Toronto real estate. Canadians are more cautious with debt

Posted September 23, 2010 by torontorealestateguy
Categories: Be First to Know!, For Investors, Toronto Real Estate Market Update

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Consumers are more “prudent” with credit after racking up a record amount of household debt earlier this year. Gerry McCaughey, chief executive officer of the Canadian Imperial Bank of Commerce, said he is confident that Canadians remain capable of keeping up with their payments – despite much hand-wringing in recent months about skyrocketing household debt.

The slowdown in mortgage lending is positive even though it means weaker loan growth for banks. “I think the consumer probably is taking a pause and acting in a prudent fashion, and that’s what’s driving this slowdown in the housing market,” McCaughey said. “And I think that is a good thing because, as I say, some day (interest) rates will rise back to more normal levels. It would be a good idea to have the level of total debt at a more manageable state.” 

Statistics Canada said on Wednesday that Canadian retail sales fell unexpectedly in July, suggesting Canadian consumers are no longer pulling their weight in the country’s economic recovery. The Star



Posted August 31, 2010 by torontorealestateguy
Categories: Be First to Know!, For Investors, Toronto Condo Market, Toronto Real Estate Market Update

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Total construction starts in Canada through July of this year were up 73 per cent in square footage and up 70 per cent in dollar volume versus the first seven months of last year, according to CanaData figures.

The residential component was up 87 per cent in square footage and up 84 per cent in dollars.

Non-residential building was up 48 per cent in square feet and up 21 per cent in dollars, while engineering was up 16 per cent in dollars.

The residential strength corresponded with starts as reported by Canada Mortgage and Housing Corp.

The single-family-home market is expected to weaken considerably in the second half of this year, due to harmonized sales tax introductions in Ontario and B.C., as well as interest rate increases and poorer resale markets.

“What is driving the multiple-unit market remains a mystery,” says CanaData chief economist Alex Carrick in his latest report.

“New major condo projects continue to be initiated, but the inventory of unsold units is more than double what it should be, according to historical averages. A serious correction seems all but inevitable.”

In non-residential building work, commercial starts are about even with last year.

Industrial construction starts have all but disappeared (down 61 per cent in square feet and down 95 per cent in dollars).

Toronto real estate. Benefits of using a mortgage broker

Posted August 24, 2010 by torontorealestateguy
Categories: For Investors, Mortgage news, Toronto Real Estate Market Update

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1. Save time with one-stop shopping.

It can sometimes take weeks to organize appointments with competing mortgage lenders — homebuyers would rather spend their time house-hunting.

Brokers work directly with lenders and can quickly narrow down a list of options that suit you best.

2. Advice on your financial options.

Mortgage brokers can make recommendations and draw from available mortgage products that match your needs and help you decide what is right for you.

3. Brokers negotiate on your behalf.

Most people are uncertain about negotiating mortgages directly with their bank. Brokers negotiate mortgages every day on behalf of buyers and have a wealth market knowledge to secure competitive rates.

4. More choice means more competitive rates. We have access to a network of major lenders in Canada, so your options are extensive.

5. Ensure that you’re getting the best rates and terms. Even if you’ve already been pre-approved for a mortgage by your bank or another financial institution, you’re not obliged to stop shopping!

6. Get access to special deals and add-ons.

We do the math on which offers might be worth your attention.

7. Things move quickly.

Our job isn’t done until your closing date goes smoothly. We’ll help ensure your transaction takes place on time and to your satisfaction.

8. Get expert advice. When it comes to mortgages, rates and the housing market, we are not limited. We will explain the various mortgage terms, conditions and rates so you can decide confidently.

9. No cost to you. There is (in most cases) no charge for our services.

10. Ongoing support and consultation.

Even once your mortgage is signed and completed, we are here if you need any advice on closing details or even future referral needs.

Alex Malkhassiants is an active Mortgage Professional with Centum Inc. in in Toronto. He works with homebuyers in Toronto and surrounding areas to find the best mortgage for them. Have a question? Please call (416) 723-9383 (cell) 0r email –


Posted July 28, 2010 by torontorealestateguy
Categories: Be First to Know!, For Investors, Mortgage news, Toronto Real Estate Market Update

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Canadian home resale prices rose for a 13th straight month in May, the longest streak since September 2006, the Teranet-National Bank Composite House Price Index showed.

The monthly gain of 1.3 percent was led by a 2.3 percent increase in Ottawa, followed by 1.8 percent in Montreal, according to a report today by National Bank Financial. Overall prices rose 13.6 percent from May 2009. The index has tracked home-price changes in six Canadian cities — Calgary, Halifax, Montreal, Ottawa, Toronto and Vancouver — since February 2000.

Housing investment should slow through this year and into 2011 after spending was pulled forward by low mortgage rates and temporary tax credits, the Bank of Canada said July 22. The central bank raised its key lending rate for a second month to 0.75 percent on July 20 and said further action would be “weighed carefully” against an economic recovery.

Alexandre Malhassiants is an active mortgage professional with Centum Mortgage Inc.  and sales representative. Have a question? Please e-mail or call 416- 723-9383.

Determining the best mortgage type

Posted June 16, 2010 by torontorealestateguy
Categories: For Investors, Mortgage news

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When comparing the monthly mortgage payment only with the adjustable versus the fixed rate, the adjustable will always win (because the rate is lower). The variable rate is a higher risk product whereas the fixed rate is a guarantee for a set term. Most of us are aware that with investments, risk is usually the higher-profit option. This is the same with mortgages. The adjustable rate offers a higher risk but has proven to be most cost effective.

The payment is not the only thing to take into consideration when choosing which will work for you. In the fixed term, you know what your payment (and rate) will be for a set period of time. For example, the five-year rate today is at 4.29% (subject to change). Your mortgage payment is based on this rate for five years and will never change. The variable rate is based on the prime rate (which can be found on the Bank of Canada website and is consistent from lender to lender) less (or in some cases plus) a set discounted rate. Today’s five year adjustable is prime (2.50%) less .75%, for a rate of 1.75%, which would result in a lower monthly payment. The risk? This payment may (and will over the five-year term) change based on the prime rate on the first of each month.

Although the rate in the variable options is lower, the qualification rules are strict. When applying for a five-year fixed-rate mortgage, you would have to qualify on the rate on 4.29%. With the variable rate, consumers have to qualify at the Bank of Canada benchmark rate, which is set weekly on Mondays. Currently that rate is 5.99%. So, when qualifying for a mortgage, the fixed vs. variable rate may make or break your approval based strictly on the “qualifying” rate. Lenders need to make sure that when a consumer chooses the adjustable-rate mortgage, that they will still be able to make the payments if and when the rate rises. This is why the qualifying rate is higher.

To make sure that you have reviewed ALL of your mortgage options, speak with a mortgage broker. We are not limited to one specific financial institution’s rules and rates. You need to make sure you have discussed your rate and product options to make an educated decision.

Alexandre Malhassiants is an active mortgage professional with Centum Mortgage Inc.  Have a question? Please e-mail or call 416- 723-9383.


Posted May 31, 2010 by torontorealestateguy
Categories: Be First to Know!, For Investors, Toronto Real Estate Market Update

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Canadians will be spared a U.S.-style wave of foreclosures when the housing market corrects and interest rates rise, according to a report from DBRS Ltd. examining Canada’s $1-trillion mortgage market.

DBRS expects housing prices to fall and acknowledges that the soaring trajectory of consumer debt is worrying. But the debt-rating firm’s study nonetheless paints a picture of a home lending business that is on much more stable footing than the one in the U.S. before its bust.

For that reason, any housing correction in Canada is likely to have a muted effect on the financial sector, nothing like the systemic problem that the U.S. downturn created by crippling banks and mortgage insurers.

“You’re not likely to have factors supporting further [home] price increases; you could have factors leading to price corrections, but they shouldn’t be anywhere near the scale we’ve seen in the U.S.,” said study author Jerry Marriott, who specializes in rating mortgage-backed bonds for DBRS.

“There are just some fundamental characteristics of the Canadian market that make lending in Canada less risky than in the U.S. – a combination of the fact that the banks have continued to use prudent underwriting and maintained better capital ratios.”

The report echoes the conclusions of major banks such as Canadian Imperial Bank of Commerce and Toronto-Dominion Bank. They also call for moderate cooling in house prices after their long runup, as more homes come on the market and higher rates and prices force some buyers out of the market.

CIBC World Markets economist Benjamin Tal said this week that prices might fall by as much as 10 per cent in the next two years, but that a “violent” correction like the United States experienced remains unlikely. TD Bank recently put out a report predicting prices could fall by 2.7 per cent in 2011.

If a correction happens, Mr. Marriott said that it’s unlikely Canadian banks will have to foreclose on many mortgages, saving Canada from one of the factors that exacerbated the U.S. plunge, when banks seized homes and tried to sell them at vastly reduced prices.

Laws in Canada are more lender-friendly, forcing people to keep paying mortgages, and banks were more careful about who they lent to.

Canadians are also less likely to end up under water – owing more than their home is worth – because they generally have more equity in their homes. For the decade and a half leading up to the U.S. housing bust, U.S. borrowers had “consistently” less equity than Canadians, by 8 per cent on average, DBRS found.

What’s more, DBRS argues that while Canadians are racking up debt at a fast pace, they are nowhere near as indebted as some analysts assert, and much less in hock than Americans, so should better be able to handle the stress of higher rates or a housing correction.

While the widely watched measure of debt-to-personal-disposable income shows that Canadians are more indebted than Americans, DBRS argues that the gauge should be adjusted to reflect differences in the two countries, such as the fact that Americans pay lower taxes but have to pay health-care bills out of pocket.

When that’s taken into consideration, at “the end of 2009, Canadian households remained financially less leveraged by 10 per cent to 45 per cent compared with U.S. households,” the report said.

“The Canadian market has been doing just fine, but it is not without risk, and [showing that] is what we’re trying to do in this study,” Mr. Marriott said.

Most Canadians are `comfortable’ with mortgage debt

Posted April 26, 2010 by torontorealestateguy
Categories: Be First to Know!, For Investors, Mortgage news, Toronto Real Estate Market Update

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Eighty-one per cent of homeowners surveyed by the Canada Mortgage and Housing Corp. say they are comfortable with their current level of mortgage debt.

The online survey of more than 2,500 homeowners also found that 68 per cent “feel there is a strong chance they will pay off their mortgage sooner than required” and 27 per cent said they have “already taken steps to pay down their mortgage through lump-sum payments or through increased regular payments, ” according to the federal agency.

Meanwhile, CMHC said its annual survey found that 89 per cent of first-time homebuyers used the Internet to get information about mortgages and 84 per cent researched mortgage terms and conditions online.