Department of Finance Housing Changes

Ottawa has announced new rules in response to concerns that some markets in Canada are overheated and that Canadian debt levels continue to increase. These changes are meant to alleviate risk in Canada’s housing market but may have a significant impact on the housing market, especially first time home buyers.

Here are the highlights:

Effective October 17th, all mortgages that require mortgage default insurance, which are typically those with less that 20% down payment, will now require borrowers prove they can qualify based on a higher mortgage rate set by the Bank of Canada called the “benchmark rate”. This measure was previously in place for mortgages with terms less than 5 years or variable rate mortgages, but will now apply to all mortgages, including 5-year fixed rate mortgages.
Effective October 3rd, a tax loophole that allowed non-residents to buy homes in Canada will be eliminated, and then get a tax exemption to avoid paying capital gains when they sell that home by claiming it as a principal residence. This increased scrutiny will ensure that the capital gain exemption is not abused, specifically by preventing non-residents from becoming residents then buying and selling a property in the same year.
The Government will continuously monitor the housing market to ensure that Canada’s housing finance system is healthy, competitive and stable by ensuring the market is balanced and appropriately reflects all parties’ abilities to share in the management of housing risks.

We are reviewing these changes for its deeper implications and will keep you informed. If you think that you may be impacted by these recent changes, please let me know so I can confirm that for you.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at WWW.GUYTHEMORTGAGEGUY.COM

Enterprise Cloud Solutions for the Banking Industry

Leveraging cloud computing is catching on with every business that is serious about their bottom line. Right now, some businesses are embracing it with more commitment than others. Banking, for instance, ever security-conscious, is one area of business that is being cautiously slow about this new technology concept.

But migrating to an infrastructure so virtualized can bear all the scrutiny it takes to finally convince boardrooms that it is here to stay, and offers enough guarantees and opportunities to merit enhanced usage. With a little forethought and preparation the migration to the cloud will meet the highest standards of security for any financial institution.

Here are three important ways that moving to the cloud can enhance financial transactions to the satisfaction of any and every financial institution:

Consolidated costs for IT are a big bonus of cloud-based banking. Banking consultant E. Michael Peterson says: “IT can be one of the biggest outlays for a bank or credit union. One of the reasons for this is the scattershot approach to data and security that IT often has to deal with — going from one platform to another to keep the whole system consistent and updated. Switching to the cloud offers a great consolidation key for IT expenditures. Legacy solutions no longer provide the cutting edge economy that only virtual infrastructure can provide. To stay ahead of the curve in technology, migrating to the cloud is essential.”

Cloud security has already surpassed that of legacy platforms. Installing the proper cloud deployment means that financial institutions can expect a much higher level of security than they can get with legacy solutions. This has been proved categorically. The cloud excels at public key infrastructure sustainability and SSL management technology. The financial industry must get past their ill-founded perception that virtual infrastructure, i.e. the cloud, is somehow still vulnerable to a host of cyber-invasive practices. As it grows in importance and sophistication, it also grows stronger in preventing any major hacking episodes.

Improved mobility is part and parcel of the cloud’s built-in flexibility. With more and more clients and managers demanding mobility upgrades because of its ease and timeliness, no business, and especially not banking, can afford to ignore where mobile technology is taking communications and transactions. More people now shop online from mobile devices than from their laptops or home computers. Millennials and younger demographics expect to conduct their daily banking on a mobile device, and this can best be achieved through the cloud. Guarding things like passwords, pin numbers, and personal information with the cloud while on a mobile device has never been more convenient and easier to maintain.

Reinforced by 20 years of experience delivering faxing over IP solutions, XMediusFAX®, now brings your enterprise cloud faxing capability, with XMediusFAX® Cloud. Cloud computing is no longer the future – it’s already here. Everything from business communications to delivering powerful solutions for close collaboration can be delivered as a cloud-based service available wherever and whenever you require.

 

 

 

 

Renewing your mortgage? Let’s talk.

Consumers are becoming much more informed about mortgages and mortgage products before taking the plunge into home ownership. According to the Canadian Mortgage and Housing Corporation’s (CMHC) 2016 Consumer Survey, 72% of mortgage consumers did online research, 65% compared various mortgage products with professionals and 69% used a mortgage calculator.

Because consumers are highly engaged, they are more confident about their mortgage decisions, according to the survey. Still, with all that research, more than half contacted a mortgage broker to get further clarification. This is a good move, considering how much the mortgage rules have changed over the past few years.

The survey also found 83% of buyers were totally satisfied with the experience with their brokers and would most likely use that broker again. An overwhelming 75% would highly recommend their broker to family and friends.

Low mortgage rates have helped make owning a house affordable.  It’s likely that this low interest rate environment will go on for the next two years.

The biggest expense for most homeowners is a mortgage payment. Yet the CMHC survey found that 39% of households automatically renew their mortgages when the term is up instead of trying to find a better deal. When you’ve done your homework prior to purchasing a home, it only makes sense to do as much research at renewal time as you can. Quite often the renewal rate offered to you by your lender is higher than the market average.

There may also be material changes in your household. Perhaps you’ve started a family, or one of you has been promoted.  This is another good time to contact a mortgage broker to review your financial situation and see what makes sense for you to do.

Here are some tips to make sure you’re getting the best mortgage product for you:

  • Get going early. Contact me four to six months ahead of renewal time. Most lenders will guarantee a discounted rate for four months but your renewal agreement is usually sent only 30 days ahead of your maturity date.
  • Do your homework. Let me shop the rates for you and get you the best deal, tailored to your particular situation. If you decide to switch lenders, there are no penalties at renewal time.
  • It’s not always about interest rate. Don’t fixate on rate. There are other options that may appeal to you such as changes to amortizations or changes to the rate type.
  • Let me negotiate on your behalf. If you don’t like negotiating and don’t have the time to do the research, I will do the legwork for you. Homeowners who use a broker at renewal time usually pay less than those who don’t use one.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at WWW.GUYTHEMORTGAGEGUY.COM

Behind on mortgage payments? I can help

There are times in our lives when the unexpected happens and we find it difficult to cope financially. It could be a job loss, an unexpected illness, the death of a loved one or separation and divorce. There may be enough money to get by for a few months, but soon many families find themselves overwhelmed as the bills start to mount and household finances begin to dwindle. Then households may start to miss payments to creditors, including a mortgage payment. While a one-time missed payment can easily be dealt with, long term problems may need a different approach. Consider the following:

  • Missing payments. If there are a few missed mortgage payments, it might be difficult to get a bank loan to pay the arrears. By missing payments it looks as if there might be an issue repaying the loan. There is a difference between a missed payment and a late payment. A missed payment is one that is completely missed and never made up. A late payment is one that’s not paid on time, but made up.
  • How a lender views arrears. Again, it might be a challenge to get a loan when in arrears, especially if you’re not working. Lenders may, however, work with clients on a plan to pay the arrears while keeping other payments current. This can be quite onerous and stressful since lenders usually want the arrears cleared up as quickly as possible.
  • Interest rate for arrears and/or default. Lenders will charge a default or penalty interest rate, which is normally charged on the overdue amount. If the lender proceeds with a Power of Sale or foreclosure, then legal costs are added on top of the penalties.  Remember, mortgage payments must stay current and paid when due along with payment for the arrears as per the repayment plan, which includes the penalties.
  • When will the lender take action? Generally, after two missed payments. Some lenders may take action sooner. It’s important to be proactive and speak to the lender to try to work with them.
  • What can the homeowner do? The longer it’s left, the more bank fees and legal fees get tacked on, which eats into the equity in the property.  There is help. A mortgage broker with experience in arrears refinancing has access to many lending solutions.
If you have an insured mortgage, the insurer may have an assistance program that offers a variety of solutions. Some common options include:
  • Capitalize arrears
  • Increase amortization period
  • Partial or shared payment plan
  • Deferred payments
  • Restructure mortgage
For a fast mortgage solution, call me today.
Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at WWW.GUYTHEMORTGAGEGUY.COM

How Brexit will impact housing

There’s been much attention devoted to Brexit, with good reason. In an historic referendum, a majority of voters in Great Britain opted out of the European Union (EU) – a partnership that came into existence after the Second World War. It morphed into an economic and political union of 28 countries working as a single market, which allows free movement of goods, capital, services and people between member states.

The negative effects of this decision was immediate – markets dropped, currency values fell and trade relations have become shaky. The reason – uncertainty. No one really knows what will happen — not the economists, not the leaders of the remaining countries, not even those who voted to leave.  And it may take years to find out.

What we do know, however, is the impact in Canada and what it could mean for our housing market. Here a six ways that Brexit may affect us:

1. Interest rates will remain low

The immediate impact of the post-Brexit vote on Canada’s economy will be pressure to keep interest rates at historically low levels, according to BMO chief economist Douglas Porter. That’s good news for consumers.  TD Bank economists suggested a U.S. interest rate hike could be delayed, which will further stabilize our Loonie. The Bank of Canada’s next interest rate announcement is July 13, but it’s not expected to move on rates.

2. The Loonie

The Loonie fell fast after the vote. In the end, it lost more than a full cent, closing at 76.93 cents US. It’s been fluctuating since but is holding at approx. 76.5 cents so far. On a positive note: If you’re headed to the U.K., chances are you’ll encounter a weaker pound and perhaps even discounted prices as Europe grapples with the economic fallout.

3. Your savings

Your investment portfolio may have taken a bit of a hit if you have equities, especially European equities; however, most economists don’t believe another financial crisis is at hand. Markets tend to overreact at first then start to reclaim some of their losses. Although Brexit is a concern, the economy has not yet taken a direct hit.

4. The global economy

We’re not headed for another global recession; however global growth may be impacted. Much of that depends on what the other EU countries decide to do. This could impact the growth of the Canadian economy. Again, no one really knows yet.

5. Foreign investment in our real estate

Canada has a challenge right now. The federal government has an opportunity to play a role on where foreign investment money goes. If foreign investors want the stability of Canada’s real estate market, then it doesn’t matter what part of the country they invest in, whether it’s a $1 million property in Vancouver or five properties in St. John’s, Newfoundland worth $1 million. This could ease the pressure on hot markets like Toronto and Vancouver.

6. The housing market

The U.S., which appeared set to hike rates in September, will likely delay that plan now. In Canada, interest rates will almost certainly remain low for even longer. In the short term, property values will go up.

  • Fixed rate mortgages:  The short-term impact will be minimal. We saw a movement to safe-assets like Government of Canada (GoC) bonds but they were only up four basis points by the end of last week. Five-year fixed are available as low as 2.49
  • Variable rate mortgages: . The BoC was not expected to raise its prime lending rate until into 2017 – this may be delayed.  Variable rates are sitting as low as 2.25.

While Brexit has created uncertainty in a dramatic way, there is an upside. If you’re searching for a new home or want to refinance an existing mortgage you can take advantage of low interest rates and potentially save thousands of dollars in interest in the long run.

Act now, call me today.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at WWW.GUYTHEMORTGAGEGUY.COM

Refinance to consolidate debt

To no one’s surprise on May 25, the central bank left its key interest rate unchanged at 0.5 per cent. While the bank said it expects the economy to “rebound”, it stopped short of discussing the likelihood that this rebound will be enough to keep overall 2016 growth on track with its previous goal of 1.7%. Many economists are not expecting Governor Stephen Poloz to start pushing up the bank’s overnight rate for at least another year.

While low interest rates and soaring regional housing markets continue to be the norm, Canadians are burdened with record-high debt loads, which have been rising since 2011.  If you’re sitting with equity in your home yet can’t seem to manage your debt payments, perhaps refinancing is the answer, especially in this low-interest rate environment.

With credit card interest rates often pushing the 20% range, five-year fixed-rate mortgages in the 2.49% to 2.69% range and variable rates even lower, you may want to consider paying off high-interest debts. Like many financial decisions, you need to look at the big picture. Here’s what you need to know.

A refinance alters the terms and conditions of your mortgage; specifically you are increasing the amount of your mortgage to pay off debt. Your mortgage payment may or may not increase, depending on a number of factors, and you may incur a penalty to break your existing mortgage if you are refinancing midterm. Depending on your current mortgage you could be paying off the refinanced debt at a much lower interest rate, which could save you thousands of dollars in interest in the long run.

Here are some reasons to refinance:

Decrease your overall monthly debt payments by using your equity to pay off those high-interest credit cards or unsecured loans, which can help you better manage your budget.
You can refinance to purchase another property. Using the existing equity in your home can be a great way to buy a rental property which, if done right, can also make the interest you pay tax deductible.
You could also take out some of the equity for investment purposes — an option that many homeowners consider this time of year.
Or you may want to refinance to renovate.

Repayment
Remember that borrowing against your property is not free money. You need to understand the costs associated with having to repay this loan.

Spending Habits
While using the equity in your home to pay off debt certainly may help to ease financial stress, there may still be challenges. Some people have experienced a job lay-off or an illness that contributed to their unmanageable debt loads. Make sure you understand what got you into your current situation.

Speak to a Professional to Understand Your Options
As you can see there are many factors to consider before deciding to refinance. Each individual’s financial situation is different. Let’s talk about your unique situation and the options available to you.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at WWW.GUYTHEMORTGAGEGUY.COM

Norma Walton, Toronto Needs a New Home Lender

The big five banks control the majority of Canadians’ money.  Those banks love residential mortgages at no more than 80% loan to value.  Anything above that ratio will require Canada Mortgage and Housing insurance to protect the banks against any possible losses, with that insurance paid for by the borrowers.  Those bankers want to lend to Canadians with good credit ratings and regular employment income.

big five banks

The Canadian banks sailed through the 2008 credit crisis relatively unscathed and became the envy of the world for their strength and conservative balance sheets where other banks failed.  Although their loan loss provisions have recently been taxed somewhat due to the plummeting price of oil and their lending to that sector of the economy, they are still immensely solid and strong without exception.  Each earns billions of dollars of profits each and every year.  They succeed because they are a protected sector of the Canadian economy and they are immensely conservative.

approved

This is all well and good if you are a Canadian with good credit and a good job.  You will be offered a variety of 2.3% to 3% five year mortgage options and can sometimes even create a bidding war amongst a couple of different bank lenders if you fit into that perfect borrower profile.  So if you do, you don’t need any new home lender as you will be immensely well served by the big five banks.

self employed

For the rest of us, Canada is a somewhat hostile place for securing a mortgage.  There are few attractive options for self employed individuals.  Scotiabank tries to understand those who run their own businesses as does Street Capital and Home Trust.  Their lending standards, though, are still arduous to qualify for and their interest rates are generally higher than the 2.3 to 3% offered to their employed peers.

bad credit

For those who are self employed with less than stellar credit, the options are very poor.  Even those who already own their own homes have trouble renewing mortgages and find it near impossible to increase their mortgage principal.  For this reason Northwood Mortgage advertises on 680 News focusing on their approval of any borrower who already owns their own home.  That is an underserved market.

northwood mortgage

There are countless places, many located in the Allen Road and Sheppard area of Toronto, offering 100% approval for car loans regardless of credit.  There are no home lenders offering the same.

Toronto could benefit from a few new lenders offering the following lending services:

  • Those that permit equity only lending
  • Those that permit lending without personal guarantees and price in the risk of the lack of guarantee
  • Those that price in the risk of lending to employed individuals who have bad credit
  • Those that lend to self employed individuals with good credit
  • Those who lend to employees who are paid in cash so don’t have qualifying income but have a sufficient down payment to buy a house
  • Anyone else who doesn’t fit the bank’s very restrictive lending criteria

The services described above would benefit Toronto residents who don’t now qualify for mortgages or who have to approach private lenders now if they wish to buy real estate.

houses

 

U.S. Factory Orders ‘Bounce’ within a Deadly Downtrend

This morning, the U.S. Department of Commerce reported that March factory orders rose 1.1% from February—more than the 0.6% expected. Good news? Not if you look back; March factory orders actually declined for the 17th consecutive month on a year-over-year basis, dropping 4.2% from a year ago.

Nothing goes straight down on a month-to-month basis. Little dead cat bounces are always a possibility. That’s why it’s important to look back a year and see what the trend is telling you, because as an investor, the trend is your friend. In 60 years, the U.S. economy has never suffered a 17 month continuous year-over-year drop in factory orders without being in a recession. Here is the year-over-year chart of orders. Most ski hills don’t slope this much.

Image 1

 

 

 

 

 

 

The March bounce amounted to just $5 billion in sales. March generated $458 billion in sales compared to February’s downwardly revised $453 billion. February’s sales were the lowest in the past five years so this bounce is truly of the dead cat variety. You can see the March dollar gain at the end of the following graph…reading glasses advised.

Image 2

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Top Six Mortgage Features

Real estate is a still a hot commodity in many parts of the country, and it’s also a competitive market. Prices are rising and listings are in short supply. And everyone wants your business — from Realtors to mortgage lenders. It’s important to understand the features of a mortgage and make sure it fits with your goals. Take a look at some of the features you might consider:

  • Blend and Extend. Many lenders offer this feature, which is simply a blend of your existing rate with the now current rate.  It may also mean extending your current maturity date as well. Depending on your situation, you may want the flexibility this feature offers.  If your current lender doesn’t allow a change in the maturity date, then you’re locked into the remaining time left on the term.  While that’s not the end of the world, in a rising rate environment this can be extremely inconvenient. If you’re moving up, and buying at your maximum loan-to-value, you may not want just a 1 to 2 year term.
  • Early Payout Penalty Calculation. Different Banks calculate their IRD (interest rate differential) penalties differently. The IRD is a compensation charge that may apply if you pay off your mortgage prior to the maturity date, or pay the mortgage principal down beyond the amount of your prepayment privileges. It’s important to understand how your early payout penalty would be calculated. Some chartered Banks are known for their extremely large IRD penalties. Most closed fixed-rate mortgages have a prepayment penalty that is the higher of 3-months interest or the IRD, while variable-rate mortgages do not have IRD penalties. If you don’t know you’ll keep the mortgage for the entire term then make sure to understand the fine print in your mortgage documents, especially as it pertains to the payout penalty.

  • Mortgage Registration. Is the mortgage registered as a non-standard charge, either a running account, or a collateral charge? If so, then it becomes harder to switch this mortgage out to take advantage of lower rates. Consider this scenario: If the lending institution knows you will have to incur $1,000 or more in possible costs, as well as put in the time and effort to complete a refinance with another lender, then there is less incentive to offer you best rates at renewal time when a small rate reduction might be enough to keep your business.

  • Pre-Payment Privileges. Is the lender offering 15/15, or 20/20?  That means allowing prepayments of 15 % or 20% annually on the outstanding balance of the mortgage.  It also means allowing you to increase your regular payments by up to 15 or 20%. Also, can these lump sum payments be made during the year or only at the mortgage anniversary? And how easy is it to make lump sum payments? Do you have to go into the branch, call a 1-800 number? Or can you simply go online and do it.  These are important factors to consider.

  • Porting Features. This feature, which allows you to keep your mortgage if you move properties, can vary from lender to lender.  This is an important factor if you think you might move before the mortgage maturity date.

  • Online Access. All of the chartered Banks offer online access as do a number of mortgage banks. Generally online access allows you to see your balance, make additional lump sum payments, or make a payment increase. This can be a time-saving feature for tech-savvy consumers.

Yes, there is more to getting a mortgage than just rate. Call me today and get help navigating mortgage features and find the best for you.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at WWW.GUYTHEMORTGAGEGUY.COM