Thursday, October 25, 2007

Canadian Boomer Resilience: 84% Not Scared Off Real Estate Despite U.S. Housing Downturn

21% of Canadian baby boomers plan to make a real estate purchase in the next three years, according to a recent Mortgage Intelligence survey -

Eight out of ten (84%) Canadian baby boomers, aged 41-61, state they are not hesitant to consider a real estate purchase despite U.S. housing market volatility, according to a new online survey by Angus Reid Strategies on behalf of Mortgage Intelligence Inc. In fact, 21% of boomers surveyed anticipate making a real estate purchase in the next three years; 63% are not apprehensive about Canadian real estate, but have no plans to purchase within three years; 6% are not considering a Canadian real estate purchase because of the U.S. housing decline; and 10% do not know how they feel about Canadian real estate.

“Canadian boomers are a savvy bunch, and our survey indicates that despite the turmoil in the U.S., they clearly understand the long-term value of real estate,” said John Schipper, President, Mortgage Intelligence Inc. “With approximately 2 million boomers planning to buy a home within the next three years, this segment will be a major driver of the Canadian real estate market.”

Results from two polls commissioned by Mortgage Intelligence, a leading Canadian mortgage brokerage, shed light on some interesting Canadian baby boomer real estate trends:

24% of younger boomers (between the ages of 41 and 54) are more likely to have plans to purchase real estate in the next three years versus 13% of older boomers (between the ages of 55 and 61). (Angus Reid Strategies).
17% of those interested in purchasing real estate are most interested in investment properties, followed by 15% who want to downsize. (Corporate Research Associates).
More younger boomers are looking for out-of the box solutions for generating additional disposable income, including real estate investments observes Barry LaValley, founder and president of the Retirement Lifestyle Centre and Special Advisor to the Scotiabank Group.“ A sub-element of the investment real estate boom is the ‘tear down’ property market. Boomers are seeking out inexpensive properties that can be dressed up and resold for a profit,” said LaValley.

“Real estate clearly remains an important investment strategy for boomers as they plan for their retirement years,” said Schipper. “Every day, our mortgage consultants work closely with these clients to offer consultative service, knowledgeable advice and flexible mortgage solutions to meet their changing lifestyles.”

About the survey
The first poll was conducted by Angus Reid Strategies on September 25, 2007 among a representative sample of 490 Canadian boomers. The results are based on two-sided tests with significance level 0.05. The second poll was conducted by Corporate Research Associates Inc. in a nationwide study of 1,000 baby boomers across Canada between August 10 to September 4, 2007. An overall sample of 1,000 drawn from the population would expect to provide results accurate to within plus or minus 3.1 percentage points 19 times out of 20.

About Mortgage Intelligence Inc.
Mortgage Intelligence Inc. is among the largest and fastest growing mortgage brokers in Canada, with more than 1,000 independent consultants and associates in offices across Canada. Mortgage Intelligence consultants help clients make better mortgage decisions for their home, revenue or vacation properties, renewals, home renovations, debt consolidation needs, and specialized mortgage requirements. The company had funded volumes in excess of $7.8 billion in fiscal year 2006. For more information, visit:

Tuesday, October 16, 2007

Bank of Canada keeps target for the overnight rate at 4 1/2 per cent

OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 4 1/2 per cent. The operating band for the overnight rate is unchanged, and the Bank Rate remains at 4 3/4 per cent.

Against a backdrop of robust global economic expansion and strong commodity prices, information received since the July Monetary Policy Report Update (MPRU) indicates that the Canadian economy is now operating further above its production potential than had been previously expected. The core rate of inflation, which has been above 2 per cent for the past year, was 2.2 per cent in August. Total consumer price inflation fell temporarily in August to 1.7 per cent, having been above the 2 per cent inflation target since the spring.

Since the July MPRU, the outlook for the U.S. economy has weakened because of greater-than-expected slowing in the housing sector. The Bank has revised down its projection for U.S. growth to 1.9 per cent in 2007 and 2.1 per cent in 2008. U.S. growth is expected to pick up to 3 per cent in 2009.

The Canadian dollar traded in a range of 93 to 95.5 cents U.S. in July and August, but since then it has appreciated sharply to as high as 1.03 dollars U.S. In the Bank's new base-case projection, the Canadian dollar is assumed to average 98 cents, the mid-point of the range since the July MPRU. As well, there has been a tightening of credit conditions stemming from the financial market developments this summer. For Canada, the Bank assumes that the cost of credit for firms and households relative to the overnight rate will be 25 basis points higher over the projection period than it was prior to the summer developments.

Despite these tighter credit conditions, momentum in domestic demand in Canada is expected to remain strong. The combined effect of a weaker U.S. outlook and a higher assumed level of the Canadian dollar implies, however, that net exports will exert a more significant drag on the economy in 2008 and 2009 than previously expected. As a result, the Canadian economy is projected to grow by 2.6 per cent in 2007, 2.3 per cent in 2008, and 2.5 per cent in 2009. This growth profile implies that aggregate supply and demand will move back into balance in early 2009. Both core and total CPI inflation are projected to return to 2 per cent in the second half of 2008.

In line with this projection, the Bank judges, at this time, that the current level of the target for the overnight rate is consistent with achieving the inflation target over the medium term.

There are significant upside and downside risks to the Bank's inflation projection. On the upside, excess demand in the Canadian economy could persist longer than projected. This could come from two sources: higher growth in household spending than projected and lower growth in productivity than assumed. On the downside, if the Canadian dollar exchange rate were to persist above the 98 cent U.S. level assumed over the projection horizon for reasons not associated with stronger-than-projected demand for Canadian products, Canadian output and inflation would be lower. In addition, the effect of the past appreciation of the Canadian dollar on demand and inflation could be stronger than expected and the effect of the weakness in the U.S. housing sector could be greater than anticipated. All factors considered, the Bank judges that the risks to its inflation projection are roughly balanced, with perhaps a slight tilt to the downside.

A full update of the Bank's outlook for growth and inflation will be set out in the Monetary Policy Report, to be published on 18 October 2007.

Information note:
The Bank of Canada's next scheduled date for announcing the overnight rate target is 4 December 2007.

For current market conditions and up to date rate: