Bank of Canada Maintains Overnight Rate

As many expected, there were no big surprises in this morning’s Bank of Canada announcement, where maintenance was the name of the game. There are also no changes anticipated for the remainder for 2010, and at least the early part of 2011.

Even though Canada's recovery is proceeding at a moderate pace, although the economic activity in the second half of 2010 appears slightly weaker than the bank projected in its October Monetary Policy Report. The same cannot be said for the sluggish US and European economies, as well as the emerging financial crisis in Ireland. Banks prime rate holds at 3%

Click her to read the complete article

Global troubles bring some good news for Canada: low interest rates

Looks like Canadians may be enjoying the record low interest rates for some time. Since June the Bank of Canada has been trying to normalize the banks overnight rate, they attempted to do this by increasing the overnight rate by .75% this past summer to 1% (3% bank prime rate). The Bank of Canada would like to see the rate increase to around 3.5% (5.5% bank prime rate) which is ideal for a balanced economy, economists believe.

This is now unlikely for some time due to the recent developments of a slower recovery in the US and in Canada, as well as the re-emergence of the European debt crisis.

Look for bank of Canada governor, Mark Carney to hold off hiking rates until at least July 2011. This is good news for most Canadians borrowing money and especially if you have a variable rate mortgage.

Click here to read the full article

Don't Expect Housing Prices to Drop Dramatically in 2011

Claims that Canada’s housing market is ready to pop are exaggerated, say economists at BMO Nesbitt Burns.

Instead, they say the market can more realistically be labelled “moderately overvalued” based upon a comparison of house prices with personal income. They also note that mortgage servicing costs for “typical” homebuyers are running near the long-term norm of 34%.

“Barring a sharp spike in mortgage rates or a relapse into recession, a substantial price correction is unlikely to occur,” economists Earl Sweet and Sal Guatieri wrote in their research report.

They noted, however, that Canadians would have a hard time dealing with a sudden 3% hike in mortgage rates. That would weaken affordability “substantially” and, in turn, drive down demand and home prices.

Click here to read the BMO Nesbitt Burns research report.

Slow Economic Growth slows interest rate hikes

Interest rate hikes appear to be on the back burner for the foreseeable future after Bank of Canada Governor Mark Carney said Thursday that overstretched households and weak US demand would crimp economic growth in the coming months.

At a speech in Windsor, Ontario, Carney said Canadians should brace for months of “modest” economic growth, acknowledging this will be reflected in the bank’s revised forecast to be released October 20th, in which third- and fourth-quarter estimates would be lowered. Any additional increases to interest rates in this environment would warrant “caution,” he added.

The remarks reinforced a growing belief among Bay Street traders that the odds of another rate hike this year were dwindling to nearly zero. Plus, data released Thursday indicated the economy contracted in July by 0.1% from June levels, the first monthly decline in almost a year.

Economists said Thursday’s speech and the GDP report point to a central bank that’s done with rate hikes for now. Click here to read the full article

Bank of Canada Raises Rates

Bank of Canada Governor Mark Carney raised his benchmark interest rate for the third straight time today, but left himself room to pause at his next scheduled decision by saying that while borrowing conditions in Canada remain “exceptionally stimulative,” the overall economic climate is fraught with “unusual uncertainty.”

In the statements on his decision to lift the overnight rate by another quarter of a percentage point to 1% (Bank lending rate is now 3%) Carney reiterated – arguably more strongly than in the past – that future moves will depend on developments around the world and, in turn, how they are affecting Canada’s export-heavy economy.

“Any further reduction in monetary stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook,” the central bank said, tweaking language in the all-important last line of the statement, which in the two previous versions referred to “considerable” uncertainty. Click here to read the full article in the Globe and mail

10 easy ways to build a credit history

I constantly run in to couples where one of them has no credit due to the fact that their spouse has the credit and they have a spousal card and assume that they have credit as well. This is not true and the reality is if they do not have their own credit cards or loans they will not be building credit, which can seriously affect their ability to borrow.

Everyone needs to have the ability to borrow money. That’s true whether you’ve just found yourself in the new role of single parent without an emergency fund, you’re a young adult starting out, or in the case above. The reality is that if you want to borrow money you must have a strong credit history. Gale Vaz-Oxlade of Yahoo Canada Finance outlines 10 easy ways to build your credit history. Click here to read the full article.

5 Expenses That Will Consume 50% of Your Lifetime Earnings

Ever wonder where all of your money goes? below are the top 5 expenses for North Americans that will consume at least 50% of your income.
1. home
2. vehicle
3. kids
4. Education
5. retirement

Click here to read the full article from Forbes for some helpful hints and guidelines to keep this in check.

Variable Rate May No Longer Win

Over the past 50 years consumers have saved money by choosing a variable rate mortgage, as long as they hold onto that variable rate over their term. Variable rate is still a lower option, but with the pending increase in the prime rate of another 1/4% in September and fixed rates close to historic lows, more Canadians may be favoring the fixed rates.

Fixed or variable, this seems to always be the question. One answer is if you are currently in a variable rate mortgage and are comfortable with your financial situation and don't need to fix your mortgage payments, you may want to ride it out. Click here to see the complete article form the Financial Post

Bank of Canada Raises rate by .25%

The bank of Canada announced today that it is again raising the overnight rate by 1/4% today (bringing the bank prime rate to 2.75%). This rate increase was expected by most annalists and the major banks. The overall Canadian economic recovery pace has slowed down slightly from what was originally expected.

The Bank expects the economic recovery in Canada to be more gradual than it had projected
Inflation in Canada has been broadly in line with the Bank's April projection. While the Bank now expects the economy to return to full capacity at the end of 2011, two quarters later than had been anticipated in April, the underlying dynamics for inflation are little changed. Both total CPI and core inflation are expected to remain near 2 per cent throughout the projection period, which should keep the interest hikes at a manageable level.

HST how does it work?

HST comes into effect for every one who resides in British Columbia tomorrow. What does that mean to have average person living in BC? How much is it going to increase your cost of living each year and what is going to be taxed differently. Click here for the New HST website to help you figure it out.

Fixed or Variable Rates? Why not both?

when getting a new mortgage or if you are renewing our current mortgage, the big question is do you go with a variable (floating rate) or take the security of a fixed rate. In recent years a number of lenders will allow you to have both mortgages, under the umbrella of one mortgage. In laymen terms they are called combination or hybrid mortgages, where the lenders will allow you to take advantage of the very low variable rate for a potion of your mortgage and put the rest in a secure fixed rate. This gives you the best of both worlds. When using a mortgage broker you will always get the wholesale rates as well as the right advice to determine if this type of mortgage is best for you. Please click here for the complete article form National Post.

Bank of Canada Raises rate by .25%

After more than a year at a record low level, Bank of Canada Governor Mark Carney raised the benchmark interest rate for the first time since 2007 by one-quarter percentage point to 0.5 per cent(banks prime rate to 2.5%). This is the first time since 2007 that that rate has increased and the Bank of Canada is the first in the Group of Seven to do so since the financial crisis and recession began in 2008.

In a statement Carney emphasized that the increase should not be interpreted as just the first of more to come. "This decision still leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in light of the significant excess supply in Canada, the strength of domestic spending and the uneven global recovery,'' the central bank said. ``Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.''

Click here to read the BOC press release.

BOC expected to raise rates June 1st

Higher than expected inflation, strong retail sales and the fact that Canada is leading the economic recovery are just some of the reasons we may see a rate hike when the Bank of Canada meets June 1st. Domestically speaking all signs point to a rate increase of probably .25%. The record low interest rate is of .25% is too low considering our economic position the past few months, and was kept there this past year as an emergency action to stimulate consumer spending.

To read the full story click here

Tips on how to make use of your tax refund

1. Pay down your RRSP loan or make your 2010 RRSP contribution now

2. Pay down credit card debt
(interest on some credit cards can eat away at your savings. Reduce the cost of credit by using your tax refund to reduce or pay down your credit card balances, targeting the highest rates first).

3. Lump sum mortgage payment
(if you have a mortgage, it is a good idea to use your tax refund to make a lump sum payment. Applied directly to your principal, a lump some payment could save you significant dollars in interest costs over the life of the mortgage).

4. Top-up your TFSA
(if you are not carrying any extra debt then make your refund work for you. Contributing to a Tax-Free Savings Account (TFSA) can let you grow your money tax free. Even if you maxed out your TFSA contribution in 2009, you have room for an additional $5,000 this year).

5. Save for education
(an education can be an expensive thing. Contributing to a Registered Education Savings Plan (RESP) can help alleviate some of the pressure that all parents feel when planning for their children's future. Consider opening an RESP using your income tax refund. A $2,500 dollar contribution to an RESP can earn a $500 grant from the government. Maximize your contributions every year and you could earn up to $7,200 in lifetime grants for every child).

Bank of Canada says rate increase may be coming as soon as June 1st.

The Bank of Canada signaled Tuesday that a half point rise in the overnight rate could happen as early as the June scheduled rate announcement. Canadians may even be hit with a 1/2 point rate increase at the next announcement June 1st. The premature move, a month ahead of the scheduled July increase, is due to a stronger than expected economic recovery. A rate hike in June would position Canada 1st amongst the G7 countries to raise rates.

Click here to read the full article.

$450-million complex/casino coming downtown

The B.C. government announced their plans yesterday to develop a new $450-million retail and entertainment complex just west of BC Place downtown. It will include 2 hotels, a new casino and 5 restaurants.

Read about it and see a video HERE

Interest rates may rise sooner than expected

Bank of Canada Governor Mark Carney acknowledged today that inflation is running hotter than he had predicted, and emphasized the central bank’s commitment to containing price increases, a combination of fact and nuance that increases the odds of an interest rate increase within the next few months.

The measure of inflation the central bank uses as a guide to where overall prices are headed touched 2.1% in February, a pace the Bank of Canada was not expecting until at least the second half of 2010.

“Core inflation has been slightly firmer than projected,” Carney said in the text of his speech to the Ottawa Economics Association.

Some economists have dismissed the stronger core rate as the result of temporary factors, such as a surge in hotel costs related to the Vancouver Olympics. Carney agreed that some of the increase is the result of “transitory factors”, but also said that a “higher level of economic activity” is also playing a role, suggesting policymakers are taking the jump in the core rate seriously.

Click here to read the full article

Housing Market to stay very stong through Spring 2010

Looks like Canada's housing boom will continue throughout the Spring. The inevitability of rates rising sometime later this year, combined with historically record rates on both the variable and fixed rates have kept Canadians on the hunt for properties. Other factors include buyers hoping to get into the market before the tighter mortgage rules come into effect April 19th, and the HST in July.

Click here to read the full article

The effects of our rising Canadian Dollar

Financial experts are saying that even with the Canadian dollar hitting par with the US, it may not slow down the inevitable rate increases that are planned by the Bank of Canada later this summer.

David Rosenberg, chief economist at Gluskin Sheff + Associates says "The Bank of Canada has had ample opportunity to talk the money markets out of pricing in a series of interest rate hikes beginning this summer,"

A strong dollar, which slows down our domestic trade to the US is supposed to slow our economic recovery by keeping inflation below the target 2% rate, thus keeping interest rates low. I guess we will have to wait and see.

To read the full article click here

Young Canadians lead home buying this year

If you're between the ages of 18 and 24- you're the age group expected to lead the way in home buying this year in Canada.
This according to a new survey done by Royal Bank; they found that 15% of Canadians in this age group are very likely to buy this year, almost double that of last year. And 35% of young Canadians are intending to buy a home due to "good real estate prices and low interest rates".

Canadian Press says " It's a marked shift in the attitudes of younger Canadians, who have tightened their budgets over the past few years to cope with tough jobs markets and the recession."

Read the full article here

Sales better than expected during the Olympics

We won't know for a while what the long-term impact the Olympics will have on the housing market in the lower mainland, but real estate activity during the month of Feb was better than expected.
The Real Estate Board recorded 2,473 sales this February, almost 30% higher than January and close to double the 1,480 sales from last February.

Read the full article from the Vancouver Sun here

Bank of Canada keeps historic low rate

Bank of Canada has kept the overnight rate at the historic low of .25% (prime rate 2.25%). The key factors for the decision was positive 4th quarter growth in 2009, as well as the high CDN dollar that is keeping exports to the US very low. They don't expect a rate increase until at least July 2010. Please click the link for the full Globe and Mail article.

Click here to read the entire Globe and Mail article

Bank of Canada announcement Tuesday

The Bank of Canada is making an announcement on Tuesday March 2nd and it won't be that mortgage rates are going up, yet. Forecasters expect the Bank to Canada to keep their promise of no rate increases until June 2010 and keep the current overnight rate of .25%. But rates are still expected to rise near the end of the year.

Read the full article here

New mortgage rules announced for insured mortgages

New Changes to mortgage insurance Rules takes effect April 19th.

Federal Finance Minister Jim Flaherty announced prudent changes to mortgage insurance rules intended to come into force on April 19, 2010.

• All borrowers must meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term
• The maximum amount one can withdraw in refinancing their mortgage will be reduced to 90% from the current 95% of the value of one's home
• Non-owner occupied properties(rentals or investment properties) will require a minimum down payment of 20%, this is a change from the minimum 5% down.
  

There were no changes to down payment requirements or length of amortizations for owner-occupied residences.

*picture courtesy of Financial Post