Monday, September 24, 2012
It's a messy mortgage world out there. There are umpteen different lenders and so many different mortgage rates, features and options... that it's hard to find the one that fits. And while we are experts at sorting through your options, we came up with a better idea: let's develop our own mortgage, so we did. It's called Partner Mortgage, and it's owned exclusively by Mortgage Intelligence.
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Gordon Isfeld | Financial Post Sep 21, 2012
OTTAWA — Could it be time for the Bank of Canada to re-write its script?
Inflation has been waning — despite upward pressure from energy prices and higher food costs — while the economy is cooling, as is the housing market.
The central bank, however, has stubbornly stuck to its rate-hike-sometime-but not-quite-yet policy, with very few edits of its statements along the way. Two years on, its key lending rate remains near rock bottom.
Still, policymakers insist this will not last, and that borrowing costs eventually must go up. Others, and the other hand, see little reason to move on rates until the global economic storm clears — and that could be a long way off.
Inflation is the key focus of the Bank of Canada, which uses its lending rate to steer consumer price rises toward 2% — the midway point of its 1%-to-3% comfort zone.
But in August, overall consumer prices rose at an annual rate of just 1.2%, down from a year-over-year advance of 1.3% the previous month, Statistics Canada reported Friday.
The report also showed that core inflation — stripping out volatile items, such as some energy and food products — slowed to 1.6% on annual basis from 1.7% pace in July.
On the same day, the federal agency reported wholesale sales — a key indicator of the health of the economy —fell 0.6% to $49.5 billion in July, after a 0.3% drop in June.
Other data this week showed house prices in Canada rising at a slower pace and sales beginning to decline, due for the most part to the federal government's recent tightening of mortgage rules.
"With core inflation tracking well below the Bank of Canada's Q3 forecast, the housing market softening and the Fed stepping harder on the monetary accelerator, rate hikes in Canada remain at least a year away," said economist Robert Kavcic, at BMO Capital Market.
Financial markets have also factored in a stay-as-you-are rate scenario until late 2013 or early 2014, according to Craig Alexander, chief economist at TD Economics.
Even so, he said Friday's report is "consistent with the Bank of Canada's forecast for inflation. They continue to believe inflation will gradually rise over the coming year and the core metric will be close to 2% in roughly a year's time."
The data "won't change the thinking at the Bank of Canada at all, even though the rate of inflation is below target."
Capital Economics, however, expects core inflation to continue declining in the coming months "as external and domestic risks dampen GDP growth. With unemployment likely to rise as a result, we expect the Bank of Canada soon to drop all pretenses about removing policy stimulus."
Bank governor Mark Carney will have an invitation-only chat with CEOs and other corporate players on Monday in Ottawa, but he has no public appearances scheduled in the coming month.
So, the next time we hear from Mr. Carney and other bank policymakers will be Oct. 23, when they announce their latest interest-rate decision. That will be followed the next day by the release of their Monetary Policy Report, a quarterly look at the economic factors and price trends behind the bank's thinking.
The bank's trendsetting interest rate has been on hold at 1% since September 2010, close to a record low. And the wording of the statements accompanying its rate decisions has not varied in recent months, maintaining that "some modest withdrawal of the present considerable monetary policy stimulus may become appropriate."
More key economic data in the coming week could support the view that the bank will tweak — if ever so slightly — the wording of its next rate statement toward a more neutral stance. In other words, watering down the "some modest withdrawal . . . may become appropriate" reference.
On Tuesday, Statistics Canada reports retail sales numbers for July, followed on Friday by the July reading on economic growth.
TD's Mr. Alexander said "the financial-market focus will be on the [central bank's Oct. 23] communiqué and the guidance they're providing about the future."
"You could certainly make the case for the Bank of Canada to adopt a more neutral set of language in their forward-looking statement, but I don't think they're going to."http://business.financialpost.com/2012/09/21/as-inflation-falls-time-for-the-bank-of-canada-to-hike-rates/
Tuesday, September 11, 2012
Barbara Shecter, National Post
Friday, Sept. 7, 2012
Friday, Sept. 7, 2012
There are signs Canadians are listening to the urging of government and regulators to get household debt under control, and the Bank of Canada could respond by raising interest rates "well before the end of 2013," according to a report released Friday by Moody's Analytics.
"Should a stronger and more sustained improvement in economic growth commence, it will not likely be met with continued monetary accommodation. We expect the bank to start raising rates well before the end of 2013," said the report written by Bodhi Ganguli, an economist on the international team at Moody's Analytics.
The Bank of Canada held its benchmark rate at 1% in September, but, unlike the U.S. Federal Reserve, it has not hinted at further economic stimulus or pledged to hold rates at their current record lows through the end of 2014.
"With GDP growing broadly in line with the projections, the [Canadian central] bank remains relatively bullish on Canadian domestic demand," noted the report by Moody's Analytics, which is a sister company of the global ratings agency.
While it is still early days for the latest moves by Ottawa to cool demand in the country's hot housing market and persuade Canadians to reduce household debt levels that far outstrip disposable income, there are signs restraint may be taking hold, according to Moody's Analytics.
Following two months of strong growth, the number and value of Canadian building permits fell in July. On a seasonally adjusted basis, permits dropped 4.9%.
"While a single month's data do not prove a trend, July's numbers could signal slower growth in Canadian housing as builders respond to diminishing demand," said the report, which notes that its commentary produced by Moody's Analytics is independent and does not reflect the opinions of credit ratings agency Moody's Investors Service Inc.http://www.financialpost.com/m/wp/news/fp-street/blog.html?b=business.financialpost.com%2F2012%2F09%2F07%2Fcanadian-rates-could-rise-well-before-the-end-of-2013-report
Monday, September 10, 2012
Tips to save thousands!
Early and often: that's the best way to pay down your mortgage, save thousands and cut years off your debt. There are a few ways to boost your mortgage paydown:
Make your house pay. Put a dent in your debt by adding revenue. Consider renting out part of your home, or taking in a roommate to help off-set expenses. Rent out an extra parking space if you have one. Or talk to your accountant about whether you can write off a room in your home as an office for your home business – then throw your tax savings against your mortgage each year!
That brings us to the best tip: Accelerate your payments. A mortgage is probably the largest debt you will ever take on. Every payment decreases the amount of interest you owe – so make a plan to pay down faster. Get in the habit of making lump sum payments whenever possible; put work bonuses or cash gifts directly against your mortgage principal. Every payment after that will be worth more. And if you're paid twice-monthly, divide your monthly payment into two and make them every time your paycheque comes in. Believe it or not, frequency makes a huge difference over the life of your mortgage.
Tuesday, September 4, 2012
Jill Krasny, Business Insider | Sep 1, 2012
It's a first-time home buyer's dream: Snag a rundown house in a terrific neighborhood, and then revamp it to your heart's content.
But fair warning, that fixer-upper could become your worst nightmare.
"You have to really know what you're getting into," says Zillow.com real estate expert Brendon DeSimone. "It could be the case where it seems like a good price and then you dig deeper and find that the windows are off, the electrical foundation is messy, and so on."
Translation: You could wind up spending more than you bargained for.
We asked DeSimone to list the pros and cons:
PRO: More room for upside
Fixing up the bathroom or kitchen will add value to your home, especially if you snagged it below market price.
"You're not buying the top of the top appliances and finishes," says DeSimone, so "there's room to renovate it, and it's going to cost less. You're building equity into the place as you fix it up."
CON: You might go overbudget
Beyond the stress of waking up to the sound of power drills, there's the issue of going over budget, something that's easy to do with fixer-uppers.
"The home may seem lower than the neighborhood, but when you get into it, it could actually end up costing a lot more," says DeSimone.
An inspector could find one problem that leads to another, or say some repairs can't be completed until the rot is cleared, the plumbing's installed, etc.
Putting a personal stamp on a house is what makes it a home. And with a fixer-upper, "you can customize it and pick out exactly what you want," says DeSimone. "You're not getting somebody else's curtains, carpet and light fixtures."
CON: You might get stuck with it
"If you're in a bind and things happen, you lose your job and you've gone overboard, what's your exit strategy?" says DeSimone. "You might not be able to sell the house quickly," especially in a down market.
His rule: If you're not planning to stay in the house for at least five to seven years, "don't be buying."
Carrying costs, or the cost of "carrying a home" while you rent another, can also add up. This is especially true of fixer-uppers that require new additions or construction, where the homeowner can't be nearby.
"You may have bought the home with a loan, but then you'll have to get a construction loan on top of it," DeSimone says. "If you're carrying it for two years, that's two years of carrying this, plus paying your old rent."
PRO: A cheap route to your dream neighborhood
A fixer-upper in a great neighborhood can get where you want to be. Per DeSimone: "If you can spend $375,000 and put some $75,000 into it, now you're in the neighborhood for $450,000 rather than $500,000." It's a great deal.
CON: It could wreck your relationship
For some couples, rebuilding a home is the ultimate bonding experience. Others find it utterly time-consuming.
"It's an emotional, physical stress, and I've seen it tear relationships apart," says DeSimone. "The husband might be all gung-ho while the wife's all focused on the baby."
Managing the renovation can be like a second, part-time job, where every worker feels spread thin."If things go wrong, people fight. You could be arguing over changes to the architecture drawings late at night," he says. http://business.financialpost.com/2012/09/01/the-pros-and-cons-of-buying-a-fixer-upper/