By The Canadian Press | The Canadian Press – Thu, 27 Jan 1:43 PM EST

TORONTO – A new report from the TD Bank suggests that Canadians are taking the phrase “Go West, young man” seriously.

More Canadians were on the move last year as a percentage of the population than any year since 1998, the bank says.

And most were headed West to take advantage of better job prospects and higher standards of living.

The analysis shows 337,000 Canadians migrated within the country’s border’s last year, 45,000 more than in 2009. The level represents about one per cent of the total population, the highest since 1998.

Except for New Brunswick, only Saskatchewan, Alberta and British Columbia experienced a net inflow of people last year.

And the report predicts that westward bound migration will continue over the next two years, although not up to the levels seen during the resource boom prior to the recession.

In relative terms, Manitoba and Prince Edward Island are losing the most people. Ontario and Quebec will continue to keep shedding numbers, but by a tiny fraction relative to their populations, the bank said.

By Julian Beltrame, The Canadian Press

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

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

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

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

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

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

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

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

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

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

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

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

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

“Moderation is the key,” Flaherty said.

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

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

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

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

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

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

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

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

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

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

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

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

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

By The Canadian Press

OTTAWA – Ottawa says over three million Canadians took advantage of the temporary home renovation tax credit, on average pocketing about $700 each.

But that is less than what Finance Minister Jim Flaherty targeted when he introduced the one-year program in 2009 as part of the government’s stimulus package.

The government had estimated in the budget that about 4.6 million Canadians would take advantage and claim on average about $650 in credits each.

In total, the program was to cost the government $3 billion, but appears to have topped out at over $2.1 billion.

Still, National Revenue Minister Keith Ashfield called the program a success, saying it increased spending on home renovations by about 18 per cent.

http://ca.finance.yahoo.com/news/Three-million-Canadian-cash-capress-2250261711.html?x=0

By Julilan Beltrame, The Canadian Press
OTTAWA – North American consumers are starting to feel better about
their personal finances and the economy, a hopeful sign for the still
fragile recovery.
Two fresh surveys, one by the Conference Board in Canada and another
from the International Monetary Fund in the U.S., detected an identical
pattern of rising confidence in January, although relative optimism
continues to be stronger north of the border.
Canada’s confidence index rose 7.1 per cent this month to 88.1 points,
the highest since the initial optimism coming out of the recession in
the latter half of 2009 and early 2010.
Overall, the U.S. measure still lags Canada but in January it reached
its highest level in eight months, rising to 60.6 from 53.3 in December,
according to a Conference Board survey there.
Releases from both the IMF and the Conference Board note that levels are
still below what would be considered positive, although they are
improvements over recent months. Analysts generally welcomed the
stronger consumer sentiment.
“In all, better consumer expectations in January bode well for a
continued upturn in consumption…which will in turn prove supportive of
overall economic activity,” said Martin Schwerdtfeger and economist with
the TD Bank.
The increases follow a month of generally more upbeat economic news,
particularly in the U.S., which has seen the early stages of an
employment recovery and strong manufacturing activity.
But Conference Board of Canada economist Pedro Antunes said while
positive news played a part, both in Canada and the U.S., there is also
a predictive element to the surveys.
“This is really about looking ahead…and people are a little more
optimistic,” he said.
Still, some economists cautioned against reading too much into surveys –
for instance, whether more upbeat consumers will translate into more
sales of homes, cars and appliances.
“It’s actions that speak louder than words,” said Scotiabank economist
Derek Hold. “The way people manage their money and spend can be very
different from how they say they will.”
While conditions appear to be improving, that comes after last year’s
summer period faced generally downbeat news, when Canada’s recovery
slowed to one per cent and the U.S. became so weak both the central bank
and the government launched a second round of stimulus measures.
On Monday, the International Monetary Fund gave a modified thumbs up to
the global recovery, while noting that advanced countries, including
Canada and the U.S., will continue in the slow-growth lane for the next
two years.
The IMF predicted Canada’s growth will average 2.3 per cent this year
and 2.7 per cent in 2012 – one-tenth of a point less than the Bank of
Canada’s estimate of the previous week. The U.S. will grow by three per
cent and 2.7 per cent in the next two years, largely thanks to stimulus,
the Washington-based financial institution said.
Both countries will get a better measure on how their economies are
progressing in just over a week’s time when employment figures for
January are released.
Canadians’ rising confidence was seen across a range of measures, but
not uniformly across the country.
One of the clearest signals was that 28.1 per cent of respondents said
they expect their financial situation to improve in the coming six
months, up 3.3 percentage points. The number who felt the next six
months looked worse, dropped by 0.7 point to 15.1 per cent.
The respondents were also more confident about Canadian labour markets,
with those who felt job opportunities would increase over the next six
months rising 1.4 percentage points, while those who felt conditions
would get worse falling 2.7 points.
There was also a clear signal that more respondents felt good about
making a major purchase, although the optimistic camp and pessimistic
group each represented about 44 per cent of respondents.
“Whether this sudden improvement on the major purchases question can be
sustained remains to be seen. But, coupled with the increasing optimism
about future employment opportunities, it does suggest healthy consumer
consumption going forward,” the Conference Board said.
Regionally, confidence rose the strongest in Ontario and the Prairies.
Quebec registered a modest increase and British Columbia and Atlantic
Canada were slightly less optimistic than they were in December.
The Canadian finding is based on the result of over 2,000 interviews
conducted between Jan. 6 and 17. The margin of error is estimated at
plus or minus 2.2 percentage points.

Fact sheet

First-time home buyers’ tax credit

What is the first-time home buyers’ tax credit (HBTC)?

The HBTC is a non-refundable tax credit for certain homebuyers who acquire a qualifying home after January 27, 2009, that is – closing after this date.

How is the HBTC calculated?

The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For 2009, the credit will be $750. However, if the total of your non-refundable tax credits is more than your federal income tax, you will not receive a refund for the HBTC.

Who is eligible for the HBTC?

You will qualify for the HBTC if:

• you or your spouse or common-law partner acquired a qualifying home; and
• you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years.

If you are a person with a disability or are buying a home for a related person with a disability, you do not have to be a first-time home buyer to get the HBTC. However, the home must be acquired to enable the person with a disability to live in a more accessible dwelling or in an environment better suited to the personal needs and care of that person.

For the purposes of the HBTC, a person with a disability is an individual who is eligible to claim a disability amount for the year in which the home is acquired, or would be eligible to claim a disability amount if we ignore that costs for attendant care or care in a nursing home were claimed as medical expenses on lines 330 or 331.

What is a qualifying home?

A qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, as well as apartments in duplexes, triplexes, fourplexes, and apartment buildings all qualify. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in, a housing unit located in Canada also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.

Also, you must intend to occupy the home or you must intend that the related person with a disability occupy the home as a principal place of residence no later than one year after it is acquired.

Important things to remember

The home must be registered in your or your spouse’s or common-law partner’s name in accordance with the applicable land registration system.

You do not have to submit documents supporting your purchase transaction with your income tax and benefit return. However, you have to make sure that this information is available if the Canada Revenue Agency asks for it.

Where can I get more information?

For more information, go to www.cra.gc.ca/hbtc or call us at 1-800-959-8281.

This document is also available for download in PDF format.

What’s affecting your credit score?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

One of the most common questions is how someone can begin building financial security, especially when they’re still paying off loans or other types of debt. After interviewing dozens of successful savers over the years, …they tend to have the following five traits in common. With the exception of the last one, they are all strategies that anyone can begin implementing today.

Here are the five secrets of successful savers:

1) They started slowly. Overcoming the initial inertia that prevents many of us from saving is often the hardest step. That’s why starting by saving just a small amount can get you on the path towards bigger savings. Nicole Mladic, a 31-year-old communications director in Chicago, couldn’t afford to put away a big chunk of her salary when she was in her mid-20s, so she started saving 2 percent. A few months later, she raised it to 3 percent, then went to 4 percent, and eventually reached her goal of 10 percent. Today, her net worth is over $90,000.

2) They read about financial and economic news. A survey by HSBC Direct found that people they call “active savers,” tend to pay attention to financial news. That might help them maintain a general awareness and savviness about money, and also teach them about basic principles such the importance of not trying to time the market, and finding accounts that don’t charge hefty fees.

3) They save regularly, often through automated systems. Online banking makes this technique easy: Sign up for monthly transfers into a brokerage or savings account. You can also transfer funds directly from your pay so you never even see the money, which means you won’t miss it. Check in with your human resources department–you might be able to set up an automatic savings account through your pay in addition to your automatic retirement savings.

4) They find saving pleasurable. This trait might sound counter-intuitive: How can anyone enjoy saving money, since doing so essentially prevents the pleasure of a purchase today? But some people–especially successful savers–naturally feel more pleasure while socking money away rather than spending it, since they know they are building financial security, and they can spend it one day in the future. If you don’t naturally feel this way about saving, you can teach yourself to, by focusing on how much financial security means to you each time you add to your savings accounts.  

5) They first began saving as a child. The HSBC survey found that most active savers had been saving money since they were little and they learned the value of saving from their parents. While adults today who didn’t receive those lessons can’t change their past, they can help pass on better lessons to their own children by talking about finances and family budgeting often. Doing so would put them in the minority: A Charles Schwab survey found that only one in five parents frequently talk to their teens about family budgeting and spending decisions, and just over half of parents teach their teens how to save regularly.

One trick that combines these strategies is to encourage elaborate family discussions about what you will do with all the money you are saving. For example, if your savings goal is to take a family vacation to Belize, children can draw pictures of the rainforest, parents can crunch some numbers, and soon you’ll be snorkeling in the coral reefs.

NEWS RELEASE

VICTORIA – More than one million B.C. homeowners with homes valued up to $1.15 million may be eligible for the full homeowner grant amount as the Province raises the threshold by 10 per cent for the 2011 tax year.

“Raising the homeowner grant threshold ensures that 95 per cent of homeowners continue to benefit from a full grant, helping them with the cost of living,” Finance Minister Colin Hansen said. “While we’re starting to see mills and mines reopen in our smaller communities, we recognize the economic downturn hit some parts of rural B.C. harder, so we’ve kept our promise to provide a Northern and Rural Home Owner Benefit to ease the burden on rural families in the months ahead.”

BC Assessment estimates the value of most properties (homes) as of July 1 each year, based on market value. Assessment notices were mailed to all property owners Dec. 31, 2010.

The Province reviews B.C. Assessment’s property value information and adjusts the grant threshold so that at least 95.5 per cent of homeowners are eligible for the full grant. People with homes valued above the threshold may be eligible for a partial grant.

The home owner grant provides a maximum reduction in residential property taxes of $570. An additional grant of $275 — for a total of $845 — may be available if the homeowner is 65 or over, permanently disabled or eligible to receive certain war-veteran allowances. The assessment data reflects the market value of homes as of July 1, 2010. The grant threshold was $1,050,000 for both 2009 and 2010.

A further measure of relief from residential property taxes for northern and rural homeowners takes effect in 2011, with the start of the Northern and Rural Area Homeowner Benefit. This benefit provides up to $200 for homeowners living outside of the Capital, Greater Vancouver and Fraser Valley regional districts. To be eligible, homeowners must meet the requirements to receive the basic or additional homeowner grants. The new benefit will be included with property tax notices in the spring, and eligible homeowners will not need to apply separately.

Other changes taking effect this year to benefit property taxpayers include:

• Increasing the Industrial Property Tax Credit to 60 per cent of school property taxes payable by light and major industrial properties.
• Establishing a credit of 50 per cent of school property taxes for land classified as “farm”.

For more information on the Home Owner Grant program and the Northern and Rural Homeowner Benefit, please visit: www.sbr.gov.bc.ca/individuals/Property_Taxes/Home_Owner_Grant/hog.htm

The changes coming into place in March are:

1. Amortizations are reduced to 30 years instead of 35 years

2. Refinancing only up to 85% instead of 90%

3. No longer insuring lines of credit

The impact on a 350,000.00 mortgage

1. On amortizations approx $35 per month per 100k in mortgage in the example above $123 a month

2. Access to 5% less equity ($17,500) in the amount above

3. Harldey no impact, lenders didn’t offer insured lines of credit even though they were avaliable.

Summary

This does not impact your down payment, you can still purchase with a 5%  down payment and remember this is for insured mortgages only. If you have a 20% down payment for your purchase or have over 20% equity in your home, your options are still open.

 A refinance is when you are taking money out of your home. This will not impact a simple mortgage renewal unless you were making a change to the mortgage to take more money out.

Rates are still at record lows, and this is a great time to purchase real estate if the fundamentals work for you.

 Angela Calla, AMP

Mortgage Expert-Dominion Lending Centres-Angela Calla

Host of The Mortgage Show on CKNW AM980 Saturdays at 7pm

Bank of Canada maintains overnight rate target at 1 per cent

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 recovery is proceeding at a somewhat faster pace than the Bank had anticipated, although risks remain elevated. Private domestic demand in the United States has picked up and will be reinforced by recently announced monetary and fiscal stimulus. European growth has also been slightly stronger than anticipated. Ongoing challenges associated with sovereign and bank balance sheets will limit the pace of the European recovery and are a significant source of uncertainty to the global outlook. In response to overheating, some emerging markets have begun to implement more restrictive policy measures. Their effectiveness will influence the path of commodity prices, which have increased significantly since the October Monetary Policy Report (MPR), largely reflecting stronger global growth.  

The recovery in Canada is proceeding broadly as anticipated, with a period of more modest growth and the beginning of the expected rebalancing of demand. The contribution of government spending is expected to wind down this year, consistent with announced fiscal plans. Stretched household balance sheets are expected to restrain the pace of consumption growth and residential investment. In contrast, business investment will likely continue to rebound strongly, owing to stimulative financial conditions and competitive imperatives. Net exports are projected to contribute more to growth going forward, supported by stronger U.S. activity and global demand for commodities. However, the cumulative effects of the persistent strength in the Canadian dollar and Canada’s poor relative productivity performance are restraining this recovery in net exports and contributing to a widening of Canada’s current account deficit to a 20-year high.  

Overall, the Bank projects the economy will expand by 2.4 per cent in 2011 and 2.8 per cent in 2012 – a slightly firmer profile than had been anticipated in the October MPR. With a little more excess supply in the near term, the Bank continues to expect that the economy will return to full capacity by the end of 2012.

Underlying pressures affecting prices remain subdued, reflecting the considerable slack in the Canadian economy. Core inflation is projected to edge gradually up to 2 per cent by the end of 2012, as excess supply in the economy is slowly absorbed. Inflation expectations remain well-anchored.  Total CPI inflation is being boosted temporarily by the effects of provincial indirect taxes, but is expected to converge to the 2 per cent target by the end of 2012.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered. 

Information note:

A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 19 January 2011. The next scheduled date for announcing the overnight rate target is 1 March 2011