Low interest rates and a hot housing market helped push Canada’s total residential mortgage debt to a record $1 trillion this year, but a cooling real-estate market is expected to slow further accumulation, says the chief economist of Canada’s mortgage industry association.

The value of outstanding mortgages is now 7.6 per cent higher than it was last year, the Canadian Association of Accredited Mortgage Professionals said in its annual report released Monday.

“We’re still seeing a lot of movement into home ownership and that’s what’s driving the growth of debt,” said Will Dunning, CAAMP’s chief economist.

“The growth will gradually decelerate but we’re still looking at rates of six and a half per cent or so, so still fairly rapid,” Dunning said.

This year’s growth was higher than the average annual increase is around 7.1 per cent. However, it is still much lower than it was in the early 2000s, when debt growth hovered closer to 10 per cent year over year.

Higher home prices drove many Canadians to borrow heavily to finance-purchases, while a low interest rate environment encouraged others to refinance loans and consolidate debt, the CAAMP report said.

The low interest rate environment has enabled some consumers to take on bigger mortgages than they might otherwise have been able to carry, while it has encouraged others to borrow against their homes.

Recent housing market data points to a massive downshift in housing market activity.

Less activity in Canada’s resale home market and moderating housing starts will mean fewer people taking on new mortgages, Dunning said.

“That (slowdown) now and in the near future going to result in less mortgage takeout as those sales get closed,” he said.

Canada’s housing market has been on a tear for much of the past year after the Bank of Canada sent its trend-setting policy rate to an emergency low of 0.25 per cent to stimulate borrowing and consumer spending.

Buyers, spurred by easy access to relatively cheap borrowing, rushed into the market and competed aggressively for homes, which drove prices to record highs.

The market has been cooling in recent months as many sales were pushed ahead to the beginning of the year in advance of tighter mortgage qualification rules, a new tax regime in B.C. and Ontario and higher interest rates.

Meanwhile, the Bank of Canada’s policy rate has been hiked three times to one per cent, still historically low. The central bank is expected to take a pause on rate hikes until the middle of next year, giving mortgage holders more time to refinance at low rates.

Most Canadians have heeded warnings from economists — including the Bank of Canada — about growing debt levels and took advantage of low interest rates to refinance and pay off other debts, CAAMP said.

The report found 18 per cent of mortgage holders have taken equity out of their homes to free up extra cash. Almost half of mortgage holders who borrowed against their homes cited a need for “debt consolidation or repayment” and the average amount borrowed against home equity was $46,000.

The association said that most mortgage holders appear to be comfortable with their debt levels and that the vast majority — about 84 per cent — said they could afford at least a $300 or 30 per cent increase in their monthly mortgage payment, Dunning said.

The association asked approximately 2,000 Canadians surveyed how much of an interest rate hike they could withstand. The average Canadian monthly mortgage payment is about $1,025 and the average homeowner has room for $1,056 per month on top of current costs, the report found.

However, about 350,000 out of 5.65 million, or about six per cent of Canadian mortgage holders, would be challenged by rate rises of less than one per cent, CAAMP said.

“Most of the people who have low tolerances for increased payments have fixed-rate mortgages,” the reports said. (So) by the time their mortgages are due for renewal, their financial capacity will have expanded and their mortgage principal will have been reduced.”

Canadians continue to favour fixed-rate mortgages and a five-year fixed-rate mortgage remains the most popular option despite the fact that variable rates have become much less expensive than fixed rates, the report found.

Canadian Association of Accredited Mortgage Professionals releases
Annual State of the Residential Mortgage Market in Canada report

Canadian homeowners are comfortable with their mortgage debt, have significant home equity and could withstand an increase in their mortgage interest rate, according to the sixth Annual State of the Residential Mortgage Market report from the Canadian Association of Accredited Mortgage Professionals (CAAMP), released today.

Highlights:

• The vast majority of Canadians with mortgages are able to afford at least a $300 increase in their monthly mortgage payments.
• One in three (35 per cent) mortgage holders have either increased their payments or made a lump sum payment on their mortgage in the last year.
• 89 per cent of Canadian homeowners have at least 10 per cent equity in their homes and 80 per cent have more than 20 per cent equity.
• Overall home equity is at 72 per cent of the total value of housing in Canada; for homeowners who have mortgages, equity level averages 50 per cent.
• As of August 2010, there was $1.01 trillion in outstanding residential mortgage credit in Canada, an increase of 7.6 per cent from last year.

“Canadians are being smart and responsible with their mortgages,” said Jim Murphy, AMP, President and CEO of CAAMP. “They are building equity in their homes and making informed, long-term mortgage decisions. The survey results speak to the strength of our mortgage market, especially when compared to the United States.”

Homeownership is a good long-term investment
Most Canadians agree that buying a home is a good long-term investment and are focused on their mortgages to support that investment.

Many mortgage holders are making voluntary additional payments: 16 per cent have increased monthly payments during the past year, 12 per cent have made lump sum payments, and 7 per cent did both.

Canadians are exercising caution when taking out their mortgages, with a majority choosing a fixed-rate (66 per cent). A five-year fixed-rate mortgage remains the most popular option in Canada. Despite the fact that variable rate mortgages have become much less expensive compared to fixed rates, the majority choice is still fixed rates: this decision is based on people’s individual assessments of risk, not just the cost difference.

Potential rate increases won’t be a problem
The CAAMP study found that a vast majority of Canadians have significant capabilities to afford higher payments if and when mortgage interest rates rise. 84 per cent report that they could weather an increase of $300 or more on their monthly payments.

Most of the people who have low tolerances for increased payments have fixed rate mortgages, by the time their mortgages are due for renewal, their financial capacity will have expanded and their mortgage principal will have been reduced.

Also, Canadians have been able to negotiate better than posted mortgage interest rates. For five year fixed rate mortgages arranged in the past year, the average rate is 4.23%, which is 1.42 points lower than typical, advertised rates.

Of the 1.4 million Canadians who renewed their mortgage in the past year, 72 per cent were able to renegotiate a decreased rate: on average, rates are 1.09 percentage points less than the rates prior to renegotiating.

Canadians have significant equity in their homes, strengthening the housing market
Canadians’ home equity is impressively high. Among homeowners who have mortgages, the average amount of equity is about $146,000, or 50 per cent of the average value of their homes.

The amount of equity take-out in the past year is unchanged from last year with around one in five homeowners, or 18 per cent, taking equity out of their home, at an average of $46,000. The most common purpose for equity take-out is debt consolidation and repayment (45 per cent) followed by home renovations (43 per cent), purchases and education (19 per cent) and then investments (16 per cent).

The report is authored by CAAMP Chief Economist Will Dunning and based on information gathered by Maritz Research Canada in a survey of Canadian consumers conducted in October 2010.

The CAAMP survey report contains a wealth of industry information, including consumer choices and borrowing behavior, opinions on current “hot topics” related to housing and mortgages, regional breakdowns of responses, and an outlook on residential mortgage lending.

For a copy of the report, please visit www.caamp.org, ‘Mortgage Industry’, under ‘Resources’.

Recently a close friend showed me how she was going to consolidate their high-interest debt into their mortgage to reduce their overall interest rate and free up hundreds of dollars in cash flow every month. Debt consolidations are nothing new, but they only work if the person is not simply looking for a quick fix.

In this particular case, $410 was freed up in monthly cash flow and the refinanced mortgage interest rate was lower. In many situations, however, consolidating debt into a mortgage comes at a cost: You must break your current mortgage and the high-interest debt then gets amortized into the new mortgage balance at a lower interest rate. Your overall debt goes up by a few thousand dollars (the cost to break the term and perhaps paying a CMHC premium on the increased balance on the mortgage), the rate of interest you pay overall goes down, but those high-interest debts are now being paid off over much longer periods of time.

So what’s better? Paying high interest for a few years or paying lower interest for a few decades? Well, you have to do the math, and then you have to figure out if you are just giving yourself more rope with which to hang yourself.

Before

$245,000 mortgage @ 5.25% amortized over 20 years, monthly payments of $1,650

$15,000 other debt @ 18.99% which would be paid off within 3.5 years with $500 monthly payments

Total Monthly Payments: $2,150

Total Principal Paid: $260,000

Total Interest Paid: $155,000

Total Principal and Interest: $415,000

After

$270,000 mortgage @ 4.75% amortized over 20 years, monthly payments of $1,740

Total Monthly Payments: $1,740

Total Principal Paid: $270,000*

Total Interest Paid: $145,000

Total Principal and Interest: $415,000

* Extra $10,000 covers fees and penalties to break current mortgage plus new CMHC premiums

Monthly cash flow saved: $410

So in this case, the math works, especially if the monthly cash flow savings of $410 is put to productive use, like contributing to an RRSP or building an emergency reserve. There are many variables at play here: interest rates, amortization, fees and penalties for your specific situation. You may find the overall cost of borrowing to be higher or lower than your current situation. Always run through the math.

But the more important consideration is whether or not you will get back into the habit of spending more than you earn. If that does happen, then what do you do the next time you’ve racked up too much debt? Refinance again? The vicious debt spiral can only be stopped once you master your monthly budget. If you can run a surplus for six months without problems, then by all means take a look at refinancing. But if you can’t run that surplus, don’t kid yourself: The same short-term thinking that caused you to run a deficit will cause you to tighten that noose around your neck.

When you’re buying a home, whether it’s your first home or your third, you want it to be perfect. Your home affects every aspect of your life, from your financial stability to things you do in your free time to the people you spend time with. It’s also probably the most expensive purchase you’ll ever make. Yet it seems like you always have to sacrifice something when buying a home. Here are the tradeoffs that homebuyers most commonly face. 

1. Location
   Location is the one thing you can’t change about most homes. Where you choose to buy affects the job opportunities available to you, your commute, your safety, the resale value of your home, where your kids will go to school, how much peace and quiet you will have and dozens of other things.

   Since location is so important, you might be thinking that your ideal location is something you should never compromise on. However, people compromise on their ideal location all the time – they move further out into the suburbs even though they work in the city because they want a larger/newer/nicer house for a lower price, for example. Sometimes it’s worth making a tradeoff on location to get something else you want. 

2. Privacy
   The type of dwelling you choose – house, condo or townhouse – will have a major impact on how much privacy you have. Will someone always notice when you’re coming and going and whether you’re home or away? Will you be able to play your music at the volume you want, turn up the TV and have parties without disturbing your neighbors? Will your neighbors be able to see what you’re doing even while you’re indoors or in your backyard?

   Keep in mind that privacy goes both ways – do you want to be subject to the intimate details of your neighbors’ lives?

   If you buy a home in a multi-unit building, your level of privacy will vary with the overall size and layout of the building, the quality of construction materials used, your unit’s location in the building and the behavior of the community (do people keep to themselves, or does everyone know each other?). In a single-family house, factors such as lot size, number of stories, fence height, vegetation, the location of the home’s windows and doors and whether the home is on a cul-de-sac or in a gated community can all impact its level of privacy.

   A house will usually offer more privacy than a condo or townhouse, but not always. Homeowners who want to live near the heart of the city often trade off privacy for location since urban areas tend to be more densely populated than suburban areas. 

3. Dwelling Type
   Whether you choose a house, condo or townhouse will also affect your lifestyle, your home’s resale value and your monthly finances.

   If you choose a condo, it will be difficult-to-impossible to have a backyard barbecue or a nice patch of grass for the dogs – in fact, it may not be possible to have dogs at all.

   Condo life means your exterior maintenance responsibilities are limited – there’s no repainting the house, replacing the roof or mowing the lawn – but you’ll still have to pay for all of these things in the form of monthly homeowners’ association fees. You’ll also have to pony up extra cash if a major repair comes up and the homeowners’ association is short on funds. So while many people think that living in a condo alleviates the burden of having to suddenly pay for major home repairs, whether that ends up being true actually depends on how well your homeowners’ association is managed. 
   Also, condos and townhouses can be more difficult to command top dollar for when you go to sell because there may be other units for sale that are identical to or very similar to yours. The larger your building, the more true this becomes. The same can also be true in neighborhoods of tract houses, but even tract houses with the same floor plan will often have more distinguishing features than condo units within the same building.

   Since condos and townhouses are often cheaper than houses, first-time homebuyers commonly make the tradeoff of choosing the former over the latter.

4. Price
   The cost of the home ranks at the top of most people’s lists in importance. A better location and nicer amenities will increase a home’s price. If you’re not wealthy, you’ll have to sacrifice some of the things you want to stay within your budget. Be realistic about what you can get for your dollar and remember to rely on your own calculations of what you can afford, not your lender’s estimate. 

The Bottom Line
It’s rarely possible to find a completely perfect home for your needs, tastes and budget, and it’s OK to make tradeoffs. Think about your priorities before you start your home search, but be flexible and willing to change your mind once you see what your true options are – viewing actual properties can shift your priorities. And remember that if you can only find places that require too many compromises, it’s OK to wait – new homes come on the market every day http://financialedge.investopedia.com/financial-edge/0810/Homebuyer-Tradeoffs-What-Will-You-Have-To-Sacrifice.aspx

OTTAWA – The Canadian economy likely suffered the worst quarter since the recession over the summer months, but Bank of Canada governor Mark Carney warns against taking too gloomy a view.

“I wouldn’t obsess about the third quarter,” Carney told reporters Wednesday after Canada’s central bank released its latest global economic outlook.

The bank conceded the economy likely continued to brake in the July-September months to 1.6 per cent growth — down from two per cent in the second quarter and the distant memory of the first quarter’s 5.8 per cent advance.

But Carney said Canadians should take a longer view and also take comfort that no matter how modest, at least activity is still positive.

“Two years ago, I (would have said) the economic picture we’ve just seen would have made the bank happy, would have made Canadians happy, given the alternative,” he said.

“We’ve recovered the jobs, we’ve recovered the lost output, we are doing better than virtually anybody else in the advanced world.”

Canada’s current rate of growth is about half the pace the bank had expected a few months ago, and even slower than the U.S., but Carney notes that there’s no comparison between the Canadian and U.S. economies.

While all and more of the about 400,000 jobs Canada lost during the recession have been recovered, the U.S. has only recouped about 15 per cent of their losses. And Canadian domestic demand is outpacing the U.S. by 20 per cent.

Dangers lurk, however, as the bank’s latest quarterly review makes clear.

Both the Canadian and global recoveries, as well as future growth projections, are more modest now than they were three months ago.

To accommodate those diminished expectations and increased risks, the bank on Tuesday suspended the monetary tightening cycle it began in June. Analysts think the bank’s key interest rate will stay at one per cent for many months.

The bank says in the balance it still believes the recovery will continue, but it highlights “important” risks, both internal and external, with the potential to upset the apple cart.

Canadian households are steeped in debt and could become a drag to the economy should housing prices collapse. Latest data shows debt-to-disposable income among households has reached a record 147 per cent.

“If there were a sudden weakening in the Canadian housing sector, it could have sizable spillover effects on other areas of the economy, such as consumption, given the high debt loads of some Canadian households,” the bank states.

Carney acknowledged keeping rates low for an extended period only increases the debtload risk, but said he believes consumer spending, including on housing, is tracking lower.

Coincidentally, the TD Bank also warned about household debt in a report Wednesday, saying one-in-10 households could find themselves in financial distress when interest rates rise. Fortunately, that many not be for some time.

Externally, the bank heightened its concerns over the growing friction in the world over currency manipulation, with advanced economies threatening to retaliate against China’s undervalued yuan.

The issue will be central to discussions at this week’s G20 finance ministers in Korea, but Carney suggested a solution will be slow and laborious.

Advanced economies, particularly the U.S., have long complained that China and other fast-growing Asian economies are artificially keeping their currencies below their true value in order to boost exports and discourage imports.

Although China has made some moves to increase the value of the yuan and hike domestic consumption, advanced economies believe those actions have not gone far enough.

Carney said as big a concern is that frustration will grow in advanced economies to such an extent that it will touch off a currency war, although he said China was the key.

“It’s not just China’s position … but as part of rebalancing the global economy, increased flexibility of the (yuan) is absolutely essential,” the bank governor said.

Despite the challenges, the bank sees the Canadian economy advancing from the slow third quarter to a 2.6 per cent gain in the fourth, and an average 2.3 per cent in 2011, followed by 2.6 in 2012.

One encouraging signal is that businesses have begun to invest in new machinery and equipment, which should boost productivity going forward.

Another, said Carney, is that exports will turn from being a net drag on growth to a tiny positive sometime next year as global demand picks up.

Still, it’s going to be a slow, hard slog back to normalcy.

The economy is not nearly as strong as the bank thought it was in July. It calculates output gap — the slack in the economy — remains at 1.75 per cent, not 1.5 per cent as estimated in the previous review.

The bank’s best guess now is that the economy will eventually right itself, but won’t be firing on all cylinders for another two years.

The Canadian Press http://news.therecord.com/Business/article/797065

How would you sell your house today if it was on the market? Would you use a real estate agent or go it alone?

It’s no small issue given the typical commission paid by the seller in this country is about $15,000 based on the latest average sale price of an existing home. When you consider most home sales are for principal residences — and profits are not subject to capital gains taxes–that $15,000 looms larger because it is after-tax money.

The truth is not much has changed since the Canadian Real Estate Association updated its rules in March to make its Multiple Listing Service more flexible, thus allowing agents to simply list a home with the consumer handling all other aspects of a transaction. Those changes are about to be made permanent because of a consent agreement with the Competition Bureau reached last month.

So, what’s the difference today? On a practical level, it’s hard to argue against listing your home on the MLS, which controls about 90% of transactions in Canada. And while you may pay as little as $109 for that listing, you can almost be sure to pay a commission of 2% to 2.5% to any agent bringing his or her customer to your door.

The option to use one of the dozen or so for-sale-by-owner, or FSBO sites, exists, but you can expect to pay a fee for the service. Plus, you can also assume any customer who buys a house through a FSBO site wants a discount on the market price because they know you are saving commission.

I tried it myself for two weeks before listing my own home on the MLS six years ago. My agent encouraged me. What happened is people who did show interest immediately started to talk about a discount. I was back to an agent and the MLS system.

But maybe there is a compromise solution, where I list on the MLS using an agent who helps me with part of a transaction. After all, there are people who paint their own homes but are reluctant to dabble in electrical wiring.

“Commissions are flexible,” says Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada. “There is [a middle ground] and people have to look for it. Many agents will offer a menu of services and that is out there already. Most people will choose to list with an agent who manages an entire transaction.”

But now that that choice is part of the game within the confines of the MLS, expect consumers to take advantage of it to save some cash.

“I’d still use an agent. My life is too busy,” says Craig Alexander, chief economist with TD Bank Financial Group. “But there are going to be people who only want an agent for some things.”

Mr. Alexander thinks changes are coming, but couldn’t put a timetable on it. He says it is basic economic theory that once you introduce elements of competition to a system, it will start to become more efficient.

Robert McLister, editor of Canadian Mortgage Trends, says many realtors will start offering a la carte services such as document preparation, showings, valuation and offer negotiations. He believes high-end real estate will be less affected by the changes and the industry might gear its efforts more to that end of the market.

And, he adds, FSBO sites that charge listing fees could be devastated by a bargain-basement MLS.

“Removal of listing barriers will allow efficient markets to take over. That will put obvious pressure on realtor fees. The era of 5% commissions in Ontario [other jurisdictions vary] could become a distant memory in three to four years,” says Mr. McLister.
Read more: http://www.financialpost.com/personal-finance/Your+options+brave+real+estate+world/3680721/story.html#ixzz135MK523U

The federal finance committee got an earful Tuesday from one group not too thrilled with the housing boom — Canadian landlords.

John Dickie, president of the Canadian Federation of Apartment Associations, said at least part of the housing boom over the past decade can be attributed to the government favouring housing over rental accommodation by providing a much larger subsidy.

“There are a number of rules in the current tax system that amount to massive favoritism towards homeowners as opposed to renters,” said Mr. Dickie Tuesday, adding it’s true for all three levels of government.

In Ontario, the group estimates, municipal, provincial and federal governments provide a subsidy of $2,629 per owner-occupied house, compared to $395 per renter.

“There is a perception among politicians that homeowners vote more frequently than tenants,” said Mr. Dickie. “There is perception in society that homeownership is good and should be encouraged.”

Homeownership rates in Canada have climbed steadily over the past decade and are now closing in on about 70% of households, something Mr. Dickie said “pushes it further than it should.”

Federal subsidies include such things as a rebate on the goods and services tax on new homes and the home-renovation tax credit. Capital gains on the sale of a principal residence are also exempt from federal and provincial taxes.

Though it varies by city, homeowners generally pay less property taxes than landlords. In Ottawa, Mr. Dickie said, landlords pay property tax of 1.7% of the value of the home, compared to 1% of the value for homeowners. Condominium owners, who rent out their space, get the residential rate in most municipalities.

He said renters should be concerned about the disparity. “They don’t know they are getting ripped because it’s the owners that cut the cheques.”

Craig Alexander, chief economist with TD Bank Financial Group, said homeownership has long been a goal of Western society.

“There is no question the policy environment provides incentives and support to homeowners,” he said.

But there is a risk subsidizing the sector, he said. “In the case of the United States, one could make the argument that part of what fuelled the housing bubble was oversubsidization of the housing market or maybe just excessive public-policy support for homeownership
Read more: http://www.financialpost.com/news/Housing+boom+blamed+subsidies/3696298/story.html#ixzz12tnVPRxd

Consumers on the long end of the borrowing spectrum appear to be getting a better deal with the five-year term fixed-rate mortgage reaching an all-time low over the past month.

Rock-bottom long-term mortgage rates appear to have handed the housing sector the lifeline it desperately needs, helping to push up sales for a second consecutive month and keep prices from falling.

The Canadian Real Estate Association said Friday sales last month rose 3% from August on a seasonally adjusted annualized basis — highest since May 2010 — and the second straight month sales rose.

Meanwhile, prices have also begun to stabilize as fears of a dramatic meltdown appear to be abating. The average price of a home sold in Canada last month was $331,089, down slightly from the $331,683 average a year ago. But prices were up from a month earlier, when the average was $324,928.

“Supply and demand are rebalancing and that’s keeping prices steady in many markets,” said Georges Pahud, president of CREA.

The other factor keeping the market afloat are interest rates.

The Bank of Canada has signalled it will take a pause on raising its key lending rate which should keep the prime rate at most banks at 3%, affecting any variable rate borrowers.

But it’s consumers on the long end of the borrowing spectrum who appear to be getting a better deal with the five-year term fixed-rate mortgage reaching an all-time low over the past month.

Gary Siegle, the Calgary-based regional manager for mortgage broker Invis Inc., said the standard rate for locking in for five years is now 3.69% but adds some lenders have dropped to as low as 3.39%.

“I’ve been working for 38 years and I don’t recall rates this low ever in my career,” said Mr. Siegle, adding the discount on variable-rate mortgages has dropped to the point that consumers can float with a rate as low as 2.35%.

“The question I wonder about is at these rates is why are people not all over the real estate market?”

CREA said two-thirds of local markets last month posted sales increases with Winnipeg, Calgary and Montreal standing out. However, compared with last year, sales still lag across the country, down 19.8% in September from a year ago.

“Record level sales activity late last year and earlier this year is expected to further stretch year-over-year comparisons in the months ahead,” the group warned.

TD Bank Financial Group economist Shahrzad Mobasher Fard expects falling mortgage rates to be a significant boost for the market for the near future. “They are a factor that cannot be dismissed,” said Ms. Mobasher Fard. “[Current rates] won’t lead to an overheating but it will support further growth in home sales and prices. The last two months of data indicate there has been a bottoming out of home-selling activity and prices.”

Demand is still tepid but there has been a slowdown in new listings, which are 15% off the peak reached in April. The number of months of inventory, which represents the number of months it would take to sell inventories at the current rate of sales activity, was down to 6.6 months in September.

It was the second straight month inventory levels dropped, having stood at 6.9 months in August and 7.2 months in July.

“Mortgage lending rates eased in the third quarter, which helped support sales activity over the past couple of months,” said Gregory Klump, chief economist with CREA.

“Interest rates are going nowhere fast, so home ownership will remain within reach for many home buyers.”

The chief executive for Royal LePage Real Estate Services Ltd. said he was almost a bit relieved to see the latest figures.

“I was pleasantly surprised to see the year-over-year average price flat given the strength of last year’s September results,” said Phil Soper. “I expected a small decline in average price. It has been driven almost entirely by the low cost of money.”

Financial Post

The Canadian economy appears to be on the mend again after a major stumble earlier this summer that rekindled fears of a possible double-dip recession.

Fresh evidence that July may have been an aberration, rather than the beginning of a downward spiral, built Friday as Canadian manufacturing, housing, and U.S. retail sales all came in surprisingly strong.

The most dramatic boost came in the unlikeliest place — a strong two per cent jump in the troubled manufacturing sector in August, powered by motor vehicle, petroleum and coal product manufacturers.

As well, new orders were up 5.3 per cent in a signal of future activity.

On the heels of better-than-expected export numbers Thursday, fuelled by auto shipments, the data is the first strong news the factory sector has received in months.

Equally important, say analysts, is that the long-idle U.S. consumer is showing signs of reviving, with the third consecutive month of healthy growth coming in September, a 0.6 per cent pickup following gains of 0.7 and 0.5 per cent the previous two months.

After a swoon, the Canadian housing sector is also showing signs of stabilizing. The Canadian Real Estate Association reports home sale activity rose three per cent in September, reaching the highest level since April.

“It’s a great way to end a Friday,” Scotiabank economist Derek Holt said. “We’ve got a whole Goldilocks round of data with pretty strong growth indicators but no inflation. This is a synchronous upturn in a broad cross-section of indicators that unwinds the synchronous downturn of the prior month.”

With positive data appearing for both August and last month, July appears to have been the low point of the rapid slowdown suffered by the Canadian recovery since it’s quick rebound of last fall and winter months.

Not only did July result in the first real contraction of activity at minus 0.1 per cent, it also ended the string of strong job creation numbers, actually producing the first loss — 9,000 overall and 139,000 full-time — since last year.

Economists caution that while a double dip appears to have been averted, for at least the rest of the year, there is also now signs that the economy is ready to take off.

The Bank of Montreal says the latest data is consistent with growth of about 1.5 per cent during the just completed third quarter — very modest for this early in a recovery cycle from recession. http://news.therecord.com/Business/article/794558

For some first-time buyers, arranging financing is more daunting than the actual purchase of a home. There’s a glossary of terminology associated with taking out a loan, including variable- and fixed-rate mortgages, debt-service ratio, amortization period, maturity date, and mortgage insurance.

Many first-time buyers look to a mortgage broker to help them stickhandle around these issues. But it’s not that easy because not everyone who calls himself or herself a “mortgage broker” is licensed to provide this service by the Financial Institutions Commission, which is the provincial regulator.

The president of the Mortgage Brokers Association of B.C., Joanne Vickery, told the Georgia Straight in a recent phone interview that members of her association work with many different lenders to negotiate mortgage financing on behalf of their clients. Potential lenders include chartered banks, credit unions, and other organizations that provide money directly to borrowers. “We’re able to source business for a client, and put them into something that’s going to best suit their needs,” Vickery said.

An independent mortgage broker is paid by the lender, so there is no charge to the consumer.

Financial institutions, including banks and credit unions, also employ people who offer advice on mortgages, but Vickery emphasized that these people are not “mortgage brokers” in the true sense of the words. She prefers calling them “road reps”.

“Road reps are technically employees of the bank,” Vickery said. “They are not mortgage brokers.”

She emphasized that road reps who work for national companies, such as the chartered banks, are licensed by the federal Office of the Superintendent of Financial Institutions. She maintained that their first obligation is to sell products offered by their employers, which sets them apart from mortgage brokers.

“Many mortgage brokers have clients who say ‘my broker from the Royal Bank or my broker from the Bank of Montreal’,” Vickery said. “We say they’re not really brokers.”

She said that MBABC is collaborating with the Financial Institutions Commission to educate the public on the difference between licensed mortgage brokers and those who sell products on behalf of financial institutions.

“I’m not saying that the lenders from corporate [institutions] are telling their people to say, ‘You’re a broker,’” Vickery stated. “That’s not really what’s happening, I believe. I believe that these individuals who are employees of the bank are calling themselves that because it’s easier. It’s easier for the consumer to understand.”

The Canadian Bankers Association declined the Straight’s request for an interview on this topic.

The Mortgage Brokers Act does not apply to employees of insurance companies, savings institutions, members of the Law Society of B.C., or any person acting for the government or any of its agencies. Samantha Gale, manager of mortgage broker regulation with the Financial Institutions Commission, told the Straight by phone that her organization has taken action in response to concerns over unlicensed advisors calling themselves mortgage brokers.

For example, Gale said, people who are not employees of a financial institution—such as independent contractors who place mortgages with third-party lenders—are not exempt from penalties under the Mortgage Brokers Act. If they call themselves “mortgage brokers”, they could be penalized if they’re not licensed as mortgage-development brokers. For a first offence under the Mortgage Brokers Act, the maximum fine is $100,000 and individuals are liable to imprisonment of up to two years.

“We only have a handful of people registered as mortgage-development brokers,” Gale said. “So my suspicion is that there is a lot more people out there working in this capacity for savings institutions that aren’t registered as mortgage-development brokers.”

In November 2009, the Financial Institutions Commission issued a bulletin stating that it now has the power to issue a cease-and-desist order. However, Gale said that her office has not received complaints about specific individuals, which is why there haven’t been any enforcement actions. “We have responded to the problem and we have a process,” Gale said. “The problem is not getting the complaint information.”

October is Mortgage Education Month, and to coincide with this, the MBABC is holding a series of seminars across the province. For more information, see www.findabettermortgage.ca