No Bank of Canada rate change

The Bank of Canada announced that it is maintaining its target for the overnight rate at 1 per cent. As a result, the prime rate will remain at 3.00%, much to the benefit of variable rate mortgage holders.



In a press release, the Bank of Canada gave the following reasons as to why they took another pass on a rate hike this time around:



"The outlook for the global economy has deteriorated (since October)."
"...very favourable financing conditions are expected to buttress consumer spending and housing activity."
"...the ratio of household debt to income is projected to rise further."
"The economy is only anticipated to return to full capacity by the third quarter of 2013, one quarter earlier than was expected in October."
"With the target interest rate near historic lows and the financial system functioning well, there is considerable monetary policy stimulus in Canada."



The next Bank of Canada rate meeting is March 8, 2012. It is expected to continue with no rate change at this meeting too.
What does this mean for you , the average consumer? If you have a variable rate mortgage or a line of credit, your interest rate will remain the same at least until March 8th. If you have a fixed rate mortgage, this announcement does not affect you at all.
By the way, if you have an unsecured line of credit you are probably paying about 6% now. If you own a home, you can get a line of credit secured against your home and pay about 3.50%. This can be a considerable saving. Contact me for more information on how you can save money.

Popularity of reverse mortgages increasing - Study

The need for an improved cash flow in retirement is leading to record number of reverse mortgages in Canada, according to a HomEquity Bank study.

The report released by the only national provider of reverse mortgages in Canada notes its reverse mortgage originations were up 42% in the fourth quarter of 2011. On an annual basis, the company originated $239 million in reverse mortgages, a 16% year over year jump.

As at December 31, 2011, the bank’s portfolio of reverse mortgages of $1.2 billion was 17% higher than at the end of 2010.

“Since its inception 25 years ago, HOMEQ Corporation has analyzed the demographic wave of Canadian seniors and how our business can address these trends,” said Steven Ranson, president and CEO.

“Now, the wave is here and we are meeting seniors’ needs for improved cash flow in retirement. This tremendous market demand is fuelling our strong growth in originations, while our disciplined approach to operating the business is resulting in healthy net income growth.”

Reverse mortgages are offered to Canadian homeowners 55 and older and have no income, credit or health qualifications. Unlike traditional loans, borrowers don’t have to service the interest or repay the principal for as long as they own their home and are living in it.

Experts like Bryan Yu, economist, Central 1 Credit Union, are watching this trend closely. “It really speaks to the overall economic environment, but also over the longer term we’re looking at the demographic that are involved with reverse mortgages.”

Over the next 20 to 25 years, the Canadians population over 55 years will reach 10 million, Yu says, predicting that retirement tools such as reverse mortgage are going to get more popular.

“Instead of making a downward move [selling property] they might want to stay within the own home and [a reverse mortgage] provides them another tool that allows them to stay in place, but also obtain an income flow from that asset without selling it.”
If you have any questions about reverse mortgages and whether they are right for you or your parents Contact me to discuss this without any obligation. .

CIBC Poll: Paying Down Debt named the Top Financial Priority for Canadians

Annual poll reveals the focus on debt management and budgeting is increasing - while retirement planning takes a back seat among younger Canadians

TORONTO, Dec. 28, 2011 /CNW/ - A new CIBC (TSX: CM) (NYSE: CM) Poll conducted by Harris/Decima reveals Canadians named paying down debt as their number one financial priority entering 2012, followed by managing day to day spending and retirement planning. Compared to the findings of the same poll one year ago, more Canadians are focusing on debt repayment in the year ahead.

Top 3 Financial Priorities, year over year:

2011 2012
Paying Down Debt 14 per cent 17 per cent
Managing Day to Say Spending & Budgeting 12 per cent 14 per cent
Retirement Planning 13 per cent 11 per cent

"More Canadians are recognizing the importance of managing debt as a component of their overall financial plan, and that is driving an increased focus on debt management and day to day budgeting entering 2012," said Christina Kramer, Executive Vice-President, Retail Distribution and Channel Strategy, CIBC. "Canadians are also increasingly seeing the connection between good management of their day to day budget and their longer term financial goals, recognizing that taking smaller steps today as part of a plan can lead to significant benefits down the road."

While paying down debt was the top priority among Canadians, financial priorities vary across age groups:

Among 25 - 44 year olds, 23 per cent named paying down debt as their top financial priority right now, while 14 per cent of this age group said building savings was their top priority.

Among 45 - 64 year olds, 20 per cent named retirement planning as their top financial priority right now, followed by paying down debt (16 per cent).

Managing day to day spending and budgeting was also a key theme in the survey across all age groups. Those 65 and over placed a particular emphasis on this aspect of their finances, with 24 per cent of those surveyed in this age group naming this as their top financial priority.

"It's not surprising to see that the financial needs of Canadians vary at different stages of life, which speaks to the need for individual financial advice," said Ms. Kramer. "For example, baby boomers have a clear focus on retirement, while Canadians over 65 years of age are focused on cash flow management given that many in this age group have started drawing on their retirement savings."

Ms. Kramer noted that while Canadians have a clear sense of their priorities for the year ahead, it is important to recognize that your finances are integrated.

"Paying down your debt can improve cash flow, which in turn gives you more money to work with each month to put towards your savings goals or longer term goals such as retirement," added Ms. Kramer. "With interest rates low as we enter the New Year, 2012 presents a good opportunity for Canadians to make progress on debt repayment as part of their long term financial plan."

While boomers maintained a strong focus on retirement, few Canadians in their 20s and 30s ranked retirement planning among their top financial priorities. Only 5 per cent of Canadians surveyed between 25-34 years of age said retirement planning was their top priority, while another 8 per cent said it was their second priority.

"It's understandable that younger Canadians are more focused on managing their mortgage and building their savings, but it's never too early to start saving for retirement, particularly with time on your side to have those savings grow over the years," added Ms. Kramer. "Part of a discussion with a financial advisor about your needs should include a long range plan for retirement that you can start taking small steps towards today."

KEY POLL FINDINGS

Percentage of Canadians that name paying down debt as their top financial priority by age:

18-24 21%
25-34 22%
35-44 24%
45-54 17%
55-64 14%
65 and over 9%

Percentage of Canadians that name managing day to day spending and household budgeting as their top financial priority by age:

18-24 9%
25-34 14%
35-44 10%
45-54 12%
55-64 13%
65 and over 24%

Percentage of Canadians that name retirement planning as their top financial priority by age:

18-24 2%
25-34 5%
35-44 7%
45-54 19%
55-64 21%
65 and over 5%

Results are based on a CIBC poll conducted by Harris/Decima, via teleVox, which surveyed 2,015 Canadians. The associated margin of error is +/-2.2%, 19 times out of 20. Polling was conducted between November 10th to 21st,

If you are having problems managing your debt I can help. Contact me and get your finances in order for 2012

Is it time to fix your mortgage?

Variable rate mortgages have been the choice for many Canadians over the last decade or so. Many Canadians have benefited over the years by having a variable rate mortgage and therefore saving thousands in interest cost.

Times have changed. Variable mortgages are now around the 3% mark but 3 and 4 year term fixed rates are as low as 3.09%. The question of course is when are the prime lending rates going up? Of course no one knows for sure and while the European sovereign debt crisis continues to loom large, most believe that it is only a matter of time before the whole crisis is in the rear view mirror. It’s been decades since the short term variable rates were so closely aligned with fixed rate mortgages and of course it won’t last.

Your current mortgage situation is not like everyone else’s. Does it make sense for you to finally go fixed? Only by reviewing your current mortgage situation can we decide if it’s the right decision for you. I can also show you how to save thousands in interest cost at the same time and have your mortgage paid years sooner.

Remember it is not just the interest rate you have but the interest you actually pay that matters most.

Call me today and let’s get started.

Don't Believe all The Economic Headlines: CIBC

Here's a report from Propertywire magazine that |I felt should be copied word for word. If you have any questions contact me .
A new report from CIBC Economics suggests that Canadians would be well advised to look at the full picture when reflecting on the housing industry. Simply, don’t be put off by the alarming headlines, but know the whole story- and all the details.
CIBC said in a report, “That is certainly the case when it comes to the highly debated ascent in household debt and the health of the Canadian residential real estate market. In both cases, any statement based on headline figures or average numbers can be hugely misleading. The truth is buried in the details—and there the picture is still not pretty, but much less alarming.”
While household debt levels in the country are high, they suggest they are not alarming. Data has put debt-to-income ratio at around 150%. CIBC says though, that that figure cannot be taken at face value. It has to be put in greater context- of the whole economy, saying that it is not the level of debt that is as important as the fact that the accumulation of debt has greatly decelerated. Canadians seem to be changing their attitudes towards debt, and are adopting appropriate behaviours to that end.
Like RE/MAX earlier this week, CIBC says that the stellar performance of the Canadian Housing market is a bit of a puzzler, when conventional wisdom and economic factors suggest that it should be taking a greater hit than it has. “The average price of a house has risen by 28% since reaching its recent cyclical low in January 2009, and it is now close to 50% above the level seen before the recession.”
What CIBC does underscore, is the dangers of identifying the national average price, as actually reflecting the average price in the nation. They centre on areas like Toronto and Vancouver, where high prices succeeded in skewing the national average. They remind Canadians that they housing market is made up of separate pieces, each with unique challenges and conditions. “Prices in the Canadian market and its sub-segments are higher than what can be explained by factors such as income growth, rent, and household formation.”

CIBC answers doomsday analysts who say that the market is overvalued, and set to crash, because there exist fundamentals to keep it afloat: “The fact that prices are overvalued today does not necessarily mean that they will crash tomorrow. After all, a violent market correction needs a trigger such as the sub-prime crisis, which ignited the US real estate meltdown, and/or abnormally high interest rates, as was the case during the 1991 property crash in Canada.”

Bank of Canada maintains overnight rate target at 1 per cent

Good news for people with variable rate mortgages. Your bank prime rate will not be going up this session.

OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at
1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
Uncertainty around the global economic outlook has increased in the weeks since the Bank released its
October Monetary Policy Report (MPR). Conditions in global financial markets have deteriorated as the
sovereign debt crisis in Europe has deepened. Additional measures will be required to contain the European
crisis. The recession in Europe is now expected to be more pronounced than the Bank had anticipated in
October, as a result of increased deleveraging and tighter financial conditions, as well as necessary fiscal
austerity and structural reforms. For more information and to discuss whether a variable rate or fixed rate is best for you contact me

Variable-rate mortgages are so over.

Rob Carrick, the Personal Finance writer for the Globe and Mail says that with the variable rate mortgages being sold at prime which is 3% why would anyone want this product. There are 4 year fixed rate mortgages available on the market now at 3% or3.09% so why take the risk. Rates are not going to go down so for the first time in 10 years Carrick is saying go fixed rate. If you want to discuss variable vs fixed rate and how it would affect your monthly payments call me and we'll talk.