Monday, September 21, 2009

The Hazards of Waiving Financing Conditions

My brokerage is affiliated with Axiom Mortgage Partners and they recently posted the following article in an internal newsletter. This is really important and worth reading. I don't know why anyone would write an offer on a property without having a "subject to financing" condition. This is the biggest purchase of your life and it is important that you are protected!

"In the heat of a bidding war it might be tempting to waive a condition of financing to obtain an edge over (or merely keep up with) other bidders. This isn't always the wisest move - especially if you're prone to emotional bidding.
Even if you're preapproved for a mortgage, it's not guaranteed that you'll receive financing. Only once your lender (and mortgage default insurer, if you're putting down less than a 20% down payment) examines the details of the property (including purchase price, taxes, condo fees, etc.) will you know where you stand in terms of financing.
If you've grossly overpaid for your new home - and blown all previous comparables right out of the water - you might be in trouble. If you had a 5% down payment, and you were preapproved to spend up to $500,000, it might seem that a home listed at $450,000 is within your price range. The problem is, if similar homes in the area have sold for $385,000, the bank may opt to loan you 95% of $385,000, which means you would have to track down the remaining financing elsewhere.
One of the best ways to avoid this scenario is to do your research. Before embarking on a bidding war, ask your real estate agent to research comparable properties in the area to find out what the home's true value is - and make a pact not to go excessively beyond that number. If possible, try to find another way to get a leg up over other bidders - such as offering a quicker closing date."

Wednesday, September 16, 2009

Here are the latest lending rates! Please note, I have added some rates regarding a few cash back options that are available. These are not the only cash back options available so please contact me if you require more information regarding a cash back mortgage. (Borrowers may receive extra cash back funds if the mortgage closes within 30 days of submission to the lending institution).

Prime 2.25 %
Open Variable Rate Mortgage 3.75 %
Home Equity Line of Credit 3.25 %
6 Month 4.60 %
1 Year 2.75 %
3 Year 3.45 %
4 Year 3.69 %
5 Year 4.04 %
5 Year Variable Rate 2.45 %
5 Year (must close in 30 days) 3.94 %
5 Year 1.4% cash back 4.39 %
5 Year 3.4% cash back 4.89 %
5 Year 4.4% cash back 5.14 %
7 Year 5.25 %
10 Year 5.35 %

* Note: Rates are subject to change without notice. Please contact us for more information. OAC. Certain conditions may apply. Rate subject to borrower and property qualification. Posted rate is the rate posted by the majority of Canadian financial institutions. Rates may vary provincially.

Tuesday, September 15, 2009

Canada home resale market up 18.5% in year

John Morrissy, Financial Post
Published: Tuesday, September 15, 2009
National Post Canada’s surging resale housing market continued to post gains in August.

OTTAWA -- Canada's resale housing market continues to rally with 42,483 homes trading hands in August, an 18.5% gain from year-ago levels, the Canadian Real Estate Association said Tuesday.
Economists warned, however, the market's outperformance in recent months is not likely to go on for long as home prices rise and the market consolidates gains.
On a month-to-month basis, in fact, homes sales dipped slightly to 42,426 units in August from 42,666 in July.
"Canada's housing market has taken its cue more from the Great Houdini than the 'Bear' (economist Noriel) Roubini, fully escaping from the clutches of a potentially lengthy, harsh downturn," said BMO Capital Markets deputy chief economist Doug Porter.
"Record-low borrowing costs combined with the growing realization that the economic storm is passing have fuelled the remarkable turnaround. However, the gaudy sales growth will be tough to maintain now that prices are moving higher again."
Resale activity rose from year-ago levels in about three quarters of local markets. Year-over-year gains of 117% in Vancouver, 27% in Toronto, 17% in Calgary, and 9% in Montreal contributed most to the national increase in activity.
August marks the third consecutive month in which year-over-year sales rose by more than 15%, CREA said.
Prices also rose, although they were skewed higher by growing demand in Canada's more expensive housing markets. The national average price rose 11.3% from a year ago to $324,779 in August, CREA said.
A market weighted average shows a more modest 5.3% year-over-year rise in average prices.
"On balance, given the recent unbelievable strength in the Canadian housing market, the modest (month-to-month) down-shift in sales in August should not be seen as anything other that a brief respite in what has been a remarkable recovery in the sector," said TD Securities economics strategist Millan Mulraine.
"Even so, we believe that Canadian housing market activity in the coming months will be relatively tepid as the sector consolidates the gains made since January."
Canwest News Service

City Number of unit sales Change year over year
Calgary 2,324 +16.8%
Edmonton 1,673 +8.6%
Halifax-Dartmouth 584 +0.9%
Montreal (CMA) 2,870 +9.3%
Ottawa 1,227 +2%
Saint John 194 -18.1%
Saskatoon 393 +75.4%
Newfoundland and Labrador 472 -12.8%
Toronto 8,042 +27.3%
Greater Vancouver 3,496 +117%
Victoria 723 +47.6%
Winnipeg 1,080 -1.8%
Note: CMA census metropolitan area. Figures for Toronto include data for Mississauga, Brampton, Durham, Orangeville and York. Source:The Canadian Real Estate Association.

City Number of unit sales Change year over year
Calgary $388,725 -0.4%
Edmonton $318,321 -3.3%
Halifax-Dartmouth $231,203 4.1%
Montreal (CMA) $276,243 +5%
Ottawa $315,176 +11.5%
Saint John $166,117 +4.7%
Saskatoon $281,871 +0.9%
Newfoundland and Labrador $211,573 +12.7%
Toronto $387,899 +6.3%
Greater Vancouver $608,032 +9.1%
Victoria $481,279 +6.4%
Winnipeg $207,389 +8.6%
Note: CMA census metropolitan area. Figures for Toronto include data for Mississauga, Brampton, Durham, Orangeville and York. Source:The Canadian Real Estate Association.


Thursday, September 10, 2009

Even Canada's real estate industry questions housing turnaround

Garry Marr, Financial Post Published: Thursday, September 10, 2009
Even the real estate industry in Canada is having a hard time swallowing the complete turnaround in the housing market.
A new survey from Royal LePage Real Estate Services Ltd. found more than a quarter of its agents do not believe the housing market's current strength is sustainable.
When 1,153 agents and brokers were surveyed across the country about whether they thought the housing market's recent performance was sustainable, only 707, or 61% said yes. Another 28% said no and 11% didn't know.
Canadian housing sales climbed 18.2% in July from a year ago and are now on pace to beat 2007 sales, a record year. The stunning turnaround comes after sales were almost frozen over the winter, with January activity at a decade low.
But declining housing prices and low interest rates, including a commitment by the Bank of Canada to keep them low, have been credited with turning the market around.
Among the real estate agents who don't believe the market is sustainable, 36% said the recovery will end when interest rates climb which they say is inevitable. Another 20% of those who don't believe in the housing recovery said there has not been enough job growth to sustain the real estate sector.
Overall, 66% of those surveyed said low interest rates were the number one reason behind the recent strength of the housing market. No other category even got a double digit response.
Phil Soper, chief executive of LePage, said the government's commitment to not moving rates until June, 2010 has been a key factor in the rising market.
"This principled stance has been received very positively by prospective homeowners," said Mr. Soper. "Together with numerous positive economic indicators seen over the course of the summer, we believe that the current health of real estate market is sustainable."

Friday, September 4, 2009

Latest Mortgage Rates @ Mortgage Success

Prime 2.25%
Open Variable Rate Mortgage 3.75%
Home Equity Line of Credit 3.25%
6 Month 4.60%
1 Year 2.75%
3 Year 3.65%
4 Year 4.09%
5 Year Variable Rate 2.55%
5 Year 4.19%
5 Year (must close in 30 days) 3.99%
7 Year 5.30%
10 Year 5.40%

OAC. Certain conditions may apply. Rate subject to borrower and property qualification. Rates may vary provincially and are subject to change without notice.

Tuesday, September 1, 2009

Worst is over for housing markets, economists say

John Morrissy, Financial Post Published: Wednesday, August 26, 2009
OTTAWA -- The worst is over for North America's beleaguered housing markets, with a steady stream of data out of Canada and the U.S. indicating the recovery is at hand, economists say.
"A similar pattern in both countries is unmistakenly suggesting we've not only bottomed in housing, but we're on the way back up," said TD Bank chief economist Don Drummond.
Canada's already brightening picture was helped along Wednesday by a report showing housing prices in major markets across the country jumped 1.5% in June, building on May's 2% advance.
The rebound in prices was evident even in most of Canada's hardest hit urban markets, like Toronto and Vancouver, the Teranet-National Bank report showed.
For National Bank senior economist Marc Pinsonneault, that means "the worst of home-price deflation in Canada is behind us," he said Wednesday.
"The improvement is consistent with the huge improvement in market conditions in most of the major cities in Canada," which show sales resales rising sharply - up 18% in July alone - and listings on the decline, Mr. Pinsonneault said.
The numbers out of the U.S. are also good, at least relative to bone-jarring declines that marked the subprime meltdown and drove housing prices 31% below their peak in 2006, Drummond said.
On Tuesday, the S&P/Case-Shiller composite index showed home prices in the U.S. also bouncing higher, for the second straight month.
And on Wednesday, the U.S. Commerce Department announced new-homes sales surpassed expectations by increasing 9.6% to 433,000 units in July, the biggest increase in more than four years and the highest level of activity in 10 months.
"The housing market has clearly turned the corner," BMO Capital Markets economist Jennifer Lee said in an interview.
"The items supporting a housing recovery have been working in tandem over the past while, and they are still going strong, like the Energizer bunny."
Renewed strength in the Canadian market was evident in four of six major markets tracked by the Teranet-National Bank survey. Vancouver posted its first price gain after 11 months of declines, up 1.6%; Montreal posted its fourth straight monthly increase, up 1.2%; Ottawa gained 2.1%; and Toronto recorded its second straight month of gains, up 2.3%.
Halifax and Calgary were the only laggards, each slipping 0.2%. For Calgary, it was the 12th consecutive losing month.
Economists were quick to point out that while the trend has shifted, markets on both sides of the border are way off previous peaks. In the U.S., for instance, about 600,000 new homes are being built annually, compared with the 2.3 million homes at the peak of the cycle.
Current conditions in Canada have created a seller's market, said Pinsonneault, although he expects greater balance to return as higher prices draw more properties onto the market.
Mortgage rates, meanwhile, won't rise over the next 12 month by more than 50 to 75 basis points from today's 5.85% posted rate on fixed five-year mortgages, he said.
One uncertainty is whether the Bank of Canada can hold lending rates steady, as promised, until the middle of next year, economists say.