tag:blogger.com,1999:blog-32890063681962067852024-03-12T21:08:37.607-07:00TMGThe Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.comBlogger180125tag:blogger.com,1999:blog-3289006368196206785.post-62488343491518867112020-07-29T06:19:00.000-07:002020-07-29T06:19:14.248-07:00Will Home Ownership be a Pipedream for Gen Z?<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhddxeELQ7T4GmlpnJPN6FfTBDgHyn9L_PvlRCvt7PNxdiwwQnj7iYByEpN61Ge4XMVuqLU3zcZlzRkpZ1vRkr1Zg_yYqhBwTWkErmNFV-Pu4w_g3L2KtLgg2YOjDnP-Yj8kE56XCp8GqVD/s1600/eliott-reyna-iO2d-KYp5JU-unsplash.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1283" data-original-width="1600" height="256" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhddxeELQ7T4GmlpnJPN6FfTBDgHyn9L_PvlRCvt7PNxdiwwQnj7iYByEpN61Ge4XMVuqLU3zcZlzRkpZ1vRkr1Zg_yYqhBwTWkErmNFV-Pu4w_g3L2KtLgg2YOjDnP-Yj8kE56XCp8GqVD/s320/eliott-reyna-iO2d-KYp5JU-unsplash.jpg" width="320" /></a></div>
There may be no better feeling than closing on your first home. Over the last 10 years, first time homebuyers have seen the market change dramatically, whether it’s mortgage rule changes that impact qualifying, or rising house prices that took some first timers out of the market altogether. Combine that with stagnant incomes, and it’s not surprising that young people feel that the dream may never happen for them.<br />
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But is it still a dream for the younger generation? Last year – 2019 – was the last for millennial graduates. We are now in the Gen Z world. Gen Z refers those born after 1996, so they’re now 23 and younger. Millennials were born between 1981 and 1996, so they’re now between 23 and 38.<br />
This group grew up with an iPhone in their hand and an iPad on their laps, and clearly have learned to process information differently than generations before them. But what hasn’t changed is their desire for home ownership.<br />
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In fact, Gen Z is poised to overtake millennials in their desire for homeownership. A survey conducted by real-estate company Zillow found that in 15 years Gen-Z homeownership will be bigger than the share of millennials who currently own their homes.<br />
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Another survey from Finder.com shows that 81% of the Canada’s Gen Z’ers think they’ll purchase a home in the next 20 years. Ten percent of the 18-24 age group say they already own their own home, while 35% (one in three) believe they’ll purchase a home within the next five years.<br />
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Interestingly, millennials are more likely to believe that homeownership is NOT in their future. The difference? It hasn’t been quantified yet, but anecdotally, Gen Z ‘ers don’t like the high cost of renting, and would rather make personal financial sacrifices to save for the large down payment needed.<br />
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For these future homeowners, education and information is key. And the best person to help guide the process is a mortgage broker. The following information is not only for Gen Z, but for everyone looking for their first home.<br />
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There are six steps to the mortgage application process.<br />
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<b>Step 1 – The Application/Pre-Approval</b><br />
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<li>It’s important to get all the following information. This allows your mortgage agent to determine the amount you qualify for and the best mortgage strategy/product for you. Current address. If you are less than three years at your current residence, you must provide your previous address as well. In addition, you will need to provide</li>
<li> Birthdate</li>
<li>Contact number</li>
<li>Do you own or rent your current home?</li>
<li>If rented, is the rent paid monthly? If not, specify term of rent</li>
<li>If owned, is there a mortgage? If so, with whom, the value of your home, and mortgage payments</li>
<li>Approximate value of assets -- identifiable assets like RRSPs, savings, investments, vehicles, other properties, etc.</li>
<li>Approximate value of liabilities -- identifiable liabilities like car payments, line of credit, student loans, credit cards, etc.</li>
<li>Any alimony or support payments</li>
<li>Employer (if less than three years, previous employer as well)</li>
<li>Title</li>
<li>Tenure</li>
<li>Salary and other compensation</li>
<li>Self- Employment information that includes historical taxable income, historical gross business income</li>
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<b>Step 2 – Qualifying</b><br />
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Your information is sent to a lender for a rate hold, pre-approval or approval. All info is sent electronically and directly to a lender. A response can come within 24-72 hours.<br />
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<b>Step 3 – Verification</b><br />
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Verification will be done on items such as your income, with a job letter and recent pay slip, and proof of down payment. Some lenders require tax returns and Notice of Assessments. Your mortgage agent will list out all the information needed and lead you through a straightforward verification process.<br />
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<b>Step 4 – Purchase</b><br />
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Once you’ve found your new home, your Realtor will draw up a Purchase and Sale Agreement, which he or she will also send to your mortgage agent on your behalf. When writing your offer, it’s strongly recommended that a “subject to financing” clause be written in, even if you have a pre-approval. <br />
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<b>Step 5 – Approval</b><br />
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During this stage the lender will review all documents and will call your employer to verify employment. You will also receive a Letter of Commitment with the rate, term, payment amount or frequency, amortization, and more. Your mortgage agent will review the commitment letter in detail with you before you sign.<br />
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<b>Step 6 – Funding/Closing</b><br />
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The only thing left to do is to register the transaction legally. This will require a lawyer or a notary, depending on where you live. The lender will forward all the documentation directly to your lawyer, and the lawyer will contact you to arrange a meeting.<br />
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During this meeting your lawyer will confirm the details of your transaction and will request a bank draft or certified cheque to cover the amounts outstanding before the closing date, which includes the down payment, the lawyers fee, property transfer tax and any other disbursements not yet paid for, less any deposits already paid.<br />
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The lawyer then receives the funds from your lender, disburses them and registers the title in your name – then you get the keys.<br />
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<b>Digital Experience </b><br />
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Gen Z’ers were born to process a massive amount of information 24/7, but info overload can negatively affect anyone. There’s a lot of mixed messages, and sometimes outright misinformation on the ‘Net. Despite the I-Generation “always on” environment, the human touch is still welcome.<br />
Buying your first house is a journey, but don’t take it alone. Contact a mortgage professional to combine your digital experience with the human touch.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-56374284298291060212020-07-07T07:33:00.001-07:002020-07-07T07:35:33.531-07:00An Alphabet Soup of Economic Predictions<div dir="ltr" style="text-align: left;" trbidi="on">
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<span lang="EN-CA"><span style="font-size: large;">Which is Canada Most Likely to Experience?</span></span></h2>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgiWpj9efYqZR-j67E3PwYrTiAxc9lyt-n_coyak2xOHvnvUNDV8VtPnYS-JlLmfj7gVyYROrG6N3OO_7aIcGtPf3AUxRAh8Z58mpTIS2ywaH79PZFKEjC5kUU_h9Xe3U653CLy6wMfXixf/s1600/predictions.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img alt="Alphabet Soup of Economic Predictions" border="0" data-original-height="200" data-original-width="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgiWpj9efYqZR-j67E3PwYrTiAxc9lyt-n_coyak2xOHvnvUNDV8VtPnYS-JlLmfj7gVyYROrG6N3OO_7aIcGtPf3AUxRAh8Z58mpTIS2ywaH79PZFKEjC5kUU_h9Xe3U653CLy6wMfXixf/s1600/predictions.jpg" title="" /></a></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">You’ve likely heard of analysts using letters of the alphabet to describe the potential paths for Canada’s economic recovery.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><br /></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">Will that graph of the country’s GDP look like a V or more like a U? Perhaps even a W, but hopefully not an L.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">Below we take a brief look at what each of the recovery shapes mean, which is most likely, and how that might affect the country’s housing markets.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">Let’s take a look at the letters that have been employed to describe the “shape” of where Canada’s economy has been and where it’s headed: </span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><b>V-Shaped:</b></span><span lang="EN-CA"><b> </b>The most optimistic of the scenarios, this forecasts the steep decline in Canada’s GDP bouncing back quickly and returning to pre-COVID levels in short order.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><b>U-Shaped:</b></span><span lang="EN-CA"><b> </b>Similar to the “V” recovery, but this scenario anticipates a longer period of low or no growth. However, it also describes an eventual quick return to pre-COVID growth levels. </span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><b>“Nike Swoosh” Shaped:</b></span><span lang="EN-CA"> This is a variation of the “U-shaped” recovery, but describes a more gradual and prolonged period of economic recovery. </span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><b>W-Shaped:</b></span><span lang="EN-CA"> Like the V-shaped scenario, except the W forecasts a second steep decline in economic performance—possibly due to a second wave of the virus—followed by a second quick recovery to more normal levels.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><br /></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><b>L-Shaped:</b></span><span lang="EN-CA"><b> </b>This is the most dreaded of them all, describing a persistent recession that doesn’t see the economy returning to pre-COVID levels potentially for many years.<br /><o:p></o:p></span><span lang="EN-CA"> </span></span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><b>Which Recovery Path is Most Likely?</b></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">There’s much disagreement over which model is likely to play out.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">Some expect the economy to face continued headwinds for at least the next year, with some ups and some downs, perhaps along the lines of a W-recovery.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">“Our economic forecast envisions the economy continuing to operate well below full capacity into 2021,” economists with RBC Economics wrote in a research note. “The road to recovery will be slow, and it could be quite bumpy.”</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">Others remain optimistic that the V-recovery is still taking shape. </span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">“The good news is that the incoming data continue to suggest a recovery that is about as v-shaped as we could reasonably have hoped for,” noted Neil Shearing, Group Chief Economist at Capital Economics. “The bad news is that sustaining the pace of recovery will get increasingly difficult from here.”</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><br /></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">In a separate research note, economists at Capital Economics added, “In terms of fundamentals, it now seems clear that household income has not fallen by anywhere near as much as we expected in the second quarter, despite the slump in employment.”</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">Then there are others who don’t think any letter—in the English language or otherwise—can accurately describe the path that lays ahead.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">“I don’t think a letter is going to neatly capture what we’re going to be looking at,” Douglas Porter, chief economist at BMO, told the <i>Financial Post</i>.</span><span lang="EN-CA"> </span></span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><b>What’s the Impact on Canada’s Housing Market?</b></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">The fallout for the real estate and mortgage markets has been a big unknown since the start of the crisis, largely because both supply and demand fell in unison.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><br /></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">“The fact both sides of the demand-supply equation fell in virtually equal proportions…revealed an important characteristic of COVID-19,” RBC economist Robert Hogue <a href="https://thoughtleadership.rbc.com/canadas-housing-market-mostly-shut-down-in-april-can-only-pick-up-from-here/?utm_medium=email&utm_source=salesforce&utm_campaign=housing" style="color: #954f72;" target="_blank">wrote</a>. “To date, it hasn’t created market imbalances.”</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><br /></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">While home sales plummeted in April by 57% as the effects of the lockdowns took hold, the decline in home prices has so far been limited in many markets.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><br /></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">And with sales already rebounding in May by nearly 57% and new listings seeing a 69% increase, there are signs some markets may be back to posting year-over-year price increases in short order.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><br /></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">As of May, MLS benchmark prices were up year-over-year in the Greater Toronto Area (+9.4%), Greater Vancouver (+2.9%), Montreal (+11%), Ottawa (+15.7%) and Halifax (+9.3%), according to the Canadian Real Estate Association.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA"><br /></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA">Still, as economic fundamentals remain below potential for the foreseeable future and as government assistance programs, such as CERB and the mortgage payment deferrals, come offline this fall, many expect modest price declines.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA" style="line-height: 15.6933px;"><br /></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span lang="EN-CA" style="line-height: 15.6933px;">“We believe downward price pressure will build in most markets in the coming months,” <a href="https://thoughtleadership.rbc.com/canadas-housing-market-woke-up-in-may/?utm_medium=email&utm_source=salesforce&utm_campaign=housing" target="_blank">wrote Robert Hogue of RBC Economics</a>. “Nationwide, we expect benchmark prices to fall 7% by the middle of 2021, though believe a widespread collapse in property values is unlikely.”</span></span></div>
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-60811306451391979582020-06-10T13:00:00.001-07:002020-06-10T13:00:17.056-07:00Mortgage Insurers Making Headlines <div dir="ltr" style="text-align: left;" trbidi="on">
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<b>CMHC Makes Policy Changes – Genworth & Canada Guaranty Stay Put</b></div>
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It came as a surprise to many mortgage industry insiders when the Canada Mortgage and Housing Corporation (CMHC) announced its plan to further tighten their lending guidelines on July 1, 2020. Thankfully for many potential homeowners, Canada’s two private insurers, Genworth and Canada Guaranty, have decided not to follow suit.</div>
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Citing a need to mitigate its exposure (and taxpayer’s) to what the Crown Corporation’s CEO Evan Siddall’s predicts will be a drop in house values by as little as 9% and as much as 18% due to COVID-19, and a potential surge in household debt from 176% to 200% through 2021, they implemented changes that would cut purchasing power by up to 11%.</div>
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Under CMHC’s new guidelines, which is set to go into effect on July 1, 2020, the following will apply:</div>
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<li>Maximum Gross Debt Service (GDS) ratios, or the max percentage of home ownership debt payments ie principal, interest, taxes, condo fees and heat when compared to gross income, will be lowered to 35% (from 39%)</li>
<li> Maximum Total Debt Service (TDS) ratios, or the max percentage of total personal debt payments relative to gross income, will be lowered to 42% (from 44%)</li>
<li>The minimum credit score needed to qualify will rise to 680 (from 600) for at least one household borrower</li>
<li>Many non-traditional sources of down payment that “increase indebtedness” will not be permitted. </li>
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However, borrowers will still be able to access their RRSPs through the Home Buyers Plan or a home equity line of credit on another property they own.</div>
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According to Mortgage Professionals Canada, 61% of first-time home buyers buy with less than 20% down. And 20% of down payment funds come from borrowed sources. This move by CMHC could cut purchasing power by up to 11%. For example, a family earning $100,000 with 5% down, with no other debt, would qualify for a $320,000 mortgage (approx.) Under the new CMHC guidelines that mortgage amount gets reduced to approx. $280,000. </div>
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Siddall said in a statement, “COVID-19 has exposed long-standing vulnerabilities on our financial markets, and we must act now to protect the economic futures of Canadians. These actions will protect home buyers, reduce government and taxpayer risk, and support stability of housing markets while curtailing excessive demand and unsustainable house price growth.”</div>
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Critics of the move wondered out loud at the timing of these changes, when provinces have begun easing lockdown restrictions to kickstart the economy, they felt it was counterproductive to efforts focused on regaining confidence in the housing sector. </div>
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Paul Taylor, CEO of Mortgage Professionals Canada was quoted as saying, “…I think the timing for the introduction of these restrictions is poor, especially since the Federal government itself is pouring billions of dollars into the economy to keep it afloat.”</div>
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<b>Canada’s Private Insurers Hold Firm</b></div>
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In Canada, federally regulated lending institutions such as banks, non-bank lenders, credit unions and trust companies, are required to insure high ratio mortgages – those with less than 20% down –against default. There are three insurers in Canada -- CMHC is a federal Crown Corporation and Genworth and Canada Guaranty are private sector suppliers of mortgage insurance. </div>
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After reviewing their policies and CMHC’s decision, the two private insurers have decided to NOT follow CMHC’s lead. Both insurers made statements defending their current underwriting polices and are confident in their ability to manage risk. This is positive for borrowers.</div>
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As the economy starts its slow climb to recovery, we have seen positive signs across the country as sales start to increase. </div>
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When it comes to real estate, consumer confidence is key. As we continue to ease restrictions, continue to practice safe protocols, and consumers start to feel comfortable again, we may see both homebuyers and those critical home sellers become more active.</div>
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It’s hard to say what the true impact to the market might have been if all three insurers had decided to tighten their rules. It’s clear that having a competitive market for mortgage insurance greatly benefits homebuyers. </div>
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-5691912254460740062020-05-15T06:36:00.003-07:002020-05-20T10:50:57.949-07:00Where would you prefer to live?<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj1Crq8fstrKO-IL1h73z7x4pLCkmRAdU67cCcafc8_LEWjjCyHSl5Ki0iiYC1U_12G6Y4Aq62b5nc7P_DfbNINl-AKgt_0qwYFe7P0PTx_gBih-535ZjweaszqrNgAiaX8RXC49zEeU39f/s1600/matthew-daniels-t_RU6Fw9Oho-unsplash.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1600" data-original-width="1281" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj1Crq8fstrKO-IL1h73z7x4pLCkmRAdU67cCcafc8_LEWjjCyHSl5Ki0iiYC1U_12G6Y4Aq62b5nc7P_DfbNINl-AKgt_0qwYFe7P0PTx_gBih-535ZjweaszqrNgAiaX8RXC49zEeU39f/s320/matthew-daniels-t_RU6Fw9Oho-unsplash.jpg" width="256" /></a></div>
As we move into Spring, and as provinces across the country begin easing restrictions, The Canadian Real Estate Association (CREA) is hopeful that home sales will start to tick up. The housing and mortgage markets have adapted to COVID-19 and have put safety measures into place with virtual house tours and electronic document signing.<br />
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According to available data from Realtor.ca, Canadians are spending more time looking at properties on the site. During the week of March 9, visits dropped by 30%; however, since April 12 traffic has crept back up by 14%, and consumer inquiries through the site rose by 25% -- similar to levels during the same period last year.<br />
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Consumer confidence is also on the rise. The Bloomberg Nanos Canadian Confidence Index ticked up slightly to 38.73 in its second-straight gain after more than two months in free fall.<br />
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Canada Mortgage and Housing Corp. (CMHC) reported that construction of multi-unit housing projects remained strong in some provinces last month despite COVID-19. The agency saw growth in Ontario, Saskatchewan and Manitoba in April.<br />
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Deputy Chief Economist for CIBC World Markets believes the hit to the real estate market isn’t as “significant as perceived”. In an interview with Real Estate News Exchange, Tal said, “For the real estate market, if this recovery is going to be relatively long, it means that interest rates will remain relatively low,” said Tal. “That’s positive.”<br />
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REMAX has just released its latest report, “Best Places to Live 2020: Canada Livability Report,” and has found “glimmers of hope” for the months ahead.<br />
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Liveability, according to the report, is about quality of life at a local level -- ‘A neighbourhood’s dynamism, or lack thereof, involves a delicate convergence between independent small businesses, public institutions, arts and culture, green spaces and housing, to name a few. Here’s what the report found.<br />
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Ninety-one per cent of Canadians have at least one important liveability factor when considering a neighbourhood they live in now or would like to live in, in the future. Affordability topped the list at 61%, followed by:<br />
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<ul style="text-align: left;">
<li>Walkability (37%)</li>
<li>Proximity to work (34%)</li>
<li>Low density neighbourhoods (30%)</li>
<li>Proximity to transit (30%)</li>
<li>Access to green spaces/dog parks (30%)</li>
</ul>
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For city lovers, liveability criteria such as proximity to transit, access to green spaces and parks, proximity to good schools and neighbourhood vibrancy (access to art and culture) tops the list for families with or without children. Various neighbourhoods such as Old Town Toronto and Beltline in Calgary best suit their overall needs.<br />
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Retirees prefer areas with access to green spaces and walking paths, proximity to health care or pharmacies, and quietness -- Mill Woods Park in Edmonton and Melville Cove in Halifax are among the top preferred neighbourhoods.<br />
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For affordability, Winnipeg and Edmonton are top regions. In Ontario, it’s regions like Ottawa, Windsor and Durham.<br />
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Edmonton is ranked at the top for most liveable city. Other cities that ranked high are:<br />
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<ul style="text-align: left;">
<li>Ottawa, with neighbourhoods such as Centretown and Lower Town.</li>
<li>In Victoria, the most up-and-coming neighbourhoods including Colwood and Langford. </li>
<li>Winnipeg neighbourhoods Bridgwater Forest, Charleswood, and Devonshire Park. </li>
</ul>
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<b><u>Highlights</u></b><br />
<br />
<ul style="text-align: left;">
<li>Most respondents say they like their quality of life and liveability in the neighbourhood they currently live in (90%):</li>
</ul>
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* 62 % say they like it a lot<br />
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<ul style="text-align: left;">
<li>Eight in 10 (82%) would make at least one sacrifice to live in the neighbourhood that meets their liveability “must-haves”:</li>
</ul>
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* 30 % would sacrifice dog parks<br />
* 29 % would sacrifice arts and culture<br />
* 26 % would sacrifice property size<br />
* 26 % would sacrifice proximity to parking options (carpool lots, parking garages)<br />
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<ul style="text-align: left;">
<li>Seven in 10 (72% ) would search the internet (i.e. Google search) to look for information about new neighbourhoods they are interested in moving to:</li>
</ul>
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* 39% would ask a real estate agent<br />
* 38 % would go by word of mouth<br />
* 15 % would rely on news and market trends reported in the media<br />
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Despite reports of slowing economic conditions there are promising signs that that the housing market will make a comeback, although it may take a while for a full recovery.<br />
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In the meantime, with many still home bound, there’s no harm in looking at the real estate listings to see what’s available in a neighbourhodd that fits your liveability criteria.<br />
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For a deeper dive into the report, <a href="https://blog.remax.ca/canada-liveability-report/" target="_blank">read it here</a>.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-64047923044094233922020-04-27T13:22:00.001-07:002020-04-27T13:29:48.084-07:00Mortgage Interest Rates in the COVID-19 Economy<div dir="ltr" style="text-align: left;" trbidi="on">
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Mortgages and interest rates are still talked-about topics in the current economic climate.<br />
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Here’s a recap. In January 2020, just prior to the pandemic surfacing in Canada, a five-year fixed rate was trending at approximately 2.89% to 3.09%. Fixed mortgage rates are loosely based on bond yields, which were trading at 1.5%.<br />
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The Bank of Canada’s (BoC) overnight rate, or key lending rate was 1.75% and the prime lending rate was 3.95%. Variable mortgage rates and lines of credit are based on the prime rate. At the time, mortgage lenders were offering discounted prime rates for new deals – some as high as 1%.<br />
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By March 2020, 5-year bond yields fell as low as 35 basis points and fixed-rate mortgage rates also fell to as low as 2.39%, but then went up to about 2.84 to 2.99%%, but are now starting to trend downwards again.<br />
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Also, in March, The BoC, cut its overnight rate three times - - it now sits as .25%. Most lenders also lowered their prime lending rates to 2.45%; however, the deep discounts have disappeared. Variable-rates are sitting at approximately Prime minus 20 basis points, or 2.25%.<br />
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It's commonly thought that five-year fixed mortgage rates are connected to five-year bond yields and that cuts to the BoC’s overnight rate will result in lower fixed rates. The two are not actually connected. Similarly, variable-rate mortgages were thought to be connected to the BoC’s overnight rate, and historically this has been the case, but it’s not written in stone.<br />
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In the current economic environment, the “traditional” rules are out the window, simply because what the economy is going through is unprecedented and everyone is moving cautiously.<br />
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Despite low bond yields and cuts to the prime rate, lenders are considering other factors – the rise in unemployment for one. One of the main indicators pointing to a continued healthy economy is jobs. Without jobs, household budgets get tighter, consumer purchases slow down, manufacturers scramble to reduce inventory, which could lead to lay-offs, and bankruptcies rise. Job loss is also a leading cause of mortgage default.<br />
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Statistics Canada reported that the country lost one million jobs in March, but that’s only a glimpse since the data is based on surveys in the week that started March 15. For perspective, economists suggest Canada's unemployment rate right now is likely around 20%, from an “average” of 5%. As you can see, the economic situation has been volatile and conditions can change daily.<br />
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Because the outlook is uncertain, and future mortgage defaults may be higher, lenders built risk premiums into their rates and we saw mortgage rates increase, despite the signs that borrowing costs were reduced.<br />
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The Government is keeping the economy afloat by injecting billions of dollars of financial support into the economy and, by default, instilling a small degree of confidence in Canadians. However, it’s likely that Canada will be in a recession – as some economist say it is now, and will take many months to recover.<br />
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The housing market is a vital component to the success of the Canadian economy. In many respects, the industry can help to stabilize a faltering economy. Having said that, not everyone is out of work and consumers are still buying and selling houses.<br />
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There is an end game here and eventually the economy will start humming along. Jobs will return slowly, and low interest rates will likely be around for a while as we start the hard road to recovery.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-4960284469164101562020-03-17T06:30:00.000-07:002020-03-18T07:57:27.793-07:00Government, Monetary Policy and Fiscal Policy Reactions to COVID-19<div dir="ltr" style="text-align: left;" trbidi="on">
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By Mark Kerzner, President TMG The Mortgage Group<br />
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There was a second emergency reduction in the Overnight rate of 50 basis points on Friday, March 13 – to ensure market liquidity, and in response to the unprecedented economic impacts of the COVID-19 virus. Many are anticipating yet another 50-basis points reduction that would bring the overnight rate to 0.25% in the near future.<br />
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Rates ultimately received by the end consumer are determined based on discounts or premiums from BANK Prime rates<br />
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One of the big questions following the latest emergency Overnight rate reduction by the Bank of Canada last Friday was whether or not Banks would follow suit with their PRIME rates and if so by what amount.<br />
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Yesterday afternoon it was confirmed that Prime lending rates are dropping but the price that new consumers will pay for variable based lending products may in fact be staying flat or potentially going up. Discounts from bank PRIME of up to 1% appear to be vanishing. For existing variable rate and line of credit clients, your rates should be decreasing.<br />
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Just to reiterate, existing discounts for variable in-force mortgages are not changing. Current discounts would related to new, renewing and refinancing mortgage clients who are choosing variable rate products.<br />
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After the Global Financial Crisis over a decade ago, variable rate discounts went from P-85 to P+100 almost overnight. One difference is that the ARM was a much more popular product a decade ago as the spread between it and fixed rate was much more pronounced. Today, the vast majority of consumers have been taking fixed mortgages, and are likely going to continue to do so.<br />
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Some have been asking questions about how is it now, that with the reduction in PRIME rates, are we seeing increases in mortgage lending rates. As bond yields fluctuate (in part due to the oscillating markets) and liquidity premiums starting to dramatically increase, the cost of funds and the desired margins earned by lenders increases.<br />
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The Government and Regulators are using other fiscal policy stimulants to work to protect the economy as well.<br />
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To stabilize funding, the Government of Canada, through CMHC, <a href="https://business.financialpost.com/real-estate/ottawa-to-buy-up-to-50-billion-in-mortgages-in-move-that-harkens-back-to-2008" target="_blank">announced</a> yesterday they were buying $50 billion of insured mortgage pools.<br />
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OSFI mandates the rate of the Domestic Stability Buffer – a rate of capital that is set aside to safeguard against shocks in the system. Over the past few years that amount has continually increased.<br />
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It was less than a year ago in April 2019, that the Big 6 banks were required to hold risk weighted capital of <a href="https://www.bnnbloomberg.ca/osfi-tells-canada-s-biggest-banks-to-hike-domestic-stability-buffer-1.1360403" target="_blank">2.25% </a>against the backdrop of increasing indebtedness of Canadian households and increasing ‘vulnerabilities’ faced by those lending institutions.<br />
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Lowering the capital requirements to 1% increases the ability for banks to lend approximately $300B in freed up capital. This is largely anticipated to support small business loans, helping those firms meet immediate business and payroll obligations.<br />
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In the mortgage world one <a href="https://www.osfi-bsif.gc.ca/Eng/osfi-bsif/med/Pages/nr_20200313.aspx?fbclid=IwAR3AKtce8lAVtcVeEyMshZNvZjoHaIhJEN2I0n5ogDkAVw7Ac46O9SkUei4" target="_blank">announcement</a> that received attention on March 13th was OSFI suspending consultation on the minimum qualifying rate for uninsured mortgages. This means the previously announced changes to the Stress Test were now not coming into force. I can assume that OSFI and the Minister of Finance never likely imagined rates dropping this low and having people qualify at 4% (or lower) when they likely consider 4% to be a more normalized rate to begin with (and not a buffer rate).<br />
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For those with mortgages, it’s now very important to speak with a licensed mortgage broker to assess options you may have available to refinance, early renew, extend term, choosing longer term fixed rate products, etc.<br />
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For those of you in financial distress who are existing mortgage consumers you have a variety of <a href="https://www.cmhc-schl.gc.ca/en/finance-and-investing/mortgage-loan-insurance/the-resource/dealing-with-mortgage-payment-difficulties?utm_source=facebook&utm_medium=canada%20mortgage%20and%20housing%20corporation%20%28cmhc%29_organic&utm_campaign=cor-org&utm_term=78eb352b-e0fa-4325-8a96-6546793e1316" target="_blank">options</a> available to you. A mortgage professional can help you navigate that landscape with your current lender and potentially with your mortgage insurer as well. Options may include, payment deferral, loan re-amortization, capitalization of outstanding interest arrears and other eligible expenses and special payment arrangements.<br />
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This situation is unprecedented and is requiring swift and significant action.<br />
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The Bank of Canada and the Federal and Provincial Governments are setting up defence mechanisms during this unprecedented global pandemic. Ensuring the financial system operates, protecting deposits, ensuring liquidity, and providing a means of support for business continuity are at the forefront.<br />
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A mortgage professional has always been best suited to guide you through your personal situation and to provide you with options worthy of consideration. That has never been truer than Today.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-73404913164573346752020-03-07T11:51:00.000-08:002020-03-07T11:51:45.500-08:00Recent changes may be good news for homebuyers<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-size: 12pt;">We’ve had back-to-back changes
recently in the mortgage world – one direct, one indirect. The benchmark rate
used to qualify will change downwards starting April 6, 2020, and the Bank of
Canada (BoC) just cut its key lending rate from 1.75% to 1.25%.</span></div>
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<span style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Two years ago, the stress test was
introduced as a safeguard against rising interest rates, to make sure
homebuyers would still be able to make their mortgage payments if their rate
increased. To qualify for a mortgage, buyers need to qualify at the greater of
2% higher than the contract rate or the Bank of Canada’s average 5-year rate,
which today is 5.19%.<o:p></o:p></span></div>
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<span style="font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Earlier this month,<span style="background: white;"> Minister of
Finance, Bill Morneau, announced changes to the benchmark rate used to
determine the qualifying rate for insured mortgages – mortgages with less than
20% down payment. This change will come into effect on April 6, 2020. </span><span style="background: white;"><o:p></o:p></span></span></div>
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<span style="background: white; font-size: 12pt; line-height: 107%;">There has been mixed response from the financial community
about this change. For some, the new qualifying rate will make it more
affordable; for others, it won’t make much of a difference, especially in
hot-market areas, where prices are rising quickly.</span><span style="background: white; font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p></o:p></span></div>
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<span style="background: white; font-size: 12pt; line-height: 107%;">Then, on Wednesday, March 4, 2020, </span><span style="font-size: 12.0pt; line-height: 107%;">the BoC cut its key lending rate by 50
basis points, from 1.75% to 1.25%, which had an almost immediate effect on
lines of credit and variable-rate mortgages -- banks dropped their prime rate
from 3.95% to 3.45%.<o:p></o:p></span></div>
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<span style="background: white; font-size: 12pt; line-height: 107%;">This means that borrowing costs for mortgages, auto loans and
other lines of credit are set to head lower. </span><span style="font-size: 12.0pt; line-height: 107%;">Consider a $400,000 mortgage on a 2.95% variable rate.
The mortgage rate would shift to 2.45%, and mean about $100 per month in
savings.</span><span style="background: white; font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p></o:p></span></div>
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<b><span style="font-size: 12.0pt; line-height: 107%;">Why is
this happening?<o:p></o:p></span></b></div>
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<span style="font-size: 12.0pt; line-height: 107%;">The interest
rate drop comes on the heels of the US Federal Reserve’s decision to lower its
rate by .50 points due to the global economic challenge posed by the uncertainty
of the coronavirus that will likely affect domestic spending. The BoC’s rate
cut of the same percentage took many by surprise – it was expected that rate
would drop a quarter of a percentage.<o:p></o:p></span></div>
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<span style="background: white; font-size: 12pt; line-height: 107%;">There were also other yellow alerts prior to the coronavirus
– a drop in global equity markets and in oil prices, created uncertainty in the
financial markets. It wasn’t a stretch to think that the same drop in
confidence would hit consumers as well. The BoC does not want to jeopardize
domestic growth.</span><span style="background: white; font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p></o:p></span></div>
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<span style="background: white; font-size: 12pt; line-height: 107%;">With regard to the
stress test, there has been pushback from some economists and housing experts
who say that the new stress test will just further fuel the housing market.</span><span style="background: white; font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p></o:p></span></div>
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<b><span style="background: white; font-size: 12pt; line-height: 107%;">Here’s what we know about the stress
test</span></b></div>
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<ul style="text-align: left;">
<li><span style="background-color: white; font-size: 12pt; text-indent: -0.25in;">Currently, the stress test for insured mortgages is 5.19%
(the minimum rate at which homebuyers must qualify, no matter the actual
contract rate.)</span></li>
<li>The new stress test, if it was in place today, would be approximately
4.89%.</li>
<li>The Big Banks will no longer determine the stress test rate.
This is good news. Banks have been hesitant to cut their-five-year posted rates
(which the stress test is based on). This has made it more challenging for
borrowers to qualify for a mortgage.</li>
<li>Borrower’s will have slightly more purchasing power</li>
</ul>
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<b><span style="background: white; font-size: 12pt; line-height: 107%;">Here’s what we don’t know</span></b></div>
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<ul style="text-align: left;">
<li><span style="background-color: white; font-size: 12pt; text-indent: -0.25in;">How it will affect the average buyer. This will depend on a
variety of factors, including the location of the property being purchased. In
smaller markets, the new benchmark could help affordability for some buyers – in
larger markets such as Vancouver or Toronto, it may have little effect.</span></li>
<li>If it will affect home prices. More consumers qualifying for
a mortgage may increase demand and put upward pressure on prices – there is
still a shortage of properties available for sale.</li>
<li>The new benchmark calculation, as stated, is more flexible.
If interest rates continue to fall, then, in many cases, buying power would
also increase.</li>
</ul>
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<span style="background: white; font-size: 12pt; line-height: 107%;">As always, time will tell how all this will play out and
there is talk that the BoC will cut the rate at least once more this year.</span><span style="background: white; font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p></o:p></span></div>
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<b><span style="font-size: 12pt;">What
does this mean for fixed versus variable-rate mortgages?</span></b><b><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></b></div>
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<span style="font-size: 12pt;">Fixed rates are priced on the bond market, which have
fallen quite dramatically since January, so it’s likely that fixed rates will
continue to move lower. <span style="mso-spacerun: yes;"> </span>Now, with the
BoC rate cut, and the banks following suit by dropping their prime rate, variable-rate
mortgages will also drop.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="font-size: 12pt;">Many factors go into deciding whether to choose a
fixed or variable mortgage, and it’s a topic to discuss with your mortgage
professional.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="background: white; font-size: 12pt; line-height: 107%;">For now, these changes could be good news for homebuyers.</span><span style="background: white; font-size: 12.0pt; line-height: 107%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><o:p></o:p></span></div>
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-36123739532437251752020-01-27T06:17:00.001-08:002020-01-27T06:17:14.544-08:00Know Your Words – Mortgage Words, that is<div dir="ltr" style="text-align: left;" trbidi="on">
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Buying a home is a big investment. With so much at stake, it’s important learn what you can about the homebuying process as well as understanding the “language” of mortgage lending.<br />
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A recent survey conducted by the Financial Consumer Agency of Canada, and the Bank of Canada in 2019 suggested that homeowners don’t have a good understanding of the terminology used in mortgage lending. A large percentage -- 74% of homeowners or soon-to-be homebuyers -- did not fully understand what a mortgage term or amortization period were.<br />
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So, to help you better understand what you’re getting into, here is a partial list of terms to increase your mortgage knowledge.<br />
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<ul style="text-align: left;">
<li><b>Adjustable Rate Mortgage (ARM):</b> A type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. The interest rate resets based on the lender’s Prime rate plus or minus a variance. With most ARM mortgages, different from VRM mortgages (variable rate mortgages) the mortgage payment adjusts automatically with each change in interest rate.</li>
<li><b>Adjustment Date: </b>A date used by the borrower and lender to move payment dates to a schedule that suits the borrower. Between the funding date and the adjustment date, the borrower typically pays interest only vs. principal and interest.</li>
<li><b>Amortization Period:</b> The number of years over which you have to repay a loan. The most common period is 25 years for a first-time homebuyer.</li>
<li><b>Benchmark Rate:</b> A qualifying rate set by the Bank of Canada and can be adjusted at any time. All insured and insurable mortgages must meet the standard affordability tests (Gross Debt Service and Total Debt Service) “as if” the interest rate is the Benchmark Rate. Also referred to as a “stress test”. Designed to ensure that borrowers and the housing market can sustain higher interest rates.</li>
<li><b>Bridge Financing:</b> (Also referred to as Interim Financing) A loan against a property being sold allowing the owner to use their equity to purchase a new property and take possession of the new property before the Closing Date of the sale. There must be a firm sale of the property being sold.</li>
<li><b>Closed Mortgage:</b> A mortgage whose term cannot be altered until maturity, unless the lender agrees and the borrower agrees to pay a fee called a pre-payment penalty.</li>
<li><b>Collateral Charges:</b> Unlike a standard mortgage, a collateral charge is often re-advanceable, meaning the lender can lend you more money after closing without you needing to refinance and pay a lawyer. A collateral charge may not be transferable -- it cannot be assigned (switched) to a new lender like a regular mortgage.</li>
<li><b>Deposit:</b> Money placed under the care of a third party (real estate representative, lawyer or notary) by the purchaser when he makes an Offer to Purchase. The money is paid to the vendor upon closing the sale or returned if the conditions are not satisfied. This is typically held in trust.</li>
<li><b>Downpayment: </b>The part of the home purchase money that is not paid out of the mortgage loan.</li>
<li><b>Equity:</b> The total value of the owner’s interest in a property, calculated as the value of the home less the total outstanding obligations.</li>
<li><b>Fixed Rate Mortgage: </b>A mortgage for which the rate of interest is fixed for a specific period of time (See term).</li>
<li><b>Gross Debt Service Ratio (GDS):</b> The percentage of the borrower’s gross monthly income that is used for monthly housing payments (principal, interest, taxes, heating costs, and half of any condominium fees).</li>
<li><b>HELOC:</b> A home equity line of credit (pronounced hee-lock) is a loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower's equity in his/her house. These are often re-advanceable.</li>
<li><b>Insurable Mortgage:</b> This type of mortgage can now be considered the new “insured mortgage”. These are still eligible for default insurance but may be portfolio-insured at the lender’s expense or high-ratio insured at the client’s expense.</li>
<li><b>Insured Mortgage: </b>A mortgage transaction where the default insurance premium is paid by the client, as is typical in a high-ratio mortgage. </li>
<li><b>Interest Rate Differential (IRD):</b> A compensation charge that may apply if you pay off your mortgage prior to the maturity date, or pay the mortgage principal down beyond the amount of your prepayment privileges, usually in a fixed-rate mortgage.</li>
<li><b>Loan-to-Value: </b>The amount of the mortgage loan compared to the value of the property.</li>
<li><b>Monoline Lender:</b> Monoline lenders focus on just mortgages as opposed to banks and credit unions which offer a variety of services. </li>
<li><b>Mortgage Default Insurance:</b> If you have a high-ratio mortgage (more than 80% of the lending value of the property) your lender will probably require that you purchase mortgage loan insurance, which is available from CMHC, Genworth Canada or Canada Guaranty.</li>
<li><b>Mortgage Life Insurance:</b> Provides coverage for your family should you die before your mortgage is paid off. This insurance can be purchased through your mortgage professional.</li>
<li><b>Open Mortgage:</b> Allows the borrower to pay any amount of the principal, including the entire balance, off at any time without penalty. You may pay a higher interest rate for the flexibility of an Open Mortgage, but perhaps warranted if a sale is anticipated or in the case of buying property to fix up and sell.</li>
<li><b>Portable Mortgage:</b> A mortgage with an option that allows a buyer to transfer a current mortgage to a new property. (Subject to full borrower and property approval)</li>
<li><b>Qualifying Rates:</b> The rate used to qualify a borrower for a mortgage. Lenders use these rates to calculate your debt-service ratio, which is the ratio between your debt and income. This serves as a gauge of your ultimate ability to repay the obligation over the life of the mortgage.</li>
<li><b>Stress test and Stress Test Rate: </b>Similar to Benchmark Rate and used for uninsurable mortgages. The Stress Test rate is the higher of the contract rate plus a government defined increment, currently at 200 basis points, or the current Benchmark Rate. All uninsurable mortgages must meet the standard affordability tests (Gross Debt Service and Total Debt Service) “as if” the interest rate is the Stress Test rate. Designed to ensure that borrowers and the housing market can sustain higher interest rates.</li>
<li><b>Term: </b>The length of time that mortgage conditions, including the interest rate you pay, are in effect. At the end of the term, the borrower (you) can pay off the mortgage or renew for another term. Mortgage terms can range from six months to ten years; the most common is 5 years.</li>
<li><b>Un-insurable Mortgage: </b>These mortgages are not eligible for default insurance and apply to refinances, rental properties, stated income clients, and on purchases greater than $1M.</li>
<li><b>Variable Rate Mortgage (VRM):</b> A type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan. The interest rate resets based on the lender’s Prime rate plus or minus a variance. With most VRM mortgages, different from ARM mortgages (Adjustable Rate Mortgage), the mortgage payment does not adjust automatically change with each change in interest rate. The lender typically reminds you that you may adjust the payment by contacting them. </li>
</ul>
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Of course there are more, but these seem to be the ones that homebuyers often ask about. If you need clarification or have question, contact your mortgage professional.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-15743769330871558832020-01-08T06:51:00.000-08:002020-01-08T06:51:22.707-08:00Reduce your holiday debt<div dir="ltr" style="text-align: left;" trbidi="on">
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Happy New Year! As we enter this new decade, do you have some spending regret? You promised to stick to a budget; you promised to scale down and have an old-school, back-to-basics, holiday. But some items were just too hard to resist.<br />
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Well, you’re not alone. Holiday spending has been ticking up over the past few years, according to a report from PWC Canada. While the 2019 numbers aren’t out yet, PWC predicted that holiday spending would be up 1.9% to an average of CA$1,593. Why? Canadians’ confidence in the economy and their own personal finances is up. And while a quarter of Canadians planned to spend more than they did in 2018, it’s younger shoppers who are leading the charge, with 42% of Gen Z and 35% of millennials bringing more joy to their world.<br />
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Every holiday season, many consumers reach their debt limit. And January is when there is a rise in bankruptcy filings and consumer proposals.<br />
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What can you do?<br />
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Here are a few tips to help get rid of that extra debt quickly.<br />
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<b>Create a budget</b><br />
Know where you’re at financially and start wherever you are. If you’re unsure of where to start, try a budgeting app. Once you know what you earn and what you spend each month -- it helps to see those numbers written out and itemized -- any monies left over can be used to pay off debt. See what bills have high-interest rates, and pay those off first.<br />
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<b>Change spending habits in the short-term</b><br />
Put away the credit cards. Pay at least the minimum amount owed to avoid extra fees, but if you can, pay extra to get that debt down faster. Look at your other expenses and see where you can trim. You can review your grocery budget; cancel subscriptions and/or put memberships on hold.<br />
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<b>Find, or negotiate, a lower interest rate</b><br />
Credit card interest rates can be notoriously high. Sometimes, if your payments have been current, creditors may be willing to reduce the rate if you simply ask. Your card company wants to keep your business, after all, and now is when competitors unleash their most attractive balance-transfer campaigns.<br />
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<b>Get a game plan to pay off multiple cards/debts</b><br />
If you’re still stuck with high-interest cards, list them in order of rates, highest to lowest. A reasonable approach is to attack the highest-interest cards first (making sure you pay the minimum on the other cards) and work your way down.<br />
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<b>Consolidate debt</b><br />
This doesn’t actually reduce debt but it can make monthly payments easier and if the loan has a lower interest rate than a credit card, then you’ll save dollars in the long run. If you own a home, consider speaking with a mortgage professional for a way to consolidate debt.<br />
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<b>Refinance Your Mortgage</b><br />
Mortgage rates are lower than consolidation loans and the increase can be amortized over the life of the mortgage. If you think refinancing may work for you, contact your mortgage professional and review all your current debts.<br />
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<b>Use your holiday bonus</b><br />
If you got one, consider using it toward paying off debt rather than spending it on a vacation or other luxury purchases. I know, you worked hard to get it, but you’ll be less stressed in the long run.<br />
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<b>Life insurance loan </b><br />
If you’ve been paying into a life insurance policy that has built up a cash value, check to see how much is available to you. You won’t be cancelling your policy but companies may let you borrow the cash that’s been accumulated.<br />
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Don’t despair, there is usually a solution for everything.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-56026720246513469452019-12-05T07:40:00.000-08:002019-12-05T07:40:17.242-08:00Some predictions for the 2020 housing market<div dir="ltr" style="text-align: left;" trbidi="on">
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We have seen many challenges in the housing market over the past few years. Housing prices have been up and down; housing sales were down but have rallied in many areas of the country in the last half of 2019. The government also introduced the First Time Home Buyer Incentive. Yet, affordability continues to be a hot topic across Canada.</div>
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Interest rates inched up slightly for variable rates and lines of credit but on Wednesday, Dec 4, the Bank of Canada left the Prime lending rate at 1.75%. Growth in Canada did slow in the third quarter of 2019, yet consumer spending expanded moderately, supported by stronger wage growth. Housing investment remained strong throughout the year.</div>
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We’ve also seen a slight increase to fixed-rates due to the upward pressure on bond yields and increases to the cost of funds. Still, rates are relatively low – perhaps this is the new normal. </div>
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According to a recent report from RE/MAX, an increase in consumer confidence could be a key factor affecting the housing market in 2020. </div>
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The report found that Canadians have adjusted to the mortgage stress test, which was introduced three years ago, and only two-in-ten Canadians say that the mortgage stress test negatively affected their ability to purchase a home in 2019. </div>
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The report also found and that older millennials are now moving into their peak earning years and will drive the market in 2020. RE/MAX found that more than half (51%) of Canadians are considering buying a property in the next five years, especially those under the age of 45. This is up from 36% at the same time last year.</div>
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<b>Here’s a cross-Canada snapshot:</b></div>
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<b>British Columbia</b></div>
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Consumer confidence in early 2019 was shaky -- the number of sales declined by 7% cent. However, confidence is returning and most regions are experiencing a balanced market. The prediction is that BC will continue to strengthen through 2021 and become a powerhouse once again.</div>
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<b>Prairies</b></div>
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Alberta’s economy was still sluggish over the year and the unemployment rate is relatively high; however, Calgary is seeing some signs of life as its population grows. According to a national housing market outlook published by the Canada Mortgage and Housing Corp. (CMHC), Calgary is expected to see a return to market growth over the next two years, supported by an increase in the city’s population. This may fuel an increase in housing starts in 2020 and 2021.</div>
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In Winnipeg, residential sales were up by 5% over last year. Regina experienced the same increase. Construction starts and house sales are both expected to improve in Saskatchewan in 2020. CMHC predicts that anywhere between 700 to 1,400 new homes will be built in Regina next year and 1,300 to 2,000 new homes built in Saskatoon.</div>
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The markets in the Prairies are a mix of buyer's and balanced markets and are expected to stay the course going into 2020.</div>
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<b>Ontario</b></div>
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Toronto and the GTA are poised for a strong housing market in 2020. Most other cities in the province are expected to show strong growth as well, especially Ottawa and Windsor, and it’s predicted sales may rise by about 7%. Overall, it’s a seller’s market.</div>
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<b>Quebec</b></div>
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The Quebec housing market is on fire. The market is getting a boost by low interest rates and a vibrant Quebec economy, which supports wage increases and buying power. The challenge is a shortage of inventory, which may be the reason the market is expected to remain strong into 2021. Single-family homes are outshining other types of properties.</div>
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<b>Atlantic Canada</b></div>
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Affordability is making this region is attractive to homebuyers, and they’re buying detached, single-family. The region's growing condominium market is being driven by retirees. Increased consumer confidence is expected to stabilize the region. Halifax and Saint John have seen solid price growth of 6% and 5%, respectively. Most markets are balanced.</div>
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<b>The Market Overall</b></div>
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The housing market has turned around slightly in the last half of 2019. A Reuters’ poll found that a strong domestic economy, rising immigration and lower mortgage rates have helped the housing market make a comeback in the second half of this year. "It is not just low interest rates that are helping the housing market – the fundamental support is demographic and that is largely from a rapidly growing population driven by international migration," Sal Guatieri, senior economist at BMO said in an interview with Reuters.</div>
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<b>What will 2020 bring?</b></div>
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The Canadian Real Estate Association’s (CREA) prediction for 2020 is that housing sales will continue to improve through 2020, albeit slowly. National home sales are forecast to rise by 7.5% to 518,100 units next year. Ontario and Quebec are predicted to see sales rise by about 7% in 2020, while activity in Alberta will recover by about 5% compared to 2019. The number of homes trading hands in other provinces is predicted to edge up or down only marginally.</div>
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With all the positives going into 2020, if you’re thinking of buying a new home, renewing a mortgage or refinancing an existing mortgage, or just want an update about your local market, reach out to your TMG mortgage agent.</div>
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-89462366321402213242019-11-07T07:48:00.000-08:002019-11-07T07:48:39.236-08:00Buying a house doesn’t have to be stressful<div dir="ltr" style="text-align: left;" trbidi="on">
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Buying a house should be an exciting time but it can get pretty stressful, not only for first time home buyers, but for move-up buyers as well.</div>
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The number one worry is finding problems after moving in. The next worry is that prices will drop and the house won’t be worth the original purchase price.</div>
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You can reduce some of that stress and worry by putting together a team of experts who will guide you through the entire process. </div>
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It starts with a mortgage professional who will take a look at your finances, including your credit score, to qualify you for a mortgage. A lot of information about you and your credit management abilities come up during this process. For example, derogatory items may be on your report, but that doesn’t necessarily deny your ability to qualify for a mortgage. Everyone’s situation is different and a mortgage agent is familiar with most situations, and can offer options.</div>
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Once you know the amount of house you qualify for, you can confidently work with a Realtor to find the right home for you. On average, home buyers spend five months house-hunting and visit 10 locations before deciding to buy. It’s certainly a good idea to take your time to make sure to get the house that’s right for you. </div>
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Interestingly, a 2013 BMO Psychology of House Hunting report found that 33% of home buyers felt rushed into making a purchase – that increased to 39% for first timers. Sixty-eight per cent were prepared to settle for a home that was less than perfect. Four-fifths of prospective buyers said they know a home is right for them as soon as they step inside. So, you may not be alone.</div>
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Once you’ve put together the Offer to Purchase with a Realtor, working with a trusted lawyer is the best way to make sure there are no surprises at closing. The bottom line is to take your time, work with professionals and do some research. </div>
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<b>Here are the suggested steps to make sure you get on the right track and into your new home:</b></div>
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<li><b>Determine the location and the type of home to suit your needs.</b> Most people will have an idea of where they want to purchase their new home based largely on familiarity and convenience. For example, living close to work or schools might be a priority, or selecting a certain area of town with parks and amenities, and/or walkability scores. This is also a good time to think about how much you want to spend and what you can afford.</li>
<li><b> Get your finances in order.</b> During the pre-approval process is a good time to make sure you have the finances to cover your down payment and disbursements on your anticipated purchase.</li>
<li> <b>Start your home search</b>. How you find the perfect property is entirely up to you. Many home buyers enlist the services of a Realtor. It’s important to only look at homes within your budget.</li>
<li><b>Hire professional services.</b> You will need a lawyer to complete a real estate transaction. A real estate lawyer ensures your paperwork is correct and that the transaction is complete. They will review the contract and mortgage documents, conduct a title search, purchase title insurance on your behalf, register the property in your name, get signatures, prepare a Statement of Adjustments that shows the amount you will pay in closing costs, and collect and disburse fees.</li>
<li> <b>Hire a home inspector. Home inspections</b> have become part of the homebuying process for both new home purchases or resales. It might seem like a waste of money to pay for a home inspection for a newly-constructed home, but you might consider getting an inspection a few months before the expiration of the New Home Warranty. Better safe than sorry.</li>
<li><b>Insurance Agent.</b> Lenders also require you to have fire insurance so an insurance agent will help you find the best coverage and the best price.</li>
<li><b>Make an offer. </b>This is done by presenting the seller with an Offer to Purchase. Sellers have the right to accept, reject or put in a counter offer. Remember to include all necessary details in your purchase offer. The deposit will be paid, in trust, to the Realtor.</li>
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If you’re planning on purchasing a first home or a new home, then get started with a mortgage professional.</div>
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-4659598448598491392019-09-24T08:20:00.000-07:002019-09-24T08:20:32.548-07:00Use the Smith Maneuver to Build Wealth<div dir="ltr" style="text-align: left;" trbidi="on">
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What’s the Smith Maneuver? It’s a wealth-building strategy to create a tax-deductible mortgage. You may have heard, and envied, that mortgage holders in the US can claim their mortgage interest as a tax deduction. Well, you may be able to use that strategy in Canada with the Smith Maneuver. Here’s how it works.<br />
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In Canada, if you borrow money to invest in a product that produces an income such as an investment property or a dividend paying stock, the interest on the borrowed money may become tax deductible.<br />
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If you borrow against the equity in your home, invest it in income-producing products, then you can use the tax refund to further pay down the mortgage. By repeating that a number of times, you can pay off your mortgage.<br />
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The man behind it all was Fraser Smith, a financial strategist based in Victoria, British Columbia. He pioneered The Smith Maneuver, a ground-breaking, legal strategy that lets ordinary Canadian homeowners make their mortgages tax deductible. In his work, he saw that too many Canadians were waiting until their mortgages were paid off before they started to build an investment portfolio, missing out on years of compounding interest, and putting themselves in the position of being house rich and cash poor in retirement, unlike his wealthier investors who used tax strategies to grow wealth. So, he learned the rules of tax deductibility and penned the book The Smith Maneuver for all Canadians.<br />
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In a simplified way -- here’s how it works: It starts with a re-advanceable mortgage, which is a mortgage linked with a line of credit. The credit limit for your mortgage plus the credit line is normally 80% of the appraised value of your home, but new rules have changed that to 65% of the value of your home. With each mortgage payment, you pay down some principal, which immediately becomes available credit in the credit line. You can now borrow this amount to invest directly from the credit line. Your investment credit line interest is normally tax deductible and you should receive a refund, which will be small in the beginning.<br />
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Use the line of credit portion to invest in incoming-producing products but never in an RRSP – you’ll lose the tax deduction.<br />
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At tax season, you can deduct the annual amount of interest you paid on your line of credit against your income. Then apply the tax return and investment income against your non-deductible mortgage and invest the new money that’s now in your line of credit. Repeat this until your nondeductible mortgage is paid off.<br />
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By doing this you get to build a large investment portfolio without waiting to pay off your mortgage first; you get to quickly pay down your non-deductible mortgage in a hurry; and your new investment loan is tax deductible.<br />
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To learn more about this strategy and to see if it can work in your situation, contact a mortgage broker.</div>
The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-8460919000197336752019-08-30T07:42:00.000-07:002019-08-30T07:42:27.664-07:00Home Ownership, yes! <div dir="ltr" style="text-align: left;" trbidi="on">
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OOPS, what happened? I moved in and I didn’t consider all that needed to get done.<br />
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Most homeowners admit to making at least one mistake when they purchased their home, according to a homeownership poll conducted by RBC a few years ago. <br />
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While owning a home is a dream come true for many, it can also be stressful if you find you’ve made an error. <br />
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Below are the top three mistakes the poll found, along with a few more you might want to think about before taking the leap.<br />
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<li><b> Property needed work – a lot of it.</b> Even with a home inspection, new homebuyers may get into a home and find it’s become a money pit. Don’t rush in, sit down and plan.</li>
<li><b>Not having a bigger down payment.</b> Once in a house, many homeowners are overwhelmed with the costs. Once again, don’t rush in, sit down and plan.</li>
<li><b>No Home Inspection.</b> If you skip this step you might find the cost of repairs needed may be astronomical, especially if you purchase an older home. An inspector will look at the overall foundation and structural features of the house, the plumbing system, will look for the presence of mould or pest infestations, check the heating and air conditioning, as well as the electrical system.</li>
<li><b>Not budgeting for the increased costs.</b> When considering the extra costs, remember there are mortgage payments, property taxes, and usually higher utility bills. On top of that you’ll may want to redecorate, perhaps buy new furniture and/or appliances. There may be some landscaping work to be done and you may want to renovate. </li>
<li><b>Not knowing the closing costs.</b> Closing day is coming and you get the call from the lawyer to come in and sign the papers and, bring a certified cheque or bank draft for X amount of dollars. WHAT? Yes, fees and disbursements. There’s the land transfer fee, the title fee, the lawyer’s fee, etc. Don’t get caught short.</li>
<li><b>Forgetting about future needs.</b> If you’re planning on having kids, you may want to consider the type and size of home you’re purchasing. </li>
<li><b>Not getting a pre-approved for a mortgage</b>. You won’t know what price range you can afford and what a lender will give you without a pre-approval. It’s easy; it’s free and absolutely necessary. If something turns up that may prevent you from purchasing, a mortgage professional can offer you solutions. </li>
<li><b>Falling in love with a house.</b> Fall in love with each other but not with a house because you may not listen to some good advice. You will ignore the obvious cracks in the foundation because it has 18ft. ceilings and has that great stone fireplace you’ve always wanted. Beware of buyer’s remorse.</li>
<li><b>Not checking market value of neighbourhood.</b> This can cause some purchasers to pay too much; especially a home that has been upgraded to the max in an area that won’t keep its value – unless you plan to live there the rest of your life.</li>
<li><b>Focusing too much on interest rates.</b> Don’t rush in to a market because the rates are low. And don’t focus on getting the lowest rate. Focus on the mortgage loan that works best for you and your financial situation. </li>
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Having said all that, the most recent RBC poll (April 2019) found that Canadians are confident and know what they want.<br />
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<li>Eight-in-10 Canadians say a home or condominium purchase is still a good investment</li>
<li>Canadians feel it makes more sense to buy than rent </li>
<li>Canadians are well positioned to weather a potential downturn in housing prices or an increase in interest rates </li>
<li>Affordability and being in a safe neighbourhood top the list of what Canadians must have, while buying in ‘the right‘ neighbourhood is less of a concern </li>
<li>Canadians are most willing to sacrifice the conveniences of being close to a major highway (16%), dining and entertainment (13%), good schools (11%) and public transit (10%).</li>
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So, bottom line is: Don’t rush in, sit down and plan. A mortgage professional can help you get that home by walking you through every step of the home buying process, with fewer mistakes, and fewer regrets.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-38824476994587804532019-08-12T09:25:00.000-07:002019-08-12T09:25:13.883-07:00Important Mortgage Features to Consider<div dir="ltr" style="text-align: left;" trbidi="on">
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Real estate continues to be a hot commodity in most parts of the country, despite the many changes we’ve gone through over the last few years. Prices in some areas are up and listings are in short supply in other areas, but the housing market overall has been moderating over the last year, and analysts are forecasting a balanced market for the rest of 2019 and into 2020.<br />
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Interest rates are comparatively low and competition among lenders to offer favourable rates is high. It’s always a good idea to read the fine print to make sure you’re getting the best mortgage product, at the best rate, for your particular need.<br />
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Because lenders do differ, it’s important to know what features are important to you before deciding on a lender. Here are six characteristics of mortgages to assist home buyers assess their offers:<br />
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<li>Blend and Extend. The “increase and blend” option has been around for almost 20 years and may be an option in some situations. For example, if your current lender doesn’t allow a change in the maturity date, then you’re locked into the remaining time left on the term. While that’s not the end of the world, in a rising rate environment this can be inconvenient. If you’re moving up, and buying at your maximum loan-to-value, you probably don’t want just a 1 to 2-year term, and with the new benchmark rule, you may not even qualify. If rates have dropped since the original mortgage you could run into the “Interest Rate Differential” (IRD), which might be too large and you can’t move. </li>
<li>Early Payout Penalty Calculation. Some chartered Banks are known for their extremely large IRD penalties. If you don’t know whether you’ll keep the mortgage for the entire term then make sure you understand the payout penalty. </li>
<li>Mortgage Registration. Is the mortgage registered as a non-standard charge, either a running account, or a collateral charge? If so, then it becomes challenging to switch this mortgage out to take advantage of lower rates, although collateral switches are becoming more widely available. Consider this scenario: If the lending institution knows you will have to incur $1,000 or more in possible costs, as well as put in the time and effort to complete a refinance with another lender, then there might be little incentive to offer you best rates at renewal time when a small rate reduction might be enough to keep your business. On the other hand, there are advantages such as making it easier to qualify with fewer expenses down the road if you need to access additional funds.</li>
<li>Pre-Payment Privileges. Is the lender offering 10/10, 15/15, or 20/20? That means allowing prepayments of 10%, 15 % or 20% annually on the outstanding balance of the mortgage. Also, can these lump sum payments be made anytime per year or only at the mortgage anniversary? And how easy is it to make lump sum payments? Do you have to go into the branch, call a 1-800 number? Or can you simply go online and do it. These are important factors to consider.</li>
<li>Porting Features. This feature can vary from lender to lender. Read the fine print, especially if you know you might need to move before the mortgage maturity date. Some lenders require a sale and purchase to occur on the same day in a port, which can be inconvenient. A more flexible, and available program allows typically up to 60 days gap or 60 days overlap; and then there can be exceptions allowing longer periods beyond that.</li>
<li>Online Access. All of the chartered Banks offer online access as do a number of monoline lenders. Generally online access allows you to see your balance, make additional lump sum payments, or make a payment increase. This can be a time-saving feature for tech-savvy consumers. </li>
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There is more to getting a mortgage than just rate. Talk to a mortgage broker first who can help you navigate the mortgage terms and who can help you find the best product for your needs.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-54650261482815577332019-07-17T10:57:00.000-07:002019-07-17T10:57:27.251-07:00Mortgage Fraud – Don’t Let It Happen to You<div dir="ltr" style="text-align: left;" trbidi="on">
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There has been a growing concern about fraud in the industry for a number of years. According to Equifax, suspected fraudulent mortgage applications have increased by 52% in Canada since 2013.<br />
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Because the mortgage industry’s rules and guidelines have become more complex, there is increased diligence among lenders and brokers.<br />
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The mortgage stress test has made it more difficult for some consumers to qualify for a mortgage. And in today’s high-tech world, it’s not always the case that lenders and borrowers meet face-to-face.<br />
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There is also pressure for some files to close quickly, from consumers who expect their real estate transactions to be fast, with minimal paperwork, which could lead to potential fraud.<br />
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<b>Categories of Fraud</b><br />
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<b>These are the general categories of fraud:</b><br />
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<ol style="text-align: left;">
<li>Fraud to get shelter. An individual commits fraud in order to get a mortgage on a home they could not otherwise obtain or afford.</li>
<li> Title Fraud. The identity of a homeowner is assumed and a new mortgage is taken out assuming the homeowner’s name and credit history but with loan proceeds going to the fraudster. The fraudster will use forged documents to transfer ownership and will use fake identification to get the mortgage on the property.</li>
<li>As part of other criminal activities. A mortgage may be fraudulently obtained to get access to a home for illegal purposes.</li>
</ol>
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<b>These are the general types of fraud that occur:</b><br />
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<ol style="text-align: left;">
<li>Fraud Involving Property. Overvaluation of property; misrepresentation of property characteristics; builder bail-out scheme using a “straw” buyer.</li>
<li>Fraud Involving Employment Status. Forged employment letter; forged or altered pay stub; inflated income; misrepresentation regarding self-employment</li>
<li>Identification Fraud. Forged or altered ID, nonexistent individual</li>
<li>Equity Fraud (Down Payment). Bogus gift letter; bank account statements not the borrower’s</li>
<li>Title Fraud. Fraudulent title transfer when mortgage has not been paid in full; property not in name of seller; identity theft relating to title fraud</li>
</ol>
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<b>Fighting Fraud</b><br />
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It’s in the best interest of the real estate and mortgage industry to work together, along with consumers, to reduce fraud. To further protect yourself and to help avoid the situation:<br />
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<ul style="text-align: left;">
<li>Always store personal information, including birth certificate, SIN, bank account numbers and credit card details, in a secure place</li>
<li>Shred documents, such as credit card statements</li>
<li>Never reply to spam or e-mails that ask for banking information, credit card details, passwords or other sensitive information</li>
<li>Safeguard your personal financial information.</li>
<li>Contact your mortgage lender or broker first if you are having difficulty making your mortgage payments.</li>
<li>Consult your lawyer before giving another person a right to deal with your home or other assets.</li>
<li>Do a land title search with your provincial or territorial land registry office. This search will show the name of the property owner and any mortgages or liens registered on the title.</li>
</ul>
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You can also help to protect yourself by inspecting your credit report at least annually by contacting Canada’s two credit-reporting agencies: <a href="https://www.consumer.equifax.ca/personal/" target="_blank">Equifax Canada</a> and <a href="https://www.transunion.ca/" target="_blank">TransUnion Canada.</a><br />
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Fraud is serious business in Canada and has a negative impact on the entire industry. Fraud hurts people, not just companies or the government. When lenders are defrauded, consumers pay the price. Losses from fraud could ultimately result in higher interest rates and fees for borrowers.<br />
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TMG mortgage professionals stay up-to-date about mortgage fraud through internal training sessions, and through industry educational sessions. They understand the concept of fraud, recognize fraudulent schemes and understand their consequences. This knowledge helps brokers protect themselves, their clients, their business relationships, and the industry as a whole.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-22834391237794888362019-06-27T06:44:00.001-07:002019-06-27T06:44:12.261-07:00There’s real estate life outside of Toronto and Vancouver<div dir="ltr" style="text-align: left;" trbidi="on">
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If you read the headlines about the housing industry, you’re bound to think that affordability is out of reach, and if you’re a first-time home buyer, you may think you will never be able to own a home. You’d be forgiven to think that. It’s likely you’re reading about the two major centres – Vancouver and Toronto. What’s happening in these two cities seems to dominate the news, but it’s not the whole story. </div>
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There is affordability and life outside these two biggies and your dreams of home ownership are very much alive. </div>
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In a recent news article, Phil Soper, CEO of Royal LePage said the move to towns near secondary municipalities has been gaining in popularity. He went on to say that eight of the 10 fastest appreciating Canadian areas are in Ontario, led by areas surrounding Windsor, London, Kitchener-Waterloo-Cambridge, Kingston, Niagara/St. Catharines, Hamilton, Belleville/Trenton and Guelph, he said.</div>
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In Ontario, Brad Knight, a mortgage broker with OMAC powered by TMG, is seeing the (Spring) market coming to life, finally. </div>
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“For the longest time, we had no inventory but now we’re seeing more listings and slightly higher prices.”</div>
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Knight works in the St. Thomas/London area and is seeing lots of families coming from Toronto. “Because there is more flex-time in the workplace and many who can now work from home, the market here is attractive with the average price of a single-detached home selling for approximately $365,000.”</div>
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The average days on market is 15-22; but with the additional listings, some are selling much faster, if the property is priced right, Knight said.</div>
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He also credits the better weather for some of the boom, but still finds the mortgage stress test coming into play for first time homebuyers. He’s not sure how the new government incentive, slated to roll out in September, will affect buyers.</div>
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“Right now, the weather has improved, mortgage business is up and it’s turned out to be a good June.”</div>
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In Corner Brook, Newfoundland, the mortgage business is not bad. According to TMG broker Brian Patey, the year started slowly but now the market has caught up to where it was last year. </div>
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“We don’t get the big swings here like they did in St John’s, where the market was hot, due to the oil industry in Alberta, but now that’s dried up and the market there has calmed down. But here, we’re pretty steady”, he said.</div>
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The market in Corner Brook is small and homes can be bought for under $200,000, which according to Patey are selling pretty fast now – the $300,000 and higher sit a bit on the market.</div>
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It’s still tough for first time home buyers because of a lack of jobs. “There’s not a lot of industry coming into this area,” Patey said. </div>
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Despite the challenges, he is optimistic and so are the Realtors in the area. The biggest change for Patey has been the time of year when the market gets busy. “It’s not a typical Spring market anymore. Now I can be very busy in January and February.”</div>
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The real estate market in Saskatoon is starting to rebound according to Corinne Lokinger, a real estate agent with Coldwell Banker. “We have seen a 16% increase in sales this year over least and a 21% increase in condo sales.”</div>
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Although still considered a down market, condo sales are doing well and consumer confidence has risen, which is stabilizing the market she said. “First time home buyers are buying the lower-priced houses and condos.”</div>
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For a while in Saskatoon, listings were down and days on market were longer – upwards to 77 days. But as the prices stabilize and the listings pick up, Lokinger is seeing that the houses that are priced right, are selling.</div>
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Lokinger also said the market there certainly felt the slowdown after the stress test was introduced, but it’s turning around now.</div>
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“I’m feeling pretty good about what’s happening now. I’ve been talking to mortgage brokers and to other Realtors -- call it intuition, but it seems like something big is coming to Saskatoon,” she added.</div>
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Back in Northern Ontario, another smaller market TMG mortgage broker Taya Weiszhaar saw a slow start to the year but business has now picked up. She services areas around Kirkland Lake, North Bay, and Sudbury.</div>
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“We had a lack of inventory and high prices,” she said. “Now, we have good, quality listings that are priced right. Some are on market for only three days.”</div>
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Interestingly, the largest part of her business comes from first time home buyers who are keen to own a home and are interested in knowing their options. </div>
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“I’m not seeing a problem with these buyers getting their down payment but our prices are low compared to major centres – you can buy a house for under $280,000 and I saw a couple listed at $89,000 and $108,000. I also advise them to buy the house first, the vehicle second.”</div>
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Weiszhaar also finds that first time home buyers are in some ways easier to finance because they haven’t accumulated the debt that her repeat buyers have. </div>
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As for the new government incentive Taya is not impressed and says it really won’t change qualifying in her market. “The first-time buyers in my market are motivated and will work hard to save the down payment,” she said. “If the government really wanted to help, they would lower the benchmark rate so that more people can qualify.”</div>
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She feels good about the future and says, “People buy houses when they’re ready, no matter the rate. They are looking for the right house at the right price and that’s it.”</div>
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-63890951446847821452019-06-10T09:47:00.001-07:002019-06-10T09:47:47.434-07:00The Ongoing Stress Test Debate<div dir="ltr" style="text-align: left;" trbidi="on">
By Mark Kerzner,<br />
President, TMG The Mortgage Group<br />
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The controversy over the mortgage stress test continues. Banks, economists, mortgage lenders, Realtors, mortgage brokers, and its association Mortgage Professionals Canada (MPC) are urging government to make some changes, not to get rid of the stress test altogether, but to consider some variables, such as income growth and mortgage repayment which may not have been factored in.<br />
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So it was curious to hear Evan Siddall, CEO of Canada Mortgage and Housing Corporation (CMHC), imploring the Standing Committee on Finance to “..look past the plain self-interest of [mortgage brokers]… Apparently, the MPC [Mortgage Professionals Canada] is content to see home builders, real estate agents and mortgage brokers receive short term benefits while Canadians bear the long-term costs.” <br />
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I am not sure where this personal attack is coming from or how this advances his agenda. As an industry we have provided a valuable sounding board and meaningful suggestions for tweaking rule changes to ensure a healthy and stable housing market today, and for the future.<br />
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When many industry experts support the position that a stress test could consider other factors such as principal repayment and income growth, for example – and such support also coming from very credible bank economists -- some of whose employers choose not to deal with brokers directly-, then it's uncertain why Siddall would personally attack an Association representing the broker channel.<br />
In addition, the Chief Economist of MPC, Will Dunning, just published a report further detailing reasons why the stress test should to be tweaked, along with market commentary by various economists and their positions on the subject.<br />
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The stress test was introduced without consultation from industry insiders and stakeholders and now the Government has a locked-in position they seem unwilling to change. The stress test is having a negative impact on the housing market and could very well affect the economy in the long term.<br />
However, the story is not one side advocating for the all-out removal of stress tests against the other side locking into an unchangeable position.<br />
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Let’s look at the entire story. When the February 2010 stress test was introduced on mortgage terms less than 5 years, and on variable-rate products, it was done seemingly to protect a consumer’s ability to handle payments in an increasing rate environment at the time of renewal.<br />
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This time around it appeared as though the stress test was introduced for different reasons. The overall amount of sovereign debt was considered too high as it approached $700 billion. There was concern about runaway prices in Toronto and Vancouver.<br />
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However, the stress tests introduced in October of 2016 by CMHC and then extended to conventional mortgages by the Office of the Superintendent of Financial Institutions (OSFI) in January 2018, was ostensibly to reduce future debt burdens. <br />
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The result has kept an estimated 40,000 would-be homebuyers on the outside looking in, according to an April TD Report. According to the Globe and Mail “The government [was] responding to concerns that sharp rises in house prices in cities like Toronto and Vancouver could increase the risk of defaults in the future should mortgage rates rise.”<br />
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From my perspective, if we are going to be heavily relying on a Benchmark rate in qualifying applicants, then the way the Benchmark rate is determined should also be changed.<br />
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It is currently set from the mode of the big banks’ posted rates. It should be determined either by a market-driven rate (perhaps as a delta to bond yields), have an established floor (say 4.25% for example) or relate specifically to the contract rate itself.<br />
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We have seen interest rates drop over the first two quarters of 2019, yet bank posted rates and the stress test have not. As interest rates were rising last year the banks chose to increase their posted rates, and the Benchmark rate was correspondingly increased. <br />
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When the 2016 stress tests were introduced, the Benchmark rate on which it was calculated was 4.64%. At the same time the discounted 5-year fixed rates were in the 3.69% to 3.99% range. Today, 5-year fixed rates can be found in the 2.89 to 3.19% range and the Benchmark rate is 5.34%.<br />
For clients renewing their mortgages AND who have made their contractual payments as agreed, to qualify them at a rate higher than their contract rate if they want to transfer their mortgage is simply anti-competitive.<br />
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The mortgage industry supports high underwriting standards to ensure a buffer exists in our collective ability to withstand higher interest rates.<br />
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Instead of creating animosity and adversity, let’s work together to create an environment that encourages qualified and responsible First Time Homebuyers in accessing the market.<br />
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If you are a mortgage customer looking to access the market make sure to use the services of a mortgage broker who can help you navigate the rules, options and opportunities to align with your long term goals and objectives.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-9606545343089806302019-06-03T06:21:00.002-07:002019-09-13T06:33:47.091-07:00Canadian Housing Affordability Improves – Really! Here’s Why <div dir="ltr" style="text-align: left;" trbidi="on">
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Housing affordability has been big talk in the country for a few years now. We’ve had rising interest rates and rising house prices, to a point where government felt it had to intervene to mitigate any negative impacts on household debt. To guard against that, and to perhaps force house prices to come down, the mortgage stress test was introduced, whereby borrowers needed to qualify at a higher rate than the actual contact rate.<br />
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Conventional wisdom is that falling prices should improve housing affordability but the stress test resulted in a percentage of the population, mostly first-time home buyers, getting priced out of the market.<br />
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Over the past six months we have heard anecdotal evidence that the situation is improving, and now we have some hard numbers that explains why. National Bank’s latest study of 10 major Canadian housing markets found that income growth was the reason, and that it had outpaced home prices -- and it looks as if that trend will continue. Rising incomes along with lower home prices, and relatively low interest rates, are a good start on the road to affordability.<br />
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National Bank measures affordability by looking at how much household income is spent on mortgage payments. Experts suggest that households should spend no more than a third of their income on housing costs. In the first quarter of 2019, the amount needed to pay mortgage payments on a average Canadian home was lower than the last quarter in 2018.<br />
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This is the case even in Vancouver, in both condo and non-condo markets. For example, in the condo market, a typical Vancouver household in the first quarter of 2019 the income needed to service a mortgage was down half a percentage point, quarter-over-quarter. And, it’s the first improvement in 15 quarters in the condo market. The improvement was even better for a house at 2.5% lower.<br />
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In Toronto that measure dropped a full percentage point but consumers still need a substantial chunk of their income to cover housing costs on an average Toronto home. However, more buyers are looking outside these larger areas where homes are more affordable. These include Calgary, Edmonton, Saskatoon, Regina Winnipeg, Saint John, Halifax and St John’s.<br />
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The National Bank’s two economists, Matthieu Arseneau and Kyle Dams, were quoted as saying, “…mortgage rates were not a drag on affordability for the first time in seven quarters.” They remain confident that more relief is on the way.<br />
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Even the Bank of Canada expressed growing confidence that the country’s economy is rebounding. Interest rates remained unchanged for a fifth straight time and said recent data has “reinforced” their view a slowdown at the end of 2018 and early 2019 was temporary.<br />
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However, we’re still not out of the woods yet --there remains the issue of the stress test. There has been a concerted effort among lenders and the real estate and mortgage broker channels to lobby government to consider making changes. The mortgage brokers channel’s association, Mortgage Professionals Canada, (MPC) has been campaigning aggressively to modify the mortgage stress test.<br />
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Many economists have added their voices to the campaign against the current stress test, pointing to the negative impact it’s had and/or will have on the housing market and on the economy – reduced housing activity can have long term impacts.<br />
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One of the core issues in their arguments is that the government didn’t take into account rising incomes. MPC chief economist Will Dunning makes a good case in his recent report titled, “The False Binary” that to take into account the future growth of borrowers’ incomes, the stress tests should be set at 0.75 percentage points above the actual contracted interest rates – they are currently at a minimum 2 percentage points above contracted rate.<br />
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The economy may be gaining strength; incomes are rising and affordability is easing in many areas. What home buyers and the housing market needs now is a little help from government. No one is advocating to remove the stress test, but perhaps they might consider lowering it.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-11465487361240142392019-05-06T07:14:00.000-07:002019-05-06T07:14:31.120-07:00Buy a House Now or Wait?<div dir="ltr" style="text-align: left;" trbidi="on">
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There are a lot of questions surrounding affordability in the housing market. There is some uncertainly as to whether the housing market will continue to slow down, with prices starting to decline in some regions, which may make buying a house a reality for first-time home buyers. A common question is: Should I buy now or wait until later. Let’s take a look at a few factors.<br />
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<b>Market Slowdown and the decision to buy</b><br />
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There is no doubt the market has slowed down compared to what it was doing two years ago, prior to the introduction of the B-20 rules and the mortgage stress test. It appears that the dire warnings from industry insiders about the impact the stress test would have on the housing market has played out as predicted. While some welcomed the stress test, it may have worked too well, to the point of inertia.<br />
When housing prices and sales steadily rise, buyers and sellers feel confident about their decisions, but confidence in markets takes a dip when prices or sales fall or rise rapidly. Buyers and sellers want to know if the market has hit bottom or if it will decline further. Prospective buyers’ question when they should jump in.<br />
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Also, buyers can have different motivations: They may be transitioning from renting, switching homes, or looking for an investment property. Family make-up is another factor – some will have school-aged children, others may have extended family arrangements, still others may be downsizing. The right decision for a buyer or a seller depends on their circumstances and motivations.<br />
A buyer may want to hold on to see whether prices will drop further over the summer, which may or may not be an effective strategy. For others, especially parents of young children, a move during the school year can be challenging.<br />
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Sellers usually want to wait for prices to rise, or at least stop falling, before they list their properties.<br />
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<b>Spring Market</b><br />
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The Spring buying market is late due to weather conditions across the country but there are some signs of improvement. The most recent data shows slow but steady activity in home sales across the country, with prices dropping in some regions – it’s all very fluid.<br />
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<b>The Economic Big Picture</b><br />
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The Bank of Canada (BoC) has taken a new position on interest rates and is leaving them comparatively low. In fact, there are rumblings that rates could go down in the near future. Our economy is closely tied to the US economy where the Fed has stopped raising rates – Canada’s interest rates can’t really deviate too far from US rates.<br />
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At its latest interest rate announcement, the BoC left its rate unchanged, at 1.75%. More importantly, the Bank removed any reference to future rate hikes and instead acknowledged that “monetary policy needs to maintain a degree of accommodation … until the economic outlook improves.”<br />
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The Bank acknowledged that the slowdown in global economic growth in the latter part of 2018 was “greater than expected” and it attributed this in large part to uncertainty arising from “trade policy conflicts”. And once again, it predicted “that the economy will pick up in the second half of the year”.<br />
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There was no mention when rates would rise again, but did say, “it will closely monitor “developments in household spending, oil markets, and global trade policy to gauge the extent to which the factors weighing on growth and the inflation outlook are dissipating.”<br />
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<b>What to do about the stress test?</b><br />
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The consensus seems to be to modify it. CIBC economist Benjamin Tal said in an interview recently that the stress test has had a broad impact on slowing down the housing market, affecting 50% of new mortgage originations. Because interest rates are not rising any time soon, Tal says the stress test may be too severe. The test also doesn’t take into account that over a 5-year mortgage term, incomes are rising while, at the same time, mortgage principal is getting paid down. By modifying it, more first-time home buyers may be able to get into the market.<br />
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There is a lot of pressure on the government from banks, mortgage broker and Realtor associations, as well as economists to consider modifying the stress test – we’ll see what happens as we head into the latter part of an election year.<br />
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<b>So, do you buy now or wait and see?</b><br />
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The future is always uncertain. The best way forward is to get the facts about what’s happening, review your personal goals and work with real estate and mortgage brokers who can help you decide.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-32058380948586472742019-04-15T07:20:00.001-07:002019-04-15T07:20:58.073-07:00Yes, you can be a homeowner<div dir="ltr" style="text-align: left;" trbidi="on">
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The news is full of negatives about housing market slowdowns, mortgage stress tests that shut millennials out of homeownership, low inventory, a slowing economy – it goes on. Although it may seem gloomy to many, there are a few silver linings. The Canadian dream of homeownership is still alive, although it may look a bit different than the traditional idea of owning a home.<br />
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First of all, the make-up of home buyers has seen a distinct change from the more traditional trend of buying with a partner/spouse. According to the recent RBC Home Ownership Poll, 28% of those polled say they need help and are purchasing or planning to purchase with their family. That is almost as many as those who say they can purchase alone (32%).<br />
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When compared to past years, buying a home with a partner or spouse has been steadily declining (42% versus 49% in 2017), while non-traditional trends, like purchasing a home alone (32% versus 29% in 2017), are climbing.<br />
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It’s also clear that what’s happening in today’s market is having an impact on buyers with 56% of Canadians thinking it's better to wait until next year to purchase a home. Almost half of those are prepared to push the purchase out two years or more (highest among 18-34-year olds, 55%). Of those waiting to buy, 54% have the expectation that house prices will come down (as high as 68% of British Columbians and 58% of Ontarians expect the price of housing to drop).<br />
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Here are some highlights in the poll:<br />
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<li>Canadians feel it makes more sense to buy than rent (66%).</li>
<li>Canadians are well positioned to weather a potential downturn in housing prices (71%) or an increase in interest rates (63%).</li>
<li>Affordability (21%) and being in a safe neighbourhood (20%) top the list of what Canadians must have, while buying in 'the right' neighbourhood is less of a concern (6%, steady decline since 2015).</li>
<li>Canadians are most willing to sacrifice the conveniences of being close to a major highway (16%), dining and entertainment (13%), good schools (11%) and public transit (10%).</li>
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<b>A new housing reality</b><br />
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In the poll, eight-in-10 Canadians say a home or condominium purchase is still a good investment (81%). When we look at the condo market, there is a lot happening. This year, a record number of condos are set for completion in the GTA, which will likely slow price growth.<br />
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The Canadian Real Estate Association (CREA), in its most recent forecast said it expects the monthly trend for sales to improve slowly over 2019. Low interest rates and a strong job market is positive, with pricing projected to stabilize over the next two years, except in markets where there is a shortage of supply.<br />
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Non-traditional housing and co-owning arrangements are popping up across the country. The focus is on community is the key to cohousing projects that generally consist of individual homes, built around a common house with shared amenities. These amenities generally contain a kitchen and dining room and can have anything from kids’ playrooms and workshops to guest rooms and gardens.<br />
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<b>Get ready</b><br />
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While it’s true that government policies have made it harder for some to qualify, the new ‘shared equity program’ and the RRSP withdrawal increase may help some of those people. <br />
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As we head into the Spring market, listings will start to increase as buyers and sellers come out of hibernation. It’s important for homebuyers to educate themselves about mortgages, including how to qualify in this new stress-test environment. Working with a TMG mortgage professional will help you navigate the ins and outs of the mortgage process, from qualifying to approval and through to closing.<br />
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If you don’t qualify right now, your mortgage professional will show you ways to increase your likelihood of qualifying in the future.<br />
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Yes, you can fulfill your dream of homeownership.<br />
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<b>Why a mortgage professional?</b><br />
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By working with a licensed mortgage professional, you have a trusted adviser and problem solver. Brokers take the time to first understand a client’s needs, both short term and long term, then recommend the right mortgage and present options. In addition to straight home purchases, brokers work with clients who refinance to consolidate debt, who are looking to purchase second homes, who are looking for the best options at renewal time, and brokers help clients make property-related investment decisions.<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-90743637208203087502019-03-22T08:10:00.000-07:002019-09-13T06:46:15.744-07:00Anatomy of mortgage changes<div dir="ltr" style="text-align: left;" trbidi="on">
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There is little doubt that housing sales have slowed down in the past year, due in large part to stricter mortgage regulations. Part of those regulations is a mortgage stress test that requires borrowers to qualify for an interest rate that’s at least 200 basis points higher than the contracted rate. </div>
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Those in favour of the stress test saw it as a way to improve housing affordability by thinking it would result in falling home prices, as well as protecting homeowners from potentially higher interest rates at renewal.</div>
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While there were some house price reductions, there was also a major slowdown in house sales, which, one could argue, has helped fuel a slowing economy. </div>
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<b>History</b></div>
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The most recent round of mortgage rule changes came into effect in 2016, then in January 2018, more changes were introduced, including using the stress test to qualify for uninsured loans. This had the greatest impact. The next month, in February, sales declined in greater Toronto by 35% from those recorded in February 2017. This past month (February, 2019) housing sales in greater Toronto were even 2.4% lower than a year ago. </div>
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Housing sales in greater Vancouver were even weaker, with February 2019 sales 33% lower than the same month in 2018. In fact, February 2019 sales are 43% lower than the 10-year average for sales in February.</div>
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Evan Siddall, who heads Canada Mortgage and Housing Corporation (CMHC), believes the stress test is bitter medicine that is working fine. Siddall credits the stress test for lowering housing prices. His comments were based on the stress test being introduced to lower housing prices; however, Carolyn Rogers, the Assistant Superintendent at OSFI, said something different in her speech to the Economic Club of Canada.</div>
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She explained, the stress test “was designed to target mortgage underwriting standards.” In her words, the test was intended to provide a safety buffer so that borrowers do not “stretch their borrowing capacity to its maximum.”</div>
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Is it plausible that OSFI and the CMHC had two different goals? Maybe. OSFI’s goal did indeed lower high-risk lending somewhat as reported by the Bank of Canada. House prices did drop slightly.</div>
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It appears the government may have overshot its mark with the stress test, and the slowdown in the housing sales may have been an unintended consequence. </div>
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<b>Pushback</b></div>
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Many housing and mortgage industry voices started to lobby the government -- some believed the stress test was working fine, other’s say the impact has been devastating to home buyers, especially first-time homebuyers.</div>
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CIBC economists, Bejamin Tal and Royce Mendes predicted in November, 2018 that the housing market would be a drag on Canada's economic growth in the coming year. Residential investment accounts for 7.5% of Canada's economy.</div>
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"It was a good run while it lasted, but the sun has officially set on the days of heady housing market growth fuelling Canada's national economy," Tal and Mendes wrote. “And that could be bad news because housing investment is more important to Canada's economy "than at any other time on record," they added.</div>
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<b>Proposed solutions</b></div>
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Two ideas emerged from various stakeholders and associations -- lower the stress test threshold that requires borrowers to qualify at least 200 basis points above the contracted rate; and/or reintroduce the 30-year amortization for CMHC insured mortgages.</div>
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<b>Government response</b></div>
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The Liberal government introduced the following two measures in their recent budget announcement to address the issue of housing affordability and first-time home buyers.</div>
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Home Buyer’s Plan Withdrawal Increase. Effective immediately, first time home buyers can now withdraw up to $35,000 from their RRSP, tax free, up from $25,000, for a down payment. If you have a co-borrower, that total could be up to $70,000. </div>
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A first-time homebuyer, as defined by the Canada Revenue Agency, allows repeat homebuyers to also be classified as “first-time” if they or their spouse haven’t occupied a home, they owned in the prior four years. </div>
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Funds must be repaid over a 15-year period or the money gets added to your income for tax purposes. Starting in 2020, those who separate from a spouse or common-law partner will get to use the Plan, even if they’re not a first-time buyer.</div>
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<b>First Time Home Buyer Incentive</b></div>
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Billed as a “shared equity mortgage”, the government will lend first-time home buyers’ money to buy a home. According to the budget document, this new incentive “enables homebuyers to reduce the amount of money required from an insured mortgage without increasing the amount they must save for a down payment.”</div>
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The government has earmarked $1.25 billion over three years, administered by Canada Mortgage and Housing Corp. (CMHC), to provide up to 5 % of the cost of an existing home and 10% of a new home through what amounts to an interest-free loan to be repaid when the property is sold. </div>
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<b>Key points: </b></div>
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<li> Borrowers must have a down payment of at least 5% -- but less than 20% -- and a household income under $120,000.</li>
<li> The insured mortgage plus incentive, combined, cannot be greater than four times the participants’ combined annual household incomes.</li>
<li>Condo purchases are allowed.</li>
<li>The program is expected to start in September 2019 with further details to come this year. </li>
<li> If you use it, the government will share in price gains or losses when you sell. (The government hasn’t released many details on this yet) </li>
<li>While the Department of Finance has not commented on this, the program is called a “shared equity mortgage”, so it may be safe to assume it will be a registered second.</li>
<li> You must be a first-time homebuyer. (We don’t know whether the government’s definition of “first-time buyer” will be the same as with its RRSP Home Buyers’ Plan (see definition above)</li>
<li>Your mortgage must be default insured. Buyers may use any of the three insurers.</li>
<li>There are no monthly payments required on this incentive money</li>
<li>You have to pay the money back when you sell your home. There was no mention of what happens during a refinance but if similar programs abroad are any guide, a cash-out refi would trigger the repayment provision. </li>
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<b>Aftermath</b></div>
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Paul Taylor, CEO of Mortgage Professionals Canada, which represents the mortgage-brokerage channel, said in an interview with the Globe and Mail, he is disappointed that the government did not heed his organization’s calls to reduce the stress-test burden, which is keeping many home buyers from qualifying for mortgages.</div>
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But he said the new interest-free loan program will help the earners most affected by the stress test, so it may be a good alternative. The program requires more analysis to assess how successful it will be, he said.</div>
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His organization estimated that the stress test would compel about 200,000 potential home buyers to change their plans in the first two years of operation. If 100,000 are helped by the loan program over three years, “a good chunk” of people most impacted may be getting help, he said.</div>
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Many other key details, including precise repayment terms and maximum available loans, have yet to be addressed. The government says CMHC will release full details later this year. That’s a long time, politically speaking and things could change again, given it’s an election year.</div>
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We will continue to monitor these announcements and update our readers as new information comes top light.</div>
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-44659377840556225332019-02-21T06:26:00.001-08:002019-02-21T06:26:41.417-08:00What if thoughts were things? <div dir="ltr" style="text-align: left;" trbidi="on">
By Bud Jorgenson, Vice-President, Prairie Region<br />
TMG The Mortgage Group<br />
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I was speaking with a mortgage broker recently who was struggling as their volume was down from previous years. <br />
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They explained they weren't doing anything differently and just found themselves in a funk, and were asking for my perspective on what they should do. <br />
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Of course, we discussed all the reasons why things had changed for them. <br />
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We talked about the changes in the market, the increased competition, the rate discounters, the underwriting rule changes etc.<br />
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My response was and is today that these changes have zero effect on your business and the only thing that matters is your response to these changes. <br />
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I heard the concept of "thoughts are things" about 25 years ago and after testing it and seeing it in action with so many successful people throughout my professional life, I believe it to be the determining factor in our success or failure, in both our professional and personal life. I also love that this is the one thing that I have complete control over. How we can apply this in our everyday life as mortgage brokers is so simple. <br />
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When walking into a first meeting with a client, take a moment to visualize how you would like the meeting to go, see it unfolding in a positive way and resulting in you completing a mortgage for them. <br />
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When a cold call comes in asking for your best rate, it's so easy to consider this a waste of time. Instead, see it as an opportunity, and challenge yourself to turn that client from a discount shopper to a value client. <br />
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When dealing with underwriters or speaking to realtors about partnering, or in every action, spend a few minutes setting the stage by visualizing the outcome in a positive way. We all know people in our lives who seem to have that humble confidence that attracts people and opportunities that has helped them be successful. Let's be those people. <br />
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I can't ever speak or write about success without throwing in a golf analogy. I will finish with a quote from golfing great Jack Nicholas who is arguably the greatest golfer in history with 18 major wins. When asked what he believed to be the most important factor in his success he said the following...<br />
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“I never hit a shot, not even in practice, without having a very sharp, in-focus picture of it in my head,” Nicklaus said. “First, I see the ball, where I want it to finish, nice and white, and sitting up high on the bright green grass. Then, the scene quickly changes, and I see the ball going there: its path, trajectory, and shape, even its behaviour on landing. Then there is a sort of fade-out, and the next scene shows me making the kind of swing that will turn the previous images into reality.”<br />
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-65498416480611545322019-01-28T06:31:00.002-08:002019-06-18T12:49:31.011-07:00The Canadian economy and the housing market<div dir="ltr" style="text-align: left;" trbidi="on">
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We are living in strange times, economically speaking. Mortgage stress tests have slowed the housing market and may be one of the reasons the Bank of Canada has signaled it may pause on increasing interest rates. </div>
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Home sales fell sharply in Canada last year -- the largest annual decline since 2008, spurring predictions the country could face stagnant sales in 2019. The decline was due in large part to slowing activity in British Columbia and in the Greater Toronto Area, both hit hard by new government measures and higher interest rates.</div>
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The Canadian Real Estate Association has forecast little improvement in 2019, predicting 0.5% growth in national sales this year, over 2018.</div>
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Christopher Alexander, regional director for Re/Max in Ontario and Atlantic Canada, said the mortgage stress test has been the biggest factor keeping buyers out of the market, especially in Vancouver and Toronto.</div>
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“It’s a lot harder to get a mortgage now than it has been for the last 10 years,” he said. “Not only do you have the stress test, but the big banks are very particular in their criteria. It just seems that everybody is being very cautious.”</div>
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However, there are variations across the country. The average price of all homes sold in the Greater Toronto Area fell 3.4% in 2018, for example, while the average price climbed 3.7% in Ottawa and 5.8% in Montreal.</div>
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Bank of Montreal economist Robert Kavcic predicts little change in national sales totals or prices in 2019. He suggested the the housing market is going into a period of stagnation.</div>
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<b>A Bigger Picture</b></div>
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Recently Statistics Canada released its third-quarter report on national wealth, which is the “value of non-financial assets in the Canadian economy.” Total national wealth hit $11.415 trillion in the third quarter, and at $8.752 trillion, real estate made up a 76% share of that figure. That was the highest that both figures had been, going back to the second quarter of 2007.</div>
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Data from both Canada and the US shows that real estate as a share of U.S. national wealth in 2007 was 75.3%, compared to 67.6% in Canada. That started to change with the 2008 recession when US real estate as a share of national wealth started to decline while in Canada real estate wealth started to grow.</div>
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BMO has estimated that Canadian benchmark home prices will grow by less than one per cent next year and two per cent in 2020, dragged by “tougher mortgage rules and higher interest rates so the share should continue to trend modestly lower.”</div>
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Economists have mixed feeling about this trend. Some say a flat housing market is not anything to worry about. Others, like CIBC’s Benjamin Tal said the Canadian housing market is more important to the overall economy than at any other time on record. Aalthough the Bank of Canada (BoC) argues that the worst is now behind us, and that housing markets are stabilizing, some economists find it difficult to agree.</div>
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The BoC’s workhorse model says that six quarters can pass before a rate hike can be felt in the economy but according to Tal and others, only five quarters have passed since the first move of this cycle and “we’re already seeing a slowdown in housing-related indicators.” </div>
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<b>The Global Economy</b></div>
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There are growing fears about a worldwide economic slowdown. Uncertainty with tariffs, ongoing trade wars, and even the US government shutdown (over for now) is all having a negative impact on the global economy as a whole. </div>
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The International Monetary Fund (IMF) downgraded its expectations for the global economy, highlighting sharp declines in Europe and warning that the risks of a major slowdown have increased.</div>
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Already, at the annual World Economic Forum being held in Davos, Switzerland, there is worry about the global economy. Absent from the Forum is representation from the US. French President Emanuel Macron stayed home to deal with ongoing domestic issues. British Prime Minister Theresa May is home, desperately trying to eke out a bipartisan deal for Brexit.</div>
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In the United States, the shutdown has cut into growth. Early this month, consumer confidence slumped to the lowest level of Trump’s presidency, according to the University of Michigan’s consumer sentiment survey.</div>
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While few see a recession as imminent, the number of risks is growing. As an economy slows, it’s easier for it to be knocked off track, many economists say.</div>
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“After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising,” said Christine Lagarde, managing director of the International Monetary Fund in an interview in the Globe & Mail. “Does that mean a global recession is around the corner? No. But the risk of a sharper decline in global growth has certainly increased.”</div>
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Chief executives ranked a global recession as their No. 1 concern for 2019, according to a survey of nearly 800 top business leaders around the world. </div>
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A survey of 1,300 chief executives released by PwC found that 30% of business leaders believe that global growth will decline in the next 12 months, a record jump in pessimism to about six times the number who said that last year.</div>
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<b>What happens now?</b></div>
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The “R” word has been bandied about lately. In economics, a recession is a business cycle contraction, a general slowdown in economic activity. Economic indicators such as GDP, employment, investment spending, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise. While we are living in a slowdown, we are not seeing high job losses or increases in bankruptcies.</div>
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There is also some optimism. In a blog by TMG’s David Larock, he writes that core inflation has not increased and five-year fixed rates continue to settle in at slightly lower levels. Variable rates are holding steady. </div>
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It’s a matter of waiting this through, as Canadians did in 2008. There may be an upside-- this projected slow period means buyers can take their time searching for a house and not worry about missing out on a sale. </div>
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As always, Canadians are a resilient bunch – this is just one more challenge they will overcome.</div>
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-11205909738769647372019-01-22T07:14:00.000-08:002019-01-22T07:14:14.301-08:00L’EXPERT IMMOBILIER PM a choisi Le Groupe Hypothécaire TMG afin de supporter leur plan de croissance stratégique.<div dir="ltr" style="text-align: left;" trbidi="on">
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<span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Le Groupe Hypothécaire TMG<span style="mso-bidi-font-weight: bold;"> </span>est fier d’annoncer qu’il a signé une alliance stratégique
avec L’</span><span lang="DE" style="color: black; font-size: 12.0pt; mso-ansi-language: DE; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">EXPERT IMMOBILIER PM</span><span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">,
ayant des bureaux et des courtiers à travers la province.</span><span style="color: black; font-size: 13.5pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Avec l’introduction prochaine de la loi</span><span lang="RU" style="color: black; font-size: 12.0pt; mso-ansi-language: RU; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"> 141 </span><span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">au</span><span lang="IT" style="color: black; font-size: 12.0pt; mso-ansi-language: IT; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"> Qu</span><span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">ébec et de
son impact dans le secteur immobilier et hypothécaire, L’</span><span lang="DE" style="color: black; font-size: 12.0pt; mso-ansi-language: DE; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">EXPERT IMMOBILIER</span><span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"> PM
cherchait un partenaire d’affaires, partageant les mêmes valeurs
et qui serait en mesure de faciliter sa croissance.
L’Expert Immobilier PM compte plus de 380 courtiers immobiliers travaillant à
travers le Québec.</span><span style="color: black; font-size: 13.5pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Les systèmes de support, la formation et la technologie
de TMG nous ont impressionné</span><span lang="PT" style="color: black; font-size: 12.0pt; mso-ansi-language: PT; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">s", a d</span><span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">é</span><span lang="PT" style="color: black; font-size: 12.0pt; mso-ansi-language: PT; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">clar</span><span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">é Pierre
Breton, fondateur et président de L’</span><span lang="DE" style="color: black; font-size: 12.0pt; mso-ansi-language: DE; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">EXPERT
IMMOBILIER PM. </span><span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">«Ils jouissent d'une excellente réputation
dans l’</span><span lang="DE" style="color: black; font-size: 12.0pt; mso-ansi-language: DE; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">industrie</span><span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"> canadienne,
ce qui viendra compléter notre solide position sur le marché québécois. Les
valeurs de TMG correspondent à nos valeurs et nous sommes impatients de
travailler avec ce groupe. « </span><span style="color: black; font-size: 13.5pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"> Claude Girard,
vice-président, Québec, Le Groupe Hypothécaire TMG est tout aussi
enthousiaste. «Nous sommes ravis de travailler avec ce groupe Immobilier dont
les valeurs sont notamment orientées vers l’expérience client, où autant les
clients que les courtiers sortent gagnant de la relation professionnelle ,
a-t-il dé</span><span lang="PT" style="color: black; font-size: 12.0pt; mso-ansi-language: PT; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">clar</span><span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">é. De plus,
l’équipe de L’Expert Immobilier, est orientée par un respect strict des codes
d’éthiques du courtage immobilier, ce qui rejoint nos propre valeurs en terme
de conformité. «Notre modèle d’entreprise, unique en son genre, permet
flexibilité et autonomie. Ils pourront bénéficier de l’excellente réputation de
TMG à l’échelle nationale. C'est une entente naturelle. Nous sommes convaincus
que ce sera un partenariat gagnant-gagnant. "</span><span style="color: black; font-size: 13.5pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span lang="FR" style="color: black; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"> </span><span lang="FR" style="background: white; color: #202020; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">Le Groupe Hypothécaire TMG, TMG The Mortgage Group, est une
bannière nationale créée il y a plus de 30 ans , qui a reçu de
nombreux prix de reconnaissance et qui est la plus importante société de
courtage hypothécaire indépendante au Canada</span><span style="color: black; font-size: 13.5pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span lang="FR" style="background: white; color: #202020; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">L’EXPERT IMMOBILIER PM est une société
de courtage immobilier innovatrice fondée par Pierre Breton en 1993. La société
a connu une croissance rapide. Aujourd'hui, l’entreprise continue d’évoluer,
utilise une technologie de pointe et emploi des professionnels de l'immobilier
compétents et expé</span><span lang="IT" style="background: white; color: #202020; font-size: 12.0pt; mso-ansi-language: IT; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">riment</span><span lang="FR" style="background: white; color: #202020; font-size: 12.0pt; mso-ansi-language: FR; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">é</span><span lang="PT" style="background: white; color: #202020; font-size: 12.0pt; mso-ansi-language: PT; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">s.</span><span style="color: black; font-size: 13.5pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0tag:blogger.com,1999:blog-3289006368196206785.post-77235510832552024022019-01-22T07:12:00.001-08:002019-01-22T07:12:43.120-08:00Le Groupe Hypothécaire TMG Quebec aligns with EXPERT IMMOBILIER PM<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="background-color: white; color: #212121; font-size: 12pt;">TMG Mortgage Group is proud to announce that it has signed a
strategic alliance with EXPERT IMMOBILIER PM, a real estate company with
offices and brokers across the province of Quebec.</span><br />
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<span style="background-color: white; color: #212121; font-size: 12pt;">With the upcoming introduction of Bill 141 in Quebec, and its
impact in the real estate and mortgage sector, EXPERT IMMOBILIER PM was looking
for a business partner who shared the same values, and who would be able to
facilitate its growth. EXPERT IMMOBILIER PM has more than 380 real estate
brokers working across Quebec.</span><br />
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<span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">“<span style="background: white; color: #212121;">TMG's support systems, training and
technology impressed us, "said Pierre Breton, founder and President of
EXPERT IMMOBILIER PM. “They have an excellent reputation in the mortgage
industry, which will complement our strong position in the Quebec market. TMG's
values reflect our values and we look forward to working with this group.”</span><o:p></o:p></span></div>
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</span><span style="background: white; color: #212121; font-size: 12.0pt;">Claude Girard, Vice President, Quebec, TMG Mortgage Group is
equally enthusiastic. "We are delighted to be working with this Real
Estate group, whose values are particularly geared to the customer
experience, where both customers and brokers are the winners of the
professional relationship," he said. “In addition, the team of L'Expert
Immobilier is guided by a strict respect of the code of ethics of the real estate
brokerage, which joins our own values in terms of conformity. Our unique
business model allows flexibility and autonomy.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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<span style="background: white; color: #212121; font-size: 12.0pt;">“They will be able to benefit from the excellent reputation
of TMG at the national level. It's a natural agreement. We are confident that
this will be a win-win partnership,” Girard said.</span><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span><br />
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<i><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";">TMG The Mortgage
Group is an award-winning
mortgage brokerage and the largest independent brokerage in Canada and has been
in business for 30 years.</span></i><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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IMMOBILIER PM is an innovative real estate brokerage firm founded by Pierre
Breton in 1993. The company has grown rapidly. Today, the business continues to
evolve, uses cutting-edge technology and employs skilled and experienced real
estate professionals.</span></i><span style="font-size: 12.0pt; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: "Times New Roman";"><o:p></o:p></span></div>
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The Mortgage Grouphttp://www.blogger.com/profile/11673347357739448483noreply@blogger.com0