Flaherty urges Canadians to get finances in order before rates go up

General Angela Calla 22 Dec

Ottawa consders tighter mortgage rules

Flaherty and Carney getting nervous

Last Updated: Monday, December 21, 2009 | 10:17 PM ET Comments360Recommend111

Ottawa is considering new measures to tighten mortgage standards and prevent would-be homebuyers from taking on more debt than they can afford.

Finance Minister Jim Flaherty said in an interview with CTV he’s worried about people piling up debt while interest rates are low and then getting into trouble when interest rates rise, as they inevitably must.

Finance Minister Jim Flaherty says he worries about Canadians taking on too much debt.Finance Minister Jim Flaherty says he worries about Canadians taking on too much debt. (CBC)

As a result, the Conservative government is considering increasing the minimum down payment from five per cent “to a higher figure,” he said, and Ottawa may also reduce the amortization period from a maximum of 35 years “to something less.”

Twenty-five-year mortgages used to be the norm, until lenders started making 30-, 35- and 40-year mortgages available to stimulate demand. In mid-2008, the Department of Finance moved to trim the maximum paydown period to 35 years and to require a minimum five per cent down payment for new federally insured mortgages.

Even so, 18 per cent of Canadian mortgages are for terms longer than 25 years, and 10 per cent are amortized over 35 or 40 years, a recent Scotiabank report estimated.

The average price of a resale home in Canada hit $337,231 in November, the Canadian Real Estate Association said last week. That’s 19 per cent higher than the depressed levels of a year earlier.

Flaherty’s comments echo Bank of Canada governor Mark Carney, who last week urged consumers to get their financial houses in order to prepare for when the central bank inevitably raises its key policy rate from its current emergency record low of 0.25 per cent.

Proceed with caution: CIBC

Word that Ottawa might step further into the red-hot real estate market had housing watchers buzzing Monday.

“You could basically shut down 25 per cent of the market,” CIBC economist Benjamin Tal told CBC’s The Lang and O’Leary Exchange. “It’s going to be significant because we’re talking about a lot of money that took advantage of those rates.”

“What the Bank of Canada and Finance Department are saying is that people are abusing these rates, but they need to be careful not to risk this fragile recovery.”

Though he admits more lending caution would be prudent, he advocates Ottawa be wary of anything as drastic as a hard cap of 30-year amortizations, or minimum 10 per cent down payments, for example.

“If you want to do it, do it in a gradual way that you do not kill housing [because] housing is the only thing ticking in this market,” he said. “The timing is tricky.”

Canada Housing Resales Climbed to Record in November

General Angela Calla 16 Dec

Canada Housing Resales Climbed to Record in November

By Alexandre Deslongchamps Bloomereng

Dec. 15 (Bloomberg) — Canadian home resales rose to a record 46,450 units in November, as the housing market helped to pull the economy out of recession, a realtor group said.

Seasonally adjusted sales in November climbed 67 percent from a year earlier, the Canadian Real Estate Association said in a statement.

“The Canadian housing market remains on fire as the combination of low mortgage rates and still favorable buying conditions continues to spur buying activity,” Millan Mulraine, an economist with TD Securities in Toronto, said in a note to clients.

The Bank of Canada has predicted growth in housing investment will stay “brisk until early 2010,” and then slow as pent-up demand is satisfied and affordability declines. The bank lowered its benchmark lending rate to a record 0.25 percent in April to spur domestic demand and pledged to leave it there through June unless the inflation outlook changes.

Canada’s five-year mortgage rate was 5.84 percent for most of November and fell to 5.59 percent by the end of the month, near the 58-year low of 5.25 percent set in April, according to Bank of Canada data.

The rebound has prompted some analysts, including Gluskin Sheff & Associates Inc.’s David A. Rosenberg, to question whether a bubble is forming in the housing market.

‘Next Closest Thing’

“Housing values are anywhere between 15 percent and 35 percent above levels we would label as being consistent with the fundamentals,” Rosenberg said in a report before today’s report. “If being 15 percent to 35 percent overvalued isn’t a bubble, then it’s the next closest thing.”

The average nationwide price rose 19 percent from last year to C$337,231 ($317,700), the association said in the statement. Seasonally adjusted listings fell 4.8 percent to 79,953 in November from a year ago.

Without adjusting for seasonality, home sales rose to 36,383 units in November, up 73 percent from a year earlier, CREA said.

“The rebound in resale housing activity led the overall Canadian economy out of recession,” CREA President Dale Ripplinger said in the statement.

British Columbia poised to recover from sharp downturn in 2009: RBC Economics

General Angela Calla 14 Dec

Positive economic growth likely in 2010 and 2011, says RBC Economics

The Canadian Press  – After a challenging year, the economy is set for a recovery in 2010, according to a new forecast by RBC Economics.

It says although the economy contracted at an average of 2.5 per cent this year, the stage is set for positive growth in 2010. RBC predicts real gross domestic product will rise by 2.6 per cent next and will continue to expand in 2011, at a 3.9 per cent clip. The report suggests the peak of stimulus spending will occur in 2010, with improving credit conditions fuelling growth next year and in 2011.

In addition, consumer spending is projected to increase by 2.3 per cent next year before accelerating to 2.7 per cent in 2011.

However, the bank says the jobless rate is expected to remain high at about 8.7 per cent in 2010 before falling to 7.8 per cent in 2011.

“With the financial crisis behind us and the U.S. economy on the mend, Canada’s economic growth is expected to rise steadily throughout the next year,” said Craig Wright, RBC senior vice-president and chief economist.

“While challenges remain, a peak in stimulus and infrastructure spending across the federal, provincial and municipal governments, along with low interest rates, should result in a sustained recovery.”

Flaherty notes stimulus money flowing as recovery kicks in

By Nelson Wyatt

MONTREAL — Federal stimulus projects are starting to snowball just as the economy is recovering from the global financial meltdown, Finance Minister Jim Flaherty said Friday.

Flaherty says cash will flow faster in 2010 for federally funded construction projects, now that numerous engineering studies and environmental assessments are being completed.

“They are snowballing, if I can put it that way,” he said in Quebec City.

“They are gathering momentum as we go forward, as engineering studies are done, as environmental assessments are done. So there’ll be a lot of cash flow next year into the Canadian economy.”

Earlier this year, in the depths of the recession, Ottawa earmarked billions for infrastructure projects.

The opposition spent months warning that the money wasn’t going out quickly enough, while the government made procedural changes to speed up the delivery process.

The Liberals say Flaherty’s comments now prove the stimulus process encountered hiccups.

“He’s admitting that we were right all along,” Liberal critic John McCallum said in an interview. “Very little of the money has gotten out.”

He drew parallels with the government’s treatment of allegations of prisoner abuse in Afghanistan.

“This is a dishonest government,” McCallum said. “They told Canadians lies about (Afghanistan) detainees and about the infrastructure money.

“And then when irrefutable facts came out to demonstrate these were lies, they spin the story in a different way. In both cases, the facts now show that they were not telling the truth on infrastructure just as they were not telling the truth on detainees.”

He said it would have been possible to get the money out faster if the government had followed a Liberal plan to transfer gas taxes directly to municipalities, who would have been able to move ahead with already approved projects.

The finance minister, meanwhile, said there are encouraging signs that the recession is petering out.

“We have seen improvements in business confidence, certainly. We are seeing an increase — some increases — in private-sector investment, although we are not comfortable yet that we’re at a place where we can stop the stimulus measures,” Flaherty told a news conference.

“The job situation has also stabilized in the last several months, which is always encouraging.”

Dale Orr, a Toronto-based economic consultant, said Flaherty had “put a bit of flesh” on earlier statements which left the impression projects were going forward and there was immediate economic growth.

“The starting point for a lot of these programs is exactly what he’s now mentioning,” Orr said.

Douglas Porter, deputy chief economist with BMO Capital Markets, said Flaherty seemed to be sticking to his message “that there isn’t going to be a whole lot of new measures next year.

“In fact, next year’s budget may be extremely thin.”

Porter said one of the biggest criticisms of fiscal policy is that by the time the problem is identified and the money starts to be spent, the economy has already started to recover.

“This may well be a case where the maximum effect of the fiscal stimulus actually hits after the economy has started to emerge from recession.”


Transmitted by CNW Group on : December 14, 2009 05:00

British Columbia poised to recover from sharp downturn in 2009: RBC Economics

Strong demand for natural resources and staging the Winter Olympics should boost B.C. economy in 2010

TORONTO, Dec. 14 /CNW/ – As British Columbia gets ready to host the 2010 Winter Olympic and Paralympic Games, the province’s economy is preparing for a burst of economic activity, according to a new RBC Economics report.

“The Games should give a big boost to tourism, retail trade and a variety of other services that will help move B.C.’s economy into recovery mode in 2010,” said Craig Wright, senior vice-president and chief economist, RBC. “This economic tonic could not come soon enough for B.C., which is ending 2009 with its worst performance since 1982.”

Signs of a recovery have been emerging in recent months, with retail sales and housing starts trending higher since the spring. A stunning rally in existing home sales, boosted by low mortgage rates, helped the B.C. resale market fully recover in October. Employment also picked up in the fall, although the unemployment rate remained elevated.

The RBC Economics Provincial Outlook forecasts that B.C.’s key forest products sector should finally begin to move out of its deep slump in 2010, as U.S. demand for building products rises. Stronger global demand for metals and coal, as well as further development of natural gas fields in the province, should contribute to increased exports. The RBC report projects that the B.C. economy will grow by a solid 3.2 per cent in 2010, second only to Saskatchewan in terms of growth rates among the provinces next year, before moving higher to 3.4 per cent in 2011.

The main theme of the RBC Economics Provincial Outlook is that a mild economic recovery is expected to be widespread among provinces in 2010, after a significant contraction spread across the country in 2009 (with only Manitoba and Nova Scotia barely avoiding a decline in activity). The full force of fiscal and monetary stimulus should positively contribute to growth in 2010. The price tag for that stimulus however, will be huge budget deficits. While such deficits might cause some discomfort, the alternative was even less attractive given the severity of the economic downturn. Returning to balance over the medium-term will be a challenge involving difficult choices. Provincial economies are expected to be in solid growth territory in 2011, with most western provinces – led by Saskatchewan – benefiting from strengthening commodity prices and hitting higher growth rates than the 3.9 per cent national average. The exception will be B.C., where the boost from the Olympics will not be repeated.

The RBC Economics Provincial Outlook assesses the provinces according to economic growth, employment growth, unemployment rates, retail sales and housing starts.

According to the report, available online as of 8 a.m. EST today at www.rbc.com/economics/market/pdf/provfcst.pdf, provincial forecast details are as follows:



                        Real                Housing             Retail

                         GDP                 starts              sales

                    Y/Y % Change           Thousands          Y/Y % Change

                  09     10     11     09     10     11     09     10     11

                  —     —     —     —     —     —     —     —     —

    N.& L.      -4.5    2.4    1.5    3.0    3.0    3.1    2.0    4.2    5.4

    P.E.I.      -0.1    2.2    3.4    0.7    0.8    0.8   -0.7    3.7    4.4

    N.S.         0.0    2.8    3.8    3.7    4.1    4.1   -0.3    4.4    4.9

    N.B.        -0.3    2.9    3.7    3.6    3.7    3.5   -0.4    3.7    4.1

    QUE.        -1.6    2.2    3.7   41.5   42.0   44.0   -0.9    4.3    5.1

    ONT.        -3.2    2.4    4.0   50.5   65.0   68.0   -2.7    3.8    5.6

    MAN.         0.2    3.0    4.0    4.2    5.4    5.5   -1.3    5.1    5.8

    SASK.       -1.6    3.9    4.6    3.4    4.1    4.4   -2.3    5.5    6.1

    ALTA.       -3.4    2.4    4.4   19.2   28.5   30.5   -8.5    4.9    7.0

    B.C.        -2.6    3.2    3.4   15.6   24.5   27.5   -5.8    5.7    4.6

    CANADA      -2.5    2.6    3.9  145.4    181    191   -3.3    4.4    5.5




                     Employment              rate                 CPI

                    Y/Y % Change               %              Y/Y % Change

                  09     10     11     09     10     11     09     10     11

                  —     —     —     —     —     —     —     —     —

    N.& L.      -2.5    0.6    1.8   15.5   15.7   14.9    0.4    1.8    2.3

    P.E.I.      -1.3    2.1    1.2   12.2   12.0   11.7    0.0    2.2    2.4

    N.S.         0.0    1.3    2.0    9.2    9.4    8.8    0.0    2.1    2.4

    N.B.         0.1    1.3    1.5    8.9    8.9    8.5    0.3    2.0    2.3

    QUE.        -1.0    1.1    2.2    8.5    8.8    8.1    0.6    1.6    2.2

    ONT.        -2.4    1.1    2.5    9.1    9.7    8.5    0.3    1.3    2.1

    MAN.         0.2    1.4    2.2    5.2    5.5    4.9    0.7    1.8    2.3

    SASK.        1.5    1.2    2.7    4.8    5.1    4.5    1.3    2.3    2.9

    ALTA.       -1.2    1.2    3.1    6.6    6.9    5.9   -0.2    1.3    2.0

    B.C.        -2.4    2.1    1.7    7.6    7.5    6.9    0.1    1.2    2.0

    CANADA      -1.5    1.3    2.3    8.3    8.7    7.8    0.3    1.5    2.2


Long term rates to rise?

General Angela Calla 14 Dec

Bond yields and mortgage rates could head higher before the Bank of Canada’s pledge to hold interest rates steady expires in July, the chief economist at Bank of Nova Scotia said this week.

“There’s a very good chance long-term rates will head up before then,” Warren Jestin said in Toronto at a briefing sponsored by the Investment Funds Institute of Canada.

He warned new homeowners with variable-rate mortgages not to be influenced by the central bank’s neutral statements on rates on Tuesday. The bank has pledged to hold rates at a historic low of 0.25% until the end of the second quarter of next year, inflation conditions permitting.

Read the “fine print” and he believes it’s likely three-year and five-year mortgage rates will be higher before July 2010.

Mr. Jestin does not foresee a double-dip recession. “Those who expect renewed recession next spring will be proved wrong.” For North America, “2010 is a year we fill in the hole we dug for ourselves in one of the most vicious recessions in our lives.” But the global economy will grow at a “slower rate than we’d consider normal a few years ago. We believe expansion won’t be that strong in 2011 so we don’t see rates continuing up in 2011.”

Christopher Probyn, managing director and chief economist for State Street Global Advisors, expects the U.S. Federal Reserve will raise interest rates by 0.75% to 1.5% in the second half of 2010. However, he said inflation may run surprisingly low so the Fed could “be on hold much longer than people anticipate.”

The 2008-2009 period was by far the worst economy since the International Monetary Fund started collecting data in 1970. “For the first time, there was a contraction in the global economy.” Growth in world gross domestic product fell from over 5% in 2007 to 3% in 2008 but went to -2.5% in 2009.

The low was the first quarter of 2009, when the economy contracted at a rate of 6% annualized. But it was flat in the second quarter and returned to positive growth in the third, “so throughout 2009 there has been progressive improvement.”

Mr. Probyn foresees a sustained but “rather gradual” recovery, with GDP expanding 2.5% in 2010. Last week’s favorable employment report suggests the next stage in recovery may already have arrived. “Maybe we’re very close to achieving stability in the labor market,” Mr. Probyn said.

Like Mr. Jestin, he doesn’t foresee a double-dip recession in 2010. He said the recovery is more likely to be U-shaped, with some bouncing along the bottom, than the instant rebound of a Vshaped comeback.


Are you thinking about buying a brand new home?

General Angela Calla 8 Dec

If so, pay attention to the new HST being implemented in the Summer of 2010.  This new tax has the potential to dramatically increase your overall purchase price.

I’ve got detailed information available, which I’d be happy to send to you upon request; however for the purposes of this blog, I am just going to touch on the highlights.

HST will be a 12 % Tax on the purchase of most goods and services in BC.  This will be applicable to NEW Real Estate, not resale.

While this tax is a substantial increase from the current 5% GST that is applicable to new home construction, the government has recently announced rebates aimed at home buyers.

The following is an excerpt from a government news release:

“Enhanced New Housing Rebate
The new housing rebate would be enhanced so that new homes purchased as a primary residence would receive a rebate of 71.43 per cent of the provincial component of the HST, paid up to a maximum of $26,250.  
As a result of the decision to enhance this proposed rebate, purchasers of homes priced up to $525,000 would pay no more tax, on average, than under the current PST. Homes above $525,000 would receive a flat rebate of $26,250. This enhanced rebate represents a 30 per cent increase in the threshold and maximum rebate available.”

The announcement was long, and complicated, but for most buyers, the bottom line is:

At a sale price of under $525 000, after all rebates you should be paying no more tax than you would presently under the GST/PST System.

Over $525 000, you will be paying significantly more for your new home.  For a $1M purchase, the additional tax will add about $33 250 to the cost of your new home.  Even after some savings on construction that may be passed along from developers as a result of HST, you will still be paying significantly more for your new home.

Buyers of resale homes should not be significantly impacted by HST, other than additional tax on closing services such as lawyer fees and home inspections.

Economic recovery is ‘solidly entrenched’: BoC

General Angela Calla 8 Dec

Economic recovery is ‘solidly entrenched’: BoC

Paul Vieira, Financial Post 

OTTAWA — After months of uncertainty, the economic recovery now appears to be “solidly entrenched,” the Bank of Canada said Tuesday, indicating its forecast for growth should unfold as envisaged.

Still, in its latest interest rate announcement, the central bank reiterated, as expected, its conditional commitment to keep its key policy rate at a record low 0.25% until June 2010 as inflation is still not expected to hit its preferred 2% target until the second half of 2011.

Recent data – from retail sales to a stunningly strong jobs report for November — have painted a mostly cheer picture of the Canadian economy, analysts say, even though third-quarter GDP growth of 0.4% annualized came in well below the central bank’s 2% expectation.

Since the central bank’s latest economic forecast in October, “global economic developments have been slightly more positive and the global outlook has improved modestly,” the bank’s governing council said in its statement, adding though that “significant fragilities” remain.

The central bank said the composition of economic growth is unfolding as expected, highlighted by a shift toward stronger domestic demand and less reliance on exports.

“The main drivers and the profile of the projected recovery in Canada remain consistent with the bank’s [outlook],” it added. “The bank continues to expect economic growth to become more solidly entrenched over the projection period and inflation to return to the 2% target in the second half of 2011.”

According to the central bank’s outlook, Canada is expected to grow 3.3% this quarter, followed by expansion of 3% next year and 3.3% in 2011. Predictions for strong growth gained steam late last week when data indicated the Canadian economy added 79,000 jobs in November.

Further, the central bank on Tuesday played down the impact of the stronger dollar, even though it acknowledged it remained a key risk to its forecast, and “could act as a significant further drag” on growth and inflation. The stronger loonie, which has advanced as much as 25% this year against its U.S. counterpart, led to a surge in imports in the third quarter – resulting in net exports acting as a drag on the economy of roughly 5.3 percentage points.

Since the last rate announcement, however, the dollar has on average traded a couple of cents below the central bank’s working assumption of a US96¢ loonie.

Most analysts were looking for any change in nuance in the bank’s statement – in particular a hint or two that it might move before its conditional pledge to keep rates at a record low until June 2010 given the surge in domestic consumption as households take advantage of record low borrowing costs.

Instead, the central bank reiterated that its target rate of 0.25% “can be expected” to remain intact until the end of the second quarter of next year. The pledge is conditional on inflation hitting the 2% target in the third quarter of 2011, as the bank expects.

The last time the bank raised its key policy rate, to 4.5%, was in July of 2007 – and shortly afterward the first signs of the credit crisis emerged.

Some economists, such as Ryan Brecht of Action Economics, expect the central bank to begin hiking its policy rate, and aggressively, starting in the second half of next year.

In a note released Tuesday morning, Mr. Brecht, the firm’s senior North American economist, said he envisaged the Bank of Canada raising its target rate by 175 basis points before December of 2010, for a policy rate of 2%, or “more normal levels.” Still, that would be below the 3% level in September of 2008, when Lehman Bros. collapsed, or the 4.5% peak hit more than two years ago.

Financial Post


The Bank of Canada has reiterated its conditional commitment to keep that rate until mid 2010

General Angela Calla 8 Dec

The Bank of Canada has reiterated its conditional commitment to keep that rate until mid 2010. 

Please see below for the full report.

One of our clients contacted us to help them with an a mortgage review this week and we saved them $1,300 dollars a month $ 15,600 a year and over the 5 years $78,000.00 in interest alone. This will help their family have a clear title home 7 years sooner and also improve their retirement cash flow by allowing them with all the money they are saving monthly, to buy a rental condo that will earn them an additional $450 a month in income. One simple call to our office changed this family’s life.

What would you do with that additional savings? Call 604-802-3983 or introduce us over an email at acalla@dominionlending.ca to someone that you truly care about to see how we can help you today!

 Bank of Canada maintains overnight rate target at 1/4 per cent and reiterates conditional commitment to hold current policy rate until the end of the second quarter of 2010

OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/4 per cent. The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.

While significant fragilities remain, global economic developments have been slightly more positive and the global outlook has improved modestly relative to the Bank’s projection in its October Monetary Policy Report (MPR).

In Canada, as expected, the composition of aggregate demand is shifting towards final domestic demand and away from net exports. In the third quarter, the balance of these shifts resulted in weaker-than-projected GDP growth. Core inflation in recent months has been slightly higher than the Bank had projected, although total CPI inflation remains close to projections.

The main drivers and the profile of the projected recovery in Canada remain consistent with the Bank’s views in the October MPR. The Bank continues to expect economic growth to become more solidly entrenched over the projection period and inflation to return to the 2 per cent target in the second half of 2011.

Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target. In its conduct of monetary policy at low interest rates, the Bank retains considerable flexibility, consistent with the framework outlined in the April MPR.

The risks to the outlook for inflation continue to be those outlined in the October MPR. On the upside, the main risks are stronger-than-projected global and domestic demand. On the downside, the main risks are a more protracted global recovery and persistent strength in the Canadian dollar that could act as a significant further drag on growth and put additional downward pressure on inflation. The Bank views all of these risks through the prism of achieving the 2 per cent inflation target.

While the underlying macroeconomic risks to the projection are roughly balanced, the Bank judges that, as a consequence of operating at the effective lower bound, the overall risks to its inflation projection are tilted slightly to the downside.

Information note:

The next scheduled date for announcing the overnight rate target is 19 January 2010. A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the Monetary Policy Report on 21 January 2010.

Enjoy your week

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

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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.

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  • Dominion Lending Centres’ Mortgage Professionals are available anytime, anywhere, evenings and weekends – and we’ll even come to you!



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