Tag Archives: Mortgage

Home Prices Rise for Second Consecutive Month: Teranet

 

According to the latest numbers the correction of housing prices late in 2010 seems to have been a short-lived phenomenon, as for the second consecutive month prices increased overall in four of six Canadian metropolitan markets. 

Canadian home prices in January were up 0.4 per cent from the previous month, according to the Teranet–National Bank National Composite House Price Index. It was the second consecutive monthly rise, following on three consecutive monthly declines. January prices were up from the previous month in four of the six metropolitan markets surveyed: 0.9 per cent in Vancouver, 0.5 per cent in Toronto, 0.4 per cent in Halifax and 0.3 per cent in Montreal. Prices were down 0.6 per cent in Ottawa, a fifth straight monthly decline, and one per cent in Calgary, a fifth decline in six months.

 

“January’s price increase confirms that the correction experienced towards the end of 2010 was short-lived,” said Marc Pinsonneault, senior economist with National Bank Financial Group. “In fact, market correction is now a local phenomenon (Ottawa and Calgary). At the national level, January’s prices were still one per cent below those in August 2010, but they were 5.5 per cent above their pre-recession peak.”

 

The 12-month gain in the composite index slowed to 3.9 per cent in January, the seventh consecutive month of deceleration. The largest 12-month rise was 8.2 per cent in Halifax. The 12-month increase was 6.4 per cent in Montreal, 5.3 per cent in Ottawa, 5.1 per cent in Vancouver and 3.9 per cent in Toronto. Only in Calgary were prices down from a year earlier, by 3.4 per cent.

 

Data for February from the Canadian Real Estate Association show generally balanced conditions in major urban markets. Relative to the average, conditions in Calgary were better for buyers and conditions in Vancouver better for sellers, a finding consistent with the movement of the Teranet–National Bank indices for these markets. The Toronto market is no longer tightening. Between January 17, when the federal minister of finance announced that the maximum amortization period for an insured mortgage would be reduced to 30 years from 35 years, and March 18, the announced effective date, the resale market may have been influenced by the prospect of this change.

 

According to Pinsonneault, market conditions are currently balanced in Canada. However the situation differs among regions. Conditions look somewhat tight in Vancouver and Toronto, while they are still favourable to buyers in Calgary. While house prices are high relative to income and rents, and a reduction in the maximum amortization period for insured mortgages from 35 to 30 years took effect recently, “there is no perspective of a sudden and severe price correction in Canada, given the fact that employment is well into expansion territory,” said Pinsonneault.

Source MortgageBrokerNews.ca   
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February 2011 Housing Starts

 

CMHC annouced today:“The seasonally adjusted annual rate of housing starts was 181,900 units in February, according to Canada Mortgage and Housing Corporation (CMHC). This is up from 170,600 units in January 2011.“Housing starts moved higher in February because of increases in Ontario and the Prairies,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “The bulk of this increase was felt in the multiples segment. From last month, multi-family starts were up in Saskatchewan and in Toronto.”The seasonally adjusted annual rate of urban starts increased by 9.4 per cent to 161,000 units in February. Urban multiple starts were up by 14.5 per cent in February to 94,900 units, while single urban starts edged higher by 3.0 per cent to 66,100 units.

February’s seasonally adjusted annual rate of urban starts decreased by 24.7 per cent in Atlantic Canada, by 7.1 per cent in Québec, and by 5.9 per cent in British Columbia. Urban starts increased by 29.3 per cent in Ontario and by 26.1 per cent in the Prairies.

Rural starts were estimated at a seasonally adjusted annual rate of 20,900 units in February.

As Canada’s national housing agency, CMHC draws on 65 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.”
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Understanding your Credit Score

 

We thought it would be helpful to pass along a little information about understanding your credit score and some do’s and don’ts to be aware of. How you handle your credit now can affect your ability to get a mortgage as well as the rate you will receive.
 

 

Understanding your credit score 101

 

Driven by the financial industries desire for an equitable method of comparing the credit worthiness of borrowers, Fair Isaac & Co developed a credit measurement tool in the 1950’s called the FICO® score.

Now considered to be the industry standard, the FICO® score is used by most lenders from across Canada and the United States to assess lending risk.

 

 

 

 

FICO® score, BEACON® score, EMPIRICA® score

The three most recognized credit reporting agencies include Equifax, Experian and TransUnion, with Equifax being the most recognized agency in Canada. Known as a BEACON® score at Equifax, EMPIRICA® score at TransUnion and the Experian/Fair Isaac Risk Score at Experian, all use formulas developed by Fair Isaac & Co.

How is a FICO® score determined?

*In general terms, the FICO® score evaluates five main categories of information:

 

Payment history (35% of the overall score)

  • Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.).
  • Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items).
  • Severity of delinquency (how long past due).
  • Amount past due on delinquent accounts or collection items.
  • Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any).
  • Number of past due items on file.
  • Number of accounts paid as agreed.
 

Amounts owed (30% of the overall score)

  • Amount owing on accounts.
  • Amount owing on specific types of accounts.
  • Lack of a specific type of balance, in some cases.
  • Number of accounts with balances.
  • Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts).
  • Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans).
 

Length of credit history (15% of the overall score)

  • Time since accounts opened.
  • Time since accounts opened, by specific type of account.
  • Time since account activity.
 

New credit (10% of the overall score)

  • Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account.
  • Number of recent credit inquiries.
  • Time since recent account opening(s), by type of account.
  • Time since credit inquiry(s).
  • Re-establishment of positive credit history following past payment problems.
 

Type of credit used (10% of the overall score)

  • Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.).
 

Add it up and you get…?

  • Each of the above noted factors, along with others, are assigned a value and a weight. The results of these factors are then added up and combined into a single number. FICO® scores can range from 300 to 800. The higher the number the better.

In general terms, borrowers with reasonable credit typical have FICO® scores, which range between 600 and 800.

Comments:
A score takes into consideration all these categories of information, not just one or two.
No one piece of information or factor alone will determine your score.
The importance of any factor depends on the overall information in your credit report.
For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your score. Thus, it’s impossible to say exactly how important any single factor is in determining your score – even the levels of importance shown here are for the general population, and will be different for different credit profiles. What’s important is the mix of information, which varies from person to person, and for any one.
Contact FamilyLending.ca for more information.

Fixed Rate Mortgage or Variable Rate Mortgage?

 

Before we answer that question, it’s important to understand the difference between a fixed rate mortgage and a variable rate mortgage.


Fixed rate mortgage – A fixed rate mortgage is a mortgage where the rate of interest is fixed for a specific period of time. Generally known as the mortgage term, it usually ranges from between 6 months and 25 years. As time goes on, more of the mortgage payment goes towards the principal and less of the payment goes to the interest.


Variable rate mortgage – A variable rate mortgage is a mortgage that has fixed payments, but the interest rate fluctuates with any changes in interest rates. If interest rates go down, more of the payment goes to principal and if interest rates go up, more of the payment goes towards the interest.

So, which one is better?

Determining which one is better is as simple as looking at your ability to handle risk…


Here’s an easy test…

If you lose sleep worrying about the possibility of a .25% increase in the interest rate or get stressed thinking about the impact on your monthly budget if your monthly mortgage payment changes, then a fixed rate mortgage is for you.

You should also take the same test when choosing the length of the fixed rate mortgage term. If you breathe easier knowing that your mortgage payment is fixed for the next 5 years then a 5 year term is right for you.

It’s pretty simple, if you don’t like risk, then a fixed rate mortgage term is right for you.

Now if risk is not as much of an issue, then a variable rate mortgage is the way to go. Here’s why…

Based on a detail study completed by Moshe AryeMilevsky of interest rates from 1950 to 2000, consumers are better off, on average, financing a mortgage with a short term floating (prime) interest rate, compared to a long term fixed rate mortgage. A consumer with a $100,000 mortgage and an amortization period of 15 years would have paid $22,000 more in interest payments by borrowing and then renewing at the 5 year rate as opposed to borrowing at prime and renewing annually.

The bottom line:

Long term stability has a price, but if you can’t sleep, what good’s the money?

Don’t forget if you, a friend or family member have any questions about mortgage financing we are here to answer those questions and to work with you to arrange the best product to fit your specific needs and comfort levels.
Contact FamilyLending.ca for more information.

Beating Your Heating Bill

 

Wouldn’t it be nice if your home came without heating bills attached? Unfortunately it does not but… fortunately, there are tips out there that can help you lower your monthly costs dramatically.Domestic wizards over the years have come up with lots of money saving home remedies and quick fixes to help you lower your home heating bills.  From washing machine tips to conquering your thermostat, we’ve compiled some of these pearls of wisdom into a handy list for you!More extensive projects and fixes may require the service of a professional. We’ve come across some excellent resources and would love to share them with you if you’re in need of a referral.Here’s hoping these tips will save you big bucks and keep your wallet happy!

5 Ways To Beat Your Heating Bill
  1. Turn down your thermostat when you are sleeping or not at home.

For every degree you turn your thermostat down, you will save money. Installing a programmable thermostat can help raise the temperature of your home just before you wake up in the mornings so you are always comfortable.

2. Install ceiling fans or reverse the spin direction of your existing fan.

Reversing the direction of the blades on your ceiling fans pushes warm air down into the room. Fans should spin clockwise in the summer and counter clockwise in the winter.

3. Close off fireplaces when not in use.

When you are not using your fireplace, the dampers should always be closed. Having glass doors to close it off also helps, as fireplaces let more heat escape then they can generate. Consider this: Fireplaces are the same as having a giant hole in your wall.

4. Wash your clothes in cold water.

About 90 percent of the energy used in washing your clothes comes from heating the water – this accounts for about 16% of the average household energy bill. Moving your temperature setting from hot to cold can almost eliminate this expense.

5. Check and repair your caulking and weather stripping.

Try your best to reduce drafts in your home.  If you can pass a sheet of paper through the door jamb while it is closed, you need to replace your weather stripping. Fix up holes or deteriorating caulking that can allow drafts.
Contact FamilyLending.ca  for more information.