Live in Studio with Bill Good we discussed why variable rates are so attractive right now, and how important it is to understand the factors of what has been holding some individuals back from taking advantage of todays record lows.

Click here to see the 9 minute segment 

http://www.youtube.com/watch?v=x8mtvKRpePo

 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!

Hot off of the press of the Financial Post

Bank of Canada raises rates

Paul Vieira, Financial Post * Wednesday, Sept. 8, 2010

OTTAWA — The Bank of Canada raised its benchmark interest rate
Wednesday by 25 basis points to 1%, arguing financial conditions remain
“exceptionally stimulative” even in the face of a slowing — but still
growing — economy.

In its accompanying statement, the central bank acknowledged the
economic recovery in Canada would be “slightly more gradual” than
envisaged it its most-recent economic outlook, due to sluggish
private-sector demand in the United States. However, it said domestic
demand was expected to be “solid” and business investment to advance
“strongly” — powered by “accommodative” credit conditions that have
eased further in recent weeks due to sharp declines in bond yields.

Banks price loans, such as mortgages, based on yields for relatively
safe government debt.

The statement provided no suggestion the central bank was set to keep
rates on hold for an indefinite period, as some analysts now expect.

“As a result of monetary policy measures taken since April, financial
conditions in Canada have tightened modestly but remain exceptionally
stimulative,” the central bank said.

For instance, consumers continue to take out loans at a steady pace,
with central bank data suggesting household credit expanded at an
annualized 7.1% pace for the three-month period ended July 31.

The Bank of Canada said future hikes in its key lending rate, up 75
basis points in the past three months, “would need to be carefully
considered in light of the unusual uncertainty surrounding the outlook.”

This decision may come as a bit of a surprise for traders, who have been
largely divided as to which way Mark Carney, the central bank governor,
and his colleagues would lean toward in the face of slower than
anticipated economic growth. Markets had priced in a roughly 60% chance
of a rate hike, and those odds increased over the past week from a less
than 50-50 chance based on better-than-expected manufacturing and labour
data in the United States.

Canadian GDP expanded 2% annualized in the second quarter, well below
the central bank’s forecast of 3%. However, analysts have said the
economy was stronger than the headline print indicated, as final
domestic demand advanced at a robust pace (3.5%). Plus, much of the drag
in the second-quarter was from so-called “import leakage,” in which
gains in imports — as firms acquired productivity-enhancing equipment
at the fastest pace since 2005 — outstripped exports.

Of the GDP results, the Bank of Canada said economic activity “was
slightly softer” than expected, “although consumption and investment
have evolved largely as anticipated.”

The central bank is likely pleased at the turnaround in business
investment, which it has argued is required for the recovery to maintain
momentum once consumer spending tapers off. Plus, investment from firms
in productivity-enhancing technology is required to ensure future
growth.

The bank said the Canadian recovery would be “slightly more gradual than
it had projected in July … largely reflecting a weak profile for U.S.
activity.” The U.S. Federal Reserve has said it was prepared to take
further action if required to stoke the recovery, although officials at
the powerful central bank are unsure such measures are required.

The Bank of Canada said inflation — which the central bank aims through
rate decisions to hit and maintain a 2% level — has been “broadly in
line” with expectations and “its dynamics are essentially unchanged.”

In terms of the global picture, it said the recovery is proceeding “but
remains uneven, balancing strong activity in emerging market economies
with weak growth in some advanced countries.” As for the United States,
the world’s biggest economy and Canada’s biggest trading partner, the
central bank said the recovery in private demand is “being held back by
high unemployment and recent indicators suggest a more muted recovery in
the near term.”

Economists have scaled back growth expectations for both Canada and the
United States, although at the same time boosting the forecast for
Europe as its major economies are advancing better than expected
following the sovereign debt crisis in the spring.

The central bank is scheduled to provide an updated economic outlook
next month, two days following its next rate decision on Oct. 19.
Previously, the central bank had forecast 3.5% economic growth this
year, followed by 2.9% expansion in 2011. The output gap — a rough
measure of the amount of excess capacity in the economy — is expected
to close by the end of 2011.

For Immediate Realease:

Bank of Canada increases overnight rate target to 1 per cent

OTTAWA –The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 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 but remains uneven, balancing strong activity in emerging market economies with weak growth in some advanced economies. In the United States, the recovery in private demand is being held back by high unemployment and recent indicators suggest a more muted recovery in the near term.

Economic activity in Canada was slightly softer in the second quarter than the Bank had expected, although consumption and investment have evolved largely as anticipated.  Going forward, consumption growth is expected to remain solid and business investment to rise strongly. Both are being supported by accommodative credit conditions, which have eased in recent weeks mainly owing to sharp declines in global bond yields.

The Bank now expects the economic recovery in Canada to be slightly more gradual than it had projected in its July Monetary Policy Report (MPR), largely reflecting a weaker profile for U.S. activity. Inflation in Canada has been broadly in line with the Bank’s expectations and its dynamics are essentially unchanged.

Against this backdrop, the Bank decided to increase its target for the overnight rate to 1 per cent. As a result of monetary policy measures taken since April, financial conditions in Canada have tightened modestly but remain exceptionally stimulative. This is 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 in light of the unusual uncertainty surrounding the outlook.

Information note:
The next scheduled date for announcing the overnight rate target is 19 October 2010. 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 20 October 2010.

Canada’s finance minister is proposing legislation that would make it easier for businesses to negotiate mortgages terms with lenders.

Finance Minister Jim Flaherty wants to tweak the Interest Act to reflect companies in all shapes and sizes more favourably.

Under the act, only corporations and joint stock companies can negotiate with lenders the penalty for paying off a long-term mortgage sooner than agreed.

All other mortgage holders must pay a mandatory penalty of three months of interest when they pre-pay the full amount of the mortgage.

“Some lenders are reluctant to provide financing to businesses not structured as corporations, such as partnerships or trusts, since the pre-payment penalty is limited to three months of interest,” Flaherty said in a release Monday.

“The government is proposing to modernize the Interest Act by broadening the list of business entities that can negotiate their own penalty. This will give all businesses an equal opportunity to get long-term financing.”

Flaherty has issued a consultation paper on the matter, inviting all stakeholders to comment.

TORONTO, Aug. 18 /CNW/ – Continuing weakness in the U.S. economy may force the Bank of Canada to put interest rate hikes on hold after September, notes a new report from CIBC World Markets Inc.

“North America’s story is again darkening,” says CIBC’s Chief Economist Avery Shenfeld in the latest Global Positioning Strategy report. “We were looking for a material second-half slowdown for the U.S. but as it turns out, it’s already happened.”

Economic growth stateside from April to June is being revised downward, Mr. Shenfeld notes, and key indicators are pointing to growth that will be slower than anticipated by U.S. monetary policy makers.

And still ahead is a “further fiscal belt tightening in 2011 that will have to be softened, and accompanied by quantitative easing, if the U.S. is to stay out of recession in early 2011 and get back to potential growth by the end of that year.

“Forget about any rates hikes from the U.S. Federal Reserve until sometime in 2012 at the earliest.”

While Canada is in much better economic shape – it leads the U.S., Eurozone, U.K. and Japan in first-half growth and has a record gap over the U.S. in the share of working age population holding a job – it “cannot move all the way to normalized interest rates while the U.S. Federal Reserve is still on hold,” Mr. Shenfeld contends.

For starters, an interest rate differential of 300-400 basis points would take the loonie “substantially stronger” creating additional headwinds for Canadian economic growth, says Mr. Shenfeld.

Furthermore, the “external environment will be one of less-than-normal growth as fiscal tightening bites in Europe and the U.S., and with our own upcoming fiscal tightening also hitting domestic demand, monetary policy might have to be set at stimulative levels to allow the economy to return to potential and remain there. To keep moving at all, you have to step on the gas if your car is trying to roll up a steep incline.”

Mr. Shenfeld doubts that the Bank of Canada “has been shocked enough to forestall a rate hike in September” but his forecast that Canadian growth in Q2 and Q3 will fall below the BoC’s outlook will likely warrant a rethinking in the October Monetary Policy Report and in the months to follow.

The report also notes that there are limits to how far the Bank of Canada can diverge from the U.S. Federal Reserve without later regretting it. Episodes in recent years in which rate overnight rates were 2 per cent or more above those stateside resulted in sagging or sacrificed growth. These are “lessons learned, we hope,” says Mr. Shenfeld.

“Since a hike at every rate setting date through 2011 would take rates substantially higher than 2%, a pause is coming on the road to tightening.”

As a result of the dampened external growth outlook, Mr. Shenfeld has trimmed his call for rate hikes. He sees Canadian overnight rates going no higher than 2% next year as the U.S. Federal Reserve stays on hold.

A less hawkish monetary policy combined with a mixed outlook for commodity prices affected by slow global growth will also likely see the Canadian dollar roughly two cents weaker than earlier forecast over the same horizon, adds Mr. Shenfeld.

The complete CIBC World Markets report is available at: http://research.cibcwm.com/economic_public/download/gps_aug10.pdf

10 things to check before you buy a new home

The process of buying a new home—especially if it’s your first time—is incredibly intimidating. And while there are certain things you may know you’re going to want to change upon moving in (like paint colors or retiling), if you’ve never gone through this before you may not know what else to watch out for before you sign the dotted line (just because a home is gorgeous on the outside, it’s not impervious to having a bunch of costly-to-fix issues that go way beyond the surface—remember The Money Pit?). Here, via apartmenttherapy.com, a handy checklist of all kinds of things a potential buyer should be mindful of:

1. Check the drains to make sure they’re not backed-up. To test, do a load of laundry, fill up the tub and sinks, and try to drain them all at the same time.

2. Open all the windows all the way to make sure they’re able to open and shut completely—fixing them is not only a pain, but a financial drain.

3. Turn on all the faucets and make sure they’re in working order.

4. Light a fire in the fireplace. While cleaning them is pretty easy (just call a professional chimney sweeper), you should also make sure they draft correctly.

5. Taste the water. Even if the city you live in has great water, if you’ve got old pipes, they may send out debris into yours.

6. Flush the toilets. Make sure that the toilets are able to flush toilet paper.

7. Open the electrical panel. Watch out for loose wires or ones that simply don’t connect to anything, which could be a sign of live wires inside!

8. Turn on the heat/air. Not only do you want to ensure they turn out, but check to see if they heat/cool to their designated temperatures.

9. Pull the carpets back. Peel away a corner of the carpet to verify what’s underneath (often there’s hardwood under there) and to make sure it’s not mildewing.

10. Basement moisture. Check for signs of dampness, not just on the walls, but near things like dehumidifiers, which suck water out of the air.

http://ca.lifestyle.yahoo.com/home-garden/articles/archive/yahoolifestyle/yahoolifestyle-10_things_to_check_before_you_buy_a_new_home

Where to buy: Top 10 cities

Jesse Kinos-Goodin, Financial Post · Sunday, Aug. 8, 2010

When investing in real estate, sometimes it’s necessary to look beyond your own backyard. The Real Estate Investment Network (REIN), a national organization of investors, has compiled what it says are the top 10 Canadian cities in which to invest. Few are major cities and some are surprising. Don Campbell, president of REIN, as well as one of the researchers on the study, says the results are based on factors such as planned transportation improvements, or if the area’s average income, population growth and job growth are increasing faster than the provincial average.

Oddly enough, nothing east of Ontario shows up on the list, and while Mr. Campbell says cities like Halifax, Saint John and Moncton “still provide decent returns,” the top cities are ones that will outperform the national average between 2010 and 2015.

1. Calgary

Calgary is “poised to outperform the average by a wide margin,” says Mr. Campbell, making it the top-ranked city.

After two years of declining average resale housing prices, the Canada Mortgage and Housing Corp. has predicted they will increase year-over-year in 2010.

The REIN report credits the downturn to a much-needed correction, and that it was “economically impossible for the [Calgary] market to continue at the pace at which it was heading.” But now that it is coming out of the recession, along with economies elsewhere, Calgary’s strengths in producing food, fuel and fertilizer will boost its growth.

“Calgary is in a unique economic and geographic position to take advantage of the direct and indirect jobs this increase in demand will create,” says Mr. Campbell, who adds that with strong in-migration and renewed affordability, the city provides a good buying window for long-term investors.

2. Kitchener-Waterloo-Cambridge, Ont.

REIN refers to Canada’s Technology Triangle as the “economic Alberta of Ontario.” That means KWC is not only seen as the economic engine of the new Ontario economy, but also that it “will outperform all other major regions in eastern Canada,” Mr. Campbell says. For indicators, he points to job growth, student growth and a new light rapid-transit system.

3. Edmonton

Edmonton sits near the top of the report’s list because of its future potential. Calling it a “perennial overachieving market,” REIN says the city is a “growing market, [with] an increasing population, and a forward-looking leadership.”

It will also be the main benefactor of energy development in Western Canada, says Mr. Campbell, resulting in a “very affordable, strong rental market with strong in-migration from across Canada.” Major infrastructure improvements, such as the ring road and LRT expansion, will be key.

4. Surrey, B.C.

British Columbia’s second-largest city is growing so fast it could become even bigger than Vancouver.

“Just a decade ago, it was known as the punch line to many a joke,” Mr. Campbell says. But with two border crossings to the United States, links to five major highways, deep sea docks and four railways, Surrey is a prime location to do business, he says.

Although there may be a strong rental market, it’s a city that requires a closer examination, taking “neighbourhoods and even the street’s characteristics into consideration when deciding where to purchase,” REIN warns.

5. Maple Ridge & Pitt Meadows, B.C.

The Translink and Gateway Project infrastructure improvements have made these B.C. towns the “most accessible regions in [Vancouver’s] Lower Mainland,” the report says. They’ve come a long way, Mr. Campbell says. The unofficial motto of Maple Ridge used to be “You can’t get there from here.” As a result of poor infrastructure in the past, property values have been historically low in this area. But with the improvements, it’s predicted an additional 400 business will move into the area, REIN says, improving the demand for both residential and commercial property.

6. Hamilton, Ont.

“The perception no longer matches the reality of Hamilton,” Mr. Campbell says. “The city’s leadership, as well as local business owners, have transformed what was once a rough-and-tumble steel town to a city with economic vitality, diversification and population growth.” REIN applauds Hamilton’s leadership as being innovative in revitalizing the city, adding Hamilton

“has beaten its overall building permit value for the second year in a row.”

7. St. Albert, Alta.

“Long thought of as a satellite of Edmonton, St. Albert is poised to be the biggest benefactor of the new Edmonton Ring Road,” says Mr. Campbell, who adds that as the transportation access improvement is completed, the city will begin to experience “a flood of not only new residents, but also the relocation of companies and jobs into town.” Other attributes of the city include consistently low vacancy rates, high rents and strong property value increases. It also helps that the city has “turned itself into a major retail centre for the northern region while adding to its industrial and commercial job base,” REIN says.

8. Barrie & Orillia, Ont.

These two cities have been shedding the perception of being just cottage country and have become a “hot bed for growth,” Mr. Campbell says. University and college expansion campuses have brought new life to the area, and the addition of Go Train access has made them viable commuter towns for the Greater Toronto Area, REIN says. For investors, this all adds up to healthy property appreciation, a respectable vacancy rate of 4.7% and the youngest residents on average in a given Census Metropolitan Area (CMA).

9. Red Deer, Alta.

In the centre of the Edmonton-Calgary corridor, Red Deer is not close to either. But REIN suggests reviewing city plans, as there will be a lot of hidden opportunities. “The whole central Alberta region has witnessed very strong population and job growth, as well as a real estate market that has continually outperformed most other regions of the country,” Mr. Campbell says. He adds that with a continually expanding industrial and commercial job base, Red Deer is in a good position to “take advantage of the inevitable growth in demand for food, fuel and fertilizer.”

10. Winnipeg

Winnipeg is often left off the real estate investment radar, but Mr. Campbell says it’s a good city for “consistent economic performance — not too high during booms and not too low during downturns.” But people should stick to buying top-quality properties. REIN also notes that housing prices, after dipping last year, are back to double-digit increases, which could “lead to an influx of inventory on the market.” But with one of the lowest vacancy rates in the country, at 1.2%, there is room for movement. Another positive factor for the city is international immigration is expected to increase under the provincial nominee program being undertaken by the government.
Read more: http://www.financialpost.com/news/Where+cities/3369599/story.html#ixzz0w4mDdnyK

According to a recent survey sponsored by mortgage insurer Genworth Financial Canada, homeowners are in the best shape when it comes to financial fitness in Canada.

Sixty-five percent of homeowners pay off their credit card balances each month (versus 48% of non-homeowners). Furthermore, a quarter of those homeowners with mortgages have managed to make a lump-sum payment or accelerate their mortgage payments in the past year.

Nearly half (44%) of homeowners were able to pay all of their bills and save some money in the past year, suggesting a strong correlation between homeownership and financial fitness.

The Financial Fitness survey was conducted in conjunction with the Canadian Association of Credit Counselling Services. Compared to the same survey undertaken in 2007 when the economy was booming, Canadians are even more likely now to say their financial fitness is good (55% versus 50%).

Other key survey findings show:

* Mortgage holders more likely to have accelerated or made a lump-sum payment include those with incomes $75-$99k (32%) or $100k+ (30%), and women more than men (26% versus 21%).

* 49% of homeowners made down payments of 20% or more on their purchase

* 13% of homeowners say they are in great financial shape

* 12% of homeowners say they have requested a credit report within the past 12 months

* 59% of Canadians say they pay their credit cards in full each month

* 39% of Canadians say that in the past year they were able to pay their bills and save some money. A further 41% were able to pay their bills but not save

* First-time buyers/those who intend to buy a home as well as those requiring mortgage insurance are more likely to have spoken to a financial planner/coach in the past 12 months

Selecting the mortgage term that is right for you can be a challenging proposition for even the savviest of homebuyers, as terms typically range from six months up to 10 years.

By understanding mortgage terms and what they mean in dollars and sense, you can save the most money and choose the term that is best suited to your specific needs.

The first consideration when comparing various mortgage terms is to understand that a longer term generally means a higher corresponding interest rate. And, a shorter term generally means a lower corresponding interest rate. While this generalization may lead you to believe that a shorter term is always the preferred option, this is not always the case. Sometimes there are other factors

If paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer mortgage term, such as five or 10 years, so that you can ensure that you will be able to afford your mortgage payments should interest rates increase.

By the end of a five- or 10-year mortgage term, most buyers are in a better financial situation, have a lower outstanding principal balance and, should interest rates have risen throughout the course of their term, will be able to afford higher mortgage payments.

If you are shopping for a mortgage for an investment property, you will likely want to consider choosing a longer mortgage term

As well, if you know you will not be staying in the same home for the next five or 10 years, opting for a shorter term can save you significant fees when it comes to early payout penalties.