ING now has the evil & dirty collateral mortgage – like TD and RBC
Also see the article from earlier this year about TD and RBC offering the collateral mortgage – which is an “IOU” for every single $ you have. (http://blog.markherman.ca/2011/05/09/why-you-do-not-want-a-collateral-mortgage-from-td-or-rbc/ ) Essentially YOU give them the right to sue YOU into bankruptcy if they need to repo your house. All other standard mortgages in Alberta only allow the bank to take the house back. Another reason to use a broker that knows what they are doing. Do you really want to put it all on the line for no reason?
ING Direct goes collateral charge
ING Direct will move this month to register all new mortgages as collateral charge, following on the heels of TD and other lenders.
The change is set to take effect on Dec. 10, 2011, with the bank to make a formal announcement to the broker channel later this week.
Canada’s economy surges ahead
There is good news out there for the Canadian economy and home buying. Here is some below.
Christine Dobby Nov 30, 2011 – 7:06 PM ET
The Canadian economy was not as bad as first feared in the third quarter. In fact, it was much better than almost anyone had hoped.
Fuelled by record monthly output from the oil-and-gas and mining sectors and overall export strength as temporary headwinds drifted away, third-quarter economic growth shot past expectations.
Statistics Canada said Wednesday that gross domestic product for the period rose by an annualized 3.5%, beating economists’ more moderate average prediction of 3.0% growth and the Bank of Canada’s forecast of 2.0%. In September alone, the economy grew 0.2% from August, falling just short of a 0.3% increase economists predicted.
The growth during the quarter comes as a welcome change after a revised 0.5% contraction in the second quarter.
Net exports staged a decided recovery as external pressures like the fallout from the Japanese natural disasters in March were no longer a factor.
But the devil is in the details as flagging domestic demand and weak business investment lurked beneath the report’s strong headline growth. A close look at the data has economists forecasting only modest growth — in the range of about 2% — in the coming quarters and predicting the Bank of Canada will remain on hold with interest rate hikes.
Here’s what stood out from Wednesday’s report:
EXPORTS
The driving force behind the uptick in GDP for the quarter, exports grew at an annualized rate of 14.4%, up from a pullback of 6.4% in the previous quarter.
Paul Ferley, assistant chief economist at Royal Bank of Canada, said that factors that weighed on Canadian exports in the second quarter — including the Japanese supply-chain disruptions as well as wildfires in Northern Alberta that led to shutdowns of oil sand production facilities — were resolved in Q3 and contributed to the increase.
But, he cautioned, “The boost to third-quarter growth provided by the reversal of these factors is not expected to continue to the same extent into the fourth quarter.”
As the global economy stalls and prospects for a quick turnaround look increasingly grim, economists predict it will could spoil the Canadian export party.
HOUSING
Canada’s unstoppable real estate market was another bright spot during the quarter. Residential construction shot up 10.9% annualized, following on comparatively modest increases of 1.6% in Q2 and 6.7% in Q1.
“After quarters of booming housing starts data, the residential construction bonanza finally translated into the GDP numbers,” said Emanuella Enenajor, economist at CIBC Economics.
The expansion in this sector came from all three major components including fees and transfer costs related to resale transactions, new housing construction and renovation activity.
“Continued strength in new-home sales has elicited more and more new housing construction, particularly in the high-rise condo market,” said David Madani, Canada economist for Capital Economics.
He noted that a reported increase in housing starts bodes well for further strong growth in this category next quarter.
CONSUMER SPENDING
Canadians slowed their spending on goods and services during the quarter, raising red flags for economists concerned about sluggish domestic demand.
Personal expenditures grew at an annualized rate of 1.2%, down from an expansion of 2.1% in the previous quarter.
“A slowing pace of income growth owing to tepid hiring and weaker wage dynamics will likely continue to put downward pressure on consumption activity,” Ms. Enenajor said.
BUSINESS INVESTMENT
Business investment actually contracted during the quarter with a decrease of 3.6% annualized, down from last quarter’s 14.6% increase.
“Weak business investment is a worry, as it has been an important source of growth since early 2010 and replaced personal spending as the main source of domestic growth,” said Charles St. Arnaud, an analyst with Nomura Global Economics.
He noted that this, coupled with the fact that personal spending is likely to remain weak, “Could mean that domestic demand stays weak over the next few quarters, as global uncertainty remains high.”
FINAL DOMESTIC DEMAND
The combined slowdown in consumer spending and business investment was a drag on final domestic demand, which rose only 0.9% in the third quarter, down from a 3.1% gain in Q2. The other component, government expenditures, was flat in the quarter as government stimulus spending continues to slow to a trickle.
“Note that the pace of final domestic demand has been consistently slowing since 2010, weakening from around 6% to its current sub-1% pace,” Ms. Enenajor said.
Rates, spreads and all the rest
This is an article that was sent to me. It is totally technical and I love it. This is the real reason behind what are the lowest rates we have ever seen.
It also explains why the days of Prime -.95% are GONE for what looks like a long time.
In between the lines is says rates are going to go up quickly as soon as there is a sniff of recovery.
—
In the last few days, RBC and Scotiabank have eliminated their advertised variable-rate discounts.
They’re now promoting variable mortgages at prime + 0.10%, twenty basis points more than their previous “special offers.”
Prime + 0.10% (i.e., 3.10%) is an interesting number. A few months ago consumers thought that fat variable-rate discounts were here to stay. Variables above prime will now come as a shock to some people.
The banks are well aware of that. They know that pricing above prime impacts consumer psychology.
They could have priced at prime. Spreads are not that horrendous. But pricing above prime makes more of an impact. It makes higher-profit fixed rates more appealing and it mentally prepares consumers for potentially higher VRM premiums down the road.
That said, banks are not just arbitrarily sticking it to borrowers. Far and away, the main reason variable rates are worsening is that banks’ costs are rising.
At the moment, there are multiple factors at play:
• Higher risk premiums are compressing margins.
O We have Europe to thank for the that.
O The TED spread, a measure of interbank credit risk, just made a new 2½ year high. As volatility increases, banks have to factor that into their funding models.
O Another reflection of risk is the most recent floating rate Canada Mortgage Bond (which some lenders use to fund variable-rate mortgages). It was issued at a 15 basis point premium over the prior issue in August.
• Margin balancing is an underlying bank motive.
O Banks have publicly stated their desire to even out margins between profitable fixed rates and low-margin variables, and they’re slowly doing just that.
O Back in September, RBC Bank exec David McKay put it this way: “…Given the dislocation between fixed and variable, the very, very thin margins (of variables), we felt we needed to move prices up in our variable rate book.”
• New regulations (e.g., IFRS) have boosted the amount of capital required for mortgage lending.
O That has lowered the return on capital for mortgages, and thus influenced rates higher.
• Status Quo for prime rate doesn’t help margins.
O Lenders partly rely on deposits (that money rotting in your chequing and savings accounts) to fund VRMs.
O Demand deposit rates rise slower than prime rate. So, when prime goes up, some lenders get wider margins temporarily.
O When expectations changed three months ago to suggest that prime rate will fall or stay flat (instead of rise like expected), it was bad news for some deposit-taking lenders. That’s because they now have no spread improvement to look forward to in the near-to-medium term.
O MBABC President Geoff Parkin says that until recently, “lenders have been prepared to accept low (VRM) profit margins with the knowledge that, as the prime rate inevitably rises, so too will their profit on variable mortgages.” As it turns out, the inevitable is taking longer than the market expected.
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Alberta leads North America in economic freedom: Fraser Institute report
This is great news for those of us in Alberta – we already knew we are booming. The rest of Canada is finding out as there were 26,000 new people added to Calgary this year. Almost the same as the boom in 2006. That means more people looking for homes or to rent and that demand will take up the housing slack.
Alberta leads North America in economic freedom: report
FILE – An oilsands mine facility seen from the air near Fort McMurray, Alta., Monday, Sept. 19, 2011. THE CANADIAN PRESS/Jeff McIntosh
CTVNews.ca Staff
Date: Tuesday Nov. 22, 2011 2:02 PM ET
Quebec and Ontario lag far behind their Western cousin Alberta and many U.S. states when it comes to economic freedom in North America, according to a new report.
While Alberta finished first of all Canadian provinces and U.S. states, Ontario finished fifth among the provinces and a dismal 49th when U.S. states were factored in.
Quebec finished eighth among the provinces — ahead of only Nova Scotia and P.E.I. — and a sluggish 58th overall in the analysis by the Fraser Institute titled Economic Freedom of North America 2011.
The report measures the economic freedom of 50 states and 10 provinces based on indicators such as size of government, taxation levels, and labour market freedom.
It found a direct connection between the states and provinces with the most economic freedom, and those where residents earned the most.
“The 12 Canadian and American jurisdictions with the highest levels of economic freedom had an average per-capita GDP of $54,435 in 2009, compared to the 12 lowest-ranked jurisdictions in North America, where average per-capita GDP in 2009 was $40,229,” the report stated.
Following are the top five finishers:
- 1. Alberta
- 2. Delaware
- 3. Texas
- 4. Nevada
- 5. Colorado
After Alberta, Saskatchewan was the second-highest Canadian finisher, but came in at only 32nd overall. Newfoundland and Labrador followed as the third-place overall Canadian finisher at 37th place.
B.C. came in 43rd overall, Ontario finished in 49th, and the bottom five spots on the entire list were dominated by the following Canadian provinces:
- 56. Manitoba
- 57. New Brunswick
- 58. Quebec
- 59. Nova Scotia
- 60. P.E.I.
Improvements in Canada
But the news wasn’t all bad for Canada. On average, the report found that levels of economic freedom increased in Canada between 2000 and 2009.
And in Newfoundland and Labrador and Saskatchewan, levels of economic freedom rose significantly in that same period.
Though less dramatic, B.C. and Alberta have also shown signs of improvement, which has allowed them to surpass several U.S. states in the rankings.
“It’s no coincidence that the provinces showing increased levels of economic freedom are also the provinces whose economies have been the most vibrant and shown the most growth in recent years,” said Fred McMahon, Fraser Institute vice-president of international research and the co-author of the report, in a statement.
“A common theme among provinces with high levels of economic freedom is a commitment to low taxes, small government, and flexible labour markets. These conditions foster job creation and greater opportunities for economic growth.”
Conversely, he said, provinces with low levels of economic freedom result in lower standards of living and reduced opportunities for families.
The report states that Quebec, Ontario, Manitoba, Nova Scotia and New Brunswick have all shown declines in economic freedom between 2000 and 2009.
Particularly troubling, McMahon said, is the fact Canada’s two most populous provinces, Ontario and Quebec, have fared so poorly.
“If governments in these two provinces want to boost prosperity and improve the standard of living for their residents, they should look to the successful policies of provinces where economic freedom has increased,” McMahon said.
Calgary housing market poised to show strong price growth
More good news on the market outlook.
November 6, 2011. 8:33 pm
Pay attention. Something’s happening here,” says Don Campbell, president of the Real Estate Investment Network in Canada.
Campbell is paying attention to the all the reports coming out these days showing some positive economic news for Alberta and Calgary. Good economic growth. In-migration levels rising. And employment growth leading the way in Canada.
The real estate market lags the economy by about 18 months, he says.And the economy is in recovery. We’ve now seen the job growth and the population growth starting to affect the rental vacancy rates which have gone down, resulting in rents rising.
Campbell says that by the spring of 2013, and perhaps by the fall of 2012, there will be a real strong upward pressure on demand for resale homes in Calgary and surrounding areas.
He predicts there will also be a jump in listings at that time which will keep a little bit of a cap on the price increases. So will continued world economic turmoil.
But even with that Calgary should expect strong price growth in the value of resale properties.
“I think you’re going to see a nice steady eight to 10 per cent increase in 2013 in average sale price for Calgary (year-over-year),” says Campbell, one of the authors of the book Secrets of the Canadian Real Estate Cycle.
Couple retires in Rimbey home built from 30 steel shipping containers
This is cool.
Containers are built to ISO 9000 standards so they are all the same and made to the same standard. Neat.
—
The Glennon family’s retirement home might just look like a stack of shipping containers of all different colours from the outside.
But once it’s complete, it will be a sprawling, 5,000-square-foot, four storey building — two levels above ground, a walkout basement and another level below — with four bedrooms, five bathrooms, a games and media room, garage and workshop, and two enclosed decks.
A massive garden with a potato crop, chickens, and a trout pond, will surround the residence on the eight-hectare property just outside Rimbey, about 180 kilometres north of Calgary.
And the shipping containers won’t be visible forever — the plan is to cover the exterior with stucco.
“It’s just going to look like a regular home,” said homeowner Bill Glennon.
Except most regular homes aren’t made of Sea-Can shipping containers — and the Glennon’s might be the only one in North America built with the containers from the footings all the way up to the roof, he said.
After years of touring show homes, checking out homes on the market, and attending home and design shows, Glennon said he never found anything he liked under $1 million.
By chance, his wife Roseann spotted a newspaper article about a shipping container home several years ago, which sparked their interest.
Putting his construction abilities to work, the former scaffolder and carpenter started drawing up plans to build his own home out of 30 shipping containers, each weighing about 5,000 kilograms with a load capacity of about 30,390 kilograms.
Besides being “really tough,” the containers are economically sound and structurally practical, Glennon said, though it can be a challenge to cut and grind materials, he added.
The couple, in their late 50s, started excavation in September 2009. A month later, 30 containers were shipped from Calgary to their property for a cost of about $3,000 per container.
Ever since, the couple and their 19-year-old daughter Kala, with help from Glennon’s brother Bruce and sister Colleen, have been hard at work welding, putting in the insulation and roof truss system, painting, installing weeping tile, lighting, and tending to the garden.
The family also hopes to live “off the grid completely” and has installed energy efficient windows, a wind generator, a 4.8-kilowatt solar panel system. A solar hot water heater, which will be their main source of heat, will come later, Glennon said.
The wooden interior walls will be insulated for extra warmth, though the fact that much of the home is underground means it will be fairly easy to heat in the winter, he added.
“Right now, we’re trying to insulate the outside, and we’re still waiting for the concrete to be poured on the roof, backfill the garage, and get some plumbing in,” Glennon said last week. “We’ve got a long ways to go.”
Glennon declined to disclose the exact cost to build the entire structure, though he offered that it works out to about $125 per square foot.
He indicated he hoped to have the entire exterior finished by next spring.
The long-term goal is to convert the residence into a bed and breakfast. After all, the Glennons already receive enough guests — both friends and strangers — driving in to catch a glimpse.
“We’ve got a lot of people come up from Calgary just to see it,” he said. “They think it’s pretty incredible.”
How do we (mortgage brokers) know rates are going up?
Hi All – many people ask how we know that rates are going to change ahead of time. Below is a sample of the data that we read on a daily basis. If you were motivated enough to read things like this every day – or figure them out for yourself – then you would know too. Or, just let a mortgage broker do it.
MARKET COMMENTS
Bond yields today are roughly where they were a week ago but there has been plenty of volatility over the intervening period.
Last week yields were pushed higher by in-line or better than expected economic data in Canada (Manufacturing Sales Growth, Trade Balance) and the US (Retail Sales Growth, Initial and Continuing Jobless Claims, Trade Balance), together with a sense of optimism that the European debt crisis will be resolved and/or that concerted steps there would be taken to protect the banking system.
Generally speaking, “good” economic news tends to push bond yields higher as market participants are less interested in the safety bonds provide.
Notwithstanding last week’s developments, yields have come back down today as worse than expected economic data in the US and a clarification from Germany that a once-and-for-all solution to Europe’s debt crisis will not be forthcoming and that markets should expect such crisis to extend into next year.
In all, these developments present the global economy in better shape than what we thought at the start of the week, and the rise in rates reflects that change.
Calgary house prices and sales rise in September
Calgary is showing solid numbers are the in-migration continues. Almost 40% of people moving to Alberta move to Calgary.
CALGARY — Calgary house prices and sales rose in September compared with a year ago, according to the Canadian Real Estate Association.
In releasing its monthly data on Monday, CREA said MLS residential sales in Calgary reached 1,789 units in September, up 11.4 per cent from September 2010 while the average sale price rose by 1.3 per cent on an annual basis to $406,252.
Year-over-year in Alberta, sales rose by 9.7 per cent to 4,316 units while the average price increased by 3.0 per cent to $359,637.
Nationally, MLS sales of 37,760 were up 11.0 per cent from September 2010 and the average price rose by 6.5 per cent to $352,581.
“Canada’s housing market remains stable amid continuing financial market volatility, contributing to Canadians’ confidence in the economy and providing support for Canadian economic growth,” said Gregory Klump, CREA’s chief economist, in a statement. “Interest rates are expected to remain low for longer, and evidence suggests that recent changes to mortgage regulations are preventing the kind of excesses they were designed to avert. Both of these developments are good news for the housing market.”
© Copyright (c) The Calgary Herald
Canadians still looking towards Alberta for employment
Comment – all the in-migration is what caused the home prices to boom form 200k to 400k in 6 months in 2006 and 2007. This is all happening again right now – as noted below.
The outcome will not be prices going to 600k but well priced homes will move quickly and there will be upward price pressure until most of the excess inventory is moved.
Alberta continues to be a draw for people in other parts of the country.
And that’s good news because in recent months there has been more talk about looming labour shortages in the future.
According to Dan Sumner, economist with ATB Financial in Calgary, 4,720 Canadians relocated to Alberta during the second quarter of 2011, largely unchanged from the 5,275 that moved here during the first quarter. But Alberta is on pace for about 20,000 net-interprovincial migrants in 2011, which if achieved will be the highest annual pace for net interprovincial migration since 2006.
Sumner says the largest net migration gain in the second quarter was from Ontario. Alberta was by far the largest benefactor of net-interprovincial migration in the country with Saskatchewan in second place gaining only 1,239 net migrants.
“Interprovincial migration can be a difficult variable to predict; however, with the unemployment rate lower in Alberta, wages higher, housing prices relatively affordable and the provincial economy expected to grow among the fastest in the country, it’s hard to imagine that more Canadians won’t be calling Alberta home over the near future,” adds Sumner.
“While more skilled workers is essential for the continued development of Alberta’s economy, it also puts pressure on social and institutional resources. As a former premier of this province once stated, ‘when people move to Alberta, they don’t bring their schools and hospitals with them’.”
Calgary resale homes top $400,000 average
CALGARY — The average price of resale homes in Calgary topped $400,000 in August, according to a report released Friday by the Conference Board of Canada.
The board said all residential property sales in the city hit an average of $404,755 during the month, up from $391,497 a year ago.
The seasonally-adjusted annualized rate of sales also jumped to 22,092 from 18,816 in August 2010.
And the annualized rate for new listings has also increased to 44,940 from 43,536.
The board said the sales to new listings ratio in Calgary increased to 0.466 in August from 0.410 a year ago.
The board also forecasts short-term year-over-year price growth of between five to seven per cent for Calgary.
According to the Calgary Real Estate Board, month-to-date up to and including Thursday, there were 740 single-family MLS sales for an average price of $466,754 and 307 condo sales for an average of $302,460.
For the same period in 2010 up to Sept. 22, there were 682 single-family transactions at an average of $467,486 and 258 condo sales for an average price of $280,790.
© Copyright (c) The Calgary Herald