Bank of Canada holds steady on rates, 2013 economic prediction

 

Bank of Canada holds steady on rates, 2013 economic prediction

Kevin Carmichael - Globe and Mail

The Bank of Canada is looking through weaker economic growth, opting to leave its benchmark interest rate unchanged, and holding to a prediction that Canada's economy should gather pace next year.

 

"In Canada, economic activity in the third quarter was weak, owing in part to transitory disruptions in the energy sector," the Bank of Canada said in a statement at the end of its latest round of policy deliberations Tuesday. "Although underlying momentum appears slightly softer than previously anticipated, the pace of economic growth is expected to pick up through 2013."

Click here to read the full article. 

 

Lowest Rates* in Canada

Term Our Rate Bank Rate
3 yr Fixed 2.74% 4.35%
5 yr Fixed 2.89% 5.35%
5 yr Variable 2.65% 4.00%
Updated : December 04, 2012
We have the best rates on a wide range of products.

Paramjeet Nagi

www. jeetnagi.com  or  www.mygtamortgage.com


What If Mortgage Rates Went Up?

What If Mortgage Rates Went Up?

 

Economic forecasters from coast to coast anticipate that The Bank of Canada will keep its key lending rate low. As it has remained unchanged for the past 25 months, it is anticipated that we will see minor changes through late 2013. Estimations are that 2014 will likely see more significant changes, and these changes will be impactful to the general consumer.

How impactful? 
Well let’s take a look at an example including the recent changes that we have seen to the amortization effective June, 2012.

If you had a $100,000.00 mortgage at the rate of 2.94%:

  • With an amortization of 30 years, your monthly payment would be $417.44
  • With an amortization of 25 years, your monthly payment would be $470.14
  • The difference is $52.72

If you had a $100,000.00 mortgage at modestly increased rate of 3.44%:

  • With an amortization of 30 years, your monthly payment would be $444.35
  • With an amortization of 25 years, your monthly payment would be $496.11
  • The difference of $51.76

 

These numbers may seem rather insignificant, but be mindful that the average residential home price in Canada was $368,000.00 in October 2012.

Based on the above information this difference with the amortization reduction and the inevitable rate increase is $78.67 per month x 3.68 = $289.50 monthly increase. Whatever your mortgage goals may be, today or in the future, these numbers are worth paying attention to.

Keeping up to date and apprised of the current market conditions, products and rates via your CENTUM Mortgage Professional, like myself, can in fact save you thousands of dollars. The above example based on a five year mortgage term turns into a savings of $16,346.40 over the sixty months.

Be aware of some of the posted “Best Rates”. If it sounds too good to be true it probably is. This can be the case with a large amount of “special” promotions. They can have tight constraints for early payouts, and in some cases you can’t pay the mortgages out during the term of the mortgage! Reduced anniversary payments and any changes to your monthly payments can command high administration fees.

If you would like more information about how I, as a CENTUM Mortgage Professional, can assist you in ensuring that your best interests are looked after, please do not hesitate to get in touch with me.

Paramjeet Nagi
Licence #: M08007836
Phone: (416) 884-1770
Web site: www.mygtamortgage.com
Web: www.pnagi.com

 

 


Choosing the Right Sales Representative/Broker

 

Choosing the Right Sales Representative/Broker


 

Choosing the Right Sales Representative/Broker
 

Your sales representative is a trained professional who knows all aspects of the real estate market. A sales representative will save you time, money and aggravation.

As with purchasing a home, you want to list with the sales representative who is the expert in your location. After all, potential purchasers will be calling this same "area expert" to inquire about houses for sale. There will be a few sales representatives who are knowledgeable about your neighbourhood. Call them up and interview them. You need to feel comfortable with him or her, after all, they will be working for you.


 

Should You Go With a Non-Exclusive or Exclusive Listing Arrangement?
If you enter into this type of arrangement with your sales representative, you are giving him or her the exclusive right to find a purchaser for your home. With this type of agreement, no other sales representative will bring potential buyers to your home, because only the listing sales representative is entitled to the commission.

You may consider this type of arrangement in a Sellers' Market during which time there are more people interested in purchasing a home than there are homes available.

Understand Market Conditions
The real estate market is in constant flux, not only as a whole but in particular areas as well. Knowing what is going on in the overall and local real estate markets will help you understand how these conditions can affect the sale of your home. We've designed the following comparison to help give you an overview of the three significant market positions. When you meet with your sales representative, ask about the current state of the market.

Buyers Market:
The supply of homes on the market exceeds demand.

Characteristics: High inventory of homes. Few buyers compared to availability. Homes usually stay on the market longer. Prices are stable or perhaps dropping.
Implications: Buyers spend more time looking for a home, and when they negotiate, they usually have more leverage.

Sellers Market:
The number of potential buyers exceeds the supply of homes on the market.

Characteristics: There is a smaller inventory of homes with many buyers. Homes sell quickly. Prices usually increase.
Implications: Prices may be higher or perhaps climbing. Buying decisions must be made quickly. Conditional offers may be rejected.

Balanced Market:

The number of homes on the market is roughly equal to the demand.

Characteristics: Demand equals supply. Sellers accept reasonable offers. Homes sell within a reasonable time period. Prices generally remain stable.
Implications: There is less tension among buyers and sellers. There is a reasonable number of homes to choose from. 

Jeet Nagi,Broker

www.pnagi.com

 


Toronto Sales Up 14.5% in May

 

Toronto Sales Up 14.5% in May

 

Greater Toronto Realtors reported 5,142 transactions through the TorontoMLS® System during the first 14 days of May 2012. This result was up by more than 14.5 per cent in comparison to the first 14 days of May 2011. The number of new listings continued to grow at a slower pace than sales – up 13 per cent year-over-year to 8,749.

“Annual growth in sales was experienced across the GTA for all major home types in the first half of May. Sales growth was strongest for the condominium apartment segment. While the condo market has generally been the best supplied market over the past year, we have continued to see enough demand to exert moderate upward pressure on average selling prices in this market segment,” said Toronto Real Estate Board President Richard Silver.

The average selling price for transactions in the first 14 days of May was $517,242 – up by six per cent compared to the same period in 2011.

“A shortage of listings in the low-rise segment of the market has resulted in a lot of competition between buyers and above average annual rates of price growth. Tight market conditions are expected to remain in place for the balance of 2012,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

Summary of TorontoMLS® Sales and Average Price

 

 

May 1 - 14

 

 

2012

 

2011

 

 

Sales

Average Price

Sales

Average Price

 

City of Toronto ("416")

1,959

$572,159

1,763

$547,659

 

Rest of GTA ("905")

3,183

$483,443

2,725

$448,126

 

GTA

 

5,142

 

$517,242

 

4,488

 

$487,225

 

 

TorontoMLS® Sales & Average Price By Home Type

 

 

May 1 - 14, 2012

 

Sales

Average Price

 

416

905

Total

416

905

Total

             

Detached

691

1,832

2,523

835,522

576,845

647,692

Yr./Yr. % Change

6%

17%

14%

5%

8%

6%

Semi-Detached

225

343

568

595,962

401,779

478,700

Yr./Yr. % Change

2%

13%

8%

8%

12%

9%

Townhouse

238

590

828

465,499

359,475

389,951

Yr./Yr. % Change

17%

17%

17%

15%

5%

8%

Condo Apartment

784

326

1,110

370,224

291,673

347,154

Yr./Yr. % Change

18%

18%

18%

4%

9%

5%

 


Toronto Home Sales Up 18% in April

 

Toronto Home Sales Up 18% in April

Greater Toronto Realtors reported 10,350 transactions through the TorontoMLS® System in April 2012. This level of sales was 18 per cent higher than the 8,778 firm deals reported in April 2011. The strongest sales growth was reported in the single-detached market segment, with transactions of this home type up by 22%compared to a year ago.

“Interest in single-detached homes has been very high, both in the City of Toronto and surrounding regions. Growth in single-detached listings has not kept up with demand, which means competition between buyers in this market segment increased. With this in mind, it was no surprise that the strongest annual price increase was also experienced in the single-detached segment,” said Toronto Real Estate Board President, Richard Silver.

The average price for April 2012 transactions was $517,556 – up 8.5 per cent compared to April 2011. While price growth was strongest for single-detached homes, the better-supplied condominium apartment segment experienced a more moderate annual rate of price growth, at four per cent.

“Monthly mortgage payments remain affordable for home buyers in the Greater Toronto Area. While interest rates are generally expected to increase over the next two years, the extent and timing of rate hikes has been thrown into question by slower than expected economic growth in the first quarter of this year. On net, borrowing costs are expected to remain a positive factor influencing home sales through 2012,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

See Toronto Real Estate Market Watch report »


Average Toronto area price up 10.5%

 

Average Toronto area price up 10.5%

 

Greater Toronto Realtors reported 9,690 sales through the TorontoMLS® System in March 2012. This result was up by almost eight per cent in comparison to the 8,986 deals reported during the same period in 2011.

“The GTA resale market has not suffered from a lack of willing buyers this year. Buyers have been spurred on by the positive affordability picture brought about by low mortgage rates,” said Toronto Real Estate Board President Richard Silver. “The challenge has been a lack of inventory. Many listings have attracted multiple interested buyers. Strong competition has led to annual rates of price growth well above the long-term average.”

The average selling price in the GTA was $504,117 in March – up by 10.5 per cent in comparison to March 2011.

“The number of new listings was up last month in comparison to March 2011. However, based on the historic relationship between price and listings, the GTA resale market should be better supplied. If competition between buyers remains as strong as it is right now, we will almost certainly see an average selling price above $500,000 for 2012 as a whole,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.


Toronto Mid-March Sales Up 7%

 

During the first 14 days of March, Greater Toronto Realtors reported 4,215 transactions through the Toronto MLS® system, representing a 7% increase compared to the same period in 2011. The number of new listings was down by 2% year-over-year to 6,970.

"Home buyers continue to benefit from the affordable housing situation in the GTA. Immigration to Toronto and surrounding areas adds to the pool of home buyers every year. The economic and ethnic diversity found in the GTA consistently attracts newcomers and foreign investment,” said Toronto Real Estate Board (TREB) President Richard Silver.

The average selling price for transactions between March 1 and 14 was $502,155 – up by more than nine per cent compared to the first 14 days of March 2011. On average, homes sold for 100 per cent of the asking price within three weeks.

“Strong competition between home buyers in many parts of the GTA has resulted in sellers realizing their asking price in a short period of time. The fact that homes are selling for 100 per cent of the asking price, on average, suggests that sellers are very much in tune with the current market situation and know the fair market value of their home,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.


Buying A Home - Getting Started The Very First Step !!!

Getting Started The Very First Step

The first question you're bound to ask is, "How much home can I afford?" That depends on a number of factors:

Your selected location. Are you set on a specific area? Downtown? The suburbs? A rural setting?

Your preferred type of home. Detached? Semi? Duplex? High-rise? Link? Townhouse? New or Resale? There are a variety of home styles you will want to explore.

Your income. After all, it's not just the mortgage you have to take into account. There are property taxes, utilities, and in some cases condo or strata fees. As a general rule of thumb, your monthly home-carrying cost should not exceed 30-35% of your income.

Market conditions. Is it a buyer's, sellers or balanced market?

There are also additional costs to keep in mind. It's a good idea to work out exactly what you want and what you can afford before you begin the search. Be specific! After all, you don't want to suddenly come to the realization that your dream house has come with a nightmare of bills and expenses. Stick to looking at houses in your price range. The more you've thought it out, the better your sales representative can meet your needs.

A part of deciding just what you can afford can be accomplished by meeting with your bank or a mortgage broker and negotiating a pre-approved mortgage. There are many types of mortgages and many different terms. Research all of your options. This ensures that there are no surprises once you're ready to make an offer.

Once you've figured out your monthly expenses and what you can afford, you can start your search. It could happen that the first home you see is the one you want; or you might look at home after home with none of them catching your interest. Rest assured, the home you're looking for is out there, and when you find it, you're ready to make an offer. If your offer is accepted, the next steps are closing and moving into your new home.

Purchasing a home is easy once you put your plans into action.

Jeet Nagi, Broker

Remax Real Estate Centre Inc.

Ph: 1-866-456-1177

www.pnagi.com

 


Understanding your credit score

 

What's Your Number?

You've most likely heard the term "credit score" in conversations about debt or borrowing and understand that it has an effect on our ability to take out loans and get a mortgage and that it's important to maintain good credit.

Do you know how your credit score is calculated or how to ensure your credit information is accurate? If you don't know, you're not alone.

Your credit score is a judgment about your financial health at a specific point in time. There are many ways to calculate your credit score, but the most common method is called the FICO Score. The FICO score was developed by the Fair Isaac Corporation, which uses statistics to measure the risk of someone defaulting by taking into account different factors in a person's financial history. Your credit score falls on a scale of 300 - 900. The higher your number, the better your credit score. This method is used by TransUnion, one of the major credit-reporting agencies in Canada. Equifax Canada uses a similar method called the Beacon Score.

    

 

Whether or not you are just starting to establish your credit or you have a long credit history, your credit score should always remain a priority. Reviewing your credit annually ensure that all of the information is accurate and that there are no unauthorized discrepancies. In some cases you can have a message added to your credit bureau for fraud prevention that ensures any credit applications presented need to be phone verified.  This diligence on your part could actually save you thousands of dollars.

Understanding how your credit score is calculated will also help you maintain a good rating for when you may need to go to a lender and ask for a mortgage or loan. Though the true calculation of the FICO score is a secret and probably far too complex for most to understand, here are the elements we do know:

 

Payment History - 35% 
Your ability to pay off your debt, like credit cards and phone bills, plays a big role in your credit score. It's important to always pay at least the minimum payment before or on the due date. If you ever get to see your credit score, you may see a list of letters and numbers like R1, O2, or I1, which are your credit ratings. The letter indicates the type of credit you are using (R=revolving credit, I=installments, O=open credit). The number ranges from 1-9. 1 meaning you pay within 30 days of payment due date, 9 meaning your credit's been placed for collection or bankruptcy.

Credit Utilization - 30%
Credit utilization is the ratio between the amount you owe and the credit limit you have (on all accounts). If you are over your limit this will have a significant impact on your score, or alternately using 90% of your approved limit will also have a negative effect.

Length of Credit History - 15%
According to the Financial Consumer Agency of Canada, research shows that consumers with longer credit histories have lower repayment risk than those with shorter credit histories. It's a good idea to keep some credit cards you've had for a long time. Closing long standing credit cards may inadvertently affect your score.

Inquiries - 10%
Ensure that you are not applying for credit cards or credit products that you have no intention of using. Having too many credit inquiries (any time you apply for a loan or credit card) can hurt your credit rating as it infers you are a large credit seeker. Your score does not lower with every credit inquiry. How inquiries affect your score will depend on other factors like your payment and credit history.

Credit Mix - 10%
Having various types of credit shows your ability to manage a variety of credit.

A mortgage, secured car loans and unsecured credit are considered good debt, debt that was incurred for something that will increase in value (mortgage for a home) or contribute to your overall financial health (student loan). Bad debt is anything that may lead to an unhealthy financial situation, like payday loans and any form of cash advances.

As I mentioned, the cost of bad credit can be significant. Take for example: you're applying for a mortgage and your FICO score is less than 600 then there is a chance you will not be approved for credit from an A lender (major lenders, like banks). You will then have to consider making you application with what is known as an alternative lender (B lender). The rates are higher (likely 1.5% higher than posted rates) based on the possible credit risk that you have been assessed at. That's thousands of dollars of interest that you would not have to pay if you had a good credit score!

Making sure you have a good credit score is very important, but there are many factors that go into getting you a mortgage.

If you would like more information about how I, as a CENTUM Mortgage Professional, can assist you in ensuring that your best interests are looked after, please do not hesitate to get in touch with me.

Paramjeet Nagi
Licence #: M08007836
Phone: (416) 884-1770
E-mail: paramjeet_nagi@centum.ca 
Web: www.mygtamortgage.com OR  www.pnagi.com

 

 

 

 


Canadian Housing Market to Moderate

 

OTTAWA, August 14, 2012 — Canada’s new and existing home markets are expected to moderate through the end of 2012 and into 2013, according to Canada Mortgage and Housing Corporation’s (CMHC) third quarter 2012 Housing Market Outlook, Canada Edition1.

“Canada’s housing markets are expected to moderate over the rest of 2012 and into 2013 after showing sustained activity levels, specifically in the multiples segment, over the first half of 2012. Balanced market conditions in most local housing markets will result in a slowing in house price growth as well,” said Mathieu Laberge, Deputy Chief Economist for CMHC.

On an annual basis, housing starts will be in the range of 196,800 to 217,000 units in 2012, with a point forecast of 207,200 units. In 2013, housing starts will be in the range of 173,000 to 207,400 units, with a point forecast of 193,100 units.

Existing home sales will be in the range of 442,300 to 485,200 units in 2012, with a point forecast of 466,600 units. In 2013, MLS®2 sales are expected to move up in the range of 440,500 to 487,600 units, with a point forecast of 469,600 units.

The average MLS® price is forecast to be between $351,300 and $378,400 in 2012 and between $358,000 and $395,800 in 2013. CMHC’s point forecast for the average MLS® price is $368,000 for 2012 and $377,300 for 2013.

As Canada's national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable housing solutions. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.

For more information, call 1-800-668-2642. CMHC Market Analysis standard reports are also available free for download at http://www.cmhc.ca/housingmarketinformation.

1 The forecasts included in the Housing Market Outlook reflect information available as of July 25, 2012. Where applicable, forecast ranges are also presented in order to reflect financial and economic uncertainty.

2 Multiple Listing Service® (MLS®) is a registered trademark owned by the Canadian Real Estate Association.