Canada could be facing a mortgage nightmare in the next few years with an estimated 30,000 subprime loans - now dubbed "orphan loans" - coming up for renewal in the next few years, according to a report in the Financial Post.
So concerned about the situation at hand, the industry recently approached the federal government with a request for a bailout - specifically to participate in a $1-billion fund to help finance the coming flood of orphan mortgages. Several alternative mortgage lenders began lobbying the government in the spring 2009 on the same issue but still have not gotten a response.
"This thing is a wave and it's just starting," Eric Putnam, formerly with a subprime lender, now managing director of Debt Coach Canada, told the Post. "Investors are no longer willing to continue on and these mortgages were not insured by the CMHC so the borrowers are not going to be able to move to another lender in today's environment."
Subprime loans have dried up in the wake of the financial crisis. There were at least a dozen sub prime lenders here in Canada and was forecast as the fastest growing sector of the entire mortgage market, Benjamin Tal, senior economist at CIBC World Markets, told the Post - who pegged it at being about five per cent of the total market.
The general term subprime refers to high interest loans made to people who are unable to get a better deal at any one of the big banks.
Mary Wozny
Wednesday, April 14, 2010
Saturday, April 10, 2010
New BFS Mortgage Insurance Rules in Effect
The new CMHC rules for self-employed borrowers took effect Friday and pose new challenges for this category of client.
First off, self-employed borrowers with more than three years in the same business who apply for a mortgage using stated income, as well as commissioned-income borrowers, are now required to provide to provide traditional proof of income (or "third party validation") through documents like financial statements, contracts and T4s.
Those who have recently become self-employed and don't have third-party validation can still apply for a mortgage, but have to come up with a 10 per cent down payment instead of five per cent. Refinancing will also be cut to 85 per cent loan to value instead of the previous 90 per cent.
Brokers have been giving the rule changes mixed reviews with some sayings the latest move was "off the wall" and hopes that if enough people talk about their displeasure with the changes, the CMHC might alter its decision.
"I don't think this was a good decision - it doesn't make sense now," one broker said, adding it also makes writing off income for tax purposes more difficult for BFS clients.
Some brokers on the other hand, agrees with CMHC's decision.
"The more people who default on loans, the worse the market becomes," they state, noting they felt a lot of self-employed people have qualified for mortgages when they shouldn't have. "This provision for self-employed is going to put the right people in the right structure of home."
First off, self-employed borrowers with more than three years in the same business who apply for a mortgage using stated income, as well as commissioned-income borrowers, are now required to provide to provide traditional proof of income (or "third party validation") through documents like financial statements, contracts and T4s.
Those who have recently become self-employed and don't have third-party validation can still apply for a mortgage, but have to come up with a 10 per cent down payment instead of five per cent. Refinancing will also be cut to 85 per cent loan to value instead of the previous 90 per cent.
Brokers have been giving the rule changes mixed reviews with some sayings the latest move was "off the wall" and hopes that if enough people talk about their displeasure with the changes, the CMHC might alter its decision.
"I don't think this was a good decision - it doesn't make sense now," one broker said, adding it also makes writing off income for tax purposes more difficult for BFS clients.
Some brokers on the other hand, agrees with CMHC's decision.
"The more people who default on loans, the worse the market becomes," they state, noting they felt a lot of self-employed people have qualified for mortgages when they shouldn't have. "This provision for self-employed is going to put the right people in the right structure of home."
Monday, April 5, 2010
Report Says 1 in 4 Canadians House Poor....
One in four Canadians rely on subsidies or spend over 30 per cent of their pre-tax income on housing costs, including mortgages and rent, according to a report by the Conference Board of Canada.
According to the report, a household is unaffordable if more than 30 per cent of its pre-tax income is spent on household costs - a situation that more than three million Canadians find themselves in. The typical household spends 50 per cent more on shelter than on food and over five times more on shelter than on clothing.
"The quality and cost of housing are major factors in the health of Canadians," said Diana Mackay, conference board director of education and health. "However, about one-fifth of Canadian households do not have the resources to afford both good-quality homes and other health-enhancing expenditures, such as nutritious food or access to recreational activities."
The report warned that the high number of Canadians stretched too thin negatively affects their health, productivity, and national competitiveness, and increases the cost of health-care and welfare.
Warmly,
Mary Wozny
According to the report, a household is unaffordable if more than 30 per cent of its pre-tax income is spent on household costs - a situation that more than three million Canadians find themselves in. The typical household spends 50 per cent more on shelter than on food and over five times more on shelter than on clothing.
"The quality and cost of housing are major factors in the health of Canadians," said Diana Mackay, conference board director of education and health. "However, about one-fifth of Canadian households do not have the resources to afford both good-quality homes and other health-enhancing expenditures, such as nutritious food or access to recreational activities."
The report warned that the high number of Canadians stretched too thin negatively affects their health, productivity, and national competitiveness, and increases the cost of health-care and welfare.
Warmly,
Mary Wozny
Tuesday, March 30, 2010
Banks Start Interest Rate Shake Up.....
Four big banks have increased their posted rates on fixed mortgages, signaling the start of an upward move on record-low interest rates.
Royal Bank, TD Canada Trust and Laurentian all moved their posted rates on five-year fixed mortgages by 0.6 per cent yesterday, a move followed by CIBC today. Many non-banks have already followed, prompting a surge in requests from variable-rate clients to lock into fixed rates.
The interest rate increase will also mean higher qualifying criteria for new clients, who must meet the five-year posted fixed rate when the new mortgage insurance rules kick in on April 19.
CIBC economist Benjamin Tal told the Globe and Mail the rise in rates along with other factors means the booming housing market will slow down significantly after spring.
"Given where interest rates are now, I still think you'll see an extremely strong spring.
However, after that I think the housing market will stagnate," Mr. Tal said. "We are in the ninth inning of this booming house market. We are not expecting a crash, but we will stagnate."
Royal Bank, TD Canada Trust and Laurentian all moved their posted rates on five-year fixed mortgages by 0.6 per cent yesterday, a move followed by CIBC today. Many non-banks have already followed, prompting a surge in requests from variable-rate clients to lock into fixed rates.
The interest rate increase will also mean higher qualifying criteria for new clients, who must meet the five-year posted fixed rate when the new mortgage insurance rules kick in on April 19.
CIBC economist Benjamin Tal told the Globe and Mail the rise in rates along with other factors means the booming housing market will slow down significantly after spring.
"Given where interest rates are now, I still think you'll see an extremely strong spring.
However, after that I think the housing market will stagnate," Mr. Tal said. "We are in the ninth inning of this booming house market. We are not expecting a crash, but we will stagnate."
Saturday, March 27, 2010
Vacancies Rising in B.C. but Sales Pick Up in Apartments
Rising vacancy rates have been good news to renters in the British Columbia apartment market as new supply has come online.
But as prices adjust, sales activity in apartments has also begun to pick up, according to a report this week by Avison Young.
While vacancy rates are climbing, up as high as 8 per cent in Chilliwack, Avison Young says prices have stabilized and sellers have adjusted their expectations.
"As a result of the lower prices in certain submarkets, the bid-ask gap will likely continue to narrow, leading to more sales as effects of the global financial meltdown and U.S. credit crisis soften," says the Avison Young Multifamily Investment Report on BC.
Despite the BC-wide vacancy increases, Victoria's vacancy remains below 1.5 per cent, and Vancouver just above 2 per cent, according to the Canada Mortage and Housing Corp.
According to Businessweek Magazine, Vancouver faces $700 million in financing for the luxury condos used by Olympic athletes in February, and the city needs to sell 474 units for as much as $10 million each to recoup its lending. These condos overlooking False Creek could otherwise prove damaging to Vancouver's credit rating.
Similarly, Montreal's 1976 Olympics left Quebec with $1.5 billion of debt that took three decades to repay, says the magazine.
Warmly,
MaryWozny
But as prices adjust, sales activity in apartments has also begun to pick up, according to a report this week by Avison Young.
While vacancy rates are climbing, up as high as 8 per cent in Chilliwack, Avison Young says prices have stabilized and sellers have adjusted their expectations.
"As a result of the lower prices in certain submarkets, the bid-ask gap will likely continue to narrow, leading to more sales as effects of the global financial meltdown and U.S. credit crisis soften," says the Avison Young Multifamily Investment Report on BC.
Despite the BC-wide vacancy increases, Victoria's vacancy remains below 1.5 per cent, and Vancouver just above 2 per cent, according to the Canada Mortage and Housing Corp.
According to Businessweek Magazine, Vancouver faces $700 million in financing for the luxury condos used by Olympic athletes in February, and the city needs to sell 474 units for as much as $10 million each to recoup its lending. These condos overlooking False Creek could otherwise prove damaging to Vancouver's credit rating.
Similarly, Montreal's 1976 Olympics left Quebec with $1.5 billion of debt that took three decades to repay, says the magazine.
Warmly,
MaryWozny
Tuesday, October 6, 2009
Ottawa Area Realtors Scramble for Listings
According to an article in todays Ottawa Citizen, homeowners in Ottawa are staying put, leaving real estate agents scrambling to find listings and creating one of the strongest seller's markets the nation's capital has seen in years.
According to the president of the Ottawa Real Estate Board, realtors in Ottawa have fewer than 3,800 resale homes available to sell. Although listings traditionally drop in the fall, realtors had more than 4,700 listings at this time a year ago.
Yet even with the limited supply, the board reported its best-ever September with 1,220 sales, topping the 1,208 sales of September 2008. That pushed the average resale price to $304,789, a 5.7-per-cent increase from a year earlier.
According to one Re/Max agent in Ottawa's west end, he is finding the market so constrained that he has sold off his last remaining houses and now has no listings of his own, indicating that "it's not the first time in his career that he's been 'listless'." "Listing inventory is definitely down. But it's not like they have been expiring, we have sold them all. It's very much a strong market right now."
The economic slowdown has caused many potential sellers to decide simply to ride out the slump. As a result, buyers who hope to tap into low interest rates must scramble for available homes.
Buyers are facing multiple offers on homes and that is influencing the upward prices. Whatever inventory is coming on the board is selling.Agents are also dealing with intense competition from newcomers that help sellers market their home directly to eager buyers.
The supply shortage is pushing builders to step up construction of new homes. The value of building permits in Ottawa jumped 8.1 per cent to $161.8 million in July, the most recent month for which statistics are available. That's up from the $149.6 million worth of building permits sought in June, according to Statistics Canada.
The increase supports a Canada Mortgage and Housing prediction in September that the pace of new home construction in Ottawa will take off in late 2009.
The resale market looked anemic in the first few months of 2009. At the end of March, 2,479 resale homes had been sold in Ottawa, an 8.7-per-cent drop from the first three months of 2008.
But September's record pace builds on a strong July and August for the real estate board.
As of September, condominiums were selling for an average $241,458, and other residential properties for an average $322,960, the board said.
According to the president of the Ottawa Real Estate Board, realtors in Ottawa have fewer than 3,800 resale homes available to sell. Although listings traditionally drop in the fall, realtors had more than 4,700 listings at this time a year ago.
Yet even with the limited supply, the board reported its best-ever September with 1,220 sales, topping the 1,208 sales of September 2008. That pushed the average resale price to $304,789, a 5.7-per-cent increase from a year earlier.
According to one Re/Max agent in Ottawa's west end, he is finding the market so constrained that he has sold off his last remaining houses and now has no listings of his own, indicating that "it's not the first time in his career that he's been 'listless'." "Listing inventory is definitely down. But it's not like they have been expiring, we have sold them all. It's very much a strong market right now."
The economic slowdown has caused many potential sellers to decide simply to ride out the slump. As a result, buyers who hope to tap into low interest rates must scramble for available homes.
Buyers are facing multiple offers on homes and that is influencing the upward prices. Whatever inventory is coming on the board is selling.Agents are also dealing with intense competition from newcomers that help sellers market their home directly to eager buyers.
The supply shortage is pushing builders to step up construction of new homes. The value of building permits in Ottawa jumped 8.1 per cent to $161.8 million in July, the most recent month for which statistics are available. That's up from the $149.6 million worth of building permits sought in June, according to Statistics Canada.
The increase supports a Canada Mortgage and Housing prediction in September that the pace of new home construction in Ottawa will take off in late 2009.
The resale market looked anemic in the first few months of 2009. At the end of March, 2,479 resale homes had been sold in Ottawa, an 8.7-per-cent drop from the first three months of 2008.
But September's record pace builds on a strong July and August for the real estate board.
As of September, condominiums were selling for an average $241,458, and other residential properties for an average $322,960, the board said.
Tuesday, September 22, 2009
Need Money? The Secret About Credit that Will Change Your Life.
I've found a short cut to money that you have to take a look at.In the next two minutes your going to learn something about credit that most folks will never know. It concerns the most profitable loophole in the credit reporting system.
Interested?
If you are, then please read this article written by national business credit expert Thomas Kish.
This short cut to money has changed a lot of peoples lives.
By Thomas Kish, President of CashFlowExperts.Biz ......
Almost everyone knows that a loan or credit card in your personal name gets reported to the credit bureaus. And this activity shows up on your personal credit report. The more you owe on your credit report, the lower your FICO credit score will be. And having bad credit will cost you dearly.
But - pay attention now - there is a way to get loans and credit cards that NEVER show up on your personal credit report.
And here it is...Here's how it works. When you get a business line of credit or business credit card In the name of a business, from my list of approved lenders - it will never appear on your personal credit report.
So you can get large amounts of cash and credit lines from the banks I work with everyday without worrying about hurting your personal credit. You can use this cash for anything you want to, and your assets will remain confidential.And you can start a business on paper for almost nothing. Just pick out a cool name for your new business and submit it on-line. You will have your business papers back in a few days.
Remember, no matter how much cash you take out in the name of your business, your personal credit score never drops.You can get $200,000 to $300,000 in cash and UNSECURED new business lines of credit by simply following my system. An unsecured business line of credit is the easiest short cut to getting money that you will ever find.
An unsecured business line of credit is simply a loan you get in the name of a business without having to give up any collateral.Business lines of credit come in the form of multi-year loans, convenient checks and business credit cards that offer cash advances that can be used anywhere.
The money available from a business line of credit can be accessed as cash wired directly into your account, with check writing privileges or like any other credit card with a interest free grace period.
You can use business lines of credit for so many things -
1. Real Estate investing
2. Stock market investing
3. Starting a new business
4. Growing an existing business
5. Advertising
6. Creating an internet business
7. Writing a book or a screen play
8. Ebay business opportunities
9. Investing in livestock or race horses
10. Or any other business activity you can dream of!
This is the best way most people have ever seen to get cash to buy real estate or start a business.
Because, in effect, the money is invisible. It does not show up on your personal credit report while you are using it.
Some people may think this is to good to be true. But savvy businesses have known about business lines of credit for the last 50 years.Isn't it time you learn about this EASY money source too.
Go to: https://m353.infusionsoft.com/go/sms-launch/mary
About Thomas Kish.
Thomas Kish is an author, speaker, business consultant and an active real estate investor.He is a national expert in the area of business credit and has shared the stage with best selling authors Robert Allen, Mark Victor Hansen, and Robert Kiyosaki . Tom has bought and sold 8 million dollars worth of real estate using business lines of credit instead of using his own money.And he has helped thousands of people change their lives with business lines of credit.
If you need money for your business check this out now!https://m353.infusionsoft.com/go/sms-launch/mary
Interested?
If you are, then please read this article written by national business credit expert Thomas Kish.
This short cut to money has changed a lot of peoples lives.
By Thomas Kish, President of CashFlowExperts.Biz ......
Almost everyone knows that a loan or credit card in your personal name gets reported to the credit bureaus. And this activity shows up on your personal credit report. The more you owe on your credit report, the lower your FICO credit score will be. And having bad credit will cost you dearly.
But - pay attention now - there is a way to get loans and credit cards that NEVER show up on your personal credit report.
And here it is...Here's how it works. When you get a business line of credit or business credit card In the name of a business, from my list of approved lenders - it will never appear on your personal credit report.
So you can get large amounts of cash and credit lines from the banks I work with everyday without worrying about hurting your personal credit. You can use this cash for anything you want to, and your assets will remain confidential.And you can start a business on paper for almost nothing. Just pick out a cool name for your new business and submit it on-line. You will have your business papers back in a few days.
Remember, no matter how much cash you take out in the name of your business, your personal credit score never drops.You can get $200,000 to $300,000 in cash and UNSECURED new business lines of credit by simply following my system. An unsecured business line of credit is the easiest short cut to getting money that you will ever find.
An unsecured business line of credit is simply a loan you get in the name of a business without having to give up any collateral.Business lines of credit come in the form of multi-year loans, convenient checks and business credit cards that offer cash advances that can be used anywhere.
The money available from a business line of credit can be accessed as cash wired directly into your account, with check writing privileges or like any other credit card with a interest free grace period.
You can use business lines of credit for so many things -
1. Real Estate investing
2. Stock market investing
3. Starting a new business
4. Growing an existing business
5. Advertising
6. Creating an internet business
7. Writing a book or a screen play
8. Ebay business opportunities
9. Investing in livestock or race horses
10. Or any other business activity you can dream of!
This is the best way most people have ever seen to get cash to buy real estate or start a business.
Because, in effect, the money is invisible. It does not show up on your personal credit report while you are using it.
Some people may think this is to good to be true. But savvy businesses have known about business lines of credit for the last 50 years.Isn't it time you learn about this EASY money source too.
Go to: https://m353.infusionsoft.com/go/sms-launch/mary
About Thomas Kish.
Thomas Kish is an author, speaker, business consultant and an active real estate investor.He is a national expert in the area of business credit and has shared the stage with best selling authors Robert Allen, Mark Victor Hansen, and Robert Kiyosaki . Tom has bought and sold 8 million dollars worth of real estate using business lines of credit instead of using his own money.And he has helped thousands of people change their lives with business lines of credit.
If you need money for your business check this out now!https://m353.infusionsoft.com/go/sms-launch/mary
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