November 23, 2007
The Experts at TD bank have changed their minds. They now believe
that the Bank of Canada will reduce Prime twice over the next 2
months. Previously they thought the Bank of Canada would leave prime
alone for the next 9 month at least.
Those who have a variable rate mortgage or are thinking about a
variable rate mortgage should be happy.
November 23, 2007
We, at True North Mortgage, have been stumped by the persistence of
the 5 year rate to not drop given the decline in rates in the
underlying bond market.
The following article from the Globe & Mail addresses this issue.
"Historically speaking, we should be paying somewhere around 5 per
cent for a discounted five-year mortgage right now.
The fact that we're paying close to 6 per cent shows how tough it is
to be a borrower of any type in a financial world turned squirrelly by
the troubles in the U.S. subprime real estate market. It's costing
banks more to borrow the money they in turn lend out as mortgages and,
naturally, this extra cost is being passed along to borrowers.
A good measuring stick for the cost of a five-year closed mortgage is
the yield on five-year Government of Canada bonds. Data provided by
Bob Dugan, chief economist at Canada Mortgage and Housing Corp., shows
that posted five-year rates at major lenders have on average been
priced at 2.44 percentage points above five-year Canada bonds for the
past 7? years. In other words, a five-year bond yield of 5 per cent
would suggest posted mortgage rates of 7.44 per cent on average.
In September, the spread between posted five-year mortgages and the
five-year Canada bonds was 2.9 percentage points, Mr. Dugan's numbers
show. In October, it rose to 3.21 percentage points and this week it
reached 3.61 percentage points.
People in the banking sector link the rising spreads to the increased
rates the banks must now pay on the investments they sell in order to
generate the funds lent out as mortgages. Whether the banks are
selling guaranteed investment certificates or pooling their mortgage
loans and selling pieces to institutional investors, they have to
offer higher rates today than they did before the implosion of the
U.S. subprime mortgage market this past summer.
November 21, 2007
Information provided by Globe & Mail
After three successive months of declines, sales of existing homes in Canada unexpectedly reversed course in October, gaining 1.3 per cent from the previous month.
The gain is most likely an aberration rather than a sustainable trend, however, and sales are expected to decline gradually for the rest of the year and in 2008, said Gregory Klump, chief economist at the Canadian Real Estate Association (CREA).
"The rebound was particularly surprising because it was spread right across the country in a number of major markets," Mr. Klump said. "However, we are still expecting that sales will gradually erode, primarily due to a decrease in affordability."
Sales of resale homes rose to 28,966 units in October, a 7.6-per-cent increase from the same month last year, according to statistics from CREA.
Activity rose in Toronto, Edmonton, Hamilton-Burlington, Montreal, Quebec City and Winnipeg. Stronger sales in these markets offset declines in Calgary, Vancouver, Saskatoon and Sudbury - cities that have experienced huge home price increases in the past year.
The average price of a resale home in Canada rose 10.6 per cent to $333,544 in October from last year, the sixth consecutive month in which the increase has exceeded 10 per cent.
In Toronto, Regina, Saskatoon and Montreal, average prices reached their highest levels on record.
Sales activity in most major centres has been strong at the high end of the market, probably because there's a dwindling supply of lower-priced homes left in many cities, Mr. Klump said.
Listings of residential properties on the Multiple Listing Service decreased slightly in October from September, but they still reached their fifth-highest monthly level on record.
"Negotiations still favour the seller in nearly all major markets," Mr. Klump said.
Sales levels are expected to edge down as higher home prices and rising mortgage rates continue to squeeze buyers out of the market. The posted rate on a five-year mortgage at the big banks is currently sitting at 7.44 per cent - 1.5 percentage points higher than where it was in April.
While sales activity is expected to slow next year, it should still be a strong year, Mr. Klump said.
"This will be a gradual slowdown but it doesn't portend disaster. [Next year] is still expected to be one of the best years on record, second only to 2007," he said.
November 09, 2007
If you are looking to watch Dan Eisners' presentation on the Dragon's Den you can view it at
You can also view an interview with Dan Eisner done with Kemton
November 06, 2007
All of us at True North Mortgage wish to thank everyone for the support and well wishes we have received from across Canada. We would especially like to thank ING Direct and our many other lenders for their continued support.
We are grateful that CBC allowed us to pitch our business on the Dragons' Den and extend our gratitude to the dragon's who showed their support for our business by making an investment offer. You can learn more about us at www.truenorthmortgage.ca.
Many of you are likely curious to know the results of the dragons' offer and how things proceeded after the show was taped in June.
The due diligence process was completed by the end of July and went fairly quickly and smoothly. We were given a letter of intent which very closely matched the offer made on the show. It included investments from Jim, Arlene and Kevin whom offered us a $250,000 debenture (loan) convertible into 50% of the company's shares at the Dragon's option.
However, the letter of intent did not include many of the details that we required in order to ensure the ongoing support of the Dragons. We went back to the Dragons numerous times with additional clauses but were repeatedly rebuffed.
Thus, after much deliberation we decided not to go ahead with the deal.
We could not get comfortable with the level of proactive leadership and tangible management support we would receive from the Dragons in the future given the level of equity we were giving up and the very modest valuation the Dragons' were willing to place on this business. (~0.70 of 2007 EBITDA, for you MBA dudes)
True North Mortgage continues to grow organically, with a second store scheduled to open in February of 2008 and a third by mid 2008. The new stores will be located in the Calgary downtown core.
If you are a skilled mortgage broker located in Calgary and have previous banking experience and good attitude, please send you resume and cover letter to email@example.com
We serve Canadians from coast to coast through our website at www.truenorthmortgage.ca. For ?No Fees, Great Rates? please check us out.
The Team at True North Mortgage
November 02, 2007
This morning, Statistics Canada released the jobless (unemployment) data for October. The results were very surprising and caught most economists by surprise (again). In October, Canada added 63,000 jobs across the country. Remember, this is net of all the job losses we continue to read about in the manufacturing sector. Hourly wages increase 4.1% vs. the same period one year earlier.
This has two implications for the economy:
First, this news suggests the Bank of Canada (BOC) will be staying put at its next interest rate meeting in December. Now, a lot could happen between now and December, but all things being equal, we can expect Prime rates to remain stable for the foreseeable future. That might not be good news for ARM and HELOC customers, who were expecting the BOC to cut rates to keep the Canadian Dollar in check.
Second, the Canadian dollar briefly shot above $1.07 U.S. on the jobless data which puts further pressure on our exporters. However, it also puts more pressure on retailers who will be forced to adjust prices to reflect U.S. pricing in order to ensure they have a strong holiday season. The combination of price cuts with the increase in jobs is expected to help shield the Canadian economy from slower exports to the U.S. as consumer spending is expected to remain strong.
Regional Data can be found in the Globe and Mail online at http://www.reportonbusiness.com/v5/content/datamap/canada/jobs_20071102.html
The above link shows the jobless rate by province and major cities. Most provinces and major cities posted declines in the jobless rate (meaning more new jobs).
Document provided by Merix Financial
November 01, 2007
Are you looking for something exciting to watch, but can't stop thinking about your mortgage. Well, you don't have to. Tune into CBC on Monday (Nov. 5th) night to watch yours truly (Dan Eisner) present the True North Mortgage business to the Dragons on CBC's Dragon's Den at 8:00pm.
The Dragon's Den is a reality based television program that originated in Japan. The format, which now airs internationally, consists of entrepreneurs pitching their ideas to secure investment finance from business experts - the "Dragons".
Our segment will last no longer than 10 minutes so don't blink; then the next morning check out the True North Mortgage blog at http://truenorthmortgage.blogspot.com/ to find out the rest of the story.