Sunday, May 10, 2009

Financing your first home

Financing your first home
TD Insurance

Even if you think you couldn’t possibly afford a home, these creative solutions can turn you from a renter into an owner.
Like many would-be homeowners, you may be wondering how you can possibly afford to buy your first home, especially if you live in a hot real estate market. But these savings and financing strategies can take you there sooner than you think.
Coming up with the cashSaving for a down payment can be a financial challenge. Here’s how to do it.• Make saving automatic. Set up an automatic savings plan at your bank to regularly move a specific amount of money directly from your chequing account to a savings account — on payday, for instance. You’ll be surprised at how quickly the “pay yourself first” approach adds up.
• Take a holiday from tax. If you open a new Tax-Free Savings Account (TFSA), you won’t pay any tax on earnings — helping you compound your savings. You can contribute up to $5,000 a year to a TFSA, and save for anything you like, tax-free.
• Borrow from yourself. The federal government’s Home Buyer’s Plan (HBP) lets you borrow from your Registered Retirement Savings Plan (RRSP) to help purchase your first home. You and your partner can each withdraw up to $20,000, provided it’s not locked-in and the money has been in the RRSP for at least 90 days. You have to repay the loan in installments over the next 15 years to avoid a tax hit.
Review your mortgage optionsWith many alternatives to choose from, finding the right mortgage product and terms can make a big difference to your ability to carry the costs of a new home.
• Stretch out your term. You can now choose to pay back your mortgage over 30 or 35 years, instead of the traditional 25-year amortization period. It means you will pay more interest over the long term, but you can reduce monthly payments to get into your starter home. You can always change this later, once your income rises and you can pay your mortgage down faster.
• Look for perks. Find out about mortgage programs that may offer valuable incentives, such as cash back options, points programs or retail discounts. The right program could help you keep cash in your pocket.
Remember, once you’ve bought a home, you can look for ways to pay the mortgage off sooner, which will reduce the long-term interest costs on that home of your own.

Wednesday, March 25, 2009

Why its time to buy a house....

Why it’s time to buy a house <> Experts say right now may be the best time in years to buy a home Friday, March 6, 2009 Julian Beltrame Canadian Press OTTAWA - Jim Rawson says it's a great time to buy a house.
The regional manager of Invis mortgage brokerage firm in Toronto has been in the business since 1978 and has never seen interest rates, both variable and fixed, so low. Pair that with falling housing prices and it's a no-brainer.
"People have to have somewhere to live and whether you are paying for a mortgage or paying rent, you still have to be paying to live somewhere," Rawson explains.
But something is missing in the equation. As prices for most consumer goods, cars and homes decline - in some cases plunge - and the cost of borrowing falls, Canadians have been hesitant to buy.
The Bank of Canada did its part this week to lure consumers and businesses out of their fox hole, dropping the overnight rate down to an unheard of half per cent - virtually zero.
Canada's chartered banks lowered their prime rate to 2.5 per cent on Tuesday, shortly after the central bank moved, and by the end of the week were lowering other lending rates.
TD Canada Trust, for one, is reducing several of its posted fixed-term mortgage rates on Saturday. TD's biggest decrease was with its two-year mortgage, which falls to 5.0 per cent from 5.75 per cent.
Scotiabank went even further, lopping nearly two full percentage points off the advertised price for its 10-year mortgage, which fell to 5.25 per cent from 7.15 per cent, effective Friday.
By almost every measure, Canadians have slowed down borrowing and spending, most visibly in the auto sector, which saw sales volume crash by 28 per cent in February.
The Canadian housing market, for years a source of boundless growth, has come crashing to earth with sales, prices, and construction of new homes all down, in many cases by double-digits.
Consumers have also stopped discretionary purchases, as the 5.4 per cent contraction in retail sales in December - the largest in 15 years - shows.
"I think they're scared out there," says Bruce Cran of the Consumers' Association of Canada. "Consumers are tapped out and frightened of over-spending. They are going back to being savers."
Bank of Canada deputy governor Pierre Duguay may have a point in saying there is a danger of "irrational fear" taking hold, but there are also very real reasons to be concerned.
Canada lost 129,000 jobs in January, the third straight month of decline, and announcements of future layoffs are being posted almost daily. Everyone is predicting the Canadian economy has much further to fall after contracting 3.4 per cent in December.
There is also fact that the days of easy money are over. Chartered banks are being more choosy who they lend to and interest rates - low as they are - are higher than they might be given the central bank rate and non-existent inflation.
Variable rate mortgages, for example, formerly could be had below the banks' prime rate. The prime rates have fallen, along with the Bank of Canada's moves, but now banks' variable mortgage rates are well above prime.
Individuals have also cut back on borrowing, hence spending. TD Bank chief executive Ed Clark said this week that overall demand for loans is coming down.
Under normal times, economists would say that is a good thing. Rampant buying, particularly in the United States, was a major contributor to the financial sector meltdown that brought the world low.
Americans have now pulled back big time making matters worse, even though the Federal Reserve rate at 0.25 per cent is lower than the Bank of Canada's. The U.S. once lamentable savings rate has shot from just above one per cent to five per cent in a matter of months.
The amount of debt Canadians held as a ratio of their income increased last year to 136 per cent from 130 per cent. What kept them solvent is that low interest rates made the cost of servicing that mounting debt at affordable levels.
That is as long as jobs, incomes and the economy were advancing. In a recent CIBC World Markets report, economist Benjamin Tal showed the squeeze was underway.
Canadians assets fell by $160 billion in the third quarter, he noted, adding that with house and equity values falling, Canadians would likely be another $180 billion poorer in the fourth quarter. Values haven't gotten better since.
As well, debt is rising and consumer bankruptcies are jumping - 13.5 per cent last year with expectations they could hit 30 per cent growth this year. Mortgage arrears are also on an upward path, rising from a record low of 0.24 per cent to the current 0.33 per cent, the highest in six years.
But the big number, says Tal, is the number of Canadians who have lost their job and the much bigger number that are for the first time in many years afraid of losing their job.
"The issue is confidence," he said. "People talk about the unemployment rate going to eight and nine per cent, but the focus should be on the 91 per cent of people who are employed and are concerned about their jobs."
Tal and most economists believe that Canadians will start spending again because they no longer can put off purchases. But he doesn't believe they will spend with the reckless abandon of the recent past.
"After the crisis is over, consumer spending will be stronger but not like it used to be because it was artificially strong before, using borrowed money," Tal said.
Rawson believes that time is coming soon, at least in the housing market.
Applications for mortgages in his Toronto office have doubled since December, Rawson says, with many in the pre-approved market. That usually involves first-time prospective buyers making sure all their ducks are lined up before taking the plunge.
"These are people who haven't bought yet but they will buy in the future," he says.

Tuesday, March 17, 2009


Credit conditions easing, banks no longer struggling to raise funds to make loans
From Tuesday's Globe and Mail
March 17, 2009 at 2:00 AM EDT
Canadian banks are turning down some of the funding that the government is making available to them, a sign that they are recuperating from the financial crisis.
The banks have stopped selling the government the full amount of mortgages they could under Ottawa's $125-billion mortgage purchase program, the centrepiece of the federal government's plan to help the industry.
“We actually don't need a lot of funding right now,” a senior banker at one of the big five banks said yesterday. “All of the Canadian banks are pretty flush right now with cash.”
That's not to suggest they aren't facing problems, with consumers increasingly losing their jobs and unable to pay off their debts. But the banks are no longer struggling to raise funds to make loans – at least for now.
Credit conditions for Canadian banks have improved since late last year, as Canadians jittery about the stock market have left more of their money in bank accounts, giving them a ready pot of cash to fuel lending. At the same time, global credit markets have eased slightly as central banks have pumped billions of dollars into the financial system.
Federal Finance Minister Jim Flaherty announced the creation of the mortgage purchase program in early October, when it was extremely difficult for banks around the world to fund their lending operations.
He originally said Ottawa would buy up to $25-billion of mortgages from the banks, through Canada Mortgage and Housing Corp., to free up capacity for them to make new loans.
The purchases take place in periodic auctions that actually turn a profit for the government. Ottawa tells the industry how much it is willing to buy – for instance, $5-billion worth of mortgages held by the banks on their balance sheets – and then the banks each say how much they would be willing to pay, in the form of interest, to sell mortgages to the government. CMHC accepts the most profitable bids.
Bankers have been griping that the program, which is projected to earn billions of dollars for Ottawa, is expensive. But until last month, that hadn't stopped them from selling all of the mortgages that they could into it, and pressing Mr. Flaherty to buy even more. Well into the new year, banks continued to have trouble raising medium-term funds.
Ottawa boosted the size of the program twice, most recently announcing in the federal budget that it would buy a total of up to $125-billion worth of mortgages. The program has been successful in leading to a reduction in mortgage rates for Canadians, with banks passing on their lower funding costs.
But in the last couple of auctions, the banks have not sold the full amount of mortgages Ottawa was willing to buy. The most recent one took place on March 11, when CMHC told the banks it would buy up to $4-billion worth. Banks sold it about half that, $2.1-billion.
That followed the Feb. 20 auction, when banks sold CMHC $2.3-billion worth after it said it would buy up to $7-billion from them.
There are a couple of reasons why the banks have lost some of their appetite for the government aid.
More Canadians are pulling their cash out of mutual funds and riskier investments and parking it in deposits, such as chequing accounts and GICs. Deposits are the largest source of funding for the banks. If stock markets recover, and customers shift their money back into mutual funds and equity investments, the banks could find themselves in need of funding help again, notes Toronto-Dominion Bank chief economist Don Drummond.
At the same time, the growth of banks' loan portfolios is slowing. The soft housing market led to very weak mortgage originations in January and February, Mr. Drummond said.
Still, the slackening demand for government help does suggest that credit conditions have eased. The lack of take-up on the mortgage auctions “seems to point to the fact that the Canadian banks are not in a big liquidity crunch themselves,” said Marlene Puffer, a managing director at Twist Financial Corp.
That means the banks' lending operations are not being held back by an inability to raise financing, she added: “Any constraints in terms of the banks lending are coming more from inside the banks than any constraints they're facing in terms of raising capital.”
The Canadian Bankers Association said in an e-mailed statement that the mortgage purchase program is still an effective tool, noting that it's already injected more than $53-billion worth of liquidity into the marketplace so far.
A spokeswoman for CMHC declined to comment yesterday, noting that the details of the auctions are confidential.

Philip Beer
Regional Vice President
Street Capital Financial Corporation
2401-1 Yonge Street
Toronto, Ontario

Thursday, March 12, 2009

Kingston Life Magazine

Kingston Life Magazine is published 6 times a year. On page 16 of the current issue, there is a snippet of statistics on the housing market in Kingston. Please visit the website at for more information about this magazine. Our listing at 128 Earl Street is features in the article! The current price on this home is $835 000.....a beautifully renovated townhouse in the heart of Sydenham Ward.

Green Energy Act, 2009

REALTORS® oppose mandatory home energy audits
On February 23, the Government of Ontario introduced Bill 150 the Green Energy and Green
Economy Act (GEA), 2009. Included in Bill 150 is a provision that will require all home owners to
provide an energy audit report to prospective buyers. Currently, the bill is in the second reading
stage of the legislative process.
To read Bill 150 in full click here.
While OREA supports the principles of energy conservation and environmental stewardship that
are enshrined in the GEA it opposes any policy that imposes unnecessary costs on homeowners and
delays on real estate transactions. Instead, OREA supports the existing government program that
encourages homeowners, through rebates, to assess the energy efficiency of their home voluntarily.
In the week following the introduction of the Bill 150, OREA issued a press release outlining
REALTOR® concerns with respect to mandatory home energy audits, while also conducting a
number of media interviews. In addition, OREA forwarded briefing notes outlining REALTOR®
opposition to mandatory home energy audits to all Ontario MPPs. These briefing notes have
been used during debate in the legislature on the bill. Lastly, OREA met with senior officials in
the Ministry of Energy and Infrastructure to directly communicate REALTOR® opposition to
mandatory home energy audits.
To read the briefing note provided to MPPs on mandatory home energy audits click here.
OREA will continue work on behalf of REALTORS® and homeowners at Queen’s Park, pushing
for amendments to Bill 150 that will mitigate the effects of mandatory home energy audits on the
real estate market.

Saturday, March 7, 2009

RRSP Home Buyers Plan changed

The changes to the RRSP Home Buyers Plan introduced in the new budget are not only good for potential home buyers, they are also seen as a victory for OREA and CREA. “It’s gratifying to see that our lobbying efforts at the national level for enhancements to this program have paid off,” says Weir.
The 2009 budget increases the withdrawal limit for the RRSP Home Buyers Plan to $25,000 from $20,000 providing first-time home buyers with additional access to savings to purchase or build a home.
The eligibility and repayment rules remain pretty much the same. The money withdrawn from the RRSP must be repaid over a period of no more than 15 years to retain its tax deferred status. The repayment period starts the second year following the year the first withdrawals were made. If a participant pays less than the scheduled annual payments, the amount that they don’t repay must be reported as income on their tax return for that year.
For example, in October 2009 a first time buyer withdraws $24,000 from his or her RRSP to finance the purchase of a home. Their first annual repayment of $1,600 ($24,000 divided by 15 years) is due by December 31, 2011.

Thursday, March 5, 2009

Bank of Canada cuts rates

Bank of Canada signals that the rate will remain at this level or lower into 2010 and promises a framework for quantitative easing on April 23rd.

As widely expected, the Bank of Canada delivered a 50 basis point cut, bringing its overnight rate to 0.50%. With the output gap widening, core inflation having tracked below the 2% target, and financial stress persisting, the Bank had every reason to cut. In particular, lending from Canada's core financial institutions perseveres, but wide spreads and tight credit persist on open markets. Recognizing the scarce room for traditional monetary policy to ease, the Bank explicitly cited the possibly of future credit and quantitative easing and promised a framework in its April Monetary Policy Report. Nonetheless, Canada's monetary policy alone cannot cure unresolved systemic risks that continue to plague international financial mar- kets. The Bank's communiqué focused attention to our in- ternational linkages and the external drivers of Canada's recession, noting the particular challenge from "the nature of the U.S. recession, with very weak auto and housing sectors" and the prerequisite of stabilization in global fi- nancial markets before Canada can rebound. The Bank endorsed timely and worldwide resolution of the paralyzing uncertainties around troubled banks' toxic assets as the lynchpin for a return to financial stability. With U.S. consumers dogged by a steep and ongoing contraction, Canada's export sector has drooped behind. The Bank notes the shock to domestic wealth resulting from protracted and deepening financial instability internationally. Going forward, diminished household wealth will weigh down down domestic consumption,further widening the output gap.The Bank believes that "the output gap will not begin to close until early 2010." The Bank's revised outlook for growth will not be clarified until April, and, as of January, the Bank forecast 3.8% growth for 2010. While this will presumably be revised downward, the Bank's 2010 outlook will likely remain optimistic relative to our projected 1.4% rebound (our Quarterly Economic Forecast will be released March 12). The widening output gap will provide an additional downdraft to core inflation, already having tracked below the Bank's 2% target in January. The Bank's announcements have become increasingly transparent, and this communiqué provided a clear statement of its policy stance, relating that "the overnight rate can be expected to remain at this level or lower until there are clear signs that excess capacity is being taken up." Going forward, facing a widening output gap and disinflationary pressures, we see an increasing tilt towards a further 25 basis point cut. This would place the overnight rate's ultimate floor at 0.25%, and we expect not to see the overnight rate raised until the latter half of 2010. Perhaps most important in the communiqué was the statement that quantitative easing is being explicitly examined. Governor Carney has hinted strongly at the Bank's "considerable flexibility" in his recent remarks. The communiqué brought clarity that the Bank was considering such action down the road, but would establish a well considered policy framework before proceeding. Setting an April release date for a framework provides excellent transparency on Bank thinking, but also signals that, if required, less traditional measures will not likely be undertaken until the spring. Grant Bishop,Economist