Kitchener Waterloo Mortgage Source

CMHC Spring 2010 Housing and Mortgage Report: Kitchener, Waterloo, Cambridge and Guelph

The Spring 2010 CMHC Housing Report for Kitchener, Waterloo and Guelph forecasts that sales will continue at a strong pace before moderating later into 2011. New home construction will increase in 2010. Housing demand in this year will be supported by low mortgage interest rates, population growth and a strengthening job market. The resale market in both these regions will be very strong this year with sales of existing homes in Kitchener and Waterloo increasing to 9%, while homes in Guelph will show an increase half of Kitchener’s rate. The report speculates that, in 2011 sales will decline in Kitchener, Waterloo and Guelph due to increased mortgage rates and the introduction of the HST. This said, mortgage rates will be dependent on several economic factors, and low rates could very well help support housing prices into 2011. It should be noted that the HST will not affect the prices of resale homes.It is forecasted that new listings of resale homes will go up in Kitchener, Waterloo and Guelph in 2010 and will continue to remain at the same high levels in 2011.

With market conditions favoring sellers, more homeowners are deciding to list their homes for sale. This should continue in the first part of the year but will return to more balanced conditions in the latter part supporting a slower pace of price appreciation. Moreover, there will be a greater proportion of higher priced homes in Kitchener, waterloo, Cambridge and Guelph as move up buyers will favor homes in the higher price range. This growth, however, will slow down in 2011. Both single detached and higher density housing will show growth this year. If mortgage rates in Kitchener, Waterloo Guelph increase in 2011, there will be a slide in the resale market. In the Kitchener – Guelph area single detached housing starts will increase in 2010. Many homeowners have brought forward their home purchases fearing price rise with the introduction of the HST and higher mortgage rates. However with low mortgage rates new homes remain price competitive. Higher demand for new home construction will push prices further higher than they are. Construction will also increase for semi detached homes, townhouses.

Apartments starts will increase in Kitchener, Waterloo and Guelph due to an increase in demand for condominium apartments. Construction of other low rise housing types will also perform well in 2010. The economy is slowly recovering along with the job market. Employment in the Kitchener area is forecast to increase by 1% while that in the Guelph will increase by 2%. There is significant population growth in both these areas driven by organic labour increases, as well as migration. Of special interest, the areas diverse economy with solid employment rates has brought increase in international migration.

At the time of writing, the overnight Bank of Canada rate had fallen to 0.25 %. With the expectation of it to increase in the coming months mortgage rates have begun to rise. Posted mortgage rates are expected to increase in late 2010 given a rebounding economy. mortgage rates could increase faster if the economy recovers and or could subdued if the recovery is slower than expected.

Money Saving Mortgage Stratagies and Planning

Often there is a great deal of emphasis placed on one mortgage product, such as the 5 year fixed or variable. And in most cases, once a mortgage has been closed, many clients are left to go about paying for their mortgage as per usual. It is important though to take a step back and look at the bigger picture when deciding who your mortgage partner is, and when signing up for a new mortgage or mortgage term. It is important to look at different mortgage strategies, and to consider a mortgage plan. Both can save you considerable amounts of money.

It will be very valuable for you to partner with a good mortgage agent or broker, and to review some of the many mortgage products and solutions available to find what mortgage strategy would work best given your comfort level, needs and goals. For example, it may be better to take an ultra low rate three year mortgage term and then look at a couple very low rate one year terms when the 3 years is up. This kind of strategy could very well save a client thousands of dollars over a traditional 5 year rate. Perhaps a lower rate three year variable mortgage or a 50/50 fixed and variable mortgage could be best for you. Or maybe a good 5 year mortgage and rate is the most comfortable way for you to go. Ultimately, there are many strategies such as these that could apply to you, and could save you thousands of dollars in interest. It is important when dealing with such a large sum of money to know what products are out there in the market, to know your options, and to work with a good broker to help construct your ideal mortgage strategy.

Mortgage planning involves pre determining a more advanced mortgage repayment structure, that leaves you with a comfortable lifestyle, and that will have your mortgage paid off years sooner and for many thousands of less interest. No matter how good your mortgage strategy and rate may be, there is always room, given a good mortgage plan, to easily save much more. Publications such as my book, 'Your Mortgage, Your Life' are designed to help make the mortgage planning process as easy, and as enjoyable as possible. My book makes planning and saving easy because everything is automatic. The savings come from areas of spending that will not negatively affect your lifestyle, and that are most easy to implement. Once the savings are uncovered, the extra money is automatically put away every mortgage payment period. So in the end, clients notice no change in lifestyle (if anything, an improvement in lifestyle!), and can be confident that they are saving thousands of dollars more in mortgage interest. And of course, plans are completely personal, and custom to each situation.

By working with a knowledgeable and experienced mortgage professional, you can attain your best possible, low cost mortgage strategy and plan.

Contact me, Brent Richardson, at your convenience for questions, or feel free to leave a comment below.

Regards, Brent Richardson www.brentrichardson.ca - brent@brentrichardson.ca   

DANGEROUS Credit Lines and Mortgage Products Offered by Banks

Over the past several years, some of the Big Banks have decided to design mortgage products that lock customers into their Bank- even when the mortgage comes up for renewal. The really unfortunate part about these Banks and products is that in most cases, the Bank will not disclose the negative information to its clients. Most in the broker industry consider these practices incredibly decietful.

With titles such as 'Step' or 'Homeline', these mortgages will offer a line of credit that is attached to the mortgage. The main issue is that when the Bank registers one of these products against your house, they register it under what is called a 'Collateral Charge Term' (not the usual 'Standard Charge Term') at 125% of the value of your home. This has the affects of:

• Disallowing any other financing to be placed against your home.
• Locking you in at mortgage term renewal. This gives Banks massive liberties to charge unfavourable rates when your term is up.  
• Charge major penalties to ever exit these products and lowers others abilities to compete for your future business.
• The ability to change their bank prime rate without your consent. For example, the Bank can decide, as they did in 2008, to move up credit lines across the board by 1% in 1 day. 

No wonder Banks call these products 'customer retention devices'. Good mortgage brokers will always fully disclose such information whereas most of the time, Banks have not been reporting this kind of information to thousands of customers. It is potentially costing customers $10,0000's each. Indeed, customers should be retained by providing excellent service, value and a good customer experience. There are many excellent mortgae products in the market that can meet your needs and goals, and give you the low rates and long term flexability that is far more desirable.

Questions? Comments? Feel free to contact me any time or leave a post below.

Best Regards,

Brent www.brentrichardson.ca - brent@brentrichardson.ca 

 

Kitchener Waterloo Home Sales Continue to Trend Upwards

According to the Kitchener Waterloo Real Estate Board, home sales posted their strongest month in over half a year in March. Specifically, a total of 497 properties were sold, a 34.7% increase over the 369 properties sold in February. Even more encouraging is that this is the third consecutive month of growth in home sales figures. Mortgage rates also remain at all time lows with 5 year rates of 3.85% or less in Kitchener Waterloo.

The local market continues to prove itself as resilient to the global economic down turn as housing prices remain constant and purchasing continues to improve. Indeed, all Realtors that I have spoken to attest to the fact that housing prices remain strong, and that there are multiple offers on most homes sold.

First time home buyers continue to drive increses in home sales, while there continues to be many individuals who are choosing this low mortgage rate environment to upgrade.

Call or email me, Brent Richardson, any time for more local information, housing trends and mortgage advice.

519 568 3377 - brent@brentrichardson.ca

Kitchener-Waterloo Real Estate Board March 2009 Report

According to the Kitchener Waterloo Real Estate Board, housing sales were up in February from the month before. Specifically, 369 homes were sold in February, a 44% increase from the January. It is encouraging to see home sales increase, especially in the wake of months of bad news and a weakening economic environment. 

It is interesting to note as well that Mortgage Rates are at record all time lows! 4.15% on 5 Year Fixed Rates!

The board reported however, that on a year over year basis, home sales were down 27%. This said, housing prices have only decreased 4% in the Kitchener Waterloo area since the same time last year. This is point reveals the very resilient housing environment in the area. Since the winter months are usually the weakest for home sales, we may see home prices actually increase as the spring and summer months approach.

Realtors that I have personally been in contact with continue to report multiple offers on almost all homes in the market. Where multiple offers are present, this usually means housing prices remain supported at strong levels. It also shows us that there is a fairly consistent supply of buyers in the market. See my article on the long term strength of Kitchener-Waterloo's economy for more reasons and details of why this is the case.  

Finally it was reported that the number houses for sale last month, when compared to the year before is up 13%.

The Board noted several factors that should continue to help support the KW housing market in the near term, including:

- Low Mortgage Lending Rates

- The Federal Government's $5.35 million dollar support of the City of Kitchener's Digital Media Park project.

- The new Balsillie School of International Affairs in Waterloo.

- Waterloo Region's diversified employment mix.

For further questions or explanations, contact me, leave a post, or visit my web site at your convenience. brent@brentrichardson.ca 519 568 3377

The Canada Mortgage and Housing Corporation (CMHC) Housing and Mortgage Market Outlook – Fall 2008

This is the most accurate and reliable report available to us in the area. It examines local, KW, Cambridge and Guelph economic trends and how these trends relate to housing and mortgage prices. I have summarized the main ideas of the report here, but a link can be found at the end of the article that contains the full material.

New Home Market

Housing starts in KW and Guelph will diverge in 2009. Specifically, housing starts will increase to 2,650 in 2006, a 4% increase from 2008. Guelph starts will shrink by 3% to 890 in 2009 from in 2008. For the area as a whole, rising house prices, a well supplied resale home market and uncertain economic conditions will combine to keep housing starts lower than levels seen in the first half of this decade.

Resale Home Market

The resale home market will continue to moderate in 2009. Sales of existing homes will lower by 6% to 6,100 units, down from 6,500 units in 2008. This said, the price of housing will continue to increase as will be expanded upon momentarily. The report states that “Rising house prices, uncertainty about the economy and the satiation of demand will dampen existing home sales in 2009”. Part of this is due to the mortgage options made available in 2006 that allowed first time home buyers to purchase homes earlier than they would have otherwise. This said, “the price advantage of resale over new, more selection, and continued population growth will combine to keep existing home sales at strong levels, but below record 2007 levels”. Upgrading to larger home will continue to be a trend throughout 2009. This is in part due to rising local incomes and sustained increases in home equity values. Specifically, the average price of existing homes will increase by 2% in 2009.

Economic Trends

Economic growth in KW-Guelph will be flat in 2009. In Kitchener Waterloo, employment will increase by less than 1%, while in Guelph it is forecasted to decrease by less than 1%. In either case, employment in the area will be much stronger than the Ontario average. “Over the next year, job growth will lead in the high tech sector, as well as in education, trade and construction sectors, in KW. These sectors are creating higher paying jobs. On the other hand, the manufacturing sector, and its largest sub sector, the auto industry, will continue to face challenges”. Overall, weekly earnings are expected to increase by 2% in both KW and Guelph in 2009. The growth in high tech, education and construction will be responsible for this increase.

 

Mortgage Rates

Mortgage rates should remain within 25-50 basis points (.25%-.50%) of their current levels throughout the rest of the year. In the first half of 2009, rates should decrease slightly as the cost of credit to financial institutions eases. However, rising bond yields will force mortgage rates higher in the second half of 2009. For the rest of 2008 and throughout 2009, mortgage rates will remain at historical lows. The strong economic benefits of home ownership will sustain for the unforeseeable future.

 

Mortgages and Identity Theft

Identity Theft

The mortgage industry has become a hot area for fraud. This, unfortunately, makes sense since such large amounts of money are involved. The central medium that fraudsters use for the achievement of their crimes is Identity Theft. Moreover, some Mortgage Brokers and Agents employ sloppy client privacy policies that help contribute to this problem. Put simply, a fraudster can steel your identity, take out a mortgage in your name, and ultimately ‘abscond’ with much of that money. This happens to the tune of over $1 Billion per year in Canada. What makes things even worse is that these fraudsters are very difficult to catch, and in many cases, it is very easy to accomplish. It’s one of those things that doesn’t happen to everyone, but it does happen to some. After reading this article and applying the advice, you can be more assured that it will not happen to you  

What, more specifically, is Identity Theft?

According to the Canadian RCMP website, identity theft is, “… the stealing, misrepresenting or hijacking the identity of another person or business and provides an effective means to commit other crimes”. For it to be accomplished, “vital information such as name, address, date of birth, social insurance number, and mother’s maiden name need to be acquired... The identity thief can take over the victim’s financial accounts, open new bank accounts, transfer bank balances, apply for loans, credit cards and other services, purchase vehicles, take luxury vacations, and so on”.

How do I prevent it?

In order to prevent Identity Theft and the resulting nightmare it would cause for you, follow this advice:

- Do not carry your SIN card in your wallet. This card is equilivant of your financial DNA, and if it gets into the wrong hands, unimaginable damage can be done to you. Memorize the number or keep the card at home.

- Shred your sensitive documents before putting them in the trash. Fraudsters are likely to check your garbage for letters that carry personal information when preparing to steal your identity.

- Sign all credit cards when you receive them and cancel ones that you don’t use.

- Never leave receipts around, destroy personal info that you don’t need.

- NEVER give your SIN or banking info over the phone.

- Ensure that the Mortgage Broker, or any one else that handles your personal information, has a good privacy policy and privacy control measures. Don’t be afraid to ask questions about how your information is treated.

This last part about ensuring that your partners in finance use the same, or better, diligence that you use is very important. Not all Mortgage Professionals use high levels of diligence and this is contributing to the over $1 Billion in fraud found yearly in Canada. Feel free to post any questions or comments below, or give me a call for more information on how to protect yourself against identity theft.

How Mortgage Brokers are Benefiting Consumers

 Most Canadians still attain their mortgage from their local Bank. Although more individuals are shopping around for better terms and rates, the majority of Canadians do not receive their best possible mortgage. By using the services of a Mortgage Broker, consumers can be confident that their interest, not the Banks, is kept at the forefront, and that they will be provided the best possible rate and terms in the market, because the services of a Mortgage Broker represent all lenders in the mortgage market.

A Canadian Institute of Mortgage Brokers and Lenders (CIMBL) survey quantifies the value that mortgage brokers add with several interesting statistics. 

Some notable points include:

• Mortgage brokers, in part, have assisted Canadians negotiate roughly 1.38% off typical posted bank rates in the last year.
• The number of Canadians using mortgage brokers has jumped 24% since 2005.
• Among those who renewed or refinanced over the past 12 months, 84% remain with the same lender, most likely a mistake given the intense competition out there.
• 88% of Canadians say they are happy with their mortgage terms.   

So even if you are in talks with your Bank about attaining a mortgage, consider comparing the Bank’s service with that of a Broker. Mortgage Brokers focus on only one financial service, Mortgages, and this focus can help save you thousands of dollars over many years and lead to much a faster pay off.

Brent Richardson

State of the Housing Market - October 2008

According to the Canadian Real Estate Association, housing markets have cooled, but have stabilized across the country over the last quarter. Despite a 6.2% quarterly decrease in home prices across Canada, prices are still up on a year over year basis. Moreover, the prices have been hit hardest in major metropolitan areas, especially in Western Canada. General feedback from realtors and mortgage brokers in the Waterloo region report that although housing activity is down slightly, we have not experienced, or are not forecasted to experience a significant housing price decline. Accordingly, Calvin Lindberg, President of The Canadian Real Estate Association states,

 "Informed buyers and informed sellers look at the facts. And the facts right now indicate the real estate resale market is stabilizing in many markets."

"There have also been a number of initiatives that will have an impact going forward, including the government’s decision to invest $25 billion in insured mortgage pools, the recent drop in the Bank of Canada rate, and the new rules reducing the maximum amortization to 35 years instead of 40," the CREA President adds. Those new mortgage rules go into effect October 15th. "The third quarter MLS® statistics and these developments are more factors showing the Canadian market is not following U.S. housing trends."

So while we are not currently enjoying the growth of the last few years, there is peace of mind for growth to resume in the mid term. Stay tuned for reporting on the local KW CMHC report of housing trends, which will be released some time in the next few weeks.

Mortgages for the Self Employed

If you are one of the more than 7 million Canadians who are either self employed or are paid on a 100% commission basis, then you may be wondering what mortgage options are available to you.

 

At one point in time, the CMHC and other mortgage insurers offered programmes that allowed the self employed to purchase a home with as little as 5% down, and prove income using alternative methods, as long as the credit score was reasonable. Unfortunately in late 2009, these programmes were cancelled, which leaves the self employed with 2 options:

 

1. Prove income using T4 and T1 General tax forms.

• In this case, you will receive the lowest market rate from almost any major lender.
• Your stated income from tax forms will be averaged over the last 2 years to determine your income going into the home purchase or mortgage refinance.
• There are a few things that can be done in order to show more income to banks if many tax write-offs are present.

2. Use alternative forms of proving income (with less or no reliance on tax forms)

• If 'low document' or alternative means of demonstrating income is the type of mortgage you wish to pursue, you will need at least 20% equity available in the home, or to put into the home.
• Rates will vary for low document mortgages from the lowest in the market to about 1.5% above the lowest market rates. There are several variables, including amount of down payment and credit, that will determine your rate.
• As long as you have 20%, and you can show some proof of business activities/ revenues, then you can get into a good mortgage at a very competitive rate - even if credit is not perfect.
• Mortgage refinancing and debt consolidation can still make good sense with low doc mortgages, even if the rate is not the absolute lowest in the market.

So although the mortgage market for the self employed wasn't what it once was given the removal of CMHC assistance, there is still plenty of opportunity for those that work for them selves to get into solid, low rate mortgages.

I am always more than happy to work with clients to help find their best possible solution on the market. Contact me, visit my site, or feel free to leave a post with a question or remark.

Brent Richardson

www.brentrichardson.ca

brent@brentrichardson.ca