Five Simple Things You Need To Know To Make The Home Buying Process Easier

Things to Consider Before you Buy Your First Home. What can you afford?

•  No. 1 of 10 Things to Consider Before you Buy Your First Home

  
  

  

  What can you afford? Have a Budget:  Buying a home shouldn’t be taken lightly; it is a big step and probably the largest financial decision you will make.  Before making the decision to buy, take time to work out your personal budget which includes what you can afford and the different costs you will incur between renting and owning.  Your budget is not necessarily referring to the maximum you qualify for, but what is more in line with your own personal spending habits.  This is imperative if you don’t want to have to change your lifestyle significantly because each month you are financially strapped, or worse, regret it and lose your home because you can’t afford it!  Use our FREE Budget Planner Tool to figure out what you can realistically afford.

  
  

  
  

  Contact me at rephard@tmacc.com for the Budget Planner.

  
  

News To Help You Save Time And Money April 2014

Why you might want to get a head start on the Spring Market!

Canada Mortgage and Housing Corporation (CMHC) just announced an increase to their default insurance rates. Anyone purchasing their home with less than a 20% down payment is required to have their mortgage insured against default. The premium charged for that insurance has increased to as much as 3.15% of the amount borrowed from the current 2.75%. What this means is that on a mortgage of $250 000 the increase will amount to an additional $1000 on your mortgage which will increase in your monthly mortgage payment.

The good news is that this doesn’t come into effect until May 1, 2014 As long as you arrange your mortgage prior to May 1, 2014 (closing date can be after May 1, 2014) you won’t be subject to this increase. Click here to read the CMHC article.

Interest rates are still low and house prices continue to slowly move upwards even though sales have been down slightly over the last couple months. According to the latest announcement from Royal Lepage “housing has continued to maintain its momentum and expect a 3.7% increase in home prices this year”.

The Canadian mortgage landscape seems to change monthly. Having a mortgage professional who is not only knowledgeable but passionate about all things mortgages is your best bet when it comes to offering sound advice. If you know someone that has a question about buying a home or refinancing contact me anytime.

Top grants and rebates for property buyers and owners

1.Home Buyers’ Plan

Qualifying home buyers can withdraw up to $25,000 (couples can withdraw up to $50,000) from their RRSPs for a down payment. Home buyers who have repaid their RRSP may be eligible to use the program a second time.

For more information go to Canada Revenue Agency at www.cra.gc.ca

Enter ‘Home Buyers’ Plan’ in the search box or call 1.800.959.8287

2.GST Rebate on New Homes

New home buyers can apply for a rebate for the 5 per cent GST if the purchase price is $350,000 or less. The rebate is equal to 36 per cent of the GST to a maximum rebate of $6,300. There is a proportional GST rebate for new homes costing between $350,000 and $450,000. At $450,000 and above the rebate is nil.

For more information call 1.800.959.8287 or go to Canada Revenue Agency www.cra.gc.ca and enter ‘RC4028’ in the search box.

3.BC Property Transfer Tax (PTT) First-Time Home Buyers’Program

Qualifying first-time buyers may be exempt from paying the PTT of 1 per cent on the first $200,000 and 2 per cent on the remainder of the purchase price of a home priced up to $475,000. There is a proportional exemption for homes priced up to $500,000. At $450,000 and above the rebate is nil.

For more information go to BC Ministry of Small Business and Revenue at www.sbr.gov.bc.ca/business/Property_Taxes/Property_Transfer_Tax/ptt.htm or call 250.387.0604.

4.First-Time Home Buyers’Tax Credit (HBTC)

This federal non-refundable income tax credit is for qualifying buyers of detached, attached, apartment condominiums, mobile homes or shares in a cooperative housing corporation. The calculation: multiply the lowest personal income tax rate for the year (15 per cent in 2012) x $5,000. For the 2013 tax year, the maximum credit is $750.

For more information go to Canada Revenue Agency at www.cra-arc.gc.ca or call 1.800.959.8281.

5.BC Home Owner Grant

Reduces property taxes for home owners with an assessed value of up to $1,100,000. The basic grant gives home owners:

• a maximum reduction of $570 in property taxes on principal residences in the Capital, Greater Vancouver and Fraser Valley regional districts;

• an additional grant of $200 to rural homeowners elsewhere in the province; and

• an additional grant of $275 to seniors aged 65+, those who are permanently disabled and war veterans of certain wars.

For more information go to BC Ministry of Small Business and Revenue at www.rev.gov.bc.ca/hog or contact your municipal tax office.

6.BC Property Tax Deferment Programs

Property Tax Deferment Program for Seniors. Qualifying home owners aged 55+ may be eligible to defer property taxes.

Financial Hardship Property Tax Deferment Program. Qualifying low-income home owners may be eligible to defer property taxes.

Property Tax Deferment Program for Families with Children. Qualifying low-income home owners who financially support children under age 18 may be eligible to defer property taxes.

For more information go to www.sbr.gov.bc.ca.

7. Canada Mortgage and Housing (CMHC) Residential Rehabilitation Assistance Program (RRAP) Grants

This federal program provides financial aid to qualifying low-income home owners to repair substandard housing. Eligible repairs include heating, structural, electrical, plumbing and fire safety. Grants are available for seniors, persons with disabilities, owners of rental properties and owners creating secondary and garden suites.

For more information go to www.cmhc-schl.gc.ca or call 1.800.668.2642.

8.Home Adaptations for Independence (HAFI)

A program jointly sponsored by the provincial and federal governments provides up to $20,000 to help eligible low-income seniors and disabled home owners and landlords to finance modifications to their homes to make them accessible and safer.

For more information go to BC Housing at www.bchousing.org/Options/Home_Renovations or call 604.646.7055 or toll-free 1.800.407.7757 extension 7055.

9.CMHC Mortgage Loan InsurancePremium Refund

Provides home buyers with CMHC mortgage insurance, a 10 per cent premium refund and possible extended amortization without surcharge when buyers purchase an energy efficient home or make energy saving renovations.

For more information go to www.cmhc.ca or call604.731.5733.

10. Energy Saving Mortgages

Financial institutions offer a range of mortgages to home buyers and owners who make their homes more energy efficient. For example, home owners who have a home energy audit within 90 days of receiving an RBC Energy Saver™ Mortgage, may qualify for a rebate of $300 to their RBC account.

For more information go to www.rbcroyalbank.com/products/mortgages or call 1.800.769.2511.

11. Low Interest Renovation Loans

Financial institutions offer ‘green’ loans for home owners making energy efficient upgrades. VanCity’s Bright Ideas personal loan offers home owners up to $20,000 at prime + 1 per cent for up to 10 years for ‘green’ renovations. RBC’s Energy Saver loan offers 1 per cent off the interest rate for a fixed rate installment loan over $5,000 or a $100 rebate on a home energy audit on a fixed rate installment loan over $5,000.

For information visit your financial institution.For more information go to www.vancity.com/Loans/TypesOfLoans/BrightIdeas and www.rbcroyalbank.com/products/personalloans/energy-saver-loan.html

12. BC Hydro Appliance Rebates

Mail-in rebates for purchasers of ENERGY STAR clothes washers, refrigerators or freezers.

For more information go to www.bchydro.com/powersmart or call 1.800.224.9376.

13. BC Hydro Fridge Buy-Back Program

This ongoing program rebates BC Hydro customers $30 to turn in spare fridges in working condition.

For more information go to www.bchydro.com/powersmart or call604.881.4357.

14. FortisBC Rebate Program

A range of rebates for home owners include a $75 rebate for upgrading to an ENERGY STAR clothes washer, $300 rebate on an Ener-Choice fireplace and a $1,000 rebate for switching to natural gas (from oil or propane) and installing an ENERGY STAR heating system.

For more information go to www.fortisbc.com/NaturalGas/Homes/Offers/Pages/default.aspx or call 1.888.224.2710.

15. FortisBC Rebate Program for Businesses

For commercial buildings, provides a rebate of up to $60,000 for the purchase of an energy efficient boiler, up to $15,000 for the purchase of a high-efficiency water heater and receive funding towards a new construction energy study.

For more information go to www.fortisbc.com/NaturalGas/Business/Offers/Pages/default.aspx or call 1.866.884.8833.

16. LiveSmartBC Small Business Program

Business Energy Advisors (BEAs) delivers free energy assessments. Help business owners tap into available product incentives and cash rebates for lighting, hot water, heating and ventilation improvements. Help business owners coordinate product installation. NOTE: this program expires March 31, 2014.

For more information go to www.livesmartbc.ca/incentives/small-business/index.html or call 1-866-430-8765.

17. City of Vancouver Rain Barrel Subsidy Program

The City of Vancouver provides a subsidy of 50 per cent of the cost of a rain barrel for Vancouver residents. With the subsidy, the rain barrel costs $75. Buy your rain barrel at the Transfer Station at 377 W. North Kent Ave., Vancouver, BC. Limit of two per resident. Bring proof of residency. There is also a limited time offer for short rain barrels for small yards. Cost $50.

For more information go to http://vancouver.ca/engsvcs/watersewers/water/conservation/programs/rainbarrel.htm or call 604.736.2250.

Other municipalities have similar offers.

18. Local Government Water Conservation Incentives

Your municipality may provide grants and incentives to residents to help save water. For example, the City of Coquitlam offers residents a $100 rebate and the City of North Vancouver, District of North Vancouver, and District of West Vancouver offer a $50 rebate when residents install a low-flush toilet.

Visit your municipality’s website and enter ‘toilet rebate’ to see if there is a program.

19.Local Government Water Meter Programs

Your municipality may provide a program for voluntary water metering, so that you pay only for the amount of water that you use. Delta, Richmond and Surrey have programs and other municipalities may soon follow. Visit your municipality’s website and enter ‘water meter’ to find out if there is a program.

Source: Real Estate Board of Greater Vancouver.

How lower interest rates are making variable mortgages more tempting

Consumers facing record housing prices are probably increasingly tempted to go with a floating rate mortgage and all the risks that come with an interest rate linked to prime. The lure is right in your face on every mortgage rate comparison site.

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Recent Bank of Canada announcement on changes to their Overnight Rate

As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate and here is your personal update from me on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate.

At 10:00 am EST, Wednesday March 5th, 2014 the Bank of Canada again did what we expected them to do … they continued to maintain their overnight rate.   What this means to you is that once again the prime rate on your mortgage, line of credit or student loan will not change and remains at 3.00%.  This is fabulous news but are you still making the most of the low payments you still have, as the rate will increase in the future.   No doubt you are getting ready to file in 2013 Income Tax Return – are you getting a refund?   Give me a call and we can chat about helping you make the most of that refund and the savings you continue to make on your mortgage – I have some great budgeting and savings strategies for you – let me know as I would be happy to assist.

Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision today:

“The global economy is evolving largely as anticipated, with growth expected to strengthen in 2014 and 2015. The United States is still expected to lead the acceleration in advanced economies, although recent data have been softer, largely owing to weather effects. Volatility in global financial markets has increased somewhat, reflecting buoyant market conditions in most advanced economies and increased risk differentiation among emerging markets. More recently, tensions in Ukraine have added to geopolitical uncertainty.  In Canada, economic growth in the fourth quarter of 2013 was slightly stronger than the Bank anticipated.  Although  exports have been a little stronger than previously thought but continue to underperform, and overall business investment has yet to pick up.”

Just as before, the Bank still does not expect to increase their rate in the foreseeable future with any change most likely to occur late 2014 or even not until 2015!   They need to wait to see economic growth continue on a more upward direction and become more sustainable long term.  Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so you won’t see a large significant increase all at once.

Fixed rates dropped just slightly since the last announcement to around 3.19% to 3.39% for a five year fixed term.

Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now, unless you feel otherwise, I’d recommend that you remain with your current variable rate product as the interest is lower than a fixed term rate right now.  However, if having a fixed payment is important to you, call me so I can calculate what your new payment would look like and also if it is suitable for you. The next announcement on any change to the prime rate is April 16th, 2014 at which time I’ll be in touch again.

The Mortgage Landscape For First Time Home Buyers – Your Mortgage Smart Tip and Update

Buying your first home can be a very daunting process; this is a large purchase you are making and navigating thru all your mortgage options can be overwhelming.    So with this in mind, let me make it easier for you by including a Mortgage Smart Tip that you might find interesting.

 MORTGAGE SMART TIPS

About your Mortgage Term

Definition: The number of years or months over which you agree to pay a specified interest rate and the lender commits to not changing it or asking for their money back (except in default of course) ! Also refers to whether it is an open or closed term

Options: Terms can be any of the follow:

Lengths:

      6 months, 1 to 10 years

      Up to 25 years for secured lines of credit although fully open

      A term that renews on a specific date the lender sets in the future e.g. could result in a 2 year 6 month term

Open or closed:

      Completely open so even though a length of term is stipulated, you can pay it back in full with no penalty or;

      Completely closed so a penalty is payable by you if you repay early

So how do you select the right one for you?

      Determine which terms you actually qualify for and can select from.  You may be limited to a 5 year fixed term based on recent legislation changes – if you want a 1 to 4 year term or a variable; you typically have to qualify at a much higher interest rate known as the benchmark rate…. This might reduce the amount you qualify for.  I can let you know your options

      Consider selecting your term based on the current trend for interest rates going up or down e.g.:

ü  You might select a 5 year fixed term because rates are starting to go up and you want to “lock in” that lower rate

ü  You might select a shorter term if rates are expected to remain low and aren’t expected to rise

      Consider selecting your term based on any expected changes in your income.  Maybe having a 5 year fixed term at the same rate and payment for the next five years makes more sense and better suits your needs now

      Consider how long you intend to stay in this home, a question we asked earlier.  You might want to align the term with your future moving plans or even possible job relocation opportunities

      You may be expecting to receive a large sum of money soon and want to pay your mortgage off in full or a large part… paying it in full before the term expires may result in a penalty if the term is closed, e.g. selecting say a 2 year term which is when you plan to pay it off in full will save you money and penalty costs!

More Mortgage Legislation Changes Impacting Home Buyers

When purchasing a home, the key areas that impact whether you qualify for a mortgage at all and for how much, are based on your income, credit and debts including your new mortgage payments and available down payment. 

In July 2012 there were some significant mortgage legislation changes that impacted qualifying for a mortgage including using a higher interest rate to qualify depending on the term you select, more income verification and down payment for the self-employed as well as lowering the amortization to 25 years.  All these changes impacted mostly those that have less than 20% down payment and therefore require default insurance (CMHC, Genworth or Canada Guaranty).

Unfortunately, there is more to come that has already taken effect with some lenders now, and others by December 31st, 2013.  All these changes are intended to curb consumer debt accumulation over and above income levels and to reinforce the importance of ensuring that borrowers do not over extend themselves financially with more debt than they can handle.

Overall, these changes are a good thing to ensure consumers don’t overspend and become “house rich and cash poor”; meaning being a home owner but living pay cheque to pay cheque with so much debt (including credit cards, loans, lines of credit etc.) that there is no extra cash for savings to build a financial cushion should there be an income loss in the future.

The downside is that these changes are impacting the ability for many to qualify to purchase a home, especially impacting first time home buyers who are struggling to find an affordable property that they qualify for close to where they live and work.

So what are the new changes coming into effect by December 31^st, 2013 and how will they affect your borrowing and purchasing power?  The changes fall into three categories which are focused on your debt to income ratios and this will determine how much of a mortgage you qualify for;

1.    Debt; The payment that must be considered when calculating how much you qualify for is now a minimum of 3% of the outstanding balance on all unsecured lines of credit and credit cards that you have.  Even if you have a lower minimum monthly payment required by the creditor, this will no longer be used. 

For secured lines of credit that are registered against real estate, a minimum monthly payment that is to be factored into your qualifying is now the outstanding balance calculated over a 25 year amortization using either the benchmark rate (5.34% as of Sept 12^th, 2013) , or the actual interest you are paying.  Even though your secured line of credit might only have a minimum payment of interest only, you now have to qualify using a much higher payment.  Some lenders are taking this one step further and using the “credit limit” instead of the outstanding balance.

How to overcome this challenge; if you pay your entire balance off each month, and can provide confirmation of this, then you will not be impacted by this change.  Work with me on your personal household budget so we can create a plan to pay down your existing debt to a point where you qualify for the mortgage you require

2.    Guarantors; if you can’t qualify for a mortgage on your own, often a guarantor can be added to your application.  The guarantor is not on title but is on the mortgage and typically doesn’t live in the property with you.  The new changes mean that you can no longer use the income of the guarantor to help qualify for the mortgage unless they will be living in the property with you.  You will now be required to prove you can afford the property without using your guarantor’s income as well.

How to overcome this challenge:  Ensure that you purchase a home and obtain a mortgage that you can actually afford to pay back on your own without any financial contribution from a guarantor.   You may have to adjust your wish list a bit, or purchase a more affordable home to get you onto the property ladder.

3.    Heating Costs; using about $75 to $100 per month to calculate the cost of heat in your qualifying has been the norm til now.  Changes now require that a higher amount than this be used as determined by the lender and will be based on the purchase price, size of the property and location. 

How to overcome this challenge:  The reality is you are most likely going to be paying more than $100 per month on heat and utilities anyway so ensuring you can afford these bills is a good thing before you buy the home.  When you find a property you want to buy, ask the existing home owners for copies of the utility bills over the last twelve months so you can see what it will actually cost to heat your home thru the entire year.  Of course, your usage might change from the existing home owners but at least you will have an idea.  Again, ensuring you can actually afford to pay the utility bills before you purchase the home is good.

These changes, along with recent rising interest rates, are impacting the amount borrowers qualify for which in turn determines the purchase price of a home. 

So what happens next?  Firstly, don’t panic as these changes may not impact your particular situation at all.  If you are considering either moving and purchasing a bigger home or purchasing your first home, call me for a free consultation to see exactly how these changes may impact your qualifying for a mortgage.  There are many strategies we can discuss together to make your dreams of home ownership an affordable reality.

Be prepared for these changes so you we can create a clear plan and path to home ownership for you.

Ronald Ephard

Mortgage Broker

rephard@tmacc.com

Important Update-CMHC Raises Premiums May 1st

CMHC is increasing its homeowner mortgage loan insurance premiums to reflect its increased 
capital targets. 
 
As a result of its annual review of its insurance products and capital requirements, CMHC is 
increasing its homeowner mortgage loan insurance premiums to reflect its increased capital 
target.The change will only apply to mortgages underwritten after May 1, 2014 and it will apply to all homeowner business from that day forward.
 
CMHC reviews its premiums on an annual basis and, going forward, plans to announce decisions on premiums in the first quarter of each year.

For the average Canadian homebuyer using a CMHC-insured mortgage, the higher premium 
will result in an increase of approximately $5 to their monthly mortgage payment. This is not 
expected to have a material impact on the housing market.

10 Common cost of owning a home

10 benefits of mortgage insurance

Canadian dollar below 90¢ again as markets speculate on interest rate moves.

CTV NewsCanadian dollar below 90¢ again as markets speculate on interest rate movesThe Globe and MailThe Canadian dollar is below the 90-cent mark again today, with a report on inflation giving the currency only the the tiniest of gains. The loonie, as the country's dollar coin is known, sank below 90 cents U.S., regaining just some ground to stand at about 89.8 ...

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Five things to do if you are over-extended on your mortgage

Mortgage default may be rare in this country, but nearly 9% of indebted households need 40% or more of their gross income to pay their debt service charges, says the Bank of Canada Financial System Review.

If you can see problems coming, then you can take action to avoid foreclosure, which happens when lenders run out of other alternatives and borrowers can do no more to pay their debts. Here are five options to consider when you are being crushed by mortgage payments:

Read the full article at The Financial Post

Condo correction not in the cards for Toronto, Vancouver, says new report

Condo correction not in the cards for Toronto, Vancouver, says new report

The rental housing market has “passed it peak” but condominium investors can probably rest easy because vacancy rates will only edge up slightly, says a new report.

CIBC says all those real estate bears waiting for the property market to crash may be out of luck.

“Canadian real estate bears are patient. For more than half a decade they have been waiting for the inevitable crash in the Canadian housing market, only to be disappointed by a defying market,” said Benjamin Tal, deputy chief economist of CIBC, in the report. “The market will be tested by higher interest rates. But as things stand now, those bears will have to continue to wait as interest rates are likely to remain low well into 2015.”

CIBC says despite the fact Toronto has 64,000 condo units under construction — up to half of them could end up rented out — it doesn’t expect that to have a significant impact on rental rates. The report estimates Toronto will see about 11,500 new rental units per year, about 1,000 more than are needed based on household growth. He suggests an analysis of the Vancouver market reveals very similar results.

“Such excess supply will raise vacancy rates in the condo space by an estimated 0.3% to 0.4% in both cities in the coming years,” says Mr. Tal. “That is not large enough a damage to derail the market or lead to a substantial softening in rental inflation.”

The other determinant of rental rates is demand and the report says growth for rental units has probably peaked from levels reached in 2012 and 2013.

Mr. Tal suggests the real challenge for investors in the coming years will be higher financing or opportunity costs as mortgage rates eventually rise. Five-year fixed rate mortgages have headed back to about 3% as bond yields have dropped in the past few weeks.

He suggests while there will be a correction but it will be “much gentler” than what is feared by some. That fear is based on a view the the increase in supply of rental units will flood the market and force investors to sell in a panic.

“Our assessment of demographically-driven demand for rental units reveals a market that has passed its peak,” said Mr. Tal. “Vacancy rates will probably rise in the coming years and rent inflation will ease. But a careful analysis of the magnitude of the projected supply/demand mismatch suggests a much gentler adjustment than feared by many.”

Source: Financial Post

2014-02-14

Forget house prices and debt, deflation is Canada’s new bogeyman

“After spending two years watching house prices and household debt measures, investors may spend 2014 focused on inflation reports when making bets on the Bank of Canada’s interest rate outlook.”

Reblogged from Bloomberg News

The slow pace of consumer price inflation surprised policy makers in 2013, reviving rate-cut bets and prompting the central bank to abandon its bias to raise borrowing costs. Bank of Canada Governor Stephen Poloz said in an interview last month he can’t explain the weak inflation, which is now almost a percentage point below where the bank forecast it would be at the start of last year.

“A lot of people are starting to position for CPI releases,” Mazen Issa, senior macro strategist at Toronto-Dominion Bank’s TD Securities unit in Toronto, said in a telephone interview. “Inflation is going to be one of the major stories for Canada” this year.

Statistics Canada reported Dec. 20 that annual inflation in November was 0.9%, unexpectedly staying below the central bank’s 1% to 3% target band. The difference between Canadian and U.S. two-year yields narrowed by 4.22 basis points, the largest one-day reaction to Canadian CPI data since September 2011, when inflation was above the target band.

Inflation below 1% gives the Bank of Canada “plenty of reason to be dovish,” said Camilla Sutton, chief currency strategist at Bank of Nova Scotia in Toronto. The Dec. 20 report was “a disappointment because the market thought we would go back into to that 1 to 3%” target band.

Linkers Losing

The Bank of America Merrill Lynch Canada Inflation-Linked Government Index, which tracks six bonds with a face value of about $45 billion, lost 0.3% between the inflation report and Thursday, compared with a 0.2% gain for U.S. linkers.

Inflation has been below the 2% midpoint of the central bank’s target for 19 consecutive months. The bank forecasts it won’t return to that level for another two years. That would mark the longest stretch of inflation below the goal since the country adopted inflation targeting in the early 1990s.

In 2012, policy makers and investors were focusing on rising consumer debt. With near historic low mortgage rates sparking a rally in Canadian house prices and fuelling record debt levels, the central bank singled out household indebtedness as the greatest domestic threat to the economy. It introduced a rate-rise bias in April of that year, making it the only G-7 central bank to hint at higher borrowing costs.

Rate Bets

A year ago today, investors priced in more than 21 basis points of tightening by the end of 2013, trading in overnight index swaps showed. Economists surveyed by Bloomberg last January forecast a rate increase by the end of the year.

Today, swaps trading shows rate-cut bets have increased, meaning investors forecasting a change are roughly balanced between rate cuts and increases during 2014.

Elsewhere in credit markets, the extra yield investors demand to own the debt of Canadian investment-grade corporations rather than of the federal government fell 1 basis point Thursday to 118 basis points, or 1.18 percentage points, according to the Bank of America Merrill Lynch Canada Corporate Index. Yields fell to 3.11% from 3.14%. In 2013 the spread narrowed 17 basis points.

Yields on provincial debt relative to federal benchmarks fell 1 basis point to 64 basis points and narrowed 11 basis points in 2013, according Bank of America’s Canadian Provincial & Municipal Index. Yields were 3.07%, compared with 3.09% on Dec. 31 and 2.55% at the start of 2013.

Corporate Debt

Corporate debt returned 0.8% in 2013, compared with losses of 2.3% for provincial debt and federal-government securities, Merrill Lynch indexes show.

The difference in yields between Canadian and U.S. two-year notes — one gauge of relative interest rate expectations — fell from 91.6 basis points at the start of 2013 to 75.5 basis points at 8:14 a.m. in Toronto.

That spread moved sharply after Poloz, who replaced Mark Carney as governor in June, completely abandoned the central bank’s bias at his Oct. 23 rate announcement and began to single out weak inflation as the biggest risk to the economy.

At 1%, Canada’s benchmark rate remains the highest in the G-7.

“Under Carney, there was a shift in terms of focusing on financial stability risks,” said David Watt, chief economist at the Canadian unit of HSBC Holdings Plc. “Under Poloz, there has certainly been a return in focus towards what the Bank of Canada is mandated to look at, which is inflation.”

Core Inflation

Inflation last year averaged 0.9% through November, the slowest since the 2009 recession, falling to as low as 0.4% and never surpassing 1.3%. Core inflation, which excludes eight volatile components and is monitored closely by the bank as a gauge of inflationary pressures, averaged 1.2% last year and never fell below 1%.

“If core inflation is becoming unhinged, then you start to be concerned with the risk that the Bank of Canada may have to think a little bit more seriously about rate cuts,” Issa said.

Bloomberg.com

5 Ways to Limit Your Risk of Credit or Debit Card Fraud

When Target acknowledged last month that 70 million credit and debit card accounts had been exposed to theft, it was another stark reminder that any of us can become victims of fraud. Close to half a billion dollars is lost to credit-card fraud in Canada annually.

Technology is advancing daily, streamlining how we make purchases. Automatic payments, contactless transactions, online and mobile banking are all examples of developments that make it easier to accomplish our day to day tasks. However, it is always good to remember that we still have the responsibility to safeguard our personal information to prevent fraud and theft. In this article from the Financial Post, Melissa Leong provides five easy ways to limit the probability of credit and debit card fraud, including not leaving your cards unattended, increasing your awareness of phone calls and emails from your credit card company or bank, and using caution when banking with a mobile device.

Click here for the full article from the Financial Post.

Canada Housing Market February 2014

With home prices continuing to rise and and the on-going rebound in sales the home selling industry is looking forward to a good year in 2014. But the home building industry is showing definite signs of a slowdown. 

The latest numbers from CMHC show another decline in housing starts in January. It was the third monthly drop in a row. As well, the value of building permits issued across the country has also been declining. 

The six month moving average from Canada Mortgage and Housing Corporation shows construction starts dipping to a little more than 191,000 for January, down about 3,000 from December. 

Economists say the sluggish performance of the Canadian economy, an over saturation of condos and the likelihood of a modest increase in interest rates will probably hold home construction in check through 2014. 

by First National Financial LP 19 February 2014

Ways to use the equity in your home

Once you’re a homeowner, the payoff can be great. When you make a mortgage payment each month, you build equity in a place of your own. As the equity in your home grows, your financial flexibility also increases. Think of it as an extra source of financing for when the unexpected happens.

An added benefit of borrowing money against the equity in your home, is it usually comes with a lower interest rate than other forms of credit, such as consumer loans, lines of credit and credit cards.

Here are some ways you can use the equity in your home:

• Pay off other debts with higher interest rates (like credit card debt)
• Renovate or repair your home – build a new room or put in a swimming pool
• For important life events – a wedding, dream vacation or university tuition
• Purchase a second home or vacation property
• Emergencies – like a serious illness

- See more at: http://homeownership.ca/financial-planning/ways-to-use-the-equity-in-your-home#sthash.lf5APedJ.dpuf

News To Help You Save Time And Money February 2014