Get your RRSP deduction & use it for down payment !! A legal loophole.
If you know you are buying your first home in the next 90 days, you can make a $25,000 RRSP contribution or $50,000 for two people. That means a big refund in April. You then withdraw the $25,000 or $50,000 to pay for that initial home’s down payment.
- Most people have the RRSP room to make a contribution. If you are buying a house by June and you have the down payment in cash, you can make the contribution to get the tax return.
- The “catch” is the contribution normally has to be in the plan for 90 days before you can take it out.
SUMMER = when interest rates are going to rise!!!
Hot off of the press – below the Bank of Canada expects mortgage rates to rise in the summer of 2014 !!!
Warren buffet said everyone knows what is going to happen – [rates rising] – but no one knows when. Now we know, or at least we think we know. The article does a good job explaining that when the market rises, bonds have to pay more to get people to buy them and this increases the bond rates. Surprise, higher bond rates = higher mortgage rates.
So … pay off that debt, the line-of-credit, the credit cards, car loans and all the rest now while you can. And, think about locking in your mortgage if you are in a variable, and getting your docs in for a 120 day mortgage rate hold to be triggered when we find out from the banks that rates are going to rise. The 6 month clock is ticking.
Mark Herman
Long-term rates may rise soon, Stephen Poloz says
Bank of Canada governor predicts pressure on bond yields as Fed continues tapering
CBC News Posted: Jan 07, 2014 1:22 PM ET Last Updated: Jan 07, 2014 2:34 PM ET
Bank of Canada governor Stephen Poloz says he expects long-term interest rates to rise this summer as the U.S. Federal Reserve continues tapering, but he believes that would be a positive development.
Poloz, who was named Canada’s top central banker in May, said he believes that the U.S. Fed will continue to taper its bond-buying program throughout the year and that will create market pressure on bond yields.
“In the context of a firming global economy, especially the U.S., we’d expect to see some upward pressure in market interest rates, long-term rates in particular, where the quantitative easing has its primary effect,” Poloz said in an interview with Amanda Lang on CBC’s The Lang & O’Leary Exchange to be aired later today.
“So as a tapering occurs we might expect to see as we saw in the summer some increases in long-term rates, most of it seems to be priced in,” Poloz added.
The Fed reduced its buying of U.S. bonds to $75 billion this month, after a decision announced at its December meeting to reduce the stimulus program meant to keep interest rates low and grow the American economy.
The market handled the tapering announcement well, though it put pressure on bond yields, including Canadian bond yields, Poloz said. That would lead to an increase in long-term fixed mortgage rates, though the Bank of Canada would not increase its benchmark rate.
…
Poloz said he believes a long-term rate rise wouldn’t greatly hurt the Canadian economy as the housing market appears to be heading for a soft landing and consumer spending, which has kept the economy strong these last few years, must come down to bring down household debt levels.
The Bank of Canada kept its benchmark interest rate at one per cent in December, but there was an uptick in mortgage rates last summer after bond yields rose. …
Proof the Banks do not Love you – Big Bank (TD) does 25% car loan
On a daily basis people call me to talk mortgages and think that the big Canadian Bank loves them. It does not!
Only in Canada do we feel great if they rip us off – just give me the security blanket of a big bank – and I’ll gladly pay more of my hard-earned, post-tax dollars!
Below is an article that this is now happening in areas other than mortgages too. So …. do you still think that they love you OR do they love their shareholders?
http://www.cbc.ca/news/canada/british-columbia/couple-feel-robbed-by-25-interest-td-car-loan-1.2483342
Couple feel ‘robbed’ by 25% interest TD car loan
Dealership promised relief after a year but didn’t deliver, customers say
Calgary homes summary for 2013 and higher prices for 2014
Below is part of an article that notes all the in-bound migration supporting home prices …
Mark Herman
Calgary sales powered by economy
In Calgary, 16,302 single family homes changed hands, an eight per cent increase, and 4,007 condos were sold, a 14 per cent rise.
The benchmark price for a single-family home was $472,200 in December, an 8.6 per cent increase from the previous year.
“Two consecutive years of elevated levels of net migration, combined with an improving job outlook and confidence surrounding long-term economic prospects, supported the demand growth,” said Ann-Marie Lurie, chief economist for the Calgary Real Estate Board.
How strong the housing market remains in 2014 depends on interest rates.
Finance Minister Jim Flaherty warned in an interview Sunday that Canada will face global pressure to raise rates in 2014 as the U.S. Federal Reserve pulls back on its stimulus efforts and the U.S. economy rebounds.
Toronto and Calgary prices to continue upward
The Toronto Real Estate Board predicts price growth will continue to exceed inflation in 2014, largely because demand for low-rise houses continues to far outstrip supply.
… In Calgary, both prices and numbers of sales are expected to rise in 2014, the Calgary real estate board said, but the increases are not likely to be as steep as in 2013.
Property Tax assessments – add 6% to average home value
Your Calgary property tax assessment is probably going to go up by 6%.
Mark Herman
—
City assessment finds values of residential properties in Calgary up 6% between 2013 and 2014
By Jenna McMurray ,Calgary Sun
First posted: Friday, January 03, 2014 07:59 PM MST | Updated: Friday, January 03, 2014 08:08 PM MST
Property values for both single family homes and condos are up in Calgary, according to the city’s assessment findings.
Based on market value on July 1, 2013 and the physical condition as of Dec. 31, 2013, the numbers were released Friday, the same day property and business assessment notices were mailed out.
The typical residential property assessment change is 6% between 2013 and 2014.
“We have certainly seen a really strong increase and sort of a re-setting of some of those values back before some of the financial crisis happened,” said city assessor Nelson Karpa.
Though it was considered a strong year, the highest market value shift was 43% between 2006 and 2007, reports the city.
This year, about 96% of residential properties’ revenue neutral taxes — pre-2014 tax rate changes — will stay within ±10% of last year’s taxes.
Though the percentage of change varies from community to community, those in the 0% to -10% are most heavily clustered on Calgary’s west side, in the inner city and in the deep south, while the northeast is dense with neighbourhoods in the 0% to 10% range.
“You’ll generally find properties that are lower in value typically will increase faster than properties that are higher value,” said Karpa, adding there’s a larger pool of people able to afford the less expensive homes….
What does Calgary housing have left for price increases in 2014?
This is part of Garry Marr’s article where he looks at what prices may do in 2014.
Mark Herman
Investors in Toronto continue to bet on price appreciation in the face of negative cash flow, leaving them vulnerable to a market shift.
“If prices start to fall, we could see investors getting antsy and start to sell their units which could aggravate the market,” said Mr. Guatieri who nevertheless says the risk is low because a spike in rates seems unlikely.
If there is a market that can support further price gains it is Calgary which has been a major benefactor of net-immigration growth. BMO noted Alberta attracted 53,000 more people in the last year than it lost.
“It’s not not just the rapid population growth but a young population and those are your first-time buyers,” said Mr. Guatieri, noting Calgary had a correction back in 2008-2009 when average prices fell 16%.
But the idea of a crash in 2014? He just doesn’t see it happening.
“I see [price growth ] still and that’s definitely true in Calgary. …
here is a link to the rest of it: Republish Reprint: Garry Marr | December 17, 2013 | Last Updated: Dec 27 5:14 PM ET
Glut of job vacancies in Alberta; 52,800 vacancies – supports home prices
This is more great news and more data on why people will continue to move to Alberta and need places to live thereby supporting home prices.
Mark Herman
Job vacancies in Alberta outstrip available labour
Province led the nation in employment opportunities in September
CBC News Posted: Dec 30, 2013 5:50 AM MT Last Updated: Dec 30, 2013 5:50 AM MT
Alberta continued to be the best place in the country for job-seekers in the fall of 2013.
Businesses in the province reported 52,800 vacant jobs in the month of September. Statistics Canada says that is fewer than the previous year, but still the highest number in the country.
Bruce Graham, the CEO of Calgary Economic Development, said the city is experiencing its lowest unemployment rate since the recession of 2008.
“We’re still considered very much a bright spot in the economic landscape of North America.”
Graham said employers are having difficulty recruiting workers.
For the full article see: http://www.cbc.ca/news/canada/calgary/job-vacancies-in-alberta-outstrip-available-labour-1.2477566
Renewing your mortgage early? It may cost you
We get this question all the time – should I renew early. Do early mortgage renewals save or cost you money? Below Rob does a great job summarizing the situation.
ROBERT MCLISTER
Special to The Globe and Mail
A rate in the hand is worth two in the bush.
Many mortgage lenders want you to believe that rate certainty is worth paying a premium for. It is the justification, they say, for staying with them and renewing your mortgage early.
Early renewal features typically let you lock in a new rate two to four months ahead of when your mortgage is due to mature. Some lenders, like Bank of Nova Scotia, even let you renew up to six months in advance.
“Unless the consumer believes that interest rates are going to move up significantly prior to their ability to lock in, I fail to see a reason to do an early renewal with their existing lender,” says mortgage broker Calum Ross.
By locking in earlier, you minimize risk of adverse rate movements. But in return, you pay a premium to the best available rates, and you’ll lose all benefit if rates drop before your term is up.
Not surprisingly, Canada’s big lenders are advocates of renewing your mortgage in advance. “We think it’s a good idea to have some room to manoeuvre [when locking in a renewal rate],” says David Stafford, Scotiabank’s managing director of real estate secured lending. Having more time to make a decision is especially important if you plan to renew with your current lender, as more than 90 per cent of customers do at Scotiabank…
… On the other hand, if your lender were pitching a “one-time-only” opportunity to renew early at 3.59 per cent or more, that warrants more skepticism. A 0.30-percentage-point rate difference would tack on $3,500 of extra interest on a $250,000 five-year term. (Note: This 3.59-per-cent rate is an actual early renewal “special” currently being offered by at least one major bank.)
I use 0.30 of a percentage point in my example on purpose: That’s roughly how high today’s best fixed rates can increase until they’re equal to a good early renewal rate.
But it’s not that often that rates jump 0.30 of a percentage point in 90 days. Since the 1950s, fixed rates have risen 0.30 of a percentage point over a three-month span only 21 per cent of the time. Mind you, we experienced one such case last May to July when rates soared three-quarters of a percentage point.
Either way, if lenders can get you to commit early, they will. By law, banks have to send you a renewal notice at least 21 days before the end of your existing term. But they’ll often contact you well in advance of that, which reduces the odds of you shopping around.
Positioning early renewals as a “convenience” or risk mitigator is a strategy that frequently pays off for lenders. According to the Canadian Association of Accredited Mortgage Professionals, almost four out of 10 people who renew with the same lender do so at the original rate proposed by that lender. In other words, they don’t negotiate…
… “It is clear to me that consumers don’t do a good job at managing this part of their personal finances,” Mr. Ross adds, and that’s certainly true. If you want a great deal on your next mortgage renewal, one that could potentially save you thousands, remember that your lender’s first offer is seldom the best offer.
Robert McLister is the editor of CanadianMortgageTrends.com and a mortgage planner at VERICO intelliMortgage, a mortgage brokerage. You can also follow him on Twitter at @CdnMortgageNews.
Alberta still the fastest growing economy in Canada
Here is a bit about the post from last week where I noted that if Alberta were a country it would tie China for growth. No surprise Alberta hast he strongest economy in Canada. All this of course will support home prices while others move her for high quality jobs.
Mark Herman
Alberta Mortgage Broker
Alberta economy fastest growing in Canada
Forecast 3.4% annual growth in 2014
CALGARY – Alberta has been the largest contributor to economic growth in the country for three consecutive years, outpacing the much larger economies of Central Canada, says a new report released Monday by the Conference Board of Canada.
And the board’s Provincial Outlook: Autumn 2013 report said Alberta will have the fastest growing provincial economy in 2014 with 3.4 per cent year-over-year growth.
Alberta will have the fastest growing provincial economy in 2014.
“Alberta’s outlook is so exceedingly bright right now in the context of all the risks that we’re seeing going on in the world. We’re seeing Alberta coming off two years of exceedingly strong growth,” said Todd Crawford, senior economist with the board. “And 2013, 2014, we’re going to see GDP growth of 3.2 per cent, 3.4 per cent over the next two years.
“It’s exceedingly strong and of course that’s all being driven in large part by the strength of the energy sector in the province. That’s not something that’s going to, or has changed, for much of the past decade.”
…
“Alberta’s economy is definitely the most resilient in Canada,” said Ben Brunnen, an economic consultant in Calgary. “No other province has grown by above 3.5 per cent each year since 2010. Strong resource demand will continue to drive Alberta’s economy into 2014, fuelling population and job growth, construction activity, and increased household spending.
Prime says at 1%. Probably till 2015.
Don’t read this entire thing. It is a sample of the stuff we read to keep you up on what is happening in mortgage land. Summary: Prime is to stay the same till about 2015. That means variable rates are a good idea now that they are at Prime – .5%. Consumer Prime is 3% so that is then 2.5% for a mortgage.
Mark Herman, Calgary, Alberta Mortgage Broker.
Bank of Canada keeps key interest rate unchanged at one per cent
The Bank of Canada is keeping its trendsetting overnight interest rate at one per cent.
But markets did not read the statement as neutral, apparently interpreting the bank’s caution that “downside risks to inflation appear to be greater” as a signal governor Stephen Poloz intends to keep interest rates low for an extended period — likely well into 2015 — and raising the possibility, although slim, of a rate cut next year.
The Canadian dollar dropped 0.31 of a cent to 93.6 cents U.S. — its lowest level since May 2010 — on the announcement.
Analysts said that may be just what governor intended, as he continued to emphasize the need for Canada to pick up its exports performance before it can create self-sustaining growth. A weak currency helps exporters compete in foreign markets.
“I think it’s quite telling that since the last meeting we’ve got better than expected growth and lower than expected inflation, and what does the bank focus on but the lower than expected inflation,” noted Doug Porter, chief economist with BMO Capital Markets.
“I would almost think, if I didn’t know better, there’s a drive here to push the Canadian even lower. Let’s just say they are not unhappy about the weakness of the currency.”
In October, Poloz unexpectedly dropped a tightening bias that had been in place for 18 months, with the result that the loonie fell immediately almost a full cent.
The bank has repeatedly insisted it is not targeting a weak dollar, but Porter noted that other central banks, particularly in Australia and some other economies that lean on exports, have taken the direct route in openly talking their currencies down.
RBC economist Dawn Desjardins said the weakening loonie versus the U.S. greenback provides additional support for Canadian exporters to take advantage of what is expected to be a long-awaited rise in demand in the United States.
“Increased demand for exports will be a key factor in boosting the economy’s growth rate above its potential in 2014 and reducing the amount of excess capacity,” she said in a note to clients, while adding that the downside risks to inflation will ease.
Statistics Canada said Wednesday the country’s trade balance with the world came to a surplus of $75 million compared with a deficit of $303 million in September.
The shift came as imports slipped 1.2 per cent while exports decreased 0.3 per cent in October.
The central bank announcement Wednesday, read as a whole, suggested the bank has not materially changed its mind about the trend of the economy since October’s rather gloomy monetary policy report, despite the fact that third-quarter growth was far stronger than it estimated.
Porter said if the bank had said “ditto October” rather than emphasizing inflation Wednesday, it would have gotten no arguments from economists.
In its analysis, the central bank acknowledged third-quarter growth, which was reported at 2.7 per cent last month, was better than the 1.7 it had pencilled in in October, but essentially looked through the improvement.
It said underlying conditions were weaker than it appeared, noting sustainable growth requires a rotation from domestic activity — in particular housing and consumer spending — to more export growth and businesses spending. That has not happened yet, it said.
“Real GDP growth in the third quarter … was stronger than the bank was projecting, but its composition does not yet indicate a rebalancing towards exports and investment,” it said. “Business investment spending is up from previous low levels, but is still recovering more slowly than anticipated.”
It also said it was encouraged that U.S. growth as stronger than expected, although it pointed out that some of that was due to temporary factors also.
As Poloz emphasized in October and at recent appearances before House of Commons and Senate committees, the bank’s governing council is particularly focused on the low inflation rate, as an indicator of “significant excess supply” in the economy.
Heightened competition in the retail sector, a likely reference to new entrants in the Canadian market, such as the Target chain, and lower gas prices, are also playing a role in low inflationary pressures, the statement said.
Given the counter-balancing factors, the statement concluded that “on balance, the bank sees no reason to adjust its expectation of a gradual return to full production capacity around the end of 2015.”
That assessment is unlikely to significantly change the opinion of most economists and markets that Poloz expects to stay on the sidelines as far as adjusting interest rates throughout 2014, and that the first change will be a 25-basis point increase in the overnight rate sometime in 2015, with a slim chance of a rate cut if conditions deteriorate.
But that is not the bank’s baseline scenario. Particularly regarding the key U.S. economy, the statement notes that the improved data of late “are consistent with the bank’s view of a gathering momentum in the U.S. economy.”
Poloz appears sanguine about what is occurring in the Canadian housing market, even if some analysts fear a sharp correction. He took note of the recent resurgence in sales, but said it was “consistent with updated demographic data” and the view that some buyers jumped into the market to get ahead of expected mortgage rate increases.
“The bank continues to expect a soft landing in the housing market,” it said.
As for the global economy, it notes that it is expanding “at a modest rate” as expected.