Mortgage Mondays Update

General Angela Calla 7 Dec

Bank of Canada to keep rates low, uphold outlook

By Louise Egan OTTAWA (Reuters) – The Bank of Canada is widely expected to keep its hands off interest rates on Tuesday, holding them at near zero and committing to do so until at least July, despite growing evidence the economy is kicking back to life.


Canada’s unemployment rate falls to 8.5 per cent as 79,000 jobs created in November


OTTAWA — Canada’s economy swelled by 79,000 jobs last month, much better than many economists had expected, as the number of people with full-time and part-time jobs increased in November while the number of self-employed fell.

Statistics Canada reported Friday that Canada’s unemployment rate fell to 8.5 per cent in November, down one-tenth of a point from October.

The number of people with full-time jobs increased by 39,000 in November, the third straight month of increases, while part-time employment increased by 40,000, following declines in October and September.

“Simply put, this was an inexplicably strong report, and points to a very strong pick-up in Canadian labour market activity in November,” Millan Mulraine of TD Securities wrote in a note to investors.

“However, we consider this pace of job growth to be unsustainable, and believe that it is inconsistent with the current pace of economic recovery in Canada.”

While analysts generally welcomed the national job numbers, they did so with a few caveats.

“This is a generally solid report but with three flies in the ointment that cause concern,” Scotia Capital’s Derek Holt and Karen Cordes said in a note to investors.

They said their first concern is that total hours worked declined by 0.3 per cent. “More bodies are being hired, but at reduced aggregate hours worked. It’s hours worked that drive paycheques, such that the consumer cash flow implications are far less impressive than the job count.”

They were also concerned about many job gains being in the education sector.

“StatsCan has admitted that they have had difficulty with abnormal seasonal adjustments in this component over recent months,” they wrote. “We don’t trust this component and caution on future revisions and or disappointing base effects to the December jobs reading a month from now.”

Holt and Cordes were also concerned about weak productivity.

Self-employment also fell in November by 32,000 jobs. That’s potentially a good sign for the economy, since economists tend to discount self-employment gains in a weak economy as mostly involuntary, the result of enterprising Canadians starting their own businesses when they can’t find regular work.

Statistics Canada says employment is now down 321,000 jobs, or 1.9 per cent, since October 2008.

The agency also noted that hourly wages were 2.3 per cent higher than a year ago, the lowest year-over-year growth since March 2007.

Employment growth were spread across the country, with the biggest gains in Ontario, Quebec and Alberta.

Most gains were among women between the ages of 25 and 54, and men aged 55 and over.

Statistics Canada notes that between October 2008 and March 2009, employment fell in almost all industries, especially in manufacturing and construction. But since March, the manufacturing sector has slowly stemmed its hemorrhaging of jobs, while employment has picked up in construction and some service industries.

“Almost all the employment growth in November was attributable to the strength of the service sector (plus 73,000), especially educational services,” the agency said in a note.

“With November’s increase, employment in the service sector is back at its October 2008 level, while employment in the goods sector remains well below (minus 324,000) where it was at that time.”

Regionally, Ontario’s unemployment rate remained unchanged from the previous month at 9.3 per cent, even though the province’s economy grew by 27,000 jobs in November.

In Quebec, gains of 21,000 jobs pulled the province’s unemployment rate down four-tenths of a point to 8.1 per cent. The province has lost jobs more slowly than other provinces during the economic downturn.

Alberta’s employment rose by 13,000 last month, the biggest gain in more than a year. British Columbia’s economy also continues to grow.

Manitoba’s economy remained stable, as it has throughout the downturn, and Newfoundland and Labrador also saw employment increase by 2,700 jobs in November.

Benjamin Reitzes of BMO Capital Markets Economics says the November job numbers should boost the Bank of Canada’s confidence in the economy following soft economic growth in the third quarter of the year and weak October figures.

“The solid November report offsets the prior month’s disappointing drop,” he said.

“The average 18,000 gain over the past two months probably best characterizes the state of Canada’s job market, and points to an economy emerging from recession.”

The Canadian Press

Bond Yields Up Big

Bond yields usually rise on good economic news and today was no different. The 5-year bond yield jumped 0.14% today on strong jobs data from both sides of the border.  (Canadian Jobs Report / U.S. Jobs Report)

Canada added 79,100 jobs in November. Traders had expected only 15,000.

With rebounding yields, fixed mortgage rates will probably halt their drop, at least for the time being.  As of now, discounted 5-year fixed rates are just under 4%—well below the approximate 10-year average of 5.36%.

The 5-year yield, which influences fixed mortgage rates, now stands at 2.53%.  It seems to be putting in a floor in the 2.35% to 2.40% range.  It may be tough to penetrate that floor in the near-term without weaker economic news, or some other economic shock.

The Bank of Canada holds its last interest rate meeting of the year on Tuesday. 19 of 19 economists polled by Bloomberg predict no change to the Bank’s 0.25% overnight rate.

Nevertheless, analysts will be watching to see if the BoC surprises the bond market with any optimistic outlooks.

Housing sales across Canada are set to reach new highs

General Angela Calla 4 Dec

By Garry Marr, Financial Post

November housing sales across the country are set to reach new highs based on fresh data from the country’s two most expensive markets.

The national numbers from the Ottawa-based Canadian Real Estate Association are not due out until mid-December but the Toronto Real Estate Board said yesterday it had its best November on record. Toronto’s news came on the heals of a Wednesday release from the Real Estate Board of Greater Vancouver that said sales activity in the city rocketed up 252.7% in November from a year ago.

What the latest numbers will likely mean is an improvement in the national average sale price, which was up 20% in October from a year ago — the largest such increase in two decades. The two cities tend to skew the national average price up or down, based on levels of sales activity.

“You are going to see a very strong national number. It will be another double-digit increase for sure,” said Benjamin Tal, senior economist at CIBC World Markets. “You have to remember you are comparing all this against a very low base. Last year at this time we were talking about 1929. This was a dead market.”

In November 2008, the greater Vancouver area had a meagre 874 sales. This November that figure was up to 3,083. But there are some indications the temperature in the red-hot housing market is dropping; Vancouver November sales were down 16.8% from October, although the numbers are not seasonally adjusted.

Toronto has a similar story to Vancouver. Canada’s largest market had 7,446 sales last month, almost double the number from a year ago, but down from the 8,476 in October.

Despite the lack of listings in the housing market, prices eased last month. The average sale price in Toronto last month was $418,460, a 14% jump from a year ago, but a drop from therecord high of $423,559 reached in October.

In Vancouver, the average price of a home reached $557,384 last month, a 12.4% increase from a year ago. But at that level, prices in Vancouver are actually down 1.9% from the peak reached in May 2008.

Re/Max, one of the country’s largest real-estate companies, issued its housing outlook for 2010 and though it still sees a strong market, both housing sales and prices are not expected to maintain their torrid pace. Re/Max says sales next year will climb by 2% while the average sale price across the country will rise to $325,000 for a 2% increase.

“There is a ton of business being done but nothing was being done in November [2008]. The whole world stopped last fall, not just the real-estate world,” said Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada. “We should expect a very good year with a continued high number of sales. We don’t expect significant changes in interest rate levels.”

Record low interest rate levels have partially fuelled the market and prices, but so have low inventory levels. In Toronto, inventory levels remain 49% down from a year ago with November 2009 new listings the same as a year ago. In Vancouver, the total number of listings is still down 39% from a year ago.

As for the interest-rate part of the puzzle, the Canadian Association of Accredited Mortgage Professionals latest statistics show consumers could find themselves exposed. In the past 12 months, only 20% of consumers opted for a variable-rate product but the overall numbers show 27% of Canadians still have mortgage tied to prime. “There is no questions rates and affordability have contributed to the market,” said Jim Murphy, president of CAAMP.


Angela Calla’s December 2009 Newsletter

General Angela Calla 2 Dec


  December 2009
Angela Calla
Dominion Lending Centres
Phone: (604) 802-3983


While most Canadians spend a lot of time, and expend a lot of effort, in shopping for an initial mortgage, the same is generally not the case when looking at mortgage term renewals. Omitting proper consideration at the time of renewal costs Canadians thousands of extra dollars every year. Homeowners should never accept the first rate offer from their existing lender. Without any negotiation, simply signing up for the market rate on a renewal is unnecessarily costing the homeowner a lot of money on their mortgage. It would be my pleasure to have the lenders compete for your mortgage business at renewal time to ensure you receive the best mortgage options and rate catered to your specific needs.


Ceiling Fan Tips:

Some ceiling fans can turn either clockwise or counter-clockwise. In the summer, you want the air to blow directly downward, to create a cooling effect. Reverse the ceiling fan in the winter so it blows upward. This will help move the warm air from the ceiling and down the edges of the walls for more even comfort, without a draft.

About DLC Leasing Inc

* DLC Leasing is the leasing division within Dominion Lending Centres Inc.

* Our leasing programs provide up to 100% financing on business-related equipment.

* Leasing options include new equipment leasing; used equipment and vehicle leasing; customized solutions through vendor finance programs; and lease-backs –where the lender buys equipment from a business owner and the owner leases it back.

* Technology, heavy equipment and trailers, furniture and hospitality equipment, and manufacturing and industrial equipment are just a few examples of available leasing options.

* With access to multiple lending sources, Dominion Lending Centres’ Lease Professionals can cater to leasing deals for a variety of credit scenarios ranging from A to C credit quality.

* Because many of our Lease Professionals are also licensed mortgage agents, we can offer standard equipment leases and creatively structured solutions for seasonal, new or growing companies.

* Working with someone who is both a lease and mortgage expert enables you to even use commercial and residential mortgage and property credit line products, alone or in combination with lease financing, to help achieve the best solutions for your equipment acquisition needs.

* Our Lease Professionals can even break up large-dollar transactions into multiple leases across a number of funders to ease and simplify the approval process.

Don Welcome to the December issue of my monthly newsletter!

This month’s edition helps you plan ahead for holiday spending, as well as discusses the results from an annual Canadian mortgage market report. Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again fo

Having trouble viewing this email? Click here

r your continued support and referrals!


Many people have faced tough times in lieu of the recession, and with the high-cost holiday gift-buying and entertaining season quickly approaching, this may be the perfect time to refinance your mortgage and free up some money instead of relying on high-interest credit cards.

You may find that taking equity out of your home will help bring joy back into your holiday season – and start the New Year off on a debt-free note, as you may also be able to use some of the equity in your home to pay off high-interest debt such as your credit card balances. This will enable you to put more money in your bank account each month.

And since interest rates are hovering near historic lows, switching to a lower rate may save you a lot of money – possibly thousands of dollars per year.

There are penalties for paying your mortgage loan out prior to renewal, but these could be offset by the lower rates and extra money you could acquire through a refinance. I can sit down with you and work through all of the equations to ensure this is the right move for you.

With access to more money, you will be better able to manage both your holiday spending and existing debt. Refinancing your first mortgage and taking some existing equity out could also enable you to do many things you’ve been longing to accomplish – such as purchasing an investment property, taking that well-deserved vacation, renovating your home or even investing in your children’s education.

By refinancing, you may extend the time it will take to pay off your mortgage, but there are many ways to pay down your mortgage sooner to save you thousands of dollars in interest payments. Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.


You can also increase the frequency of your mortgage payments by opting for accelerated bi-weekly payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it’s guaranteed to save you a significant amount of money over the term of your mortgage.

If, for instance, you have a $100,000 mortgage, an interest rate of 5% and an amortization period of 25 years, your monthly mortgage payment would be $581.60 and your total payments for a year would be $6,979.20 ($581.60 x 12).

To understand the savings accelerated bi-weekly mortgage payments can make, take the monthly mortgage payment of $581.60 and divide it by two ($581.60 ÷ 2 = $290.80).  Next, take that payment and multiple it by 26 to arrive at your total payments for the year ($290.80 x 26 = $7,560.80).

As you can see, by using the monthly mortgage payment plan, you’ve made payments totalling $6,979.20 for the year, while using the accelerated bi-weekly mortgage plan you’ve made payments totalling $7,560.80 – a difference of $581.60. 

By opting for accelerated bi-weekly mortgage payments, you’re making one additional monthly payment per year.

Using this example, you would reduce the amortization on your $100,000 mortgage from 25 years to just over 21 years and your total savings on interest over the life of the mortgage would be just over $12,000.

By refinancing now – before the holiday season is in full swing – and planning ahead, you can put yourself and your family in a better financial position.

As always, if you have any questions about refinancing, reducing debt or paying down your mortgage quicker, I’m here to help!


Canadians are emerging from the recession confident that the value of their homes is rising and optimistic about their local housing markets. The Canadian mortgage market is rebounding and will surpass the $1 trillion mark in 2010, reports the Canadian Association of Accredited Mortgage Professionals (CAAMP) in the fifth edition of the Annual State of the Residential Mortgage Market, released in late November.

Canadians are positive about house prices, and attitudes about whether this is a good time to buy a home have never been higher in the three years that CAAMP has surveyed on that question. The overwhelming majority of those surveyed (40%) expect house prices to go up, which is more than double the opinion of those surveyed in spring 2009 (18%).

In past surveys, negative house price sentiments were most evident in British Columbia, Alberta and Ontario – provinces that, in retrospect, were hardest hit by the economic downturn. On a 10-point scale (where 1 is very negative and 10 is very positive), attitudes in these provinces have sharply rebounded to 6.44 from 4.77 in fall 2008, 6.24 from 5.00, and 6.30 from 5.11, respectively, and are now in line with the 6.25 national average.

Most Canadians are optimistic and believe now is a good time to purchase a home, setting a record-high national average of 6.56 out of 10, up almost a full point from 5.58 last fall. Ontarians are most positive at 6.82, while Saskatchewan residents, who have seen house prices increase rapidly, are most negative at 6.05.

As interest rates remain low, it is not surprising that Canadians continue to be satisfied with their mortgages. Of those who renewed in the last year, 73% received lower rates than their original mortgage term.

“Mortgage consumers have been busy, and have effectively capitalized on low interest rates to shop and renegotiate,” said Jim Murphy, President and CEO of CAAMP. “CAAMP’s survey found that, on average, negotiated rates were discounted by 1.23 percentage points lower than typical advertised rates for five-year


mortgages, and we see this discounting trend continuing. ”In spite of continued job loss concerns, Canadians’ mortgage debt load remains reasonable. Homeowners have close to three-quarters (74%) of the value of their properties in equity and for those with mortgages, equity is more than one-half (52%) of the value of their homes. Fewer Canadians took equity out of their mortgages this fall (down to 18% from 22% last year). The primary motivator was, once again, debt consolidation or payment (approximately $17 billion), followed by home renovations (approximately $12 billion, down from $14.5 billion in 2008). One third of respondents who took out equity to fund home renovations said the Home Renovation Tax Credit had influenced their decision.

Significant Statistics from the Study

  • Overall, Canadians remain very satisfied with their current mortgage, with 77% either completely satisfied or satisfied. The top reason cited is the mortgage rate, which averaged 4.55% this past year – a dramatic decline from 5.41% last year.
  • Canadians in provinces that have felt the greatest effect of the recession are also the most optimistic about the increase in house prices – 42% of people in Ontario, 43% of people in Alberta and 47% of people in British Columbia feel that house prices will increase in the next year.
  • Two-thirds of all mortgages are fixed for terms of four or more years, with five-year terms remaining the most popular at 56%. But many people who took out a mortgage in the past year chose a shorter term, with 20% at one year or less.
  • 68% of mortgage holders have fixed-rate mortgages, while 27% have variable- and adjustable-rate mortgages. Fixed-rate mortgages are the most popular among people between the ages of 18 and 34, while those in the 55+ age group are more likely to opt for variable-rate mortgages.

Click here to download the full report.

  • We are Canada’s premier online mortgage company, and one of the fastest growing mortgage brokerages nationwide!
  • We have more than 1,500 Mortgage Professionals from more than 200 locations across the country!
  • Our Mortgage Professionals are Experts in their field and many are ranked among the best nationally.
  • We work for you, not the lenders, so your best interests will always be our number one priority.
  • We have more than 100 mortgage programs, making it easy to choose the best fit for your unique situation.
  • We close loans in all 10 provinces and 3 territories.
  • We can process your mortgage in as few as 7 days.
  • We are the preferred mortgage lender for several of Canada’s top companies.
  • Dominion Lending Centres’ Mortgage Professionals are available anytime, anywhere, evenings and weekends – and we’ll even come to you!



Forward this message Update your profile Update your subscription
Remove me from this mailing list

Are you prepared for when interest rates rise?

General Angela Calla 1 Dec

Mortgage brokers should prepare borrowers for higher interest rates: experts

By Kristine Owram (CP) – Nov 23, 2009

TORONTO — Interest rates aren’t going up any time soon, but when they do the rise will be rapid enough to potentially prove devastating for homeowners who aren’t prepared, mortgage industry experts say.

Because of this, mortgage lenders and brokers have a responsibility to help home buyers assess their capacity to make higher monthly payments, and to constantly evaluate their chances for default.

“There should be some prudence and there should be counselling by mortgage brokers to ensure people do leave a little wiggle room,” Ivan Wahl, chairman and CEO of Xceed Mortgage Corp. (TSX:XMC), said at an industry conference Monday.

Wahl praised Canadian regulators for preventing the housing meltdown that decimated the American economy, but said mortgage lenders have a responsibility to self-regulate as well.

“Regulators have a very specific role, but you can’t regulate prudence,” he said. “Self-discipline has to continue to be supplied.”

He called for an “early warning system” that would allow lenders to adjust quickly if an increased number of borrowers default on their mortgages as a result of higher interest rates.

The Canadian housing market fared much better than its American counterpart during the recession due to both better regulation and a more prudent culture. While the financial crisis in the U.S. was caused in large part by subprime mortgages, which led homeowners to default en masse when housing prices began to fall, strict regulations helped the Canadian economy avoid a similar meltdown.

Last week, a report said a record-high 14 per cent of U.S. homeowners with a mortgage were either behind on payments or in foreclosure at the end of September.

Similar Canadian statistics are hard to come by, but the comparable number would be “much lower” in Canada, said Gregory Klump, chief economist of the Canadian Real Estate Association.

Even mortgage lenders weren’t expecting the Canadian housing market to fare as well as it has.

“The last half of ’09 is better than anybody expected,” said John Webster, president and CEO of Scotia Mortgage Corp.

“We were looking at a nuclear winter . . . (for new mortgages), a 30 to 35 per cent drop, and that hasn’t happened,” agreed Stephen Smith, chairman and president of First National Financial LP (TSX:FN.UN).

The health of the Canadian housing sector has been aided by low interest rates – 5.59 per cent for a five-year fixed-rate mortgage and 2.25 per cent for a five-year variable-rate mortgage at one bank.

Depending on whether they are fixed or floating-rate, mortgages are tied to either the bond market or the Bank of Canada’s key lending rate, which are closely related. The central bank’s rate has been sitting at a record low of 0.25 per cent since the spring and it has said it will keep it steady until at least next June to help stimulate the ailing economy.

Benjamin Tal, senior economist with CIBC World Markets, said he expects the Bank of Canada will end up keeping its lending rate steady into 2011, as it would endanger the economy to raise rates too soon.

However, this isn’t to say higher interest rates won’t hit Canadian consumers eventually, Tal said. He predicted inflation of between three and five per cent by 2011.

“This will be enough to kill the bond market and to lead to higher interest rates down the road,” he said.

And when interest rates do rise, they’ll rise quickly. This could hurt Canadian homeowners who haven’t carefully evaluated their ability to carry their mortgage at a higher interest rate.

For example, a $200,000 mortgage with a term of 25 years and an interest rate of 2.25 per cent has monthly payments of $876.26. For the same mortgage with an interest rate of five per cent, the monthly payments become $1,169.18.

“We have to educate ourselves and our clients that interest rates will rise and when they rise they will rise quickly, 200 to 300 basis points,” Tal said. Borrowers then have to decide if they’ll still be able to finance their mortgage at a higher interest rate.

“If not, buy a smaller house,” Tal said. “It’s as simple as that.”

Mortgage lenders and brokers gathered in Toronto on Monday for the Canadian Association of Accredited Mortgage Professionals’ annual conference and expo.

CAAMP says the volumes of residential mortgage credit outstanding is forecast to grow by seven per cent between 2009 and 2011, and is predicted to pass $1 trillion in 2010. The average mortgage interest rate was 4.55 per cent as of October, down from 5.41 per cent a year ago.