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
Monday, November 29, 2010
HOME OWNERSHIP AFFORDABILITY IMPROVES (PART 2: ONTARIO)
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
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
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
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
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
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
Thursday, November 25, 2010
EXCLAIM.CA x Rick Moran Article
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
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
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
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
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
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
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
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
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)
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
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)
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
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"
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
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
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
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
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