.

No Bank of Canada Rate Change For The 11th Consecutive Meeting

2012-01-18T06:30:00.000-08:00

With weaker outlooks for Europe and the U.S., the Bank of Canada announced earlier today that it is keeping its key policy rate steady, exactly where it's been since September 2010, which makes this the longest recorded rate pause.

In its statement the Bank noted that "the recession in Europe is now expected to be deeper and longer than the Bank had anticipated", and that the "U.S. recovery will proceed at a more modest pace going forward." The Bank noted that while the Canadian economy "had more momentum than anticipated in the second half of 2011, the pace of growth going forward is expected to be more modest than previously envisaged, largely due to the external environment."

The prime rate at most lenders will stay at 3.00%, which means those with variable-rate mortgages will not see their payments change and will continue to enjoy historically low rates. New variable rate mortgages are available to qualified borrowers at Prime minus 0.10%.

The Bank's next rate decision is scheduled for March 8.

And while not related to the prime rate, it is worth noting that fixed mortgage rates are near all-time lows, with 4 and 5 year mortgages available at rates that are close to variable-rate pricing.

If you would like to review your options, please let me know.

Rick Moran, AMP #M08001997

Understanding your credit report and credit score – Part 1

2012-01-10T09:44:00.001-08:00

What many prospective borrowers don't realize is that the pricing of mortgages and other loans is based in part on their credit-worthiness. Consumers need to be aware of how their credit is evaluated by lenders, and how they can work to avoid so-called "bruised credit" – people with a lower credit score can find themselves paying a higher interest rate, or even denied access to certain types of loans.

A credit report is a detailed history of how consistently you meet your financial obligations, and provides a picture of your financial health based on your past behaviour. A credit score is a three-digit number, usually between 300 and 900, representing your overall credit-worthiness, based on personal information from your credit report and other sources.

Both your credit report and score are important. When deciding whether or not to grant a mortgage loan, lenders refer to an applicant's credit report and score, along with a range of other factors such as income, employment history, and size of down payment.

The higher your score the more likely you are to be approved for a mortgage and receive favourable rates because the lender considers you to be a better credit risk. Several factors are used by the two main credit agencies in Canada (Equifax Canada and TransUnion Canada) to calculate credit scores:

Debt payment history.
Amounts owed compared to your current credit limits with lenders.
How often you seek new credit.
Length of time you have had credit accounts.
Type of credit, such as car loans, lines of credit, credit cards.

Rick Moran, AMP #M08001997

MORTGAGE PLANNING 2012

2012-01-10T09:43:00.001-08:00

Consider a mortgage check up in the new year

As we begin 2012, consider getting a mortgage check up in the new year to make sure you have the best mortgage strategy for meeting your financial goals.

A personalized mortgage check up from an Invis mortgage professional is a simple way to ensure:

that your repayment approach suits you, for example with payments structured to maximize mortgage principal reduction,
any consumer debt you may have (such as credit card balances) is transferred to a lower interest rate,
you have access to the lowest-cost funds for renovations, education or other major expenditures.
Contact us to learn more about your current mortgage options and how to make your home equity work for you.

Rick Moran, AMP #M08001997

Experts are calling for a bit of a mixed bag in Canadian real estate for 2012

2011-12-20T10:44:00.000-08:00

Housing market prognosticators say next year will be marked by bursts of growth in certain hot regional markets throughout the country combined with a cooling trend in other areas, namely that of robust markets such as Toronto.
Look for mixed market signals in Canadian real estate as a market theme in 2012 as cities like Halifax and Edmonton and Calgary will begin to feel a marked increase in demand for real estate purchases, with average price increases beginning late in the year, according to says Vancouver real estate consultant Don Campbell. Toronto’s hot market will start to ease off next year, although its condo real estate market will remain stable.

“Sophisticated homeowners and investors will have to dig a little deeper, especially in 2012 and 2013, to find out how their region is performing because Canada is really going to be a tale of regions over the next few years,” says Campbell, a real estate investor and author. “Where one region is booming, the next may be underperforming.”

Expect price moderation in Toronto in the neighbourhood of five to 10 per cent, says Todd Hirsch, a senior economist with ATB Financial in Calgary. “There could be a little more worry of a small bubble (bursting) in Toronto,” says Hirsch, “because the Ontario economy in 2012 will likely cool off a bit, not tremendously, though. You won’t see a recession.”If you’re thinking the same for Vancouver, think again, advises Hirsch. Given that Vancouver is the destination of choice for Asian investors, prices there will remain far higher than what they are in Calgary and Toronto. This will likely continue into 2012, predicts Hirsch, who expects the Chinese economy will moderate next year although not enough to prevent its citizens from wanting to invest in Canada’s west coast real estate market.

But the markets in Toronto and especially Vancouver, which comprise approximately 40 per cent of Canadian real estate, should be eyed carefully by home buyers or investors. According to Campbell, time lines should run short at 12 to 18 months or long at five years or more as statistics show signs of market turmoil in the medium term (19 months to four years) as interest rates begin to edge up, inventory outstrips population demand. That’s when speculators will try to dump properties and market confidence will be lower. In Calgary and Edmonton expect stable prices, says Hirsch.

Saskatchewan is where you’ll find the best real estate deals in the country with the average house price in Saskatoon running at $320,000. That province also has the lowest unemployment figures in Canada with unemployment pegged at three per cent in Regina.

Halifax and St. John’s are stand alone in Atlantic Canada as those two cities experience an unrivalled economic boom right now. House prices in those cities could actually gain a little in 2012.

As for the rest of Atlantic Canada, notes Hirsch, much of it is a depressed economy in which its rural areas are being hollowed out as residents leave the countryside for jobs in urban areas. Quebec City’s economy is faring not too badly these days as its house prices are undervalued at about one third below the national average.

Still, growth in Quebec will be a bit sluggish in 2012 with no real strong real estate gains. While its economy will be sluggish, keep in mind the province’s housing prices are not as overvalued as in Toronto so you won’t see as much deflationary pressure as in Toronto. While the province is not looking at a recession in 2012, the year will be economically softer.

Strong real estate markets will be in Canadian regions where job growth continues, low unemployment rates continue to drop and where there’s a migration of people with jobs (as opposed to retirees), says Campbell, who cites Halifax, Kitchener/Waterloo/Cambridge, Hamilton, Saskatoon, Edmonton, Calgary, St. John, Dawson Creek and Surrey as having the most stable markets.“Many Canadians will be fooled into thinking that their home value is either increasing or decreasing because of reports that are released discussing the ‘Average Price in Canada,’ “ he says, “producing either a false sense of confidence or a false sense of doom, depending on the report of the month.”

According to CREA, the national housing market is edging closer to being a seller’s market.“The Canadian housing market is proving resilient in the face of ongoing global economic and financial uncertainty, to the benefit of Canadian economic growth,” said Gary Morse, CREA’s president. “That said, some housing markets are picking up, while others are holding steady or consolidating.”

A quarterly economic forecast by TD Economics economist Francis Fong indicates that the low interest rate environment coupled with slowing jobs and income growth, especially in the first six months of 2012, will hold back resurgence in housing activity. Expect a slight pullback in homes sales and prices to the tune of one to two per cent. “Looking ahead, 2012 will likely be a much more subdued year for the housing market,” wrote Fong in her report released this week.

What are your predictions for 2012? Do you think your market will stay the course, grow or drop off? What sense are you getting from clients? Tell us what you’re thinking.

Rick Moran, AMP, OMB # M08001997

Best Interest Rates in the Market

2011-12-07T18:03:00.001-08:00

New Interest Rates have been arranged with a new Lender that will only deal with selected Brokers.
5 year fixed rate @ 3.14% with a 45 day rate hold or, Variable Rate Mortgages at Prime less .30% (2.70%)

December 6, 2011

Rick Moran, AMP, OMB # M08001997

First time buyers: Make the most of the Home Buyers Plan

2011-11-28T22:47:00.001-08:00

If you're a first time homebuyer, you can use the federal Home Buyers Plan (HBP) to take out funds from your registered retirement savings plan (RRSP) to use towards the purchase of a qualifying home.

The Plan allows first time buyers to withdraw up to $25,000 from their RRSP (or, up to a maximum of $50,000 per couple) tax free, and have 15 years over which to pay the funds back into their RRSP.

While 44 percent of first-time homebuyers are using the HBP to make a down payment, 46 percent of recent first-time buyers have no RRSP savings to use toward a down payment, according to mortgage insurer Genworth Financial Canada. If you do not have RRSPs, we can show you how to establish an RRSP with borrowed funds, and use the resulting tax refund for a down payment or a lump-sum mortgage payment.

If you or someone you know would like to learn more about the HBP or about saving for a down payment, talk to us. Also, www.Moneytools.ca from the Financial Consumer Agency of Canada has useful information on making a budget and sticking to it.

Rick Moran, AMP, OMB # M08001997

Five Reasons to Always Say Thank You

2011-11-22T15:21:00.000-08:00

Never, ever, underestimate the value of saying thank- you. By the same token, don’t underestimate the potentially negative influences of keeping appreciation to yourself- especially in business.

Clients always have a choice. While your best bet to keeping clients happy and rewarding them for having chosen you is by delivering top-notch service and exceeding their expectations, acknowledging the fact that they chose you- and that you appreciate it is not only polite, it is crucial to generating business in the future.

It’s Not Just Business, it’s Personal

In the relationship-based business, there are a lot of cross-over elements from personal relationships; nuance and emotional connection are either the adhesive that binds a relationship together over the long term, or can be the source of cracks to threaten the foundation.

While your relationship is rooted in business, the emotional content resides in a very different place. It is that connection that resonates with clients; it is from this connection that trust grows, and context is given to those important intangibles like integrity and accountability that people need to move forward in client centric business.

Simply, if you don’t thank clients, you run the risk of hurting their feelings, or having them feel unappreciated. Clients who don’t feel appreciated are much less likely to refer friends or family, or to return to do repeat business- especially if they feel that their business would be more appreciated by someone else.

It Really is the Thought that Counts

Saying thank- you to a client doesn’t have to be a grand gesture.

If you are considering showing your appreciation with a gift, even something small, if presented with genuine appreciation goes a long way.

Often all that is needed is a small token, a coffee card, a book or something similar. Or, to really emphasize the relationship aspect of your business, get the client a gift card for their favourite store, or for one of their favourite activities, to show that you’ve been listening.

The key here is not to fuss over what to get; it is all about delivery and sincerity of the message.

The Writing is on the Wall

In this electronic age, we favour speed, access and immediacy when communicating.

When saying thank -you to a client, consider using the time-honoured, often –overlooked handwritten note on crisp, nice stationary or a card.

Sitting down and putting pen to paper accomplishes a number of things: It personalizes the message. It sets up a direct sense of contact between the sender and recipient. It also supports the sincerity of the appreciation, because it suggests that you took extra time and preparation to deliver this message.

A Gesture in Moment; an Eye to the Future

There are logical connectors, and there are emotional connectors. Logical connectors will entice clients in the moment; emotional connectors are what help a client make a decision to stay with you over the long term. It’s all about feeding those connectors.

Saying thank- you not only supports the relationship in the moment, it gives base and reason for referrals in the future.

Creating an atmosphere of good will through gratitude facilitates the ask for referrals as well. It almost seems a logical next step, when you’ve got them feeling all warm and fuzzy.

Timing is Everything

We’ve established that the how is important when delivering a thank you- but as important is the when.

You have a brief window in which to extend a thank-you. If you miss the opportunity, the impact of the message and of the sincerity of the gratitude diminishes.

Make sure you send your gift or note immediately following a transaction or other event. This keeps feelings of gratitude fresh in everyone’s mind.
No matter how you say thank-you, make sure it is out loud, and make sure it is often. As Gladys Stern said, “Silent gratitude isn't much use to anyone.”

Rick Moran, AMP, OMB # M08001997

There is no Place like a Second Home for Investors

2011-11-22T15:19:00.000-08:00

As wealthy foreign buyers snap up more and more luxury homes in Canada, high-net-worth Canadians are similarly showing strong interest in purchasing multimillion-dollar residences abroad. But while their sights were once set on a French château, perhaps, or a Tuscan villa, the trend now is towards buying in the United States.

“We've really seen a fall-off in buying in Europe because of all the confusion over the past 12 months or so,” says Don Campbell, president of Abbotsford, B.C.-based Cutting Edge Research Inc. and the author of five best-selling books on real estate investing.

With so much volatility in Europe, especially in Spain, Portugal and Italy, “people don't know in which direction the market is heading, or the direction of the potential tax implications,” he says. France has just added a new tax on foreign property owners, and the market in Dubai “is getting hammered,” he explains.

Currency fluctuations can cause real estate values to plummet in real terms, while economic woes often leave European governments with little choice but to raise taxes on properties belonging to the super rich.

As a result, says Mr. Campbell, there's a lot of confusion about where high-net-worth individuals should buy that second property. Hence the popularity of buying in the U.S., where as Mr. Campbell says “you know what you're getting”.

Other destinations of choice right now are stable tropical nations, such as Costa Rica and Panama. But, he says, “No.1 is the U.S. There's no question about that.”

The financial incentives for buying luxury residences south of the border are obvious. “They're at a historic low in terms of pricing,” said Chris Potter, a partner in the Toronto PricewaterhouseCoopers real estate practice.

Lawyer David Altro, author of Owning U.S. Property: The Canadian Way, also finds high-net-worth Canadians are increasingly attracted to real estate prospects south of the border. He says his clients in the eastern part of the country tend to buy in south Florida, while those in the West are eyeing properties in exclusive California cities such as Palm Springs, Desert Palms and Rancho Mirage, or in Hawaii.

The main reasoning behind such preferences is ease of access. Direct and relatively short flights mean less stress and hassle in travelling back and forth between Canadian and U.S. homes.

“They are also liking those areas because they have health care there, too,” he says. “But the bottom line is, we like to go south in the winter to get out of the Canadian weather and play golf and go to the beach. So no matter what the U.S. real estate market is like, it's always going to be busy.”

Mr. Altro says many boomers and high-net-worth Canadians are taking up permanent residence in the U.S. With a much lighter tax regime “on a regular annual income basis,” he points out, “we have a steady stream of high-net-worth Canadians who are moving to the States. I have a client in Vancouver, worth about $50-million, and all that invested money in Canada is being taxed at such a high rate. Move to the U.S. and it's like they have a new annual revenue.”

Hunter Milborne, a partner at Sotheby's International Real Estate, explains why buying a property needs to be planned correctly. If a Canadian owns a property personally, “they have a fairly onerous estate tax [on inheritances], whereas if you own something corporately or through a trust, then that's not the case.”

For Mr. Campbell, another issue implicit in owning foreign property is having sound insurance advice. “Being such a litigious country, you better have an incredibly good insurance agent for liability, fire and all the things you need to protect yourself for down there,” he says.

“If you're buying into a gated community or a high-end condo, check to make sure how many of those properties are actually in use, as opposed to being in arrears, foreclosure or owned by a bank,” he says.

“Because the community still needs money to run ... a lot of people who buy into those semi-deserted gated communities because it's relatively inexpensive, find that their fees and operating costs can start to really go through the roof.”

There are, however, many Canadian multimillionaires opting to simply stay put, keeping the Canadian market in luxury real estate buoyant.

“The real favourite right now is keeping money in your hands and in your own country,” says Mr. Campbell, “especially with the global confusion that's going on, and economic and political confusion in the U.S.”

Rick Moran, AMP, OMB # M08001997

Smart Home Renovations

2011-11-22T15:18:00.000-08:00

Why not do a home renovation project that allows you to live better now and make your home more saleable later? Think cost-effective improvements that enhance curb appeal or boost energy efficiency.

The Appraisal Institute of Canada compared typical costs for renovations versus the impact on a home's selling price to come up with a "payback range" for common projects.

Bathroom reno: 75% to 100%
Kitchen reno: 75% to 100%
Installing a deck: 25% to 75%
Exterior siding: 50% to 75%
Flooring upgrade: 50% to 75%
Basement reno: 50% to 75%

Talk to me today – I can introduce you to your renovation financing options, to get you started on making the most of your home.

Rick Moran, AMP, OMB # M08001997

Real Estate Industry Myths Debunked

2011-11-19T16:34:00.000-08:00

As human beings, we often form ill-conceived notions about people based on our education, our upbringing, our experience. These notions, many of which on the surface appear to pose little threat, eventually stick to the signposts of our society becoming a sort of common knowledge.

Think about the used-car salesperson. What image did you conjure? Was it favourable? Likely not. The same applies to the real estate profession.

For a multitude of reasons, there are a number of ill-conceived ideas shared by the public about the industry and those in it and that’s what we plan to examine today. “We’re rank slightly below lawyers and slightly above used car salesman,” says Laurin Jeffrey, a sales rep at Century 21 Regal Realty in Toronto. “A lot of people fit us in there.”

The reason, he surmises, has to do with the fact that clients think they are paying Realtor®s too much for the service they provide. There’s a saying in journalism that to get to the bottom of a story, you should follow the money. That saying could well be applied to our first misconception about Realtor®s. It’s the one that prescribes to the notion that real estate agents make a great deal of money doing very little for their clients.

“What they don’t understand is we’re responsible for everything,” Jeffrey points out. “I pay taxes, do my advertising, marketing, printing of business cards and signs, insurance and extra insurance to drive people around. I have no medical benefits. There’s a lot of risk that goes into that.”

In addition, the industry has had a history of “less-than-ethical” characters, says Jeffrey, an image that it is starting to shed thanks to higher fees and tougher professional regulations. “It’s a lot more cutthroat now,” says Jeffrey. “Before the Internet, the only way you could get information on a property was through that slimy guy down the street. They knew that and they had you.”

Steven Fudge laughs at the prospect that people think a career in real estate is easy money. Even in a hot market such as the one he currently works in in Toronto, his clients are typically bidding on six to 12 properties before they can secure one. That’s a lot of showings, home inspections, writing of offers in addition to a lot of heartbreak and disappointment to deal with.

A sales rep for Bosley Real Estate Ltd., Fudge recently received a one-year anniversary gift from clients. When he looked somewhat perplexed by the gift, his clients sweetly reminded him that, yes, it’s been a full 12 months that they’ve been on the hunt for a home.

In addition to the behind-the-scenes amounts of work Realtor®s put in, there is also the little-publicized fact that Realtor®s have to work while everyone else is having fun, says Fudge.

Evenings, weekends and holidays are common as is working until 8 or 9 each evening. Fitting in a 70-hour work week is the norm for Fudge. By the same token, the career makes for great flexibility so Fudge allows time for daily work-outs with a trainer and late lunches with good friends. Still, the immediacy of technology in combination with a hot market means he must fly when called. “Often I have to drop what I’m doing so that by dinnertime, it doesn’t matter if I’m hosting a party, attending a recital...whatever,” says Fudge. “You do not have complete control of your time if you’re committed to being in complete control over your clients. I have missed my own birthday party.”

The perception that Realtor®s don’t have to work hard for their money is what has fuelled the For-Sale-By-Owner industry, but as Mississauga sale rep Marjorie Canales points out, that myth is seeing its own backlash. “That’s why most end up listing with traditional real estate,” says Canales. “They think they will put up a sign and maybe put up a little website for the property and so many things can go wrong. That’s why 90 per cent or more of homes are sold through a Realtor®.”

Another related misconception about real estate is the belief that Realtor®s have oodles of freedom and spare time. “That is actually not the case,” she says. “You get out, what you put in and it’s very unstructured so you have to be disciplined with your time. It’s easy to derail and slack off. I wouldn’t call it easy money at all.”

Furthermore, adds Canales, Realtor®s are one of the few professions that work on contingency and aren’t paid a dime till well after the property sells. “We’re taking a bigger risk from the get-go. Immediately, I have to go into my pocket and pay for marketing and if the house doesn’t sell, I don’t get paid.’

While OREA president Barb Sukkau agrees that the profession is the target of unfair criticism, she feels more can be done to put public thought back on the right track. “We don’t do a good enough job at telling consumers how valuable our service is,” Sukkau says. “There are a lot of misconceptions about Realtor®s and it comes from consumers that don’t appreciate the level of expertise we have and the knowledge we have.”

“People don’t realize we are bound to be ethical honest and we have certain obligations under the act that we have to follow and there are certain repercussions if we don’t.”

In addition, there is the continuing education that agents are required to complete in order to keep their license current.

Real estate associations large and small are embarking on campaigns to help deliver the message to media and consumers about the value services Realtor®s provide, she says, referring to the www.howRealtor®shelp.ca website.

In St. John’s, Bill Dilny often hears rumblings from people who believe that house prices are set by Realtor®s because it’s to their advantage to sell higher-priced homes. While Dilny doesn’t dispute that it is beneficial to some extent, the misconception that agents set prices is laughable. “But you don’t increase the price by 20 per cent because you’ll make more money,” says the Remax agent. “That’s ludicrous. It’s the market that drives prices.”

One fact about Realtor®s that Edmonton Realtor® Craig Pilgrim would like more people to know about is their high level of community mindedness. Despite mythical assertions that the profession embraces greed in its formula for making easy money, the high level of community involvement and payback would suggest there’s something more altruistic at play than simply mercenary means. “It is commonplace for Realtor®s to attend pretty much every social good function and fundraising event and to spend and donate both in terms of money, in kind donations, work and effort,” Pilgrim says. “Realtor®s are really committed to their communities and it does show.”

The Realtor®s’ Community Foundation in Edmonton, of which Pilgrim volunteers his time, is celebrating its 25th anniversary this year. Since its inception, the organization has returned in excess of $3-million to more than 100 Edmonton-based charities.

“The vast majority of Realtor®s just do these things -- they serve on boards and local charities and that’s typical and below the radar and that’s just done,” Pilgrim says. “I think the reason it’s so significant in our industry has to do with the flexibility in our industry. People are drawn to this profession because you’re seeing and touching so many people, their lives, their passions, their personal causes. It’s because of the connectedness of the industry.”

What myths about the profession would you like to shatter? Ever heard a real doozy? Let’s hear it.

Rick Moran, AMP, OMB # M08001997

Get the Most from Your Financing with a Mortgage Check Up

2011-11-08T09:33:00.000-08:00

Have you thought about your mortgage lately? Your financial picture can change significantly over time, and having the right mortgage strategy is an important part of making sure your financial needs and goals are met.

A personalized mortgage check up is an easy, no-obligation way to:

• ensure that your repayment approach suits you, for example with payments structured to maximize mortgage principal reduction,

• ensure any consumer debt you may have (such as credit card balances) is transferred to a lower interest rate,

• ensure you have access to the lowest-cost funds for renovations, education or other major expenditures.

Common reasons for a mortgage check up:

• You are planning to have children
• You want to explore your investment options
• You or your spouse have had a change in employment
• You are looking to start or buy a business
• You would like to renovate your home
• You would like the assurance of fixing your mortgage payments
• You are trying hard to manage your payments
• You can't remember the last time you assessed your home financing strategy

It can pay to book an appointment with us to determine if you are getting the most use out of your mortgage features. Call us today.

Real Estate Sales Continue to Climb: TREB

2011-11-08T09:32:00.000-08:00

The market in Toronto seemingly only knows one direction- up.
According new data released by TREB, sales for October climbed an impressive 17.5%, year-over-year.

“The pace of October resale home transactions remained brisk in the GTA. This bodes well for a strong finish to 2011,” said Toronto Real Estate Board President Richard Silver. “Home buyers who found it difficult to make a deal in the spring and summer due to a shortage of listings have benefitted from increased supply in the fall.”

As Steven Fudge, Sales Representative, Bosley R.E. Ltd told Propertywire.ca, although there are plenty of signs that indicate that 2011 will close out with similar, robust activity, there are elements at play that do pose the possibility of influence: “The general consensus is that the fundamentals for Toronto real estate are sound, but the erratic stock market and headline news of other world economies may be causing a reason for pause. If the market slows before the end of the year, these will be the big factors influencing a decline in sales.”

And it wasn’t just sales activity that continued to climb through October; average prices in this hotbed continue their ascent as well, up 8% year-over-year, resting in at $478,137.

And as Fudge points out, these intense conditions, while support consistent upward trends, begin to take their toll on consumers after awhile. “In the City of Toronto, sales of freehold properties will remain strong for the balance of the year, as demand continues to outstrip supply, though purchasers are displaying signs of fatigue and are weary of the bidding wars. Many are refusing to go head to head in competition, which is causing some homes to stay on the market longer than expected “

“Sellers’ market conditions remain in place in many parts of the GTA. The result has been above-average annual rates of price growth for most home types,” said Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis. “Thanks to low interest rates, strong price growth has not substantially changed the positive affordability picture in the City of Toronto and surrounding regions.”

Fudge sees the condo market as a possible driver towards balanced territory in Toronto: “The City of Toronto, which has a significantly larger supply of condominiums for sale, is not as robust as the freehold market segment. Unless aggressively priced, condominiums will be for sale longer before trading, which signals a more balanced market. Hopefully this indicates a soft landing, rather than a crash.”

House prices and sales will remain stable through 2012, according to the latest forecast by the Canada Mortgage and Housing Corporation (CMHC)

2011-11-08T09:31:00.000-08:00

In its fourth quarter outlook, CMHC predicts the average price will increase 1.2% from $363,900 in 2011 to $368,200 in 2012. Sales will rise from 450,100 units in 2011 to 458,500 in 2012, up 1.9%. Housing starts, however, will drop 2.2% from 191,000 in 2011 to 186,750 in 2012, according to the CMHC outlook.

Global economic concerns have resulted in growing fears about how that might impact Canada’s market, but CMHC Deputy Chief Economist Mathieu Laberge said the country’s real estate market will remain strong.

“Despite continued uncertainty in the global economy, Canada’s economic fundamentals remain positive, particularly with respect to interest rates, employment and immigration,” said Laberge. “These factors will continue to support Canada’s housing sector in 2012.”

In Vancouver and Abbotsford, where average-price growth has topped any other Canadian city, the average will gain 3.2% in 2012, on top of 5.3% gains forecasted for this year.

Unemployment there will drop from 7.9% to 7.5%, said the CMHC report. Sales activity, however, will start to tail off from the 7.3% growth in 2011 to 3.3% growth in 2012.

The market will likely continue to attract builders, with housing starts expected to rise 9.4% in 2012 and building on 5.1% gains in 2011 over 2010.

In the Greater Toronto Area, apartment starts are expected to be 37.5% higher in 2011 over 2010, totalling 18,200 stats in 2011. Those numbers won’t slow in 2012, as apartment units will gain another 1.6% to reach 18,500 in 2012.

Overall housing starts will drop 2.3% in Toronto, CMHC predicts, largely based on a 14.1% drop in single-detached starts, from 8,500 in 2011 to 7,300 in 2012.

Toronto price gains will also slow, from 4.3% gains in 2011 to 1.4% gains in 2012 to an average of $457,500.

Fast-tracking your mortgage

2011-06-23T08:50:00.000-07:00

When it comes to putting your mortgage on the fast track, a little can go a long way. Here are some strategies for saving on interest costs and shaving years off your mortgage.

Increase your payment frequency. Opt for biweekly accelerated payments – take your current monthly payment and divide it in two, then set those payments for every two weeks. You'll make 26 payments a year instead of 24, and pay off your mortgage significantly faster than you would if you were making monthly payments.

Amortize frugally. While 35-year amortization periods are fairly common, don't assume that's the best option for your situation. If you can afford the higher payments, opting for a shorter amortization period will not only get you debt-free sooner, but save you thousands of dollars in the long run.

Make lump sum payments. The portion of your monthly blended mortgage payment allocated toward interest is significantly higher in the infancy of your mortgage, and decreases gradually as you pay down the principal. This means that the sooner in the life of your mortgage you make a lump sum payment – whether it's your annual bonus, your income tax refund or just savings you've socked away throughout the year – the more dramatic its long-term effect will be.

Adjust your payments. If your term is coming up for renewal, you may be able to secure a lower monthly payment by taking advantage of current interest rates, which are still relatively low. But if you can still afford the payments you're making now, keep them the same amount – you'll be paying down more towards the principal without affecting your current cash flow. Likewise, if you get a raise, consider allocating a portion of your pay raise toward increasing your monthly payment – your monthly budget will never know the difference.

Please contact us with any queries that you might have,

Rick Moran, AMP, OMB # M08001997

Turn to an Independent Mortgage Professional for Maximum Choice

2011-06-07T09:30:00.001-07:00

For Canadians looking for a mortgage, rates continue to be low by historical standards. To get a competitive rate and the financing features that fit their needs, consumers need access to a range of mortgage options.
Canadians wanting to get a new mortgage or renew / re-finance an existing mortgage can approach:
• a financial institution and select from their particular menu of mortgage options and rates
• a mortgage representative who must sell a specific line of mortgage products
-or-
• an independent mortgage broker, who can offer a full range of mortgage types and interest rate options, and who works only on his or her client's behalf.
By approaching one or two financial institutions and choosing from their in-house mortgage products, many consumers miss out on an array of mortgage choices that could suit their needs better and save them a lot of money over the long term. Comparing different mortgage types and interest rates on your own is a time consuming and rather intimidating task. And if you deal with a financial institution directly and your application is declined, you must start over from scratch with another institution.
An Invis independent mortgage professional has access to a wide range of mortgage lenders and can guide you to a mortgage that suits your individual needs, at a very competitive rate. They can work with lenders including chartered banks, credit unions, and trust companies, as well as other sources of funds such as life insurance companies and pension funds. Best of all, this objective expertise is available to you for free in most cases, because the selected lending institution pays Invis to source the mortgage business. Please feel free to contact me with any question that you may have.

Rick Moran, AMP, OMB # M08001997

Buying a home? Here are some things you need to know (Part 2)

2011-05-31T23:00:00.001-07:00

The spring house hunt is here in markets across Canada. For those navigating the home purchase process, this week we look at additional home buying tips:

6. Borrow up to $25,000 for your down payment from your RRSP – tax-free! If you are a first-time buyer, the Homebuyers Plan (HBP) allows you to withdraw up to $25,000 from your registered retirement savings plans (RRSPs) to buy or build your home. An Invis mortgage professional can tell you more about this program.

7. Understand closing costs. When buying a home, it pays to be informed about closing costs, which can represent up to three per cent of the purchase price, including: land transfer tax, lawyer's fees, appraisal fees, title insurance and home inspection fees.

8. Know your financing options. Many lenders offer mortgages which feature a 5% down payment, or in some cases 100% financing. If you borrow more than 80 per cent of the purchase price, your mortgage must be insured, typically by the Canadian Mortgage and Housing Corporation (CMHC), Genworth Financial or Canada Guaranty.

9. Don't do it alone – explore the benefits offered by mortgage brokers. Mortgage brokers act as a one-stop shop for planning advice and the best rates. Invis mortgage professionals work with prospective homeowners across Canada to provide valuable advice before and during the home buying process.

Rick Moran, AMP, OMB # M08001997

Buying a home? Here are some things you need to know (Part I)

2011-05-26T18:02:00.001-07:00

For most Canadians, buying a home is the single largest financial transaction they will ever encounter and it's critical that prospective homebuyers prepare themselves before they start their search.

This week we look at the some tips for those navigating the home buying process:

1. Know what you can afford. A mortgage pre-approval offers peace of mind by helping you determine the price range of homes you can shop for and the maximum mortgage you can afford. Remember that final mortgage approval is also based on your information and the property that is to be mortgaged.

2. Lock-in a mortgage rate before you begin shopping for a home. Many financial institutions will lock-in a rate for up to 120 days when pre-approving potential borrowers for a mortgage. Remember to renew the 120-day period if mortgage rates fall during this time, or better yet let an Invis mortgage professional do this for you.

3. Be specific about your lifestyle needs. Remember to consider not just the home itself but the property as a whole, including the neighbourhood and its proximity to work, shopping, restaurants, and other important places you'll be spending your time at.

4. Don't confuse an appraisal with a home inspection – you need both! An appraisal determines the worth of the property by estimating the market value of the land and building. A home inspection inspects the adequacy and condition of the building and all major systems.

5. Place conditions on your offer. Conditions provide you with the flexibility of withdrawing your offer if you are unable to obtain the necessary financing, or if the inspection reveals structural problems with the home. Even with pre-approval, homebuyers who make an offer without conditions do so at their own risk.

Part 2 coming next week.

Rick Moran, AMP, OMB # M08001997

Canadian Mortgage Borrowers Exhibit Confidence

2011-05-17T22:23:00.001-07:00

Many Canadians are aggressively reducing their mortgages by making lump sum payments, increasing monthly payments and reducing amortization periods, revealing confidence and financial flexibility in a stable mortgage environment, according to a recent survey by the Canadian Association of Accredited Mortgage Professionals (CAAMP).

Survey Highlights
· 22 per cent of mortgage borrowers increased their payments during the past year; 18 per cent made a lump sum payment; 9 per cent did both and 27 per cent who renewed increased their payments;

· For mortgages repaid in the last 20 years, one third were paid off early;

· Home Equity Lines of Credit (HELOC) represent 22 per cent of all mortgages, making these lines of credit a $215 billion industry;

· On average, Canadian homeowners have $222,000 in home equity, equal to 66 per cent of the value of their homes;

· During the past year, homeowners borrowed $26 billion in additional equity from their homes. 15 per cent of homeowners withdrew equity, averaging $30,000;

· Investments (28 per cent) replaced debt consolidation (19 per cent) as the number two use of home equity takeout. Home renovations remain number one (36 per cent).

"Prudent management of their mortgage debt has paid off for Canadians," said Jim Murphy, AMP, President and CEO of CAAMP. "By taking advantage of low interest rates, we have been paying down our mortgages. As economic confidence returns in Canada, many survey respondents have told us they now feel comfortable using some of that equity to improve their homes and to invest," said Murphy.

Controversial document infuriates brokers

2011-04-19T13:28:00.000-07:00

Them’s fighting words: A document from an RBC employee outlining the differences between mortgage brokers and specialists is drawing the ire of brokers – charging it mischaracterizes their work, their qualifications and their motives.
“Brokers will farm out your mortgage to a number of companies and then will set you up with a financial institution based on only the lowest rate, no other factors,” reads the undated document -- “Understanding the difference between mortgage specialists and mortgage brokers.” An RBC logo and the name of one of its British Columbia mortgage specialists appear on the flyer.
There’s more.
“When selling your mortgage the broker and the financial institutions reviewing your file may pull numerous credit bureau requests depending on their software capabilities,” continues the document, which aims to provide mortgage specialists with talking points to answer client questions. “Brokers will charge set up fees and have other hidden costs you should be aware of.”
Neither the specialist nor RBC corporate communications in Vancouver returned MortgageBrokerNews.ca calls Friday.
Still, the flyer has now been posted to industry websites across the country, with more than 150 brokers venting their rage and disappointment.
“I think the relationship between mortgage brokers and mortgage specialist is akin to some of the biggest rivalries in sports,” Greg Williamson, founder of 180 Degrees Coaching, told MortgageBrokerNews.ca. “But this is misleading and for those who read it and don’t know our business, it will mislead them.”
The broker was one of the first to post it on his blog website, www.gregwilliamson.ca. One of the document’s most glaring inaccuracies, maintains Williamson, is that suggestion brokers repeatedly run reference checks on clients.
“If a mortgage broker is using Filogix, they’re generally only pulling a credit check once,” he said. His blog has now attracted more than 280 responses, mostly from brokers concerned the RBC flyer will erode consumer confidence in their industry.
Under another section marked “Training and Educational Differences,” the writer extols the financial planning and institutional knowledge of bank mortgage specialists. She then offers a much briefer synopsis of broker qualifications: “Depending on your province, mortgage brokers must be licensed through the Accredited Mortgage Professionals course. Only this course is required, no financial planning included.”
Many brokers are concerned that the document may speak to the bank’s corporate attitudes about the broker channel. It is, in fact, the only one of the Big Five that has never used external brokers.
“There were obviously inaccuracies in the report,” CAAMP President and CEO Jim Murphy told MortgageBrokerNews.ca. “I’m in discussions with senior officials from RBC that they were not aware of it and are looking into it.”

My personal comments are: these RBC Specialists deal with one institution and one set of Mortgage Products. In many cases,
I would challenge them to have 30 years of Industry experience….enough said.

Rick Moran, AMP, OMB # M08001997

First-time buyers in major Canadian markets move to get in ahead of higher interest rates, says RE/MAX

2011-04-05T15:17:00.001-07:00

MISSISSAUGA, ON, April 5 /CNW/ - Driven by the threat of higher interest rates down the road, first-time buyers are contributing to strong upward momentum in residential housing markets across the country, according to a report released today by RE/MAX.

The RE/MAX First-Time Buyers Report, highlighting trends and developments in nineteen major Canadian centres, found that low interest rates and balanced market conditions have provided significant impetus in 2011, particularly at lower price points. Just over 30 per cent of markets are reporting sales in excess of 2010 levels as a result, while almost 70 per cent have experienced an upswing in average price. Leading the country in terms of percentage increases in the number of homes sold are Western Canadian markets, including Saskatoon (up close to 15 per cent), Greater Vancouver (up close to 12 per cent), and Winnipeg (up just over 11 per cent). With an average price hike of close to 20 per cent year-to-date (February), Greater Vancouver continues to show unprecedented strength, followed by Hamilton-Burlington (eight per cent), Quebec City (seven per cent), Winnipeg (close to seven per cent), GreaterToronto (five per cent), and Greater Montreal (five per cent).

"Despite homeownership rates approaching 70 per cent, there is clearly room for growth as entry-level buyers make their moves from coast-to-coast, undeterred by higher housing values and changes to lending criteria" says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. "Many purchasers intent on realizing homeownership are scaling back on expectations or are willing to sacrifice location, quality and/or size to make their dream a reality - not unlike generations before them."

Inventory levels, while tight in several larger centres, are more balanced overall, giving first-time buyers a good selection of housing product from which to choose. Not surprisingly, condominium apartments and town homes have become the first step for many entry-level purchasers, especially in Greater Vancouver, Victoria, Kelowna, Edmonton, Calgary, London-St. Thomas, Hamilton-Burlington, Greater Toronto, the Island of Montreal, and Halifax-Dartmouth where average prices have risen unabated in recent years.

"With the Canadian economy on firmer footing overall, residential real estate is well-positioned moving into the traditionally busy spring market," says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. "Consumer confidence is climbing in conjunction with economic performance, and concerns over a secondary recession fade with each passing day. The mood is cautiously optimistic, as first-time buyers enter the market."

Changes to recent financing criteria have not created the anticipated run up in activity in most markets. From a financial standpoint, most rookie home buyers remain quite prudent. Those making the leap are not doing it lightly, buying within their means. While this most recent round of policy tightening will likely have a negligible effect on demand, the message is getting across.

Affordability remains a growing concern in most markets, and—aside from first-time purchasers—no one is more in tune with that than housing planners and developers. In fact, the growing demand for reasonably-priced product is creating a shift in the country's housing mix. That trend is expected to gain traction in coming years, as builders look to create greater options for those seeking to realize homeownership. In recent years, builders have helped ease the move to homeownership by concentrating on intensification—condominium buildings with smaller suites and small-lot subdivisions offering detached, compact homes at a fraction of the cost of a traditional single-family home. On the flip side, the affordability factor is also breathing new life into tired older neighbourhoods, and that, in turn, is contributing to rising values.

As prices escalate, first-time buyers are indeed spending more—some out of necessity, but others are simply in a position to do so. Unlike in years past—a greater percentage of today's first-time buyer pool is comprised of dual-income, college or university-educated couples with solid earnings. They're spending close to average price or slightly more to secure—in most cases—a better location or a home that will grow with them. Yet, the fact remains that those on a tighter budget can get in for considerably less, with reasonable choices in every major market across the country. While some may feel discouraged by eroding affordability levels, the underlying confidence in the concept of homeownership is rising.

"While market conditions are one thing that influences first-time buyers, few things trump the fundamental belief in homeownership," says Sylvain Dansereau, Executive Vice President, RE/MAX of Quebec. "Today's entry-level buyers are steadfast in their mindset. They know they have to live somewhere, but they simply don't want to pay someone else's mortgage. Savvy or practical, they remain a driving force. The bottom line is that the demand for entry-level product will remain steady. The role of starter homes in the marketplace is becoming ever more vital."

Rick Moran, AMP, OMB # M08001997

American Mortgage Market Getting Better

2011-03-19T18:07:00.001-07:00

The number of Americans defaulting on their mortgages has steadily been declining, according to February data out this week for the Standard & Poor’s/Experian Consumer Credit Default Indices.

First mortgages in default were down 14% in February compared to a month earlier, and down 42% compared to a year earlier. Second mortgages in default were down 3% compared to January and 52% compared to a year earlier.

Similar declines were seen in bank card and auto loan defaults.

“Default rates continue to fall across all major categories and year-over-year across the five highlighted cities,” said Craig Feldman, director at S&P Indices. “The overall trend lasted a number of months now, reflecting improved consumer health and the appearance of a continued economic recovery.”

But another study out recently by Core Logic showed 23% of U.S. homes were in negative equity at the end of 2010.

Rick Moran, AMP, OMB # M08001997

Canada Drops Mortgage Rates as Global Instability Causes Concern

2011-03-19T18:06:00.000-07:00

Global instability, highlighted by turmoil in Libya and Japan, has caused Canadian banks to drop their mortgage rates.

Just as changes to mortgage rules coming into effect Friday were likely to make borrowing for a new home more difficult, the latest drop in interest rates has helped potential new borrowers in the short term find a more affordable price.

The Mortgage Lenders across the Board, slashed its rates on various fixed rate mortgages.

After heightened confidence led to mortgage rate increases last month, banks are now following the cue of declining bond rates, according to the Globe and Mail.

For the RBC, the country’s largest bank, its residential mortgage four-year special fixed rate for closed mortgages was reduced 0.15% to a rate of 4.19%.

The Mortgage Broker Community currently has 5 year fixed rates at 3.79% and Variable Rate Mortgages at 2.15%

Rick Moran, AMP, OMB # M08001997
phone: (905) 824-3210

Time to Make a Plan - Spring is Right Around the Corner

2011-03-15T11:30:00.000-07:00

This is the absolute best time to begin to plan your Springtime Renovations, be it the Interior or the Exterior of your home.
There is nothing more gratifying than the feeling of pulling in to your driveway looking at the awesome updates that make your house look next to brand new.

Currently, by speaking to your qualified Mortgage Professional, you will discover that by taking advantage of the equity in your home for Home Improvement purposes is more affordable than you have ever considered.
The Variable Rate Mortgage today enjoys an interest rate of 2.25%, while if you would rather fix the rate, a 5 year term is as low as 3.89%.

The CMHC Mortgage and Real Estate Report has been very clear about the most profitable areas of your home to renovate and enjoy the maximum increase in the value of your home. Kitchens and Bathrooms are the number one most popular reno, and that will in most cases increase the value by what you spend.
It is also a great time of the year to have a good look at the condition of your roof, windows and air conditioner. These are all expensive upgrades that will immediately qualify for you to take equity out of your home and refinance the mortgage.
Many clients of ours have also chosen to upgrade the Landscaping, interlocking walkways, patios or decks.

Remember the most important thing is that you enjoy the fruits of your labour. Capitalize on your equity and reap the benefits today – you can’t take it with you.

Rick Moran, AMP, OMB # M08001997

The Rise and Fall of Mortgage Rates

2011-02-23T13:56:00.000-08:00

Research released by the Bank of Canada Thursday, not surprisingly suggests that Canada’s largest banks are slow to pass on cuts in the Bank of Canada’s policy interest rate.

“Canadian lenders appear to be extremely slow to pass on changes in the Bank Rate to their customers,” author Jason Allen wrote in the report entitled “Competition in the Canadian Mortgage Market.”

Researchers found that “in the short run, five of the six largest Canadian banks adjust their rates upward more quickly when there are upward cost pressures than downward when costs fall,” he said.

Having market power in Canada, “there is scope for banks to coordinate implicitly or explicitly,” Allen wrote.

If costs rise they all want to increase their prices, but if costs fall they wait before reducing rates “because all the banks can earn higher profits.”

Most Mortgage Brokers agree, calling the banks’ practice of holding off discounting for longer periods “common practice.”

Banks usually lenders hold off until after the end of the month before passing on lower rates because this is when renewal notices for maturing mortgages are printed and issued in advance of the maturity date.

“Renewal notices with a higher rate printed on them provide the illusion of a potentially bigger discount that can be offered to the client – a client who most times does not want to put in the effort in the mortgage transfer process.”

Rick Moran, Senior Mortgage Consultant with Invis, adds: “Great Advantage is taken of those clients that assume they are being offered the best rate at the time. We must educate the consumers to shop – contact your expert Mortgage Broker”.

Dave Larock, a broker with Integrated Mortgage Planners-TMG in Toronto said there is another group affected – borrowers who are just about to close their mortgage transaction. “Since most rate drop policies are in effect until seven days prior to closing, it is this group that misses the savings if rate drops are delayed,” he said. “From a lender’s perspective, this group is not very rate sensitive because they are so close to their funding date that switching lenders is usually not feasible, while mortgage applicants who are earlier in the process will eventually receive the lower rate through any standard rate-drop policy, provided that the rate decrease is sustained.”

The research also indicated that borrowers who use a mortgage broker pay less, on average, than borrowers who negotiate with lenders directly. This average discount is about an additional 19 basis points.

“The conclusions of the report are very reasonable,” said Jim Murphy, president and CEO of CAAMP. “They coincide with our own research at CAAMP on discounts. Mortgage brokers play a key role in offering choice to borrowers when making their most important financial decision.”

Larock said he agrees with the paper’s overall premise that more lending competition leads to better rates and choice for consumers and that in today’s market banks can coordinate implicitly or explicitly. “That’s just the nature of an oligopoly,” he said. “If Canada’s big banks were allowed to merge they would increase their market muscle at the customer’s expense. We need more lenders, not fewer.”

The report stated that Canada’s mortgage market represents “almost 40 per cent of total outstanding private sector credit, BOC researchers said in the quarterly Financial System Review.” It is dominated by the nation’s six major national banks plus a large credit union, the Desjardins Movement, and the Alberta province-owned ATB Financial.

The “Big Eight” controls 90 per cent of the assets in the banking industry. All offer the same types of mortgage assets, the great bulk of these being guaranteed by the federal government’s Canada Mortgage and Housing Corporation.

“The Canadian mortgage market is relatively simple and conservative, particularly when compared with its U.S. counterpart,” the report stated. “Many Canadians sign five-year, fixed-rate contracts for the life of the mortgage -- typically 25 years.”

Bruno Valko, director, national sales for Resmor Trust said there is an advantage because the mortgage broker marketplace is not dominated by a few big players.

“In the broker/wholesale channel, there’s more competition and lenders will move quicker to lower rates and attract business when the opportunity presents itself,” he said. “Furthermore, the scale of product offerings is greater, so in the event a person doesn’t qualify at the Big Eight, a broker can potentially offer solutions.

“And if we agree that the broker/wholesale channel moves quicker to lower rates when the opportunity presents itself, that's another advantage for consumers to choose mortgage brokers.”

Rick Moran, AMP, OMB # M08001997

Inside Mortgage Investment Corporations (MICs)

2011-02-11T15:09:00.000-08:00

Some believe Mortgage Investment Corporations (MICs) are one of the best undiscovered income-producing investments in Canada.

We wanted to investigate that a bit, so we took the opportunity to chat with one of the pioneers of the Canadian MIC industry, Wayne Strandlund.

Wayne is the founder and CEO of $250 million Fisgard Capital Corporation. Fisgard is one of Canada’s larger MICs. Over the past 16 years, Fisgard has placed over $50 million in mortgages each year, and paid dividends averaging 10.79% net per year to its investors.

Here’s part one of a two-part interview…

Intro to MICs

Before we begin, let’s define what a MIC is.

A MIC is an investment that lets people pool their money to be lent out as mortgages. 100% of the net profits from those mortgages flow through to the investors.

MICs have been around since 1973 when federal legislation was enacted to promote private financing and make it easier to invest in mortgages.

MICs are one of the lesser known asset classes, despite yielding solid long-term returns and despite being RRSP, TFSA, RRIF and RESP eligible in most cases.

************

Q: To what extent would you say MICs are an undiscovered or underrated asset class in Canada?

Wayne: The MIC was established by federal legislation in 1973 but it didn’t take hold until the mid ‘90s when it really started to take off, principally because it was the most accommodating investment structure to replace mortgage syndication. Mortgage syndication had been damaged by a number of debacles at the time, most notable of which was ‘Eron.’ Eron had lost millions worth of investor money.

Thanks to the MIC, instead of owning a syndicated (often unregistered) interest in a mortgage, investors could now be shareholders in a non-taxed flow-through entity. MICs, with their strict audit and reporting regulations, are a more streamlined, transparent and effective way of investing in mortgages and real estate.

Early MIC managers didn’t give much thought to the MIC structure beyond its facility to raise investment money. Their focus was predominately raising capital not only through cash investment but also through various registered retirement and savings trusts such as the RRSP, RRIF, DPSP, LIF, LRIF, LIRA, IPP and RESP. Today we also have the TFSA and RDSP.

The MIC flourished after 1995. Today there are hundreds of MICs in Canada. Some have as little as $1 million capital, and are essentially “convenience MICs” of maybe twenty or so shareholders. You might find those MICs in real estate offices, for example, where their main function is to facilitate sales for the office’s marketing staff.

On the other end of the spectrum are the larger MICs which are basically mortgage banks with hundreds of millions of dollars and thousands of shareholders.

The MIC is now fairly well established, but underrated as an investment asset class. Not being particularly well suited to public trading, MICs have not been recognized by financial advisors and stock and mutual fund traders who prefer investments that are publicly traded and generate fees and commissions.

This lack of attention has nothing to do with the quality, security and dividend production of the MIC.

Q: What are the biggest differences between MICs today and MICs 15 years ago?

Wayne: Today there are many more MICs struggling for a share of a market that is not growing in lock-step with the increasing amount of mortgage money available through MICs as well as institutional lenders.

Fifteen years ago it was easier for a MIC to place money in secure mortgages than it is today. Competition for good mortgages is fierce, and growing.

MICs are practicing the same type of lending they were fifteen years ago. Despite the intense competition for quality mortgages and the recent global recession, most MICs have done well for investors. Yet, they have not received the recognition they deserve, despite outperforming many investments in terms of capital preservation and dividends. The MIC is still a niche investment, not well known or understood.

Securities regulation NI 31-103 was introduced in 2008 and made law in September 2010. It is too early to say, but I believe the new regulation will change the MIC industry. It could be that small MICs may not be able to meet the onerous requirements of the new regulation, including increased capital, bonding, disclosure, compliance and so forth, and simply close shop, or merge in order to survive.

The reasons for NI (National Instrument) 31-103 are still being hotly debated and rationalized based on whose ox is being gored, the small MIC struggling to raise a bit of capital or a giant bank’s brokerage house that is not particularly fond of anyone else playing in what the bank sees as its very own sandbox (the world’s investment money). At any rate it appears that the capital-raising field has been levelled by NI 31-103 and MICs as well as their managers and investment referral agents must now meet strict regulatory standards in order to raise capital through public markets. The positive outcome is that qualifying MICs will now become “institutionalized” in the eyes of the public, and will benefit from the legitimacy that comes with achieving new levels of licensing and registration. Short term pain, long term gain.

Q: From a general risk and return standpoint how would you say investing in a MIC compares to investing in (for example) a rental property, assuming the same dollar investment?

Wayne: A rental property may appreciate in value and may experience the tax advantages of depreciation and other expense allowances. A MIC is a “flow through” investment and, in fact, the MIC must distribute 100% of its net profit to its investors every year. It is not designed to accumulate profit and is not likely to increase in value as a rental property might.

While a rental property is likely to be an active investment involving hands-on management, the MIC is more a passive investment. It simply flows dividends through to its investors, in whose hands the dividends are treated as interest income for tax purposes. The MIC sometimes, but rarely, flows capital gains or losses through to its investors.

A MIC is likely to be purchased at a nominal $1 per share, for example, and end at a $1 redemption or wind-up value. It will provide dividend income throughout the investment period. In exceptional circumstances the MIC might experience a capital gain if, for example, the MIC buys a property or forecloses on a property, takes it into inventory, and sells it at a profit. The MIC may flow capital gains – and capital losses – to its investors, but these are relatively rare occurrences.

As stated, dividends paid to MIC investors are treated as interest income for tax purposes. Income from a rental property is taxed differently depending, for instance, on whether it is held personally or in a corporation. Investors should consult tax experts when choosing between a MIC and a real estate investment, such as rental property.

Q: Are there any major 3rd party distribution channels for the MIC? For example, do any big banks or investment brokers sell them to clients? If not, why not?

Wayne: To date most MICs have raised capital themselves with negligible support from financial planners, advisors and brokers. Most MICs do not trade on the public market, and therefore do not attract the attention of brokers who make a living through fees based on trading volume.

Also, most MICs raise capital by way of Offering Memorandum as opposed to Prospectus. This precludes certain investment firms from investing in them as a matter of policy.

Q: Will returns suffer going forward as more investors throw money at MICs, and as more MICs and private money join the fray?

“If there is a crisis of money in Canada, it is not that we don’t have enough, but that there are too few simple, understandable and reliable places in which to invest it.”

Wayne: MIC returns are normalizing. The high private interest rates that have fuelled double-digit MIC returns for nearly two decades are not sustainable in the borrowing world at the present time, particularly with the slowdown in construction and development which is traditionally an active lending market for several MICs.

Not only will MIC returns normalize due – at least temporarily – to a shrinking market for mortgage money, but also because more money is choosing the MIC investment resulting in what might turn out to be an over-supply in some cases.

The MIC’s advantage is that the average investor understands what real estate is and what a mortgage is. Investors appreciate that a MIC investment is uniquely Canadian and secured by real property located only in Canada. These are simple important facts that make the MIC such a comfortable, easy-to-understand “investment” compared to the thousands of impossibly complex financial products being pedaled daily on the public market. Simplicity is one of the MIC’s most popular attributes.

The law of supply and demand will prevail, and borrowing rates (hence MIC returns) will be influenced not only by bond yields but also by the sheer volume of money now seeking the relative safety of mortgages secured by Canadian real estate property. If there is a crisis of money in Canada, it is not that we don’t have enough, but that there are too few simple, understandable and reliable places in which to invest it.

Real estate – the mortgage security – is one of the last bastions of conservative long-term investing, and there is no indication of this changing any time soon. We may look for the MIC to become very popular as a mainstream investment and special purpose lender.

Q: Do you foresee more distribution channels evolving for MICs in the future?

Wayne: Yes. The world of Exempt Market Products – which includes qualifying MICs – is poised for growth. NI 31-103 will have the effect of institutionalizing MICs and MIC managers that meet the new requirements. As a result a broader spectrum of the investment community will invest in MICs, regardless of whether they are publicly traded or not. The so-called ‘liquidity’ touted by stock and mutual fund brokers is not what it’s cracked up to be, and more and more investors now realize that it’s much too expensive. Good old-fashioned fixed term investments are trumping liquidity in many cases.

Exempt Market Products are about to experience wide acceptance and popularity amongst mainstream investment dealers. EMPs are no longer the poor cousins of publicly traded stocks and mutual funds. The popularity of the MIC as an Exempt Market Product is growing and attracting the attention of institutional investors. The credibility of the MIC is greater than it has ever been.

Q: What would you consider a high default (impaired loan) rate on a typical Canadian MIC? (e.g. 2%?)

Wayne: MIC lending is private as opposed to conventional lending, so risk and reward must be viewed from that perspective.

The number of impaired mortgages as a percentage of the total number of mortgages in a MIC at any given time is one consideration.

The dollar volume of impaired mortgages as a percentage of the total dollar volume of the portfolio is another.

The level of impairment is also a consideration. For example, an NSF cheque is one level, non-payment of property taxes, insurance or strata fees is another, and non-payment of the mortgage on maturity yet another.

Ten percent of the number of mortgages in a portfolio (e.g. 40 out of 400 mortgages) is probably an acceptable ratio on the impairment scale, erring on the high side.
Five percent of the dollar volume (e.g. $25 million out of $500 million) is also on the high side. Impairment doesn’t mean a loss of interest or capital. At any time a MIC may have 10% of its loans in an impaired state, but that does not mean it will lose 10% of its capital. It may not lose any capital.

Impairment level takes into account the composition and relative risk of a MIC’s mortgages, and risks vary from one MIC to another. Some MICs underwrite conventional 1st mortgages (including insured mortgages), some MICs underwrite more risky 2nd mortgages, and some MICs underwrite the full spectrum of mortgages: 1sts, 2nds, land development, construction, mezzanine financing, and so forth. It is difficult to assign impairment ratios without carefully considering the portfolio mix. It’s the degree of impairment that one must consider.

************

Rick Moran, AMP, OMB # M08001997

Canadian Real Estate Association Changes 2011 Forecast

2011-02-11T15:04:00.000-08:00

Canadian Real Estate Association Changes 2011 Forecast

Canadian home sales this year will be better than previously thought, helped by improving consumer confidence that will partially offset the anticipated deterrent of interest rate hikes, the Canadian Real Estate Association predicts.

CREA released a revised forecast Tuesday that estimates there will be 439,900 existing homes sold in 2011, down 1.6 per cent from 2010, but better than the nine per cent decline that CREA had forecast at the end of last year.

The real-estate association is also taking a more positive view of pricing, with the national average price now expected to rise by 1.3 per cent in 2011 to $343,300. CREA had earlier predicted that the national average home price in 2011 would fall by 1.3 per cent from last year to $326,000.

CREA's January sales data won't be released until next week. But recent reports on building permits and housing starts -- two indicators of how much new housing will be available for sale in future -- indicate a measured start to 2011.

Canada Mortgage and Housing Corp. reported Tuesday that the pace of new-home construction in Canada increased slightly last month, rising to 170,400 units, up from 169,000 in December on a seasonally adjusted annual rate.

That puts the country on a pace for about 10 per cent fewer housing starts than last year.

Krishen Rangasamy, an economist at CIBC World Markets said housing starts will likely soften over the coming months as home prices moderate and the Bank of Canada resumes its tightening cycle by mid-year.

A moderation in housing starts is a sign that supply is contracting in line with reduced demand, which could avoid an unhealthy glut of available houses on the market if demand declines when interest rate hikes are announced.

Some economists have warned that a combination of higher interest rates and new mortgage rules that go into effect March 18 could put a chill on demand in the later months of this year.

CREA predicted Tuesday that some sales that would have been made later in the year will likely occur in the first quarter, as a result of the new rules. A previous change in mortgage rules last year contributed to extremely strong first-quarter demand as buyers sought to beat the deadline.

"This is expected to produce a milder version of the volatility in sales activity that we saw last year which resulted from additional transitory factors," said CREA's chief economist Gregory Klump.

Last year, sales were also pushed ahead to the first part of the year as buyers in two provinces -- British Columbia and Ontario -- rushed to avoid a switch to the harmonized sales tax on July 1.

Those factors exacerbated the effect of interest rate hikes last summer and the market reached a trough in July.

Robust first quarter expected

Following last year's pattern, sales will likely be robust in the first quarter as buyers enter the market before the tighter mortgage rules take effect and then drop off in the second quarter.

However, CREA predicts that the market will gain traction in the second half of this year as economic conditions, job and income growth and consumer confidence improve, in contrast to 2010 when economic growth softened.

"Even though mortgage interest rates are expected to rise later this year, they will still be within short reach of current levels and remain supportive for housing market activity. Strengthening economic fundamentals will keep the housing market in balance, which will keep home prices stable," Klump said.

The Bank of Canada has forecast that housing will be a minor net negative for the economy this year, although it also cautions the market is a potential key downside risk for the economy.

It is expected to maintain its key lending rate at a low one per cent until at least the second half of the year, as some global economic uncertainty lingers. The key lending rate has the most immediate impact on variable-rate mortgages whereas home owners with fixed-rate mortgages won't be affected until renewal time.

The Royal Bank, CIBC and TD said this week they are raising the posted rate for a five-year closed mortgages by 0.25 percentage points to 5.44 per cent.

I remain your best option with 5 year funds available at 3.99%.

Rick Moran, AMP, OMB#M08001997

Are US Mortgage Brokers Giving Canadians a Bad Name?

2011-01-31T23:23:00.002-08:00

For many homeowners, paying off their mortgage as quickly as possible is a top priority. Paying down extra principal in the early years by whatever means possible can shorten the life of your mortgage – and dramatically lower the interest you'll pay over the long haul. Here are a few tips on how to make this happen:

1. Increase your payment annually to the most you can afford
The upside is that most lenders will allow you to reduce it again to the previous level if it turns out to be too great a burden or your circumstances change.

2. Prepayments give great return on investment
If, for example, you pay an average of 6.0% in mortgage interest, for each $1,000 by which you reduce your mortgage principal, you will save $60 in after tax cash every year.

3. Make use of your RRSP-driven tax rebate as a mortgage prepayment method
Even if you can only prepay annually, make sure tax refunds are set aside for paying down your mortgage. Many Canadians borrow (at prime) to buy an RRSP to ensure the maximum rebate. When applied to the mortgage principal, this refund is a "gift that keeps on giving". Combining the refund with the tax-free interest earned on the RRSP over the subsequent years will quickly outpace the short-term interest costs of the RRSP loan.

4. Increase the frequency of your payments
Make accelerated bi-weekly payments to get a "free" principal reduction equivalent to one full mortgage payment every year — painlessly.

It pays to have a mortgage reduction strategy in place. Call me today for expert advice on how to pay off your mortgage sooner.

Rick Moran, AMP, OMB # M08001997

Money Saving Tips on Paying Off Your Mortgage Faster – Part 2

2011-01-31T23:23:00.001-08:00

Last week I noted that homeowners have much to gain by paying off their mortgage as quickly as possible. By paying down extra principal in the early years of a mortgage, you can dramatically lower the interest you’ll pay throughout the life of the mortgage. Here are some additional tips on how to make this happen:

5. Make use of double-up privileges wherever possible
Tell yourself that you will "skip-a-payment" whenever necessary... then skip only when you absolutely must.

6. Round your payments up
By adding even a nominal amount of say, $10 per payment, the amount of interest you are saving will be unbelievable, and the extra money is relatively painless to part with.

7. Pay a lump sum whenever possible
By decreasing the principal of the mortgage, your payments will not be allocated as much to interest, thereby accelerating the end of your mortgage.

8. Keep payments the same when mortgage rates have fallen
If the payment amount has not been a problem so far, then keep it the same, thereby paying down the principal faster.

9. Raise payments in line with increased income on an after-tax basis
If your income increases, don't keep your mortgage payments the same. Although the disposable income may be fun to spend on unnecessary luxuries in the short-term, the long-term benefits of being mortgage free faster a far outweighs the short-term sacrifice

If there are any other related issues that you would like to discuss, I would welcome a call at (416) 418-8614

Rick Moran, AMP, OMB # M08001997

Money Saving Tips on Paying Off Your Mortgage Faster – Part 1

2011-01-25T11:58:00.000-08:00

Real Estate Industry Predicts Stronger Market due to Increased Demand and Lower Interest Rates in 2011

2011-01-25T11:57:00.000-08:00

The average price of a home in Canada increased between 3.9 and 4.6 per cent in the fourth quarter of 2010, compared to the previous year, as markets shrugged off a lackluster third quarter and returned to a post-recession growth profile.
Home values are forecast to continue a moderate and steady climb in many of the country's key housing markets through 2011 with sales activity skewed to the first half of the year, according to the Royal LePage House Price Survey and Market Survey Forecast released today.

Phil Soper, president and chief executive of Royal LePage Real Estate Services says, "2011 is expected to unfold much like 2010, when close to 60 per cent of sales volume occurred in the first half of the year in anticipation of interest rate increases that never materialized. However, housing market activity in the first half of 2011 will be modestly closer to the norm, as last year's phenomenon was exacerbated by mid-year tightening of mortgage accessibility and the introduction of HST in Ontario and British Columbia."

Rick Moran, AMP, OMB # M08001997

REACTION TO MORTGAGE RULE CHANGES

2011-01-25T11:56:00.000-08:00

Yesterday, Jim Flaherty announced changes to mortgage rules that will take effect on March 18. Following is my reaction to these changes:

Many industry leaders say that the changes announced were a measured approach to balance the Canadian real estate market, scale back consumer debt loads and reduce the looming threat of personal financial crisis for Canadians who would be in danger if rates increase the next few years. I believe that this is an overreaction, however the fact remains that the best advice continues to come from the expert Mortgage Broker.
I do predict that some sales will be pulled forward over the next 60 days as serious buyers close deals to preempt the changes ahead of the March 18th deadline.

Rick Moran, AMP, OMB # M08001997

The Yummy Mummy Club "Mummies Do Rule" By Rick Moran

2011-01-20T18:38:00.000-08:00

The Yummy Mummy Club is housing an article of mine entitled "Mummies Do Rule." Please feel free to read on or visit The Yummy Mummy Club's original post here.

The other day my partner (also my wife and a yummy mummy member) and I had a lively discussion surrounding the majority of the couples that we assist all year long (I head a team of Mortgage Consultants in the greater Toronto area).

Janice stated that she had done some research, looking into the thousands of people that we have assisted over the years. Her claims initially surprised me, that is, until I began to do my own research. I began to read, search and compile verifiable data and I made the most interesting discovery.

Over half of Canadian women say that they are responsible for most of the day-to-day financial decisions, according to MasterCards 2010 MasterIndex of Canadian Women Consumers. More than half of those enjoy their role as the primary decision maker.

The report examined the role of women over the age of 18 in Canada as well as looking at the effects of the global recession on consumer behaviour. "The recession was a financial marathon, but Canadian women emerged leaner, stronger and more financially satisfied," says Julie Wilson, Director, Public Affairs in a press release, "They are more confident in their financial situation. They are still spending, but they are now dollar-store chic."

Although the number of women who are responsible for the day-to-day household financial decisions was down to 51 percent from 2006's 55 per cent, more Canadian women enjoy that responsibility. Moms are the ones most likely to have the sole responsibility of day-to-day finances in their home, the study found. More specifically they are making the principal Mortgage Decisions.

Six in ten Canadian women are satisfied with their personal financial situation, with only 14 percent being very satisfied. This number is up from 54 percent in 2006.

Six in ten Canadian women are savers. Their stage of life often dictated how women spend their money. Over seventy per cent of Canadian women say that a good price is the most important factor when they are shopping for themselves and their households. For “New Earners”, brand name is a bigger consideration for moms when it comes to buying for themselves.

That data reverses when it comes to buying household items. The 2010 research was conducted by Environics Research Group from July 22 - August 4, via a national online survey of 2,000 adult Canadian women aged 18+.

Upon discovering this most interesting and verifiable phenomenon, I assembled the “team” and we began a review of over a thousand of the families that we have arranged Mortgages for over the past 10 years. In fact in our experience, over 64% of the ladies have made the final mortgage decision.

I humbly expressed my apologies to all of the girls involved on our team, and I surrender…Mummies do rule.

Further tightening of Mortgage rules not necessary say Brokers

2010-12-14T16:33:00.000-08:00

Finance Minister Jim Flaherty warned again on Monday the government could tighten mortgage rules further if needed, after a report showed the country's household debt levels have soared.

"As I've said before, if necessary, we will tighten the mortgage rules again. We keep an eye on the level of credit," he told reporters.

But Ottawa is not about to take immediate steps to curb household borrowing, he said, based on discussions with banks about default rates. The government has recently tightened mortgage rules twice.

"There is no reason for extreme concern now. There is reason for concern, so I watch," Flaherty said.

"Part of what I have to do is balance the amount of credit we see out there with the job creation that we see in the economy as well."

Colin Dreyer, President and CEO of Verico Financial thinks Canadians aren’t being given enough credit when it comes to fiscal responsibility.

“It seems to me that Canadian consumers are somewhat self regulating in terms of being fiscally responsible," Dreyer told Mortgage Broker News. "I think a further tightening of the mortgage rules at this time is not necessary as residential sales are already moderating based on the existing economic conditions.”

Earlier on Monday, Bank of Canada Governor Mark Carney flagged his concerns over household debt levels, which according to a Statistics Canada report on Monday surpassed household debt levels in the United States in the third quarter.

A lengthy period of low interest rates has prompted Canadians to rack up debt faster than their disposable income is growing. For the first time in 12 years, Canadian households now have a higher debt-to-income ratio than those in the United States. It hit a record 148% in the third quarter, new Statistics Canada data show.

Rick Moran, AMP, OMB # M08001997

SEVEN DIRECTIONS IN THE FUTURE OF THE MORTGAGE INDUSTRY

2010-12-08T21:14:00.000-08:00

As I constantly study trends in the industry, I like to pass on the really informative ones. Following is a very recent article by Deloitte, I find it informative, but I disagree with the number of households that will be using Mortgage Brokers – I will always maintain the importance of the relationship that is developed between the consumer and the talented Mortgage Professional. For over twenty years I have insisted on providing solid advice, preparation and complete disclosure at all times, ensuring a stress free experience..

Unlike the U.S. mortgage broker market, brokers will remain a fixture in the Canadian mortgage distribution landscape, and Canadian mortgage holders will ultimately benefit as a result, says a new report by Deloitte.

“The Canadian mortgage industry is undergoing another significant paradigm shift,” says Todd Roberts, consulting partner and leader of the corporate strategy practice for Deloitte. “In the face of significant industry developments such as the recent credit crisis, industry consolidation and price competition, many banks and non-bank lenders are starting to seriously evaluate the economics involved in pursuing the mortgage brokerage channel. As more and more of these lenders enter this business, Canadian mortgage consumers will ultimately benefit in the form of increased choice of products, value-added advice and more convenient services.”

The future for the mortgage broker channel in Canada remains positive, although the scenario anticipated five years ago where mortgage brokers were expected to represent the majority of origination volume is unlikely, says Deloitte. The channel will continue to stabilize, settling at approximately one-third of mortgage origination dollar volume, it says.

In response to consumer group concerns that mortgage prepayment penalties are complicated and lack disclosure, the federal government has stated its intention to standardize its calculation and disclosure. The typical repayment penalty is either three months’ interest or the difference between the existing rate and the rate the lender could charge in the current environment – known as the interest rate differential (IRD). In a rapidly falling rate environment, the IRD method provides the lender with greater compensation for the foregone interest revenue, but it is typically more expensive for borrowers who plan to discharge their mortgages.

“If new government regulations remove the IRD penalty as a barrier to switching, more consumers will likely switch mortgages in periods of declining interest rates,” says Roberts. “In the absence of stiff payment penalties, lenders will therefore seek to minimize lost customers by building strong relationships through active cross-selling and retention strategies for at-risk groups.”

According to Deloitte, emerging trends that are expected to shape the Canadian mortgage industry and ultimately impact Canadian mortgage holders include:

1. The balance of power will shift from financial institutions to mortgage-seeking Canadians. As the mortgage lending landscape continues to shift, Canadians will have access to a wider range of options when selecting a mortgage. This has increased competition among lenders (bank branches, mobile mortgage specialists, independent mortgage brokers, and online sources) which in turn will result in more customer-friendly service, increased product offerings and convenience for Canadians seeking a mortgage.

2. Online and telephone banking will continue emerging as viable channels. Remote self-service options such as online and telephone banking are emerging as popular alternative channels for obtaining mortgages. Given the new level of sophistication telephone banking has recently achieved, Canadians no longer need to leave home to obtain a mortgage because some lenders are allowing borrowers to complete their mortgage applications using a voice signature. In addition, online features such as calculators, planning tools and live chat options with lenders are giving Canadians access to more information than ever. Although these channels are not new, they are in the early stages of adoption and signify an important trend for Canadians interested in the self-service option.

3. Mortgage brokers will evolve from “rate shoppers”’ to “advisors” in order to survive. Given that Canadians now have increased access to mortgage rate information, mortgage brokers as “rate shoppers” is quickly becoming irrelevant. As such, the “mortgage broker as advisor” value proposition will be the most successful approach for this channel. To succeed in today’s hypercompetitive marketplace, mortgage brokers will start to offer value-added advice to Canadian mortgage holders similar to the way investment brokers have evolved from transactional to advice-based roles.

4. Major banks will continue to compete for broker business. Major banks will continue to invest heavily in proprietary distribution to compete directly with the mortgage broker channel, and to a growing extent, each other. In particular, the emergence of bank mobile mortgage sales forces (MMSF) is challenging the perception of brokers as the low-rate/better customer service alternative (particularly among non-branch/monoline lenders). As a result, bank MMSF are making major inroads due to convenience and customer service. Armed with differentiated products, more than 2,800 mobile mortgage sales agents are operating in Canada today. The evolution of MMSF and the role major banks choose to play in the broker channel will have significant implications for the future of broker originated lending in Canada. If banks choose to stay in the broker channel, Canadians will have more choice and competitive pricing. Brokers will also need to raise their game and increase their level of client service sophistication. However, if banks withdraw from the channel, it will dramatically restrict the supply of mortgages in the broker channel.

5. Investments in technology will benefit consumers in terms of speed and convenience in obtaining a mortgage. As more lenders make technological advances, quick turnaround and visibility on deal status will improve, ultimately benefiting consumers. Improvements to workflow management tools streamline back-office operations, facilitate accurate and timely front-end communication with consumers, and allow lenders to proactively handle exceptions and reduce turnaround times. For example, if a borrower wants to know whether they can increase their mortgage to win a bidding war, the lender can now evaluate the risk and provide them with an answer within four to six hours – compared to the several days it used to take using a manual process.

6. The super-broker networks will continue to consolidate. In recent years, increased competition, heightened compliance requirements and rising technology costs have pushed the broker market to consolidate, with smaller shops merging into super-broker networks. In 2005, almost 70 per cent of Canadian brokers were employed by one of five broker houses. Today, this figure tops 85 per cent as new mid-tier networks have emerged. As a result, the quality of the remaining firms is much higher (for example, more consistent training for brokers, better technological enablement, greater negotiating power with large lenders on behalf of consumers for better products and rates).

7. Niche lenders with specialized product offerings will emerge via the broker channel. As the participation of new lending institutions in the mortgage broker channel continues to evolve, niche lenders with specialized products will emerge via the broker channel. In doing so, they will provide new options to groups of Canadians who previously had few mortgage options available to them due to their financial circumstances (for example, new immigrants, the self-employed and individuals with credit challenges).

Rick Moran, AMP, OMB#M08001997

WHY IT PAYS TO STAY IN TOUCH WITH YOUR MORTGAGE BROKER

2010-12-08T10:05:00.000-08:00

When you were researching your options for your current mortgage, you probably spent a fair bit of time speaking with your mortgage broker. You may not realize that your mortgage broker can still be a valuable resource many years from now.

1. Your broker understands your needs. Whatever situation you might find yourself in as a homeowner, your broker has extensive experience providing with mortgage advice to others in similar scenarios, whether it’s buying, selling, or refinancing.

2. Your broker understands the market. You can count on an independent view of what’s happening in the markets. Your broker stays on top of the trends in real estate financing and other economic conditions and is aware of new developments and products that could be useful to you.

3. Your broker is a source of advice and knowledge about refinancing. If you’re thinking of refinancing, your mortgage broker is one of the first people you should speak to. He or she will again review your goals and outline your options, so you can make an informed decision.

4. Your broker can refer you to good people. Your mortgage broker regularly works with lenders, real estate agents, home inspectors, and lawyers who specialize in real estate. If you ever need a referral – for example, if you are looking for a real estate agent to help you find your next home – your broker can provide you with recommendations.

Rick Moran, AMP, OMB # M08001997

BANK OF CANADA KEEPS KEY RATE UNCHANGED

2010-12-07T10:41:00.000-08:00

The Bank of Canada said today that it will leave its key interest rate unchanged. In its statement this morning the Bank pointed to risks to a rebound in Canadian exports based on “a combination of disappointing productivity performance and persistent strength in the Canadian dollar.”
The Bank stated that keeping its key rate steady “leaves considerable money stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada,” and that any further increases “would need to be carefully considered.”

Earlier this year, the Bank had raised its key interest rate three times since June, but it also kept borrowing costs steady on October 19, noting some uncertainties in the economic outlook and continuing weakness in the U.S. economy.

Today’s Bank of Canada announcement means that Canadian lenders are expected to keep their prime lending rate steady. Products typically linked to a lender’s prime rate include variable-rate mortgages, variable-rate credit cards, and home equity lines of credit. The pricing of fixed-rate mortgages, on the other hand, is more affected by trends in the bond markets.
In the U.S. Ben Bernanke is investing $600 million in government bonds that he believes will provide an injection directly into the U.S. economy. Correct or not, this indicates to me that the U.S. prime rates are unlikely to move anywhere in the near future.

Rick Moran, AMP, OMB # M08001997

HOME OWNERSHIP AFFORDABILITY IMPROVES (PART 1: CANADA)

2010-11-29T18:49:00.000-08:00

After four consecutive quarters of rising homeownership costs, housing affordability improved in the third quarter of 2010 thanks primarily to a drop in mortgage rates and some softening in home prices, according to the latest Housing Trends and Affordability report released today by RBC Economics Research.

"The improvement in affordability during the third quarter has relieved some of the stress that had been mounting in Canada's housing market over the past year," said Robert Hogue, senior economist, RBC. "After appreciating rapidly during the strong rebound in resale activity last year and early this year, national home prices recently came off the burner and retreated modestly as market conditions cooled considerably through the spring and summer."

RBC notes that affordability could well improve further in the near term, with additional cuts in the posted five-year fixed rate already in place in the early part of the fourth quarter and previous home price increases still being rolled back in certain markets.

However, RBC expects the Bank of Canada will resume its rate hiking campaign by the second quarter of next year, which will eventually have a more sustained upward effect on mortgage rates.

Rick Moran, AMP, OMB#M08001997

HOME OWNERSHIP AFFORDABILITY IMPROVES (PART 2: ONTARIO)

2010-11-29T18:47:00.000-08:00

Home Ownership Affordability Improves (Part 2) Ontario
After four consecutive quarterly increases, the cost of homeownership declined in Ontario in the third quarter thanks to lower mortgage rates and some softening in property values. RBC's Measures fell between 1.3 and 2.4 percentage points, fully reversing the increase in the second quarter.
Existing home sales ended their precipitous slide confirming RBC's earlier expectation that the slowdown in activity through the spring and summer largely reflected various transitory factors - including the HST and changes in mortgage lending rules - that spurred demand at the start of this year. With the market now back in balance, the recent softness in home prices will likely prove to be a healthy recalibrating following a strong rally.
Contacting your Mortgage Professional and spending quality time planning is the most important component in your quest for a healthy financial future.
Rick Moran, AMP, OMB#M08001997

FIVE WAYS TO PAY OFF YOUR MORTGAGE FASTER

2010-11-29T18:46:00.002-08:00

For most of us, paying off a mortgage as quickly as possible is a priority. Here are some ways to pay down extra principal early on, to shorten the life of the mortgage and the interest you'll pay over the years.

1. Round your payments up – this little extra adds up over time.

2. Pay a lump sum whenever possible. Set up a separate Bank Account earmarked for the lump sum payments only.

3. Increase payments when you get a raise.

4. Make bi-weekly payments – you’ll end up paying more toward the principal each year.

5. Keep payments the same when mortgage rates have fallen, particularly when you are in a Variable Rate Product.

Rick Moran, AMP, OMB#M08001997

WOMEN MAKING THE FINANCIAL DECISIONS IN CANADIAN HOUSEHOLDS

2010-11-29T18:46:00.001-08:00

Over half of Canadian women say that they are responsible for most of the day-to-day finance decisions, according to MasterCard's 2010 MasterIndex of Canadian Women Consumers. More than half of those enjoy their role as the primary decision maker.

The report examined the role of women over the age of 18 in Canada as well as looking at the effects of the global recession on consumer behaviour.

"The recession was a financial marathon, but Canadian women emerged leaner, stronger and more financially satisfied," says Julie Wilson, Director, Public Affairs in a press release, "They are more confident in their financial situation. They are still spending, but they are now dollar-store chic."

Although the number of women who are responsible for the day-to-day household financial decisions was down to 51 percent from 2006's 55 per cent, more Canadian women enjoy that responsibility.

Moms are the ones most likely to have the sole responsibility of day-to-day finances in their home, the study found. More specifically they are making the principal Mortgage Decisions.

Six in ten Canadian women are satisfied with their personal financial situation with only 14 percent being very satisfied. This number is up from 54 percent in 2006.

Six in ten Canadian women are savers. What stage of life often dictated how women spend their money. Over seventy per cent of Canadian women say that a good price is the most important factor when they are shopping for themselves and their households. For 'New Earners' brand name is a bigger consideration than for moms when it comes to buying for themselves. That data reverses when it comes to buying household items.

The 2010 research was conducted by Environics Research Group from July 22 - August 4, via a national online survey of 2,000 adult Canadian women aged 18+.

Rick Moran reports that over 60% of their clients decisions are made by the lady of the house.

Rick Moran, AMP, OMB#M08001997

EXCLAIM.CA x Rick Moran Article

2010-11-25T19:47:00.000-08:00

By Allison Outhit

Rick Moran (www.rickmoran.ca) has over 20 years experience and is part of a select group of Mortgage Professionals in Canada that hold an Accredited Mortgage Professional designation. He has worked with a number of arts and media professionals and as a regular guest on Newstalk 1010 AM radio Toronto, Rick has assisted thousands of listeners with their financial questions.

Do musicians have particular issues when it comes to getting into the real estate market?
What I have found is that anybody who’s young and/or struggling at all seem to be of the same mind, which is "I will never be able to buy a house or qualify for a mortgage.” That is in fact 90 percent of the time just not the case. I specialize in self-employed people who have had a decent past credit history and who are self-employed and that transfers instantly to the music industry and the arts.

What should young artists think abut to get on the right path?
It’s very important that they establish a credit history that’s healthy and on an ongoing basis make some sort of plan to budget to buy real estate. I am a firm believer in investing and to take it a step further, invest your money in real estate.

What are the chief obstacles for musicians who don’t think they can do it?
It’s education, it really is. To give you an example: the mortgage brokerage industry in Canada has become very much not fee-generated. We used to charge fees in order to place mortgages on people’s behalf. Today the industry has morphed greatly, and our compensation for the most part is done with AAA business being given to some 50 lenders in Canada who pay us a commission for placing a mortgage with them. In most cases if you have good credit history and you have a good go to the bank deal, there will be no charge from the mortgage broker. My best interest rate will be much better than what their bank’s rate is, and over a five-year term it’s monster money. So the message is, we are able to do much better without it costing you any money to do it. The challenge is getting this message out to the entertainment industry: we are professionals with a very good understanding of how credit works and will not hesitate to spend our time providing advice or counselling to help people get where they should be. And it’s firmly my belief that everyone should own a piece of real estate.

Why?
It would make our country much healthier and make the general population much happier. There comes with ownership of real estate a level of pride that a renter will ever have. It’s much more than just having it for your retirement. As long as it is possible to access your day-to-day world, find something in your price range that is accessible somehow. Buying properties jointly [with band members] is not a bad idea, and there’s no reason why that couldn’t be done. You have to start somewhere.

RESTRUCTURING YOUR CREDIT - MAKING LIFE MORE AFFORDABLE

2010-11-25T19:44:00.000-08:00

One of the most important life situations is the disposable income. Many households through, day to day living find themselves accumulating debt. Loans, credit cards and the ``don`t pay a cent event`` can accumulate resulting in living paycheque to paycheque making life and affordability very difficult.

Using the equity in your home can make a huge difference in your daily lives. Following is an example of a real situation using the actual numbers, and how I helped my clients get their lives back.

Current Situation

Mortgage: $130,000 @ 4.99% payments $ 789

Credit Cards: $55,000 @21% (average) Payments $1,650

Loan: $40,000@ 6% Payments $ 772

Don’t Pay a Cent $15,000 No Payments – due now

Totals: Payments $ 3,211

$3,211 per month with $15,000 due or converted to 29.9% interest

This is how I restructured everything:

New Mortgage: $245,000 @ 3.59% with payments of $1,235 per month. The new mortgage reflects any costs to arrange the new mortgage (legal,appraisal) and the client ultimately saved $1,976 per month.

This is what I call giving your clients their lives back.

Rick Moran, AMP, OMB#M08001997

USA MORTGAGE MARKETS

2010-11-25T19:43:00.001-08:00

As we move toward the end of 2010, we look to check on the current conditions in the United States housing markets.

The number of U.S. households behind in their mortgage payments fell during the third quarter to 13.52 per cent from 14.42 per cent in the second quarter, reported the Mortgage Bankers Association on Thursday November 18, 2011. It was the lowest delinquency rate since the beginning of 2009.

Delinquencies declined during the summer months because bankers reduced how many were seriously behind their mortgages by offering loan modifications. Seriously delinquent mortgages—those that are three or more months overdue—fell during the third quarter to 8.7 per cent of all loans from 9.11 per cent in the second quarter, said the bankers group.

The report “is clearly good news, but perhaps we should wait” another quarter before concluding that the delinquency decline is permanent, said the BMO Capital Markets to The New York Times. None the less, it is a positive rather than a negative trend.

Rick Moran, AMP, OMB#M08001997

REAL ESTATE MARKET INFORMATION FOR FIRST TIME BUYERS

2010-11-25T19:42:00.001-08:00

Research done by a major Canadian Chartered Bank indicates that almost half of the first time homeowners in Canada believe it is now time to buy a home. The report went on to say that prices are expected to rise by 8% in the next year slowing to about 1.5% later in the frame.

Interest rates remain at record lows, with 5 year money available: fixed 3.59% (Nov 23/10) and variable 2.25% (Nov 23/10). These interest rates should be available from your reputable mortgage consultant without any brokerage fees.

Consultation and proper planning with your mortgage broker professional makes home ownership a real possibility for 2011. Discuss budgets, carrying costs and closing costs ensuring that you are completely comfortable about the entire process. This is the most important responsibility of the mortgage broker that you deal with. Always remember that your mortgage broker has access to over 40 Institutions in Canada – make use of them.

Rick Moran, AMP, OMB#M08001997

RENOVATION LOANS

2010-11-25T19:41:00.000-08:00

When considering a Home Renovation Loan the first order of your plan should be to find a Mortgage Consultant that specializes in this type of product. Failure to find the right individual can result in unmitigated disaster. The structure and advance in addition to the draw schedule and conditions are the key to the successful fruition and a stunning completed result.

The Appraisal Institute of Canada has provided the following as a guideline as a general rule of return on specific home renovation projects:

Bathroom renovation: 75% to 100%
Kitchen renovation: 75% to 100%
Installing a deck: 25% to 75%
Exterior siding: 50% to 75%
Flooring upgrade: 50% to 75% (hardwood and slate/granite only apply
Basement renovation: 50% to 75%

My specific advice when arranging your renovation loan: have a starting position, conditions arranged, and a satisfactory conclusion for all terms of the loan.

Rick Moran, AMP, OMB#M08001997

SELF EMPLOYED FINANCING(Part 1)

2010-11-25T19:39:00.000-08:00

Part 1

In lean economic times, the “Banker” is not always your best friend. In many cases, you will be dealing with people that have always had a regular paycheque, and therefore do not completely understand the concept of having receivables 30 or more days out. In simple terms, if you need credit, and you are self employed, the answer is most often “no” (after they study your documents for 2 weeks)

The experienced, connected mortgage broker has Lenders that will look at the equity position that you may have in your current property, or, the down payment available and grant the Loan/Mortgage instantly.

The mortgage broker will review the entire situation with you – the client; make their best recommendation, and secure the maximum loan available to make everything easiest for you - the client.

More in Part 2...................

Rick Moran, AMP, OMB#M08001997

SELF EMPLOYED FINANCING (Part 2)

2010-11-25T19:38:00.000-08:00

Part 2

Self Employment comes in many forms. You may own your own business, be a contractor, or rely on commissions as your sole source of income. As I said in my last entry, obtaining credit in lean times is very difficult when dealing with a conventional banker.

I recently had a situation where my client was the owner of a business with no debt, worth millions of dollars, yet for tax and divorce reasons chose to defer 1 years worth of income. It was mortgage renewal time, and his bank responded with “we will reluctantly renew this mortgage with a 1% fee and a 2% rate premium”.

At the end of the day, after an extensive meeting, we decided upon a new variable rate mortgage to pay out the existing first mortgage and a large personal line of credit (at prime plus 2.0%) combining the two into a new first mortgage loan at 2.25% (prime less .75%)

The moral of the story: Contact an experienced, knowledgeable mortgage broker with great references.

Rick Moran, AMP, OMB#M08001997

THIS WEEK'S "FOR YOUR INFORMATION"

2010-11-25T19:36:00.000-08:00

The Toronto Dominion Bank has instituted a new policy effective immediately on all mortgage and credit products secured by real estate.

For many years all Canadian Banks, Trust Companies, Mortgage Bankers and Life Companies that lend in Canada calculated their interest semi-annually not in advance (this means the interest calculation is made twice per year).

The new TD way allows for the interest to be calculated monthly, twelve times per year. It also allows them to demand the balance at any time or to change the rates (and I mean increase if they feel like doing so).

Really Fair, be aware

Rick Moran, AMP, OMB#M08001997

POWERFUL INFORMATION FOR FIRST TIME BUYERS

2010-11-25T19:32:00.000-08:00

Buying a home is the single most important investment that you will make in your lifetime. This is a seriously good time to consider buying, before doing so there are two things that you absolutely MUST do.

The first is to find a really reputable Mortgage Broker. He or She must have many years of experience, and I would urge you to do the following; check them out thoroughly, ask to view their website. If they don’t have one, or it is a corporate jumble, take a pass. You want to feel comfortable, taken care of, read the testimonials and make your decision. You must know that the successful broker deals with over 40 Lenders in Canada, not just the one off products the Banker’s representatives typically access.

Finally, find a broker that has access to a Financial Planner. One that will spend the time to explore all of your options in conjunction with the “entire team”. Terms and all costs associated with your purchase must be disclosed. This is supposed to be a happy joyous experience. With the right group of people guiding you it will be an incredible memory.
Good Luck!!!

Rick Moran, AMP, OMB#M08001997