Krepskigroup's Blog

No New Mortgage Rule Changes

stefankrepski — Wed, 11 May 2011 15:38:31 +0000

There has already been “some softening” in the Canadian real-estate market so there is no need for further tightening of mortgage rules, Finance Minister Jim Flaherty said Tuesday.

In his first public comments since the election, Flaherty said the country continues to weather the ongoing upheaval in the global economy. He said his first priority is to deal with the budget — which will likely be presented in June — in order to continue to implement his government’s economic action plan.

Unlike the United States and Europe, the Canadian housing market has continued to rise after the financial crisis, leading some observers to caution we could be headed for a bubble.

Flaherty said he’s already intervened to toughen mortgage rules three times in the last few years and there’s no need for further action as conditions in the market are finally moving in the right direction.

Flaherty said he does not believe there were any unintended consequences in the housing market resulting from government intervention in the mortgage business during the financial crisis to keep banks lending money.

Still, he said his government keeps a close eye on the housing market and subsequently stepped in three times with changes to mortgage rules when there were concerns about risk.

Flaherty said his government will present a slightly revamped budget in June. It will be changed to reflect an economic update and may include some items from the election platform, but will be largely the same budget he presented in March, he said.
© The Financial Post

Post Election

stefankrepski — Thu, 05 May 2011 13:28:45 +0000

Okay, so we had an election. What do the results mean to the real estate/ mortgage market. Go across the country and you will hear various outlooks some of shear blind hope and others more tempered in sanity. We have heard that the new conservative majority will change some of the recent mortgage restrictions by returning to some of the rules they had in place before being pushed by the opposition during their minority reign. More likely it will just stop any further restrictions which would only further hurt first time buyers. There is a higher sense of stability with the new majority, in Ottawa in particular where so much depends on the civil service work force. We also should not face another election until 2015 avoiding the inevitable hiccups in economic growth we have faced every two years including slow downs in the real estate market.

Elections Results Effect?

stefankrepski — Thu, 28 Apr 2011 12:54:11 +0000

With the uncertainty arising over the possible outcome in next week’s election, Conservative minority or majority, NDP as the official opposition or possibly a coalition with the Liberals with Jack Layton in the drivers seat, will the real estate market be affected? Whatever the outcome I believe there will be a pause in the market as buyers and renovators wait to see not only the results but the effects. Could the conservatives ask the BofC to enforce even stricter rules to borrowers? How will interest rates be effected? Depending on the final scenario we could end up with higher taxes because of spending by NDP and Liberals. Will investors still look favourably on Canada? Will the middle class feel secure enough to make large expenditures such as real estate or take on a wait and see attitude before taking the plunge. All in all it will be an interesting time.

Flaherty details new mortgage rules

stefankrepski — Mon, 17 Jan 2011 14:02:56 +0000

BILL CURRY
OTTAWA— Globe and Mail Update
Published Monday, Jan. 17, 2011 8:12AM EST
Last updated Monday, Jan. 17, 2011 8:54AM EST
Concern over rising consumer debt levels is prompting Ottawa to make three new changes to Canada’s mortgage rules.
Finance Minister Jim Flaherty announced Monday that new federal rules will reduce the maximum amortization period to 30 years from 35 years for government-backed insured mortgages with loan-to-value ratios of more than 80 per cent.
Secondly, Ottawa will lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 per cent from 90 per cent of the value of their homes.
Thirdly, Ottawa will withdraw government insurance backing on lines of credit secured by homes.
Though longer amortization periods reduce monthly payments, they greatly increase the amount of interest paid over the life of the mortgage and make it harder to build up equity.

The average Canadian resale home sold for $344,551 in December. Assuming a five-year mortgage at 4 per cent interest, and the minimum 5 per cent down payment of $17,227, a 35-year mortgage would have monthly payments of $1,441. Shorten the amortization period to 30 years, and the monthly payment increases to $1,555.

At a news conference in Ottawa, Mr. Flaherty said the measures will encourage Canadians to save more through home ownership. He said they will also reduce the exposure of Canadians to financial risks.

Mr. Flaherty said his concern is not Canada’s mortgage default rate – which is less than 1 per cent. Rather his concern is those who are borrowing as much as possible.

“We’re seeing people borrow to the max, and borrowing to the max at low interest rates,” he said. “Most Canadians are not doing that.”

Mr. Flaherty predicted the measures will have “some moderating” impact on the housing market.

He said the changes will not take effect imediately because of a requirement to give the industry 60 days notice before making policy changes of this nature.

He said past experience suggests there is no need to fear a rush on 35-year mortgages before the new rules take effect.

In addition to cutting mortgage terms, Ottawa is taking action to reduce the rapid rise in home equity lines of credit, or HELOCs. The government will do this by clamping down on the insurance that Canada Mortgage and Housing Corp. offers to the lines of credit.

Home-equity lines of credit and loans have surged in Canada, rising at almost twice the pace of mortgages over the past decade to account now for 12 per cent of overall household debt.

The third measure that will reduce how much Canadians can draw on their home equity. Last February the Finance Department announced that it would lower the maximum amount Canadians could withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. It is now reducing that maximum to 85 per cent from 90 per cent.

Observers have been speculating that Finance Minister Jim Flaherty would take steps to tighten mortgage credit in the next federal budget. The timing of the move suggests concerns are growing in government circles about household debt and its impact on the economy.

CIBC chief economist Avery Shenfeld referred to the mortgage changes as part of a larger move by the government to “force Canadians on a debt diet” as household debt levels sit at record levels.

“Policy makers now have that credit buildup in their policy gun sights, and will use higher rates and regulatory changes to bring spending into better line with income, and cool mortgage demand,” Mr. Shenfeld wrote in an economic forecast on Monday.

“Canadians aren’t on the verge of a U.S.-style default crisis – not at these interest rates, and not with debt having been granted to stronger hands than was the case before America’s crisis, when subprime mortgages and credit cards were given out like candy,” he said.

“But maintain this diet of borrowing for five more years and debt obesity would indeed weigh down the household sector’s momentum. It’s time to start the borrowing diet now, and that means policies aimed at slower debt-financed consumption growth and a cooler housing market.”

Bank of Montreal’s head of Canadian retail banking supported the government’s move, since the bank has been primarily recommending mortgages with a maximum 25-year amortization to build more equity and retire the loan faster, rather than paying more interest.

“The actions announced today by Minister Flaherty are prudent, measured, responsible and timely,” Frank Techar, president of personal and commercial banking at BMO, said in a statement issued by the bank. “For many months, BMO has been encouraging Canadians to lower their total cost of household debt by paying down short-term higher interest debt and considering the benefits of a mortgage with a 25-year maximum amortization to help them save interest costs and pay down their mortgage faster.”

It’s not the first time the Conservative government has tinkered with the mortgage market. In 2008, Mr. Flaherty announced Ottawa would no longer back 40-year amortizations, with a goal of cooling down a hot real estate market and preventing the emergence of a housing bubble in Canada. At that time, the government said it would also back only mortgages where the buyer has put down at least 5 per cent, effectively eliminating zero-down mortgages.

Last February the Finance Department lowered the maximum amount Canadians could withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. Mr. Flaherty also introduced a measure requiring borrowers to qualify for a five-year fixed-rate mortgage, even if they sought a variable mortgage at a lower rate. Until that change, home buyers only had to qualify for the higher of either a three-year fixed-rate or variable-rate mortgage.

Top Ten Resolutions for for Financial Consumers

stefankrepski — Tue, 04 Jan 2011 17:08:46 +0000

Canada’s Ombudsman for Banking Services and Investments (OBSI) released its Top Ten Resolutions for 2011, highlighting the ways in which Canadians can help avoid future problems with their financial affairs.
According to Ombudsman Doug Melville, some of the ideas contained in the list may appear obvious, but are often overlooked as Canadians go about their busy lives.
“Time and time again, we see the same sorts of financial complaints coming in the door,” said Melville. “Many of these issues would be mitigated or even avoided altogether if everybody adopts these simple resolutions.”

TOP TEN RESOLUTIONS FOR 2011:

1. Read everything you sign: Few people bother to read in full every document they sign. They should. Understand what you are signing to avoid nasty surprises down the road.
2. Ask questions: Knowledge is power. If something isn’t clear to you, ask for more information or clarification. If you still don’t understand, bring along someone you trust so you both hear the explanation.
3. Keep records: The individual or institution you are dealing with will have a record of their interactions with you. So should you. Take notes of important conversations, confirm instructions in writing, and keep copies of everything.
4. Save your money: Set aside a portion of your income each month for your retirement and unforeseen events. Life is full of surprises; have a contingency fund in place for the unpleasant ones.
5. Review your account statements: Carefully review all account documents sent to you each month, whether by mail or electronically. Report any errors or suspicious activity immediately; if you wait too long, you might be held responsible.
6. Safeguard personal information: Keep your financial documents in a safe and secure place. Shred all personal financial information that you no longer need so the bad guys can’t use it.
7. Plan ahead: Have a financial plan so in the future you can live the life you want. Don’t be caught unprepared in later years.
8. Make a will: They say that the only things certain in life are death and taxes. No matter how old you are, make sure that you have a valid and updated will. If you don’t, you lose control over where your wealth goes. Don’t let lawyers or the government make the decision for you.
9. Create a Power of Attorney: Regardless of your age, have a valid power of attorney in place in case you become unable to manage your own affairs. By doing so you can prevent heartache for your loved ones should something happen to you.
10. Speak up: Most banking services and investment firms want to do the right thing for their customers. If you have a concern or complaint, don’t be afraid to let your financial services firm know. If they can’t make things right for you, know that there are other places where you can go for assistance, like the Ombudsman for Banking Services and Investments.

11 Resolutions for Business Owners

stefankrepski — Wed, 29 Dec 2010 18:20:49 +0000

Excerpt from Financial Post – Rick Spence
1. Make this a year of opportunities
2. Leverage your strengths
3. Explore new geographic markets
4. Look for ways to add more value
5. Appoint someone on your team to explore opportunities in social media
6. Focus on corporate culture
7. Hire better people
8. Invest in your best employees
9. Give your staff a big audacious goal to focus on this coming year
10. Find a mentor
11. Make yourself more interesting

2011 could be your best year yet!!!

Bank of Canada seen hiking rates in first half of 2011 – Claire Sibonney, Reuters •

stefankrepski — Fri, 03 Dec 2010 14:11:02 +0000

TORONTO – The Bank of Canada is unanimously expected to keep interest rates on hold next week, but the uneven economic recovery has primary dealers and global forecasters divided on the timing of the next hike in 2011.
The Reuters poll, released on Thursday, showed 93% median probability that the Bank of Canada will keep its key rate at 1% at its next policy announcement date on Dec. 7, with all 44 forecasters polled predicting no move.
Among the 42 that forecast the central bank’s next hike, the majority saw it happening in the first half. The median forecast for the May 31 policy date has the rate rising to 1.25%.
But among the 12 Canadian primary dealers — the institutions that deal directly with the central bank to help it carry out monetary policy — the majority forecast rate hikes in the second half with a median prediction of a first hike in July.
When compared with a similar poll taken in October, the more recent survey showed rate hike forecasts had been moved deeper into 2011.
Thirty of the 44 forecasters surveyed say the central bank will still be at 1 percent after March 1, a more pessimistic view than the last poll.
“Given that the Bank of Canada had indicated that they didn’t want to see that great a divergence with U.S. rates and the Fed was actually doing quantitative easing, it made sense to push out the Canadian rate hike as well as opposed to adamantly defending a Q1 move,” said David Watt, senior fixed income and currency strategist at RBC Capital Markets.
“We’ve had a lot of recovery and we’re seeing some fade at the present time, so you get that caution that maybe the domestic side of the economy is not strong enough to offset the still sizable trade hit and currency strength.”
A report out on Tuesday showed Canada’s economy disappointed in the third quarter with the weakest growth rate in a year, while the economy shrank outright in September, adding pressure on policy makers to safeguard the patchy recovery.
Bank of Canada Governor Mark Carney in October gave a blunt assessment of the global and Canadian economic recoveries, saying the central bank would plot its next move with extreme caution.
Massive new monetary stimulus by the U.S. Federal Reserve to support a flagging U.S. economy also prolongs low rates south of the border, and Canada is seen not wanting to race too far ahead of its largest trading partner.
Mr. Watt noted that a concern for the central bank has been a Canadian dollar strengthening near parity without having seen a strong rebound in oil and natural gas prices.
“Sluggish Canadian growth and an elevated exchange rate will keep the Bank of Canada on hold until well into 2011 if, as we expect, core inflation readings return to their more muted earlier monthly trend,” said Avery Shenfeld, chief economist at CIBC World Markets.
“The U.S. Fed should still be on hold at a near-zero funds rate in early 2012, and wider interest-rate differentials would push the (Canadian dollar) to levels that would be too damaging to Canada’s export prospects.”
Estimates of the central bank’s target for the overnight rate by the end of 2011 range between 1% and 2.5%.
Next on the domestic data front, analysts will keep a close eye on the monthly jobs report on Friday and inflation figures later in the month.

Read more: http://www.financialpost.com/news/Bank+Canada+rate+hike+seen+first+half+2011/3916924/story.html#ixzz1707v8WNk

stefankrepski — Mon, 22 Nov 2010 18:30:01 +0000

Pretend that every single person you meet has a sign around his or her neck that says, “Make me feel important.” Not only will you succeed in sales, you will succeed in life.

(Mary Kay Ash)

Get Out!!!!

stefankrepski — Wed, 03 Nov 2010 16:44:26 +0000

Get out. Seriously, Get out! Get up from behind your desk and get out of your office.
This isn’t about taking a vacation or “management by walking around.” This isn’t about spending time on the shop floor, listening to your customers, or clocking the competition. Those are all important activities, but they’re not how the future is created. You have to go much further than that. If you want to do anything new in the marketplace, you’ve got to get as serious, rigorous, and creative about renewing yourself as any other aspect of your business. So, get out.
*Get Out Of Your Comfort Zone – discover something new
*Get Out Of Your Frame Of Reference – go somewhere you have never been or do something you have never done
*Get Out Of Your Own Skin – Risk discomfort, ask unanswerable questions, start over

By The Numbers

stefankrepski — Mon, 25 Oct 2010 16:01:03 +0000

Lots more mortgage payments….The number of residential mortgages held in Ontario has almost tripled in the past 20 years, from about 600,000 in 1990 to 1.7 million today. But the percentage in arrears has stayed fairly constant, at well under 1%, says the Canadian Bankers Association.
Compiled by the Canadian press