Experts best at brokering mortgage

Denise Deveau, Postmedia News · Mar. 30, 2011 |

Cheryl Hutton and Aaron Coates always thought getting a mortgage would be a challenge. But within 18 days of visiting a mortgage broker, they were able to close a deal on a new townhouse in Calgary without a hitch.

Now in their early thirties, both have careers in the theatre, something Ms. Hutton says has been a bit of a sticking point with banks. “In our industry we never fit the paperwork guidelines ‘for the banks.’ For some reason, people don’t think we pay our bills.”

Although it was their first home purchase, Ms. Hutton says it was surprising how easy the whole process was once they had someone who could walk them through it. “He sat us down, told us what our options were, showed us that it was possible and explained all the steps we needed to take. If it wasn’t for him, we may not have made the leap.”

Sorting through a mortgage process and negotiating rates can be overwhelming for first-time and seasoned home buyers alike. That’s why people such as Ms. Hutton and Mr. Coates turn to brokers to do the legwork for them.

Yet mortgage brokers will tell you that a good portion of home buyers out there don’t really understand what they do. “Part of the challenge we have in our world is that people aren’t really sure what a mortgage broker is,” says Gary Siegle, regional manager for Invis Inc., a mortgage brokerage firm in Calgary.

Brokers should not be confused with “rovers,” mortgage specialists attached to a specific financial institution who visit customers outside of banking hours, Mr. Siegle explains.

“They only deal with that bank’s product. A broker, however, is an intermediary whose job is to make a match between a lender and a borrower. We represent the individual, not the bank.”

About 30% of mortgages in Canada are done through a broker, according to Perry Quinton, vice-president, marketing, for Investor Education Fund, a Toronto-based non-profit financial information service.

“The reason more people don’t know about them is because the banks are so visible. It’s easy to gravitate to them when you have your savings accounts, credit cards and investments there already,” Ms. Quinton says.

Going for the comfort factor could cost you however, she adds. “A broker has access to different lenders including banks, and can shop rates and features. A half per-cent may not sound like much but that could make a difference of about $20,000 for a $250,000 mortgage amortized over 25 years. Any little bit helps.”

Mr. Siegle confirms that shopping around can deliver significant savings.

“Let’s take today’s average posted rate of 5.44%, and you get a point off that at your bank. So you think you just got a really great deal. But the vast majority of rates we deal with as brokers would be another 30 basis points lower -around 4.14%. And if you look at preferred deals that don’t offer features such as prepayment privileges, it can get as low as 3.89%. That’s another 25 basis points below what’s generally available.”

The reason for that is simple, he says. “We offer wholesale rates, banks offer retail.”

For anyone considering a broker, Ms. Quinton advises people to do a bit of groundwork first if they have the time.

“It helps to educate yourself about options and what you can afford. Look at all your living expenses, including student loans and credit card debt. Chances are you are understating those.”

Another thing to look into is the different types of available mortgages and features, including interest rates, payment frequency, amortization, cash-back programs and the ability to make lump sum payments.

“Knowing these things before you go in can save you a lot of money,” she adds.

Any mortgage broker you choose should always meet the right licensing and education requirements, so be sure to check their registration.

If you’re not completely prepared, however, that shouldn’t be a concern when working with a good mortgage broker, Mr. Siegle says.

“After all, mortgages are pretty much all we do. So even if you come in cold, good brokers will walk you through the process and ask all sorts of questions,” Mr. Siegle notes.

“You just need to be prepared to answer them openly and honestly so they can get you the best deal possible.”

Calgary ranks third on global prosperity score card

Calgary ranks third on global prosperity score card: Toronto Board of Trade

Calgary is back near the top of a score card that ranks prosperity in a number of cities around the world, besting all other Canadian metros on the list.

Strong population growth, a young workforce, disposable income, affordable housing and clean air helped boost the city to the number three spot on the list behind Paris and San Francisco.

That’s up from last year’s fifth place ranking, but below its first place finish in 2009, the first time the Toronto Board of Trade compiled results, using information from the Conference Board of Canada — including commute time, income equality, gross domestic product and productivity — to compare 24 major cities.

However, Calgary did score low in some key areas, including transportation.

“I think it speaks to Calgary’s more dynamic economy, more dynamic than we had in the ‘80s when it took us years to crawl out of the recession,” Todd Hirsch, senior economist at ATB Financial, said of the city’s post-recession recovery. “What you’d really hate is to be extremely high in some (indicators) and at the bottom on others.

“You’d rather be really good on a number of indicators and get an overall ranking quite high, like Calgary got.”

The Toronto board of Trade said “Calgary’s success comes from a combination of solid fundamentals in both (economy and labour attractiveness), not just from a robust economy. With the fastest population growth of all metros, Calgary proved that it was an attractive place for people seeking work.

“Calgary’s housing affordability and clean air provide further evidence of its livability.”

Elsbeth Mehrer, director of research, workforce and strategy for Calgary Economic Development, says the city’s ranking shows it should be a choice destination for both companies and people.

“To be able to put the city in the context of major global cities like Paris and San Francisco, that’s an important frame around our positioning,” she said. “I think that helps to elevate the conversation to a different level.

“If you’re comparing yourselves with communities of this stature, now it’s a very different conversation in terms of the types of target companies you’re trying to attract, the types of investment.”

On the score card Calgary ranked third overall, and third for being attractive to workers (behind Paris and London).

The ability to attract labour is important, said Chamber of Commerce chief economist Ben Brunnen, because “the labour shortage, labour retention issue is starting to emerge again. Positioning Calgary as a destination for young talent is a fundamental first step for long-term prosperity.”

Calgary placed sixth if only the economy was looked at (behind San Francisco, Boston, Seattle, Dallas and New York).

The Toronto Board of Trade wrote that Calgary overcame “near-bottom rankings on venture capital investment, market size, and IPOs, with first or second-place results on income growth, unemployment rate, residential building permit growth and GDP growth” to get to that sixth spot.

Calgary’s average office rents also put them in the top half of the rankings, in that they’re cheaper than more than 50 per cent of the list.

In the first three months of 2011, according to CB Richard Ellis, Calgary’s office vacancy fell to 12 per cent from 15 per cent compared to the same period a year before. Regional managing director for Alberta Greg Kwong said in a release that given the amount of office space coming onto the Calgary market, the drop is “amazing. This is a testament to how resilient Calgary’s office market has become.”

However, for all the good news, the city rated an overall 13th place in the transportation category.

That factored in an average commute time of 67 minutes, longer than Los Angeles, Chicago and Berlin, but better than Toronto’s 80 minutes, and a score in the bottom half when public transit ridership was evaluated.

“It points out some of the warts, too,” Hirsch said of the score card. “It’s good to be made aware of this is where we rank in global cities when it comes to commute times. A 60-minute commute time is not normal, this not just being part of a big city.

“This is a problem. Who knows where we would be if we could solve some of those transportation problems.”

Calgary also ranked lower in areas that included productivity and venture capital, which Mehrer said are on-going issues the city’s business community knows need work.

“It reaffirms what we know needs to be a focus,” she said.

© Copyright (c) The Calgary Herald

Calgary house prices expected to increase

Calgary house prices expected to increase

Local market classified as balanced

CALGARY — Short-term year-over-year price growth is expected to be in the five to seven per cent range for Calgary, according to the Conference Board of Canada.

In releasing its monthly Metro Resale Index on Wednesday, the board said Calgary’s real estate market is currently classified as being under balanced conditions.

In February, the average residential resale price rose to $406,216, up from $401,743 the previous month and $394,850 in February 2010.

The board also said that sales, on a seasonally-adjusted annual basis, were up by 6.1 per cent in Calgary to 23,784 following a 2.2 per cent hike in January to 22,416. But that is still down from 23,820 in February 2010.

“It’s a reasonably balanced market. That’s what we’re seeing,” saids Robin Wiebe, senior economist with the board. “Sales are on the upswing. They rose six per cent in February from January and that builds on a two per cent growth the month before. And that’s starting to eat away at the stock of listings.

“Sales are bouncing back from a bit of a tough spot later in 2010. They’re coming back . . . There seems to be a little bit of momentum building in the Calgary market which is why we are forecasting a decent price outlook.”

The sales to new listings ratio in Calgary increased to 0.558 from 0.547 in January and 0.531 in February 2010.

The board also said that new listings were 46,812 in February on a seasonally-adjusted annual basis compared with 44,748 the previous month and 48,576 a year ago.

“Over the last couple of months, we’ve definitely seen sales pick up,” said Dan Sumner, economist with ATB Financial in Calgary. “I still think all in all sales aren’t really strong. We are seeing kind of a recovery from really low levels.

“In Calgary, it’s been stronger than other areas of the province. The Calgary resale market has been better than most of the rest of Alberta but it’s still nothing to get too excited about.”

Sumner said preliminary data indicates that March “has not been a blockbuster month” for MLS sales in the city.

In its Metro Resale Index, the board classified Saskatoon, Gatineau, Montreal, Quebec, Sherbrooke, Trois-Rivieres and Saguenay as having short-term price growth expectations in the seven per cent and higher range.

Victoria, Vancouver, Fraser Valley, Edmonton, Regina, Winnipeg, Halifax and Newfoundland joined Calgary in the five to seven per cent range followed by Thunder Bay, Sudbury, Hamilton, St. Catharines, Kitchener, Kingston, Ottawa, and Saint John in the three to five per cent range.

Toronto, Oshawa, London and Windsor can expect short-term year-over-year price growth of zero to three per cent.

© Copyright (c) The Calgary Herald

Lower Canadian Mortgage Rates – should have happened a month ago

Here is some bank-spin b.s. in full display. Bank mortgage rates should have come down 3 weeks or a month ago like the broker rates did. Banks intentionally left their rates higher to keep their profits up. So it is supposed to be a big deal now that the Big 5 banks have a 5 year at 4.09% when we have been at 3.89% for the last month?

Always use a mortgage broker to take care of your interests! And the banks pay us so there are normally no fees to you for our services!

Global instability leads to lower mortgage rates in Canada

By | 16/03/2011 9:43:00 AM 

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Global instability, highlighted by turmoil in Libya and Japan, has caused Canadian banks to drop their mortgage rates.

Just as changes to mortgage rules coming into effect Friday were likely to make borrowing for a new home more difficult, the latest drop in interest rates has helped potential new borrowers in the short term find a more affordable price.

The Royal Bank of Canada (RBC), along with the Bank of Montreal, slashed its rates on various fixed rate mortgages. Other lenders are also expected to follow suit.

After heightened confidence led to mortgage rate increases last month, banks are now following the cue of declining bond rates, according to the Globe and Mail.

For the RBC, the country’s largest bank, its residential mortgage special fixed rate was unchanged at 3.2% for one-year closed mortgages, but its four-year special fixed rate for closed mortgages was reduced 0.15% to a rate of 4.19%.

The same rate, 4.19%, now applies to five-year special fixed rate closed mortgages, which are down 0.1%, while 5.1% applies to a seven-year closed special fixed rate, which is down 0.2%.

Prime to be at 4% by 2012

BoC rate to reach two per cent by year end: RBC

By | 11/03/2011 2:00:00 PM | 0 comments

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As part of its economic outlook for 2011, RBC projects that the Bank of Canada overnight rate will rise from one per cent to two per cent by year-end.

The gradual pace of rate increases combined with anchored inflation expectations will result in less upward pressure on long-term interest rates, added the Economic Outlook released by RBC Economics.

On the back of solid net exports in the final quarter of 2010, Canada’s economy finished the year on a high note recording stronger than expected gains. The biggest support for the economy came from net exports, which added a full 4.5 percentage points to the quarterly growth rate. Continued consumer spending also played a vital role in driving overall GDP, marking the fastest increase in spending since late 2007.

RBC expects real GDP to increase at 3.2 per cent in 2011, as U.S. demand for Canadian exports increases. Growth in 2012 is forecast to rise by 3.1 per cent.

The report also stated labour market conditions will remain firm in 2011and disposable income is expected to post a 4.1 per cent gain that will provide continued support to consumer spending.

“Consumers’ earlier confidence in taking on increasing amounts of debt was based on a combination of lower interest rates, a strengthening labour market and a 4.6 per cent rise in disposable income,” explained Craig Wright, senior vice-president and chief economist, RBC Wright. “An expected slowing in the housing market, rising interest rates and tightening mortgage lending standards all add up to a levelling out in consumer debt relative to income.”

At the provincial level, RBC forecasts Saskatchewan will lead the country in growth this year. Alberta is expected to return to a top three placing, closely trailing growth in Newfoundland and Labrador. Ontario and Manitoba will hover close to the national average while both Quebec and British Columbia will fall slightly below. Nova Scotia, New Brunswick and Prince Edward Island are still projected to lag behind at the lower end of the scale for 2011.

TD Canada Trust releases 2011 Home Buyers Report

TORONTO (March 7, 2011) – When homebuyers browse the listings and hit the open houses this spring, will they be looking for brand-new homes that won’t need any work or fixer-uppers that they can renovate to suit their taste?   According to the 2011 TD Canada Trust Home Buyers Report, Canadians are divided with men and women sitting on opposite sides of the fence.

Half of Canadians would prefer a new home because everything will work perfectly (25%) and it hasn’t been lived in before (24%), while the other half prefer older homes, which they feel offer better quality (34%) or have more character (17%).   The TD Canada Trust Home Buyers Report found that men are more likely than women to prefer a fixer-upper because it is more affordable (14% versus 8%) and because they can renovate to their taste (37% versus 29%).

“If you are willing to do the renovations or upgrades, buying a home that needs some work can give you the ability to transform the space into your dream home,” says Farhaneh Haque, Regional Manager, Mobile Mortgage Specialists, TD Canada Trust. “However, if you decide to go the renovation route, it’s important to understand the costs of the upgrades you intend to make and factor those in when deciding on the price range for a home that is realistic for you.”

The most important factors in deciding what home to buy:

Whether it’s brand new or older with charm, Canadians say the most important consideration when buying a home is cost (97%).  Women are more likely to say this is a very important consideration (82% versus 70% of men).  Other important factors are features of the home (94%), size (93%), security and safety (92%) and location (91%).

“When house-hunting there are some factors, like the features of the home, which can be adjusted once you’ve made your purchase. Other factors, like the location, cannot be changed.  Finding the right home is about getting the right balance – and at a price you can afford,” says Haque.   “Canadians wisely say that that cost is the number one consideration for a home purchase, evidence that Canadians realize that in order to truly be comfortable in their home, they need to comfortably be able to afford it!”

About the Home Buyers Report:

TD Canada Trust commissioned Environics Research Group to conduct a custom online survey of Canadians who had either purchased a home within the last two years or intend to purchase one in the next two years.  Between December 22 – 29, 2010, a total of 1,001 interviews were completed.

Reno coach –

What a great idea this is. Note below that the coach actually recommended that they move and not try to renovate.

Reno coach keeps projects in the ballpark

Planning her first major home renovation in the summer of 2009, Tina Davies felt like she was awaiting her first baby: excited, nervous and not sure what to expect.

The project would plunge the Toronto makeup artist’s household into chaos for five months, but once it was done, her family of three would have a new kitchen and bathrooms, updated plumbing and electrical systems and upgrades to the entire interior, from new floors to freshly plastered ceilings.

With $350,000 on the line, however, Ms. Davies wasn’t impressed by the vague quotes and sparse details being offered by the first three contractors she approached, whose contracts were so unprofessional, they looked as though they’d been drawn up “on paper napkins.”

Was this normal? She wasn’t sure. She’d never done this before.

“As a homeowner, you’re just really at the mercy of these contractors and you don’t know their language or what is the proper way to have something done,” Ms. Davies said. “You’re so overwhelmed and confused and you want to make sure you don’t do the wrong thing.”

She figured she needed help from someone knowledgeable and impartial, who understood how the industry worked. Then she heard about reno coaching, a relatively new service where, for $75-$100 an hour, a project manager would come to her house and help her draw up a budget and advise her whether her project was practical and affordable – think Mike Holmes meets Gail Vaz-Oxlade, but with the aim of preventing expensive mistakes.

The reno adviser she hired, Jay Charendoff of House Calls Project Management, “was really good about advising us about what to do before you get into it,” said Ms. Davies, adding that once she found a reputable contractor, he went through the contract line by line and highlighted problem areas.

“It’s just nice to know that there’s somebody on your side,” she said.

Mr. Charendoff, who has a degree in architecture and is a LEED-affiliated professional, launched his business four years ago and is among a handful of professionals offering reno advice in Canada.

It’s a service that is starting to catch on due to a new consumer awareness about the financial risks of renovating, says Carl Mascarenhas, president of eRenovate Inc. With the housing market cooling, he says, it’s no longer a given that property values will rise and homeowners will recoup their costs; they are more cautious now.

As with any new industry, Mr. Mascarenhas says it’s buyer beware when hiring a renovation adviser. As demand for the service increases, opportunists will emerge, he says. “There’s still a bit of caution for consumers to really weigh out the role the professional is playing and that they have the right credentials or experience to do so.”

Home renovations are big business in Canada. According to a survey by the Canada Mortgage and Housing Corp., Canadians spent $25.8-billion on home renovations in 2009, with the average project costing about $12,100. Of those 2.1 million households, 35 per cent said they went over budget.

“People don’t really know how much things are going to cost,” Mr. Charendoff says. “People sometimes have a general idea of what they want to do, but in this business, it’s really about the details.”

In addition to budgeting advice, Mr. Charendoff also looks at housing market conditions and gives homeowners straight talk if he thinks they are not making a good investment.

Such was the case for Karen Weinthall, who asked for advice while planning a major kitchen renovation on her 1920s Toronto home. After inspecting the property, Mr. Charendoff told Ms. Weinthall that her house, which was built on top of a steep hill, was slowly sinking into the ground.

He looked at the kitchen and looked at the floor and said you really are not going to be able to do that without a huge structural job. So I moved,” Ms. Weinthall said with a laugh.

“If we had just gone ahead and hired a contractor to do the kitchen, at what point in that proceeding would we have found out what a big problem it was?”

Mr. Charendoff says a reno adviser acts as a middleman between the homeowner and the contractor, whose main objective is sales. “The hat that I wear is really a different hat – it’s what advice and guidance can I offer to this owner that’s going to be a wise financial decision.”

Lisa Rapoport, a partner at Plant Architect Inc. in Toronto, is skeptical of the reno coaching trend and says any good designer or contractor will offer the same advice, and will be able to help clients find savings to match their budgets. “Just providing that kind of middleman service sounds like an extra cost, and I guess if you’re going to pay the extra cost, I’d rather put it into a good contractor,” she said.

Finding a good contractor requires a bit of homework, says Mr. Mascarenhas. He recommends consumers begin by doing some research on the CHMC and Better Business Bureau websites, and read consumer reviews on sites like and

For Ron Singer, hiring a reno adviser was certainly a wise financial decision. In the midst of constructing a $30,000 art studio for his wife, he began to have some doubts about whether the contractor was putting in adequate insulation. The adviser confirmed his doubts, and he was able to have the contractor fix the problem on the spot.

“As far as I’m concerned, hiring someone for a couple of hundred in order to ultimately save down the road in terms of either repairs or things that go wrong, is certainly worth it,” Mr. Singer said. “We now have without a doubt the best constructed, best insulated studio one can have.”

The pre-reno checklist

1. Know the rules. Building codes and local by-laws may limit what and how you renovate. There’s nothing worse than discovering the project you’ve painstakingly planned is not allowed. Talk to your municipal building department and find out about zoning and permits.

2. Know what’s possible. Your home’s heating, plumbing and electrical systems will also affect how you can renovate. For big projects, it’s wise to check with an architect, home inspector or contractor before you begin.

3. Create a budget. Doing a detailed financial analysis of your project in advance of the physical design allows you to evaluate your situation and study a variety of options well before you get to the construction stage. It’s a low-cost exercise that allows you to clarify your needs versus your wants.

4. Do the math. Get quotes from at least two reputable local renovators, architectural firms or material suppliers. Take the most reasonable quote and add 10 to 15 per cent for unexpected costs.

5. Spend wisely. If you need financing, you may be able to renegotiate your mortgage or apply for a personal loan to cover the cost of the reno. You may even be eligible for assistance, as some utilities and governments offer incentive programs for energy-efficiency upgrades.

Sources: Dianne Nice, CMHC, House Calls Project Management

‘Window closing’ on ultra-low mortgage rates

Essentially we are in artificially low interest rates and the government is expecting rates to come up to normal levels in the near future. Bond yields are continuing to put pressure on long term mortgage rates and we will continue to see the rates moving upward this year. The government is also trying to make it more difficult for individuals to qualify for insured mortgages. This article, from the Financial Post, speculates rates will increase rates by May.

Enjoy the Read!

Amid the noise of volatile-but-improving economic indicators, mortgage rate hikes are likely to repeat like a chorus in the coming months.

Canadian banks are raising interest rates on mortgages, marking the beginning of a trend as they correlate with rising bond yields and expected monetary tightening.

That’s making a strong case for borrowers to lock into fixed rates before it’s too late, said Benjamin Tal, deputy chief economist with CIBC World Markets. “The window is closing.”

TD Canada Trust and CIBC both announced Monday hikes to their residential mortgage rates, the first increases since changes to the rules of borrowing were announced by the federal government last month. The other big banks where expected to follow the moves shortly.

Effective Feb. 8, the interest rate on the banks’ benchmark five-year closed fixed rate mortgage will increase 25 basis points to 5.44%. The country’s other major lenders are expected to soon follow suit.

Toronto mortgage broker Paula Roberts said rising borrowing costs will compel more of her clients to abandon ultra-low variable rates in favour of higher, fixed-rate mortgages.

That can be a tough decision for borrowers to accept higher payments, but not one that should strain a mortgagee’s finances, she said.

“If you can’t afford [your payments] … that’s a problem,” Ms. Roberts said. “That’s why the government has changed the rules.”

In two stages over the past year the federal government announced changes to the conditions of mortgage lending — shortening the maximum amortization from 35 years to 30 years and requiring borrowers to qualify for a fixed-rate plan, even if they are opting for a variable rate.

Many who only qualify under the old rules, however, will try to secure mortgages before the shorter maximum amortization periods come into effect next month, Ms. Roberts said.

“There are going to be a lot of people that will enter into their agreements by March 18.”

Much of the momentum in mortgage rates can be attributed to a bond selloff and rising yields across the board. That effect is partly a reflection of building global inflationary pressures as well as a global economy that is proving more robust than expected.

“In my opinion, the bond market will not be the place to be over the next six months, and if that’s the case, you will see mortgage rates continue to rise,” Mr. Tal said.

In addition, anticipation of increases to the Bank of Canada’s benchmark lending rates is building, also contributing to rising yields, which puts pressure on fixed-income mortgages.

If there was any lingering doubt that the Bank will soon raise rates, last week’s jobs report erased them. The report showed Canada added four times more jobs than expected in January.

“[It] creates a fairly powerful story for the Bank of Canada, which is clearly concerned on the domestic front,” said Camilla Sutton, chief currency strategist at the Bank of Nova Scotia. “I think there’s a material change.”

So do investors. The probability that the central bank will boost its key policy rate by May, as measured by overnight index swaps, jumped to almost 75% after the jobs data.

Source: Financial Post

Info your banks would prefer you didn’t know

What your Bank doesn’t want you to know

Monday, 28 February 2011 22:47
A list of some pertinent information your banks would prefer you didn’t know:

  • An extensive study recently conducted by the Bank of Canada (BoC) concluded that Canadians with the best mortgage rates tend to be those who use brokers. They found that brokers significantly lower “search costs” and one average reduce rates by 17.5 basis points. That represents $1,670 worth of savings on interest on a $200,000 mortgage over 5 years.
  • In another recent study by the Bank of Canada it was found that banks are slow to pass on cuts in interest rates onto their customers and of the 6 biggest banks in Canada “five of the six largest banks adjust rates upward more quickly when there are upward cost pressures than downward when costs fall”.
  • In a report done following the announcement of the Bank of Canada’s decision to lower amortization and to limit Canadians ability to refinance Moody’s concluded that these reforms would be “credit positive for Canada’s banking system and its bondholders.” The report goes on to forewarn that these new measures will most likely see an increase in unsecured lines of credit, a facet of banking which generates higher interest rates and therefore far greater profits for the banks.
  • A warning to our customers: TD and some other banks are now offering the opportunity to register the collateral in their property for an amount of up to 125% of the approved principal amount of the mortgage. While this may seem uncharacteristic altruistic on the banks part clients should be ware that taking such an action would most likely leave you unable to refinance your mortgage or shop your mortgage around with other lenders. This gives TD and the other banks an immense advantage when it comes to negotiating a refinance.