Toronto real estate. What will happen if mortgage rates will go up?

   About 12 per cent of Canadian mortgage holders would be challenged if their rate went up by less than one percentage point, found a report from the Canadian Association of Accredited Mortgage Professionals. CAAMP is a national agency that represents 12,300 people who work somewhere in the mortgage industry.
    Some 650,000 out of 5.8 million Canadians who have some sort of mortgage would be at risk if their rate went up by as little as less than one percentage point, the agency said in its annual report. Many of those people are on fixed-rate mortgages, and the agency says by the time their mortgages are due for renewal, their financial capacity will have increased and the amount of mortgage debt will be reduced. Indeed, the group's annual report paints a picture of a mortgage market in gradual recovery from the recession. All in all, there's a "gradually falling rate" of people falling behind on their mortgages, the report notes.
    But the report also says as many as 175,000 Canadian homeowners — as much as two per cent of the market — may owe more on their mortgages than their homes are worth on the market.
    On the other side of the ledger, the report found there are 2.85 million Canadian homeowners who are debt-free on their homes — meaning, they owe nothing on their homes either in terms of a mortgage or home-equity line of credit. And 94 per cent of Canadian homeowners own at least 10 per cent of the equity in their homes, the report finds. Within that, more than three-quarters (78 per cent) own more than 25 per cent of their homes.
     But about 75,000 Canadian homeowners own less than 10 per cent of their homes. That figure represents less than two per cent of mortgage holders, but those are the people who could be susceptible to a modest pullback in home prices, as has happened in large parts of Europe and the United States in recent years.
For much of the past year, the Bank of Canada, federal government officials and private sector economists have warned Canadians to get their finances in order and reduce their debt loads ahead of higher mortgage interest rates to come.
    "While the forecasts for the economy, housing market, and mortgage market are encouraging, there is, as always, uncertainty about the outlook," the report warns.
    And to be sure, the picture of Canada's housing market painted in the CAAMP report looks significantly better than the picture in the United States. A report from real estate data firm Zillow released Tuesday found that 28.6 per cent of U.S. homeowners are underwater — meaning, they owe more on their mortgages than their homes would be worth if they sold them.
     Nonetheless, the CAAMP report says a "sizable minority" of Canadian homeowners would be unable to withstand even a one percentage point rise in their mortgage. Although 60 per cent of Canadians are in fixed rate mortgages (the average rate was at 3.92 per cent in 2011, a drop from 4.22 per cent a year earlier) the budgets for a number of homeowners are squeezed enough that they would be in trouble if their rates went up by that comparatively small amount.
     "A vast majority of mortgage holders has considerable capacity to afford rises in mortgage interest rates," the report stated. CAAMP estimates that the typical mortgage-holder could withstand an increase of about $750 a month without succumbing.
     Canadians owe a collective $982 billion of debt on their homes, and the report estimates that there are about 13.6 million occupied dwellings in Canada.
     Within that, about 9.55 million are owner-occupied, including about 5.80 million with mortgages and 3.75 million without mortgages.
     Across all homeowners, the average amount owed on a mortgage is $90,000 and the average home-equity line of credit is $12,000. http://www.cbc.ca/news/canada/story/2011/11/09/caamp-mortgage-survey.html

MORTGAGE RATES ARE DROPPING

Royal Bank of Canada started the latest round of cuts.
Toronto-Dominion Bank cut its four-, five-, seven and 10-year fixed rate mortgages to 4.99 per cent (-0.15 per cent, 5.34 per cent (-0.10 per cent), 6.14 per cent (-0.20 per cent) and 6.50 per cent (-0.15 per cent) respectively.
TD also cut its four-, five-, seven-and 10-year closed special fixed rate offers to 4.19 per cent (-0.15 per cent), 4.09 per cent (-0.10 per cent), 4.79 per cent (-0.20 per cent) and 4.99 per cent (-0.20 per cent) respectively.
Canadian Imperial Bank of Commerce cut its four-, five-, seven-and 10-year closed mortgages to 4.99 per cent (-0.15 per cent), 5.34 per cent (-0.10 per cent), 6.50 per cent (-0.20 per cent) and 6.60 per cent (-0.15 per cent).
National Bank adjusted its four-and five-year closed fixed-rate mortgages to 4.99 per cent (-0.15 per cent) and 5.34 per cent (-0.10 per cent). It also cut the 10-year closed mortgage to 6.40 per cent (-0.25 per cent) and the variablerate closed capped mortgage to 5.34 per cent (-0.10 per cent).

Financial Institution	3 Yr	5 Yr	7 Yr	10 Yr	5 Yr Variable
CENTUM Primo**	3.35	3.89	5.65	5.50	2.30
Concentra	3.80	4.09	N/A	N/A	3.00
First National	3.80	4.04	4.79	4.99	2.30
FirstLine	3.80	3.89	4.99	5.19	2.35
Home Trust	4.09	4.69	N/A	N/A	3.00
ING	3.89	4.04	5.10	5.40	2.25
MCAP	3.89	3.84	5.10	5.40	2.35
Scotia	3.80	4.04	5.10	5.69	2.85
Street Capital	3.80	4.09	N/A	N/A	2.30
TD	3.80	4.04	4.79	4.99	2.35
ResMor	3.74	3.94	N/A	N/A	2.65
Lendwise	3.35	3.80	N/A	N/A	2.60

Rates Effective as at: Mar 17, 2011
Prime Rate: 3.00%
Qualifying Rate: 5.44%

If you have any questions about Canada mortgage rates and Toronto real estate, call Alexandre Malkhassiants, Sales Representative and Mortgage Specialist. Right at Home Realty Inc., Real Estate Brokerage. 
Office: (416) 391-3232. Cell: (416) 723-9383. 
E-mail: amalkhass@rogers.comWebsite: Toronto real estateWebsite: Ontario real estateBlog: Lowest Canada mortgage rates<>

WHAT YOU SHOULD DO BEFORE START SEARCHING FOR THE HOUSE

    If you are a prospective homebuyer the first thing you need to think about is where you want to live. You have to think about the type of location you need -near schools, outside the city, near a big park.
     Then you should look at your budget - what price you can afford based on debt load. Usually person could afford 3.4 times their salary. so a couple with an income for $100,000 could afford to buy a house worth $340,000. The house, all debts, including the new mortgage, can be no more than 40 per cent of their salary. So out of that $100,000 gross income, no more than $40,000 can be used to cover their debts.
     Then there's the down payment, which the buyer must have in hand before a mortgage will be granted. If you're buying a house you need five per cent for the down payment and 1.5 per cent of the purchase price for the additional costs such as notary fees, taxes, property insurance, home inspection, moving costs.
     There's another consideration for home buyers: you have to pay a premium to the Canadian Mortgage and Housing Corporation (CMHC) in order to get a CMHC-approved mortgage.
     Then you should think what kind of mortgage do you want. Eventually it will become important to you to being able to make additional lump sum payments or weekly or bi-weekly payments. You should consider many things about mortgage - for example, the ability to defer or reduce your mortgage payment in the case of an unexpected event or shortfall. You want real flexibility when it comes to mortgage payments. That's why you need a good mortgage agent to guide you through the whole process.
     For more information go here - http://www.torontogreathomes.com/

Canada Mortgage in 2011

Prime Minister Stephen Harper hinted the government may adjust mortgage rules in 2011 to help Canadians avoid going deeper into debt.

 

“We’ve tightened mortgage rules before,” Harper told CTV during a year-end interview that aired on Christmas Day. “If we have to do that again, we will.”

Harper also committed to eliminating the federal deficit but will not use “slash and burn” cuts, particularly in the critical areas of health and education. mortgagebrokernews.ca

Younger Canadians feel prepared to buy a first home

While homeowners of all ages agree that purchasing a house is a solid long term investment, there is a marked difference in today's 18-34 year old first time home buyers  actions and attitudes as compared to older generations aged 55+ when they were first time buyers of the same age.

Young Canadians aged 18-34 are more likely to feel they are financially ready to buy a house than their parents and grandparents were when they were purchasing their first home. What is motivating this belief? The TD Canada Trust Generational Homeownership Study reveals a trend by 18-34 year olds towards purchasing older homes and a significant increase in young homebuyers who are relying on financial assistance from family to make their home purchase a reality.

When asked what prompted them to consider buying their first home, just over half of younger Canadians (51%) said they felt financially ready compared to 37% of older Canadians 55+ when they were thinking of buying their first home. However, over a third of younger Canadians 18-34 (36%) said they could not have afforded their first home without help from family (compared to 16% of those 55+), and 27% said that they received money as a gift or borrowed from family/friends to put towards the purchase of their first home (compared to only 10% of those 55+).

When today's Canadians 55+ bought their first home, paying off their mortgage was a top priority; more important than it is to today's younger homebuyers. Today, less than half of young Canadian adults (49%) agree that paying off their mortgage is a first priority, compared to 64% of Canadians over 55.But for Canadians across all generations, their home is their biggest investment. Eighty-eight per cent of Canadian adults 18-34, 87% of Canadians 35-54 and 78% of 55+ all agreed that their first home was an investment for the future. Sixty-four per cent of younger Canadian adults 18-34 said that they put all their savings into their first home compared to 62% of Canadians 55+ and 54% of Canadians 35-54.

The research revealed that when it comes to getting a mortgage, young adults tend to shop around more than their older counterparts did. Sixty-two per cent of older Canadians were loyal to their own bank and received financing where they were already a customer, compared to 36% of younger homeowners who were more likely to shop around and take recommendations.

"There are so many different options available now, and easier access to information with the use of the internet, that it's no wonder today's first time homebuyer shops around a bit more," added Wisniewski. "It's a great idea to look around and see what's available. 30 years ago when people were looking for financing, they usually had limited choices. Now there are many options to explore with your bank including a variety of fixed rate mortgages, variable rate mortgages, and even green mortgages for buyers who want to lessen their footprint on the environment." tradingmarkets.com