Industry News 

 

Will higher mortgage rates ruin the housing market? How much will mortgage rates rise in the next 12 to 24 months?

 

Click here to watch a quick video with Globe and Mail Personal Finance Columnist Rob Carrick and BMO Chief Economist Doug Porter.

 

Canada’s small businesses want us to give up our credit cards one day a week, and use debit or cash instead.

 

The Canadian Federation of Independent Business (CFIB), which represents almost 110,000 small- and medium-sized concerns, teamed up with financial commentator Gail Vaz-Oxlade today to launch a campaign for “Credit Free Friday.”

 

It’s to their benefit, of course, and the CFIB acknowledges the merchant fees attached to credit card use.

 

But it also points out that consumers can save themselves a bundle, too, while scaling back on the record high debt burden among Canadian households.

 

“Very few consumers know than $5-7-billion each year in credit card processing fees is embedded in the cost of everything they buy, and with ever-higher tiers of premium cards hitting the market, that cost is only going up,” CFIB President Dan Kelly said as he launched the campaign.

 

Click here for the full Globe and Mail article.

 

Lucky number seven. That’s where Vancouver appears on Lonely Planet’s Best in Travel 2014 – top 10 cities.

 

Lotus Land is sandwiched between number six Shanghai and number eight Chicago – the only other North American city included on the list. Sorry, top “brand” cities New York and Toronto.

 

The world’s best city for travel, according to Lonely Planet, is “The City of Love,” Paris, France.

 

Vancouver, regularly cited as one of the world’s “most livable cities,” was lauded by the travel publication for its natural surroundings: Vancouver delivers on nature’s eye-candy – visit, and you’ll never be too far from spectacular mountain vistas, rambling evergreen parks and protected sandy beaches. You’ll appreciate the big-city-look/small-town-vibe the moment you arrive at the airport. Situated neatly on the Burrard Peninsula, a hotchpotch of office towers and hastily planned condos compete for the best of some of the world’s most expensive views, earning the nickname ‘City of Glass’. People live here because they love to run, bike, swim, ski and play. Boredom is not permitted here. If you simply can’t take any more of how good it gets, or it won’t stop raining, or you’ve run outta cash, head for the hills: Cypress, Seymour and Grouse Mountains, and the world-famous Whistler (ski) and Blackcomb (snowboard) areas are within easy reach.

 

Click here to read more from BuzzBuzzHome.

 

The CMP Canadian Mortgage Awards are back with a focus on charity and ready to honour this year’s leading industry players.

 

Online nominations opened earlier this month, giving nominees even more time to campaign before the event kicks off May 9th at the Liberty Grand in Toronto.

 

New this year, CMP has put together a how-to video on nominations to guide you through the process and ensure finalists are, once again, drawn from across Canada’s broker channel. That aid, along with much more on the event’s future and history are available on the CMA website. Click here to access the video.

 

And, once again, organizers are publishing the judging criteria for each award on the same web portal, inviting you to review that list before making your nominations. But above and beyond the nominations themselves, CMP is also identifying leading brokers in all award categories as deserving of a nomination and consideration by the judges – a collection of experts drawn from within and outside the industry. You can find the criteria for all 21 awards by clicking here.

 

Click here to make your nominations today!

 

Be sure to review this information early and encourage your clients, referrals sources, industry partners, etc to nominate you for your award(s) of choice! Being proactive during the nomination process is much more likely to result in you becoming an awards finalist!

 

There has been a sea change at the Bank of Canada. No longer are policymakers setting a specific monetary course. For the first time in more than a year, they have dropped any reference to interest rates eventually rising.

 

At the same time, they’re also taking a less-rosy outlook for the economic climate, in Canada and globally.

 

What hasn’t changed, however, is the central bank’s biggest policy lever – its benchmark lending rate, which has remained at a near-record-low of 1% since September 2010 and which has been locked in by lower-than-anticipated inflation and lagging growth.

 

Today, those policymakers – now under the leadership of Stephen Poloz, who replaced Mark Carney in June – again kept that rate as is. They also downgraded growth estimates for Canada, despite some positive economic signs coming out of Europe and Asia, tempered by ongoing uncertainty over budget crises in the US.

 

Click here for the full Financial Post article.

 

The lowest possible rate is how many define a good mortgage. But that’s like judging the “best car” by the one with the lowest monthly payment.

 

Anyone who’s had to cough up a mortgage penalty or deal with refinance limitations can vouch for one thing: Mortgage restrictions can easily outweigh small (eg, 0.10 to 0.15 percentage point) differences in interest rates.

 

It’s tough to predict your refinance needs three or four years out. Statistics show that well over half of Canadians with a mortgage renegotiate before their term is up. And the average five-year borrower changes their mortgage every three-and-a-half years.

 

That’s why it often pays to trade a slightly lower rate for more flexibility, unless you know you won’t change your mortgage during its term. A cheap rate can certainly save hundreds of dollars up front. Just be sure it doesn’t cost thousands after closing.

 

Click here for The Ultimate Mortgage Checklist courtesy of the Globe and Mail.

 

“The longer it (low interest rates) goes on, the more people can start to think this is normal and it’s not normal; it’s very, very far from normal.” – Julie Dickson, OSFI Superintendent, September 23rd, 2013 via MortgageBrokerNews.ca.

 

When people hear an authority – like the head of Canada’s banking regulator – make these statements, it compels many to lock in to a long-term rate.

 

At the very least, it gets a whole lot of people wondering, “What are normal interest rates?”

 

If you ask many economists, “normal” is an overnight rate that’s 2.00 percentage points higher than today. If you ask a lender, “normal” may be the 20-year average of 5-year posted rates (ie, 157 bps higher than today) or the 20-year average of prime rate (which is 207 bps higher than today).

 

Click here for more details from CanadianMortgageTrends.com.

 

“Double, double, toil and trouble.” Written over 400 years ago by the Bard, this phrase from Shakespeare’s infamously dark play, Macbeth, could just as easily describe Canada’s real estate market in recent years.

 

On one side, there are international economists – and their much publicized reports – declaring the market to be overvalued and due for a sudden, corrective crash. Then there are the local analysts who oscillate between doom-and-gloom predictions and the potential for a soft landing. Caught in the middle are prospective homeowners and real estate investors who are just trying to negotiate a good deal.

 

That’s where MoneySense can help. While we don’t believe anyone should rush into the real estate market, we do think there are still good deals to be found. To help identify those deals, we performed a ground-breaking analysis of the real estate market to find out which neighbourhoods are set to soar in value in five of Canada’s largest cities.

 

Click here for the best value neighbourhoods from MoneySense.

 

Buyers of new homes should do their homework and be wary of builders who promise too much, says the man overseeing Ontario’s regulator for home builders.

 

Tarion President and CEO Howard Bogach is touring the province to promote the corporation’s work and warn of illegal building practices. The Ontario government created Tarion Warranty Corp in 1976 to regulate the building of new homes. It licences builders of new homes and condominiums and guarantees warranties.

 

Registered builders must have the technical competence and enough financing to allow them to absorb any losses that could arise during a home’s construction.

 

Bogach said buyers should “make the phone call” to learn if the builder’s registered. Its website at www.tarion.com also has a directory of registered builders.

 

Click here to read more from the Trentonian.

 

Cars are a problem in personal finance, but they’ve been getting a free ride.

 

The surge in home sales in recent years and its impact on family finances has received non-stop attention in the past couple of years. But a similar jump in car sales has mostly been treated as a business story about rising fortunes in the country’s most important manufacturing sector.

 

Cars are a voracious wealth destroyer – they burn both gas and money. Behind houses, they’re a top contributor to today’s high personal debt levels and inadequate saving. Thinking of jumping into what is expected to be a record year of new car buying in Canada? Back up for just a moment and reconsider.

 

Of course, houses are a bigger financial strain than cars. The average house price in Canada was $385,906 in September, while new cars averaged $26,755 last year. But houses are at least an appreciating asset. If you buy today, you can reasonably expect to see your home post average annual price increases at the inflation rate over the next 10 to 15 years. Cars bought today will have marginal value a decade from now compared to the purchase price.

 

Click here for the full Globe and Mail article.

 

The CMP Canadian Mortgage Awards are back with a focus on charity and ready to honour this year’s leading industry players.

 

Online nominations opened earlier this month, giving nominees even more time to campaign before the event kicks off May 9th at the Liberty Grand in Toronto.

 

New this year, CMP has put together a how-to video on nominations to guide you through the process and ensure finalists are, once again, drawn from across Canada’s broker channel. That aid, along with much more on the event’s future and history are available on the CMA website. Click here to access the video.

 

And, once again, organizers are publishing the judging criteria for each award on the same web portal, inviting you to review that list before making your nominations. But above and beyond the nominations themselves, CMP is also identifying leading brokers in all award categories as deserving of a nomination and consideration by the judges – a collection of experts drawn from within and outside the industry. You can find the criteria for all 21 awards by clicking here.

 

Click here to make your nominations today!

 

Be sure to review this information early and encourage your clients, referrals sources, industry partners, etc to nominate you for your award(s) of choice! Being proactive during the nomination process is much more likely to result in you becoming an awards finalist!

 

Mortgage fraud in Canada has increased by a staggering 50% in recent years, according to Equifax.

 

While accounting for only 13% of attempted frauds in 2011, mortgage fraud was responsible for two-thirds, or $400 million, of the estimated dollar amount of financial fraud in Canada. According to John Russo, Vice President of Equifax, that number jumped to $600 million in 2012.

 

First party mortgage fraud – whereby an applicant misrepresents their financial circumstances by getting creative with a pay stub, job letter or notice of assessment – is surprisingly common these days. In 2012 it made up the majority of the $1.6 million-a-day in attempted mortgage fraud. And the Internet is an enabler. Questionable websites do everything from creating paystubs to “reworking” T4s and notices of assessment.

 

Last month I overheard a conversation where somebody openly admitted to forging his employment documents. He then arranged for a friend to act as his employer when the lender called to verify employment details.

 

Click here to read the full story from CanadianMortgageTrends.com.

 

A recent report from the Conference Board of Canada predicts that Canada’s condo sector will not collapse. This has been a topic of much speculation in major Canadian cities like Toronto, where condo development is booming. Some economists have warned that overproduction will affect real estate prices and could pose a risk for the economy. 

 

However, the report from the Conference Board of Canada, completed for Genworth Canada, argued that population growth and employment gains will assist in keeping the condo market afloat.

 

Highlights:

• Condo markets in Toronto and Montreal are cooling, but should avoid any major downturns as there is still a decent demand for condos amongst the Baby Boomer demographic. 
• Vancouver’s market is already well into a slowdown and will benefit from population growth and the “rising share of condominium-loving empty-nesters aged 55 or more.”
• Predicts a 0.5 per cent decline in Vancouver resale condo prices this year to $364, 593. Montreal’s average resale price is expected to drop 0.7 per cent to $265, 344 and Toronto is forecast to see its average price remain the same this year at $305,239.

OSFI has held off on further tweaks to underwriting rules, but amid speculation that it may soon spring into action, one representative has assured MortgageBrokerNews.ca the public – including brokers – will be allowed their say.

 

“If we decide to revise Guideline B-20, we will undertake public consultations,” said OSFI’s Annik Faucher. “No decisions have yet been reached.”

 

In May of this year, OSFI issued a report on the real estate market, wherein it expressed the importance of regulating interest rates.

 

“As noted by the outgoing Governor of the Bank of Canada, it is important that regulation and supervision be a strong line of defence to some of the consequences of low interest rates,” Superintendent Julie Dickson said in the May address. “Sustained low interest rates are a major area of focus for OSFI.”

 

About two-thirds of first-time buyers say they’ll purchase a home as planned and are unaffected by new mortgage rules brought in by Ottawa a year ago, says a new survey.

 

The findings come as the banks continue to increase long-term interest rates in the face of rising bond yields but refuse to bump up the posted rate for a five-year, fixed-rate closed mortgage – a key measure in deciding how much a consumer can borrow after the new rules were introduced.

 

Rates on the five-year mortgage have been rising steadily since the beginning of May in response to bond yields. At one point the Bank of Montreal offered a five-year, fixed-rate closed mortgage for as little as 2.99%, but that’s now up to 3.59%.

 

Meanwhile the posted rate has stayed at 5.14% at most banks. That posted rate is used by Ottawa to establish what is called the qualifying rate for consumers who require mortgage default insurance. Consumers not locking in for five years or more face the qualifying rate but, since it hasn’t risen, they can borrow as much as ever.

 

Click here for the full Financial Post article.

 

Canadian housing starts were stronger than expected in June and May figures were revised higher, according to data released yesterday – the latest report to show the property market rebounding from last year’s government-induced slowdown.

 

The seasonally adjusted annualized rate of housing starts was 199,586 units in June, according to data from the Canadian government’s housing agency. Analysts polled by Reuters had expected 187,000 starts in June.

 

CMHC also revised May starts higher, to 204,616 from the 200,178 originally reported.

 

The stronger-than-expected numbers helped boost the Canadian dollar in early trading.

 

Click here for more from the Financial Post.

 

Opaque contracts. Stiff penalties. Unnecessary insurance fees. Mortgage documents are full of traps that make it extremely difficult to pay off your biggest debt.

 

Click here for tips from MoneySense to pay off your mortgage early and become debt-free sooner than you imagined.

About two-thirds of first-time buyers say they’ll purchase a home as planned and are unaffected by new mortgage rules brought in by Ottawa a year ago, says a new survey.

The findings come as the banks continue to increase long-term interest rates in the face of rising bond yields but refuse to bump up the posted rate for a five-year, fixed rate closed mortgage — a key measure in deciding how much a consumer can borrow after the new rules were introduced.

Rates on the five-year mortgage have been rising steadily since the beginning of May in response to bond yields. At one point the Bank of Montreal offered a five-year, fixed rate closed mortgage for as little as 2.99% but that’s now up to 3.59%.

Meanwhile the posted rate has stayed at 5.14% at most banks. That posted rate is used by Ottawa to establish what is called the qualifying rate. Consumers not locking in for five years or more face the qualifying rate but since it has hasn’t risen they can borrow as much as ever.

A department of finance spokeswoman noted the five-year is set by the Bank of Canada and is based on the posted rates at Canada’s largest banks.

“The Government continues to monitor the mortgage market and protect taxpayers,” said Stéphanie Rubec manager, media relations, via email. “Prices for financial products, including mortgage interest rates, reflect a financial institution’s business decisions. Due to the fact that taxpayers are the ultimate backstop for government-backed insured mortgages, financial institutions are expected to lend prudently.” 

Farhaneh Haque, director of mortgage advice and real estate-secured lending at Toronto-Dominion Bank, said for most consumers it hasn’t had an impact because the majority of mortgages are for longer than five years — meaning consumers can use the lower rate on their contracts to qualify.

“The profile for our customers is the longer term anyway so it hasn’t had a material impact,” said Ms. Haque.

The Bank of Montreal survey, conducted by Pollara, found on the one year anniversary of the latest mortgage rule changes 66% of Canadians buying for the first-time will do so as planned.

Among the other changes was shortening of amortization lengths from 30 years to 25 years. The survey found 14% of Canadians will buy sooner, partially out of fear rules could get even tougher.

Meanwhile there is very little to indicate the posted rate will be rising any time soon, despite the fact government of Canada five-year bond has risen about 65 basis points since May 1.

“You do have to remember when rates where at all-time lows they didn’t lower the qualifying rate either,” said Rob McLister, editor of canadianmortgagetrends.com. “I have never talked to a banker or lender who has openly admitted they are keeping the rates low to qualify more people.”

He says it’s mostly a practical issue for qualification because very few people actually take the posted rate. Mr. McLister said some lenders like to keep it low to appear more competitive.

But there is no question the qualification rate will have to rise if bond yields keep rising. Plus, rising long-term rates might send people back to cheaper variable rate products, creating a more urgent need to tighten loan requirements.

“Once you get a one percentage point gap between short-term and long term, people start looking at variable,” said Mr. McLister.

David Madani, an economist for Capital Economics, agrees it is just a matter of time before the qualifying rate and posted rates start to jump. “There is usually a bit of a lag,” said Mr. Madani.

One bank economist, who asked not to be named, said there is a caution at the banks right now about the bond market. “They want to know that these rates are here to stay,” said the economist.

Canadians accustomed to cheap money are quickly realizing that the era of rock-bottom rates could soon be coming to a close.

 

Since the worst of the financial crisis, government interest rates in Canada and the United States have remained exceptionally low, and for the past three years government bond yields have kept falling to shocking depths, with the five-year Government of Canada bond dropping once again to below 1.2 per cent in early May.

 

Since then, however, there’s been a sudden turn.

Although the upswing in yields was anticipated, the feverish pace of this rise wasn’t. Since the beginning of May, the yield on 10-year U.S. Treasuries has spiked roughly 60 basis points, or 0.6 per cent, to hit 2.5 per cent, their highest rate since August, 2011. (A basis point is 1/100th of a percentage point.)

 

These yields affect many parts of the economy, from residential mortgage rates to the values of Canadians’ pensions. The sudden jump has caught many off guard. In the past month Royal Bank of Canada has already raised mortgage rates twice.

 

Bond yields began rising in early May when U.S. jobs numbers came in much better than expected, and then they shot up this week after U.S. Federal Reserve chairman Ben Bernanke suggested the central bank could start tapering its asset-buying program, under which the central bank now scoops up $85-billion (U.S.) of bonds and securities each month to keep their yields low.

Now interest rates on Canadian bonds are following suit because international investors largely view U.S. and Canadian bonds as alternatives to one another.

This is “uncharted territory,” said Toronto-Dominion Bank chief economist Craig Alexander.

“We’ve never been in a world where the Federal Reserve is buying $85-billion of bonds a month, and now the government is going to start scaling that back.”

As investors navigate the choppy waters, the question now, he said, is whether the recent spike in rates will hold. “Do they continue to climb, or does the market take a pause and recognize that it went too far too quickly?”

Whatever the outcome, uncertainty is weighing on everyone from small businesses to pensioners, who wonder how the market will shake out.

The Bank of Canada’s key interest rate isn’t expected to jump higher than its 1-per-cent level for some time, but government bond yields are at the whim of the market, and these yields are the benchmarks from which so many other products are priced.

Mortgage Rates

Royal Bank of Canada, the country’s biggest mortgage lender, has boosted its five-year rates for fixed-rate mortgages twice in the last two weeks to 3.49 per cent, and has also raised rates on mortgages of other lengths. Rival banks are following suit. These hikes follow a period during which rates sank to new lows, luring more people into the housing market. Such low rates prompted Finance Minister Jim Flaherty to lecture banks at a time of high consumer debt and house prices. Now the market is doing his work for him.

Personal savings

Canadians nearing retirement have had few choices for quality, dependable investments over the past few years – something they need at such a vulnerable point in their lives. Rock-solid 10-year federal government bonds that paid north of 4 per cent before the crisis offered returns less than half that amount until early May, and the banks’ super safe guaranteed investment certificates (GICs) barely offered more than the paltry inflation rate. That’s quickly changing as bond yields rise, widening investment options for baby boomers.

Business borrowing

The rates at which businesses of all sizes, from family-run restaurants to major corporations, can borrow money are quickly escalating. These rates are priced off soaring underlying government bond yields, which means the banks and the end borrowers have little control over them. However, the upside is that higher rates make the loans more economical for the banks, because they earn better margins on them. That means the banks should be more willing to lend money out – provided businesses have good reason to borrow.

Pensions

Low interest rates have caused serious pain for defined-benefit pension plans, and rising rates should be good news for people who are counting on payments from such plans in retirement. Pension accounting rules require plans to calculate a discount rate that determines whether they have enough money to fund their pension liability. This rate is priced off of bond yields, and higher yields translate into higher discount rates, making pension plans more solvent.

CMP magazine is holding its sixth annual review of Canada’s Top 75 Brokers for 2012 funded mortgage volume, giving residential brokers the chance to win the top spots based on individual volumes.

 

In addition to the CMP Top 75, this year marks the second year of the Small Market Top 20 – a list celebrating the accomplishments of mortgage professionals in markets with 2012 average home prices of $290,000 or less.

 

The entry deadline is Friday, June 21st, so don’t delay!

 

Last year’s Top 75 list included funded volumes (from 2011) ranging from just over $26 million in 75th position to more than $410 million in top spot. If your funded volume for 2012 is above $25 million, it’s definitely worth your while to fill out the submission form.

 

Please note that your volume submission must only include deals you personally generated and for which you alone received commission. It’s okay if someone else helped you process the deals, but no one else should have been paid commission on these deals.

 

Click here to enter online today.

 

When it comes to the purchase of a home, most Canadians admit to making some mistakes, according to the 20th Annual RBC Homeownership Poll conducted by Ipsos Reid.

 

The majority (60%) of Canadian homeowners indicate they’ve made some kind of mistake when buying a home, compared to two in five (40%) who say they haven’t.

 

Asked to list up to three mistakes, Canadian homeowners include the need for significant renovations (15%), not having a bigger down payment (14%), and not getting a home inspection (13%).

 

A further one in 10 list purchasing too quickly (11%), failing to account for extra costs or total cost of homeownership (10%), making compromises to budget and lifestyle (9%), making an emotional purchase and paying too much (8%), not thinking about future family and space needs (8%), or waiting too long to buy (8%).

 

Click here to read more of the RBC press release.

 

This spring homeowners are feeling optimistic about taking a bite out of their mortgage without having to cut back in other areas of their lives.

 

According to Scotiabank’s Mortgage Landscape Study, nearly two-thirds of mortgage holders (67%) agree that it’s possible to pay off their mortgage faster without impacting their lifestyle. In fact, most mortgage holders (59%) say they believe adding $20 per month to their mortgage payment would have no impact on their finances.

 

“Sometimes when people think about speeding up their mortgage payments, they get into the mindset that their only option is to make a large lump-sum payment in order to make a real dent,” said David Stafford, Managing Director of Real Estate Secured Lending at Scotiabank. “While periodic lump sums and even switching to bi-weekly payments are great options, increasing your payments by small amounts, like $20 per month, can have an incredible impact over the years. This small amount translates into paying off your mortgage years sooner, and every dollar that you don’t have to pay interest on for a 20- or 30-year mortgage can add up to real savings.”

 

When asked if they own or rent their primary residence, 35% of Canadians own with a mortgage, 29% own without a mortgage, 32% say they rent and 4% listed ‘other’ as their answer. Of those with a mortgage, half (51%) say they have spoken to their mortgage provider about how they can become mortgage-free faster.

 

Most mortgage holders (79%) have taken at least one step to pay off their mortgage faster. The top steps Canadians have taken to say goodbye to their mortgage faster include increasing the frequency of regular payments (45%), renegotiating for a lower mortgage rate (29%), increasing amount of regular payments (26%) and making additional payments (26%).

 

Click here for the full Scotiabank press release.

 

There’s been a surge of ‘Best Rate’ sites popping up. Chances are, you’ve probably seen one or more of their online ads. You know the ones…‘shopping’ for the Best mortgage rates in Canada’ and ‘comparing Canada’s mortgage brokers for the best rate”. It does sound great, and it seems to be getting lots of attention. Even the media are covering and quoting these sites. And although I like that these sites promote how Mortgage Brokers can offer great rates, I’ve noticed some disturbing trends that you need to watch out for.

 

You say you want the ‘best rate’? Really? Or do you want to pay the least amount of money on your mortgage? I’ll bet it’s the latter. Make no mistake, these two things are very different and I’ll prove it. But let’s face it, the rate gets everyone’s attention. Most people don’t want to hear anything beyond that… until they get burned for $$thousands on the mortgage later on.

 

Now what if I told you that 80% of my clients were paying a rate of 1.35% during 2009 and 2010, would that get your attention? Of course. And it’s true. 80% of my clients were in a Variable Rate mortgage based on my recommendations… and almost all of them didn’t panic and lock into a fixed rate (like the BIG SIX BANKS wanted them to). They stayed in those products based on my specific advice recommending they not lock into a Fixed rate. That’s called being in the right product at the right time. My average client saved $6,000 during that time.

 

Today, Fixed rates have our attention due to the rates being at all-time record lows. So, once again, I’m seeing consumers flock to the Internet to see who’s got the ‘Best Rate’. Hey, the strategy hasn’t changed. We still want to be in the right product at the right time. But the products have become more complicated and we’re seeing some poor product recommendations.

 

It’s time to put these sites to the test. Click here for the results followed by some recommendations after two months of research courtesy of an Ontario-based broker.

 

When she tours homes in the neighbourhood west of Eglinton and Bathurst in Toronto, Lindsey Springer knows exactly what she’s looking for: three bedrooms; finished basement; and easy access to transit.

 

“Definitely accessibility to the TTC is really important. My husband takes the TTC to work every day so that’s really important,” she says.

The suburbs don’t suit her lifestyle but finding a home close to existing transit is proving hard. “More expensive, definitely multiple offer situations, and we wish they were more affordable.”

 

The problem she’s facing is a common one. Homes and condos in denser, walkable and transit-friendly neighbourhoods come at a price often out of the reach of young families.

 

Making those neighbourhoods more affordable for people like Springer is the idea behind location efficient mortgages (LEM). The LEM idea is based on the premise of encouraging people to use public transportation and getting away from a lot of the congestion common with cars in big cities.

 

Click here for the full CBC News story.

 

Gift letters are often required by mortgage companies when parents are helping children buy a home. Mortgage companies want to see that the down payment either comes from the borrowers’ own resources or has been gifted.

 

In a case decided in April, a father had made a gift of $83,500 on the purchase of property by his son and daughter in-law. Later, the son and daughter in-law divorced. In the legal action to divide the matrimonial property, the father said that the gift was intended solely as a gift to his son. Alternatively, he told the Court that it should be treated as a loan. Otherwise, the wife stood to receive $41,750 – one half of the gift – on dissolution of the marriage.

 

In this case, the Alberta Court of Queen’s Bench agreed with the wife. They treated the $83,500 down payment from the husband’s father as a gift to both the husband and wife and, therefore, the wife got her $41,750. But the Court decision leaves it open to specify that a gift is to one child only.

 

So your clients may want to be very precise when they do a gift letter, and may want to keep a copy for future use.

 

Click here to read more about this court case from the Calgary Real Estate Review.

 

First-time homebuyers shopping for a mortgage have all the technology at their fingertips to make informed decisions, and financial experts say those resources should arm them with enough knowledge to prepare themselves, and even negotiate a better rate.

 

“In today’s environment, with so many things on the Internet, social media in general, there’s no reason why people shouldn’t be doing a lot more research,” said Jim Murphy, President and CEO of the Canadian Association of Accredited Mortgage Professionals.

 

One of the biggest challenges can be finding a starting point. Begin by taking a hard look at your financial goals and then match them with the many features and functions a mortgage has to offer.

 

Murphy suggested visiting CAAMP’s website for the basics on mortgage shopping. CAAMP is the national organization representing Canada’s mortgage industry, with more than 12,250 mortgage professionals representing over 1,700 companies.

 

Click here to read more from the Globe and Mail.