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Showing posts with label real estate. Show all posts
Showing posts with label real estate. Show all posts
Sunday, 23 April 2017
6 Questions to ask yourself before selling your home
Sunday, 2 November 2014
Save thousands in mortgage interest with this strategy
The accelerated bi-weekly payment is calculated by dividing your monthly payment by two. You then make 26 bi-weekly payments. Just like the accelerated weekly payments you are in effect paying an additional monthly payment per year.
This additional amount accelerates your loan payoff by going directly against your loan's principal. The effect can save you thousands in interest and take years off of your Mortgage.
Steven Porter - Mortgage Advisor, CIBC, steven@stevenporter.ca
Monday, 8 September 2014
Will you need to pay any additional costs?
While your down payment and mortgage will cover the purchase price of your home, it's wise to consider the other expenses involved in buying a home.You'll pay some costs at the beginning of the home-buying process and others, known as closing costs or disbursements, when your home purchase is finalized.
Additional costs that could add up when you buy your first home:
Property valuation fee Approximate Cost: $150 - $200
This is the fee for determining the property lending value for mortgage purposes. This value may or may not be the same as the purchase price of the home.
Home inspection fees (may not apply if you are purchasing a new home) Approximate Cost: $500
The home inspector evaluates the structures and systems that make up your home and provides you with a written report. While not mandatory, many people make a professional home inspection a condition of their Offer to Purchase.
Property survey Approximate Cost: $750 - $1,000
A survey indicates the boundaries and measurements of the land and positions of major structures, and any registered or visible easements (such as a driveway) or encroachments (such as a neighbour's fence) on the property.
Land transfer tax (if applicable) Varies based on Province
This is charged whenever a property changes hands and is based on the purchase price. Most provinces in Canada charge a provincial land transfer tax and some cities also charge an additional municipal land transfer tax. In some cases, first time homebuyers may be exempt from a portion of this cost. You can obtain further details about land transfer tax on provincial or municipal websites to help you estimate the cost.
As an example, if you are thinking about purchasing a home in Toronto, Ontario for $300,000, the provincial land transfer tax is $2,975 and the municipal land transfer tax is $2,725 for a total cost of $5,700.
Legal fees and related expenses Approximate Cost: $1,300 - $2,500
These fees vary by province and are subject to GST or HST where applicable. Ensure your lawyer's quote includes all related expenses and disbursements, not just legal fees. Make sure your interests are protected by discussing your Offer to Purchase with your lawyer or notary prior to signing.
GST/HST where applicable (sometimes included in sale price)Varies based on Province
Some properties are GST and/or PST sales tax exempt and some are not. Generally, GST or HST where applicable is charged on new homes, but not on resale properties. Always ask before signing an Offer.
Title insurance Approximate Cost: $250
Title insurance is optional and covers problems that may arise due to encroachment issues (for example, a structure on your property is actually part of your neighbour's property and needs to be removed), existing liens against the property's title, title fraud, undischarged mortgages and other issues relating to the property's previous owners.
Insurance costs for high-ratio mortgages Variable
Usually, mortgage default insurance premiums range between 0.5% and 2.75% of the principal plus applicable fees (may be subject to provincial sales tax which cannot be added to mortgage amount)
If your down payment is less than 20% of the purchase price of your home, you must pay a one-time insurance premium on your mortgage amount. You can make arrangements to pay the premium to CIBC before closing, or it can be added to the principal amount of your mortgage. If it is added to the principal amount of your mortgage, you will pay interest on it at the same interest rate you pay on the principal amount of your mortgage.
Interest adjustments Approximate Cost: $100 - $1,000
You will need to pay interest on any gap between the closing date of the purchase and the first payment date of the mortgage. You can avoid an interest adjustment by arranging to make your first mortgage payment exactly one payment period after your closing date.
Prepaid property tax and utility adjustments Approximate Cost: $400 - $500
You will be required to reimburse the vendor for any prepaid property taxes or utility bills.
Home insurance $450/year
Protection for your home and contents.
Mortgage life insurance Variable
Costs vary but can be conveniently included in your regular mortgage payment.
Mortgage life insurance is optional and provides peace of mind. It protects your family’s financial security by paying off all or a portion of your mortgage (up to a maximum of $500,000) in the event of the premature death of you or your spouse.
Don’t forget to consider general expenses such as moving, upgrades, and home decorating costs as well.
Steven Porter, Mortgage Advisor, CIBC. 905-875-2582; steven@stevenporter.ca
More mortgage and real estate information available at http://www.FreeMortgageInfo.ca
Monday, 25 August 2014
6 Things to Consider Before Applying for Debt Consolidation
For a great many people who happen to be in financial difficulty, debt consolidation might seem to make perfect sense.
If you happen to be one of these people, you will probably be familiar with the claims that debt consolidation is a fast and easy way to get out of debt.
However, it could be the case that you end up in deeper trouble than ever, possibly even losing your home in the process. It is not without good reason that debt consolidation has developed a pretty bad reputation in recent years.
Alleviating Your Financial Problems
In this article we will be exploring how debt consolidation could work for you. Naturally, we will also be exploring some of the pitfalls. Listed below are 8 points that, if carefully heeded, might just be of help in finding a good debt consolidation loan and thereby alleviating your financial problems:
1. Credit Report
If your credit rating has actually improved since taking out the loans, you might well be able to consolidate your loans at a much lower rate. It is for this very reason that you should start by getting your credit report. Study your credit report carefully and keep an eye out for any inaccuracies that might damage your score and prevent you from getting a decent rate.
2. Get Credit Counselling
A reputable credit counselling agency would be able to provide helpful advice, often free or at minimal cost. A good agency would assist you with preparing a budget as a means of getting your finances under control. However, it is extremely important that you exercise caution in this endeavour, as some less than scrupulous credit counselling agencies might attempt to take advantage of your situation.
3. Pay Off Your Debt Quickly
When consolidating your debts, try to pay off the loan as quickly as possible. Reduced monthly payments could merely be the result of your debt being spread over a lengthy period of time, meaning that it could end up costing you far more in the long run. If at all possible, try to get your monthly repayments as high as you are reasonably able to afford in order to clear the debt quickly.
4. Getting the Right Loan
When applying for a debt consolidation loan, be sure that it is the right one for you. You could opt for a home equity loan as a way of keeping the interest rate down, although you should seek advice from your mortgage broker before going down this particular path. Any default on repayment could potentially lead to the loss of your home. A less risky option would be to take out an unsecured loan, although you would be required to pay a significantly higher interest rate.
5. Get Quotes
Before committing yourself to a particular credit consolidation loan do a bit of shopping around first in order to compare interest rates. What you will probably discover is that your own bank or credit union would be prepared to offer the best deals.
6. Read the Loan Contract
This might sound obvious but it is vital that you fully understand every single line of your loan contract before signing on the dotted line. The slightest missed detail could possibly end up costing you a fortune or even your home.
Summary
If you happen to be in serious difficulty, consolidating your credit card debts and high interest loans might seem to make sense. Unfortunately, a great many people end up worse off. By exercising caution and taking stock of your situation, it might be possible to make debt consolidation work for you.
Author: Economic Voice Staff
Bidding war homebuyer beware: Appraisers not so eager Appraisals come in lower than buyers' offers
Competitive homebuyers in hot housing markets are often facing a critical disagreement as they try to buy a house – the property appraiser doesn't share their opinion about how much the house is worth.And that can leave homebuyers without the financing they need to close the deal.
The tension, between eager buyers and sellers and often conservative appraisers and bankers, is arising more in the hot housing market and the winners may be blinded by their victory.
There’s a good chance that buyers are so excited about getting the house they want that they’re willing to pay more than market value.
An appraisal is typically the value the mortgage lender will allow buyer to borrow against on the house. So when the appraisal comes in under what the buyers have agreed to pay, they may have to scrounge up the deference between their own funds and what the lender is willing to lend.
It's important buyers make sure they've completed their full application for a mortgage before making an offer, not just submit the initial pre-approval paperwork.
And something that the public should know about when they’re considering purchasing a home.
In competitive situations, many times buyers will increase their competitiveness by making their offer “firm.” But if they’ve gone into the offer without making it conditional on their loan coming through, they could be in trouble – facing a “lawsuit or loss of their deposit or both.
Steven Porter, CIBC Mortgage Advisor, steven@stevenporter.ca
Monday, 16 December 2013
Black Belt Negotiating for Homebuyers
How would you like to save $10,000 or more off your next house? It's really quite easy if your real estate agent has a black belt in negotiating. The challenge is that most people in general and real estate agents in specific rarely take advantage of the power of bargaining, except on rare occasions when making large purchases like cars and houses. In other countries, like Asia, people there negotiate everything everyday and save thousands.
Negotiating is like a martial arts contest where power, leverage and timing can mean the difference between winning and losing. For instance, a martial artist would never go into a contest without first spying on his opponent to find weaknesses. In the same way, you can gain bargaining power by doing your homework. When buying a house find out how long it's been on the market, why the owner is selling, if there have been previous offers and if you will be the only one making an offer at this time. Obviously, finding the answers to questions like these could save you a lot of money.
First, make sure that your agent presents your offer in-person, if possible. It's very difficult to negotiate a good deal by fax.
Before engaging in contest, a martial artist warms up by stretching. Likewise, a savvy negotiator warms up by building rapport and finding common ground with the other party, because people like to do business with people they like. In real estate, a smart agent will try to get the seller emotionally involved with you before he brings out your offer. He should have you compose a hand-written letter about why you want the home and perhaps even show a few photos of you and your family. When faced with several competing offers I know of instances when a client's contract has been accepted even when it didn't present the highest price because the seller took a likeness to the buyers.
Next, fighters will cautiously probe each other looking for weaknesses. In bargaining this is done by throwing offers onto the table to see how the other party reacts. Experienced fighters often use guile to lure their opponents into range by pretending a blow has hurt them more than it really did. Similarly, your agent could pretend to be shocked by a seller's counter to your offer to get him to come down in price. Visibly showing surprise or hurt is called flinching and it used by master bargainers to gain concessions without giving up anything.
Martial artists are taught to read the body language of their opponents so they can see a blow before it is unleashed. Experienced negotiators can literally read the other party's mind by watching body language and listening carefully. If a seller says, "Make us an offer" you know their price is flexible before you even start. Also, without saying a word their body language can also tell you if they like or dislike any offer you make so be sure your agent watches very carefully as they show the seller your purchase contract. If the pupils of the owner's eyes get larger as they read the price you are well on your way to a deal but if his pupils get smaller your agent will have to do a lot of selling.
Martial artists do not believe in win-win and neither should you. Even when sparring with their best friend they want to give their best effort. Expect and demand your agent fight for the best deal possible assuming that the seller and his agent will take care of themselves because they will.
Fighters are supremely aware of time and try to use it to their advantage by saving as much energy as possible for the last few seconds of a round when they can score points against a tired opponent. Black belt negotiators put their opponents under time pressure by setting deadlines. Be sure that your agent mentions to the seller that you are considering several other similar properties in the area and that the seller must give a prompt response to your offer.
In martial arts, as in life, there are unfair fighters who will do anything to win, so you must protect yourself at all times. Negotiators must be aware of unfair tactics such as nibbling, which is asking for concessions after an agreement has been reached. If this happens to you just remember this blocking technique, "Before you give a concession - get a concession." For example, if a seller suggests that to hold the deal together that you'll have to pay for the transfer tax or other fee, simply respond with, "If we did, what can you do for us?" When a nibbler realizes that every time they ask for something you will respond in kind they will stop nibbling.
Finally, when a contest ends, fighters will bow to each other in mutual respect. You should congratulate the seller for having done good deal otherwise he might change his mind and try to find a way to wiggle out of the agreement.
So, how do you find a real estate agent who is a black bet in negotiating? Just ask these hypothetical questions and see how he or she answers them:
1. What information do we need before making an offer and how would you get it?
2. What's your experience with negotiating?
3. What's your philosophy of negotiating? (If the answer is "win-win" find another agent!)
4. Do you prefer to present offers in-person or send them in?
5. How can we make sure the seller responds to our offer right away?
6. When you sit down with the seller what's the first thing you do? (If the answer is "I pull out the contract" keep interview agents. You want someone who knows that closing a deal begins with building a relationship.)
7. How can you tell if the seller immediately likes or dislikes our offer?
8. How would you react if the seller gives us a full price counter-offer?
9. What would you do if the seller asks for something additional after the contract has been signed?
10. If the we were five hundred dollars apart from having a ratified contract what would you do? (If the answer is, "I'd give it to you from my commission" find another agent. Anyone who cannot negotiate their own fee will have difficulty protecting your interests.)
Steven Porter ABR CNE SRES
is a Real Estate Broker of 27 years with
RE/MAX Aboutowne Realty Corp. Brokerage.
Steven is an Accredited Buyer Representative,
Certified Negotiation Expert and has been student of
Japanese Martial Arts for 46 years
Steven can be reached at 905-875-2582, email: steven@stevenporter.ca
Or www.PorterRealEstateSystem.com
Literary credit to Michael Soon Lee
Friday, 29 November 2013
To rent or to buy? 8 questions Canadians should ask before taking theplunge
Conventional wisdom suggests it’s a no-brainer – buying real estate is a worthwhile investment with a high return.
Despite record low interest rates, the sky high prices and carrying costs are causing many to rethink the allure of home ownership.
When you factor in the costs of repair, maintenance and other expenses associated with owning a home, Toronto-based financial planner Shannon Simmons argues that renting and putting saved money into another investment – such as a stock portfolio – could earn more in the long run.
Simmons gives new clients a questionnaire asking where they see themselves in 10 years. Many answer “buying a house.”
“Then we meet in person, and they say, ‘Oh I don’t really care if I buy a house, but shouldn’t I want to?’”
Based on advice from financial planners—both independent and those employed by banks—Global News has compiled a list of questions (and some context) to help you decide whether buying or renting is the right move for you.
You can also use our affordability calculator to figure out where you rank when it comes to affording a house:
1) Do you have 10-20 per cent of the home’s purchase price saved for the down payment?
While it’s possible to purchase a home with as little as five per cent down in Canada, big banks prefer first-time home buyers to have an average of 10 per cent.
“If this is the property of your dreams and it’s a really good buy, and you don’t have the full 20 per cent down,” says Royal Bank of Canada’s Rachel Wihby, it may make sense to pay the mortgage loan insurance charged to anyone who doesn’t put 20 per cent or more down on the home.
But “the less you put down, the higher the amount that you’re actually being charged,” Simmons said. That could mean you end up paying an additional $10,000 or more.
2) Do you have another 1.5-5 per cent saved for closing costs?
First-time home buyers don’t have to pay realtor fees, but there’s a number of other closing costs that need to be taken into account.
Depending where you live, land transfer taxes can carry a “significant” price tag, said Farhaneh Haque, director of mortgage advice for TD Canada Trust.
“Lawyer fees, seller/buyer property tax adjustment, appraisal fees, home inspection fees, even just your moving costs,” Haque said.
David Stafford, Scotiabank’s managing director of real estate secured lending, added fire and loss insurance to the list, suggesting $50-$100 per month as a ballpark figure.
Stafford also stressed the value of a building inspection, particularly for first-time home buyers, who may be easily impressed by granite countertops and hardwood floors but miss such other details as an old furnace, a leaky roof, or electrical wiring that’s in need of repair.
“Given you’re contemplating a multi-hundred thousand dollar purchase, a building inspection for a couple hundred dollars isn’t a bad idea.”
3) Can you keep debt servicing below 40 per cent of your income?
Your total debt service ratio measures the percentage of your gross annual income needed to cover housing payments (principal, interest, property taxes and heat, known as “PITH”) plus registered debts like car loans, personal loans and credit cards if applicable. Simmons says this 40 per cent rule is “specifically to please the bank” and is the general eligibility criteria when applying for your mortgage at most financial institutions.
So if you add it all up, housing payments and other debts should be between 35 and 40 per cent of your gross annual income.
4) Are your monthly fixed costs at 50-60 per cent of your after-tax income?
These “fixed costs” include housing and transportation, groceries, toiletries, and “everything you have to pay every month whether you like it or not,” Simmons said.
“When the money hits your bank account, if more than 60 per cent is tied up in things that you can’t get out of every single month, then you have no room after that for spending money which is not a fixed cost – things like going out for dinner, going out with friends, weddings, anything else that’s not just a bill.”
Keeping this ratio under control ensures you have enough money left over to keep saving, and avoid becoming “house poor.”
“Once you buy a house, it’s not like retirement’s done; you still have to save for other things,” Simmons added. “You also want to make sure that you have enough cash flow every single month that you don’t have to go into credit card debt – and that’s what I see: house broke, all the time.”
5) Can you save 1-2 per cent of your income in a “housing maintenance fee” each year?
The top mistake Canadian homebuyers make? Underestimating “significant renovations needed to the property,” according to a recent RBC poll.
Stafford suggests asking your realtor, and getting a home inspection.
“Even if it’s in pretty good shape, most homes of any age, there’s something you’ve got to do every year…and you need to factor that into your cash flows,” he said.
Simmons advises setting aside 1-2 per cent of your after-tax income each year to what she calls a “house maintenance fund” to avoid going into debt.
“When there’s not that extra cash sitting in an emergency fund, if there’s a $10,000 renovation or if you get cockroaches … It has to go on debt, because you’re not going to live in a place with cockroaches,” she said. “That can take a long time to pay off if you don’t have flexibility with your cash flow.”
6) Do you plan to stay in your home for at least three years?
Haque said TD advises clients to think about their life in three- to five-year chunks when considering purchasing a home.
A young couple buying a condo, for example, should consider how soon they’ll need a bigger space if they want children in the near future.
Wihby suggests regarding a home as a long-term investment – it might not be worth it if you buy a home and sell it a year later.
7) Is your job stable?
Are you planning to stay in your field? What would happen if your income decreased?
These are some of the questions RBC planners ask clients to determine how monthly payments and lifestyle would change as a result of job fluctuations.
“So you need to think of things like, will you be on a single income household instead of two?” Wihby said. “Maybe that means you won’t be taking those trips you thought you’d be taking or maybe you won’t be going to the gym as often.”
8) Are you emotionally ready to own a home?
It may sound hokey. But this is a big lifestyle leap to take.
“A lot of people heard that it was almost a no-brainer to go into property, especially when we saw property prices rising like we did in the past,” Wihby said. “But I think a lot of people got into purchasing a home before they were ready emotionally.”
The impact of what Stafford calls the “single biggest financial commitment for most people” includes the mental shock of going from a tenant to a homeowner.
“When you’re a tenant, the month that cheque goes out, it clears your account, and then you don’t think about it for the next 30 days,” Haque explained. “But when you’re a homeowner, you have those multiple payments like home insurance, maintenance fee, utilities, property taxes, that you have to account for on an ongoing basis. And sometimes it’s very much a shock to your system.”
Simmons emphasizes that homeownership is a personal choice, and isn’t the imperative it was 30 or 40 years ago.
“I know a lot of professionals who just don’t want to be bothered cutting the grass on Saturday, and doing the gardening. … They would much prefer to rent and save a bunch of money, so they can travel every weekend,” she said. “If you’re not actually going to enjoy the house, what’s the point in buying it?”
Global News - Erika Tucker, Nov 27, 2013
Thursday, 28 November 2013
Nest Egg: The lowdown on low down payments
Hot markets and
cold feet might keep some people out of the housing market, but a lack of
upfront cash doesn’t have to be an obstacle. While it’s long been the
convention in the industry to start with a 20% down payment, the availability
of mortgage default insurance means ownership is still possible with as little
as 5% down, as long as the buyer meets industry standards of income and
creditworthiness.
“What mortgage
insurance allows people to do is to get into the market with today’s prices,
with today’s low interest rates, once they have determined that home ownership
is right for them,” says Mary Stergiadis, principal for Ontario business
development at Canada Mortgage and Housing Corp. The insurance repays lenders
if a homeowner defaults on payment.
People with
insured mortgages can take advantage of the same interest rates as those taking
out conventional mortgages, she says. And the insurance doesn’t cost as much as
some people think.
Here’s how it
works: With 5% down, the insurance premium is 2.75% of the mortgage. On a
$400,000 property with $20,000 down, the mortgage insurance premium would be
$10,450. That would bring the total being borrowed to $390,450. Assuming a
five-year closed at 3.75% amortized over 25 years, the monthly payment would be
about $2,000, including less than $55 a month for the insurance. The same
property with 20% down would have a monthly payment of $1,640.
“What consumers
have to ask themselves is what $60,000 means to them in terms of savings,” Ms.
Stergiadis says, referring to the amount needed to reach a 20% down payment for
this property. “How long would it take to save that additional down payment?
Where will home prices be within that time? Where will interest rates be?”
(But note that the tax on the premium — 8% in Ontario — cannot be amortized and is due on closing.)
(But note that the tax on the premium — 8% in Ontario — cannot be amortized and is due on closing.)
The insurance
rate goes down as the down payment goes up. For buyers with 10% down, for
instance, the premium is 2%; with 15% down, it’s 1.75%.
A popular
misconception is that this insurance applies only to the primary residence of
the borrower. But it is also available for a second property, such as a home or
condo in the city to cut a commute or to house an aging parent or a student.
CMHC does not, however, insure recreational properties.
Private
mortgage insurers, such as Genworth Canada and Canada Guaranty, also insure
high-ratio mortgages. The rates offered match those of CMHC; consumers usually
aren’t aware of differences, as lenders apply directly to the insurers once an
offer has been made and accepted on a property.
Genworth
estimates about 30% of Canadian mortgages are insured, down from historical
levels of as high as 40%. That percentage tends to be lower in the GTA, says
Jason Neziol, Genworth’s regional vice-president of sales for Ontario and the
GTA. That’s because higher prices mean more people make larger down payments in
order to quality for mortgage loans.
‘What mortgage insurance allows people to
do is to get into the market with today’s prices, with today’s low interest
rates, once they have determined that home ownership is right for them’
Mr. Neziol says
private insurers play an important role in the market by providing more choice
for lenders and helping to educate the public about options. “It gives options
to consumers,” he says. “It’s good for lenders to have a choice in terms of
what insurance providers would do.”
You don’t have
to be a first-time buyer in order to qualify. Plus, even conventional
mortgages, those with 20% or more down, can be insured. This can happen if a
loan is slightly outside of a lender’s usual parameters.And there can be a rental component. A buyer can purchase a duplex with 5% down, for instance, but must live in one unit. A 10% down payment is the norm for three- and four-unit properties, where one unit is owner-occupied and the others are rented out.
The point, Mr. Neziol says, is to be aware of the many options available.
Susan Smith, Special to National Post | 23/11/13
Wednesday, 20 November 2013
Key Stats from CAAMP's Fall 2013 Report
Top 10 CAAMP (Canadian Association of Accredited Mortgage Professionals) Mortgage Stats:
- 16%: Share of mortgages on homes purchased in 2013 that had amortizations over 25 years
- Versus 34%, for homes bought between 2008 and 2010
- 8%: Percentage of respondents who believe the housing bubble will burst within the next five years
- 2.15: Average percentage point discount from "posted rates" for 5-year fixed rate mortgages obtained this year
- 82%: Percentage of new mortgages that were fixed rate mortgages—for homes purchased in 2013
- 2%: Percentage of buyers with less than 20% down who chose a variable or adjustable rate mortgage
- 42%: Share of new mortgages in 2013 that were obtained directly from a Canadian bank
- Down from 47% in 2012
- 40%: Share of new mortgages in 2013 that were obtained from a mortgage broker
- Also down from 47% in 2012
- 70%: Percentage of households with mortgages that have 25% or more equity
- 57%: Percentage of 2013 homebuyers who were first-time buyers, about 250,000 buyers YTD
- 5.0%: Decrease in average monthly sales following the government's 2012 mortgage insurance policy changes.
Other Stats of Note:
Amortizations
- 84%: Share of mortgages on homes purchased in 2013 that had an original amortization of 25 years or less
- Up from 78% in 2011/2012
- 30%: How much faster mortgages have been repaid (versus their original amortization)—applies to mortgages repaid during the past two decades
Lump Sum/Accelerated Payments
- 16%: Percentage of borrowers who increased the amount of their payments in the past year
- $400: The average monthly increase
- 17%: Percentage of borrowers who made a lump sum payment
- $14,000: The average amount
- 8%: Percentage of borrowers who have increased their payment frequency in the past year (e.g., gone from monthly payments to accelerated bi-weekly or weekly payments)
- 38%: Percentage of borrowers who took one or more of these actions
- 62%: Percentage of borrowers who took none of these actions
Professionals consulted when obtaining current mortgages
- 69%: Percentage of current mortgage holders who consulted a bank representative about getting a new mortgage
- 43%: Percentage of current mortgage holders who consulted a mortgage broker about getting a new mortgage
Feelings About Mortgages
- 17%: Percentage of respondents who strongly agreed with this statement: "I regret taking on the size of mortgage I did"
- 63%: Percentage of respondents who indicated that they did not regret their mortgage choices
- 68%: Percentage of respondents who were in agreement that mortgages are "good debt"
Interest Rates
- 3.50%: The average mortgage interest rate for homeowners’ mortgages
- 3.23%: The average mortgage interest rate for mortgages on homes purchased in 2013
- 3.20%: The average mortgage interest rate for mortgages renewed in 2013
- For these borrowers, their average interest rate is 0.82 percentage points lower than prior to their renewal
Mortgage Discounting
- 3.06%: The average mortgage interest rate for those with 5-year fixed rates in 2013
- 3.90%: The highest recorded actual rate
- 1.3 percentage points: The worst discount off posted rates received by a 5-year fixed borrower in CAAMP's survey
Variable vs. Fixed Rates
- 86%: Percentage of borrowers with less than 20% down who chose a fixed rate
Equity
- 46%: The average equity ratio for owners with mortgages but not HELOCs
- 43%: The average equity ratio for owners with both mortgages and HELOCs
- 76%: The average equity ratio for owners with HELOCS but without mortgages
- 83%: Percentage of Canadian homeowners with 25% or more
Equity Take-Out
- 11%: Percentage of homeowners who took equity out of their home in the past year
- $57,000: The average equity take-out amount
- Up from $49,000 in 2012
- $59 billion: The estimated amount of total equity take-out in the past year
- $16.6 billion was used for debt consolidation and repayment
- $15.1 billion was used for investments
- $12.3 billion was used for home renovations
Real Estate/Mortgage Market
- 9.52 million: The number of homeowners in Canada
- 4.28 million: The number of renters in Canada
- 5.58 million: The number of homeowners with mortgages (who may also have a HELOC)
- 3.94 million: The number of homeowners who are mortgage-free
- 2.3 million: Number of total homeowners who have HELOCs
Mortgaging Activity
- 450,000: The number of households that bought homes over the past year
- 400,000: The number of buyers who took mortgages
- One-third: Ratio of borrowers who have a HELOC, out of those renewing their mortgage this year
Mortgage Market Outlook
- 8.6%: Average annual growth of mortgage credit in Canada over the past decade
- 4.5%: The likely growth rate for all of 2013, estimates CAAMP
- 10.3%: The decline in the rate of sales since the last mortgage rules took effect in July 2012 (compared to the decade prior)
Study details
The data quoted from this report was commissioned by CAAMP and produced by Will Dunning, Chief economist of CAAMP, in collaboration with Maritz. This report is based on online survey responses from 2,223 Canadians compiled during October 2013. Nearly 60 percent of those surveyed were homeowners with mortgages.
Canadian home sales fall back in October
Ottawa, ON, November 15, 2013 – According to statistics released today by The Canadian Real Estate Association (CREA), national home sales declined in October 2013.
Highlights:
- National home sales declined by 3.2% from September to October.
- Actual (not seasonally adjusted) activity came in 8.3% above levels in October 2012.
- The number of newly listed homes declined by 0.8% from September to October.
- The Canadian housing market remains in balanced territory.
- The national average sale price rose 8.5% on a year-over-year basis in October.
- The MLS® Home Price Index (HPI) rose 3.5% year-over-year in October.
The number of home sales processed through the MLS® Systems of Canadian real estate Boards and Associations and other co-operative listing systems fell 3.2 per cent on a month-over-month basis in October 2013. The decline returned activity back to near where it stood last June and July.
“October’s lower activity provides early evidence confirming that sales in the later summer and early fall were boosted by homebuyers with pre-approved mortgages at lower than current interest rates jumping into the market before their preapprovals expired,” said Gregory Klump, CREA’s Chief Economist. “Now that interest rates appear to be going nowhere fast, sales activity in the near term may be held in check by homebuyers who are in less of a hurry to purchase. While the Finance Minister will no doubt continue to keep a close eye on Canadian housing markets for signs of overheating as interest rates remain low, October sales results may provide him with reassurance that tightened mortgage regulations and lending guidelines are working as intended.”
Sales were down in a little over half of all local markets, including Greater Vancouver, the Fraser Valley, Greater Toronto, Hamilton-Burlington, and Montreal. The monthly decline in activity among these markets offset increased activity in a handful of less active major urban centres.
Thursday, 24 October 2013
Is The Bank of Canada hinting that we should go ?
Is the Bank of Canada hinting that we should all have Variable Rate Mortgages? Did you read our last newsletter?.
The Bank of Canada speaks a little differently than we do, so let me translate.
First, they said it by dropping one line that was in all of their reports over the past few years:
“Over time, as the normalization of these conditions unfolds, a gradual normalization of policy interest rates can also be expected…”
They replaced it with this line:
“the substantial monetary policy stimulus currently in place remains appropriate”
Then they said they were worried that prices don’t seem to be moving up as they expected despite of all the new money that was printed. Here is how they said that:
“the fact that inflation has been persistently below target means that downside risks to inflation assume increasing importance.”
The Bank of Canada doesn’t think they will have to act to slow growth until at least the end of 2015, which means no movement in the Prime Rate for at least 2 years.
This isn’t only happening in Canada. The trend to more dovish policy (meaning a bias towards keeping rates low or dropping them) is spreading around the world right now. Have a look at this article from Bloomberg.
Yesterday’s report should really not come as a surprise to any of our Clients who read our last newsletter, or have been in our offices in the past month or so. The Prime Rate is pretty much guaranteed not to go up for at least 2 years. So, what type of mortgage should you take? It is really hard to make a case for a bloated 5 year Fixed Rate Mortgage. Especially when you can take a Variable Rate Mortgage from a NON BANK LENDER who will guarantee to lock you into a low market priced fixed rate when we fear rates might spike up. If you forgot how Banks price their fixed rate mortgages when you are already their client with a Variable Rate click here.
This is great news for anyone with a mortgage. Fixed rates are high, which means penalties to break mortgages are low, and variable rates are cheap, which means you can save a bundle. Your Mortgage Lender is scared that you will leave them, use this to your advantage, get someone negotiating for you. Get your existing Lender to start competing for your business, or move your mortgage while your penalty is still cheap. The average client can save about $7,250.00 by switching from their 5 year Fixed Rate Mortgage over to a Variable Rate Mortgage right now.
Marcus - Morcan Direct
Wednesday, 23 October 2013
Realtors. Can we call ourselves professionals?
In recent years, from many quarters, concerns have been
expressed about the continuing decline in professionalism. This includes
medical doctors, lawyers, accountants, other professions and certainly
Realtors, assuming that we who transact in real estate as agents for sellers
and buyers could be considered as a profession in the first place.
Inspired by an editorial by Lloyd R. Manning AACI, FRI, CCRA, PApp
That all Realtors can legitimately call themselves
“professional” is questionable, because many of the basic canons of a profession
seem to be lacking. One only has to follow the blogs and opinion pieces in real
estate publications to prove the point. The public is very cynical about this.
Some place Realtors in the same category as used car salesmen and politicians.
In the real estate industry there appears to be less focus by Realtors on the
needs of clients and more on making that sale or getting that listing. It is
suggested that many have forsaken their professional roots and regard their
agency solely as a business, and professionalism is a lesser priority. This
creates the need to inform the public more by deed than word that Realtors are
indeed professionals. We as Realtors must demonstrate by high standards of
ethical behaviour, service and conduct that we live up to the tenets of
professionalism and the Codes of Ethics we and the public so often hear
preached.
Professionalism is best described as a relationship
between a person who has a high level of expertise and discipline in a chosen
field and who is a member of an organized group of like-minded individuals with
the same expertise and discipline in the same field, and the relationship they
have with their clientele. The building blocks of professionalism are being
well educated in the chosen discipline, integrity, honour, leadership,
independence, pride, collegiality and service, all balanced with commercialism.
This includes the relationship between a Realtor and a
client and the unwritten contract between the Realtor and society. An essential
attribute is the ability to provide sound advice, competent service and to
quote the medical profession, “Do no harm.” Real professionalism involves a
pride in one’s work, a commitment to quality, a dedication to the interests of
the client and a sincere desire to help. Professional success is about
attitudes and about character. These are demonstrated by energy, drive,
initiative, commitment, involvement, enthusiasm and the ability to provide
sound advice.
Professionalism does not mean wearing a suit, carrying a
briefcase, driving a high-priced automobile or always having your cell phone at
the ready, just in case. Nor is it having a collection of meaningless (to the
public) designations and diplomas, which many associations and commercial
diploma mills are far too anxious to hand out. It is not one, but a combination
of qualities; not a skill but a blending and integration of a variety of skills
and attributes.
In real estate brokerage there are many very competent,
very conscientious and very honest Realtors who could justifiably call
themselves “professional”. They demonstrate all the mandatory characteristics
just referred to. However, this is not the majority. In so many areas of the
real estate brokerage industry commercialism and old-fashioned greed has taken
over. To earn a good living is a common goal and a necessity, yet many are
given over to avarice. Fundamental ethical behaviour, which often is in
competition with increased revenue and profit, is losing.
Realtors win prizes and in-house recognition, not for
doing a good job, not for advancing the acceptance of the industry, not for
assisting the less knowledgeable or for high-quality professionalism, but for
making the most sales, getting the most listings or earning the most
commissions.
The real estate brokerage industry is a fractured
commercial system comprised of largely poorly trained, ill-fitted candidates
who were initially attracted by romantic notions of what selling real estate is
all about and anticipation of high earnings, but for whom the starvation rate
is high and the retention rate low. Although the pre-licensing courses have
reduced the revolving door concept to a degree, the high failure rate persists.
No other industry or profession would tolerate such seduction of the innocent
and this waste of human resources as does the real estate brokerage industry.
There is a philosophy, not spoken about but certainly
practiced by the real estate brokerages. If at the beginning of a fiscal
quarter you hire 10 new sales agents and if at the end of the quarter two
remain, your real estate brokerage has done well.
Professionalism must start with the Realtors themselves,
insisting that all practitioners uphold the tenets of true professionalism and
eliminate from their ranks those who do not. Until this occurs, acceptance by
society will never be attained. The greatest challenge will be the elimination
of unprofessional conduct from all unethical and incompetent Realtors. This is
to consider the interests of real estate clients and the public as the No. 1
priority. This will demonstrate care and concern of the real estate client’s
welfare in all of Realtors actions, not by giving only lip service or obtaining
continuing education credits for having taken an ethics course, but a genuine commitment.
Inspired by an editorial by Lloyd R. Manning AACI, FRI, CCRA, PApp
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