Toronto mortgage news.BANK OF CANADA: NO CHANGES FOR MORTGAGE RATES

The Bank of Canada saw no reason to move its key lending rate from 1.00%, where it has been for a little over a year.
That's precisely what the market anticipated and it means prime rate (which is the basis for variable mortgage rates) should remain at 3.00%.
The Canadian economy is now expected to return to full capacity by the end of 2013 (it was previously mid-2012). Core inflation is expected to be declining through 2012. 

The bank left out language about potential rate hikes or cuts, but slashed its 2012 Canadian growth forecast from 2.6% to 1.9%.
With a commitment from the U.S. Fed to keep its policy rates “exceptionally low” until mid-2013, there is little expectation that the BOC will diverge and raise rates substantially before then.
The bank also hinted that if the euro-area crisis is not contained, that could be a reason to lower rates here.
According to the current Big 6 bank consensus forecast, 2012 should see a 50 bps increase in prime rate. Financial markets don't believe that, however, with derivatives traders effectively pricing in no change by the Bank of Canada in the next year.
The final BoC rate meeting for 2012 is December 6.
To find out more about Toronto mortgage rates and lowest mortgage in Ontario go here - http://www.torontogreathomes.com/ONTARIO_MORTGAGE/page_929364.html

Toronto real estate. MORTGAGE NEWS

Financial Institution	3 Yr	5 Yr	7 Yr	10 Yr	5 Yr Variable
CENTUM Primo**	3.29	3.49	5.65	4.99	2.40
First National	3.65	3.79	4.79	4.99	2.25
FirstLine	3.79	3.89	5.04	5.24	2.60
HomeTrust	3.65	3.79	N/A	N/A	2.60
ING	3.69	3.89	4.79	4.99	2.25
MCAP	3.69	3.74	4.79	4.99	2.35
Scotia Express	3.69	3.69	4.79	5.39	2.50
Street Capital	3.49	3.79	N/A	N/A	2.40
TD	3.65	3.89	4.90	5.14	2.35
ResMor	3.94	3.79	N/A	N/A	2.50

Rates Effective as at: August 2, 2011
Prime Rate: 3.00%
Qualifying Rate: 5.39%
Greater Toronto area home prices accelerated during the second quarter as buyers grappled with a tight supply of residential properties for sale. The heightened competition between buyers has created a seller's market, leading to multiple offers and pushing the median sales price up 10 percent, to $405,000 (about $424,000 in U.S. dollars), in June.
At the same time, active listings declined 24 percent from a year ago in Canada's largest metropolis.

Toronto real estate. Benefits of using a mortgage broker

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 - amalkhass@rogers.com

Toronto real estate. CANADA HOME PRICES INCREASED

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 amalkhass@rogers.com or call 416- 723-9383.

Determining the best mortgage type

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 amalkhass@rogers.com or call 416- 723-9383.

FORECLOSURE IN CANADA: YES OR NO?

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. CTV.ca

Toronto real estate. Countdown begins to interest rate hikes

The Bank of Canada took its first steps in March toward returning the country to more normal interest rate levels by signalling a more hawkish tone on inflation and acknowledging the economy is performing better than expected on "vigorous" consumer demand.

The messages were conveyed in the Bank of Canada's latest interest-rate statement, which kept its record-low benchmark rate of 0.25% as is and pledged to keep it there until July. But most bank watchers took note of subtle changes in the statement, compared with previous rate announcements, and there was enough there for them to begin the countdown to rate hikes.

"I suspect [governor] Mark Carney and company are starting to feel the urge to tighten -- not a strong urge now, but an urge nevertheless," said Michael Gregory, senior economist at BMO Capital Markets.

Among the key changes was a declaration from the bank that the risks to its inflation outlook are "roughly balanced," and no longer "tilted slightly to the downside" -- language that suggests deflation is no longer a concern and that price increases are creeping up to a level that may prompt a response. (The central bank sets its interest rates to ensure inflation remains at 2%.)

The wording change may appear trivial, "but it is nonetheless significant as it reflects an economic backdrop that continues to improve at a much faster pace than what the bank had envisaged," said Paul-André Pinsonnault, senior fixed-income economist at National Bank Financial.

The rate statement emerged a day after economic data indicated the Canadian economy grew at a robust 5% annualized pace in the final three months of 2009, blowing past market expectations for a 4% gain and the central bank's original 3.3% forecast. Economists say the fourth-quarter performance has set the stage for another robust gain, of perhaps 4% or more, for the first three months of 2010.

Meanwhile, recent data indicate that both the headline and core inflation rates have moved much closer to the 2% level than the central bank had expected. Under the bank's forecast, the 2% level would not be reached until the third-quarter of next year.

In the statement, the central bank acknowledged economic activity has been "slightly higher" than its own projections, with the 5% gain in the fourth quarter powered by "vigorous domestic demand" and a recovery in exports.

Using the adjective "vigorous" caught the eye of some analysts, such as Mr. Gregory. "That implies a strong unleashing of demand pent-up during the recession, with the credit creation process critical to this unleashing.

"In other words," he added, "low interest rates are doing their job in stimulating demand -- perhaps, increasingly, too well."

Mr. Pinsonnault noted the bank also dropped any reference to "considerable" excess supply, an indication, he said, that the slack in the economy is being absorbed at a faster pace than the central bank anticipated.

The consensus remains that the central bank will wait until July to begin raising rates, but the bank used Tuesday's statement to begin building its case. There are two more scheduled rate decisions between now and then, with one April 20 and then June 1.

"What we saw [Tuesday] was one of many steps aiming at moving away from dovish statements to relatively more hawkish ones. This gradual movement comes naturally well before an actual tightening in monetary policy," said Sébastien Lavoie, economist with Laurentian Bank Securities.

His firm believes rate increases will begin in the third quarter, but he said the odds have increased that the first hike will be in July as opposed to September.

How much, and how rapidly, the central bank raises rates beginning in July is up for debate, with economists estimating increases of 100 to 150 basis points in the second half of 2010. Financial Post

If you want to know more about Toronto real estate, call sales representative and mortgage agent Alexandre (Alex) Malkhassiants, Right at Home Realty,  with all your questions: (416) 723-9383 (cell).

Toronto real estate. Canadian housing market sound

Canada's hot housing market received a clean bill of health from a major Canadian bank Friday, dismissing concerns voiced by the Bank of Canada that consumers may be taking on too much debt.

In a report on house and stock market rallies, economists with CIBC World Markets argue that the central bank's concerns are exaggerated, even though the bank was justified in raising them.

"Canada is not doomed to see a U.S.-style housing and mortgage blow-up," wrote CIBC's chief economist, Avery Shenfeld.

"The lessons for the U.S. were not that an extended period of low rates caused a mortgage and housing blow-up. It was a massive failure to supervise the worst excess of the American mortgage market that caused the trouble."

Last week, the Bank of Canada called record household debt the top risk facing the country's financial system, a warning repeated in Toronto earlier this week by the central bank's governor, Mark Carney.

The central bank did note that the risk to Canada's banking system was small, but worried that when interest rates rise to normal levels, up to 10 per cent of households could face difficulties in meeting monthly payment requirements.

Fresh data released Friday showed that spending by Canadian households averaged $71,360 last year, two per cent more than in 2007, with shelter representing about 20 per cent of the load.

Others have also expressed concern about consumer debt levels. In a note Friday, Bank of Montreal economist Sal Guatieri said at current rates the debt burdens being piled on by Canadians could reach American and British levels "just before they keeled over."

CIBC's Shenfeld and Benjamin Tal say their analysis shows that there is basis for the concern, but there are also critical factors that make the Canadian situation different.

By their calculation, the current $350,000 average selling price for a home in Canada is about seven per cent too high.

But they also say that with housing starts on the rise, thereby increasing the supply, the price of housing in Canada will moderate, not collapse.

And Canadian households are not exposed as their southern neighbours were to a market collapse.

Some have substantial equity in their homes and could downsize. Others, about 40 per cent of mortgage holders, have high debt payments because they are making accelerated pay-downs on principal, which they could suspend.

They note that while mortgage interest rates average about 4.4 per cent, payments as a share of after-tax income are higher - at the level they would be if rates were effectively six per cent.

And "history suggests many will jump into fixed mortgages" once variable rates come under upward pressure.

"The Bank of Canada was justified in raising these concerns, but once you get into the details, some of those threats don't appear quite as ominous," Shenfeld explained in an interview.

The CIBC economists agree with Carney that interest rates will rise, likely starting in the second half of next year, but "we don't see that as endangering a bubble either in the mortgage market or the equity market."

In a separate analysis, Shenfeld, Peter Buchanan and Krishen Rangasamy, all of CIBC, judged that the equity markets in Toronto still have room to grow even if some analysts believe stocks are overpriced already.

And they predict the Canadian dollar will average $1.05 US next year.

winnipegfreepress

Banks reaching out to help new Canadians buy a home

In the past, many immigrants to Canada came by sea – often landing at Pier 21 in Halifax. Nowadays, as a new Canadian, you are more than likely to touch down at Pearson International Airport after a journey of several hours rather than days or weeks.

    Either way, once on the ground, making a financial start has always been a tough route. Thankfully, today’s evolution of technology makes it easier to prove your creditworthiness in Canada, and to qualify for a mortgage in order to buy your first home here.

    "One of the key things … is credit. You have to find some sort of credit history," says Jim Rawson, regional manager of Invis mortgage brokerage firm in Toronto. "With the Internet, with easy access to information, we can now check credit from just about anywhere, so we can get credit histories much easier than we could in the past."

    As with any financial agreement, your credit status will determine how much you can borrow.

    "There are different kinds of qualifications, depending on how long you’ve been here and depending on whether you have a job or not, whether you’re landed immigrants or here on work permits," Mr. Rawson says. "But there are several lenders that have new-immigrant policies."

    Every country has its own customs and laws when it comes to home purchasing, and Canada is no different. Colleagues and friends can be a good source of recommendations for trusted accredited real estate agents, lawyers and mortgage brokers to guide you through the process.

     Canada Mortgage and Housing Corp. has also produced The Newcomer’s Guide to Canadian Housing, which includes a section on what to consider when buying a home in Canada – right from scoping out a location, to the documents required, to budgeting for the many expenses involved, and the process of making an offer.

    As well as the usual costs attached to home purchasing, as a new immigrant, you will need to add on the additional time and expense of obtaining proof of your immigration and financial status and maybe even fees for wiring money from your country of origin to cover the purchase deposit.

     Buying a home will likely be your largest financial commitment when you come to Canada, but it may not necessarily be the most complex purchase.

    "Getting a mortgage for a house was easier than getting a car loan," says Graeme Morton, who emigrated from Scotland to Guelph. "I had to get my colleague to counter-sign to get the car loan – which was less than $10,000.

    "And as for cellphones, they asked for so much proof as to who we were it was unreal. Obviously, houses are the less portable of the three!"

    If you do not have a credit history, then financial institutions with specific programs for immigrants, such as HSBC and Scotiabank, may help.

    "We have a program, where, even before they establish their Canadian credit history, new immigrants who are willing to put down a 30% downpayment will most likely be approved for 70% of their home purchase," says David Kuo, vice- president, retail branch network for HSBC, Ontario East.

     Mr. Rawson at Invis says that in the past, immigrants could have been required to have a larger deposit to secure a mortgage.

    "If you’re not landed [a permanent resident] you might be looking for a larger deposit," Mr. Rawson says. "But the insurers CMHC and Genworth have pretty decent new-immigrant policies that [allow for] high-ratio financing." kelowna.com

    If you want to know more about Toronto real estate, call sales representative and mortgage agent Alexandre (Alex) Malkhassiants with all your questions: (416) 723-9383 (cell).

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