KRISTINE OWRAM THE CANADIAN PRESS
Lower home prices and shifting demographics mean first-time buyers could lead a rebound in Canada's real estate market, experts said yesterday at a real estate conference in Toronto.
Phil Soper, president and chief executive of Brookfield Real Estate Services, said rookies are the largest category of buyers in the real estate market, accounting for close to 70 per cent of all transactions at the height of the housing boom.
However, they've been scared away in droves by the economic downturn, which was led in part by record foreclosure rates in the United States as homeowners defaulted on their mortgage debt.
Such a lack of first-time buyers can grind the real estate market to a halt, Soper told Scotiabank's annual real estate outlook conference.
"When new buyers stop entering the market, it's like sand in the gears,'' he said.
Although Canada has managed to duck the severity of the housing crisis in the U.S., the 10-year boom that saw housing prices soar, particularly in the western provinces, ended abruptly last year.
Canadian housing starts -- the number of new residential construction projects -- were down to 211,056 in 2008, about eight per cent lower than an average of almost 230,000 in the period from 2004 to 2007. Resale activity fell by 17 per cent in 2008 while home prices dipped by one per cent, according to Scotiabank.
Things seem to have worsened dramatically in January, with housing starts falling to an eight-year low of 153,500 annualized units and home prices down 11 per cent year-over-year.
And the bank predicted the decline will continue through 2009, with housing starts forecast to fall to around 155,000 units, another 15 to 20 per cent decline in the number of resales and a 10 per cent drop in prices.
But Adrienne Warren, a senior economist and real estate specialist at Scotiabank, said this points to a buyers' market.
"Certainly the softening we've seen in prices, the increase in listings, is giving first-time buyers more choice,'' Warren said.
Thursday, February 26, 2009
Friday, February 20, 2009
Housing numbers exaggerate the bad
By Jay Bryan, Canwest News ServiceFebruary 9, 2009
Canada's housing market registered a couple of jolts Monday. One was quite serious; the other, not so much.
The bad one was the news that January's construction of new homes plunged to the lowest level since 2001. The implications for Canada's economy are ugly, at least for the next several months, since home construction is a key driver of employment and growth.
The other was the forecast by Canada's real estate brokers that prices will drop sharply this year. Don't worry so much about this one.
While it seems likely that prices will indeed drop, we need to be very cautious about the widely circulated figure from the Canadian Real Estate Association for an eight per cent drop in the average 2009 price compared with the average 2008 price.
Why? Because the usual method of calculating average home prices greatly exaggerates price declines when markets go sour.
Here's an example of how much. Using the standard calculation from the Canadian Real Estate Association, home prices were down by 9.8 per cent in November from 12 months earlier.
But using a more rigorous measure, embodied in the new Teranet-National Bank house price index, the average price for six of the biggest cities in Canada actually inched up a bit, by 0.6 per cent, in this period.
The numbers aren't an exact comparison, since the CREA calculation includes more than six cities, but since these big cities include a very large chunk of Canada's homes, they're a fair approximation of the national market.
And this new index does show how a real home has changed in value.
First, it gives the same weight to each city regardless of how many sales happen there in a particular month. Second, it tracks a huge database of specific homes, looks at those that have sold more than once, then compares actual price changes on the very same home.
The big gap between the two measures isn't because the Canadian Real Estate Association's numbers are bad. It's simply because the association's averages are calculated in a way that isn't designed to demonstrate changes in the price of any particular house.
Instead, the CREA numbers add up the value of every home sale in Canada, then divide by the number of sales. If sales of high-priced homes fall the most, as tends to happen when the market turns sour, the average price falls because it's largely the highest-priced homes falling out of the calculation.
This happens in two ways. First, look at a city like Vancouver, where homes cost twice as much as in the cheapest big city, Montreal. Vancouver sales have collapsed in the past year, while those in Montreal have fallen only about half as much.
When lots of high-priced Vancouver sales drop out of the national average, but fewer low-priced Montreal sales, the reported price for all of Canada falls more than it should. .
Second, within Vancouver (or Montreal or any other city) sales of the highest-priced homes tend to fall the most when the economy turns bad, notes CREA economist Gregory Klump. This skews the average for every city where markets are slowing, exaggerating the true price decline within that city.
The upshot is that the CREA numbers are useful for real estate brokers and economists who want to know about Canadian real estate conditions in general, but not a good guide to changes in the value of any individual home.
You can take away part of the distortion in CREA numbers by holding the weighting of each city or province steady, regardless of whether sales have fallen or grown.
By this measure, Klump calculates that average prices this year will be down by 6.4 per cent, not the eight per cent raw average. But this still leaves the distortion among different kinds of homes in the same city, so you might reasonably assume that a typical home price will drop less.
And of course, even this is still just a national average. When it comes to housing, we each live in a specific city.
Sadly, Marc Pinsonneault, the National Bank economist who puts together Teranet-National Bank index, isn't in the business of forecasting home prices.
But based on his data through November, the weakest market in Canada was Calgary, with a drop of 7.7 per cent over 12 months, followed by Toronto, down 1.6 per cent, and Vancouver, down 1.3 per cent. The strongest was Halifax, with a gain of 5.8 per cent, followed by Montreal, up 5.1 per cent, and Ottawa, up 4.2 per cent.
That's not a guide to the coming year, since nearly all markets were weakening in November, but it could offer some idea where the biggest drops will come.
© Copyright (c) Canwest News Service
Thursday, February 19, 2009
Support for home ownership and the housing sector
Subject: The Mortgage Market
________________________________________
RENOVATION TAX CREDIT
Any Canadian who spends money on home renovations will be eligible to receive up to $1,350 in tax relief thanks to the new Home Renovation Tax Credit proposed in the Harper Government's Economic Action Plan.
"Every time Canadians invest in home renovations, they are helping to create construction and building-supplies jobs in their own communities," said the Prime Minister. "By providing an incentive for Canadians to invest in their homes, we are also encouraging them to invest in local jobs."
To highlight the kind of projects that will be eligible under this plan, the Prime Minister visited an Ottawa-area home renovation site and met with a local contractor who will be better able to protect and create jobs thanks to the additional home renovation projects that will be encouraged through this tax credit.
The Home Renovation Tax Credit will provide a one-year, temporary 15% income tax credit on eligible home renovation expenditures for work performed, or goods acquired between January 27, 2009 and February 1, 2010. The credit may be claimed on eligible expenditures exceeding $1,000 but no more than $10,000.
The Home Renovation Tax Credit is one of several initiatives to help homeowners and homebuyers that is contained within the Harper Government's Economic Action Plan. Before homeowners, homebuyers, and local construction and building supply workers can benefit from these new initiatives, Parliament must pass the 2009-2010 Federal Budget.
Support for home ownership and the housing sector
28 January 2009
Ottawa, Ontario
For many Canadians, owning a home represents both the achievement of a key life goal and the most important investment of their lives. A robust housing sector is also an important source of economic activity in Canada as it promotes demand for labour, building materials and other goods. To provide needed stimulus in these challenging economic times, Budget 2009 proposes four measures to help Canadians purchase and improve their homes.
Home Renovation Tax Credit
Home renovations can represent a smart investment in the long-term value of a home and generate broad-based economic activity. They can also reduce energy consumption and the long-term cost of owning a home. To support economic growth during these challenging times, Budget 2009 proposes to introduce a temporary Home Renovation Tax Credit (HRTC).
The HRTC will provide a temporary incentive for Canadians to undertake new renovation projects or accelerate planned future projects, thus providing timely stimulus to the Canadian economy while boosting energy efficiency and the value of Canada's housing stock.
How the Temporary HRTC Will Work
The proposed HRTC will provide a temporary 15 percent income tax credit on eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010, pursuant to agreements entered into after January 27, 2009. The credit may be claimed for the 2009 taxation year on the portion of eligible expenditures exceeding $1,000, but not more than $10,000, and will provide up to $1,350 in tax relief.
Who Can Claim the HRTC
The HRTC will be family-based. For the purpose of the credit, a family will generally be considered to consist of an individual, and where applicable, the individual's spouse or common-law partner. Family members will be able to share the credit.
The amount eligible for the credit will be based on the total value of eligible expenditures incurred across all eligible dwellings. A dwelling will generally be considered eligible if it is used for personal purposes. This will include a house, a cottage, and a condominium unit.
It is estimated that about 4.6 million families in Canada will benefit from the HRTC.
Benefits of the Temporary Home Renovation Tax Credit-Examples
The following examples illustrate how homeowners can benefit from the HRTC.
1. Sally and Ed are a couple who have recently purchased a house. To take advantage of the temporary HRTC, they decide to replace their windows and improve the insulation in their home in 2009, instead of waiting, incurring $10,000 in expenditures. After taking account of the $1,000 minimum threshold, a 15-per-cent credit will be available on $9,000 in eligible expenditures, providing tax relief of $1,350.
2. William and Marie are a couple who are planning to purchase a more energy-efficient furnace for their home, and build a deck at their cottage sometime later. To take full advantage of the temporary HRTC, they decide to do both projects in 2009 rather than waiting. They pay $5,000 for the furnace and $3,500 for the deck. They also decide to have the area around the deck landscaped for $2,500, bringing their total costs to $11,000 ($5,000 + $3,500 + $2,500). Marie claims a credit of $1,350 on the maximum allowable amount of $9,000. This credit is in addition to the ecoENERGY Retrofit grant that William and Marie expect to receive for installing a more energy-efficient furnace.
3. Karen and Heather are sisters who share ownership of a condominium unit. They each incur $7,500 in expenditures renovating the kitchen in the condominium, in part to provide access for Heather's wheelchair. Karen and Heather each claim a $975 credit on eligible expenditures of $6,500 ($7,500 - $1,000).
This credit is in addition to the Medical Expense Tax Credit that Heather may claim on the portion of expenses eligible for that credit.
Expenditures Eligible for the HRTC
It is proposed that the HRTC be claimed for renovations and alterations to a dwelling or the land on which it sits that are enduring in nature. For example, homeowners will be able to claim expenditures for major renovation projects such as finishing a basement, renovating a kitchen, or building an addition. Costs associated with such projects will be eligible for the credit, including permits, professional services, equipment rentals and incidental expenses.
Routine repairs and maintenance normally performed on an annual or more frequent basis (e.g. cleaning, lawn fertilization, and snow removal) will not qualify for the credit.
The cost of purchasing furniture, appliances, audio-visual electronics and construction equipment will not be eligible.
Individuals will need to keep receipts for expenditures, and may claim the HRTC when filing their income tax returns for 2009.
Examples of HRTC-Eligible and Ineligible Expenditures
Eligible
Renovating a kitchen, bathroom or basement
New carpet or hardwood floors
Building an addition, deck, fence or retaining wall
A new furnace or water heater
Painting the interior or exterior of a house
Resurfacing a driveway
Laying new sod
Ineligible
Purchase of furniture and appliances (e.g. refrigerator, stove, and couch)
Purchase of tools
Carpet cleaning
Maintenance contracts (e.g. furnace cleaning, snow removal, lawn care, and pool cleaning)
The HRTC will complement support provided by the Government for Canadians to undertake energy-saving improvements to their homes. Federal grants paid through the ecoENERGY Retrofit program will not reduce the value of claims made for these expenditures under the HRTC.
Eligible renovation expenditures claimed under the Medical Expense Tax Credit may also be claimed under the HRTC.
The effectiveness of the HRTC will be enhanced to the extent that retailers also encourage homeowners to undertake renovations to their properties.
It is estimated that this measure will cost $500 million in 2008-09 and $2.5 billion in 2009-10.
''We don't do optimism; we don't do pessimism; we do realism at the Bank of Canada,'' he said. "We don't do spin.''
Julian Beltrame
The Canadian Press OTTAWA
Canada's economy can bounce back next year, but only if the United States and other world governments take "exceptional'' measures to end the crisis in financial markets, says Bank of Canada governor Mark Carney.
The hopeful and sobering assessment comes a month after the central banker put his credibility on the line with what other economists called an overly optimistic forecast pointing to a strong rebound next year after a tough 2009.
''Decisions taken in the coming weeks in the United States and in other major economies to isolate toxic assets in order to create a core of 'good' banks will be critical,'' Carney said in his first appearance before the House of Commons finance committee since the recession hit Canada in the fall.
'If these national and multilateral measures are not timely, bold, and well-executed, Canada's economic recovery will be both attenuated and delayed.''
Shortly after Carney spoke, the U.S. Senate approved President Barack Obama's giant economic stimulus measure, part of a string of powerful government steps that could marshal close to $3 trillion US in taxpayer and private money to revive the collapsing U.S. economy.
The 61-37 vote by the Senate was a key victory for Obama but sets up tough talks with the House of Representatives, which passed a slightly different version than the $838 billion bill approved yesterday.
In another development yesterday, a senior Canadian Finance Department official called the U.S. Senate approval and the pending passage of a bailout package helpful in helping stabilize the financial system and restarting the flow of credit.
The U.S. plan will be a topic at the weekend meeting in Rome of G7 finance ministers and central bank governors where Finance Minister Jim Flaherty is expected to be the lead speaker on a discussion on financial markets.
In his Commons committee appearance, Carney pointed to the U.S. bailout bill as an example of the extraordinary policy initiatives he believes can rescue the global economy. In Canada, MPs approved in principle last week the federal government's budget containing a $40-billion stimulus -- initiatives Carney believes will fully kick in in 2010.
Under skeptical questioning from MPs, the central banker stuck to his prediction of a 3.8 per cent growth in 2010 and dismissed criticism that his forecast was overly rosy.
''We don't do optimism; we don't do pessimism; we do realism at the Bank of Canada,'' he said. "We don't do spin.''
Liberal finance critic John McCallum was encouraged by Carney's optimism, but said he is not convinced the Harper government is committed to rolling out the $40-billion stimulus contained in the budget as quickly and effectively as possible.
Although Canada is doing slightly better than the U.S., McCallum noted that 129,000 jobs were lost in January alone, while personal bankruptcies soared by 51 per cent nationally in December from a year ago -- indications the slump is broadening.
The TD Bank has estimated job losses could hit 325,000 by year's end, pushing the unemployment rate to 8.8 per cent.
In another sign of the bleak times, General Motors Corp. became the latest of a growing list of companies announcing massive layoffs. It said it is cutting 10,000 salaried employees worldwide, including an unspecified number in Canada, where the company has 2,000 white collar workers.
Economists expect the Canadian economy to shrink by more than one per cent this year as the troubled manufacturing sector in Ontario and Quebec continues to shed employment and resources industries in Western Canada cut jobs to cope with lower prices for oil, grain, metals and minerals.
The greatest compliment we can receive from our clients is the referral of your family, friends and colleagues. We promise to treat anyone you refer with the greatest consideration. Thank you for your loyalty.
Sincerely,
Gemma Riley-Laurin, AMP (LIC # M08005023)& Kevin Laurin (LIC# M08004955)
The Laurin Team
Integrity Financing Inc #10933
www.thelaurinteam.com
info@thelaurinteam.com
Home Buyers' Plan
The Home Buyers' Plan (HBP) allows first-time home buyers to withdraw amounts from a Registered Retirement Savings Plan (RRSP) to purchase or build a home without having to pay tax on the withdrawal. Budget 2009 proposes to increase the HBP withdrawal limit to $25,000 from $20,000.
First Time Home Buyers' Tax Credit
The First Time Home Buyers' Tax Credit is an income tax credit to offset closing costs such as legal fees and disbursements and land transfer tax. The credit is applied on closing costs up to $5,000, which equates to a maximum tax savings of $750.
Get to Know US
Welcome to the Laurin Team - your source for mortgages and financing in Ottawa from Gemma Riley-Laurin, Kevin Laurin and Kristin Stauffer.
With more than 20 years of combined experience in the financial industry our goal is to offer mortgage solutions, that best suit our clients' individual financing needs.
Our focus is to ensure that our clients gain the knowledge necessary to make sound financial decisions around their borrowing needs. We offer professional and personal service for residential and commercial needs.
ontact Info:
Gemma Riley-Laurin & Kevin Laurin, AMP Mortgage Agents
Kristin Stauffer, Mortgage Agent
www.thelaurinteam.com
Office: (613)845-0786
Gemma direct: (613)290-0196
Kevin direct: (613)794-3846
Kristin direct: (613)697-8021
Gemma email: gemma@thelaurinteam.com
Kevin email: kevin@thelaurinteam.com
Kristin email: kristin@thelaurinteam.com
________________________________________
RENOVATION TAX CREDIT
Any Canadian who spends money on home renovations will be eligible to receive up to $1,350 in tax relief thanks to the new Home Renovation Tax Credit proposed in the Harper Government's Economic Action Plan.
"Every time Canadians invest in home renovations, they are helping to create construction and building-supplies jobs in their own communities," said the Prime Minister. "By providing an incentive for Canadians to invest in their homes, we are also encouraging them to invest in local jobs."
To highlight the kind of projects that will be eligible under this plan, the Prime Minister visited an Ottawa-area home renovation site and met with a local contractor who will be better able to protect and create jobs thanks to the additional home renovation projects that will be encouraged through this tax credit.
The Home Renovation Tax Credit will provide a one-year, temporary 15% income tax credit on eligible home renovation expenditures for work performed, or goods acquired between January 27, 2009 and February 1, 2010. The credit may be claimed on eligible expenditures exceeding $1,000 but no more than $10,000.
The Home Renovation Tax Credit is one of several initiatives to help homeowners and homebuyers that is contained within the Harper Government's Economic Action Plan. Before homeowners, homebuyers, and local construction and building supply workers can benefit from these new initiatives, Parliament must pass the 2009-2010 Federal Budget.
Support for home ownership and the housing sector
28 January 2009
Ottawa, Ontario
For many Canadians, owning a home represents both the achievement of a key life goal and the most important investment of their lives. A robust housing sector is also an important source of economic activity in Canada as it promotes demand for labour, building materials and other goods. To provide needed stimulus in these challenging economic times, Budget 2009 proposes four measures to help Canadians purchase and improve their homes.
Home Renovation Tax Credit
Home renovations can represent a smart investment in the long-term value of a home and generate broad-based economic activity. They can also reduce energy consumption and the long-term cost of owning a home. To support economic growth during these challenging times, Budget 2009 proposes to introduce a temporary Home Renovation Tax Credit (HRTC).
The HRTC will provide a temporary incentive for Canadians to undertake new renovation projects or accelerate planned future projects, thus providing timely stimulus to the Canadian economy while boosting energy efficiency and the value of Canada's housing stock.
How the Temporary HRTC Will Work
The proposed HRTC will provide a temporary 15 percent income tax credit on eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010, pursuant to agreements entered into after January 27, 2009. The credit may be claimed for the 2009 taxation year on the portion of eligible expenditures exceeding $1,000, but not more than $10,000, and will provide up to $1,350 in tax relief.
Who Can Claim the HRTC
The HRTC will be family-based. For the purpose of the credit, a family will generally be considered to consist of an individual, and where applicable, the individual's spouse or common-law partner. Family members will be able to share the credit.
The amount eligible for the credit will be based on the total value of eligible expenditures incurred across all eligible dwellings. A dwelling will generally be considered eligible if it is used for personal purposes. This will include a house, a cottage, and a condominium unit.
It is estimated that about 4.6 million families in Canada will benefit from the HRTC.
Benefits of the Temporary Home Renovation Tax Credit-Examples
The following examples illustrate how homeowners can benefit from the HRTC.
1. Sally and Ed are a couple who have recently purchased a house. To take advantage of the temporary HRTC, they decide to replace their windows and improve the insulation in their home in 2009, instead of waiting, incurring $10,000 in expenditures. After taking account of the $1,000 minimum threshold, a 15-per-cent credit will be available on $9,000 in eligible expenditures, providing tax relief of $1,350.
2. William and Marie are a couple who are planning to purchase a more energy-efficient furnace for their home, and build a deck at their cottage sometime later. To take full advantage of the temporary HRTC, they decide to do both projects in 2009 rather than waiting. They pay $5,000 for the furnace and $3,500 for the deck. They also decide to have the area around the deck landscaped for $2,500, bringing their total costs to $11,000 ($5,000 + $3,500 + $2,500). Marie claims a credit of $1,350 on the maximum allowable amount of $9,000. This credit is in addition to the ecoENERGY Retrofit grant that William and Marie expect to receive for installing a more energy-efficient furnace.
3. Karen and Heather are sisters who share ownership of a condominium unit. They each incur $7,500 in expenditures renovating the kitchen in the condominium, in part to provide access for Heather's wheelchair. Karen and Heather each claim a $975 credit on eligible expenditures of $6,500 ($7,500 - $1,000).
This credit is in addition to the Medical Expense Tax Credit that Heather may claim on the portion of expenses eligible for that credit.
Expenditures Eligible for the HRTC
It is proposed that the HRTC be claimed for renovations and alterations to a dwelling or the land on which it sits that are enduring in nature. For example, homeowners will be able to claim expenditures for major renovation projects such as finishing a basement, renovating a kitchen, or building an addition. Costs associated with such projects will be eligible for the credit, including permits, professional services, equipment rentals and incidental expenses.
Routine repairs and maintenance normally performed on an annual or more frequent basis (e.g. cleaning, lawn fertilization, and snow removal) will not qualify for the credit.
The cost of purchasing furniture, appliances, audio-visual electronics and construction equipment will not be eligible.
Individuals will need to keep receipts for expenditures, and may claim the HRTC when filing their income tax returns for 2009.
Examples of HRTC-Eligible and Ineligible Expenditures
Eligible
Renovating a kitchen, bathroom or basement
New carpet or hardwood floors
Building an addition, deck, fence or retaining wall
A new furnace or water heater
Painting the interior or exterior of a house
Resurfacing a driveway
Laying new sod
Ineligible
Purchase of furniture and appliances (e.g. refrigerator, stove, and couch)
Purchase of tools
Carpet cleaning
Maintenance contracts (e.g. furnace cleaning, snow removal, lawn care, and pool cleaning)
The HRTC will complement support provided by the Government for Canadians to undertake energy-saving improvements to their homes. Federal grants paid through the ecoENERGY Retrofit program will not reduce the value of claims made for these expenditures under the HRTC.
Eligible renovation expenditures claimed under the Medical Expense Tax Credit may also be claimed under the HRTC.
The effectiveness of the HRTC will be enhanced to the extent that retailers also encourage homeowners to undertake renovations to their properties.
It is estimated that this measure will cost $500 million in 2008-09 and $2.5 billion in 2009-10.
''We don't do optimism; we don't do pessimism; we do realism at the Bank of Canada,'' he said. "We don't do spin.''
Julian Beltrame
The Canadian Press OTTAWA
Canada's economy can bounce back next year, but only if the United States and other world governments take "exceptional'' measures to end the crisis in financial markets, says Bank of Canada governor Mark Carney.
The hopeful and sobering assessment comes a month after the central banker put his credibility on the line with what other economists called an overly optimistic forecast pointing to a strong rebound next year after a tough 2009.
''Decisions taken in the coming weeks in the United States and in other major economies to isolate toxic assets in order to create a core of 'good' banks will be critical,'' Carney said in his first appearance before the House of Commons finance committee since the recession hit Canada in the fall.
'If these national and multilateral measures are not timely, bold, and well-executed, Canada's economic recovery will be both attenuated and delayed.''
Shortly after Carney spoke, the U.S. Senate approved President Barack Obama's giant economic stimulus measure, part of a string of powerful government steps that could marshal close to $3 trillion US in taxpayer and private money to revive the collapsing U.S. economy.
The 61-37 vote by the Senate was a key victory for Obama but sets up tough talks with the House of Representatives, which passed a slightly different version than the $838 billion bill approved yesterday.
In another development yesterday, a senior Canadian Finance Department official called the U.S. Senate approval and the pending passage of a bailout package helpful in helping stabilize the financial system and restarting the flow of credit.
The U.S. plan will be a topic at the weekend meeting in Rome of G7 finance ministers and central bank governors where Finance Minister Jim Flaherty is expected to be the lead speaker on a discussion on financial markets.
In his Commons committee appearance, Carney pointed to the U.S. bailout bill as an example of the extraordinary policy initiatives he believes can rescue the global economy. In Canada, MPs approved in principle last week the federal government's budget containing a $40-billion stimulus -- initiatives Carney believes will fully kick in in 2010.
Under skeptical questioning from MPs, the central banker stuck to his prediction of a 3.8 per cent growth in 2010 and dismissed criticism that his forecast was overly rosy.
''We don't do optimism; we don't do pessimism; we do realism at the Bank of Canada,'' he said. "We don't do spin.''
Liberal finance critic John McCallum was encouraged by Carney's optimism, but said he is not convinced the Harper government is committed to rolling out the $40-billion stimulus contained in the budget as quickly and effectively as possible.
Although Canada is doing slightly better than the U.S., McCallum noted that 129,000 jobs were lost in January alone, while personal bankruptcies soared by 51 per cent nationally in December from a year ago -- indications the slump is broadening.
The TD Bank has estimated job losses could hit 325,000 by year's end, pushing the unemployment rate to 8.8 per cent.
In another sign of the bleak times, General Motors Corp. became the latest of a growing list of companies announcing massive layoffs. It said it is cutting 10,000 salaried employees worldwide, including an unspecified number in Canada, where the company has 2,000 white collar workers.
Economists expect the Canadian economy to shrink by more than one per cent this year as the troubled manufacturing sector in Ontario and Quebec continues to shed employment and resources industries in Western Canada cut jobs to cope with lower prices for oil, grain, metals and minerals.
The greatest compliment we can receive from our clients is the referral of your family, friends and colleagues. We promise to treat anyone you refer with the greatest consideration. Thank you for your loyalty.
Sincerely,
Gemma Riley-Laurin, AMP (LIC # M08005023)& Kevin Laurin (LIC# M08004955)
The Laurin Team
Integrity Financing Inc #10933
www.thelaurinteam.com
info@thelaurinteam.com
Home Buyers' Plan
The Home Buyers' Plan (HBP) allows first-time home buyers to withdraw amounts from a Registered Retirement Savings Plan (RRSP) to purchase or build a home without having to pay tax on the withdrawal. Budget 2009 proposes to increase the HBP withdrawal limit to $25,000 from $20,000.
First Time Home Buyers' Tax Credit
The First Time Home Buyers' Tax Credit is an income tax credit to offset closing costs such as legal fees and disbursements and land transfer tax. The credit is applied on closing costs up to $5,000, which equates to a maximum tax savings of $750.
Get to Know US
Welcome to the Laurin Team - your source for mortgages and financing in Ottawa from Gemma Riley-Laurin, Kevin Laurin and Kristin Stauffer.
With more than 20 years of combined experience in the financial industry our goal is to offer mortgage solutions, that best suit our clients' individual financing needs.
Our focus is to ensure that our clients gain the knowledge necessary to make sound financial decisions around their borrowing needs. We offer professional and personal service for residential and commercial needs.
ontact Info:
Gemma Riley-Laurin & Kevin Laurin, AMP Mortgage Agents
Kristin Stauffer, Mortgage Agent
www.thelaurinteam.com
Office: (613)845-0786
Gemma direct: (613)290-0196
Kevin direct: (613)794-3846
Kristin direct: (613)697-8021
Gemma email: gemma@thelaurinteam.com
Kevin email: kevin@thelaurinteam.com
Kristin email: kristin@thelaurinteam.com
The art of mortgage renegotiation
ROB CARRICK Globe and Mail Report on Business
Falling mortgage rates have revealed yet another way the banks are charging their clients more in these financially stressful times.
Rates on mortgages have fallen a lot in the past several months, prompting many people to ask about renegotiating in order to cut costs. “The bulk of my business today is people breaking their mortgages,” said Jim Tourloukis, a mortgage broker with Advent Mortgage Services in Markham, Ont.
The problem in breaking a mortgage is the penalty that lenders charge. Banks typically have two ways to calculate the penalty and recently they've switched to the more expensive one.
A little context may help you gauge how annoyed you should be about this. With a recession and global financial crisis hurting their revenues, the banks have been pushing up interest rates on lines of credit, charging more in service fees and adjusting credit card rules to extract more money from clients. Mortgage penalties are somewhat different in that they're mainly influenced by what's happening with interest rates.
It's boilerplate in mortgage contracts for penalties associated with breaking a loan to be set at the greater of three months' interest or the difference between the interest the bank could make on your mortgage as originally arranged versus lending money out at current rates.
Mr. Tourloukis explained that three months' interest was the typical penalty until rates began to fall hard in the past couple of months. Now, the so-called interest rate differential, or IRD, is the larger penalty.
“The spread between the client's rate and what banks can lend money for now has grown dramatically,” he said.
If you have any thoughts of breaking your mortgage, get on it today. If mortgage rates fall further, and they could ease a little bit more, then interest rate differentials will grow in size and cost you more.
Mortgage brokers say breaking your mortgage is worth some thought if your current rate is in the low 5-per-cent range or more.
The first step in breaking a mortgage: Ask your lender what your penalty would be. There's no standardized calculation of penalties, so your number will depend on your lender's own policies and personal circumstances like the amount you've borrowed and the number of years left on your mortgage.
In some cases, breaking your mortgage just won't make sense because of the steep IRD amount. “If you have a lot of time left on your term, it could be deadly,” said Vince Gaetano, vice-president at Monster Mortgage in Toronto.
Practices vary widely among banks, but one method for calculating the IRD is to compare a client's original rate against the posted rate for the term that corresponds with the remaining time left on the mortgage. Example: You're two years into a five-year mortgage, so your IRD would be calculated using the current posted three-year rate.
Once you know your penalty, ask your lender to show you how much interest you'd save by renegotiating with the best possible current rate. If the penalty overwhelms the potential savings, then you have a couple of options beyond giving up.
One is to try and negotiate the penalty lower, or have it eliminated altogether. Mr. Tourloukis said lenders have the discretion to help clients out this way.
Another is to chop the amount of money you owe on your mortgage, thereby reducing the penalty for breaking the loan. The way to do this is to take advantage of the prepayment privileges built into most mortgages.
For example, you might be allowed to prepay as much as 20 per cent of your outstanding balance in a year without incurring any charges. Make this lump-sum payment and then get a quote on the penalty to break your newly shrunken mortgage.
There are a couple of strategies to look at if you'd benefit from breaking your mortgage but can't afford the penalty charge.
One is to take the cost and add it to your mortgage balance. In some cases you'll still end up paying less interest than if you stayed with your current mortgage.
Another possibility is a blend and extend, where you jump into a new mortgage that blends your existing rate with the lower current rate and extends your term by a few years. There's no penalty charged in a blend and extend, but you won't save as much as you would if you paid the penalty and got the best possible current interest rate.
Falling mortgage rates have revealed yet another way the banks are charging their clients more in these financially stressful times.
Rates on mortgages have fallen a lot in the past several months, prompting many people to ask about renegotiating in order to cut costs. “The bulk of my business today is people breaking their mortgages,” said Jim Tourloukis, a mortgage broker with Advent Mortgage Services in Markham, Ont.
The problem in breaking a mortgage is the penalty that lenders charge. Banks typically have two ways to calculate the penalty and recently they've switched to the more expensive one.
A little context may help you gauge how annoyed you should be about this. With a recession and global financial crisis hurting their revenues, the banks have been pushing up interest rates on lines of credit, charging more in service fees and adjusting credit card rules to extract more money from clients. Mortgage penalties are somewhat different in that they're mainly influenced by what's happening with interest rates.
It's boilerplate in mortgage contracts for penalties associated with breaking a loan to be set at the greater of three months' interest or the difference between the interest the bank could make on your mortgage as originally arranged versus lending money out at current rates.
Mr. Tourloukis explained that three months' interest was the typical penalty until rates began to fall hard in the past couple of months. Now, the so-called interest rate differential, or IRD, is the larger penalty.
“The spread between the client's rate and what banks can lend money for now has grown dramatically,” he said.
If you have any thoughts of breaking your mortgage, get on it today. If mortgage rates fall further, and they could ease a little bit more, then interest rate differentials will grow in size and cost you more.
Mortgage brokers say breaking your mortgage is worth some thought if your current rate is in the low 5-per-cent range or more.
The first step in breaking a mortgage: Ask your lender what your penalty would be. There's no standardized calculation of penalties, so your number will depend on your lender's own policies and personal circumstances like the amount you've borrowed and the number of years left on your mortgage.
In some cases, breaking your mortgage just won't make sense because of the steep IRD amount. “If you have a lot of time left on your term, it could be deadly,” said Vince Gaetano, vice-president at Monster Mortgage in Toronto.
Practices vary widely among banks, but one method for calculating the IRD is to compare a client's original rate against the posted rate for the term that corresponds with the remaining time left on the mortgage. Example: You're two years into a five-year mortgage, so your IRD would be calculated using the current posted three-year rate.
Once you know your penalty, ask your lender to show you how much interest you'd save by renegotiating with the best possible current rate. If the penalty overwhelms the potential savings, then you have a couple of options beyond giving up.
One is to try and negotiate the penalty lower, or have it eliminated altogether. Mr. Tourloukis said lenders have the discretion to help clients out this way.
Another is to chop the amount of money you owe on your mortgage, thereby reducing the penalty for breaking the loan. The way to do this is to take advantage of the prepayment privileges built into most mortgages.
For example, you might be allowed to prepay as much as 20 per cent of your outstanding balance in a year without incurring any charges. Make this lump-sum payment and then get a quote on the penalty to break your newly shrunken mortgage.
There are a couple of strategies to look at if you'd benefit from breaking your mortgage but can't afford the penalty charge.
One is to take the cost and add it to your mortgage balance. In some cases you'll still end up paying less interest than if you stayed with your current mortgage.
Another possibility is a blend and extend, where you jump into a new mortgage that blends your existing rate with the lower current rate and extends your term by a few years. There's no penalty charged in a blend and extend, but you won't save as much as you would if you paid the penalty and got the best possible current interest rate.
Wednesday, February 18, 2009
Obama launches stimulus package
The Associated Press
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