likely to slide even further over the next two to three months. “It’s mostly supply and demand. In Canada, we tend to drive less in fall and winter because it’s colder,” said Toews, who added that’s not the only reason he expects gas to fall to as low as $1.05 per litre by year’s end. The average price of regular unleaded gasoline in the Greater Toronto Area right now is $1.225 per litre, down from $1.31 per litre two weeks ago. “It’s actually cheaper for them to refine gasoline in the winter than during summer, because the additives they need to put in for winter time are cheaper,” said Toews. He estimates the cheaper production costs alone slash roughly two cents per litre off the pump price. Mortgage rates may rise Variable mortgage rates are already starting to creep up, and fixed rates could soon follow if Wednesday’s higher-than-expected inflation numbers turn out not to be a fluke, says mortgage expert Robert McLister. Canada’s inflation rate hit 3.1 per cent in August, driven by rising food and energy prices, Statistics Canada revealed Wednesday. Even the so-called core inflation rate — which excludes food and energy — hit 1.9 per cent. “Keep your eye on inflation. If the core rate goes above 2 per cent for a couple months in a row, then we’ll start to hear (Bank of Canada governor) Mark Carney talk about cooling things down,” said McLister. Raising interest rates is a tool used by central bankers to slow down an economy, the thinking being that if borrowing becomes more expensive, less money is being spent, resulting in less economic activity. Already, said McLister, the spread between fixed rates and variable rates has dropped to less than one per cent, as banks eliminate much of the discounting they give on variable rates. Home prices to stabalise Housing prices in the Greater Toronto Area won’t be skyrocketing as much over the next few months as they did over the last year or so, says an analyst with the Toronto Real Estate Board. That’s because more houses are being put on the market, according to Jason Mercer. “With the prices having risen the way they did, more people are going to start listing because they think they can take advantage of the prices they’ll get,” said Mercer. If enough people list, that can drive prices down. “There’s no question that it’s been a seller’s market recently, but as more inventory comes onto the market, things will start to become more balanced,” Mercer said. Still, Mercer isn’t expecting prices to be slashed – he just doesn’t think they’re going to rise as quickly. “I still think there’s enough support for some price increases, but it’s not going to be what it has been,” Mercer said. The average price of a home in the Greater Toronto Area was $451,000 in August, up 10 per cent from the same time last year. Food price increases to moderate While food prices rose by four per cent in August (compared to the same period last year), that trend is unlikely to continue, says BMO senior economist Sal Guatieri. That’s because a slumping North American and European economy means lower demand for the commodities — such as wheat, corn and rice — which had been driving food inflation, Guatieri explained. “We see food prices leveling off this year, and perhaps by late next year, even falling,” said Guatieri of BMO’s forecasts. Jobless rate to remain high If you’re among the 7.3 per cent of Canadians out of work, don’t expect things to get much better this fall, cautioned BMO’s Sal Guatieri. “We expect the economy to grow a bit in the second half of the year after shrinking a bit in the second quarter, but it’s not really going to be enough to move the jobless rate,” said Guatieri.  September 22, 2011 Julian Beltrame Ottawa— The Canadian Press Published Wednesday, Sep. 21, 2011 7:07AM EDT Last updated Wednesday, Sep. 21, 2011 10:33AM EDT Inflation in Canada rose above the Bank of Canada's comfort level last month as higher prices for gasoline and food pushed the rate up four notches to 3.1 per cent, Statistics Canada reported Wednesday. The surprisingly strong gain in the cost of consumer goods reverses a recent trend towards more moderate inflation, which had seen the rate fall from 3.7 during May to 2.7 in July. On a month-to-month basis, prices rose 0.3 per cent from July to August. Core or underlying inflation, which excludes volatile items such as energy and some foods, also saw a sizable increase to 1.9 from 1.6 per cent, pushing close to the central bank's two-per-cent target. In a speech Tuesday, Bank of Canada governor Mark Carney said he was not concerned about inflation and would not raise interest rates to deal with the issue. The bank's mandate is to keep consumer prices within a range of one and three per cent, and as close to two as possible. With the global economy entering what the International Monetary Fund called a “new dangerous phase,” most analysts agree that inflation will moderate as demand diminishes. But at the moment Canada is getting the worst of both scenarios, stubbornly high inflation and a slowing economy. Gasoline and food, two items that constitute significant portions of household spending, continue to be big drivers of annual inflation. Gasoline was 22.8 per cent more expensive last month than in August 2010, food cost 4.4 per cent more, and food bought at grocery stores was five per cent higher. “Excluding food and energy, the consumer price index increased 1.5 per cent in August after advancing 1.2 per cent the previous month,” Statistics Canada noted. Passenger vehicles, electricity, homeowners' house and mortgage insurance, telephone service and jewelry also contributed to the increase in annual inflation from July, the agency added. Not all consumer goods and services are rising, however. Mortgage interest costs declined 1.7 per cent, video equipment was down 13.9 per cent, prescribed medicines slipped 3.9 per cent, natural gas one per cent, and digital computing equipment and devices fell 10.4 per cent. Still, prices rose in all eight major components tracked by Statistics Canada, and increased at a faster pace than the previous month in five of those components. Prices also increased at a faster pace for eight of the 10 provinces, with New Brunswick continuing to experience the highest inflation in the country at 4.1 per cent. September 21, 2011 Roma Luciw Globe and Mail Blog Posted on Monday, September 19, 2011 6:40PM EDT A report that showed Canadian household debt levels have topped U.S. ones should be taken with a grain of salt, according to one economist. In a note released Monday, National Bank of Canada’s Matthieu Arseneau says the Canadian government’s indicator on household debt “does not lend itself well to such an international comparison owing to the considerable differences between the social safety nets of the two countries.” At first glance, personal disposable income levels appear much lower in Canada than in the United States. Mr. Arseneau attributes that to higher tax levels in Canada that are used, in part, to fund our national health care system. Americans, meanwhile, must allocate nearly 20 per cent of their personal disposable income to paying for health care, he says. “If we adjust for this factor, the debt ratio of U.S. households exceeds that of their Canadian counterparts by 12 per cent.” A report released last week showed that Canadian household debt rose to a record high in the second quarter, surpassing levels seen in the United States since the start of the year. Statistics Canada said last Tuesday that the ratio of household credit-market debt – which includes mortgages, consumer credit and loans – to personal disposable income climbed to 149 per cent from 147 per cent in the first quarter. That’s the highest level since Statscan started gathering figures in this category in 1990. The government agency attributed the growing debt to higher mortgages and increased consumer credit borrowing. With interest rates slated to remain at low levels for the foreseeable future, Canadians are taking on both mortgages and consumer loans. Policy makers have expressed concerns about high household debt levels and warned against what could happen if rates were to rise. In his note, Mr. Arseneau also noted that the Statscan ratio represents only one facet of the financial health of households. “If we consider the ratio of debt to net worth, which is still markedly higher in the United States, we understand why household deleveraging is ongoing south of the border whereas nothing of the sort is happening in Canada,” he said. Mr. Arseneau concluded his note by warning of the need to be vigilant, because excessive household debt levels “could represent a risk factor for Canada’s economic stability down the road.” September 20, 2011 OTTAWA — Canada’s wholesale sector bounced back in July after a flat performance the previous month, Statistics Canada said Tuesday. Wholesale sales rose 0.8% during the month to $48.2-billion. That follows an unchanged reading in June, which the federal agency revised from a 0.2% gain. “Although five of the seven sub-sectors, representing more than 85% of total sales, reported increases, most of the growth was concentrated in the machinery, equipment and supplies, the personal and household goods, and the motor vehicle and parts subsector,”the agency said. The July wholesale figure was in line with economists’ forecasts. Emanuella Enenajor, an economist at CIBC World Market, said the wholesale report points “to a positive contribution to the month’s GDP — along with an early bounce back in manufacturing activity.” Meanwhile, another Statistics Canada report on Tuesday showed a major barometer of the country’s economic health —the index of leading indicators — was little changed in August. Economists had expected an increase on about 0.2% for the month. “The weakness in the index was concentrated in the housing index and the stock market, both of which fell more than the month before,”the agency said. The agency also revised its July index reading to a 0.1% gain, from a previous estimate of a 0.2% increase. The Canadian economy contracted 0.4% in the second quarter of this year, with much of that decline attributed to supply chain disruptions due mainly to the earthquake and tsunami in Japan. Still, the Bank of Canada said in its most recent monetary policy statement that “growth will resume in the second half of this year.” The central bank has also forecast economic growth in Canada of 2.9% in 2011 and 2.6% in 2012. September 20, 2011 CMHC said the average MLS price will plateau through 2011 to an average of $367,500, and then rise 1.3% to reach $372,400 in 2012.“Despite recent financial uncertainty, factors such as employment, immigration and mortgage rates remain supportive of the Canadian housing sector,” said Mathieu Laberge, deputy chief economist for CMHC.The CMHC report is the latest to predict moderate gains in the market through 2012, but other analysts such as Capital Economics have said Canada’s housing prices will collapse by as much as 25% over the next three years. CMHC’s outlook assumes that mortgage rates will remain relatively flat through 2011 and will start moderately increasing in 2012.Sales of existing homes peaked in the first quarter of 2011 and moderated in the second quarter, said CMHC, remaining close to where they were a year earlier. CMHC revised its national outlook for 2011 housing starts up from 179,500 units to 183,200 in its second quarter report. It forecasts the number will climb in 2012 to 183,900 units. In 2010, there were 189,930 starts.Overall housing starts will be down by the end of this year, according to the report, but the exceptions will be Ontario and Saskatchewan, which will both experience moderate growth. In 2012, Alberta, British Columbia and Manitoba are slated for the most growth in housing starts.Aside from mortgage rates, migration will also be a major factor in the housing market, said the report. Due to an improving economy and better employment opportunities, net migration is forecast to increase to 245,900 in 2011 from 244,644 in 2010, then increase again to 263,350 in 2012.Employment will improve 1.7% nationally in 2011 and 2012, said the CMHC citing Statistics Canada figures. The greatest gains will be in Newfoundland, up 4% in 2011 and 1.5% in 2012, and in Alberta, up 2.8% in 2011 and 2.4% in 2012. The only province to see a decrease in employment in 2011 is New Brunswick, down 1.6% after also decreasing 0.9% in 2010. September 19, 2011 By Sue Pigg | Thu Sep 15 2011 Toronto home sales were up 2 per cent in August over July, outpacing the rest of the country where sales declined 0.5 per cent, according to figures from the Canadian Real Estate Association. Average house prices were down slightly across the GTA in August, to $451,663 from July’s average of $459,122. However, average prices recorded in August were up 10 per cent year-over-year. An easing of demand for high-end homes in both Toronto and Vancouver, which had been putting upward pressure on average prices right across the country, saw average Canadian prices decline to $349,916 in August from $361,181 in July. The average price of a house or condo in Canada was up 7.7 per cent in August from a year ago, said Gregory Klump, CREA’s chief economist. The price of a detached house in Toronto hit a record $648,491 in August — compared to $531,458 in the 905 regions — largely because of a shortage of listings. But prices are expected to ease somewhat as more houses come on the market over the next few weeks. There were a record number of balanced markets across Canada in August, which included the GTA, said Klump. That means there was, for the most part, a healthy ratio of homes for sale to people looking to buy. While Toronto’s spring market was unusually hot, fuelling bidding wars and double-digit price increases, those are expected to ease back into the low- or mid-single digit range going into 2012, said Jason Mercer, the Toronto Real Estate Board’s senior manager of market analysis. “Looking ahead, less favourable economic fundamentals and heightened financial uncertainty are likely to take more wind out of the market’s sails,” said TD Economics housing analyst Francis Fong. He expects the market to continue to “oscillate alongside the rest of the economy” until the end of 2012, and predicts house prices could drop about 10 per cent from current levels when interest rates eventually start to rise, likely in early 2013, said Fong. Some 324,030 homes have changed hands in Canada so far this year via MLS, according to CREA. “This bumpy ride that the global economy and financial markets are on is good for the continuation of low interest rates and low interest rates are good for the housing market,” said Klump. September 16, 2011 Terry Campbell Financial Post Sept. 15, 2011 With the increased global economic uncertainty, stockmarket volatility resulting from sovereign-debt risks, notably in Europe, and headlines here at home about the housing market, Canadians are once again looking closely at the soundness of the country's financial system. For the fourth year in a row, Canada's banks have been ranked the soundest in the world by the World Economic Forum, but can that position of strength be maintained as banks face numerous international regulatory challenges and additional economic uncertainty? These are questions that bank executives and bank regulators ask themselves every day. Let's remind ourselves of a few key facts that are just as important today as they were in the dark days of the global financial crisis three years ago. Our banks are well-positioned to deal with emerging challenges because of the structure of our banking system and because banks in Canada are well-managed, well-capitalized and well-regulated. The national structure of our banking system, with the largest banks operating in all provinces and territories across the country, makes them less susceptible to local economic fluctuations. For example, loans in one economic sector that is doing well offset loans to another sector that may be struggling. This system greatly contributes to our banks' ability to weather economic downturns in different sectors and regions of the country. Many of our banks are also highly diversified organizations that combine retail, commercial and investment banks in one financial group, allowing them to offset weaker growth from one area of the bank with stronger growth from another. Canada's financial system has also benefited from a streamlined regulatory system. Unlike some other countries with a wide array of different regulators, banks in Canada have two primary regulators: the Office of the Superintendent of Financial Institutions (OSFI) for prudential regulation and the Financial Consumer Agency of Canada (FCAC) for consumer matters. The efficiency of this system means banks and regulators are in constant communication, which helps ensure our financial system is prepared for any challenges that may arise. The true strength of the country's financial system, however, lies in the sound management of our banks. Mortgages represent a significant portion of bank loans and banks in Canada have always been prudent mortgage lenders. This is one of the main reasons they avoided the financial difficulties that banks in the United States experienced over the past three years. In contrast to the United States, the Canadian banking model is one in which mortgages are originated to stay on the bank balance sheet, which is an incentive to lend prudently. The effectiveness of this approach is evident when looking at mortgage-inarrears statistics in Canada - for the country's largest banks, less than half of 1% of all mortgage-holders have gone more than three months without making a payment. This number has remained well below levels in the United States and the U.K. and has been stable for more than two decades, in times of high and low unemployment, high and low interest rates and a strong or weak Canadian dollar. Our banks lend carefully and their customers make payments regularly. The banks' prudent management is also evident when looking at their capital levels; the amount of money they maintain on hand to cushion against potential financial shocks. Before the global financial crisis, during the crisis and still today, banks in Canada are some of the best-capitalized banks in the world. Among Canada's largest six banks, levels of the most secure capital, known as Tier 1 capital, stand at more than three times what is required by current global standards and close to double the standard set by OSFI. There were lessons for everyone in the last global financial crisis and there is a widespread recognition that reforms to the world's financial system are needed. Here at home, banks have worked closely with the federal government to develop new rules around mortgage lending to ensure that the market remains strong and that Canadians continue to take on affordable mortgages. On the global stage, Canadian banks, along with the Bank of Canada, OSFI and Finance Minister Jim Flaherty, have been actively involved in addressing the fallout from the financial crisis, including working to influence the form of the new capital and liquidity standards collectively known as Basel III. While Canada's economy continues to recover, we can't forget that Canada's banks are well-managed, well-capitalized institutions and are operating within a well-regulated and secure financial system. Banks are also closely monitoring economic and financial conditions at home and abroad and taking steps to ensure that they can absorb the next challenges and possible shocks that come their way. It is the prudent thing to do. September 15, 2011 Jonathan Chevreau Financial Post Sept. 14, 2011 10:17 AM ET Canadians still don't seem to be getting the message about carrying excessive household debt. On Tuesday, Statistics Canada reported the ratio of household credit-market debt to personal disposable income inched up from 147% in the first quarter to 149% in the second. Household credit-market debt includes consumer credit, mortgages, loan debts of households, non-profit institutions serving households and unincorporated businesses. The higher ratio indicates debt levels are growing faster than the growth in personal disposable income. Despite warnings by policymakers about taking on too much debt, households continue to take advantage of historically low interest rates to take on more mortgages and consumer loans. Until this summer, the general feeling was interest rates were near to bottoming, prompting warnings that interest rates could only rise. But the troubles in Europe and the United States, coupled with a scary stock-market correction in August, have pushed back the expected inflection point when rates would bottom. When the U.S. Federal Reserve announced it would keep rates low for at least two more years, that quashed expectations the Bank of Canada would soon boost rates. The latter warned earlier this year that the number of Canadians vulnerable to an adverse economic shock had risen to its highest level in nine years. Statscan said per capita household net worth fell for the first time in a year to $184,300 from $185,500 in the first quarter. This 0.3% drop occurred in spite of rising home prices and was caused by a drop in stock prices and equity mutual funds, whether held in pension plans or individual retirement accounts. (The S&P/TSX composite index fell 5.9% in the quarter). At the Toronto edition of the MoneyShow last week, TD deputy chief economist Derek Burleton warned we are in a "balance-sheet recession that will take years to shake off." As a result, Burleton said, interest rates will stay "very low for a long time." At the same show, Danielle Park, of Barrie, Ont.-based Venable Park Investment Counsel Inc., told attendees to "keep your powder dry, pay off debt and use these record low interest rates to get debt free and downsize real estate sooner than later, where necessary: Canada has gone on longer than it ought to have in this cycle." In his new book, The Wealthy Barber Returns, David Chilton warns against both the dangers of saving too little and taking on too much debt. Chilton sees it as just a matter of time before interest rates start rising. "We're not going to be living in an easy-credit environment forever," he writes, "At 3%, all this borrowing is manageable. At 7%, it's tough. At 11%, buy some canned goods and head for the basement - we're in big trouble." Of course, the rates-risingsoon scenario assumes some element of economic recovery. But it's by no means certain that developed economies like North America won't succumb instead to the kind of deflation Japan has suffered from for two long decades. That's the gist of recently published books like Gary Shilling's The Age of Deleveraging or John Mauldin's Endgame. Inflation helps debtors, whether governments or individuals, but deflation makes it that much tougher to get out of the hole. Worse, in a deflationary environment, there's a bigger possibility of job loss, which makes debt servicing that much more problematic. As the old joke runs, it's a recession when your neighbour loses his job. It's a depression when YOU lose your job. I agree with Park and Chilton. Make hay while the sun shines: the time to cut debt is while you're still working and interest rates are low. It's easier to reduce mortgage principal when rates are low and more of your payments are going to principal, rather than interest. If you're considering buying a home, don't view low rates as an opportunity to get "more" house. View it as a chance to get a modest home you can own free and clear as soon as possible. If and when interest rates do rise, you want to be on the receiving end of payments (as a bond holder), not on the dishing-it out end. September 14, 2011 September 13, 2011 By Krystal Yee Life insurance isn’t something that most 20-somethings spend time thinking about as they enter the work force, buy first homes and start to settle down into a routine. In fact, most 20-somethings probably think they are invincible – and that's a huge reason to think about buying life insurance. Nobody wants to think about their own mortality, especially while young and healthy. But the best way to ensure that you can get the right kind of coverage when you need it, is to buy it when you don’t. The earlier in life you buy your life insurance, the cheaper it will be. Here are four reasons why you would want life insurance in your 20’s: 1. You have debt. If you get into an accident tomorrow ad are seriously injured, who will pay your mortgage if you can't work? What about the $30,000 in student loans, or your credit card debt? Your parents or someone in your family will be left to take care of those expenses. Life insurance protects you from becoming a financial burden. 2. You have children. If you are a single parent, or if you have a loved one who is dependent on your income, taking out a life insurance policy will cover the future expense of your children’s college education. 3. You have dependents. A dependent could be a family member, a partner, or anyone who is dependent on your income – or who will be dependent on your income in the future. If your income vanishes, will your dependents be able to save and retire on their own? 4. Life insurance is cheaper when you’re younger. You can’t beat the life insurance rates you can get when you’re in your 20’s.  And if you wait until you actually need life insurance? Well, that’s the worst time to buy.  Buying early in life, when you are still healthy, will allow you to lock into affordable premiums for decades. When you have decided to purchase life insurance, the next step is to determine how much coverage you’ll need. Take into consideration expenses such as a funeral, end-of-life medical expenses, living expenses and future education costs for your dependents, as well as any debt you might carry – such as mortgage, vehicle, student loans, credit cards, etc. In a past Moneyville article, Paul Russell, a writer with a background as a pensions lawyer, says that a good rule of thumb to determine how much coverage to purchase is: your family debt + $20,000 for funeral and taxes + $60,000 per child for education + 20 times the annual income you want to replace. Make sure to check out Moneyville’s life insurance calculator as well. If you are covered by life insurance through your extended health package at work, take the time to check and see how much your employer’s insurance provides, and calculate whether that amount is sufficient enough to cover your debts and support your family after you are gone. We spend money each year insuring our homes, our cars, and our possessions – it only makes sense we take the time and effort to insure our lives as well. Do you own a life insurance policy? September 13, 2011 Published on September 12, 2011 The Canadian Press The bank reduced its forecast for the Canadian economy after a "mild contraction" in the second quarter and softer growth in the U.S. and eurozone economies. Chief economist Craig Wright said financial market volatility took a toll on business and consumer confidence this summer. However, he expects the global economy will avert another downturn despite the slide of late in the equity markets and in commodity prices. RBC Economics has cut its U.S. growth projection by one percentage point to 1.7 per cent for 2011. Wright said that RBC is "cautiously optimistic" that Canada's economy will grow by 2.5 per cent next year, matching the bank's forecast for the United States. Saskatchewan is expected to lead the way in terms of economic growth this year, with Alberta and Newfoundland and Labrador following closely behind. Manitoba is projected to improve in 2011, while Ontario, British Columbia and Prince Edward Island will dip slightly below the national average, RBC added. Quebec, along with New Brunswick and Nova Scotia, will trail, RBC predicts. The Bank of Canada is expected to follow the U.S. Federal Reserve's lead and keep interest rates low. The key lending rate is expected to remain at one per cent until mid-2012, the report said, adding that lower commodity prices should help reduce Canada's inflation rate to within the central bank's target range of two per cent. Meanwhile, the bank says Canada has recovered the jobs lost during the recession. As of August, 164,000 more people were employed, with the gain concentrated in full-time jobs. The business investment cycle is also on the upswing in Canada, growing at double digit rates throughout 2010 and the first half of this year, RBC said. Businesses have cash available due to improved profits and better access to financing. And the strong Canadian dollar has also provided support for increased investment. September 12, 2011 Financial Post · Sept. 9, 2011 | Last Updated: Sept. 9, 2011 12:05 PM ET OTTAWA — Canadian housing starts declined more than expected last month, Canada Mortgage and Housing Corp. said Friday. There was an annual rate of 184,700 homes for which work began on in August, the federal housing agency said. That was down 9.7% from 204,500 in July, which was revised down slightly from the previously reported 205,100. Economists polled by Bloomberg expected a housing-start rate of 200,000 last month. “Housing starts in August were in line with current demographic fundamentals and are consistent with CMHC’s recent housing market outlook,” Mathieu Laberge, deputy chief economist at CMHC’s market analysis centre, said in a statement. In urban areas, housing starts were down 10.2% to 165,800. That included a 15.5% decline in multiple-housing starts and 0.3% decline in singles. Rural starts were down 5% to 18,900 in August. September 12, 2011 However, a much larger decline in the labour force meant the unemployment rate fell to 5.2 per cent, down from 5.5 per cent the month before. Jobs are measured on a three-month moving average basis. The participation rate in the local labour force also slid to 71 per cent from 71.3 per cent in July. Ottawa lost around 1,600 jobs in July after adding around 2,600 jobs in June. However, Statistics Canada notes it only considers a local job loss or gain of 3,700 jobs to be significant. The last that happened was in September 2010, when the region lost 4,000 jobs. Nationally, Canada lost jobs for the first time in nearly half a year as unemployment increased to 7.3 per cent in August, up 0.1 percentage points. The country shed 5,500 positions. Economy consensus pegged a job gain of 25,000 in the education sector as students returned to school, but the largest increases came in health and social assistance. Full-time employment across the country increased by 25,700 and part-time work declined by 31,200. – With files from The Canadian Press September 9, 2011 Mortgage Brokers Ottawa is pleased to sponsor The Bear's latest promotion, "Locked and Loaded".  We were happy to host the Bear on location at our Island Park office today as part of the contest. To learn more about how you can win visit www.thebear.fm   September 7, 2011 OTTAWA — The Bank of Canada on Wednesday kept its key lending rate on hold but warned the slowing global economy and growing financial uncertainty means monetary stimulus will need to continue for the time being.  The central bank said the European debt crisis "has intensified" and financial market volatility "has increased sharply" amid slower global economic growth.  "Reflecting all these factors, the bank has decided to maintain the target for the overnight rate at one per cent," it said in a statement.  Many economists have now ruled out a move on rates until the second quarter of 2012 or even later.  "In light of slowing global economic momentum and heightened financial uncertainty, the need to withdraw monetary policy stimulus has diminished. The bank will continue to monitor carefully economic and financial developments in the Canadian and global economies, together with the evolution of risk, and set monetary policy consistent with achieving the (bank's) two per cent inflation target over the medium term."  The Canadian economy contracted by 0.4 per cent in the second quarter of this year, which the Bank of Canada said was "largely due to temporary factors."  During an appearance last month before the House of Commons finance committee, Bank of Canada head Mark Carney acknowledged the economy was slowing but said he did not expect that to lead to a recession.  He also said it was unlikely that Europe and the United States would see a major economic downturn.  The bank had earlier projected growth of 2.9 per cent in 2011 and 2.6 per cent in 2012.  On Wednesday, the central bank said that although the Canadian economy stalled in the second quarter, it still expects "growth will resume in the second half of this year."  That growth will be led by business investment and household spending, "although lower wealth and incomes will likely moderate the pace of investment and consumption growth," the bank said.  It said financial conditions in Canada have "tightened somewhat and could tighten further" if global financial conditions "continue to deteriorate."  Also, the bank said Canadian exports are "expected to remain a major source of weakness, reflecting more modest global demand and ongoing competitiveness challenges, in particular the persistent strength of the Canadian dollar." September 7, 2011 Ottawa, Ontario - The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent. The global economic outlook has deteriorated in recent weeks as several downside risks to the projection in the Bank’s July Monetary Policy Report (MPR) have been realized. The European sovereign debt crisis has intensified, a broad range of data has signalled slower global growth, and financial market volatility has increased sharply. Recent benchmark revisions show that the U.S. recession was deeper and its recovery has been shallower than previously reported. In combination with recent economic data, this implies that U.S. growth will be weaker than previously anticipated. The Bank expects that American household spending will be even more subdued in the face of high personal debt burdens, large declines in wealth and tough labour market conditions. Fiscal stimulus in the United States will also soon turn into material fiscal drag. Acute fiscal and financial strains in Europe have triggered a generalized retrenchment from risk-taking and could prompt more severe dislocations in global financial markets. Resolution of these strains will require additional significant initiatives by European authorities. Growth in emerging-market economies has been robust, although its rate and composition will be affected by weakness in major advanced economies. While commodity prices have declined owing to diminished global growth prospects, they remain relatively high. Largely due to temporary factors, Canadian economic growth stalled in the second quarter. The Bank continues to expect that growth will resume in the second half of this year, led by business investment and household expenditures, although lower wealth and incomes will likely moderate the pace of investment and consumption growth. The supply and price of credit to businesses and households remain very stimulative. However, financial conditions in Canada have tightened somewhat and could tighten further in the event that global financial conditions continue to deteriorate. Net exports are now expected to remain a major source of weakness, reflecting more modest global demand and ongoing competitiveness challenges, in particular the persistent strength of the Canadian dollar. Slower global economic momentum will dampen domestic resource utilization and inflationary pressures. The Bank expects total CPI inflation to continue to moderate as temporary factors, such as significantly higher food and energy prices, unwind. Core inflation is expected to remain well-contained as labour compensation growth stays modest, productivity recovers, and inflation expectations remain well-anchored. Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. In light of slowing global economic momentum and heightened financial uncertainty, the need to withdraw monetary policy stimulus has diminished. The Bank will continue to monitor carefully economic and financial developments in the Canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2 per cent inflation target over the medium term. September 7, 2011  By Sheryl Smolkin A friend of mine recently told me about a break- in at her home. The front door was smashed off the frame and all her jewellery was stolen. The loss of heirloom pieces that had belonged to her mother was devastating.As a result, she installed an expensive burglar alarm system including cameras at both the front and the back of the house.While Statistics Canada reports that alarm systems and motion detectors have led to a steady reduction in home break-ins in recent years, they may not deter a determined thief. They should be combined with other measures that help keep burglars from finding your home an attractive target.Here are some things you can do at little or no cost:1.    Take your name off your mailbox: This will prevent thieves from calling 411 to get your phone number. Many thieves will call a house they are planning to rob first to see if you are home.2.    Never leave a note on the door: If you are going out and expect a delivery, resist the temptation to leave a note on the door asking the post office to leave the package with your neighbour.3.    Stop mail or newspapers: Before you go on vacation, stop mail and newspapers. Even if you leave town for a weekend, have a neighbour pick up these items plus unsolicited fliers.4.    Get a yappy dog: Dogs are not free, but if you have one that barks when people come to the door, pay attention. He may know something you do not. Even the most affectionate puppy like mine can scare away bad guys.5.    Prune trees or shrubs: If you have verdant greenery close to the house, tame it regularly so burglars do not have a place to hide.6.    Hide you spare key carefully: A key left under the door mat, on the ledge over the door or under a flower pot is an “open door” invitation to a dishonest person. Be more creative, or leave it with a neighbour.7.    Doors and windows: Always lock doors and windows and change the locks if you move into a new home or lose the key. Combination locks are becoming more popular because it is easier to change the code than replacing the whole lock. Put security bars on basement windows and secure sliding doors with a stick or a metal bar.8.    Don’t leave valuables in the open: If a thief can see valuables like art, electronics, jewellery or silver through a door or window, you could become a target. Consider a bolted down, fireproof safe.9.    Make the house look lived in: Have the grass cut and the driveway shovelled when you are away. Keep a car in the driveway. Use timers on lights, radios and TVs. Don’t put a message on your voice mail announcing your absence.10.    Put neighbours on alert: Let your neighbours know how long you will be away and if someone is coming to feed the cat. Make sure they have a way to contact you in case they see something strange happening around your home.11.    Don’t widely advertise your plans: Never mention you are going to be away to strangers or tweet your plans to all of your 10,000 followers.12.     Hire a house-sitter: Getting a friend to house-sit while you are away is a great way to keep your house safe from burglars. And if you have pets that need care, in-house care for them could be an added bonus.Desperate, dishonest people are hard to deter. But they may also take the path of least resistance. With a little preparation, you may be able to prevent that path from leading to your front door. September 6, 2011 Nancy Woods Globe and Mail Update Published Thursday, Sep. 01, 2011 1:43PM EDT Dear Nancy, I’m wondering what your view is right now on new mortgages - whether fixed or variable is the way to go. Studies I have read suggest variable has historically been the better deal long term. But with fixed mortgage rates so low right now, isn’t it better to lock it in for five or more years? Thanks, David   Dear David, It is true that variable-rate mortgages can have lower overall interest costs in the long run than fixed-term mortgages. What you need to assess is how are you able to financially cope if your mortgage payment increases substantially? I would have you plan with the assumption of having a fixed-rate mortgage and see if it is financially manageable. If so, then get the variable mortgage and make the fixed rate payments. Don’t just budget with the current rates of your mortgage payment. If you are worried about interest rates rising drastically, and you are looking for piece of mind, then the fixed rate may be the way to go. I would like to point out that the variable-rate mortgages are based on the bank rate, which reflects short-term interest rates. Fixed mortgages are based on longer-term bond rates. If you are contemplating a five-year fixed rate mortgage, be aware of the trends of the bond yields and interest rate curve rather than focusing on the bank rate. Many people confuse the two. There are a number of financial institutions that will let you choose a combination of fixed and variable portions of your mortgage. With that, you could have a portion of your mortgage with a variable rate, and another portion that is fixed. You'd have the flexibility to pay down whichever portion at any particular time carries the higher interest rates, should you want to pay off your mortgage faster. September 2, 2011 John Greenwood, Financial Post · Sept. 1, 2011 | Last Updated: Sept. 1, 2011 10:02 AM ET Despite repeated warnings that that they are borrowing too much money, Canadian consumers continue to rack up debt at a quick clip.   That’s one of the main conclusions to be drawn from the most recent results from the domestic banks. Despite headwinds in capital markets and other areas, the big banks all benefitted from higher consumer loan volumes, especially in residential real estate.   Colleen Johnston, chief financial officer of Toronto-Dominion Bank, said she’s confident that TD won’t get caught out in the event of a rise in interest rates because even though TD has one of the biggest consumer loan portfolios, its customers are prudent borrowers.   “We are comfortable with the lending we are doing,” Ms. Johnston said in an interview. While interest rates will likely rise in the next couple of years resulting in “some stress” among households in this country, she said TD’s customers are better prepared than the average consumer.   The comments come as Canada’s second biggest bank posted a 23% jump in third quarter profit on the back of higher loan volumes including an 8% increase in domestic residential mortgages.   Back in the spring, Jim Flaherty, the federal finance minister, tightened up mortgage lending rules as a way to slow the level of mortgage borrowing by Canadians. Recent evidence suggests the changes are having some effect on certain parts of the mortgage market but as a whole it continues to grow.   According to Statistics Canada, the ratio of household debt to income is at the highest level ever. Mr. Flaherty’s action on mortgage rules came after Mark Carney, the governor of the Bank of Canaada, warned that the high level of consumer borrowing had left the broader financial system vulnerable. September 1, 2011 Tavia Grant Globe and Mail Update Published Wednesday, Aug. 31, 2011 8:47AM EDT Last updated Wednesday, Aug. 31, 2011 10:19AM EDT The Canadian economy shrank 0.4 per cent in the second quarter of the year, the first contraction since the recession, as supply disruptions slammed exports. The country’s gross domestic product registered a sharp slowdown in the April to June period after a revised 3.6-per-cent reading in the first quarter of the year, Statistics Canada said Wednesday. The slump reflects a number of temporary factors, as wildfires in northern Alberta and maintenance shutdowns sliced oil productions and Japan’s tsunami caused supply disruptions. Details of the report – which show activity picked up at the end of the quarter – suggest Canada will not fall back into a recession, economists said. “While the headline number is disappointing, the details of the report are more upbeat, and do not signal a recession,” said Diana Petramala, economist at Toronto Dominion Bank. “Look for a better third quarter,” said Jennifer Lee, senior economist at BMO Nesbitt Burns in a note. The report comes after both Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney sought to reassure Canadians earlier this month, saying Canada will likely avert any recession, and that they are prepared to act if they are wrong. At a news conference Wednesday, Mr. Flaherty described the reading as a “pause” and repeated he sees modest growth for the rest of the year. “The Canadian economy is still very fragile,” Mr. Flaherty said in Toronto, although the “fiscal fundamentals in this country are good.” Domestic demand remains strong, with robust business investment and solid consumption, he added. The economy expanded 0.2 per cent in June, which economists took as an encouraging sign that activity picked up in the third quarter. Economists had been expecting a flat reading for the quarter and a 0.1-per-cent increase in June. The second quarter contraction is the first time the economy shrank since the second quarter of 2009. The weak reading suggests the central bank will not raise interest rates at its meeting next week. “BoC rate hikes should be off the table for the foreseeable future,” said Jonathan Basile, director of economics of Credit Suisse. Oil and gas extraction tumbled 3.6 per cent in the quarter due to disruptions of petroleum production. Manufacturing output fell 0.9 per cent as auto and auto parts production was hurt by Japan’s woes. Still, business investment in plant and equipment rose 3.7 per cent in the quarter, a sixth straight quarterly increase. Government spending rose, along with consumer spending. August 31, 2011 By Krystal Yee A home is most likely going to be the most expensive purchase of your life, yet according to a recent 2011 Canadian Mortgage and Housing Corporation survey, only 48 per cent of first-time home buyers choose to use a mortgage broker to help them navigate through the financial aspect of the home buying process. A mortgage broker acts as a liaison between lenders and borrowers in order to provide you (the borrower) with the best available terms and rates. They will do all of the paperwork for you, and will usually work with dozens of lenders in order to secure the financing options for you. When I started the home buying process earlier this year, I knew I was going to use a mortgage broker to help me secure financing on my first home. Here’s why: A mortgage broker saves time and money As a first-time home buyer, the most important advantage of a mortgage broker is their ability to approach and network with various lending institutions to try and secure the best terms and rates for you. Scott Dawson, a mortgage broker for Verico Paragon Pacific Mortgages, suggests that a good broker can also be a consistent person of contact throughout the sometimes confusing home buying process. “If a first-time buyer is going through the process alone, and going from bank to bank looking for the best rates, not only is it wasting their time, but they also won’t get the same level of service as they would by working with just one individual,” he said. Not only is it easier to deal with one person as your point of contact regarding everything related to your financing, but if you are buying your first property, you will likely have a lot of questions to ask. “You will want to find a mortgage broker that is willing to spend the time educating first-time buyers along the way,” Dawson said. “Additionally, brokers work outside of normal banking hours, so it’s convenient for clients to get a hold of us.” The service is free for borrowers Mortgage brokers work for you, and their service is completely free. So instead of charging you a fee, they are paid a commission from the lender once they close a deal. A broker’s commission can vary, depending on the type of mortgage you choose. For example, fixed terms typically pay more commission than variable terms, and brokers that bring in more business to lenders could receive additional bonuses. Your credit rating is protected A mortgage broker will only pull your credit report one time, and use it for all of the lenders. Whereas, if you went shopping for rates yourself, chances are that each lender would pull their own copy of your credit score. This can negatively impact your credit score in a hurry! When choosing a mortgage broker, it is important to work with somebody that you can trust. Don’t be shy asking as many questions as you want, or speaking with several different brokers until you find one that fits your personality. August 30, 2011 Tara Perkins Globe and Mail Update Last updated Monday, Aug. 29, 2011 11:02AM EDT Canada Mortgage and Housing Corp. says that it has seen mortgage refinance activity drop nearly 40 per cent since Ottawa brought in new rules. The crown corporation, which must now issue quarterly financial results as a result of a new law, issued its second-quarter results on Monday and they include insight into how Canada’s housing industry is faring. CMHC said that refinance activity fell by almost 40 per cent and has continued to remain around that level since Finance Minister Jim Flaherty made changes to the mortgage insurance rules earlier this year. One of those rules was to reduce the maximum amount that Canadians can borrow in refinancing their mortgages from 90 per cent to 85 per cent of the value of their homes. That rule kicked in on March 18. Among the other rule changes, Mr. Flaherty cut the maximum term of new mortgages where the home-buyer’s down-payment was less than 20 per cent from 35 years to 30 years. CMHC said Monday that after the rules took effect purchases of CMHC homeowner mortgage insurance initially fell by about 10 per cent, and by the end of June was still about five per cent below the level of sales before the rule changes. But CMHC’s profits still rose by $61-million or 19 per cent, to $383-million, for the three months ended June 30 thanks to earnings from mortgage-backed securities, gains from selling financial instruments, and lower expenses. August 29, 2011 OTTAWA — When Ian and Wendy Jackson moved into an adult-lifestyle bungalow in April they were thinking future tense. Both 62, they are still in good health and working. But they also know that in 10 or 15 years they won’t be as spry. Anything from creaky hips to being dependent on a walker is possible. Staying in their large, single home would have, sooner or later, become impractical. So they moved into Larco Homes’ upscale Solera community near Hunt Club and Albion roads (larcohomes.com), where their bungalow includes design features like an open concept and extra-wide doorways that mean even a wheelchair won’t present a major problem. “We were looking ahead, getting the moving-and-settling-in done now,” says Ian. Adds Wendy, “We didn’t want our children to worry about us. We wanted to be self-sufficient. And we can totally live on this one level. There’s a second bedroom we can use as a den, and the laundry room is on this level.” The Jacksons, who felt a condo or apartment wouldn’t be large enough to accommodate overnight visits from their grandchildren, have decided to be proactive about staying in their own home as they age, a concept known as aging in place or aging at home. It’s an example the rest of us boomers who are still tooling around our two-storey, maintenance-heavy houses would be wise to heed. But there are two main problems: Many boomers are in denial about their greying hair, and home builders for the most part haven’t yet clambered on the aging-in-place bandwagon. “No one wants to think about getting older, about (it) being harder to get around,” says Scott Puddicombe, owner of Puddicombe Access Solutions in Ottawa (puddicombeaccess.ca). He employs principals of universal design, ideas like easy-to-grasp lever handles, walk-in showers with no thresholds, and wheelchair- and walker-friendly entrances to create homes where anyone with a physical limitation can live more easily. Whether we want to think about it or not, the reality is that more of us than ever can look forward to age-related physical hurdles. According to a 2006 study from Statistics Canada, the number of Canadians over age 65 will double by 2036, increasing seniors’ share of the population from 13.2 per cent to 24.5 per cent. The Canadian Association of Gerontology says that the majority of aging Canadians want to stay in their own homes. Programs like Ontario’s Aging at Home Strategy can help by providing financial assistance for community support programs, assistive devices and the like. However, most of our homes are built for young, active families who can readily negotiate stairs, narrow halls and high kitchen cabinets. They are simply not geared to aging in place. Builders have been generally slow to respond to the shifting demographic and its need for universal design. A number of them do build adult-lifestyle bungalows, but those get snapped up quickly and don’t usually offer much more than an open concept and wider passageways. “We have both an opportunity and a responsibility to take (aging in place) into the market as quickly as possible,” says John Kenward, chief operating officer of the Canadian Home Builders’ Association. A 2008 survey for the association found that, nationwide, the majority of builders had included features for clients with disabilities in fewer than six per cent of their projects in the past year. Those project included new homes and renovations. Ottawa-based Phoenix Homes (phoenixhomes.ca) would like to expand its portfolio to include aging in place features, says vice-president of operations Rahul Kochar. But “we haven’t had requests from many people. The top end for us right now would be our adult-lifestyle bungalow.” Tartan Homes president Ian Nicol concurs. “In a perfect world, we’d have two or three models we could easily convert to universal access, but we only get an inquiry every two or three years. It is buyer- and market-driven, but if we’re smart, and I think we are, we’ll get ahead of the curve.” He adds that Tartan (tartanhomes.com) is open to customizing a home to meet special needs, and hopes to have a standard package of universal design upgrades available in the next few months. One problem is that while builders are good at responding to consumer demand, they are also “very conservative,” says Avi Friedman, an architecture professor at McGill University. He designed the Grow Home and Next Home, universal design-based dwellings that have resulted in thousands of homes in Montreal and inspired similar projects throughout North America. “(Developers) will go on selling single-family homes until there is no more demand,” he says. Friedman predicts that within a decade most homes will have to be designed to accommodate an aging population. He says Europe and Asia, where respect for the elderly is ingrained, are far ahead of us. In Japan, for example, the drive to put technology to the aid of older citizens has resulted in innovative housing ideas. They include a bedside device that takes blood pressure and even a blood sample and digitally transmits the results to a nurse who can follow up if necessary. On the other hand, if there’s not much demand, it’s hard to blame builders for not jumping all over aging in place. Eric Cosgrove, a real estate agent and member of the board of directors at The Council on Aging of Ottawa, says he sees builders wanting to contribute to affordable seniors’ housing but hamstrung by the need to make a profit — not always so easy when you’re building affordably — and the tangle of bureaucracy when they apply to the city for project approvals. Richmond-based Courtyard Developments (hydeparkrichmond.com) seems to have found a way around the affordable part by building the not-for-profit Hyde Park, an adult community of bungalows, apartments and retirement suites in Richmond that use a life-lease model. That model is an increasingly popular way of funding the construction of communities for elderly people who have assets but not a lot of income. Basically, residents buy shares in the development, giving them a return on investment, and the developer uses the investment to construct the homes. Depending on the unit, residents may have a choice of buying or just renting. As they age, Hyde Park residents can move from independence in the adult-lifestyle bungalows to the apartments or the comprehensive care available in the retirement residence. There’s also a medical facility planned for the site. “We are constructing a community, not building houses and apartments,” says president Steve Hyde. “Our goal is that people don’t have to move out of the community at all.” However, hold ups in municipal approval — the result of amalgamation and new water regulations — delayed the project for 18 months when it started a decade ago. Intense lobbying of City Hall by two potential residents helped finally move the approval process along. Still, the Hyde Park units don’t come equipped with a lot of universal design features: The bungalows, for example, are basically open concept and wheelchair-accessible. The current site has sold out its bungalows, but Hyde has another, similar project planned for south of Ottawa. It will have upward of 300 bungalows starting around $200,000. Ashlar Homes (ashlarconstruction.ca), a custom and pre-designed green builder working in Merrickville and other communities, includes an “Ease-of-Access” package in its offerings. Targeting the aging-in-place market, the package includes a roll-in shower, grab bars where specified, an easy-access kitchen and other design ideas. Yet, says Ashlar president Stefan Hamed, “I haven’t had any takers yet. People seem more interested in granite countertops.” Longwood Building Corporation (longwoodbuilders.com) has also been targeting the aging market. Like other builders, it’s constructed adult-lifestyle bungalows in a number of Ottawa communities. It’s also building the Montage, a condo near Billings Bridge Plaza. Most of the buyers so far are 50-plus, with one in his 80s, says Longwood sales manager Darice Greene. The condo units feature low-threshold patio doors that swing open rather than sliding for ready wheelchair access. At Greene’s suggestion, the design of the ensuites was changed from a large corner tub and small shower to a four-foot shower with a swing door. The company will also arrange custom kitchen cabinetry with pull-down shelves. One alternative to buying a new home is to build custom. In that case, you can include features like stacked closets that can later be converted to an elevator shaft, an option that custom builders say is growing in popularity. Such features recall Canada Mortgage and Housing Corporation’s (CMHC) FlexHousing, a concept developed in the 1990s. A FlexHouse is one that allows easy conversions — for example, turning one bedroom into two or an attic into a family room — as a family evolves. It also incorporates universal design features like sinks and cook tops that are open underneath to allow wheelchair access. A family could theoretically live in a FlexHouse for decades rather than upsizing and downsizing as needs change. Rather than buying or building new, some are renovating their homes. Lynda and Colin Welch did a bit of both by basically rebuilding their 30-year-old cottage in the Madawaska Valley into a year-round home. Both are still working, but Colin has had a knee replacement and suffers from arthritis. Their home now features a dumb waiter to haul groceries and other heavy objects up to the main level, a raised toilet and grab bars in the bathroom, lever handles on most doors, and pullout kitchen cabinetry for dishes, pots and pans. “It gets harder to do all these things as you get older,” says Lynda. They’ve also installed stairs with a wide tread and low risers that are easy to navigate and they’ve minimized floor coverings to avoid tripping on carpet edges, a common problem as we age and no longer step lively. Totally wheelchair accessible, the Welchs’ home is also energy efficient, an important factor as they shift to the fixed incomes of retirement. “We can also section off parts of the house that we won’t use, so that keeps heating costs down,” says Lynda. They’ve done all this without sacrificing esthetics. Their home is warm and comfortable, with features like a sunroom and a large, sheltered porch for outdoor meals and just relaxing. Ottawa-based HealthCraft Products (healthcraftproducts.com) is helping us age in style. Its Invisia Collection of grab bars and other bathroom accessories is sleek and contemporary. That’s a far cry from the soulless institutional look these items often have, a look that actually discourages people from installing them because they just about shriek, “You’re getting old!” Other aids include interior stair lifts with a chair to transport you from one level to the next. “The number one response when people get them is, ‘I can’t believe how much energy I have,’ ” says Puddicombe. “They say they used to use so much energy just going up and down the stairs.” A system for a straight staircase runs around $3,400, including installation, at Canada Care Medical in Ottawa (canadacaremedical.com). Curved stairs require a custom-built system running $10,000 to $20,000. The stairs usually need to be at least 81 centimetres wide. The company also sells porch lifts. Resembling an open elevator, they’re usually installed at the back of the house and will accommodate a wheelchair or even a scooter. They run $5,000 to $7,000 at Canada Care Medical but do require a concrete pad. Some boomers who are adding secondary suites, also known as granny flats, to their homes for their aging parents are thinking even longer term. Christopher Straka of Vert Design, an Ottawa sustainable design and development firm (vertdesign.ca), mentions an Alta Vista couple that’s adding an accessible suite for the wife’s 90-year-old mother. When the mother passes on, their children may take over the suite or the couple might themselves, turning the main house over to one or more of their children. “They are thinking of design for multiple generations. Doing things like building the suite at grade with wheelchair access, it doesn’t matter if you’re 25 or 55 or 95; it will work.” The City of Ottawa encourages the building of secondary suites by offering a tax incentive. CMHC offers a forgivable loan of up to $24,000 in southern Canada to build a secondary rental unit for a low-income senior or adult with a disability. CMHC also offers a forgivable loan of up to $3,500 to low-income seniors and landlords making other minor adaptations to allow aging in place. From adult-lifestyle bungalows to closets that become elevators to designer grab bars, the components to allow aging in place are out there. So is a rapidly greying cohort of boomers, who traditionally haven’t been shy about making their wants known. The hitch is putting all the pieces together. As the Council on Aging’s Cosgrove notes, “It’s a long-term project to turn the Queen Mary around.” August 26, 2011 OTTAWA — A much anticipated correction in the Canadian housing market is not in the cards, according to a report by the Canada Mortgage and Housing Corp.   In its third-quarter market outlook, the national housing agency forecasts the market will ease slightly but “remain steady”this year and next.   “Housing starts have been strong in the last few months, but are forecast to moderate closer in line with demographic fundamentals,” Mathieu Laberge, deputy chief economist for CMHC, said Wednesday. “Despite recent financial uncertainty, factors such as employment, immigration and mortgage rates remain supportive of the Canadian housing sector.”   In fact, CMHC revised up its outlook for 2011 housing starts to 183,200 units from 179,500 in its second quarter report. It forecasts the number will climb in 2012 to 183,900 units.   In 2010, there were 189,930 housing starts.   CMHC also forecasts existing home sales will total 446,700 units in 2011 — approximately the same level as in 2010, although slightly lower than its second quarter forecast of 452,100. It forecasts sales will rise “modestly” in 2012 to 458,000 units.   The outlook runs contrary to a report in July from TD Economics, which projected that Canada’s housing market was poised to correct over the next two calendar years, with resale activity falling 15.2 per cent and average prices dropping 10.2 per cent.   “A combination of more subdued job and household income growth, rising interest rates, the recent tightening in borrowing rules for insured mortgages and fewer first-time home buyers are expected to be the chief culprits behind the slowdown,” said the report, prepared by deputy chief economist Derek Burleton and economist Sonya Gulati.   Earlier this summer, BMO Capital Markets warned that the Canadian market could suffer a price setback if there is a rapid rise in interest rates due to higher inflation, an increase in unemployment because of a weak U.S. economy or a slowing in foreign investment.   CMHC, however, projects that despite a slowing in the second half, average resale prices will deliver an overall increase in 2011, and continue to rise, albeit at a more modest pace, in 2012. August 25, 2011 Tara Perkins AND Steve Ladurantaye Last updated Wednesday, Aug. 24, 2011 6:52AM EDT Some Canadian banks are hiking their variable mortgage rates, seeking to pump up its profit margins as it becomes evident that interest rates will remain low for some time to come. Royal Bank of Canada (RY-T50.930.871.74%), the country’s largest bank, kicked off the increases on Tuesday, raising the rates on its five-year variable closed residential mortgages by 0.20 percentage points. As a result, the price of its current special offer rate is now prime minus 0.45 per cent. Bank of Montreal (BMO-T60.220.420.70%) followed suit hours later with a 0.15-percentage-point hike. The prime rate is currently 3 per cent. The profit margins that banks are earning on variable rate mortgages have become extremely thin. That’s becoming more of a problem for lenders because there are already signs that Canadians are piling back into variable-rate, as opposed to fixed-rate, mortgages. The trend is being fuelled by diminishing expectations that the Bank of Canada will raise interest rates significantly in the near future, expectations that fell further after the U.S. central bank recently signalled it intends to keep rates at rock-bottom levels well into 2013. The moves by RBC and BMO signal that they are choosing profits over market share. RBC tends to lead the pack on mortgage-rate changes and some other rivals are likely to follow suit. But some might decide to keep rates low with the hope of luring new customers who may eventually lock in to more profitable fixed-rate mortgages. A spokesperson for RBC said that mortgage rates are tied to the bank’s funding costs, which change from day to day. “Our long-term funding costs have gone up considerably due to global economic concerns, and while we have held off in passing on these rate changes to our clients, it is now necessary for us to increase this mortgage rate,” the spokesperson said. The last time RBC adjusted the variable closed posted rate was in January, when it dropped it from prime minus 0.15 per cent to prime minus 0.20 per cent. That posted rate (as opposed to the special offer rate) is now the same as the prime rate. Prime minus 1 per cent was common prior to the financial crisis, when those rates, which tend to move in step with the central bank’s benchmark rate, were higher. Given that interest rates and prime rates remain depressed, “we’re going to have low mortgage rates, both fixed and variable, for at least another year and a half,” said Jim Murphy, chief executive officer of the Canadian Association of Accredited Mortgage Professionals. Alyssa Richards, CEO of Ratehub.ca, said banks tend to move their variable rates higher as they near the end of their fiscal years to help pad their profits and meet targets. With the fourth quarter under way, she said the timing shouldn’t come as a surprise. “You start to see some tricky stuff going on around this time of year,” she said. “The takeaway for a buyer is that you should probably get a pre-approval if you’re in the market, because they’ll lock you in at a rate for up to 120 days.” Canada’s big banks report their earnings over the course of the next two weeks, and the pressure on their lending margins in Canada is being watched closely by analysts and investors. Tough competition for deposits coupled with low interest rates have compressed the amount that banks earn from their loans. Ratehub.ca tracks mortgage rates, and Ms. Richards has found the number of people searching the site for variable rate mortgages has skyrocketed in the last several months because rates have been so low. And with the stock market diving and the economic outlook deteriorating, people believe rates will stay low for some time yet. “People are looking at what’s happening out there and thinking that it’s so tempting to go variable,” she said. “It’s all about strategy.” RBC, Canada’s biggest mortgage lender, had a Canadian mortgage portfolio of about $157.7-billion at the end of the second quarter, up from $149.4-billion a year earlier. Chartered banks hold more than $548.5-billion worth of residential mortgages in Canada. August 24, 2011 For children, the excitement of moving into a new home is often clouded by uncertainty. Parents can ease the transition — starting at the dinner table. The ritual of sitting down to a family meal can help kids start to feel at home, said Nancy Darling, a psychology professor at Oberlin College in Oberlin, Ohio. She also urges adherence to bedtimes. “When kids feel like everything is changing, they need that stability,” she said. “They need attention and stability.” That may mean anything from choosing familiar paint colours in the new house to letting kids be part of decorating decisions. Barbara Miller, an interior designer in Portland, Ore., who has moved with her children three times, painted their new rooms the same colour as their old ones. “I try to keep things as much the same (as possible) — especially if they’re nervous,” said Miller. Moving can be more disruptive for kids than parents realize, added Doug Tynan, a child psychologist with the Nemours Foundation in Newark, Del. Be prepared to handle tears or unusual behaviour as children adjust to their new setting, he said. “Don’t take it personally if they walk into a wonderful new house and burst into tears,” said Tynan, who estimates it takes five to six weeks for children to adjust to a move. He recommends that parents talk openly with children about the move as soon as they decide it’s going to happen. “The more information the better,” he said. “Be as up front as possible.” When John Seyerle’s fellowship was ending at a hospital in Columbus, Ohio, he and his wife, Maria, told their daughters, Anna, 8, and Sophia, 5, that a move might be in their future. When he took a job in Cincinnati, the couple took the girls house hunting. “We did talk about what their criteria were for a new house,” Maria Seyerle said. “They wanted a swing set and tub with jets.” The girls, who got their swing set shortly after moving into their new home in June, have adjusted well, Maria Seyerle said. “That’s not to say that they don’t have their moments of being sad,” she said. “We’ve made it clear that we have mixed emotions too.” Tynan, Darling and Miller offered these additional tips to help children adjust to a new home: •Introduce children to their new home: If possible, take them to the new house before the move. If they don’t have a chance to see the interior, take photos or show them the online listing. Talk about how the family will use the new spaces. •Let them help arrange their new space: Give kids a floor plan of their new room and let them decide where to place the furniture. •Show them their new school: If the school has a website, spend time online getting to know the building and its teachers. Arrange to visit the school in person as soon as possible. •Pack with care: Pack the kids’ room last so they face as little disruption as possible. Unpack their room first at the new house. •Let them help: Give children a box to pack. Tell them to put their most valuable possessions in it. If possible, let them carry the box with them when travelling to the new house. •Show kids around the new house: When you arrive, take kids on a tour. Point out the location of light switches, bathrooms and other useful details. Make sure children know how to get to their parents’ room during the night. Consider using night lights or placing glow-in-the-dark stickers on light switches to help kids feel more comfortable. •Take them around the neighbourhood: Visit a playground or other attractions they might like. Point out positives, such as proximity to a pool, ball field or ice-cream shop. •Keep children active: Sign them up for sports teams, classes and other extracurricular activities as soon as possible. If the move occurs during the summer, try to register for a camp or class that will include local kids. August 24, 2011 By Mark Weisleder Closing day in a house deal is a milestone for both the seller and the buyer. To make it go smoothly, it is very important that both buyer and the seller are properly prepared. Here’s a checklist if you are selling: 1. Make sure you have given your lawyer a copy of any deed, mortgage, survey and current property tax bills. You should have received these from your lawyer when you bought the house. 2. Do not cancel your household insurance policy until you have heard that the deal has closed. Also, if you are moving out more than 30 days before closing, you need to notify your insurer that the home will be vacant. This way, you will still be covered if anything happens in the home up to the closing date. 3. You will visit your lawyer a few days before closing to sign the papers. Make sure you give one set of keys to give to your lawyer, which will be passed on to buyer’s lawyer at closing. 4. If you are a non-resident of Canada, you must obtain a certificate from Canada Revenue Agency regarding any income tax payable, or else the buyer will be holding back 25 per cent of the sale price until you do get it. Non-resident means you have not lived in Canada at least 183 total days in the past year before the closing day.  This can take up to two months so let your lawyer know right away so that the proper application can be filed. 5. Have all your utility meters read on the day of closing. That way you will only be responsible for your share of utilities. Also notify your cable and telephone provider so that your service can be disconnected. If your house is heated with an oil tank, you need to make arrangements to fill the tank on the closing day. 6. Cancel any pre-authorized or postdated cheques at your bank, to make sure you don’t pay for anything after closing. 7. As you have to be out of the property when it closes, arrange to move out before 5 p.m. Here’s a checklist if you are buying: 1. Schedule your pre-closing visit shortly before closing, so that you can conduct your final inspection to make sure that the home is in the same condition as when you signed the offer. 2. Arrange moving time late in the afternoon, as that is likely when the seller will have moved out. If it is a condominium, and you need use of the elevator, contact the management company well in advance of closing to reserve the elevator. 3. Fire insurance must be arranged for the full replacement cost of the home. If it is a condominium, you need a policy to protect your contents and liability. Do not leave this to the last minute. 4. If you are arranging a mortgage for less than 20 per cent down, the bank will be deducting certain costs, such as mortgage insurance, appraisal fees and HST. Find out early what all these deductions will be, as you will have to come up with any difference needed to close your deal. Make sure you have provided the lender with all required proof of income, or down payment well in advance so that it does not delay the money. 5. Your lawyer will be receiving a statement of adjustments just before closing. This could add to your closing costs if the seller has prepaid some expenses, especially property taxes. Find out exactly what this is as it can add up to 0.5 per cent more to what you may owe. 6. You will need to deliver, at least 2 days before closing, the balance of money needed for your lawyer to close the deal, by certified cheque, money order or bank draft. 7. Let the lawyer know how you will be taking title to the property. If you take as joint tenants and one of you passes away, the other party immediately becomes the owner. If you take as tenants in common, you can transfer your interest to a beneficiary under your will. 8. Tell your lawyer to order title insurance for you. This will protect your property against title defects, survey issues, work orders and frauds while you own the property. 9. Arrange for your cable and telephone providers to install service on the day of closing or immediately after closing. 10. Contact the utility companies, to make sure they read the meters on closing, so that you are only responsible for charges after you move in. Being prepared in advance will ease the stress of closing day and hopefully begin the creation of happy memories for you and your family. August 23, 2011 RBC's quarterly housing trends and affordability index stated home resales fell 4.5 per cent in the first quarter of 2011 and 4.2 per cent in the second, a trend it said was linked to moderate price increases across all housing types. On average, housing costs took up 41.2 per cent of a household income, up 1.3 percentage points. "Although still comparing favourably against other major Canadian cities, affordability  in the Ottawa area is likely pinching local homebuyer demand," RBC stated. "Any further deterioration will put that market at greater risk of slowing further." Across Canada, RBC said home price and small mortgage rates increases decreased affordability in most major markets, but in most cases not in a big way. The exception was Vancouver, where "extremely poor and rapidly eroding affordability ... is somewhat skewing the national picture," RBC stated. On a national average basis, condominiums were up 0.8 percentage points to 29.2 per cent, detached bungalows increased 1.7 per cent to 43.3 per cent, and two-storey homes bumped up 1.2 per cent to 49.3 per cent. RBC also called for delaying any interest rate hikes until at least the middle of next year, given ongoing turmoil in world markets. August 22, 2011 Sonali Verma Globe and Mail Blog Posted on Friday, August 19, 2011 6:20AM EDT Is there anyone else out there who feels ripped off by compact flourescent lamps (CFLs)? You know, the curly, spiral-shaped light bulbs that are 75 per cent more energy-efficient than the traditional incandescent light bulb? They cost a few dollars a pop, compared with several cents for a traditional light bulb, and never seem to come close to lasting the 10,000 hours or so advertised on the box. Although the outlay is small, I will admit to feeling a bit cheated because they promise so much. (They also contain mercury, and the fact that cleaning up a broken bulb or disposing of a burnt-out bulb is a major production does not endear them to me either.) The government, on the other hand, loves them. The average Canadian home has 30 light fixtures that consume close to $200 of electricity every year, according to Natural Resources Canada. "Replacing just five bulbs with Energy Star-qualified CFLs in high-use areas can save up to $30 a year, depending on location and amount of time used. That means you'll pay off the added cost of the bulbs in less than two years, and they last for at least five. Better still, you won't have to change them as often!" the department says on its website. Not all users are as enthusiastic. Consumer Reports found that CFLs last 3,000 hours before wearing out, on average. California utility Pacific Gas and Electricity Corp. recently cut its estimates of average bulb lifetimes, from 9.4 years in 2006 to 6.3 years, amid controversial, taxpayer-subsidized CFL sales. How can you get more out of your swirled light bulbs? Here's what I found: 1.) Don't use them in enclosed light fixtures and recessed lighting, where heat gets trapped around the bulbs. That means they're operating at higher-than-normal temperatures, which makes their lives shorter, according to lighting technology consulting firm Roberts Research and Consulting. If you must place them in enclosed fixtures, aim for low-wattage bulbs in cooler parts of the house. 2.) To get the lifespan advertised on the box, you must leave them switched on for at least for four hours at a time, according to architect and builder Bob Formisano. If they are on for only an hour, you get a 20 per cent to 50 per cent reduction in lamp life, he says, and if the CFL is on for five to 30 minutes at a time, the life is reduced 70 per cent to 85 per cent. "The lifetime quoted on a CFL is just an average, meaning that 50 per cent of the lamps can and do fail before the stated hours and it can still be considered a valid rating," he adds. 3.) Don't use them in fixtures with ceiling fans or in areas where they are vulnerable to vibrations and jolts. According to Popular Mechanics, the life of a lamp installed in the foyer is likely to be shortened every time you slam the front door. Heavy-duty bulbs are apparently available for spaces such as this. 4.) Remember how your mum always told you to switch off the lights if you were leaving a room? Don't switch CFLs on and off too often -- leave the lights on if you're returning within 20 minutes, says Natural Resources Canada. Similarly, go with old-fashioned incandescent bulbs for that light that is activated by a motion sensor on your porch. 5.) They are also sensitive to voltage fluctuations. If you live in an area where power surges are the norm, your bulbs will burn out faster. 6.) If you have the time, tape the receipt for the bulbs to the packaging. If they burn out early, contact the retailer or manufacturer and ask about the return policy. I found my research... illuminating. So, maybe using CFLs in the ceiling-fan fixture in our warm kitchen, located directly beneath the bedroom where our boys are always jumping around, is not such a bright idea. August 19, 2011 By Susan Pigg Financial consultant Jose Jimenez has been on his own gut-wrenching roller coaster ride the last few weeks — and not because of the stock market fluctuations he monitors daily. Jimenez, 35, has been trying to buy his first home. “In a way, I’ve been rooting for the markets to tank a bit and hoping that might encourage other people not to buy right now, but that doesn’t seem to be the case,” says Jimenez, whose wife is expecting their second child. In fact, whipsawing markets, fears of a double-dip recession and global economic uncertainty seem to have made housing look as good as gold. Canadian home sales were up 12.3 per cent last month from July, 2010 and are expected to grow slightly the rest of this year because of low interest rates, the Canadian Real Estate Association said Tuesday. “We anticipate that, going forward, the housing market in Canada is going to be an oasis of stability compared to what is expected to be further volatility in financial markets,” Gregory Klump, CREA’s chief economist, said in a telephone interview. Almost 285,000 housing units have sold across Canada so far this year, just 1.6 per cent below sales for the same period last year, and that’s expected to hit 450,800 by the end of 2011, according to CREA forecasts. That’s despite dire predictions earlier this year from some housing analysts that the real estate bubble is overdue to burst and send Toronto prices toppling by as much as 25 per cent. Jimenez is keenly aware of all those numbers but has a few more pressing ones on his mind: His second child is due in September, his 2-year-old daughter Sadie will start school in a couple of years and Jimenez and his wife, Sydney Richardson, just want a house they can make a home. Richardson is now worried the couple are “doomed” to have to raise their children in their two-bedroom Beach apartment after losing out Monday in a six-person bidding war — their second in just a few weeks — on a renovated three-bedroom Beach semi that was listed for $699,000. The couple offered $703,000, only to be outdone by a so-called “bully bid” — a down-to-the-wire offer almost $100,000 over asking price. Last month they were braced to offer $70,000 over the $550,000 asking price for a Rhyl Ave. house but found themselves up against 13 other potential buyers. The house sold for $120,000 over asking. The couple has talked about putting things on hold until the real estate market calms down, but their biggest fear is that day will never come. While Sonya Gulati, an economist at TD Economics, anticipates sales will be a little more subdued in the fall, she said first-time buyers and immigrants are still being drawn into the market by interest rates that are expected to remain low until 2013. “On the one hand, they are incredibly brave given all the economic uncertainty out there,” says Gulati, “but you need a place to live and a house is a long-term purchase so people seem to think it makes sense despite the market gyrations.” Real estate agent Dave Tsaparis says he’s seeing more and more home buyers, banking on low interest rates, taking on mortgages of $300,000 to $500,000. Veteran Beach real estate agent Dianne Chaput blames lack of supply for many of the bidding wars, but expects that could ease in the fall as more baby boomers look to cash out on their biggest asset at peak market. Domenic Polsoni is so confident real estate is a sure bet, he recently traded in his Milton home, and gave up one car to help finance the move to a more expensive house in the Dufferin St. and Sheppard Ave. area. “People have been saying for years that the real estate bubble is going to burst, but I can’t imagine that will happen. We survived a major hit in 2008, people held their breath and then everything just seemed to march along.” Jimenez fears getting caught up in the current real estate “panic.” “But this is the neighbourhood where we want to raise our kids. Even if we were to take a short-term loss, I wouldn’t be too worried about it in the long run. “I think we’d definitely get the value back from it, not just in the sale price, but in the life we will have had bringing up our family in that neighbourhood.” August 18, 2011 Published on August 17, 2011 The Canadian Press The comments came after the Canadian Real Estate Association revised its 2011 national forecast for home resales, citing stronger than expected sales and higher prices in the second quarter. An earlier CREA forecast that called for a one per cent dip in sales this year from 2011. But the association said Tuesday sales should grow this year – albeit less than one per cent above 2010. CIBC deputy chief economist Benjamin Tal said recent stock market uncertainty due to the European debt crisis and the United States credit downgrade is actually helping boost sales in Canada's real-estate market. Bad economic news abroad tends to keep Canadian interest rates low, he said. Since the European and American debt issues came to a head in recent weeks, economists have been predicting the Bank of Canada will leave its key rate untouched at one per cent until at least next year. That's a change of opinion since last winter, when economists widely expected Canada's central bank would begin hiking its rates sometime in 2011 as the economy strengthened – putting upward pressure on the price of borrowing. With the global economy now looking weaker than expected, and the U.S. Federal Reserve promising last week that it will keep its key short-term rate at an all-time low for another two years, the Bank of Canada is now expected to put off raising its short-term lending rates. "The uncertainty globally is really benefiting mortgage holders because it's really postponing the increase in interest rates in Canada," Tal said, explaining that when the stock market turns volatile, real estate becomes an attractive investment because of its security. "Many people can use this opportunity to look into extremely low mortgage rates, so again the misery of other people elsewhere is helping Canadian home buyers." Sonya Gulati, an economist at TD Economics said the bank is anticipating that sales will be a bit more subdued in the next two months, but buyers, especially first timers and immigrants won't likely be deterred in the longer term as interest rates stay low. "People may be waiting to see whether or not they want to purchase homes, see if things turn for the better. It really has been a roller coaster for the last little while so we anticipate a little bit more subdued activity in August and September," she said. "(The stock market) will be a factor in their decision making process, but at the end of the day one of the key things for people is the interest rate and mortgage rates are still very low and they may actually want to enter the market for that reason despite the uncertainty out there." Meanwhile, CREA's chief economist Gregory Klump said it is too early to judge whether buyers are moving towards or shying away from real estate due to volatile stock markets. But he said historically, real estate does well during times of uncertainty. "During periods of financial market upheaval the Canadian real estate market has remained far more stable," he said, adding that even though some investors put off buying high end homes during the financial crisis of 2008 and 2009, those buyers returned to real estate soon after recovery began. "The last time we had financial market instability, the housing market wasn't immune, but it was certainly less volatile and certainly Canadians recognize that and feel comfortable investing in their home." Overall, CREA said Tuesday that 450,800 housing units are expected to be sold across Canada under its Multiple Listing Service in 2011, and the average selling price will be slightly higher. In May, it had estimated 441,100 units would be sold through the MLS. About 90 per cent of home resales in Canada are listed on MLS. Both Gulati and Tal said they expect the market to cool off in 2012 once interest rates rise again. Gulati said home prices could fall as much as 10 per cent, while Tal said they could fall between five and 10. Gulati described this as a "correction" while Tal said it was an "adjustment," but "nothing to write home about." Meanwhile, the association said it was revising its sales expectations for 2012 downward to 447,000 units, roughly on par with the 10-year average. On a regional basis, British Columbia's 2011 sales forecast has been revised slightly higher as home sales in the province appear to have bottomed out soon than predicted, while stronger than expected activity in Ontario is expected to offset slightly softer than anticipated demand in Quebec, Manitoba and Newfoundland and Labrador. CREA said it now expects the national average home price will rise 7.2 per cent in 2011, to $363,500. The previous estimate in May was $352,500. The upward revision reflects increases in the second quarter in Vancouver and acceleration in other parts of the country, particularly Toronto. Vancouver has experienced a surge in multimillion-dollar home sales this year. CREA said the two markets have a high number of sales and average price, so they play a big part in influencing the national average. Additional new listings should also result in a more balanced resale housing market in most provinces, with the national average price forecast to stabilize in 2012. August 17, 2011 Kim Mackrael Globe and Mail Update Last updated Tuesday, Aug. 16, 2011 11:39AM EDT The Canadian Real Estate Association has revised its forecast for home sales upward for 2011, citing stronger-than-expected sales and prices in the second quarter and good momentum entering the second half of the year. But economists warn Canadians should expect a gradual slowdown in the housing market to begin next year, as sales in Toronto and Vancouver cool and interest rate hikes eventually kick in. The association also revised its estimate for 2012 sales to fall seven tenths of a percentage point to 447,000 housing units. “Less favourable economic fundamentals, combined with new mortgage rules in place, are beginning to clip the wings of the Canadian housing market activity,” TD economist Sonya Gulati wrote in a note. Average home prices are expected to moderate in the second half of the year following an unusually high surge of expensive Vancouver home sales. Sales in July stayed flat in Toronto and fell slightly in Vancouver, according to CREA, and national housing prices were at their lowest level since January 2011 last month, at $361,181. “Going forward, a correction is ripe for these cities in order to bring both markets in line with balanced territory. However, we expect such a retreat in prices and sales to be gradual in nature taking place over several quarters, with the brunt occurring in late 2012 into early 2013,” Ms. Gulati wrote. CREA said Tuesday it expects activity will increase by less than one per cent this year compared with 2010, up slightly from its previous forecast of a one per cent decline in sales. National sales are expected to reach 450,800 homes in 2011, the association said, and average sales prices will be 7.2 per cent higher than the previous year. “While there had been some talk of potential interest rate increases, that hasn’t happened,” Gary Morse, the association’s president, wrote in a statement. “In fact, rates have actually come down, and are now expected to remain low for the remainder of this year and into 2012. It’s a great opportunity to purchase a property with financing at very favourable rates.” August 17, 2011 May Jeong From Monday's Globe and Mail The Canadian Real Estate Association reports monthly housing sales numbers for July on Tuesday, but it’s the national association’s long-term forecast that may provide greater clues into the state of the Canadian housing market. The housing market has been climbing steadily since the end of the recession, with market watchers constantly worried about a crash. CREA has said that sales and prices may ease slightly in the coming year, but past forecasts have maintained that, over all, the market is healthy. While July’s housing numbers are expected to show a minor decline in sales, observers who have seen early reports from regional markets are trying to figure out whether a dip in prices reflects a seasonal weakness or will prove to be a signal the market is cooling. Several factors could see CREA lowering its sales projections for the rest of the year. Fears about the debt crisis in Europe and a possible double-dip recession in the United States could keep Canadians from buying new homes until things settle. That may be what happened in Vancouver and Toronto in July, where sales fell more than 20 per cent compared with June, despite record low interest rates. The association, representing some 100,000 real estate agents across Canada, updates its sales forecast quarterly. The May forecast predicted a decline of 1.3 per cent to 441,100 units in 2011 compared with last year. Despite the pressures, most bank economists expect Canadian house prices to hold steady for the next year, even as sales moderate. “One of the more surprising aspects of the Canadian economy right now is just how well the housing market has been doing,” said Robert Kavcic, economist at BMO Nesbitt Burns Inc. “Interest rates are still extremely low and the job market has held up well in Canada, contributing to the relatively strong housing market.” August 15, 2011 By Tony Wong The upside in a global stock market rout may ironically be a healthier housing market – at least in the short term, say economists. “The housing market has nine lives. Every time interest rates are supposed to go down, something happens and it helps to keep the market going,” said Benjamin Tal, senior economist at CIBC World Markets. Interest rates were supposed to be headed up before the crisis of terrorist attacks in New York on 9/11, and the last crash in 2008. But that didn’t happen. And it looks like rates will be staying down for a while, says Tal. The market is already betting that Bank of Canada Governor Mark Carney’s plans to hike interest rates as soon as September will have to be put off until the end of next year. South of the border, the Federal Reserve said Tuesday that it expects “exceptionally low levels of the federal funds rate at least through mid-2013.” And ironically, while the U.S. has experienced a downgrade in its credit rating from Standard & Poors, investors have continued to pile into the Treasuries market. The U.S. dollar remains the global reserve currency as investors head for shelter as they find few safe haven options out there. The demand for treasuries means that yields have gone even lower. Which means there is downward pressure on longer-term interest rates. Long-fixed term rates are affected by a variety of factors such as competition for funds in financial markets and to prices in the bond market. Short-term rates are more affected by the key overnight central bank rate. “The interest rate environment will continue to be very attractive for homebuyers for both short term and longer term borrowing costs. With the safety of U.S. bonds that’s keeping longer term rates low,” said Scotiabank economist Adrienne Warren. Industry groups are warning, meanwhile, that during an already tough recovery, any sudden move upward in rates could have dire consequences on real estate sales. “The very recent global economic news demonstrates the Bank of Canada needs to consider any future rate hikes with extreme caution, as the recovery may be more fragile than believed,” said Ontario Home Builders’ Association President Bob Finnigan. Some investors may also be looking at real estate assets for a place to park their money because of the volatile stock market, said Tal. Lance Dore, a member of the U.S.-based Royal Institution of Chartered Surveyors, says investment in real estate may be a beneficiary from those looking for safe haven. “The sell-off of stocks is a clear signal that people are not confident in the future and want safety now.  What has also happened in the past declines in the stock market is a flight to quality,” said Dore. “Real estate tends to be the recipient as part of this flight. Real estate values are at all-time lows with returns at all-time highs.  The convergence of excess cash due to stock sell-off and corporations flush with cash for investment will push these excess funds into the inevitable diversification to real estate.” While the future for the stock market looks shaky, the real estate sector is improving due to improving fundamentals based on increasing rents, absorption of distressed supply and increased interest for diversification, said Dore. However, if the stock market continues on a downward path, housing will not escape unscathed. While lower interest rates are a huge mitigating factor, the losses on the market may eventually translate into job losses. For one thing, it takes confidence to plunk down that down payment for a home. It usually means that you’ve got a job, some savings, and hope for the future. But confidence is not in abundance in global stock markets this week as concerns over sovereign debt have panicked investors. Without confidence, the housing market – the biggest ticket item on the consumer checklist will suffer no matter how low rates go, say economists. In the United States, where more than a quarter of borrowers have negative equity – meaning they owe more than their homes are worth – this could mean another setback for the already beleaguered market. In Canada, where markets have been stable, and have been forecast to cool down next year, this could mean that sales and valuations may come down to earth quicker than expected. “Assuming the volatility and uncertainty continues in the markets it will have negative implications for both potential home buyers and for builders,” said Scotiabank economist Warren. “There is still a big difference between Canada and the U.S. But it certainly reinforces our view that growth in Canada and internationally will be on the soft side.” So far, economists have not changed their outlook on the Canadian housing market. Most expect the market to flatline or correct slightly by next year. But that could change if the rout continues. “If this is the precipitation of a larger more protracted slowdown for the economy it will certainly affect housing,” said Peter Norman, chief economist real estate consultancy Altus Group.” If we get into a soft patch with slower employment growth then we will see slower home sales. For investors who are speculating on future events this adds another layer of uncertainty in the market. So this would cause them to sit on the sidelines.” In separate reports on Tuesday, Canadian housing starts surprised by rising unexpectedly in July, climbing to a 15 month high, up 4.3 per cent to 205,100 units according to the Canada Mortgage and Housing Corporation. And U.S. home values actually had the smallest drop in four years in the second quarter according to figures released by Zillow Inc. But this was before the impact of the stock market drop which will affect confidence as consumers suffer from a declining wealth effect. During a recession, the high end of the market, of purely discretionary purchases such as cottages and luxury condos might be the first to feel the impact. But a lack of confidence will affect all sectors of the market. “We continue to hold that new home construction will start to cool in the second half of the year, but this may come more slowly than anticipated as rates remain low for longer,” said Arlene Kish, principal economist for IHS Global Insight. “On the other hand, if the recent slide in financial markets remains persistent, consumers will become less optimistic and will likely stay away from home purchases.” August 12, 2011 Rob Carrick From Thursday's Globe and Mail Last updated Wednesday, Aug. 10, 2011 7:31PM EDT The debt problems in the United States and Europe have taken the pressure off Canadians with mega-mortgages and credit lines that are over the line. Remember how Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty were warning not too long ago that high personal debt levels could become unmanageable when interest rates moved higher? Well, interest rates aren’t going anywhere for now. That’s the view of economists following the worsening of the debt crisis in some European countries and the continuing difficulties the U.S. economy is having. “Rate expectations have taken a big step backwards,” said Doug Porter, deputy chief economist at BMO Nesbitt Burns. Early in 2011, when the economy was humming and inflation was moving higher, Mr. Porter expected the Bank of Canada to raise its trend-setting overnight rate by a full percentage point in total over the year. That forecast was trimmed to an increase of half a percentage point, and then further reduced just recently. “We’re leaning to nothing now,” Mr. Porter said. It’s a sign of how decisively the global economic outlook has changed that economists are even considering the possibility of interest rate cuts. Mr. Porter noted that rates are still close to the depths reached in 2009, but he thinks they could fall a bit if global economic problems reach crisis proportions. Canada’s government debt problem is mild when compared with the likes of the United States and some European countries. The issue here is personal debt, which has hit record levels in relation to income and continues to grow, although at markedly slower levels than a year or two ago. Global economic upsets do nothing to reduce personal debt here in Canada. But they do make it easy to carry that debt. Here’s the thinking on that: With economic growth in the United States stuck at frustratingly weak levels, Canada’s economy is bound to feel the effects. Debt-cutting by Washington and European countries could further choke back growth around the world. The Bank of Canada is also constrained by the fact that cranking up borrowing costs here while rates remain low in the United States would drive our dollar higher. That’s bad for our manufacturing sector because its products become more expensive in foreign markets. All of this means that heavily indebted Canadians get a reprieve from the higher interest rates they’ve been warned about for more than a year. “But you have to be careful what wish for,” Mr. Porter said. “There are real economic consequences to this kind of financial upset. We could end up with much weaker job growth that what would have otherwise been the case.” This is why you should reduce your debts, even while borrowing costs remain at attractively cheap levels. If the economy struggles and your job is affected, it’s not going to matter that you got a great rate on your mega-mortgage. Recent history suggests low rates are hard to resist, however. In the recent recession, Canadians did the opposite of what you’d expect and increased their borrowing. This was particularly noticeable in the housing market, which experienced a short, sharp slump and then soared. Mr. Porter said global economic uncertainty could temporarily affect consumer confidence here in Canada and in turn chill the housing market. “But as the smoke clears in financial markets and we’re left with low borrowing costs, we could get a fairly quick rebound in sales activity.” If you are buying in the next while, the current rate outlook argues in favour of a variable-rate mortgage. On Tuesday, the U.S. Federal Reserve Board said it expects to keep rates near zero for two years at least, which in turn limits the Bank of Canada. Mr. Porter said he expects the central bank to boost rates by just half a point in 2012. Those who prefer the security of a five-year, fixed-rate mortgage will pay as little as 3.6 per cent, which is tremendous by historical standards. Chalk up another benefit to Canadians from global financial upheaval. When the stock markets plunge, money flows into bonds. Bond prices rise, which means bond yields fall. Mortgage rates track bond yields, which means mortgage costs are falling. It’s Canada’s biggest borrowers who are the biggest beneficiaries of what’s happening in financial markets, though. As Mr. Porter put it, “If you have a secure job and lots of debt, things have unfolded well for you.” GLOBAL ECONOMIC WOES AND YOUR DEBTS Troubles in the global economy mean interest rates will stay low for longer. Call it a reprieve for those who need to cut the amount they owe. Here are current interest rates for common borrowing products: Variable-rate mortgages 2.25 per cent (based on a prime rate of 3% minus a three-quarter-point discount) Five-year fixed-rate mortgages 3.6 per cent or so at best; Big Bank posted rates are at 5.39% New home equity lines of credit 3.5 to 4 per cent, depending on how much of a markup over prime you have to pay Car loans 6.8 per cent on average over five years August 11, 2011   Published on August 9, 2011  Krystle Chow Ottawa Business Journal   A total of 385 homes were started last month, down from the 763 units in July 2010, with double-digit declines in both the single-detached and multi-family segments.   "A moderate resale housing market, the effects of tighter mortgage rules and emerging global uncertainties have combined to temper demand for new homes in Ottawa," said CMHC senior market analyst Sandra Perez Torres in a statement.   Apartment construction, which is generally more volatile than that of other housing types, had the most significant year-over-year decrease of 76.4 per cent, with the total number of apartments started slipping to just 70 in July.   The drop - along with a 42.3-per-cent decrease in row housing starts, to 120 units - contributed to an overall 58.1-per-cent decline in the multi-family segment, which recorded a total of 230 starts.   Still, Ms. Perez Torres said the apartment starts decrease "remains in line with underlying demographic fundamentals," and that the figure indicates a still-solid trend.   Single-family starts, meanwhile, fell 27.6 per cent to 155 units, the CMHC report showed.   CMHC noted that almost 30 per cent of total housing construction took place in Ottawa's core in July, driven largely by the 70 apartment units, which represented a single social housing complex project in the downtown area. Despite the activity, the region comprised of the old city of Ottawa, Rockcliffe Park and Vanier had one of the largest percentage declines among the nine surveyed areas, at 60.5 per cent, with starts falling to 111 units.   Gloucester also posted a large 78.9-per-cent decrease, to just 20 units, although CMHC noted the east-end section was the only area to see significant row housing construction growth.   Only Cumberland and Rideau Township saw increases in housing construction in July, and both hikes were relatively small, the report showed. Cumberland had a 12.24-per-cent rise to 55 units, while the Rideau Township saw starts rise to five from two.   On a year-to-date basis, Ottawa starts are down 17.8 per cent, with residential construction activity for most regions trailing behind last year's pace. The sole exception, CMHC noted, is downtown Ottawa, "due to a warm early start of the year."                           August 10, 2011 Published on August 9, 2011 The Canadian Press After a massive selloff on North American markets Monday and more bad news on the global economy, the analysts said Canada won't be immune from a weakening U.S. economy that many predict will slip back into recession. "It's a big factor when the biggest economy in the world and our biggest trading partner potentially goes into a tailspin," said John Stephenson, vice-president of First Asset Funds, a Toronto-based money manager. "The spillover effects are really into overall confidence and that will impact the consumer." Fears of a slumping U.S. economy and a growing debt has battered global confidence in the United States, hammering financial markets and sparking a pessimism not seen since the Wall Street financial crisis three years ago. Canada is stronger economically than the United States – with booming oil and mineral sectors and a solid housing market – but the countries are so interconnected it cannot avoid fallout from a slowdown south of the border. Canadian businesses won't be in much of a mood to hire, while consumers may lack the confidence to spend enough to keep the economy growing, Stephenson said. That could dampen job cretaion and make it difficult to further lower the jobless rate, now at 7.2 per cent. However, on a positive note for consumers, the falling cost of oil – down nearly 20 per cent in recent weeks – will put downward pressure on high gasoline pump prices across Canada. S&P credit rating agency downgraded the U.S. debt from the coveted AAA status for the first time in history late Friday, sending already plummeting markets further into lows not seen since the 2008 credit crisis. The actual impact of the downgrade is minimal – Canada saw its debt downgraded in 1993, and the stock market rallied the following year. But it has had severely negative psychological effects on investors already reeling from the European debt crisis and other U.S. indicators that signal its economy is weakening. "(The downgrade) is the drop that makes things tip over, the bucket is getting full now and there's too much worry out there," said Louis Gagnon a business professor at Queen's University. "The risk of a double dip – a second dip into recessionary territory – is certainly not inconceivable." A TD Economics report said Monday there is now a 1-in-3 chance of a renewed U.S. downturn. Fearful investors are taking money out of the stock market and putting it into perceived safe havens such as gold, which hit a new record high Monday of over US$1,700 an ounce. "What we're seeing now is another one of those episodes of panic, we're seeing risk aversion," Gagnon said. Canadian manufacturers and resource companies – some of the country's biggest employers – will feel the brunt of the slowdown since 80 per cent of Canadian exports head to the U.S. Exports have already been hit by a strong loonie, which is losing steam in the wake of the recent crisis, but still hovers above parity with the greenback. It fell about a cent and a quarter to 100.92 cents US on Monday. The Toronto Stock Exchange fell nearly 500 points Monday, extending a streak of losses that Bank of Montreal economist Robert Kavic said could continue for some time. Wall Street's key Dow Jones industrial average dropped more than 630 points. With the most recent market drops, average investors are losing money each day, affecting consumer confidence and spending. That could deter many from making big purchases like homes and undermine prices in the influential housing market, especially in Vancouver and Toronto. Any deterioration in home prices would further deplete consumers' assets. Consumers should be concerned about reduced investment income from stock losses, especially at a time when Canadians have racked up debt at cheaper borrowing rates, said Stephenson. "The problem is very significant, its not something that people should minimize." Gagnon said many people are growing worried about their retirement savings as the value of large pension funds and their own investments plunge on the stock markets. "I think people have to brace themselves for tougher years ahead and it may very well be that many of us who want to retire will have to retire much later than anticipated because we can't count on the stock market to produce the returns they did in the past." August 10, 2011 Published on August 10, 2011 The Associated Press It's the first time the Fed has pegged its "exceptionally low" rates to a specific date. The Fed had previously said only that it would keep it key rate at record lows for "an extended period." Stocks plunged after the statement was released, but then shot up shortly after. The Dow Jones industrial average sank more than 176 points, then recovered its losses and gained more than 120 points in late-afternoon trading. Fears of another U.S. recession – and worries about how governments will deal with global debt problems – continue to roil financial markets around the world. "Crises of confidence do not have silver bullet solutions," TD Bank senior economist James Marple said in a research note Tuesday. "The Fed's action today is unprecedented and will have a modest positive stimulative impact on near-term economic growth." It "may prove to be more stimulative a little down the road. The market appears to be pricing in a very significant chance of a recession. By removing some uncertainty about future Fed actions, longer-term rates should remain lower for longer." The low rates in the United States will put more pressure on the Bank of Canada to keep borrowing costs on hold north of the border as well. There had been recent speculation that the Canadian central bank would begin raising rates this fall to curb inflationary pressures in the Canadian economy, which has been growing faster than the United States. However, economists say the recent stock market turmoil and the fears of a double-dip recession in the United States has made it likely that rates won't rise in Canada until next spring at the earliest. That's good news for the Canadian housing sector, which has expanded strongly because of low mortgage rates and solid economic growth in recent years. After the Fed move, many investors sought the safety of long-term Treasurys, whose yields fell as low as 2.07 per cent. "There is a definite undertone of significant economic concern from the Federal Reserve," said Greg McBride, an economist with Bankrate.com. University of Oregon economist Timothy Duy called the move "weak medicine." Duy said he wanted to see the Fed commit to buying more Treasury bonds, to try to keep long-term rates down, until the economy improved. The Fed's two-year time frame for any rate increase underscored a stark reality: A sluggish economy and painfully high unemployment have become chronic. The Fed did hold out the promise of further help down the road but did not spell out what else it might do. The central bank's decision was approved on a 7-3 vote with three Fed regional bank presidents who have been worried about inflation objecting. It was the first time since November 1992 that as many as three Fed members have dissented from a policy statement. The Fed used significantly more downbeat language to describe current economic conditions. It said so far this year the economy has grown ``considerably slower'' than the Fed had expected and that consumer spending "has flattened out." It also said that temporary factors, such as high energy prices and the Japan crisis, only accounted for "some of the recent weakness" in economic activity. The more explicit time frame is aimed at calming nervous investors. It offered them a clearer picture of how long they will be able to obtain ultra-cheap credit, and was at least a year longer than many economists had expected. Fed officials met against a backdrop of speculation that they would say or do something new to address a darkening economic picture. The stock market has plunged and government data have signalled a weaker economy in the four weeks since Chairman Ben Bernanke told Congress that the Fed was ready to act if conditions worsened. The economy grew at an annual rate of just 0.8 per cent in the first six months of the year. Consumers have cut spending for the first time in 20 months. Wages are barely rising. Manufacturing is growing only slightly. And service companies are expanding at the slowest pace in 17 months. Employers hired more in July than during the previous two months. But the number of jobs added was far fewer than needed to significantly dent the unemployment rate, now at 9.1 per cent. The rate has exceeded 9 per cent in all but two months since the recession officially ended in June 2009. Fear that another recession is unavoidable, along with worries that Europe may be unable to contain its debt crisis, has rattled stock markets. The Dow Jones industrial average has lost nearly 15 per cent of its value since July 21. On Monday, it fell 634 points _ its worst day since 2008 and sixth-worst drop in history. The tailspin on Wall Street was further fueled by Standard & Poor's decision to downgrade long-term U.S. debt. Bernanke didn't speak publicly after Tuesday's Fed meeting. The chairman this year made a historic change by scheduling news conferences after four of the Fed's eight policy meetings each year, but Tuesday's wasn't one of them. Later this month at the Fed's annual retreat in Jackson Hole, Wyo., Bernanke will likely address the weakening economy, the S&P downgrade and the market turmoil. Earlier this summer, the Fed ended a $600 billion Treasury bond-buying program. The bond purchases were intended to keep rates low to encourage spending and borrowing and lift stock prices. August 10, 2011 Globe and Mail Update: Last updated Tuesday, Aug. 09, 2011 7:43PM EDT Canadian fixed-term mortgage rates could fall to even more affordable levels after roiling financial markets pushed the yield on five-year government bonds to record lows on Tuesday. As investors fled equities in recent days, money poured into the haven of Canadian government bonds, pushing prices up and yields down sharply. Because banks borrow government bonds to help finance their fixed-rate mortgages, there is a tight link between five-year bond yields and five-year mortgage rates. “We have seen a precipitous drop in five-year bond yields,” said Toronto-Dominion Bank chief economist Craig Alexander, mainly because Canadian bonds look so attractive because of the country’s positive fiscal situation. Since July 21 the yield on those bonds has dropped a remarkable three-quarters of a percentage point, Mr. Alexander said, hitting an all-time low of about 1.5 per cent on Tuesday. Five-year mortgage rates tend to move in lock-step with that yield, but about 1.1 to 1.4 percentage points higher, and with a lag of up to several weeks before major lending institutions react with their changes. “The lag is really about financial institutions assessing whether the movement is going to be sustained,” Mr. Alexander said, noting that the time for them to react varies. In the current volatile market, financial institutions won’t likely move until they see whether bond yields stabilize for a period of time, he said. “There is a distinct possibility of a decline in five-year mortgage rates, but it is not clear [yet] how much of a decline there will be.” He expects to see a drop in mortgage rates, but perhaps not as dramatic as current bond yield numbers would suggest. For home buyers, or those looking to renew their mortgages, the prospect of lower five-year mortgage rates is very positive, said Alyssa Richard, founder of the mortgage-rate tracking website RateHub.ca. Five-year mortgage rates, on average, have been at about 3.5 per cent in recent weeks, she said, but if current bond yields are maintained those rates could drop to below 3 per cent, a level not seen before in Canada. Such a drop would save a home buyer almost $1,200 a year on a $360,000 mortgage amortized over 30 years, Ms. Richard noted. People holding variable-rate mortgages will also likely get a break, she said. Variable rates – which are linked to the Bank of Canada’s prime rate – will rise after the central bank’s next rate increase. But with U.S. Federal Reserve Board Chairman Ben Bernanke having said Tuesday that he will hold U.S. rates steady for two years, and the Canadian economy growing only marginally, Bank of Canada Governor Mark Carney is not expected to hike rates until next year at the earliest. For Canada’s real estate market, which has shown some signs of softening, the prospect of even cheaper mortgages could provide a welcome shot in the arm. “The Canadian real estate market has nine lives,” said Benjamin Tal, deputy chief economist at CIBC World Markets Inc. “Every time it looks like it’s going to slow down, something happens somewhere else in the world and interest rates stay low. The market could have been a lot weaker if not for such things.” Still, low interest rates can also send the wrong signal to some people, said Louis Gagnon, finance professor at Queen’s University in Kingston, Ont. “Many will enter the [real estate] market at prices that are too high, with very little equity, and they will run into trouble later when rates begin to go higher.” August 10, 2011 OTTAWA — New housing construction in Canada rose more than expected last month, according to data released Tuesday. Canada Mortgage and Housing Corp. said the annual rate of housing starts on a seasonally adjusted basis was 205,100 in July, up 4.3 per cent from June. That beat the median forecast of 194,500 provided by economists polled by Bloomberg. June’s numbers were revised down slightly to 196,600 from 197,400. The gains seen in July were driven by the construction of multiple-housing units in all regions except Quebec. Multiple starts in urban areas were up 13 per cent, while there was a 7.8 per cent decline in starting single-homes in cities. Overall, urban starts were up 4.7 per cent to a rate of 185,200. Rural starts were relatively unchanged at 19,900. The rate in new urban housing projects surged by 33 per cent in British Columbia and 36.1 per cent in the Atlantic region. It saw smaller gains of 1.7 per cent in Ontario and 0.3 per cent in the Prairies, and was down 7.8 per cent in Quebec. “Today’s report and the recent resilience of both permits and sales (suggest) housing continues to be one of the economy’s strongest sectors, although sentiment among purchasers obviously remains vulnerable to recent market turmoil,” CIBC World Markets economist Peter Buchanan said in commentary. August 9, 2011 When you apply for a mortgage, you usually just ask about the term, amount, interest rate and monthly payment. Not many people understand the difference between a conventional mortgage and a collateral mortgage. Yet many banks are now asking borrowers to sign collateral mortgages — and it could result in them being tied to this bank, for life. With a normal conventional mortgage you bargain for a set amount, rate and amortization. Say the property is worth $250,000 — you bargain for a $200,000 loan, at 3.5 per cent, a five-year term/25-year amortization, payments of $998.54 per month. A conventional mortgage is registered against the property for $200,000. If all the payments are made on time, the mortgage is renewed on the same terms every five years and no prepayments are made, the balance is zero after 25 years. Should another lender decide to lend you money as a second mortgage, there is nothing stopping them from doing so, subject to their own guidelines. Under normal circumstances the principal balance on a conventional mortgage goes only one way, down. In addition, banks will accept “transfers” of conventional mortgages from other banks, at little or no cost to the consumer. A collateral mortgage has as its primary security a promissory note or loan agreement and as “backup,” a collateral security, being a mortgage against your property. The difference is that, in most cases, the mortgage will be for 125 per cent of the value of the property. In our example, the mortgage registered will be for $312,500. But you will only receive $200,000. The loan agreement will indicate the actual amount of the loan, interest rate and monthly payments. The collateral mortgage may indicate an interest rate of prime plus 5-10 per cent. This will permit you to go back to this same bank and borrow more money from time to time, without having to register new security. The lender will offer you a closing service, to register the mortgage against your property, at fees that will be cheaper than what a lawyer would charge you. Sounds good so far, doesn’t it? However, this collateral loan agreement has different consequences, which are usually not explained to the borrower.  • Most banks will not accept “transfers” of collateral mortgages from other banks, so the consumer is forced to pay discharge fees to get out of one mortgage and additional fees to register a new mortgage if they move to a new lender. Thus the bank is able to tie you to them for all your lending needs indefinitely because it will cost you too much to move.  • Lenders may be able to use the collateral mortgage to offset any other unpaid debts you have. Offset is a right under Canadian law that says a lender may be able to seize equity you have in your home, over and above the mortgage balance, to pay, for example, a credit-card balance, a car loan, or any loan you may have co-signed that is in default with the same lender. In essence any loans you may have with that lender may be secured by the collateral mortgage. Nobody goes into a mortgage thinking about default, but “stuff” happens in people’s lives and 25 years is a long time.  • Let’s say your house value is $200,000. A collateral first mortgage registered on the property is $250,000. The amount owing on the mortgage is $150,000. If you were to need an additional $20,000, but the lender declines to lend it for any reason, then practically speaking you won’t be able to approach any other lender. They will not go behind a $250,000 mortgage. Your only way out would be to pay any prepayment penalty to get out of the first mortgage and pay any additional costs to get a new mortgage.  • Let’s say your mortgage is in good standing but you default under a credit line with the same bank. The bank could in most cases still start default proceedings under your mortgage, meaning you could lose the house.  • Some lenders are offering collateral mortgages in a “negative option billing” manner. Unless you are informed enough to say you want a conventional mortgage, you will be asked to sign documents for a collateral mortgage. One bank is only offering collateral mortgages. I spoke with David O’Gorman, the president and principal mortgage broker with MortgageLand Inc. He tells me it is his duty under the law to ensure the “suitability” of any mortgage he arranges for a consumer. He would be hard pressed to justify the recommendation of this type of collateral first mortgage to any consumer, without disclosing both verbally and in writing the points listed above, and he believes the consumer should have their own lawyer review everything before they sign. Lending money to people without proper explanation of the consequences is wrong. The banking regulators need to look into this practice and stop it. In the meantime, do not sign any mortgage document without discussing it first with your own lawyer. August 8, 2011 Aug 8, 2011 – 7:14 AM ET | Last Updated: Aug 8, 2011 7:15 AM ET By Amanda Cooper LONDON — The gold price was set for its second largest daily gain this year on Monday after the respective pledges by the G7 and the European Central Bank to quell the turbulence in the financial markets did nothing to put investors at ease. In Europe, Spanish and Italian bond yields fell. Traders said the ECB had made good on its promise to solve the eurozone debt crisis by widening its bond-buying programme to include paper from those two nations. Friday’s downgrade to the quality of U.S. sovereign debt by ratings agency Standard & Poor’s was widely anticipated, but its longer-term impact on anything from mortgage rates to the economy is unclear. Investors have bought more gold in the last month than in the prior six months, looking at the increase in open interest on COMEX for speculators and money managers, as well as inflows into exchange-traded products. Spot gold XAU was set for a second consecutive trading rally, up 2.7% from Friday at US$1,706.44 an ounce by 0900 GMT, having hit a record US$1,715.01 earlier and having traded at all-time highs in sterling XAUGBPR and euros XAUEURR. “Everyone was talking about Armageddon at the weekend and this morning, it’s held the rot but doesn’t remove the themes that have been driving the stock markets,” said Saxo Bank senior manager Ole Hansen. “The question right now is if gold will be allowed to move much further. There has been a huge build-up in speculative and long positions across the board over the last couple of weeks, but I suppose that central banks buying more bonds is not helping the overall worry about how the economies are going to do over the months ahead,” he said. According to data from the Commodity Futures Trading Commission, which collects information on holdings of futures and options, and to ETF data collected by Reuters, investors bought over 18 million ounces of gold, or 30% of total identifiable investment demand in 2010, in the last month alone, compared with about 8.4 million in the year to early July. Finance chiefs from the world’s industrial powers pledged on Sunday to take whatever actions were needed to steady financial markets, spooked by the political wrangling in Europe and the United States over slashing their huge budget deficits. FEWER “SAFE” HAVENS? Treasury Secretary Timothy Geithner said U.S. Treasury debt is as safe as it was before the S&P downgrade, urging European leaders to ensure there is an “unequivocal financial backstop” for eurozone governments facing fiscal and debt problems. “The uncertainty in the financial markets is keeping gold prices underpinned. It’s essentially safe-haven buying,” said Ong Yi Ling, investment analyst at Phillip Futures. “One of the events that investors will watch is of course the FOMC meeting that is scheduled Tuesday … investors will scrutinise the statement on the assessment of the economy and outlook for monetary policy.” Investors are watching for any statement on whether the Fed will ease monetary policy further. The prospect of an even longer period of low U.S. interest rates prompted Goldman Sachsto raise its longer-term forecast for the gold price. Goldman said it had lifted its forecasts to US$1,645, US$1,730 and US$1,860 on a three-, six- and 12-month horizon, respectively. Goldman had previously forecast the gold price peaking at US$1,600 an ounce in mid-2012. Meanwhile, gold in euros hit a record 1,195.66 euros an ounce, bringing gains in the last month alone to over 12%, while gold in sterling hit a peak of 1,043.76 pounds, for a gain of 9.3% in the same period. In other precious metals, silver XAG got a lift from the strength in gold as it can sometimes act as a cheaper safe-haven proxy for investor. Spot silver was last up 3.7% on the day at US$39.72 an ounce, while the more industrial platinum group metals reacted to the gloom in the broader commodity markets. Platinum XPT was flat on the day, around US$1,714.00 an ounce, while palladium XPD was down nearly 2% at US$725.50. The palladium price has fallen by more than 14% in the last 6 trading days, since hitting a five-month high. © Thomson Reuters 2011 August 8, 2011 OTTAWA — Canada's pace of employment growth took a step back last month.  There were 7,100 more people working in July, Statistics Canada said Friday, about half of the 15,000 economists were expecting.  The unemployment rate fell to 7.2 per cent in July from 7.4 per cent per cent in June as fewer people sought work.  That followed three-straight months of strong job gains — 28,400 in June, 22,300 in May and 58,300 in April.  In July, there were 94,500 more people working in the private sector, Statistics Canada said, but 71,500 fewer in the public sector. As well, there was a decline of 15,900 individuals who considered themselves self-employed.  Full-time employment was up by 25,500 while part-time workers fell by 18,400.  Douglas Porter, deputy chief economist with BMO Capital Markets, said the jobs data was "not exactly what the doctor ordered, but not bad," noting the gains in full-time and private-sector employment.  He also pointed out that the unemployment rate is the lowest it's been since late 2008, and there was a 1.2 per cent rise in hours worked last month.  "The one downbeat aspect of the release is that average hourly earnings faded further to just a 1.4 per cent (gain) year-over-year . . . falling further below recent headline inflation trends of more than three per cent," Porter added.  CIBC World Markets senior economist Peter Buchanan said the jobs data was "a fairly mixed report overall, with the details somewhat better than the headline."  He noted the rise in "paid employment jobs" overall versus people being in business for themselves, saying the former "tend to be of higher quality."  Employment growth in July was seen in the sectors of construction, transportation and warehousing, as well as retail and wholesale trade. There were fewer positions in health care and social assistance, educational services, business, building and other support services, natural resources and agriculture.  A few economists highlighted the effect that 30,000 fewer education jobs had on the overall numbers, with those reductions likely to be reversed when school's summer break is over.  "Typically, these jobs are recovered in August (or) September, meaning that this represents a one-off factor and, if excluded, employment gains were actually healthy at 37,000," said Dawn Desjardins, assistant chief economist for RBC Economics.  Looking across the provinces, Alberta, and Newfoundland and Labrador, saw job gains of 12,400 and 3,800, respectively, while there were 22,400 fewer workers in Ontario. Other provinces saw little change.   August 5, 2011 OTTAWA, August 4, 2011  Members of the Ottawa Real Estate Board sold 1,326 residential properties in July through the Board’s Multiple Listing Service® system compared with 1,116 in July 2010, an increase of 18.8 per cent. The five-year average for July sales is 1,377.  Of those sales, 307 were in the condominium property class, while 1,019 were in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked etc.), which is registered as a condominium, as well as properties, which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.  “What a difference a year makes. Last summer the real estate market was reeling from the implementation of the HST that saw many buyers and sellers move up their purchases to the winter and early spring. 2011 is a different story, one that looks a lot more like the average year for Ottawa’s resale housing market,” said Board President-Elect Ansel Clarke.  The average sale price of residential properties, including condominiums, sold in July in the Ottawa area was $341,330, an increase of 6.2 per cent over July 2010. The average sale price for a condominium class property was $270,933, an increase of 11.3 per cent over July 2010. The average sale price of a residential class property was $362,539, an increase of 4.8 per cent over July 2010.  The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold. August 4, 2011 One of the sacred cows of American tax breaks that many have blamed at least partially for the U.S. housing collapse is coming under fire in the United States. At a forum last week in Washington, D.C., the real estate industry found itself the target of both the right and the left over mortgage interest deductibility, something Canadians have drooled over for decades because it lowers taxable income substantially. Americans claimed about $500billion in deductions related to mortgage interest last year, resulting in $100-billion in tax breaks. While the United States seems to have solved its immediate debt impasse, those looking for ways to balance the budget continue to eye mortgage interest deductibility as one of the answers. The debate centres around whether Americans have sought bigger homes than they might otherwise have purchased and mortgages that they are reluctant to pay down because of the huge tax break available. "It makes a big difference," says Ted Rechtschaffen, a certified financial planner in Toronto and president of TriDelta Financial. No such interest deduction rules exist in Canada for principal residences despite various lobbying attempts over the years. In 2003, the Ontario Conservatives led by Ernie Eves pledged to make Ontario the first province to allow consumers the tax deduction. But the Liberals won the election and nothing happened. Few people in the Canadian real estate industry were lobbying for it because the housing industry was doing well and, eight years later, it is doing even better. U.S. realtors say if mortgage industry rules were changed at this point, it would destroy any hopes of recovery in the sector. "It is the worst possible time to discuss it because of the fragility of housing," said Lawrence Yun, chief economist and director of research with the National Association of Realtors. He noted editorial writers from the Wall Street Journal and the New York Times have found common ground to attack mortgage interest deductibility as did groups on the far left and far right that were part of the forum organized by the Washington, D.C.-based Urban Institute. "Mortgage interest deductibility was in place for 100 years," said Mr. Yun, about whether it caused the U.S. housing bubble. "Perhaps it caused some aspects, but not by itself." The U.S. government wasn't thinking of personal mortgages when it first allowed interest expenses to be deducted for businesses and investment. "We could almost call this an accidental tax subsidy," said Eric Toder, institute fellow with the Urban Institute, noting that 100 years ago, few paid taxes and or even had a mortgage. But after the Second World War, the U.S. economy expanded and people began buying houses with debt. By 1986, the U.S. eliminated consumer interest as a deduction but continued to allow deductions on home loans of up to US$1-million and US$100,000 on home equity lines of credit. "Nothing has changed, but it is definitely now on the table as never before," Mr. Toder said. U.S. studies have shown the tax break tends to benefit the wealthy with 65% of people making US$50,000 to US$200,000 claiming the deduction despite being only 31% of the population. The benefit also tends to help more in places with expensive housing, and the conference heard three major markets - the New York/New Jersey area, the San Franciso Bay area and Los Angeles - reap 75% of all interest deduction benefits for the entire United States. Mr. Rechtschaffen says there is little doubt that if the tax break existed in Canada, he would be advising clients to take advantage of it. "Should you pay your mortgage or not? It depends on what your aftertax interest rate is," he said. At 5%, you start paying off your mortgage. Start lowering the effective rate with tax breaks and now who wants to pay off their mortgage? Not that many people, which is what Americans found out. And while mortgage interest deductibility may not have caused the bubble, it sure didn't help. Like most U.S. tax policy, it now seems impossible to unwind. It's no wonder no one in Canada wants to visit the issue. August 4, 2011 Jonathan Chevreau, Financial Post · Aug. 3, 2011 | Last Updated: Aug. 3, 2011 8:06 AM ET The global economy may have temporarily dodged a bullet with the 11th-hour raising of America's US$14.3-trillion debt ceiling, but individuals should draw some salutary lessons for their personal financial health. The Bank of Montreal has issued five tips on how individuals can avoid hitting their own personal debt ceilings. Like Washington, one in three Canadians live beyond their means, with 27% living paycheque to paycheque - a 10% increase over last year. Individual Americans are in just as precarious a spot, with the average household carrying US$75,600 in debt and 44 million relying on food stamps. BMO's first two tips could apply both to the U.S government as well as citizens of eithercountry: don't overspend and curb credit card debt. These are obviously related. Both at government and individual levels, overspending increases debt. It's taken Uncle Sam decades of profligate spending to reach this crisis, but the average citizen can get into credit card trouble far more quickly. Government has two advantages. First, the interest it must pay on government bonds is less than the doubledigit rates consumers are charged on retail credit cards. Second, governments can raise their own credit limits: the United States has done this 69 times since 1962. The current crisis is unusual only because a political impasse prevented the normal rubber-stamping of raising the ceiling. Individuals who hit their credit card limits should take it as a sign their discretionary spending is out of control and start cutting back. Or they can emulate governments by raising revenues. Employees can't do this by increasing taxes, but they can raise revenues by getting a raise, finding a betterpaying job, moonlighting or running a business on the side. The trouble starts if you maintain or increase spending without boosting your income. Too often, indebted consumers do just what Washington has done and ask their financial institution to raise the limit on their credit card. However unwise this is, the request is often granted because that's how the banks make their money. But even if your card issuer does you a favour by refusing to raise your limit, debtors hellbent on their ultimate financial destruction may apply for second and third cards, bypassing the safety mechanism of hitting the limit on the first card. Problems snowball if you pay only the suggested monthly minimum payment. The power of compound interest goes in reverse and you get in over your head - drowning if unexpected job loss curtails your ability to meet even the seemingly low monthly minimums. Another BMO tip is become mortgage-free faster. This tip comes after curbing credit card debt, since mortgage interest is much lower than that charged by most credit cards. Credit card debt is considered bad debt because it involves spending on consumption. Mortgage debt is good debt because it helps you build equity while putting a roof over your head, and is tax-deductible for Americans. You have to live somewhere, but renting means paying off your landlord's mortgage, not building equity in your own home. The problem is mortgages are front-loaded to consist mostly of interest payments in the early years, rather than principal. But that's only if you play it the banks' way and drag out your mortgage over 20 or 30 years. It's analogous to paying only monthly minimums on credit cards. If the mortgage is large and monthly payments small, you'll pay more in interest than the house cost, meaning your effective home price is double or triple the asking price. The best mortgage is no mortgage at all and the way to eliminate one is to have high regular payments that reduce significant amounts of principal from day one. Take advantage of annual prepayment privileges (often 10% or 15% of outstanding principal) and you'll be amazed how fast your personal debt ceiling fades into irrelevancy. Once credit card and mortgage debt are eliminated, along with student loans and car loans, focus on becoming the beneficiary of compound interest instead of its victim. BMO's fourth tip is invest to save, ideally through the new tax-free savings accounts. The last tip applies to individuals or Washington: have a Plan B. Unfortunately, too often the B stands for bankruptcy. This is invariably a disaster for consumers and as the world almost discovered the past week, a disaster for everyone if the government of the world's largest economy goes bankrupt. August 3, 2011 By Rubina Ahmed-Haq  Mon Aug 1 2011 When I started my first permanent job as a journalist in 2004, I made the best financial decision of my life — I invested in two rental properties with my brother. While many of our friends were living in chic condominiums, we were chasing tenants for rent and fixing leaky pipes. We made mistakes that cost us time and money, but years later we're financially ahead. Our first investment was a triplex in east Toronto. We took the lowest available five-year, fixed-rate mortgage. Considering the low interest-rate environment that followed, a variable rate would have saved us more than $20,000. But at the time, we were unwilling to take the risk. With no time or money to renovate, we chose a house that was in move-in condition. It closed at the beginning of the month, giving us enough time to advertise and have renters in place before the first mortgage payment was due. We moved into one unit and rented out the other two. From the beginning we paid rent. After all, we were tenants in our investment. Eighteen months later we took equity out of the investment and bought another property in the same area. We stuck to what we knew and we bought another turnkey triplex. For the first three years we managed both properties, which was a lot of work. From taking calls in the middle of the night when the furnace broke to the death of a tenant, this was real work and we often thought of quitting. We also made a lot of mistakes. In the beginning, we didn't keep a good account of the money we spent on our investment. Also, we missed opportunities to write off expenses; we saw our tenants as friends and were lax in collecting rent. And we often spent weekends removing snow and throwing out garbage that was piling up because we had failed to create a system for general maintenance. And, as bad as it sounds, our biggest mistake was borrowing money to put down a responsible 20 per cent on our first property. At the time, 5 per cent would have been enough, and we could have written off the mortgage interest, saving thousands. After a few years of managing on our own, we sought professional help. We had both moved into our own homes, so we hired a property manager to oversee the six units. His company charges 6 per cent of total rent revenue collected each month. He finds the tenants, does the credit checks and deals with the day-to-day calls. We're not out-of-touch landlords. My brother and I meet once a month to go over our account, do the checks and balances and bring up any concerns. We also have a line of credit against our investment. This is our business line and we pay all the bills from it. The interest on this loan is tax deductible and we pay it down with the money collected from rent. It's also good to have one accountant looking at all the tax claims in your family. It gives them a holistic view of your financial situation and helps identify opportunities to save money. Ours is great. She's not cheap — last year I paid more than $800 in fees — but her advice has saved us thousands over the last few years. When the time came to renew our first mortgage, I quickly learned banks offer better treatment to new customers and we could take advantage of this fact. Mortgages are banks' biggest business, and they're willing to offer huge incentives to make you a client. We moved our business from one major bank to another and collected thousands in cash-back incentives. Both of us are in our 30s and we estimate the properties will be paid off by the time we're in our early 50s. Conservatively our real-estate agent says our houses are worth 45 per cent more than what we paid. We realize we've benefited from the housing price boom, but according to the Toronto Real Estate Board the long-term trends are still good. Even with the threat of a house price correction we're okay. Real-estate investment is not for everyone. If you're a so-called couch-potato investor, don't become a landlord. In the beginning it's a lot of work. But for us it was worth it and I feel good knowing our investments are growing. Life only gets more expensive — I realize now the disposable income I had during my first job was the most I will probably ever have and investing it was the smartest move I made. August 2, 2011 Globe and Mail Update Published Friday, Jul. 29, 2011 12:00AM EDT Last updated Friday, Jul. 29, 2011 6:41AM EDT When it comes to financial planning, it’s fine to hope for the best, as long as you also expect the worst. It would be great to retire at 55 – and apparently it’s easy as pie if you just put money away monthly and get a 10 per cent rate of return. We would love to get those 10-per-cent projections you see quoted in compound growth examples, but the likelihood of attaining those rates of return decade after decade is pretty low. A 5-per-cent projection would be much more prudent. Financial planning expectations can be pretty far removed from reality at times. Some people, for example, will put off getting life insurance or having wills and powers of attorney drawn up because they think they won’t be dying for a long time. By that rationale, you shouldn’t buy life insurance until the day before you die, but how would you know when that’s going to happen? Similarly, some investors give up flexibility in exchange for the highest potential net worth. But what might be the best strategy from a mathematical point of view may not be the best strategy from a financial planner’s point of view. For example, a reader asked me if he should pay down the rest of his mortgage with his RRSP as he is currently unemployed. He assumes the rate of return on his RRSP is going to be very low, whereas he knows his effective rate of return for paying down debt is guaranteed. Since he has little income being reported for the tax year, the taxes owing on an RRSP deregistration will be minimal, he assumes. He may have himself convinced the strategy is best from a numbers perspective, but from a planner’s perspective, it puts him in a very precarious position if everything doesn’t go according to plan. What if he has an emergency and needs access to cash? Deregistering funds from an RRSP account could be easier than trying to get money from the bank if they require a credit assessment update, which includes looking at his employment status. Further, when markets have been choppy or in decline, many people feel less strongly about being invested and are more inclined to sell off their portfolios and deploy the funds elsewhere. Generally speaking, if you can buy when everyone is thinking it’s time to sell because of prolonged malaise in the market, you’ll do pretty well as an investor. You’re supposed to buy low, sell high, after all. I suggested he talk to a financial planner and discuss some of the curveballs that life can throw. He could look at a middle-of-the-road approach. In his case, that might mean paying off only half of his mortgage balance and retaining some of his RRSP assets. Contingency planning is an important part of personal finance. It might not be fun to expect the worst while hoping for the best, but you’ll be less likely to get caught out when life happens. July 29, 2011 OTTAWA— Globe and Mail Update Last updated Thursday, Jul. 28, 2011 11:33AM EDT Moody’s Investors Service Inc. has renewed Canada’s triple-A credit rating, citing the factors that helped the country emerge from the global financial crisis relatively unscathed, such as its ``economic resiliency, very high government financial strength, and a low susceptibility to event risk.’’ Even though governments across the country ran deficits to fight the recession, Ottawa and the provinces are ``on a track of fiscal consolidation,” the agency said in its annual report on Canada, and their debt loads will improve ``over the next few years.” Since the provinces also enjoy high credit ratings, the risk they pose to Ottawa’s books is deemed low even though their debt loads are ``relatively large,” the agency said. The main risks to Canada’s outlook are linked to the housing market and to Quebec’s ongoing sovereignty issues, Moody’s said, adding that the chances of either risk affecting the federal government’s credit rating is low. Given the share of residential mortgages backed by Ottawa through the Canada Mortgage and Housing Corp., a ``major downturn” in home prices could hurt the federal government’s balance sheet, Moody’s noted. Nonetheless, the agency reckons that ``even in an extreme scenario,” any added debt wouldn’t be enough to change its rating for Canada. ``As a large and diversified economy with a stable political system and strong regulatory framework, Canada has a low susceptibility to event risk,” the agency’s report says. ``Natural resource industries, a competitive manufacturing sector, and a well-developed and well-regulated financial market also support the country’s resiliency,” as does Canadians’ high per-capita income, Moody’s said. Moody’s attributes much of Canada’s comparatively strong economic performance since the downturn to the Harper government’s stimulus spending and the fact the Bank of Canada kept interest rates low, which encouraged borrowing and spending and shielded the housing market. Even though Canada is in many ways joined at the hip with the United States – which the agency this month placed under review for a credit downgrade amid the debt-ceiling impasse in Washington – Moody’s noted a number of ``important differences” between the two economies. These include the fact Canada’s economy puts a greater emphasis on trade, the fact Ottawa has more fiscal flexibility thanks to a smaller debt load, and also that the banking system and housing market in Canada are stronger and less vulnerable to shocks. ``Compared to other AAA-rated sovereigns, Canada’s general debt levels are near the median level, but the federal government’s position by itself is relatively strong,” the agency said, noting that total debt of all levels of government in Canada amounts to about 70 per cent of gross domestic product. At the same time, Moody’s noted that Ottawa’s annual budget gap is little more than 2 per cent of GDP after peaking at 3.6 per cent of GDP in fiscal 2009-10, and is forecast to be closed in 2014-15. But Moody’s also flagged what is likely to be a central political issue for years to come in Canada, noting that the government’s budget projections depend on a path for spending restraint that may difficult to achieve as the population ages and health care costs escalate. ``Whether expenditure restraint to this extent is sustainable is a question in the face of rising pressure on government resulting from the aging of the population,” the report says. ``In part, this will be a political question as to how health care costs are managed and shared between the federal government and the provinces.’’ July 28, 2011 By Vernon Clement Jones | 26/07/2011 5:00:00 PM RBC may be priming the pump for an interest rate hike at the Central Bank, its economists arguing prime should soon be pushed up in order to block vulnerable buyers from entering the housing market – that warning coming as banks continue to cut rates in order to win greater mortgage volumes. “There is a popular misconception that the Bank of Canada cannot afford to raise interest rates because this would prove too damaging for mortgage holders,” Eric Lascelles, chief economist for RBC Global Asset Management, says in a report released this week. “The opposite is, in fact, true. The reality is that the Bank of Canada cannot afford to delay raising interest rates, for precisely the same reason. The longer the bank delays, the more marginal borrowers will enter the market and be walloped when rates rise, and the further home prices will go above their equilibrium levels, only to tumble later.” The report was released on the heels of the Bank of Canada’s decision last week to maintain its overnight rate at 1 per cent. It cited global volatility in the U.S. and Europe as reasons for keeping the economic stimulus in place. In so doing, it has prolonged the current lending climate, one marked by tight margins and decreased profitability. Despite that, the banks have moved to undercut already rock-bottom pricing available through the broker channel in order to better compete for a dwindling number of originations. That climate has posed a risk to some of the channel’s smaller lenders, said one national network head.“The rate (hold), no question, is good news in terms of generating business and sustained the broker channel, as it has over the last couple years,” John Bargis of Mortgage Edge told MortgageBrokerNews.ca. “But the longer the rates remain at these levels, which is basically an anomaly, the longer the difficult period for our smaller lenders, now struggling with spreads. Holding the rate puts the squeeze on our mono-lines because they don’t ancillary products and services to sell to the client.” Lascelles is arguing that any further extension of those rates could compromise the country’s economic stability if it encourages unprepared borrowers to enter the housing market just before the inevitable rate increase. Still, the economist concedes that a relatively small portion of Canadians are most vulnerable to the shock of rising rates. That’s despite the high levels of household debt-to-income ratios, currently sitting at147 per cent. July 27, 2011 KATE HAMMER — EDUCATION REPORTER From Wednesday's Globe and Mail Published Tuesday, Jul. 26, 2011 8:34PM EDT Last updated Wednesday, Jul. 27, 2011 8:02AM EDT Lest history repeat itself, Ontario has laid the educational groundwork for a new generation of students who appreciate the perils of interest rates and debt, and know the real cost of borrowing money. The province’s Ministry of Education has released comprehensive teacher guidelines that identify places in the Grade 4 through 12 curriculum where financial literacy can be inserted into classes as varied as mathematics, computer science and native studies. Ontario’s is one of a number of education systems across the globe that, in the wake of the recent financial meltdown, were forced to take a hard look at how debt and personal finances were treated inside the classroom. Many Canadian provinces, including British Columbia, Manitoba and Ontario, have since been looking for ways to inject financial literacy into their curriculums. The question is, will it be enough? Probably not, says Gail Bebee, the author of No Hype: The Straight Goods on Investing Your Money, who also teaches night courses on investment planning for the Toronto District School Board. Ontario’s new guidelines are “just a resource guide, what the teachers can use if they want to … which is all well and good, but what I couldn’t see was a list of the core competencies which the education system is trying to impart on students by the time they graduate,” she said. She pointed to Utah as an example of a better system. Since 2008, high-school students in that state have been required to complete a half-credit course called “general financial literacy” to graduate. In mandating the course, the Beehive State has taken a stronger tack than Canadian provinces, which have generally stuck to sprinkling financial literacy throughout existing courses. Ontario, for example, suggests that in high school, “when studying classical civilizations, students could address aspects of trade, economics and use of money in ancient times,” according to the new teacher guidelines. The idea is that by spreading the financial lessons out, they’ll reach more than just those who are already inclined toward math and business courses. There’s also an advantage to disguising the lesson, said Casey Cosgrove, director of the Canadian Centre for Financial Literacy. “If you don’t call it ‘financial literacy’ it seems to be quite appealing to kids,” he said. “I think Ontario’s taken a huge step in the right direction.” Devan Aris, a 16-year-old Grade 11 student at Thomas A. Blakelock High School in Oakville, Ont., thinks finance is fascinating. He understands mortgages and interest rates and how they contributed to the recent recession, but he says he gained that knowledge through a combination of part-time jobs, his parents and an optional Grade 10 business course. “There’s lots of kids who don’t have jobs and they just use their parents’ money so they don’t get too concerned about how they spend it,” he said. Data support his claim: In a 2008 survey by Credit Canada, only 13 per cent of teens said they knew a lot about managing money, and they ranked taking a class in school as the best way to learn about it. Financial literacy has become such a hot topic in education that the Organisation for Economic Co-operation and Development is investigating the best ways to learn about it. Next year, for the first time, when 15-year-olds across the globe write the OECD’s math, reading and science tests that are used to rank the world’s education systems, some will also be tested on financial literacy. Eighteen countries, including the United States, Australia and New Zealand, have decided to participate, but Canada opted out. In Ontario, Education Minister Leona Dombrowsky said she was confident that the new guidelines would inject more personal finance into the classroom. “There are lots of opportunities that I think that teachers are going to be able to introduce the concept of borrowing money and making payments and how the interest adds to the overall price,” she said. “I think that concept is really important.” July 27, 2011 Team Triumph Mortgage Brokers Ottawa claims the highest number of mortgage professionals on this year’s Top 50 List.  Vernon Clement Jones delves into the reason for that and discovers that there are several Lisa Theriault drives a two-and-a half-ton GMC Yukon.  Actually, given that it’s “fully-wrapped” with black, white and red logos – all sporting the Mortgage Brokers Ottawa brand – it may weigh closer to three. “It’s my daily drive, and I don’t feel at all self-conscious about it, “laughs the broker and regional partner with one of the country’s largest firms.  “In case they miss the badging, my 27-inch chrome rims should help get your attention.  I’m very proud of our brand and am always out there as a representative of the business.” As far as marketing statements go, there may be more subtle ones, but probably few as effective. Theriault brought in $67 million in funded volume last year, earning her 21st spot on CMP’s coveted 2010 Top 50 Brokers list.  She’s not alone.  The 38-year-old was one of an astounding seven mortgage professionals at Mortgage Brokers Ottawa to make the cut. Mortgage Brokers Ottawa President and CEO Mike Hapke came 50th on the list, with managing partner York Polk, making it all the way to 14th, given his own $84 million in funded volume.  That’s only one ahead of another of the firm’s managing partners, Frank Napolitano, who attracted $77 million last year to earn 15th place, while the group’s fourth partner , Jeff Cody, brought in $57M in funded volume, earning him 32nd spot in the national ranking.  Regional Partner Murray Groen, with a funded volume of $60 million came in 29th.  And mortgage agent Darren Keck made the list at 45, with $42 million. The collective performance represents the single-best showing of any brokerage, not only this year, but of any since the inaugural listing in 2008.  While the group accomplishment is a nod to the demographics of the Ottawa market and the widespread acceptance of mortgage brokers as an alternative to the banks, concedes Hapke, it also speaks to the strength of the organization’s individual brokers.  They are, nonetheless, focused on moving forward as a team. “With our model we don’t lose top producers”, a pleased, if not entirely surprised Hapke tells CMP after receiving the standings.  “Our brand is exceptional in our region and with that comes loyalty.  We tend to continue to hold onto brokers after they’ve cut their teeth and come into their own.  When you’re aiming for a billion in sales this year, with only 60 brokers and agents, you tend to attract the crème de la crème.  So, it’s a mix of up-and-comers and established brokers, but the numbers that we have in the Top 50 speak for themselves.” Hapke and Napolitano launched the company in 2005, bringing their combined 40 years-plus of banking experience in tow.  They would later move their Elite Mortgage Team of 20 in 2006, two years later merging with Polk and Cody’s firm.  It’s one Hapke had, in fact, left to start up his own business three years earlier. Together the four successfully led the company to independence in 2010 before agreeing to partner with The Mortgage Centre Canada last fall.  That strategic move has already begun to add heft to the company’s presence in the Ottawa market, says Napolitano, pointing to its exclusive broker channel access in eastern Ontario to President’s Choice and CIBC product lineups.  Those offerings such as a cash-back switch and a one-year construction rate hold have better positioned Mortgage Brokers Ottawa as a direct competitor to the banks. “Being connected into a bank is not a bad thing, yet we have maintained our freedom in terms of offering clients access to all the other lenders we can access,” Napolitano says.  “We make it clear that we built our business based on what’s best for our clients.  Everything else is secondary.” The partners are candid about their tricks of the banking trade they’ve picked up from their years inside those financial institutions.  In fact, all but one of the seven Mortgage Brokers Ottawa brokers to make the Top 50 has an extensive banking background.  We’re trying to do exactly what the banks do in terms of branding, but with a local focus.” says Napolitano, the former TD mortgage specialist, who like most of the executive team drives a “fully wrapped” pickup no more and, certainly, no less promotional than Theriault’s.  “Through our advertising, our jingle and our community involvement we’ve become a recognized brand in Ottawa and that has helped us to compete with the banks.” Increasingly that brand acts as a calling card for Mortgage Brokers Ottawa agents and brokers, says Groen, but ultimately it’s the brokers themselves who are extending the company’s reach in a market where average incomes are some of the highest in Canada, buoyed by federal government jobs and a burgeoning high-tech sector. “If it’s a question of which came first – the brand or the brokers – it is the brokers,” Groen says.  “Because the people behind the brand have made the brand what it is.  Those of us on the list were in the industry before the brand was a brand, but now the brand has value that we have sort of imparted to it, and I’m sure it does help me now with referrals.” A bank-style public relations approach has gone a long way in terms of keeping Mortgage Brokers Ottawa top of mind with existing and potential clients.  Still, brokers in the capital city enjoy a higher market share than much of the rest of the country. “in Ottawa, it’s not predetermined that homebuyers are going to take their business directly to the banks and that they’ll just accept what their banks offer.” says Groen.  “The economy in Ottawa is a lot more stable than a lot of the rest of the country, and they are very well-educated and understand how a broker can help them.  But we don’t have 90 per cent market share yet, so there is an awful lot of room for growth.” Actively seeking new business remains the focus of all the company’s mortgage professionals, says Cody, even as the company’s strong Internet presence increasingly attracts younger clients more inclined to begin their search for a mortgage online. “It’s really still about building personal relationships,” says Cody, who obtained his brokers license more than 30 years ago, after leading a top Invis brokerage with then-partner Polk before teaming up with Hapke and Napolitano. “You can’t just sit on the web and expect business to flow in.” Both individual and company success have come from building a team approach to brokering even as brokers increasingly face competition from within their own ranks. “We grew exponentially very quickly and a large part of that was cementing brand recognition, “Theriault tells CMP.  “But also key was that we support one another.  If something works well, we share it.  Through training and marketing, and regular meetings with the entire company, we keep things in the open.  We like to see each other do well.” Part of that is knowing what individual strengths his brokers bring to the game and supporting them in areas where they need help, says Hapke. Of the 60 agents and brokers, 70 per cent have now agreed to lower commission splits in order to transfer administrative duties like storing documents, preparing closing documents, submitting deals for underwriting and collecting conditions to Hapke’s support team. We see it as having helped to create the kind of sales environment you need to help agents generate business,” says Hapke, who spends most of his time on corporate direction and strategic planning, but still managed to bring in $41 million in funded volume last year, most of it generated from referrals through past clients.  He’s not alone. “All of the Mortgage Brokers Ottawa people on the Top 50 list are veterans of the industry, no question,” he says. “They’re passionate and as driven as they were the first day I met them.  It’s what you need to be.” CMP July 26, 2011 From Tuesday's Globe and Mail Published Monday, Jul. 25, 2011 7:25PM EDT Last updated Tuesday, Jul. 26, 2011 9:20AM EDT As the clock ticks toward next week’s deadline set by the Obama administration for raising the $14.3-trillion (U.S.) debt ceiling, collars are tightening in Washington, capital markets are becoming more volatile, and pundits of all political stripes are ratcheting up the rhetoric. According to some, the financial world as we know it will come crashing down if no debt deal is signed, sealed and delivered by next Tuesday. But others, like U.S. Secretary of State Hillary Clinton, are essentially telling the rest of the world to relax: The politicians will set aside their typical Washington posturing in time to reach a compromise and lift the cap. But if intransigent Democrats and Republicans refuse to budge, the world’s biggest debtor will be sailing into uncharted waters. What happens if the debt ceiling is not raised by the Aug. 2 deadline? Global markets are already battening down the hatches in advance of the potential storm. Margins have been raised slightly on debt-related instruments in the futures market and the price for insuring U.S. debt in the credit default swap market has climbed to the highest level in a year and a half. But apart from a nasty market reaction if the worst comes to pass, there would be little other fallout, at least in the short tern. The government is not going to have to call on the International Monetary Fund for a bailout on Aug. 3, and it will not default on any of its bond obligations. The U.S. Treasury has several money-raising options in times of emergency, and it has undoubtedly examined all of them, despite frequent denials that there is a plan B. After all, the Treasury actually hit the ceiling in mid-May. Existing tax and other revenues are enough to cover more than half the government’s expenses, including its most pressing obligations – interest on the debt, Social Security, Medicare and military expenditures. The Federal Reserve can also dip into its hoard of about $2.6-trillion worth of Treasury bonds and other securities on its balance sheet to absorb whatever extra money the Treasury has to print. And the Treasury itself holds billions worth of mortgage-backed securities, as well as close to $400-billion in gold that it could sell or swap with the Fed. What will the rating agencies do? Any hint that Washington will not be willing or able to meet all of its bond obligations would almost certainly trigger rating cuts. Loss of its sterling Triple-A rating would not, by itself, trigger a widespread selloff of Treasury bonds. But it could add even more billions to the U.S. debt load, as investors demand higher premiums to hold U.S. assets. The higher costs would cascade down to U.S. corporations and even to individual consumers faced with renewing mortgage and other debt. That said, the rating agencies are likely to downgrade the United States at some point anyway, because of its soaring debt and deficits, even if there is no risk of default. What would happen to the economy? The impact could be severe and widespread if Washington delays social spending, halts less-essential services, stops paying military personnel, or postpones deals with outside contractors. Faced with higher borrowing costs and dimmer economic prospects, already-cautious corporations would curtail capital spending plans. Unemployment could worsen and the U.S. could be plunged back into recession. The fragile global economic recovery would not be able to withstand such strong U.S. downdrafts. What political fallout should we expect? Ask most Americans, and they will say the debt ceiling is too high already. And political gridlock has become an accepted way of life in Washington. But once cheques start being delayed for everything from Social Security to government salaries, outside contractor and vital state transfer payments, both political parties will have a lot of explaining to do to aggrieved constituents. The economic decline stemming from a sharp reduction in government social spending, and any cutbacks in public services, will turn into a destroyer of political careers for Democrats and Republicans alike. Why worry so much about borrowing limits? Can’t the Treasury just print its way out of this mess? Always a tempting solution for deadbeat sovereign borrowers; and the devalued U.S. dollar that would result would probably be good for the trade balance. But the country would end up deeply tarnished in the global community. And the resulting surge in inflation would inflict more damage on the U.S. economy than would a temporary cutback in government spending. July 26, 2011 Adrienne Brown SPECIAL TO YOURHOME.CA This summer has been hot, sunny and nothing but ideal for relaxing outdoors. While it’s the people that make the party, not the space, a functional and attractive backyard or balcony never hurt, regardless of the size. “When I look at an outdoor space, I like to think of it as an extension of the house. It’s like any other room,” says Jim Fairweather of Distinctive Spaces. Here’s how to spruce up your small space for summer entertaining: 1. Declutter “People often use their decks and balconies for extra storage,” says Fairweather. If you plan on using the space to entertain, the first thing you’ll need to do is stash those brooms, extra chairs and miscellaneous sports equipment elsewhere. Also think about how you can add extra storage without taking up too much space, such as investing in a deck box that doubles as a bench. “Anything that does double duty is great,” says Fairweather. 2. Define spaces What do you plan on doing in your space? Once you can answer this question, you can plan properly. There’s no sense in cramming a dining table and chairs into a small backyard if you’ll never use it. A small bistro set, two-person swing or even a hammock might be all you need. Fairweather suggests outdoor area rugs as a simple way to set off one area from another — especially if you’re struggling to figure out what direction your space should take. “Find one that inspires you,” he says, “then pull a colour from it to choose linens and cushions.” Keep your barbecue off to one side so you can play with what you have left. 3. Choose your furniture wisely Once you know what you need, you can begin to shop for any new furniture you may want. If you are happy with your key pieces, consider rearranging them to suit your designated zones. “Function will drive what you’re going to put out there,” says Fairweather. He says a glass table is great for a small area because, visually, it doesn’t take up much space. However, he says teak is also great for outdoor furniture because it’s durable and wears well. The same goes for wrought iron and many new wicker and plastic sets. “Always take a camera and tape measure,” says Fairweather. “Everything looks small at the store” when you’re standing under sky-high ceilings and the walls feel miles away, but you don’t want to get an item home to discover it doesn’t fit on your deck. If you expect to have a large crowd on your balcony (since that’s where people tend to congregate at summer get-togethers) you may want to explore folding chairs and bistro sets that can be tucked away when they’re not being used. 4. Add accessories and colour If you’ve picked neutral furniture, it’s easy to add splashes of colour here and there — and then change them when you tire of them. Fairweather suggests adding excitement with fun and funky dishes. Inexpensive acrylic plates are no longer the cheap, ugly dishes they once were — they can actually be quite attractive. Torches, candles and outdoor fireplaces are also easy ways to liven up a space. Of course, always choose fire-focused decor based on your space and what your local bylaws or building regulations allow. Don’t forget about all the accessories you have inside, too. A centrepiece of fresh flowers in one of your regular vases instantly refreshes any table before a dinner party. 5. Make the space your own Fairweather says “you don’t need to go crazy” to personalize your space. Try placing a flowering tree in each corner or add a water feature — you can even get some that hang on a wall, so you don’t have to find extra floor space for it. If space is really tight, opt for hanging baskets, railing planters or small pots that can be moved inside if necessary. Ultimately, though, whether you hang outdoor curtains and deck out your deck or keep things fairly simple with just a hammock and a barbecue, your outdoor space should work for you. July 25, 2011 Jul 21, 2011 – 8:30 AM ET | Last Updated: Jul 21, 2011 8:47 AM ET The Canadian dollar jumped to a new 3-1/2 year high on Thursday, tearing through an April peak, amid expectations for higher interest rates in Canada and burgeoning foreign interest in Canadian assets. The loonie reached US1.06.13¢, surpassing the April peak of US105.98¢ to its highest level since November, 2007 when it was at US105.99¢. It had closed on Wednesday at US1.056¢. The loonie may have also been boosted by an EU summit draft proposals which made reference to extending European Financial Stability Facility loans and allowing the rescue fund to intervene on a precautionary basis. The draft proposal gave the euro a lift against the U.S. dollar and helped send Italian bond yields lower. “Governor Carney has made a slight shift in tone to slightly hawkish tone which is positive for the Canadian dollar because higher interest rates in Canada tend to be positive for currency,” said Camilla Sutton, Chief Currency Strategist, Scotia Capital. “Secondly we have a generally weak U.S. Dollar over the year – and what we have for Canada is a small, open economy which is a good diversification vehicle for those not wanting European or U.S. exposure.” July 21, 2011 A Texas man has claimed ownership of a house recently valued at $300,000 for just $16 by taking advantage of a rare circumstance and law. According to the Houston-based KHOU TV station, Kenneth Robinson moved into a house previously under foreclosure for a year, located on a well-manicured prestigious block in the town of Flower Mound. The former owners were forced to leave after the house went into foreclosure, but then the mortgage company also went out of business.Robinson took advantage of a little known law called adverse possession that allowed him to move in and own exclusive bargaining rights with the previous owner. If he’s able to stay within the property for three years, Robinson will take full ownership by being awarded the title. Adverse possession was created to allow someone to move in and prevent an abandoned home from falling into disrepair. The website http://adversepossession.com promotes the practice, even pointing to the possibility of doing it in Canada.Robinson told the Texas TV station that until he wins the title, he doesn’t expect the mortgage payments to be made by the previous owner, nor does he expect an expensive legal battle with the existing mortgage holder, which would force him out. Until then, he’s been living without electricity or water due to the lack of deed, but the reward after three years seems worth it.“This is not a normal process, but it’s not a process that’s not known,” Robinson told KHOU.Neighbours, however, are not happy, calling Robinson a squatter who should be forced to pay for the house July 21, 2011 The option of rent control and reform of it has been debated across Canada, especially in cities like Winnipeg and Ottawa, where vacancies are low and rents are rising. But Real Estate Investment Network President Don Campbell told CRE Online such rent control regulations have unintended consequences that will hurt investors, developers, the government, and even renters. Politically, controlling the rising cost of rents might look good to voters, but it will be a long-term detriment all around, he said.“Often these bills are passed due to the optics of the bill and often throughout history they are instigated in election years,” he said.Renters who mostly support these controls fail to realize they would drive up rents, he said. There are three reasons this would hurt renters, he said:1.     They severely restrict the ability for anyone to financially build rental-specific properties (apartment buildings), thus driving more renters into the more costly option of condo properties.2.     Rents increases will hurt new renters each time properties change hands. Although rent increases are controlled by government guidelines, investors can raise rents back to market levels as soon as tenants move out. Because of a lack of supply, these increases could be quite high.3.     Landlords would be forced to decrease the amount of money spent on repairs and maintenance, thus lowering the quality of the living space for tenants.The government would also face some problems, said Campbell:1.     They will be pressured to provide incentives (like the 1970s and 1980s) to get rental specific buildings built.2.     As actual rents increase, the government will have to increase funding to affordable housing projects.3.     The disputes between tenants and landlords will increase, occupying government resources.4.     What the government gains in “optics,” they will lose in increased spending in these areas.Investors, often some of the most vocal opponents against rent controls in Canada, will no doubt be affected in a number of ways:1.     In Ontario, limiting rents on post-1991 buildings will lead to a decreased amount of funds available for maintenance. 2.     Many investors will let their buildings deteriorate as capital expenditures spending will decrease.3.     Investment money will be pushed out of the region to less regulated areas of the country.Lastly, Campbell said developers will also be dissuaded from building apartment rental buildings knowing that interest rates and energy prices will increase at a faster rate than rents. “Money will be provided elsewhere where it provides a better yield,” he said. July 21, 2011 ROB CARRICK From Wednesday's Globe and Mail Published Tuesday, Jul. 19, 2011 5:13PM EDT Last updated Tuesday, Jul. 19, 2011 7:01PM EDT The debt problems of the global financial system are your problems. So pay down your credit card, credit line and mortgage. Making your household balance sheet tidier has the fortunate spillover effect of saving our economy. From what? Just look at what’s happening in the United States: The housing market is a disaster, weak consumer spending has crippled the economy, and politicians are grappling with how to fix things through a mix of government spending cuts and tax increases. The Bank of Canada gave you another reason to get your debts in line on Tuesday, when it signalled, in its typically obscure way, that interest rates will rise in the foreseeable future. The bank did this by deleting the world “eventually” from a discussion of rate increases. Rising rates will hit you in two stages. The first is instant – when the central bank raises its overnight rate, the major banks increase their prime lending rates by an identical amount. That, in turn, means higher interest charges for people with variable-rate mortgages, lines of credit and floating rate loans. The second phase is when mortgages and other borrowing products with fixed rates start to rise. If you’re buying a house or renewing a mortgage in the next couple of years, you’re going to pay more than you would now. How much more remains to be seen. You’ve heard this before. For the past 18 months or so, the nagging has been non-stop from Bank of Canada Governor Mark Carney, the federal finance minister and this column, among others, about the need to pay down debt before rates rise. And you’ve listened. CIBC World Markets reported last week that debt levels are rising at their lowest pace since 2002. If you take mortgages out of the calculation and adjust for inflation, Canadian borrowing has slowed to the lowest level since the early 1990s. Should current credit trends persist, we could see non-mortgage borrowing actually decline in the second half of the year. As for mortgage borrowing, that should take care of itself if predictions about a correction in housing prices are right. All in all, we’re doing okay here in Canada. An orderly decline in borrowing is much preferred to what’s happening in the United States. A report in The New York Times on Sunday documented how American consumers have become miserly after years of binging on debt. The decline in spending is so drastic that it’s being blamed for stagnant job growth. Measured in terms of sales per 1,000 people, housing is down 24 per cent since 2007, automobiles are down 26 per cent and washers and dryers are down 26 per cent. The Economist reported recently on how almost one in seven Americans was using food stamps as of April. The U.S. unemployment rate was 9.2 per cent in June, double what it was five years ago, before the global financial crisis began to develop. This is the background that explains the political battle in Washington about whether to increase the ceiling on government debt. The United States can finance its operations and meet its debt obligations to bondholders around the world – it just needs to borrow more money to do it. There has been a lot of worrying lately about Greece and other European countries that are spending more then they’re generating in revenue. Now, it looks like China could be added to the list of countries with debt issues. In a report issued Tuesday, TD Economics said questions are being asked about the quality of the loans issued by Chinese banks in a flurry of lending that was meant to help stimulate the economy following the financial crisis. Reducing your own debts is how we avoid these kinds of problems here in Canada. Each individual with excess debt is a stress on the system. Add enough stress and we get the stories playing out in other countries. There have been a few times in the past couple of years where interest rates seemed poised to rise and then didn’t because of global financial uncertainty. So the Bank of Canada’s time frame for rate increases is still somewhat open-ended. Even when rates do start to rise, it will likely be in small increments of one-quarter of a percentage point. That means you still have time to reduce your debts. Start with your credit cards because they have the highest interest rates, and work down to your loans, credit lines and your mortgage. Every dollar in debt you pay off makes our economy stronger. July 20, 2011 For immediate release 19 July 2011 Contact: Jeremy Harrison 613 782-8782 Ottawa - The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent. The global economic expansion is proceeding broadly as projected in the Bank’s April Monetary Policy Report (MPR), with modest growth in major advanced economies and robust expansions in emerging economies.  The U.S. economy has grown at a slower pace than expected and continues to be restrained by the consolidation of household balance sheets and slow growth in employment. While growth in core Europe has been stronger than expected, necessary fiscal austerity measures in a number of countries will restrain growth over the projection horizon. The Japanese economy has begun to recover from the disasters that struck in March, although the level of economic activity in that country will remain below previous expectations.  In contrast, growth in emerging-market economies, particularly China, remains very strong. As a consequence, commodity prices are expected to remain at elevated levels, following recent declines. These high prices, combined with persistent excess demand in major emerging-market economies, are contributing to broader global inflationary pressures.  Widespread concerns over sovereign debt have increased risk aversion and volatility in financial markets. In Canada, the economic expansion is proceeding largely as projected, although the expected rotation of demand is somewhat slower than had been anticipated. Household spending remains solid and business investment robust. Net exports remain weak, reflecting modest U.S. demand and ongoing competitiveness challenges, particularly the persistent strength of the Canadian dollar. Despite increased global risk aversion, financial conditions in Canada remain very stimulative and private credit growth is strong. Following an anticipated slowdown in growth during the second quarter due to temporary supply chain disruptions and the impact of higher energy prices on consumption, the Bank expects growth in Canada to re-accelerate in the second half of 2011. Over the projection horizon, business investment is expected to remain strong, household spending to grow more in line with disposable income, and net exports to become more supportive of growth. Relative to the April projection, growth in household spending is now projected to be slightly firmer, reflecting higher household income, and net exports to be slightly weaker, reflecting more subdued U.S. activity. Overall, the Bank projects the economy will expand by 2.8 per cent in 2011, 2.6 per cent in 2012, and 2.1 per cent in 2013, returning to capacity in the middle of 2012. Total CPI inflation is expected to remain above 3 per cent in the near term, largely reflecting temporary factors such as significantly higher food and energy prices. Core inflation is slightly firmer than anticipated, owing to temporary factors and to more persistent strength in the prices of some services. Core inflation is now expected to remain around 2 per cent over the projection horizon.  Total CPI inflation is expected to return to the 2 per cent target by the middle of 2012 as temporary factors unwind, excess supply in the economy is gradually absorbed, labour compensation growth stays modest, productivity recovers, and inflation expectations remain well-anchored. The Bank’s projection assumes that authorities are able to contain the ongoing European sovereign debt crisis, although there are clear risks around this outcome. Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn, consistent with achieving the 2 per cent inflation target. Such reduction would need to be carefully considered. July 19, 2011 Vito Pilieci, Postmedia News · Jul. 16, 2011 | Last Updated: Jul. 16, 2011 3:04 AM ET The trend toward green living has finally caught the attention of the banking industry. Banks have watched as consumers have made greener choices in everything from washing detergent and light bulbs to high-efficiency furnaces and solar energy panels. With consumers interested in greening their lives, most of Canada's major banks have seen the opportunity to offer "green mortgages," which offer homebuyers a discounted interest rate and other incentives to buy environmentally sensitive houses or perform upgrades aimed at lowering their environmental footprint. "We made the decision [to offer green mortgages] to respond to that market," says Katie Archdekin, head of mortgage products for BMO. "We wanted to encourage customers to make positive change and positive choices for the environment. We've had great response." Consumers, especially first-time buyers, are increasingly looking to green home upgrades to help the environment and lower the carrying costs of owning a new home. According to surveys conducted by Leger Marketing, while Canadians are interested in lessening their impact on the environment, the decision to buy a "green home" is really being driven by saving cash. More than 59% of respondents cite financial savings as the main reason for making ecofriendly upgrades and purchases. The results are not surprising, considering more than 51% of survey respondents say utility costs are the biggest surprise financially when it comes to owning a home. Having new windows, doors and a high-efficiency furnace can go a long way to help make those carrying costs more palatable, according to Leger, which found 92% of Canadian respondents recognize the cost advantages of energy-efficient home upgrades. It also found nearly half of all home buyers plan to make investments in energy-efficient upgrades in the next year, especially with the anticipated extension of the federal government's ecoENERGY Retrofit program (see story at top of page). The program allows Canadians to write off a portion of their green home renovations on their taxes. The green trend isn't just affecting resale homebuyers. According to an EnerQuality Green Building survey released in November 2009, more than 40% of Ontario homebuyers are willing to pay up to $10,000 more for a new green home, or a home that is Energy Star certified. That number is almost double the 22% of homebuyers who were willing to spend that amount of money in 2008. Farhaneh Haque, regional manager of Mobile Mortgage Specialists at TD Canada Trust, says that with the additional money, buyers are willing to spend on green homes and upgrades, many have been inquiring about discounts and incentives from the banks to help them. "Environment has become increasingly popular. "A lot of politicians are talking about it, the general public is talking about it, there are a lot of home renovation projects that you see around or on TV that are talking about it, major suppliers of home appliances are talking about it. It's become very evident in the market," Ms. Haque says. "It just made a lot of sense to have a product that supports our clients' motivations. It encourages clients to seek out home renovations and take part, or participate, in environmental initiatives. It encourages green behaviour." While almost all of Canada's big banks are offering green mortgages, the loans aren't open to just anyone. Buyers must qualify for the green loan by proving the house they are buying meets certain green energy standards, or that they will be completing certain green upgrades to the home shortly after moving in. Incentives offered by the banks vary. Some will provide rebates equal to the cost of a home energy audit, which is around $300, and then a cashback incentive that can be used for green upgrades. Others offer discounts to posted mortgage rates. ECO MORTGAGES With so many different "green" mortgage offerings out there, wading through them can be a daunting task. Below is a list of a few of the more popular options: ? RBC Energy Saver Mortgage Receive a $300 rebate on a home energy audit. Get a five-year, fixed mortgage with an annual interest rate of 4.34%, more than 1% lower than the regular posted five-year rate. TD Canada Trust Green Mortgage Offers customers 1% off the posted interest rate on a five-year, fixed-rate mortgage. Customers also receive a cash rebate of up to 1% of the amount of the mortgage when home buyers make Energy Star-qualified appliance purchases and home upgrades or purchase CSA-approved solar panels. TD will also donate $100 to the TD Friends of the Environment Foundation charity for each Green Mortgage opened. BMO Eco Smart Mortgage Offers buyers of green properties a 3.89% annual interest rate on their mortgage. In order to qualify for the BMO Eco Smart Mortgage, the home must meet certain requirements as confirmed by a third-party appraiser (or energy auditor) arranged by BMO. Canada Mortgage and Housing Corp. (CMHC) incentive If a person uses CMHC insured financing to buy an energy-efficient home or purchases a house and makes energy-saving renovations to make it more energy efficient, a 10% refund on the mortgage loan insurance premium may be available. July 18, 2011 Financial Post · Jul. 15, 2011 | Last Updated: Jul. 15, 2011 10:02 AM ET OTTAWA — Home sales rose by a seasonally adjusted 2.6% in June from the previous month, a sign the housing market is on a “solid footing,” the Canadian Real Estate Association said Friday. Sales activity remained stable in Toronto, with gains recorded in Victoria, Calgary and Montreal, as well as in the Ontario cities of Ottawa, London and Hamilton, CREA said. However, monthly sales declined in Vancouver and the nearby Fraser Valley. “The Canadian housing sector remains on a solid footing,” said CREA chief economist Gregory Klump. “The rise in monthly home sales activity at the end of the second quarter, upbeat business sentiment and hiring intentions, and signs that the Bank of Canada is in no rush to raise interest rates bode well for home sales activity and prices going into the second half of 2011.” On an unadjusted basis, sales were up 10.8% in June from the same month last year. On Wednesday, TD Economics said Canada’s housing market is set to undergo a “modest” correction, with resale activity poised to drop 15.2% and average prices likely to fall 10.2% over the next two calendar years. Still, another report this week showed home construction rose more than expected in June, led by a jump in single-unit activity. Canada Mortgage and Housing Corp. said the seasonally adjusted annual rate of housing starts was 197,400 units last month, up 1.7% from a revised 194,100 units in May. July 15, 2011 David Pett, Financial Post · Jul. 14, 2011 Last Updated: Jul. 14, 2011 9:40 AM ET Things are definitely looking up for the Canadian economy, but don’t bank on interest rates rising anytime soon.  With Europe’s credit mess spilling over and the faltering U.S. recovery eliciting serious talk about QE3, it’s pretty much unanimous the Bank of Canada will stand pat when setting its policy direction next Tuesday and may not budge until later this year or next year.  “The arguments are there for the Bank of Canada to start hiking rates next week, but we increasingly think that this fall might even be too early given the problems we are seeing in the global economy,” said Jimmie Jean, an economic strategist at Desjardins Capital Markets based in Montreal.  Despite encouraging news over the past week, including solid housing and jobs numbers and improving business sentiment that suggest Canada is bucking the global slowdown, not one of 37 economists and strategists recently surveyed by Reuters expects the Bank of Canada to hike rates July 19.  While some do expect a 25-basis-point increase in September, the median forecast predicts the central bank will leave its key policy rate at 1% until the fourth quarter.  Mr. Jean has pushed his rate-hike expectations out to December. In his mind, as positive as Canadian economic data have been lately, there is no urgency for the Bank of Canada to tighten policy when both Europe and the United States, the world’s two biggest markets, are struggling.  If Europe’s sovereign crisis results in a country defaulting on its debt or escalates in some other manner, it could shock the global financial system by straining funding markets for banks — Canadian ones included — to create another liquidity crunch, he said.  Meanwhile, prospects of the U.S. economy regaining its footing in the second half of the year seem to be diminishing, especially following last week’s dismal jobs report and now U.S. Federal Reserve chairman Ben Bernanke has raised the possibility of another round of quantitative easing.  “That was pretty firmly ruled out just a few weeks ago and now the possibility is being raised,” Mr. Jean said. “There’s no question that if the Fed goes QE3, the Bank of Canada is not going to hike rates.”  Karen Cordes Woods, a financial markets economist at Scotia Capital Markets said the risks of tightening monetary conditions currently outweigh the benefits and she doesn’t think the Bank of Canada will move on rates until the second quarter of 2012.  She said material tightening is being imposed on the economy from fiscal retrenchment and the strength of the Canadian dollar to stricter mortgage lending guidelines and elevated commodity prices that continue to crowd real wage growth despite the improvements in the labour market.  Although there is recent evidence of inflation creeping into the economy, it’s not nearly enough to justify a rate hike and Ms. Cordes Woods believes a move to tighten by the Bank of Canada would only put more upward pressure on the dollar and represent an unwanted headwind for the economy.  “The Bank of Canada still has time to stay on the sidelines,” she said. “They will do what they see fit given the conditions.” July 14, 2011 Shelley White Globe and Mail Update Posted on Monday, July 11, 2011 6:39PM EDT I recently wrote about my kitchen renovation for Home Cents, detailing how I managed to keep my budget under $25,000 while still ending up with a functional and beautiful room. There were a lot of comments (thanks for those, by the way) - some people thought I’d paid too much, some thought I’d paid too little. But there did seem to be a consensus that the post demanded some photographic evidence. So, due to popular demand, here are the before and after photos of my kitchen renovation. And please note: I took them myself, so excuse my not-quite-awesome camera skills. Although I’m enormously pleased with how the renovation turned out, I certainly wouldn’t say the project was free of mistakes. In fact, there are some small things I might do differently if I had to do it all again (you may spot a couple of those in the photos, in fact). So how can you avoid renovation missteps before they happen? HGTV has put together a useful collection of the 25 Biggest Renovating Mistakes. It’s quite a comprehensive list, but here’s a sampling of some of the factors I could relate to: Gutting Everything It can be tempting to want to just tear everything out - including the walls - and start from scratch. But that is where the additional costs can come creeping in. My contractor wisely elected to take a look inside the wall we were going to take down before totally ripping it out. Once we found out that tearing the wall would add challenges and money to the job, we changed the plan and kept the wall. “I see this time and time again where people just start, and they think they’re going to pull a piece of wallpaper off, and by the time the process is over, they’ve completely gotten themselves into a deep, dark hole that’s very difficult to get out of,” says Mr. Eric Stromer, host of home reno show Over Your Head. Inaccurate Measurements I measured once, twice, three times and then again before ordering cabinets. My contractor was also meticulous with his measurements, but I could see how things could go quickly off the rails is someone was sloppy or rushed. When dealing with countertops, always choose a company that will come and do the measuring for you, preferably using a cardboard template. That way, the onus is on them to ensure it fits correctly. That also allows you can take a look at the template and make sure you’re getting the shape you want. When you’re talking about a slab of stone worth thousands of dollars, you don’t want to take any chances. Going Too Trendy “People often make the mistake of wanting to be too hip and trendy in their new home by picking the latest, hottest, coolest things,” says Ms. Carmen De La Paz of HGTV show Hammer Heads. “What they don’t take into consideration is that trendy means that it’s short term.” Five years ago I had my heart set on aqua-coloured glass tile for my kitchen backsplash. Sure, it would have looked good for a couple of years, but take it from someone who really loved her royal blue and bright yellow kitchen when she painted it 11 years ago – your taste will change. Unless you’ve got the extra cash to redo your kitchen, the best thing to do is keep it classic and simple. I think our choices will stand the test of time, but you can be the judge of that. Ignoring Lighting Hammer Heads carpenter Ms. De La Paz put it this way: “Another mistake that homeowners will often make is not taking into consideration the lighting in their home. The lighting in your home can completely change the colors, the feeling, the ambiance.” In other words, ignore lighting at your peril. When I first planned our new kitchen, I completely forgot about lighting. Our old kitchen had one overhead lamp that cast a lot of shadows. Thanks to our contractor’s suggestions, we’ve got a number of pot lights on a dimmer plus under-cabinet lighting, and the difference is vast. Failure to Anticipate Chaos Now that it’s over, I can look back on our renovation experience and think, “It was a piece of cake.” But around week three, our kitchen was an utter mess. For readers that wondered why my family and I spent $2,200 to rent a condo instead of sticking it out at home – that place was a dust pit. Moving out was essential for our sanity and our health - drywall dust is not good for anyone. Your reno might go smooth as molasses, but just in case, it’s a good idea to assume it will be dustier, messier and more annoyingly inconvenient than you ever could have imagined. July 13, 2011 TORONTO, July 12, 2011 /CNW/ - Boomers started 2011 with good intentions to put more away for retirement. However as the warm weather signals the mid-point of the year, many don't feel they are delivering on their 2011 goals when it comes to building their savings. In a recent CIBC poll conducted by Harris-Decima, almost one-third (30 per cent) of respondents aged 45-64 felt they were doing a poor job of building their savings so far in 2011, including 17 per cent who rate their progress as "very poor". Overall, less than half of boomers surveyed (42 per cent) believe they are making good progress in building their savings so far in 2011. These results suggest boomers are not placing enough emphasis on an area they cited as their primary focus at the start of the year. In a survey of Canadians' top financial priorities for 2011 released by CIBC in January, boomers were the most likely to say that planning for their retirement was their top financial priority. Yet, the most recent CIBC/Harris Decima poll shows that just over half of boomers are proactive when it comes to building their savings: Only 53 per cent have a regular savings plan in place where they automatically put money away each month 58 per cent have a budget in place for themselves that they track each month 61 per cent have met with an advisor in the last 12 months "While boomers have taken the important first step of identifying retirement as their top financial priority, some don't feel confident about the progress they have made when it comes to building their savings so far in 2011," commented Christina Kramer, Executive Vice-President, Retail Distribution and Channel Strategy, CIBC.  "Savings is clearly a priority for Canadians who are approaching retirement, and seeing only half of Canada's largest demographic with a regular savings plan in place suggests a significant opportunity for more boomers to start saving on a regular basis." The good news is there is still time to get back on track before the end of the year.  Survey results indicated that simple steps can lead to feeling better about your progress in building your savings: Putting money away as part of a regular savings plan makes a significant difference in building savings over the long term. Among boomers who feel they have made good progress in building their savings so far in 2011, 70 per cent have a regular savings plan in place.  Among those who feel they have done a poor job of building their savings in 2011, only 32 per cent have a regular savings plan. Meeting with an advisor who can guide your savings efforts and help you structure your finances was also identified as important in the survey. Boomers who were positive about their savings progress were likely to have met with an advisor, with 72 per cent saying they had met with an advisor in the last 12 months.  Among those who feel they have done a poor job of building their savings in 2011, only 48 per cent had met with an advisor. "There's a clear link between feeling positive about your savings progress so far this year and certain key activities like having a regular savings plan in place, or meeting with an advisor to discuss your overall financial picture," added Ms. Kramer. "Meeting with an advisor can help to ensure your savings are on track to meet your income targets in retirement." Ms. Kramer also believes there is an opportunity for those already saving regularly to ensure they review their plans on an ongoing basis. "Even among boomers who have a regular savings plan in place, the financial strategy they created a number of years ago may need to be updated, including the amount they are putting away each month as they near retirement," she says. Ms. Kramer adds that once boomers have established a regular savings plan with their advisor, they can begin to look at the broader investment options that may be right for them to optimize retirement income, such as deciding how to utilize TFSAs versus RRSPs and other options. Data Highlights: Boomers' evaluation of their progress towards their savings goals thus far in 2011: Very Good - 14%Good - 28%Fair - 26%Poor - 13%Very Poor - 17% Percentage of boomers who have consulted with a Financial Advisor in the last 12 months, regionally: Atl. - 53%Que. - 59%Ont. - 63%Man./Sask.- 69%Alb. - 64%B.C. - 59% Percentage of boomers who have a regular savings plan in place where they automatically put money away each month, regionally: Atl. - 49%Que. - 51%Ont. - 57%Man./Sask.- 56%Alb. - 51%B.C. - 52% Regional perspective of boomers who have a monthly budget in place that they track each month: Atl. - 72%Que. - 60%Ont. - 62%Man./Sask.- 63%Alb. - 46%B.C. - 45% Each week, Harris/Decima interviews just over 1000 Canadians through teleVox, the company's national telephone omnibus survey. These data were gathered in a sample of 854 Canadians aged 45-64 between May 26 and June 5, 2011. A sample of this size has a margin of error of +/- 3.4% 19 times out of 20. July 13, 2011 Eric Lam, Financial Post · Jul. 12, 2011 Home builders swung into action this spring, with June capping the best three-month showing since last fall, figures showed on Monday. While Canada's strong June housing starts data caught many by surprise, it was the even-stronger revisions to prior April and May figures that surprised economists. The data suggest the rough patch the Canadian economy ran into in the second quarter may not be as bad as initially thought, and the results also bode well for second-half growth. "The whole package of the three months combined was quite a bit higher than expected," Robert Kavcic, economist with BMO Capital Markets, said Monday. "The month-over-month increase in June wasn't much higher than expectations but the fact that we got those big revisions put Q2 a lot higher than we were expecting," Mr. Kavcic said. Data from government housing agency Canada Mortgage and Housing Corp. (CMHC) showed 197,400 seasonally adjusted annualized housing starts in June, up 1.7% from May and well ahead of consensus forecasts of 185,000. Housing starts for both May and April, however, were revised to 194,100 from 183,600 and 178,700, respectively. This represents a 5.7% revision for May and an 8.6% change for April. Overall, housing starts gained 6.7% quarter over quarter, the first gain in three quarters. "This is a good sign for the economy," Mr. Kavcic said. "Obviously, construction will be a good contributor of growth in the second quarter. It's a little bit fast, maybe a little bit of overbuilding, but that's not a concern yet. We're still well below starts levels seen before the recession, nowhere near what it was like between 2003 and 2008 when we were regularly hitting 200,000-plus." The CMHC attributed the strong showing in June to an 11.1% surge of single-family urban starts in May. Urban multi-unit construction, which includes condomin-iums, apartments and duplexes, contracted 3.1% while rural starts declined 2.1%. Ontario markets gained the most, up 24.1% in June. British Columbia, home to the most overheated market in Canada in Vancouver, actually had starts contract by 27.6%. This could be residual effects of the multi-unit housing boom in the run-up to the 2010 Vancouver Winter Olympics. Some locals have considered the many multi-storey athletes' residences built for the Games to be overpriced, leaving many finished but empty suites in the city and putting a damper on new starts, Mr. Kavcic said. Even so, the overall starts trend has been stable in British Columbia so unless the decline continues, June may be a blip as home prices, particularly at the very high end, remain far out of whack with the rest of Canada. David Onyett-Jeffries, an economist with RBC Economics Research, said the updated figures show the gap between construction permits and construction starts in recent months is narrower than previously thought. "Eventually that gap was going to close. At least now we see there was an underlying strength, and what the revisions did was show that that gap was smaller," he said. "In terms of what drove this, we've had better-than-expected employment gains and interest rates have remained low, so both have been positive for housing demand." erlam@nationalpost.com July 13, 2011 Roma Luciw Globe and Mail Blog Posted on Friday, July 8, 2011 5:27PM EDT My husband and I are blessed in many ways. We have our health, wonderful children, fulfilling jobs and a beautiful home. We have something else that many people would kill for: a contractor in the family. Over the years we have renovated a vast majority of our aging Toronto home. Not because we are flush with cash, but because we needed to accommodate our growing family. With every renovation, my brother has turned out to be worth his weight in gold. On the heels of a housing boom, Canadians are renovating in record numbers, pouring thousands of dollars into upgraded kitchens, bathrooms, basements and decks. Not everyone has the luxury of having a renovator they trust at their fingertips. And given that my facebook account is packed with people looking for good contractors, it made me wonder where other people find theirs. Natalie Scollard-Wear and her husband are in the process of renovating the kitchen of their forty-year-old Calgary townhouse. They hired a contractor to put in 320 square feet of new floor, new baseboards, a new tile backsplash, a new countertop, a new kitchen sink and faucet. They also asked him to improve their space by moving the kitchen island. Ms. Scollard-Wear says she found her contractor by chance. “First I saw a truck driving by with the name of the company. Then I saw a news article in the Calgary newspaper about a good deed, where this contractor was building a home for a less fortunate family.” Ms. Scollard-Wear, who works for the Real Estate Council of Alberta, checked the contractor's rating on the Better Business Bureau before having him come out to give her an estimate. She spent hours combing through the BBB website, a process she described as “frustrating,” and got quotes from two other contractors. She did not go with the cheapest contractor, but rather the one who felt most trustworthy and allowed them the most flexibility. Part of the challenge in finding someone, she said, was that she and her husband budgeted about $15,000 for their project, which many contractors dismissed as too small a job. According to a survey by Canada Mortgage and Housing Corp., Canadians spent $25.8-billion on home renovations in 2009, with the average project costing about $12,100. The CMHC has an excellent website with tips for how to find and choose a contractor, what questions to ask them during an interview, how to get written estimates and a sample contract. So how do people who are not related to a contractor find one? Here are few ideas: 1) Word of mouth Ask your friends, family and neighbours. Referrals are a great way to find someone. If a person you know and trust is happy with their work, chances are you will be too. 2) Signs in your neighbourhood This is another good way to find contractors who work in your area. When walking, biking or driving in your neighbourhood, keep an eye peeled for renovators’ signs on front lawns. 3) Through your real estate agent or architect Sometimes people in the real estate business will be able to recommend someone you can get in touch with about home renovations. Similarly, if you used an architect to design your new space they might be able to suggest renovators for you to interview. 4) The Internet There are a number of websites people looking to renovate can check out. They include HomeStars.com, casaGURU.com and uknowa.com, among others. 5) Better Business Bureau Check with the BBB to see how the contractors in your area stack up. This is a great place to find out whether customers have had problems with them, as well as whether they are accredited and insured. July 12, 2011 Friday July 8, 2011, 11:15 am EDT Warren Buffett acknowledges that this morning's June jobs report is disappointing, but he's sticking with the economic optimism we heard in yesterday's CNBC live interview.   While some are saying the economy may be heading back to a recession,Buffett tells Bloomberg this morning, "I would bet very heavily against that. How fast the recovery will come, I don't know. I see nothing that indicates any kind of a double dip."       HOW BUFFETT WOULD FIX THE DEFICIT         Even so, he says President Obama can't be happy with this morning's report from the Labor Department that payrolls increased by just 18,000 in June as the unemployment rate increased to 9.2 percent.   "It means that we're still a ways off from getting to where we should be. We're seeing growth around the world, but it's not mushrooming."   Buffett repeated his belief that once the residential construction rebounds, "We will come back big time on employment."   He's predicting a decline to an unemployment rate of 6 percent "within a few years."                 July 11, 2011 CBC.ca Friday July 8, 2011, 11:48 am EDT The U.S. added 18,000 jobs in June, far fewer than the 120,000 that many economists had been hoping for, the U.S. Bureau of Labour Statistics reported Friday. "The June jobs report was a shocker," said Nigel Gault, chief U.S. economist for IHS Global Insight. "It was far worse than expected, and weak on all key dimensions — job creation, unemployment, the length of the work week, and hourly earnings." The unemployment rate edged up by one-tenth of a percentage point from May, to 9.2 per cent. The rate is up by 0.4 of a percentage point since March. Employment in the private sector rose by 57,000, the weakest month since May 2010, while government employment fell 39,000. Economists had initially been expecting to see 90,000 jobs added in June, according to a survey by FactSet. But after the release of strong economic data earlier this week, many economists raised their estimates to 120,000 jobs, and some jumped to 200,000. The June numbers are especially disappointing because a big jump would have suggested the 54,000 jobs added in May was a temporary setback. But with the June increase so low, the economic recovery is still moving very slowly. The revision of the increase in May job numbers, cut by more than half to 25,000 from 54,000, was another discouraging sign. "The recent pattern of jobs suggests that the economy hit a brick wall in May," Gault said. Stock markets dropped with the report, indicating the concern with the progress of the recovery. There are now 14.6 million people officially unemployed in the U.S, and since March, the number has risen by 545,000, the department said. There were another 8.6 million people working part time because their hours had been cut back or because they were unable to find a full-time job. And 2.7 million people were not in the labour force, but wanted employment, were available for work, and had looked for a job in the prior year. But they were not counted as unemployed because they had not searched for work in the four weeks before the survey. July 11, 2011 Detailed analysis shows a highly segmented market that will see prices drop over time, but preconditions for a market crash don't exist TORONTO, July 7, 2011 /CNW/ - The Canadian housing market is becoming highly segmented and multi-dimensional which is making traditional measures, like average prices, increasingly irrelevant in gauging the health and state of the sector, finds a new report from CIBC World Markets Inc. "Glancing at popular metrics such as the price-to-income ratio or the price-to-rent ratio, it is tempting to conclude that the housing market is already in clear bubble territory and a huge crash is inevitable," writes Benjamin Tal, Deputy Chief Economist at CIBC, in his latest Consumer Watch Canada report. "Tempting, but probably wrong. When it comes to the Canadian real estate market at this stage of the cycle, any statement based on average numbers can be hugely misleading. The truth is buried in the details—and there the picture is still not pretty, but much less alarming." He notes that while the average house price in Canada rose 8.6 per cent on a year-over-year basis in May, that number slows to 5.6 per cent if you take Vancouver out of the picture. Remove Vancouver and Toronto and the average price increase drops to 3.7 per cent. By digging into the details on the high profile Vancouver market he found that the gap between average and median prices is reaching an all-time high. While the average house price climbed 25.7 per cent on a year-over-year basis to more than $800,000 in May, he found that by removing properties that sold for more than a $1 million there was a much more moderate price appreciation in the market. It also reduced the average sale price by $220,000 to just over $590,000. "What makes Vancouver abnormal is the high end of its property market," says Mr. Tal. "And in this context many, including Bank of Canada Governor Mark Carney, point the finger at foreign—mainly Asian wealth—as the main driver here." Data on the extent of the role that Asian investors have played in Vancouver housing prices is quite limited. Mr. Tal's analysis of data obtained from Landcor Data Corporation suggests that only 10 per cent of the nearly 4,500 transactions involving foreign money over the past five years were above the $1 million mark, with an average purchasing price of just under $600,000. According to the information provided by Landcor, foreign money accounted for only 2.6 per cent of all sales during the same period. However, Mr. Tal believes that could be a serious underestimate, as it is based on where property tax assessments are mailed, and would exclude offshore buying on behalf of children or other local proxies. "There are many reasons to believe that a significant portion of what is perceived to be buying by offshore investors is, in fact, driven by Chinese immigrants that are integrated into the community but still maintain strong links to mainland China, with many residing and working in China while their family establishes roots in B.C." "Looking beyond the average price numbers reveals a highly segmented and multi-dimensional market that is probably influenced by different forces," says Mr. Tal. "But even a multi-dimensional market can overshoot—and the likelihood is that prices in the Canadian market and its sub-segments are higher than what can be explained by factors such as income growth, rent and household formation. Given that, the housing market will eventually correct. The only question is what will be the mechanism of that correction." Mr. Tal feels the price correction in Canada will be gradual as the two key triggers for a price crash - a significant and quick increase in interest rates and/or a high-risk mortgage market that is very sensitive to changes in economic factors - are not at play in Canada. "In Canada, a sharp and brisk tightening cycle is unlikely. The market expects a gradual increase in short-term rates in the coming years. The rising number of mortgage holders that carry a variable rate mortgage will be the first to feel the pain. But if history is any guide, they will return quickly to the comfort of a five-year fixed rate the minute the Bank of Canada starts hiking." He also believes that the country is in relatively good shape when assessing the two sub-segments of the mortgage market that traditionally account for m