September 27, 2006
There is a lot of discussion on the US housing market and what impact the decreasing Real Estate sector in the US will have on the overall economy and consumer spending in the US. The forecast for Real GDP growth is only 1.0% for the US in Q2 2007 versus an actual 2.9% growth rate for Q2 in 2006.
This may seem dismal, but fortunately for the US economy, labour income is back on the rise and should offset some of the fallout from loss of home equity purchasing power. Since wage growth is typically the way Americans financed consumption in the past, consumption being driven the old fashioned way will assist the US economy in coming months.
Also, the Fed Funds rate is at its highest level in 5 years, so there's plenty of room to lower rates to help boost the economy.
There's a prediction of a 50 bp decrease in the Fed Funds rate over the next 9 months.
The Canadian housing sector, in general, has not experienced the same run up in prices, so the threat is far less here. The issue here is the Canadian Dollar, perhaps even hitting 92 cents this year, causing the Ontario economy to falter below 2% growth rate. The Bank of Canada will not want to see a higher CDN Dollar. The prediction is for three 25 bp reductions in prime over the next 9 months or so.
This will help keep the energy driven CDN Dollar from further damaging the Canadian economy.
Bond Yields are also predicted to fall by over 50 bps in the next 9 months. The markets will likely not worry about another hike in rates and potentially see some rate reductions.
Got a mortgage question? Give us a call or visit http://www.blogger.com/www.truenorthmortgage.ca.
True North Mortgage
September 05, 2006
Your Mortgage Update
Rates are going down!Canada's lower inflation rate, nearly 2% lower than the United States' economy is generating, will allow the Bank of Canada to steer a lower course on interest rates. Much of the credit to the lower inflation rate can be attributed to the stronger loonie.Prediction is that the Fed in the US has slightly overshot rate hikes and will reverse course in 2007, lowering the rate to 4.75% from its current level of 5.25%.With core inflation much lower in Canada, the Bank of Canada may have to lower rates further here due to the strong Canadian Dollar weighing heavily on non-resource exporters. The prediction is for Prime to fall from its current level of 6.00% to 5.25% by June 2007.The bond market is predicted to perform well over the next 12 to 15 months with the 10 year benchmark Gov't bond yield moving from its current level of 4.32%, down to 3.95% in June 2007 and 4.00% in Dec 2007. So basically low and even lower interest rates for fixed rate mortgages as well as variable rate mortgages are predicted for the remainder of 2006 and for all of 2007 which will continue to support a strong real estate and housing market in Canada.If you think a closed varibale rate mortgage is right for you, don't look any further than our prime minus 0.95% mortgage.No Fees, Great Rates!Sincerely, --The Team at True North Mortgage 1-877-248-6677
August 16, 2006
Interest article for people looking to bu a rental property
Rental squeeze set to tighten
Tuesday, August 15, 2006
There will be no relief for Calgary renters looking for new accommodation in 2007.
A national housing agency report forecasts this year and next to be one of the tightest periods ever for the city's apartment market.
Canada Mortgage and Housing Corp. said Monday that Calgary's vacancy rate will end up at 0.6 per cent this year and in 2007, the lowest level in Canada. The minuscule vacancy rate is a boon for landlords -- some of whom are increasing rents in Calgary after three years of flat prices -- but a serious headache for renters.
"It has been so stressful," said non-profit sector worker Kirsteen Connelly, 35, who learned -- to her relief -- she had snagged a two-bedroom apartment Monday. Connelly and her husband, Phil, are expecting a baby in December and had been looking for a home for the past month.
At one point, the couple viewed an apartment alongside two dozen other people. "I've been close to tears more than a couple of times," she said.
CMHC's forecast counts units in buildings that have three or more rental spots and are available for immediate occupancy.
Richard Corriveau, a Calgary-based economist for the CMHC, said Calgary is approaching the record-low vacancy level of 0.5 per cent seen in 1997 -- when the city grew rapidly without the scale of home building seen now.
"Obviously this gives rise to some significant rent increases, which we're already experiencing," Corriveau said.
However, "when people see vacancies that low and 20 per cent rent increases, they see that as a market that is extremely tight and does give additional incentive to produce new units."
CMHC said Edmonton also will be one of the tightest rental markets in the country, with a forecast vacancy rate of 1.5 per cent this year, dropping to one per cent the next.
The housing agency report came the same day the provincial NDP called on the government to create a ministry of housing.
"We've got a crisis brewing right across the province," MLA Ray Martin said. "At least the Lougheed Conservatives saw the need to do some planning when you have an overheated economy."
The NDP said a ministry dedicated solely to housing existed from 1982-86, and it co-ordinated the policies for housing across the province.
Martin said it could be created without adding to government bureaucracy if another department was trimmed. "Things are going to get worse before they get better, if we don't start to make some fundamental changes."
Jason Chance, a spokesman for Seniors and Community Supports, said the department is already a one-stop shop for housing programs for low income Albertans. "We've been quite effective in not only establishing new housing opportunities, but we've also created an effective support mechanism for those units that we've already got in place."
Earlier this month, Premier Ralph Klein rejected the NDP's call for a task force on homelessness, saying that his government is doing enough already.
Over the past four years, the federal and provincial governments have spent about $200 million in Alberta helping to build 3,200 affordable housing units. About $36.5 million of that has been spent in Calgary.
But criticism of the government's housing policy also comes from other quarters. Stephen Shawcross, a Calgary director with the IBI Group -- an international urban design consulting firm -- said both the federal and provincial governments are abrogating their responsibilities by not implementing concrete plans to spur the development of affordable housing.
Offering incentives to investors to built rental accommodation and allowing "granny suites" over garages are just two options, he said.
"There are solutions to the problem," Shawcross said. "This isn't rocket science. It takes political will."
The space crunch in Calgary has also motivated Calgary social justice activist Grant Neufeld to organize a coalition dedicated to improving protections for tenants. A meeting will be held to discuss the yet-unnamed organization tonight at 6 p.m. at the Old Y building, 223 12th Ave. S.W.