Know your Options

There has long been the belief that the “bank” was the best place to go when searching out a mortgage. That based on your long term banking relationship they will give you the best mortgage possible. The mortgage broker was the person you saw if you had less than stellar credit and your bank had turned you away.

In actuality it is quite the opposite. Mortgage brokers deal with all clients from the best credit to slightly bruised credit. There are many mortgage rates and products available from an array of lenders, and as you would a medical diagnosis, a second opinion on your mortgage offer is always in your best interest.

Where banks are limited to their own rates and products, Mortgage Brokers provide mortgages from a variety of lenders. This means many options are available, often with access to the same bank you may have visited but with a better rate. The Mortgage Broker works for you not for the lender. With one application and one check on your credit bureau, a broker can shop your mortgage. Working with a Mortgage Broker will help you avoid repeated checks on your credit bureau which could ultimately reduce your credit score. Best of all the services provided to you by a Mortgage Broker are free, with only a very few exceptions.

Situated at 2446 Beacon Ave. in the old “Candy Shop” you will find over 20 years of mortgage and real estate experience. Locally owned and operated, Mortgage Depot has been arranging mortgages for over 19 years. The Sidney Mortgage Depot is a family run office with Arlene Modderman, her daughter Sherri Brown and close friend Krista Lawless. Arlene Modderman is known as the Gulf Island specialist with offices in Victoria, Sidney and Salt Spring Island. Krista Lawless and Sherri Brown operate as the Lawless Brown Mortgage Team with offices in Victoria and Sidney. With various convenient locations and an interactive websites, the Accredited Mortgage Professionals (AMP’s) of Sidney Mortgage Depot are easily accessible.

These ladies believe that excellent customer service and the best mortgage products go hand in hand. They will make the mortgage process as comfortable and stress free as possible and while professionalism and privacy are top priority, it is important to know that they will find the lowest rates and best mortgage product suited for your individual needs.

Your home can be your biggest asset and is deserving of the best attention to make sure you have the most suitable products to maximize your investment.

Krista Lawless

Sherri Brown

www.lawlessbrown.com

November numbers heat up housing bubble talk

Wednesday, 16 December 2009


With the Canadian Real Estate Association's release of November housing numbers Tuesday, talk of a bubble is heating up among economists and industry professionals.

The CREA report said existing homes sales in November increased by a whooping 73 per cent compared to a year ago and prices rose almost 20 per cent.

"We're on the bubble of a bubble," Bank of Montreal economist Doug Porter told The National Post, sharing his worry about a potential surge of home sales before the central bank raises rates and the new harmonized sales tax is introduced in B.C. and Ontario. "We could see a bit of a buying frenzy coming this spring...followed by a "pop" in 2011?"

But despite continued fears that skyrocketing numbers signal the formation of an asset bubble, some insiders said the dramatic rise is due to how low the market was at this time last year. The number of listings also went up by five per cent from October to November, which is expected to help ease price increases.

"The numbers look huge, but you are coming off such a bad year," TD Securities economics strategist Millan Mulraine told The Globe and Mail. "You're seeing big numbers in the recovery, but the pace and momentum has eased. You could definitely say it's not driving as fast as it was a few months ago."

Another argument against a bubble came from Genworth Financial Canada president Peter Vukanovich, who told The National Post that because more consumers have been switching into fixed rate mortgage products, they will be less exposed to expected interest rate hikes.


www.lawlessbrown.com

CMHC’s Role in Canada’s Credit Crisis Recovery

Think back to the fall of 2008 … Banks failing … credit getting tight … the stock market crashing. Most of this was blamed on sub prime mortgages. What would you have thought if your pension manager or RRSP administrator had chosen that moment to invest your money into mortgages? You probably would have tried to have them arrested!

That’s the dilemma that banks and mortgage lenders faced. For the most part, the money that Banks lend as mortgages is raised from investors’ money in RRSP’s, pensions and non-registered investments. ALL those investors were justifiably refusing to put any new money into mortgage investments. No money … no new mortgages. No new mortgages and our housing industry would come to a complete halt … prices would fall and foreclosures would begin to rise.

The solution … the government of Canada expanded the role of CMHC (Canadian Mortgage Housing Corporation) to allow them to insure much larger numbers of mortgages. CMHC insurance protects the lender against a loss in the event the borrower fails to pay. Because CMHC is backed by the government, the lender is sure of recovering all funds. With that in place, investors can now allow their funds to be invested in mortgages safely. For a period of time, lenders were so careful about mortgages, that nearly all new mortgages were insured with CMHC, even mortgages that were for a small percentage of the value of the property. Naturally, this caused sharp increase in the number of mortgages insured.

Recognizing we were entering a recession, CMHC tightened the rules banks must follow for qualification, thus avoiding much of the trouble facing the USA, where loose lending practices were a big factor in triggering the whole mess.

The result? Today we have strong solvent banks, relatively low mortgage delinquency and a housing market that has cooled down without destroying millions of people’s lives and investments. Was it the right thing to do? Compare Canada to the rest of the world and the massive public bailouts that were necessary to save banks. CMHC’s increased role suddenly looks like an awfully good alternative!

Mortgage Depot

lawlessbrown.com

Home ownership becomes more expensive in third quarter

By The Canadian Press

TORONTO - The cost of homeownership in Canada became more expensive in the third quarter, according to a report by RBC Economics Research.
The bank says this hasn't happened since the spring of 2008 and was due to a slight rise in mortgage rates and higher property values. The RBC index measures the proportion of pre-tax household income needed to service the costs of owning a home.
During the third quarter, the benchmark detached bungalow moved up by one per cent to 40.2 per cent and the standard townhouse rose by 0.7 per cent to 32.3 per cent.
The standard condo climbed by 0.5 per cent up to 27.6 per cent and a standard two-storey home increased 1.2 per cent to 45.8 per cent.
RBC says housing demand has outgrown supply, leading to a more competitive market and widespread increases in home values.
"With such strong momentum in the housing market and the cyclical low in mortgage rates behind us, it seems unlikely that affordability will improve in the near future," said RBC senior economist Robert Hogue.
"The housing market still faces obstacles, as mortgages have become more difficult to handle for many Canadians amid challenging labour conditions. This is likely to persist until the economic recovery is well established and job creation is sustained next year."

lawlessbrown.com

Our November Newsletter - Victoria BC

Every month we publish a newsletter with great info about the Real Estate market in British Columbia and more specifically Victoria BC. If you would like to receive our newsletter for free, contact us at Lawless Brown Mortgage Depot or more specifically at krista@lawlessbrown.com.

Enjoy!

Click Here for Our OUR NOVEMBER NEWSLETTER!

Demand kicks up new-home building

Supply Shortage
Garry Marr, Financial Post Published: Tuesday, November 10, 2009


The Canadian housing market's surprising turnaround is spreading to new-home construction as developers scramble to respond to a supply shortage that has sent pricing soaring for existing homes.

But any increase in construction of new homes will likely not surface fast enough to feed the demand for housing still pumped up by record low interest rates.

Canada Mortgage and Housing Corp. said yesterday 157,300 units were built last month on a seasonally adjusted annualized basis, a 5.4% increase from a month earlier. Annualized starts dropped as low as 118,500 in April.

"There is not a lot of inventory around," said Gary Friend, president of the Canadian Home Builders' Association, adding his industry has been careful not to speculate. "We have to watch our Ps and Qs, as we try to meet this demand."

Any increase in supply would be welcomed as a shortage of new listings has caused a spike in prices. The Canadian Real Estate Association said last month existing home prices across the country were up 13.6% in September from a year ago as supply was short in almost every city.

The shortage has yet to ease despite a belief higher prices would coax homeowners to sell. This month the Toronto Real Estate Board reported sale prices in October were up 20% from a year ago.

"The existing-homes market is in short supply so we've gone from a buyers' market to sellers' market," said Bob Dugan, CMHC's chief economist. "The way it gets linked is you get some spillover into the new-homes market and that's starting to happen."

CMHC has upped its forecast for new-home construction for 2010 to 164,900 from 150,300 though that's still off the 211,000 starts of 2008.

Paul Ferley, assistant chief economist with Royal Bank of Canada, said "at the margins" new-home construction could help ease the housing crunch though builders "can't turn on a dime."

gmarr@nationalpost.com

www.lawlessbrown.com

CMHC forecasts continued new housing rebound

The Canadian Press

OTTAWA — The national housing agency is reporting that housing starts have started to recover and it expects the recovery to continue.

Canada Mortgage and Housing Corp. predicts starts will reach 141,900 this year and increase to 164,900 in 2010.

The CMHC’s fourth-quarter market outlook forecasts housing markets will continue to strengthen over the next year as economic conditions improve.

It says demand for existing homes has rebounded and both new and existing home markets are characterized by lower inventory levels.

However, the national housing agency says the strong pace of sales in the second and third quarters partly reflects delayed activity and is not likely to be sustained.

The CMHC says it expects the level of sales to move back closer in line with anticipated economic conditions.

It predicts existing home sales will reach 441,300 units in 2009 and increase to 445,150 units in 2010, while the average price is expected to be $312,950 in 2009 and $324,500 in 2010.

www.lawlessbrown.com

Fixed or variable? Time to revisit

Jonathan Ratner, Financial Post Published: Thursday, October 22, 2009
Related Topics

While history has shown that variable mortgage rates save borrowers more money, the anticipated upward trend in interest rates as the economy emerges from recession could make this one of the rare periods when a fixed rate turns out to be the superior choice, a new report says.

Inflation may not have been a problem in Canada since the early 1990s, but there is an outside risk that inflation flares up amid record government deficits and as global central banks keep "the pedal to the policy metal," says a new report BMO Capital Markets. The inflation risk becomes even more prominent if the global economic recovery turns out to be stronger than expected.

This could force the Bank of Canada to aggressively raise interest rates, driving variable mortgage rates higher, but leaving fixed rate choosers unscathed.

"Another reason fixed rates are attractive in the current environment is that short-term rates are already as low as they can go -- rates are only going to move higher from here as the economy recovers," said BMO economists Douglas Porter and Benjamin Reitzes.

Fixed rates were advantageous during only two recent periods -- through the late 1970s and briefly in the late 1980s. In both cases, this was ahead of a period of rising interest rates, as is the case now, the economists added.

For those with limited financial flexibility who could run into problems if there was a pronounced upswing in interest rates, such as your average first-time home buyer, the moderate extra cost for the peace of mind a fixed rate mortgage provides may be worth it.

On the flipside, the case for variable rate mortgages is driven by an inflation outlook that remains benign as the soaring Canadian dollar puts downward pressure on prices. As a result, it looks like the Central Bank may follow through on its commitment to hold rates steady through June 2010.

There is also the possibility that fixed rates fall even further if the economy performs worse than anticipated.

Read more: http://www.nationalpost.com/news/story.html?id=2133046#ixzz0UmpgE2LO

www.lawlessbrown.com

B.C. house prices forecast to hit new highs over next 2 years

By Business Reporter, The Province
October 21, 2009

B.C.'s born-again real-estate market will see house prices hit record levels in 2010 and 2011, a new report predicts.

Low mortgage rates and economic recovery are driving the sector's resurgent activity, Central 1 Credit Union said as it released a market forecast yesterday.

"The strong market momentum coming out of the recession will carry into 2010, driving unit sales and prices to new highs," Central 1 chief economist Helmut Pastrick said.

Housing sales, which fell 25 per cent in 2008, will rise 10 per cent this year and 30 per cent in 2010.

Sales are expected to dip slightly in 2011, reflecting a typical cyclical sequence of strong initial recovery, fall-back and then a renewed climb, Central 1 said.

The median sales price for residential properties in the province will climb to $369,000 in 2009 from $360,000 in 2008, Central 1 said.

A six-per-cent gain in each of the next two years will drive the median price to a record $391,000 in 2010 and $415,000 in 2011, Central 1 said.

"The monthly sales price will set a new high before the end of this year, regaining the entire amount lost during the recession," it said.

Housing starts, which will plunge from 34,321 in 2008 to an expected 14,600 this year, will also strengthen over the next two years.

The arrival of the harmonized sales tax on July 1, 2010, will add to the cost of higher-priced new homes, spurring builders to produce more units before it takes effect, Central 1 said.

"Builders are expected to ramp up production to meet the strong pickup in sales and build houses early in the year to beat the implementation of the HST," Central 1 said.

Starts will rebound almost 50 per cent to 21,400 units next year, rising to 27,500 in 2011.

Renovation spending is expected to rise four per cent to $5.5 billion this year from $5.3 billion last year.

With the Home Renovation Tax Credit expiring next February, renovation spending will slip to $5.35 billion in 2010. Resumed growth in 2011 will see spending rise to $5.65 billion that year, Central 1 said.

The jump in housing sales has been much more robust in metropolitan markets such as Vancouver and Victoria than in resource-dependent areas of northern B.C. or the Kootenay. Multiple Listing Sales will grow 45 per cent in Vancouver and 25 per cent in Victoria this year, the report said.

But sales gains of 30-50 per cent next year in the Okanagan, the northeast and Vancouver Island outside of Victoria will surpass the 20-25 per cent expected for Vancouver and Victoria.

A double-dip recession is identified as the biggest risk factor in the credit union's forecast but is given a less than 20-per-cent probability.

© Copyright (c) The Province

Why Canada's housing sector didn't collapse

Globe and Mail Update Published on Monday, Oct. 19, 2009

While it's tempting to think of a “housing correction” as a continent-wide phenomenon, National Bank Financial says the Canadian and U.S. markets couldn't be more different.

“The two have absolutely nothing in common,” senior economist Marc Pinsonneault wrote in an economic update Monday. “In Canada, the correction got under way much later and lasted nowhere as long.”

Mr. Pinsonneault said “prudent lending practices” in Canada prevented the housing market from falling as hard as its American counterpart, and pointed out that Canada's crisis was a side-effect of its recession rather than its cause.

Here are four ways the markets have differed:

Duration of slowdown

The Canadian market began to slide in October, 2008, while the American slump has lasted 2 1/2 years.

“People wishing to sell their homes either cut their asking price or quite simply took their property off the market,” he said of the Canadian market. “Lower interest rates, lower home prices and renewed consumer confidence led to a quick recovery in sales, so much so that as early as last May, these had surpassed pre-recession levels.

Price declines

According to Teranet, Canadian home prices fell 8.9 per cent from their August, 2008, highs to their recessionary lows eight months later. In the U.S., the S&P/Case Shiller index shows prices slid 33 per cent in 33 months.

Delinquency rates

Canadian banks have seen delinquency rates climb to 0.4 per cent, compared to the 0.65 per cent high reached in 1992. The number is far greater in the U.S., at 3.67 per cent.

Consumer spending

When home prices are under pressure, consumers tend to reel in the spending.

“According to Statistics Canada, from the end of Q3 2008 to mid-2009, the value of household real estate wealth sagged only 1.1 per cent,” he said. “The impact of this impoverishment on consumer spending has been negligible.”

In the U.S., the value of household real estate wealth dropped 18.2 per cent. The Federal Reserve estimates that for each dollar lost in housing wealth, consumer spending pulls back up to 15 cents.

Steve Ladurantaye

www.lawlessbrown.com