Canada's home resale prices rose in June in the biggest monthly gain in ten months.

"June marks the largest monthly increase in 10 months. But we do not believe that acceleration in the Teranet-National Bank index will be sustained," said Marc Pinsonneault, National Bank Financial senior economist.

According to numbers from the Teranet-National Bank Composite House Price Index, overall prices rose 1.5 per cent from May, the largest monthly increase since last August. Prices were up 13.6 per cent from last year.

Teranet noted it's too early to call the price increases of recent months a trend.

It was the third straight month prices rose across all six surveyed metropolitan areas.

Sales of houses on Toronto MLS are down on a year-over-year basis, which isn’t a surprise. The decline was predicted.

Each says last year’s sales were higher than expected because many buyers were brought into the market before the threat of higher fixed mortgage rates became a reality this year, skewing sales figures, thus the large difference this year from last.

Fair enough, but the threat didn’t materialize.

In fact, fixed rates started going down about seven weeks ago and this past week Canada’s major banks knocked them down another 0.1%.

The reason is complicated, even for professionals, says Mark Herman, a Calgary-based broker with Mortgage Alliance. “I know what’s going on, but I have to really concentrate, so I know how confusing it can be for the average guy,” says Herman, adding fixed rates are determined by bond yields.

“The banks usually look for a spread of from 1.5% to 1.75% between bond yields and fixed rates,” he says. “The Canada bond yield is at 2.12% and (special discounted five-year fixed rates are at 4.09%, so the spread is 1.97%, and that means we’re a quarter point higher than we should be right now.”

Complicated and confusing understate it.

Simply put, mortgage rates are low and likely going lower, as a full economic recovery remains uncertain, says Stu Pocock, broker/mortgage planner with CMAC Mortgages.

“It is very hard to predict the future, but indications continue to be for fixed rates and our prime to remain at historic lows, while we continue our economic recovery,” says Pocock. “Our recovery seems to be fragile and Canada will not be able to recover in a bubble, that is, things are still quite tough in the U.S.A., and until we see some stronger indications of recovery south of the border, we expect fixed and variable rates to remain low.”

Variable rates are affected by the Bank of Canada’s overnight rate, which sits at 0.75%, and they have improved lately, says Pocock.

“The discounts below prime on variable products are getting better for our clients,” he says. “Now prime minus .80 is happening.”

The Bank of Canada is scheduled to review its overnight rate on Sept. 8 and Herman thinks it will hold steady at 0.75%. If so, the variable will remain attractive, says Pocock.

“The trend is downward (and) how long that will continue is a guessing game but sentiment is that we will continue to experience historic low rates until the economy shows consistent strength and consumer confidence returns to the markets,” he says.

The bottom line is if you didn’t join the rush to buy a house last year, you haven’t missed out on historically low mortgage rates. The selection is good and it’s a buyer’s market. (Calgarysun.com)

To find out more about market and mortgage rates call real estate agent Alex Malkhassiants (416) 723-9383 or go here - http://www.torontogreathomes.com/ONTARIO_MORTGAGE/page_929364.html

Canadian homeowners are in the best shape when it comes to financial fitness, according to a survey conducted by Genworth Financial Mortgage Insurance Company Canada.

The survey found 65% of homeowners pay off their credit card balances in full each month compared to 48% of non-homeowners.

Those more likely to pay off their credit card balance include those aged 60+ (67%), those with incomes over $100,000 (75%), and those who own their homes with no mortgage (74%).

Plus, of homeowners who are still managing mortgages, 25% made a lump sum payment or accelerated their mortgage payments in the past year, while 44% were able to pay all of their bills plus save money in the past year.

Mortgage holders more likely to have accelerated or made a lump-sum payment include those with incomes between $75,000 and $99,000 (32%) or more than $100,000 (30%), and women more than men (26% vs. 21%).

The findings suggest a strong correlation between homeownership and financial fitness, says Peter Vukanovich, president and chief operating officer of Genworth Financial Canada.

“Homeownership is an achievable goal for those who are prepared,” says Vukanovich. “It helps people focus on their financial situation and get their fiscal house in order.”

Compared to the same survey from 2007, when the economy was booming, Canadians are even more likely now to say their financial fitness is good — 55% this year versus 50% three years ago.

More men than women report being in good shape (60% compared to 51%), the majority — 69% — are university graduates and 65% have paid off their mortgages.

“A mortgage is easier to manage when people have good personal finance skills,” says Henrietta Ross, chief executive officer of CACCS.

Only 22% of recent buyers or those intending to a buy a home say they sought preapproval for a mortgage, with women, at 25%, more likely to seek pre-approval than men, at 19%.

Almost half of those surveyed who bought a home in the last year made down-payments of 20% or more.

The report’s authors conclude Canadians who report their financial fitness as being poor or very poor (11%) are more likely to be renters, while those who consider their financial situation to be good or better are much more likely to own a home and own without a mortgage.

calgarysun.com

Canadians will be spared a U.S.-style wave of foreclosures when the housing market corrects and interest rates rise, according to a report from DBRS Ltd. examining Canada’s $1-trillion mortgage market.

DBRS expects housing prices to fall and acknowledges that the soaring trajectory of consumer debt is worrying. But the debt-rating firm’s study nonetheless paints a picture of a home lending business that is on much more stable footing than the one in the U.S. before its bust.

For that reason, any housing correction in Canada is likely to have a muted effect on the financial sector, nothing like the systemic problem that the U.S. downturn created by crippling banks and mortgage insurers.

“You’re not likely to have factors supporting further [home] price increases; you could have factors leading to price corrections, but they shouldn’t be anywhere near the scale we’ve seen in the U.S.,” said study author Jerry Marriott, who specializes in rating mortgage-backed bonds for DBRS.

“There are just some fundamental characteristics of the Canadian market that make lending in Canada less risky than in the U.S. – a combination of the fact that the banks have continued to use prudent underwriting and maintained better capital ratios.”

The report echoes the conclusions of major banks such as Canadian Imperial Bank of Commerce and Toronto-Dominion Bank. They also call for moderate cooling in house prices after their long runup, as more homes come on the market and higher rates and prices force some buyers out of the market.

CIBC World Markets economist Benjamin Tal said this week that prices might fall by as much as 10 per cent in the next two years, but that a “violent” correction like the United States experienced remains unlikely. TD Bank recently put out a report predicting prices could fall by 2.7 per cent in 2011.

If a correction happens, Mr. Marriott said that it’s unlikely Canadian banks will have to foreclose on many mortgages, saving Canada from one of the factors that exacerbated the U.S. plunge, when banks seized homes and tried to sell them at vastly reduced prices.

Laws in Canada are more lender-friendly, forcing people to keep paying mortgages, and banks were more careful about who they lent to.

Canadians are also less likely to end up under water – owing more than their home is worth – because they generally have more equity in their homes. For the decade and a half leading up to the U.S. housing bust, U.S. borrowers had “consistently” less equity than Canadians, by 8 per cent on average, DBRS found.

What’s more, DBRS argues that while Canadians are racking up debt at a fast pace, they are nowhere near as indebted as some analysts assert, and much less in hock than Americans, so should better be able to handle the stress of higher rates or a housing correction.

While the widely watched measure of debt-to-personal-disposable income shows that Canadians are more indebted than Americans, DBRS argues that the gauge should be adjusted to reflect differences in the two countries, such as the fact that Americans pay lower taxes but have to pay health-care bills out of pocket.

When that’s taken into consideration, at “the end of 2009, Canadian households remained financially less leveraged by 10 per cent to 45 per cent compared with U.S. households,” the report said.

“The Canadian market has been doing just fine, but it is not without risk, and [showing that] is what we’re trying to do in this study,” Mr. Marriott said. CTV.ca

• 5% Down Payment is still available at the lowest interest rates, assuming provable income and good credit.
• 1.85% variable rate and 3.69% 5 year fixed rate.

1. minimum down payment increases from 5% to 10%
2. self employed borrowers who have been in business for 3 years or more will now have to prove their income meaning stated income will not be acceptable.
3. commission sales people are no longer eligible for the stated income option.  This will be a problem for commissioned real estate professionals who will now have to prove their income by means of their tax returns.

If you want to know more about Toronto real estate, call sales representative and mortgage agent Alexandre (Alex) Malkhassiants, Right at Home Realty,  with all your questions: (416) 723-9383 (cell).

The Bank of Canada took its first steps in March toward returning the country to more normal interest rate levels by signalling a more hawkish tone on inflation and acknowledging the economy is performing better than expected on “vigorous” consumer demand.

The messages were conveyed in the Bank of Canada’s latest interest-rate statement, which kept its record-low benchmark rate of 0.25% as is and pledged to keep it there until July. But most bank watchers took note of subtle changes in the statement, compared with previous rate announcements, and there was enough there for them to begin the countdown to rate hikes.

“I suspect [governor] Mark Carney and company are starting to feel the urge to tighten — not a strong urge now, but an urge nevertheless,” said Michael Gregory, senior economist at BMO Capital Markets.

Among the key changes was a declaration from the bank that the risks to its inflation outlook are “roughly balanced,” and no longer “tilted slightly to the downside” — language that suggests deflation is no longer a concern and that price increases are creeping up to a level that may prompt a response. (The central bank sets its interest rates to ensure inflation remains at 2%.)

The wording change may appear trivial, “but it is nonetheless significant as it reflects an economic backdrop that continues to improve at a much faster pace than what the bank had envisaged,” said Paul-André Pinsonnault, senior fixed-income economist at National Bank Financial.

The rate statement emerged a day after economic data indicated the Canadian economy grew at a robust 5% annualized pace in the final three months of 2009, blowing past market expectations for a 4% gain and the central bank’s original 3.3% forecast. Economists say the fourth-quarter performance has set the stage for another robust gain, of perhaps 4% or more, for the first three months of 2010.

Meanwhile, recent data indicate that both the headline and core inflation rates have moved much closer to the 2% level than the central bank had expected. Under the bank’s forecast, the 2% level would not be reached until the third-quarter of next year.

In the statement, the central bank acknowledged economic activity has been “slightly higher” than its own projections, with the 5% gain in the fourth quarter powered by “vigorous domestic demand” and a recovery in exports.

Using the adjective “vigorous” caught the eye of some analysts, such as Mr. Gregory. “That implies a strong unleashing of demand pent-up during the recession, with the credit creation process critical to this unleashing.

“In other words,” he added, “low interest rates are doing their job in stimulating demand — perhaps, increasingly, too well.”

Mr. Pinsonnault noted the bank also dropped any reference to “considerable” excess supply, an indication, he said, that the slack in the economy is being absorbed at a faster pace than the central bank anticipated.

The consensus remains that the central bank will wait until July to begin raising rates, but the bank used Tuesday’s statement to begin building its case. There are two more scheduled rate decisions between now and then, with one April 20 and then June 1.

“What we saw [Tuesday] was one of many steps aiming at moving away from dovish statements to relatively more hawkish ones. This gradual movement comes naturally well before an actual tightening in monetary policy,” said Sébastien Lavoie, economist with Laurentian Bank Securities.

His firm believes rate increases will begin in the third quarter, but he said the odds have increased that the first hike will be in July as opposed to September.

How much, and how rapidly, the central bank raises rates beginning in July is up for debate, with economists estimating increases of 100 to 150 basis points in the second half of 2010. Financial Post

If you want to know more about Toronto real estate, call sales representative and mortgage agent Alexandre (Alex) Malkhassiants, Right at Home Realty,  with all your questions: (416) 723-9383 (cell).

The average Canadian's debt-to-income ratio amounted to 145% after the home prices hiked five times, the average persons' after-tax income.

The report from Vanier Institute said that the mortgage arrears were up by 50%, although the absolute number of arrears was still ultra-low by international standards.

The media suggests increase in defaults. The housing market has seen prices and sales activity rise rapidly.

Finance Minister Jim Flaherty tightened mortgage rules. Mr. Flaherty's changes apply to any mortgage backed by Canada Mortgage and Housing Corp.

But Craig Alexander, Deputy Chief Economist at TDBank Financial Group, said that the practical effect of changes to CMHC-backed mortgages was that the lenders tended to extend at least some of those provisions to all mortgages.

The trend could end up softening the sharp price increases that have hit many cities.

The Canadian Real Estate Association reports a jump of nearly 20% in the average selling price of a home in Canada, a little more than $337,000.

Investors will now have to put up 20% of the purchase price to get a government-backed mortgage, in an attempt to prevent a homeowner from carrying a mortgage worth more than the home itself.

Once again, the Bank of Canada announced it would keep the key interest rate at a record-low 0.25 per cent to achieve its inflation target of two per cent.

While the Bank said economic growth in Canada resumed in the third quarter of 2009 and there has been a slightly higher than expected rate of inflation in recent months, it reiterated that the economy is still lagging, particularly due to factors like a strong Canadian dollar and low levels of U.S. demand.

Repeating many of the same projections as its October monetary policy report, the Bank predicted the economy to return to full capacity and reach a two per cent inflation rate in the third quarter of 2011. It forecast the economy to grow by 2.9 per cent in 2010 and 3.5 per cent in 2011.

The next Monetary Policy Report will be released Thursday and the next rate announcement will be made March 2.

Greater Toronto-area house hunters were out buying up real estate, to the tune of 1,749 sales of existing homes in the first two weeks of this year, the Toronto Real Estate Board says. This was almost double the 888 sales recorded for the same period last year (granted that was when the market was suffering the agonies of the recession).

Greater Toronto REALTORS reported 3,079 existing home transactions in the first two weeks of December compared to 1,487 in 2008. The strong growth represents both increased home ownership demand and the fact that we are comparing the recovery phase of the sales cycle this December with the contraction phase experienced last winter.

Year-to-date sales, at 84,888, were up 16 per cent compared to the same period last year and have moved in line with the healthy levels experienced in the 2004 through 2006 period.

"We experienced a very strong and broad based recovery in the second half of 2009," said Toronto Real Estate Board President Tom Lebour. "The rebound in the housing sector speaks to the confidence that households have in overall economic recovery."

The average resale home price during the first two weeks of December rose 17 per cent to $423,103. The year-to-date average was $395,411, up four per cent compared to the same period in 2008.

"The double-digit price growth we have experienced since September will continue through the first quarter of 2010. Average price growth will move to a sustainable pace in the spring as listings increase," according to Jason Mercer, TREB's Senior Manager of Market Analysis.

Toronto housing starts have risen for three months in a row, CMHC says in a report released this week.

The seasonally adjusted annual rate of total housing starts rose 13% in October from the month prior, Canada Mortgage and Housing Corp. says, to a total of 34,200 units. Single-detached starts have remained stable, but condo starts have once again started to inch ahead. But those figures are still well below the starts posted in October 2008.

For Ontario, starts in urban areas (those with a population of 10,000 and up) rose to their highest level since March, reaching 55,700 units, a gain of almost 15% from September, but still almost 20% below the same period last year.

Perhaps it was those uncharacteristically high temperatures that had homebuyers out in droves in the first two weeks of November. Certainly, they had gotten over the doom and gloom of the first two weeks of last November.

According to the Toronto Real Estate Board, realtors reported 3,666 sales, a staggering 84% up on the same period last year. Prices year-over-year rose a more modest, but still impressive, 10% to hit an average of $415,066.

“Increased interest in ownership housing has been widespread throughout the GTA and across all housing types,” notes TREB president Tom Lebour in a release. “However, it is important to point out that we are now making comparisons to the fall of 2008 when we experienced a marked decline in sales and average price.”

The numbers for year-to-date sales also rose a healthy 11% compared with the same period in 2008, to reach 78,233. The average price for this period was $393,180 a 3% rise over the same period last year.

“Sales and average price in the GTA this winter will be well above levels reported throughout the fourth quarter of 2008 and the first quarter of 2009,” notes Jason Mercer, TREB’s senior manager of market analysis in a release.

Across Canada, sales had increased in the month of October. According to numbers from the Canadian Real Estate Association, home sales activity through the Multiple Listing Service was the highest ever for an October. The Canadian real estate boards reported 42,288 residential sales, a 41.5% hike over the same month last year. The year-to-date total rose to 401,124, a 1.6% increase on the same period last year.

The average sale price in October was $341,079, a 20.7% rise on last year.

“Low interest rates and upbeat consumer confidence continue to release the pent-up demand that built late last year and earlier this year,” notes CREA president Dale Ripplinger in a release. “The release of that pent-up demand has boosted national sales activity to new heights and is drawing down inventories.”

The marked rise in resale housing demand has continued to reduce inventories of unsold homes. In October, MLS had 194,994 homes listed for sale, down 20.8% on the same month last year.

New homes in the GTA’s 905 region have also skyrocketed, with home builders showing a 173% increase in low-rise sales for the month, compared with October 2008.

Activity may have been on the rise in Canada, but south of the border where tentative signs of recovery had been evident, October housing starts and building permit numbers came as a rather nasty shock.

If you want to know more about Toronto real estate, call sales representative and mortgage agent Alexandre (Alex) Malkhassiants, Right at Home realty,  with all your questions: (416) 723-9383 (cell).

GTA home sales skyrocketed 64%, with gains at every price point, says the Toronto Real Estate Board.

Nearly 8,500 homes were sold, up 64% from last October, with the average price at $423,559 - up by 20% compared to the same month last year.

“It has been GTA-wide,” Jason Mercer, TREB’s senior manager of market analysis, said today. ‘‘The 416 neighbourhoods versus the 905 neighbourhoods are all pretty much in line and the same applies when we’re talking about price.’’

Sales growth occurred across all property classes, from existing homes, to low-rises, and apartments, across the GTA. Even luxury home sales of over $750,000, which saw the greatest increase in sales, bounced back after a steep decline last year.

“We’ve seen this resurgence for the demand of existing homes since the spring. Consumer confidence is growing more broadly .... big ticket items like housing has been at the forefront of recovery,” Mr. Mercer said.

TREB anticipates sales and price increases will continue in November and December. Mr. Mercer also said more homes will hit the market in early 2010 once homeowners see the increase in property values.

“We’re expecting to see homeowners selling their homes in 2010. We won’t see decline in sales, but there will not be a sustained period of double-digit price increases,” Mr. Mercer said.