VERICO Designer Mortgages

Canada’s five-year bond yields reached their highest level in almost a year, in part due to improved employment numbers in the U.S., BusinessWeek reported. 

“Banks are hedging seasonal mortgage flows, which is weighing on the five-year sector,” Mohammed Ahmed, a rates strategist at CIBC told BusinessWeek. “Banks are receiving a fixed-rate asset and to hedge that, they typically pay the fixed rate in swaps, or sell cash bonds.”

Canada’s benchmark five-year bond yielded 3.04 per cent yesterday, the magazine reported, up 15 basis points from April 1 and the first time the yield has broker the three per cent mark since October 2008. The Bank of Canada will auction $3 billion worth of 1.5 per cent bonds tomorrow.

Most lenders raised five-year, fixed mortgage rates last week in anticipation of higher inflation. These rates will serve as the qualifier for borrowers when the new mortgage rules come into place on April 19. 

http://www.mortgagebrokernews.ca/news/bond-yields-rise-as-fixed-mortgage-rates-move-up/43642

Great info on HST from the Realtors Association of Hamilton-Burlington.

HST Update

Canwest News Service

FP MortgageCash-back

The arrival of spring signals summer moving season and the return of even more heated competition between banks for consumer mortgages. Case in point: the current flogging of cash-back mortgages.

Cash-back mortgages give consumers a percentage of their mortgage in cash to spend as they please. The money could be used to buy new furniture or appliances, pay for closing fees or invest in the stock market – whatever you like.

The catch? Cash-back users generally only get the posted mortgage rate instead of the discounted rate that qualified mortgagers often obtain. “The difference between the posted rate and discounted rate is huge sometimes,” says Anne Marie Found, an Oakville, Ont-based mortgage broker at Invis Inc. The posted rate for a five-year, fixed mortgagethe standard term for a cash-back offerat many major banks is around 5.5%, but the discounted rate can be as low as 3.89%.

“The banks will get their money either one way or another,” says Found. “If they’re going to give you cash back, they are going to charge you more.”

Most customers, however, are still either going for a fixed five-year, fully discounted rate, or an even lower variable rate, but while cash-back mortgages are still a small part of a bank’s business, they do have benefits, says Chris Wisniewski, group product manager, real estate secured lending, at TD Canada Trust.

They can be particularly useful for first-time homebuyers who don’t have enough money left over after making the minimum 5% down payment to buy furniture to appoint their new property or who want to make immediate upgrades. “A cash-back might be a good alternative versus putting those purchases on a credit card or getting a loan, so the interest rate savings would be significant,” says Wisniewski.

However, Wisniewski doesn’t advise taking a cash-back offer if someone is planning to sell the house before the five-year term is up. That’s because there are the usual fees associated with breaking a mortgage early plus some of the cash-back has to be paid back.

“The amount depends on the term remaining, but it’s usually pro-rated over whatever the remaining term is at the time that you break it,” says Wisniewski. For example, if you have 80% of the term left, you’ll probably have to pay back 80% of the cash-back received.

TD Canada Trust currently offers a 5% cash-back mortgage up to a maximum $25, 000. In other words, on a $300,000 mortgage you would get $15,000 back. Scotiabank has a very similar deal, while RBC and CIBC are offering up to 7%.

CIBC is also offering a new wrinkle: giving consumers 2% cash back and a mortgage rate of 3.99% on a five-year rate if they switch their existing mortgage from another financial institution to CIBC. Considering CIBC’s posted five-year rate is 5.39%, the savings could be quite substantial depending on your current rate.

However, some or even all of the 2% cash back may end up going to your existing mortgage backer to pay the penalties associated with breaking your fixed-rate mortgage early. The offer also only applies to straight transfers and not refinancing.

Stephen Forbes, executive vice-president of marketing, at CIBC, says there has never been a better time to find a low variable rate or flexible fixed-rate terms, so the key is figuring out what works best for you. “There are so many options that it makes sense to get advice,” says Forbes.

Qualifying for cash-back programs is usually the same as qualifying for a five-year mortgage. The maximum mortgage you can get is still 95% of the purchase price, although some lenders may still allow homebuyers to apply the cash back to their down payment to help come up with the necessary 5%. Scotiabank is one with their Free Down Payment program.

“I’m not a big fan of cash-back offers and I don’t push them, but I have done them,” says Lois Volk, an Invis mortgage broker in Toronto. “I wouldn’t recommend it for the average purchaser.”

But Volk says there are some cases where using cash-back programs to make a down payment might make some sense. For instance, young professionals a few years removed from university might not have the required down payment because they’ve been busy paying off their student loans, but they have the income and job stability to otherwise handle a mortgage.

For the average mortgager there are better ways to get the 5% so that you can get the better rates, believes Found. “In the long run, it will be much cheaper for you if you use your RRSPs, get a gift from a parent, or save so much a month and then come back to me when you’re ready,” she says.

And if you really do need some financial help to buy new furniture, says Found, “You can always go to Leon’s and not pay for a year and save the money that way.”

OTTAWA — With Bay Street convinced the Bank of Canada will maintain its pledge to wait until July to begin raising interest rates, the debate now turns to how aggressively the central bank should behave thereafter.

In the view of a paper prepared for the C.D. Howe Institute, the central bank should act with zeal. If it wants to get ahead of the inflation curve, the bank should raise its benchmark rate by 50 basis points at every scheduled rate announcement until the middle of next year, the paper said.

Michael Parkin, an economics professor at the University of Western Ontario and member of the think-tank’s monetary policy council, said “steep” increases would be required to make up for keeping the benchmark rate so low for so long.

The paper comes a week before the Bank of Canada’s next interest-rate statement, scheduled for March 2 and the same day Mark Carney, the bank governor, held an annual meeting with leading private-sector economists in Ottawa.

The bank cut its benchmark rate last year to a record low 0.25%, and made a pledge — conditional on inflation — to keep it there until the end of June in an effort to pump up the economy amid the financial crisis. Analysts say the move has worked. Figures on gross domestic product, to be reported next week, should indicate the economy grew roughly 4% in the fourth quarter, above the central bank’s own expectations. And inflation is closer to the bank’s 2% target earlier than envisaged, although analysts suggest price increases could lose some steam in the weeks ahead.

The main thrust of Mr. Parkin’s argument is the central bank needs to raise rates as aggressively in anticipation of the recovery as cut in response to the financial crisis. This would be in line with the Taylor rule, which dictates by how much a central bank should move its benchmark rate in response to inflation.

Based on the central bank’s own economic projections, Mr. Parkin calculated the future path of interest rates. “When the [benchmark] rate starts to rise, it must be on a steep upward path,” he wrote. Under the Taylor rule the benchmark rate should in fact, be higher than present levels. As a result, a target rate “somewhat higher” than what otherwise would be required might be necessary for the latter half of this year and all of next, he said, “to avoid inflation running above target.”

Economists indicate the central bank, if possible, will keep its pledge because reversing course now could damage its credibility.

Other analysts also signalled that they shared some of Mr. Parkin’s view.

“In order to move from an exceptionally low to low-rate environment, you need to move fast,” said Sébastien Lavoie, economist at Laurentian Bank Securities, which last fall indicated in a report Mr. Carney would need to entertain rate increases of up to a percentage point.

Michael Gregory, senior economist at BMO Capital Markets, said that by mid-2011 the benchmark rate would “have to be in proximity of being neutral.”

However, he added the central bank would have to take into account the strength of the loonie in determining the appropriate level of interest rates. The currency is likely to climb as the Bank of Canada moves ahead of the U.S. Federal Reserve, and perhaps more aggressively, Mr. Gregory said.

Financial Post
(Feb 24, 2010)

This year’s budget is not expected to be overly exciting and that seems to be a good thing for the current economic state. With all the major changes to the market, including changes to the Mortgage rules, being released ahead of time; or as this article states, “Finance Minister Jim Flaherty and his officials have spent weeks diligently stealing their own thunder”; the resulting budget should surprise few of us.

The expected result is that Canada will fare far better than all other G7 nations, forecasting the lowest GDP deficit.

Link below for more details:

http://www.reuters.com/article/idUSN2611003320100301?type=usDollarRpt

January 21, 2010

CBC NEWS

At least two million people are homeless in Haiti

500,000 more than originally estimated

officials fear an outbreak of disease among survivors living in makeshift camps.

The grim figures from the European Commission come as reports continue to emerge about survivors being found more than a week after the Jan. 12 earthquake.

On Wednesday, a five-year-old boy was pulled out of the rubble from his home by his uncle. The boy, identified as Monley Elize, was severely dehydrated but in otherwise good condition.

His parents are believed to have been killed in the quake.

How to help

To help those affected by the earthquake, here is a list of organizations [http://www.cbc.ca/haitirelief] accepting donations.

Experts have said that without water, buried quake victims were unlikely to survive beyond three days. But rescuers continue to scour through the rubble of destroyed homes and buildings, looking for any signs of life.

Meanwhile, officials fear that those who survived the 7.0-magnitude quake are at increasing risk for a number of diseases.

“The next health risk could include outbreaks of diarrhea, respiratory tract infections and other diseases among hundreds of thousands of Haitians living in overcrowded camps with poor or non-existent sanitation,” Dr. Greg Elder, deputy operations manager for Doctors Without Borders in Haiti, told The Associated Press.

Medical clinics have 12-day patient backlogs, which means untreated injuries are festering.

Building collapses feared

According to the European Commission, many of the two million homeless are afraid to stay in their homes, fearing the buildings will topple in aftershocks.

The commission also believes that 250,000 are in need of urgent aid. While the death toll is estimated at 200,000, some say an exact tally will never be known.

I don’t think we will ever know what the death toll is from this earthquake,? Edmond Mulet, the newly appointed head of United Nations operations in Haiti, told the New York Times.

He said people are burying bodies by themselves, many have been thrown into dumps outside the city and an untold number still lie under the rubble.

About 80,000 are believed to have been buried in mass graves. Workers have been using earth-movers to carve out mass graves in Titanyen, north of Port-au-Prince, to bury 10,000 victims in a single day .

About 100 surgeons, nurses and medics with the 1st Canadian Field Hospital will deploy to Haiti beginning this weekend, CBC News has confirmed.

The mission will be based in Jacmel, a city of 80,000 near the capital that has an airstrip already in use by the Canadian military. The unit will set up a hospital with an intensive-care unit and up to 50 beds.

Two surgical teams, including a general surgeon and an orthopedic surgeon, will be in charge.

As donations for Haiti pour in from people around the world, the United States has passed a bill allowing faster tax breaks for U.S. donors.

It would allow donations made by the end of February to be deducted from 2009 tax returns. So far, Ottawa has not made a similar decision for Canadians who donate to the Haitian relief effort.

Heeding Rupert Murdoch’s words, global financial powerhouse is taking on the big domestic players in a specific niche

Canada, meet Macquarie Group.

In a little more than two years, with three major acquisitions, the giant Australian bank has become one of the biggest foreign challengers in Canadian high finance, with about 1,000 employees across a broad range of businesses.

And the name is about to become a lot more familiar.

With the most recent purchase, the acquisition of Blackmont Capital’s chain of financial advisers, Macquarie is the first big non-Canadian player in years to try to face off against the RBC Dominion Securities and BMO Nesbitt Burns of the world in the business of stock brokerage and mutual fund sales to everyday Canadians.

As of next month, when Blackmont is rebranded as Macquarie Private Wealth, the name will be on the wall across Canada in cities such as Victoria, Edmonton, Ottawa and Guelph, Ontario.

It’s all part of a strategy by Paul Donnelly, who came to Canada from Sydney in 2007 to head Macquarie’s business here and exploit what the company believes is a gap in the Canadian market, now dominated by big banks and small boutiques. Those banks are huge but mostly focused on Canada, giving Macquarie what it believes is an edge because of its global presence. At the same time, the Australian firm plans to offer more services than the boutique investment dealers.

Mr. Donnelly wants Macquarie to feel like a Canadian firm, rather than like a small branch of a global bank, which is the model for many of the immense so-called bulge bracket foreign firms that try to do business in Canada with just a few locals and others who fly in from head office when needed.

“We’re proud to be different and we’re deliberately different,” Mr. Donnelly said. “We’re global perhaps in a way that the large Canadian banks aren’t. We’re truly committed to Canada perhaps in a way the bulge brackets aren’t, and we’re really full service in the way perhaps the boutiques aren’t.”

Starting in 2007 with the first big deal, the purchase of Orion Financial Inc., the Australian firm has built a business in Canada that specializes in financing industries such as construction, real estate and infrastructure, and that aims to offer all the products of a big Canadian bank along with international experience and access.

Mr. Donnelly’s philosophy is based in part on a quotation from tycoon Rupert Murdoch, who Mr. Donnelly laughingly calls “that famous ex-Australian.” Mr. Murdoch once said “You have to look for a gap where competitors in a market have lost contact with the customers” - words that stuck with Mr. Donnelly.

“If we are really strong in something, but all the Canadian banks are equally strong, maybe you can break through but you’re going to butt your head against the wall a lot before you succeed. So we just focus on a clear and discernible difference: Where can you sit down and have a conversation with someone that’s going to be different than any other conversation they’re having.”

Prior to the acquisitions, Macquarie’s presence in this country was a mixed bag of businesses few Canadians would have run across: A group of mining bankers here, an infrastructure investment fund there, a mortgage business on the side. All in all, there were about 300 people, but few outside of niche finance businesses would have run across them.

Starting in late 2007, that changed. The Orion purchase gave the firm a big team focused on energy and mining.

Then Macquarie began to broaden further, spending money on high-profile hires. Former senior bureaucrat Stanley Hartt, once a top man at Citigroup Inc. in Toronto before the bank shut down its operations here, is now chairman of Macquarie in Canada.

Top-ranked analysts followed in key areas such as utilities, real estate and banking.

With the purchase last year of Calgary-based Tristone Capital, Macquarie added expertise in energy. It also became a player in what’s known as acquisition and divestiture - the business of helping oil and gas companies buy and sell real estate.

It hasn’t all been smooth. Some key personnel left Tristone, and one of the biggest mining bankers who came from Orion recently departed for a competitor.

But the result of all the expense has been some big clients. Now, the firm is advising the government of New Brunswick on the sale of its power producer to Hydro Quebec and helping Suncor Energy Inc. sell natural gas assets.

The final piece was Blackmont, which gives the firm a force of about 130 brokers who can sell shares of companies that Macquarie finances to individual investors. The goal now is to double that number in three to four years.

Doing the acquisitions of Tristone and Blackmont in quick succession wasn’t part of the original plan, but fast growth has been a hallmark of Macquarie globally.

“When you want to act and when the opportunities are available rarely line up,” Mr. Donnelly said. “You can’t do a linear strategy. You have to take advantage of the opportunities”

He doesn’t expect there’s anything more that Macquarie needs to buy in Canada.

But then, Mr. Donnelly points out that getting bigger fast is in Macquarie’s DNA - globally the firm has expanded at a furious pace - giving the sense that if something offbeat were to come up, something unexpected that could help the company, Macquarie might be there with a check book and a plan to grow.

“We didn’t know we were going to do Tristone, and we didn’t know we were going to do Blackmont, but that’s the nature of our organization.”

Bank of Canada cut its overnight lending rate by 0.25% to a historic low of 0.25%.

The Bank of Canada also stated that it will keep the key overnight rate at 0.25 percent until mid-2010.

Various Canadian Banks quickly cut their Prime Rates following this announcement by 0.25% to 2.25%.

The Bank of Canada’s next rate announcement is due June 4.

Gina Burgio, Mortgage Agent
VERICO Designer Mortgages Inc.
Toll Free: 1-877-345-6265
Fax: 1-877-345-6256
Email: gina@ginaburgio.com
www.ginaburgio.com

Each VERICO Broker is an independent owner operator.

Bank of Canada cut its overnight lending rate by 0.50% to 1.00%, the lowest since the central bank was formed in 1934. The decrease was inline with most economists expectations.

The previous lowest rate level set by the Bank of Canada was last seen at 1.12% in 1958.

In the past few days leading up to this morning’s announcement by the Bank of Canada, a few lenders began cutting some of their fixed term mortgage rates. Various Canadian Banks quickly cut their Prime Rates following this announcement by 0.50% to 3.00%.

Gina Burgio, Mortgage Agent
VERICO Designer Mortgages Inc.
Toll Free: 1-877-345-6265
Fax: 1-877-345-6256
Email: gina@ginaburgio.com
www.ginaburgio.com

Each VERICO Broker is an independent owner operator.