The upside to the downside in housing prices is it has made housing more affordable. The index of Canadian housing affordability is "slowly but surely inching its way" back up to its historic average.
The country's largest bank, RBC made housing even more affordable, announcing mortgage rate cuts of up to three-quarters of a percentage point. Other banks began following with similar widespread cuts.
The grim economic forecasts attributable to the global financial crisis caused household confidence to plummet this fall. This climate of uncertainty also contributed to the ongoing decline in the number of existing homes sold, which is down 12.6% in Canada since the start of the year.
On the other hand, the quasi-stability of mortgage rates these past few months did nothing to influence recent shifts in affordability in Canada. The benchmark one-year rate remained at 6.25% while the five-year rate rose slightly from 7.1% at the end of June to 7.2% at the end of September. The recent rate cuts reduce the one-year posted rate at both RBC to 5.6% and their five-year rates to 6.95%.
Americans, meanwhile, were getting an even greater dose of mortgage rate relief. U.S. mortgage rates dropped by the most in at least seven years, a drop which was credited to the U.S. Federal Reserve's pledge this week to buy US$600-billion US of debt, aimed at increasing the availability of credit.
U.S. housing reports, meanwhile, continued to suggest that economy is in desperate need of such relief to revive an already deeply depressed market that continued to deteriorate last month. New U.S. home sales tumbled 5.3% last month to their lowest level since the 1991 recession, while prices fell 7% from the already depressed levels of a year earlier.
BMOCapital Markets analyst Benjamin Reitzes said recent declines in recent months occurred as "mortgage rates increased, credit conditions tightened, consumer confidence plummeted and home prices continued to drop, all weighing on the U.S. housing market."
This month's sales won't be pretty either, though December could see a bounce thanks to the U.S. Federal Reserves measures to inject liquidity into mortgage markets, which resulted in the fall in mortgage rates this week.
financialpost.com
Showing posts with label Add new tag. Show all posts
Showing posts with label Add new tag. Show all posts
Thursday, November 27, 2008
Monday, November 17, 2008
Toronto real estate. SCARBOROUGH'S MARKET IS STILL STRONG
While the U.S. housing market is in shambles, things in Scarborough aren’t so grim, local real estate brokers say.
It’s an excellent time to buy in the area. There are very fair prices in Durham and east Scarborough. It's a balanced market. A couple years from now people will look back on it and think this is probably one of the best times there was to buy a house.
It’s definitely a buyer’s marketplace right now. But it’s not the end of the world for sellers. If it’s a slow market and you’re selling and you get your house sold and you buy in a slow market, you haven’t lost anything because you’re moving laterally in the same marketplace.
Also, people worried about getting mortgages in Scarborough should rest easy. Lending criteria is slightly stricter because of the U.S. subprime mortgage crisis but doesn’t affect very many people. Most of the people who would’ve got mortgages before are still able to get mortgages.
The average three-bedroom home in the area of east Scarborough now costs around $330 to $350 thousand. Last year, it would have cost from $340 to $360 thousand.
Low prices won’t last very long in the area. Three to five years from now they’re going be higher and the best time to buy a house is probably right now.
To begin the search for your Scarborough house go here - http://www.torontogreathomes.com/Scarborough_houses/page_1522367.html or call Realtor Alex at (416) 723-9383.
It’s an excellent time to buy in the area. There are very fair prices in Durham and east Scarborough. It's a balanced market. A couple years from now people will look back on it and think this is probably one of the best times there was to buy a house.
It’s definitely a buyer’s marketplace right now. But it’s not the end of the world for sellers. If it’s a slow market and you’re selling and you get your house sold and you buy in a slow market, you haven’t lost anything because you’re moving laterally in the same marketplace.
Also, people worried about getting mortgages in Scarborough should rest easy. Lending criteria is slightly stricter because of the U.S. subprime mortgage crisis but doesn’t affect very many people. Most of the people who would’ve got mortgages before are still able to get mortgages.
The average three-bedroom home in the area of east Scarborough now costs around $330 to $350 thousand. Last year, it would have cost from $340 to $360 thousand.
Low prices won’t last very long in the area. Three to five years from now they’re going be higher and the best time to buy a house is probably right now.
To begin the search for your Scarborough house go here - http://www.torontogreathomes.com/Scarborough_houses/page_1522367.html or call Realtor Alex at (416) 723-9383.
Monday, October 27, 2008
Toronto real estate. WHY CANADIAN BANKING SYSTEM IS STRONG
Canadian politicians, bank executives and monetary authorities have stressed in recent months that Canada's banking system is strong.
Its banks are better capitalized than global peers and avoided many of the problems infecting other financial institutions, they say.
Here are some key differentiating factors:
Canada's federal regulator, the Office of the Superintendent of Financial Institutions, requires chartered banks to keep a minimum Tier-1 capital ratio of 7 percent, versus 6 percent in the United States.
Canadian banks' capital ratios are well above that minimum. The median Tier-1 capital ratio of the six biggest Canadian banks was 9.8 percent in the latest quarter, according to RBC Capital Markets.
Canada's five largest banks have branches in all 10 provinces, so their economic/credit risks are diversified (the sixth-largest operates mainly in the province of Quebec). No U.S. bank has branches in all 50 U.S. states.
Canada's largest banks contain both commercial and investment bank businesses, and OSFI has oversight over the entire entity. In the United States, investment banks have been separate from and regulated differently from commercial banks. The five major U.S. investment banks have this year either gone bankrupt, agreed to be acquired, or changed their banking structure to become commercial banks.
Canadian banks were conservative in approving mortgage loans. The Canadian Bankers' Association estimates that "non-prime" mortgages -- loans to customers who nearly qualify for prime mortgages as well as to riskier borrowers -- make up less than 5 percent of outstanding mortgages
Canadian borrowers are more likely to keep up their mortgage payments. The CBA says the rate of mortgages at least three months in arrears was 0.27 percent in July, near historic lows.
The Canadian Bank Act requires insurance on mortgage loans that exceed 80 percent of a home's value.
Canadian banks were the first in the world to adopt new risk-management rules under the Basel II capital framework.
By law, shares of large, publicly traded banks and insurance companies must be "widely held," which in effect prevents domestic mergers or foreign takeovers unless approved by the Canadian finance minister.
reuters.com
Its banks are better capitalized than global peers and avoided many of the problems infecting other financial institutions, they say.
Here are some key differentiating factors:
Canada's federal regulator, the Office of the Superintendent of Financial Institutions, requires chartered banks to keep a minimum Tier-1 capital ratio of 7 percent, versus 6 percent in the United States.
Canadian banks' capital ratios are well above that minimum. The median Tier-1 capital ratio of the six biggest Canadian banks was 9.8 percent in the latest quarter, according to RBC Capital Markets.
Canada's five largest banks have branches in all 10 provinces, so their economic/credit risks are diversified (the sixth-largest operates mainly in the province of Quebec). No U.S. bank has branches in all 50 U.S. states.
Canada's largest banks contain both commercial and investment bank businesses, and OSFI has oversight over the entire entity. In the United States, investment banks have been separate from and regulated differently from commercial banks. The five major U.S. investment banks have this year either gone bankrupt, agreed to be acquired, or changed their banking structure to become commercial banks.
Canadian banks were conservative in approving mortgage loans. The Canadian Bankers' Association estimates that "non-prime" mortgages -- loans to customers who nearly qualify for prime mortgages as well as to riskier borrowers -- make up less than 5 percent of outstanding mortgages
Canadian borrowers are more likely to keep up their mortgage payments. The CBA says the rate of mortgages at least three months in arrears was 0.27 percent in July, near historic lows.
The Canadian Bank Act requires insurance on mortgage loans that exceed 80 percent of a home's value.
Canadian banks were the first in the world to adopt new risk-management rules under the Basel II capital framework.
By law, shares of large, publicly traded banks and insurance companies must be "widely held," which in effect prevents domestic mergers or foreign takeovers unless approved by the Canadian finance minister.
reuters.com
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