Canada’s condo building frenzy showed no sign of abating last month, as housing starts surged to their highest level since 2007.
While some analysts had predicted housing starts would weaken after a particularly strong March, starts in April rose to an annualized rate of 244,900, readily beating predictions of 204,000 made by most economists.
“This report reflects unbelievable strength in Canadian housing starts, and all of the gain was in multiples again, which reflect the ongoing Canadian condo craze,” said Scotia Capital Economist Derek Holt.
Multiples, which include apartments and condominiums, posted the second-highest number of starts on record for the month of April. In total, multiple urban starts in Canada rose by 27% to 158,500 on a seasonally adjusted basis.
The future is unknowable, but it doesn’t stop people from guessing about it.
And when it comes to interest rates, this seems especially true. Haven’t you heard? Interest rates will probably be going up, making debt payments unaffordable for some Canadians, who will lose their homes, causing a popping of the housing bubble, which could result in a recession.
Following up on commitments made in the past two budgets, the federal government has announced measures that will stop banks from mailing unsolicited credit card convenience cheques to customers, and that will reduce the holding period on newly deposited cheques. The banks will also have to stop being so secretive about the penalties clients must pay when they want to get out of a mortgage early.
These measures represent some good work by a government that has been under pressure lately as a result of the robo-call affair. Strangely, the measures were announced on a Sunday and, therefore, didn’t get the initial attention they deserve.
The sharp decline we’ve seen in mortgage rates over the past few years has prompted many people to think about breaking their mortgages in order to lock in lower borrowing costs. A mortgage penalty must generally be paid in this situation, but it’s exceedingly difficult to find out how much it is and how it’s calculated.
There’s one piece of good news about mortgage prepayment penalties: The cost of the penalty can be used as a tax deduction if you’re breaking your mortgage to move 40 km or more to be closer to work.
The Canada Revenue Agency has a provision that allows you to deduct the costs of moving if you’re doing so for a job or for full-time study at a university, college or other type of course at a post-secondary level.
You can claim other costs associated with selling your old residence as well: advertising, notary or legal fees, real estate commission as well as that dratted mortgage penalty “when the mortgage is paid off before maturity.”
Keep the receipts and fill out form T1-M Moving Expenses Deduction. For tax purposes, the mortgage penalties get lumped under “other selling costs, specify” on Line 16 of the T1-M form.
That helped housing values climb a wall of worry (prices rose another 4.6% year-over-year as of November) despite numerous predictions of a correction. Mortgage balances went along for the ride, growing another 7%.
2011 was a year marked by new mortgage regulations and a rate market that continually surprised most observers. Among all of the various developments, however, there were five mortgage stories that stood above the rest.
Click here for the top five mortgage trends of 2011 from CanadianMortgageTrends.com
A surprising majority of Canadians – 70% of them – say the country is in the middle of an economic recession, even though economists will tell you Canada hasn’t been in one since 2009, and is nowhere close.
The results, from a new online survey sponsored by the Economic Club of Canada and conducted by Pollara Strategic Insights, highlight a growing disconnect between how financial professionals quantify and measure the health of the economy, and how Canadians feel about their every day prospects.
Michael Marzolini, chairman of Pollara, called the results the most pessimistic in 16 years.
“Canadians are more self-centred. They believe themselves under siege,” he said at a breakfast presentation hosted by the Economic Club in Toronto that included top economists from Canada’s Big Five banks.
Click here for more details from the Financial Post.
With Christmas fast approaching our hours will be as follows for the holiday season:
December 19th-22nd 10AM-4PM
December 23rd-26th CLOSED
December 27th-29th 10AM-4PM
December 30th-January 2nd CLOSED
January 3rd Resume Regular Hours (Mon-Fri 9-5)
If you can’t live within your means in your working years, there’s no reason to believe you'll pull it off in retirement.
So let’s start familiarizing ourselves with the options for retirees who didn’t save enough to live the kind of lifestyle they want. One is to go back to work. Easy to say, but hard to do unless you can consult or have an affinity for fast food.
Another is to rent out a basement apartment or sell the family home and either buy a cheaper house or rent. Moving is a non-starter for many retirees because they still enjoy their homes and want to have a place for kids and grandchildren to stay.
This brings us to two options for borrowing against the equity in your home, one of which, reverse mortgages, was covered last week (read that column here). The other option is the home equity line of credit, which a lot of people will set up and use long before they retire because it’s an efficient way to borrow.
The oldest dilemma about mortgages - Whether to go with a fixed rate or variable rate? Well historically, the variable rate has performed better then the fixed rate however since the US meltdown, the new reality has changed all that. Presently lenders/banks have reduced and in most cases eliminated the discounts on variable rates. Prime being at 3.00% and a 4 year rate being offered at 3.39%, it is fair to assume the bank of Canada will increase the prime rate by at least by .5 to 1% in the next 2 years making it more expensive than the fixed rate.
One strategy is to ride the variable rate until it goes up and switch to a fixed rate at that time, the downfall is most of the time the fixed rate has already increased. All that to say, presently the balance is tipped in favour of the fixed rates.
Your credit report is important and, because of that, a lot is written about it as well as talked about over dinner or as topics of water cooler conversations.
Although some of the advice comes from well-meaning people trying to help, misinformation or failing to go to trusted sources could make for some unfortunate surprises if you were to later view your credit score.
Click here to read five lies about your credit score from CanadianFinanceBlog.com.
If there’s one plaintive cry you tend to hear again and again from credit counsellors, it’s this: “If only our clients had come to see us sooner.”
By the time many people actually ask for help, their debt problems are so huge that their credit ratings are in tatters and some solutions may no longer be an option.
With that in mind, click here for a few of the early warning signs courtesy of CBC News that are pretty good indicators that people may be on their way to financial disaster and should seek help.
When it comes to buying a condo, what’s a better investment? Buying one that’s already built and is being resold, or buying on the hype of a new building that’s yet to be constructed?
Jana Masiewich considered both a resale and pre-construction condo before deciding that buying a condo prior to it being built presented a better opportunity for her to make money on her investment. The 29-year-old, who lives and works in downtown Toronto, was looking for a condo property that met her criteria, in particular one in an up-and-coming area of the city. But she also had to discuss with her advisers whether she had the cash to purchase a yet-to-be built condo now.
To land confidently on her decision she consulted with her financial planner, her realtor, and did her due diligence on the developer building the condo. Masiewich says she understands there is some risk in buying pre-construction, but if you do your research, and go with a credible builder, then you significantly reduce the chance of a bad investment.
With all the uncertainty surrounding many of the world’s economies at the moment, there was a semi-sure bet- that they Bank of Canada would stay put, given the strength of the headwinds blowing against our borders.
Yet again, Mark Carney is holding the overnight rate at 1 %. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
B.C.’s minimum hourly wage took its second of a total of three increases this week making it $9.50, ($8.75 for alcohol servers). All part of Premier Christy Clark’s plan to increase the minimum wage to $10.25, (9.00 for alcohol servers) by May 1, 2012. Leaving business owners concerned about how it will impact their bottom line in an already uncertain economic climate. "This is part of a bigger picture of how tough it is for them," said Shachi Kurl, the B.C. director of the Canadian Federation of Independent Business.
On the other end of the spectrum of concerned business owners are the employees who while I’m sure they are welcoming the increase, it’s really just a drop in the bucket. Looking at what a “Living Wage” is for our area is at approximately $18.81/hour, even with the new increases there is still a fairly large gap.
There is also a lot of debate on whether or not the tiered program for alcohol servers is fair or not. Having someone rely on their earning of tips could have their income sufficiently jeopardized on slow nights.
When buying a home you have just made the largest purchase of your life based on borrowing more money than ever before. Bothering to read that 25 page contract is not high on peoples list. But it should be. It could save you thousands of dollars down the road.
The ambiguity in mortgage contracts has landed more than one consumer in trouble they didn’t anticipate and now it has spawned a class-action lawsuit against one of Canada’s largest banks.
Kieran Bridge, a Vancouver-based lawyer with the Construction Law Group, has filed a lawsuit against CIBC over what he describes as vague language over early payment of mortgages. The suit was filed in British Columbia and Ontario this month.
It is time to go to paper and tell you what's new! A brand new office at #119-2745 Veterans Memorial Parkway. A new website to better share important information, Facebook and Twitter account to share with my clients interest rates and Real Estate news as it comes. It is time that I become the ultimate point of contact for expert advice for any questions you may have on mortgages or real estate
You can find links to Twitter and Facebook here on the new site. Stay tuned for updates, video and blog posts on all things real estate and mortgage related including events around the community here at Rochar Financial.
You are very welcome to stop by and say hello at anytime! Your continual support is very appreciated.
Thank you,
Roger Levesque
Roger Lévesque
CD, B.Sc., M.B.A
Victoria, BC Tel: 250-405-4351 Cell: 250-380-8048 Toll Free Fax: 1-866-467-7881
