Category Archives: General Interest

The Ripple Effect: How the European Financial Crisis Will Impact Canadians

News of increased financial strain in Spain today has caused the Bank of Canada to brace for a ripple effect on the other side of the ocean. Any spillover from the increasingly vulnerable European market is expected to carry over to North American, rocking the fragile U.S. banking sector before it lands on the doorstep of Canadian homeowners.

Households with high debt will be the first to feel the impact. Already debt-burdened households could begin defaulting on their mortgages as historically low rates begin to rise and  banks begin to tighten their lending restrictions in response to growing uncertainty. From there, it’s a domino effect of job loss, a housing freeze and decreased market action. Continue reading →

Fewer First Time Home Buyers Could Signal Trouble

A recent report from Canada Mortgage and Housing Corporation shows that there are fewer first time home buyers entering the nation’s real estate market. The recently released Renovation and Home Purchase Report, which highlights the key trends, analyses and statistics from ten major Canadian cities, predicts that the housing market could be headed towards trouble thanks to a decreasing number of first time home buyers.  Continue reading →

Mortgage Rule Changes Not So Severe

The first round of changes to Canada’s mortgage rules were more bark than bite, according to a letter sent to the nation’s banks on Wednesday from the Office of the Superintendent of Financial Institutions. Earlier this year, mortgage experts speculated that new mortgage rules could have a dampening effect on hot real estate markets, as more and more mortgage applications would inevitably be rejected.

Draft guidelines released in March suggested that the OSFI would eliminate 100% financing using a 5 percent cashback mortgage as well as enforce stiffer regulations concerning loan-to-value ration calculations and stated income mortgages. The document also inferred that borrowers would be required to re-qualify each time their mortgage came up for renewal.

However, Wednesday’s announcement tells an entirely different story.

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Bank of Canada Keeps Overnight Rate Locked

The Bank of Canada announced that it would maintain its overnight rate of 1 percent this morning, thanks to disproportionate growth in the Canadian economy. According to the official release from the Bank, economic growth in Canada was slightly slower than expected in the first quarter of 2012. Even so, the underlying economic momentum appears largely consistent with projected expectations. As such, the latest release from the Bank appeared to ease up on the possibility of an imminent rate hike. However, the overall tone of the piece did little to dispel the fact that rates will increase eventually.  Continue reading →

Rates on the Way Up

Canada’s major banks have begun to increase rates, putting an end to near-historical lows across the country. News broke on Monday that several banks would be increasing their rates by 6/10ths of a percentage point, signifying a shift in the real estate market.

The largest increase was attached to the popular five-year fixed closed rate. The posted rates at Royal Bank, Laurentian Bank and TD Canada all went up from 5.25 percent to 5.85 percent. Of course, posted rates are routinely discounted. As such, RBC’s new discounted rate for the five-year term also increased 6/10ths of a percentage point to 4.59 percent. TD discount mortgage rates now sit at 4.55 percent, while the discounted rate at Laurentian is holding steady at 4.54 percent.  Continue reading →